The pandemic coronavirus has rattled most companies across the United States, Zumiez Inc. (ZUMZ - Free Report) being no exception. Resultantly, management has issued business updates, including temporary store closures and withdrawal of guidance. Also, retailers such as Abercrombie & Fitch (ANF - Free Report) , Nordstrom (JWN - Free Report) and American Eagle Outfitters (AEO - Free Report) withdrew their initial guidance and closed stores.
As a safety and precautionary measure, the apparel retailer said that it will temporarily shut down all stores across the United States and Canada, effective today till Apr 3. However, it also informed that the duration of closure can be altered as per directions from the government and health officials. Moreover, its Blue Tomato stores in Europe are temporarily shuttered. As of Feb 29, 2020, Zumiez operated 718 stores, including 607 in the United States, 52 in Canada, 48 in Europe and 11 in Australia.
Owing to the outbreak and its impact on revenues and costs, management has withdrawn its first-quarter and fiscal 2020 guidance, issued alongwith its fourth-quarter earnings results on Mar 12. For the fiscal first quarter, Zumiez projected net sales of $219-$223 million and comparable sales (comps) growth of 2-4%. It anticipated consolidated operating margins of 0.4-1.3% and earnings per share of 1-7 cents. For the full fiscal, management estimated comps growth in the low single-digit range and earnings per share of $2.70-$2.80.
During this time off, customers can avail the company’s merchandise via Zumiez.com, Zumiez.ca and blue-tomato.com. This is likely to provide some cushion to the company’s overall top line that is likely to be impacted by loss of sales owing to store closures. We note that the company is striving to expand its e-commerce and omni-channel platforms to provide consumers with quick and easy access to its products. In this regard, Zumiez has considerably improved customer 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, reserve online and pay in store.
Impressively, Zumiez boasts an impressive comps run. The Zacks Rank #3 (Hold) company has seen the 14th successive quarter of positive comps in fourth-quarter fiscal 2019. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
We note that shares of the company have tumbled 46.6% in the past three months compared with the industry’s decline of 49.2%.
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