Zumiez Inc. (ZUMZ Quick QuoteZUMZ - Free Report) reported first-quarter fiscal 2026 results, wherein the top line surpassed the Zacks Consensus Estimate and increased year over year, while the bottom line missed the same and declined from the prior-year period.

The company delivered another quarter of positive comparable-sales growth and improved margins. However, investors focused on management’s cautious fiscal second-quarter outlook and commentary regarding increasing pressure on discretionary consumer spending. As a result, ZUMZ shares plunged 11.3% in after-hours trading following the earnings release.

More on Zumiez’s Q1 Results

ZUMZ reported a first-quarter fiscal 2026 loss of 82 cents per share, slightly wider than the Zacks Consensus Estimate of a loss of 81 cents. The company had incurred a loss of 79 cents in the year-ago quarter.

Total net sales increased 4.9% year over year to $193.3 million from $184.3 million and surpassed the Zacks Consensus Estimate of $191 million. The improvement was driven by positive comparable-sales performance across both North America and international markets, reflecting continued traction from merchandise assortment improvements and customer experience initiatives.

Comparable sales increased 4% year over year, marking the eighth consecutive quarter of positive comparable-sales growth. The Zacks Consensus Estimate for comps growth was pegged at 2% for the quarter under review. The increase was driven by higher dollars per transaction, supported by gains in average unit retail and units per transaction, partially offset by lower transaction counts.

ZUMZ’s Regional & Category Performance

From a regional perspective, North America net sales were $155.6 million, increasing 3.9% year over year. Other international net sales, comprising Europe and Australia, rose 9.1% to $37.8 million. Excluding the impacts of foreign currency translation, North America net sales increased 3.7%, while other international net sales declined 0.1% from the prior-year quarter.

Comparable sales in North America increased 4.4%, marking the ninth consecutive quarter of positive comparable-sales growth in the region. Other international comparable sales improved 2.2%, reflecting improving trends in Europe and continued traction from the company's strategic initiatives.

By category, men’s merchandise delivered the strongest comparable-sales growth, followed by hardgoods, women’s and accessories. In contrast, footwear remained the only category to experience a decline in comparable sales during the quarter.

Insights Into Zumiez’s Margins & Costs

Gross profit increased 10.9% year over year to $61.3 million from $55.3 million. The gross margin expanded 170 basis points year over year to 31.7%. The improvement was primarily driven by a 70-basis-point increase in the product margin, 50 basis points of leverage in store occupancy costs, 30 basis points of benefit from web shipping costs and 20 basis points of benefit from lower inventory shrinkage.

Selling, general and administrative (SG&A) expenses increased 1.8% to $76.5 million from $75.2 million in the prior-year quarter. As a percentage of sales, SG&A improved 120 basis points to 39.6% from 40.8% in the year-ago period.

The improvement was primarily driven by a 150-basis-point benefit from a one-time $2.9-million litigation settlement recorded in the first quarter of fiscal 2025, along with 50 basis points of savings from store-wage efficiencies and 40 basis points of leverage in non-wage store operating costs. These benefits were partially offset by a 70-basis-point headwind from vendor credits received in the first quarter of fiscal 2025, as well as 20-basis-point increases in both non-store wages and other corporate costs.

Zumiez reported an operating loss of $15.2 million compared with an operating loss of $19.9 million in the year-ago quarter, leading to a 290-basis-point improvement in the operating margin.

ZUMZ’s Financial Health

As of May 2, 2026, the company’s cash and current marketable securities totaled $124.2 million, up from $101 million on May 3, 2025. The increase was mainly attributable to $47.5 million generated from operating activities and the release of $3 million in restricted cash. These gains were partially offset by $19 million spent on share repurchases and $10.5 million invested in capital expenditure. The company remained debt-free at the quarter-end and retained full access to its unused $25-million credit facility.

Shareholders’ equity stood at $305.9 million. In the first quarter of fiscal 2026, the company repurchased 0.3 million shares for $6.2 million under the stock buyback program authorized by its board of directors on March 11, 2026.

This Zacks Rank #3 (Hold) company ended the quarter with an inventory of $153.2 million, representing a 2.2% year-over-year increase. Excluding currency fluctuations, inventory rose 0.7% year over year. Management expressed confidence in the quality and placement of its inventory as it prepares for the important back-to-school and holiday shopping seasons.

ZUMZ’s Store Details

As of May 30, 2026, Zumiez operated 715 stores, including 560 in the United States, 45 in Canada, 83 in Europe and 27 in Australia.

Management expects to open five stores in fiscal 2026, all located in the United States. The company also plans to close 26 stores during the year, including 20 in North America and six internationally.

Closer Look at Zumiez’s Other Updates

Net sales for the four weeks ended May 30, 2026, increased 0.1% year over year. Comparable sales decreased 0.1%.

From a regional perspective, North America net sales declined 1.9% for the same four weeks, while other international net sales increased 10.7%. Excluding the impacts of foreign-currency translation, North America net sales decreased 2%, whereas other international net sales increased 5.3% from the year-ago period.

Comparable sales in North America declined 1.5% during the said four weeks, while comparable sales in other international markets increased 7.2%. By category, men’s delivered the strongest comparable-sales performance, followed by accessories, women’s and hardgoods. Footwear remained the only category with negative comparable sales.

ZUMZ’s Q2 Guidance

For the second quarter of fiscal 2026, Zumiez expects total sales between $210 million and $215 million, indicating a decline of 2% to an increase of 0.5% from that reported in the prior-year quarter. Comparable sales are expected to be generally in line with the overall sales trend.

For the fiscal second quarter, the product margin is expected to range from slightly below to slightly above the prior-year level. Operating income is projected between a loss of 1.5% of sales and breakeven. The company expects a loss per share of 23 cents to 8 cents, whereas it incurred a loss of 6 cents in the year-ago quarter.

Zumiez’s FY26 Outlook

Management remains confident in its strategy and execution but continues to exercise caution, given increasing pressure on discretionary consumer spending and broader macroeconomic uncertainty. As a result, the company has not provided specific full-year earnings guidance for fiscal 2026.

Despite a softer start to the fiscal second quarter and a more challenging consumer environment, Zumiez expects total sales to increase in fiscal 2026, even after accounting for an estimated $12-million sales headwind from planned store closures. Management also believes product margins will improve year over year, supported by continued gains in North America, disciplined pricing and full-price selling in international markets, and the ongoing strength of its private-label business, which represented 34% of fiscal first-quarter sales.

The company expects a modest gross-margin expansion and some leverage in SG&A expenses as sales grow. Assuming no significant deterioration in consumer spending trends, Zumiez continues to anticipate an operating margin expansion of 50-100 basis points in fiscal 2026.

The company expects its effective tax rate to be 40-45% for fiscal 2026, whereas it registered 44.4% in fiscal 2025. Capital expenditure is projected between $14 million and $16 million. Shares of the company have gained 4.4% in the past three months against the industry’s decline of 3.4%.

ZUMZ Stock Past 3-Month Performance

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Stocks to Consider

We have highlighted three better-ranked stocks in the retail space, namely, Tapestry, Inc. (TPR Quick QuoteTPR - Free Report) , Genesco Inc. (GCO Quick QuoteGCO - Free Report) and Levi Strauss & Co. (LEVI Quick QuoteLEVI - Free Report) .

Tapestry is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. The company flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Tapestry’s current fiscal-year earnings and sales indicates growth of 36.3% and 13.8%, respectively, from the year-ago actuals. TPR delivered a trailing four-quarter average earnings surprise of 15.6%.

Genesco is a specialty retail and branded company that sells footwear and accessories in retail stores. The company sports a Zacks Rank #1 at present. 

The Zacks Consensus Estimate for Genesco’s current fiscal-year earnings indicates growth of 55.2% from the year-ago actual. GCO delivered a trailing four-quarter average earnings surprise of 3.8%.

Levi Strauss designs and markets jeans, casual wear and related accessories for men, women and children. It currently carries a Zacks Rank of 2 (Buy).

The Zacks Consensus Estimate for Levi Strauss’ current fiscal-year earnings and sales suggests growth of 11.9% and 5.2%, respectively, from the year-ago actuals. LEVI delivered a trailing four-quarter average earnings surprise of 21.4%.