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What Makes Zumiez (ZUMZ) an Extraordinary Investment Choice?

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Zumiez Inc. ZUMZ is much sought-after among investors now, given its sound fundamentals and strategic efforts. Management’s upbeat sales and earnings per share (EPS) view for fourth-quarter fiscal 2019 on stellar holiday performance is further boosting investors’ sentiments. Shares of this Lynnwood, WA-based company have risen 53.1% in the past six months, comfortably outperforming the industry’s 14.5% rally.

The holiday season turned out pretty well for the company, as evident from the stronger-than-anticipated quarter-to-date sales. The company reported 6.8% growth in comparable sales (comps) for the nine-week period ended Jan 4, 2020, compared with 4% growth in the nine-week period ended Jan 5, 2019. This prompted management to lift the comps and earnings per share view for the final quarter.

Management now projects fourth-quarter comps growth of around 6% compared with the prior view of 2-4% growth. We expect Zumiez’s solid comps growth trend to continue for the 14th consecutive quarter, when the company reports fiscal fourth-quarter results. Moreover, adjusted EPS is anticipated in the band of $1.34-$1.38, up from prior view of $1.26-$1.32. The current guided EPS range suggest growth of 13-17% from $1.18 earned in the same quarter last fiscal.


Speaking of Zumiez’s growth endeavors, the company has been gaining from its differentiated and localized merchandising assortments. Moreover, the implementation of advanced technology has helped augment customers’ shopping experience across diverse channels. Further, it is boosting competitiveness by investing in logistics, planning and allocation along with omni-channel capabilities.

The company has been striving to expand its omni-channel platforms to provide consumers with quick and easy access to its products and brands. In this regard, Zumiez has considerably improved customers’ experience by integrating its physical and digital networks. This allows customers to access inventories through all channels alongside availing facilities like buy online, pick up in store, and reserve online and pay in store. Its efforts to reach customers faster in each aspect through enhanced digital interactions and improved in-store experiences bode well. In addition, its efforts to contain costs and create efficiency are likely to boost profits.

On that note, we believe that this Zacks Rank #1 (Strong Buy) company is well poised for growth, making it a worthy investment pick. Also, the company has an impressive earnings picture, with straight beats in the last seven quarters.

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