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Zumiez Retains Positive Comparable Sales Trend in October

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Zumiez Inc.’s (ZUMZ - Free Report) decent comparable-store sales (comps) trend is commendable. Notably, October marked the 10th straight month of positive comps this year. This specialty retailer of apparel, footwear and accessories reported a 1.6% increase in comps for the four-week period, (ended Nov 3, 2018). Comps improved 1.2%, 9.5%, 9.1%, 2.7% in September, August, July and June, respectively.

In the first and second quarter of fiscal 2018, the company delivered comps growth of 7.5% and 6.3%, respectively. It expects the metric to increase in the band of 4-6% during the third quarter.

Further, total net sales for October advanced 0.6% to $61.9 million from $61.5 million in the year-ago period. We note that in the first and second quarter of fiscal 2018, the company witnessed sales increase of 13.9%.

Looking at the second half of fiscal 2018, Zumiez remains confident about delivering accelerated earnings growth backed by solid top line and positive comps trends, margin expansion programs, improved expense leverage and lower taxes. Moreover, it believes that infrastructure investments made to provide seamless customer experience, and a unique approach toward merchandising will help lift the company’s performance.

For fiscal 2018, management anticipates comps to improve in a mid-single digit. Moreover, it expects earnings per share of $1.64-$1.70 in the fiscal year, reflecting an improvement of 52-58% from $1.08 last year. However, earnings and sales for the fourth quarter and fiscal 2018 are expected to be hurt due to the absence of an additional 53rd week this year.

Further, the company revealed that results for the fiscal third quarter will be negatively impacted by the calendar shift of the back-to-school season to the fiscal second quarter this year. This, in turn, is likely to impact sales by $10 million, operating profit by $3.2 million and earnings per share by 10 cents.

In the past six months, shares of the company have underperformed the industry. This Zacks Rank #3 (Hold) stock has lost 12% compared with the industry’s 5.5% decline.

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