By  on October 22, 2007

Zumiez Inc. is skating past the competition by settling into a profitable niche.

The board sports retailer has managed to garner a 44 percent gain in stock price for the year-to-date period, despite the sluggish performance of specialty retailers, including direct competitor Pacific Sunwear of California.

"While so many comp stories begin and end when fashion trends change, Zumiez's ability to adapt to fashion changes as well as lifestyle changes, such as surf, skate, snow...makes the business model far more defensive than other retailers," said Brad Stephens, retail analyst at Morgan Keegan & Co., in a research note.

In September, Zumiez's same-store sales increased 13.9 percent on top of a 14.9 percent gain last year. Analysts expected a 7 percent increase. In the second-quarter period, earnings surged 90 percent to $3.1 million, or 11 cents a diluted share, on sales that climbed 47 percent to $82 million.

Pacific Sunwear has been unable to ride the wave.

For the year, the stock price at the surf-inspired retailer is down 24 percent. And while the company reported a 2.4 percent boost in September same-store sales, it was up against a 9.4 percent decline last year.

Zumiez's success comes from its strong corporate culture and knowledgeable employees that are truly immersed in the skate and surf lifestyle, said Dorothy Lakner, retail analyst at CIBC World Markets. "Some companies as they get larger become more corporate-driven, but that has not been the way Zumiez has operated," she said.

What also makes Zumiez stand out from competitors is the number of brands they offer and selection of action sports equipment.

While the company sells big names like Quicksilver, Roxy and Billabong, they also stock small niche brands that customers cannot find at other retailers.

The company carries more than 400 brands a year, and often the niche brands command higher price points, Stephens said.

Pacific Sunwear offers fewer brands and a more edited assortment, Lakner said.

"Zumiez is more like a core surf and skate shop than any other mall retailer and is more focused on action sports brands than any other teen specialty store," she said.

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