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Zumiez (ZUMZ) to Report Q1 Earnings: Key Factors to Note

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Zumiez Inc. (ZUMZ - Free Report) is likely to witness a decline in the top line when it reports first-quarter fiscal 2022 numbers on Jun 2, after the market close. The Zacks Consensus Estimate for revenues is pegged at $218.3 million, suggesting a decline of 21.8% from the prior-year reported figure.

The Zacks Consensus Estimate for quarterly earnings per share has been stable at 7 cents over the past 30 days. It suggests a sharp decline from earnings of $1.03 reported in the year-ago period. The bottom line of this specialty retailer of apparel, footwear, accessories, and hard goods missed the Zacks Consensus Estimate by a margin of 5.6% in the last reported quarter.

Key Factors to Note

On its last earnings call, management had guided first-quarter fiscal 2022 net sales between $215 million and $221 million, which suggests a significant decline from $279.1 million reported in the year-ago period. This is due to lapping record government stimulus a year ago and the current economic scenario. Evidently, supply chain bottlenecks and soaring inflation have created a challenging operating environment. These are likely to have weighed on the company’s top line in the quarter to be reported.

Owing to the anticipated decline in sales, Zumiez foresees deleverage in the income statement related to both fixed costs and re-introduction of expenses forgone last year because of the pandemic, such as store wages, training and travel. These might get reflected in the company’s first-quarter margins.

The company had projected first-quarter operating margin in the bracket of 0.0% to 1.5%. This indicates a sharp contraction from operating margin of 12.3% reported in the prior-year period. It estimated earnings to be roughly breakeven to 10 cents a share compared with $1.03 reported year-ago quarter.

Despite the aforementioned headwinds, we cannot ignore Zumiez’s effort to mitigate these challenges. The company’s consumer-centric approach, merchandise initiatives and expense management might have provided some cushion. Also, it looks well-poised to capitalize on the market opportunities that emerge internationally. The company may have witnessed some softness in Europe due to the ongoing conflict in Ukraine.

Zumiez Inc. Price, Consensus and EPS Surprise

Zumiez Inc. Price, Consensus and EPS Surprise

Zumiez Inc. price-consensus-eps-surprise-chart | Zumiez Inc. Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Zumiez this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zumiez has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

3 Stocks With Favorable Combination

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Kroger (KR - Free Report) currently has an Earnings ESP of +3.15% and a Zacks Rank #2. The company is expected to register bottom-line growth when it reports first-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly earnings per share of $1.27 suggests growth of 6.9% from the year-ago quarter’s reported figure.

Kroger’s top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $43.22 billion, indicating an increase of 4.7% from the year-ago quarter. KR has a trailing four-quarter earnings surprise of 22.1%, on average.

Designer Brands (DBI - Free Report) currently has an Earnings ESP of +4.35% and a Zacks Rank #2. The company is likely to register an increase in the bottom line when it reports first-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of 23 cents suggests an increase of 91.7% from the year-ago reported number.

Designer Brands’ top line is expected to increase year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $806.7 million, which indicates an improvement of 14.7% from the prior-year quarter. DBI has a trailing four-quarter earnings surprise of 112.8%, on average.

Chipotle Mexican Grill (CMG - Free Report) currently has an Earnings ESP of +2.21% and a Zacks Rank #3. The company is likely to register an increase in the bottom line when it reports second-quarter 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $9.06 suggests an increase of 21.4% from the year-ago reported number.

Chipotle Mexican Grill’s top line is expected to increase year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $2.24 billion, which indicates growth of 18.6% from the prior-year quarter. CMG has a trailing four-quarter earnings surprise of 9.3%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.