Zumiez Inc. matched first-quarter analysts’ consensus estimates while providing weak second-quarter guidance based on an expected drop in sales during the current quarter.
Shares, down 0.5 percent during the day’s regular trading session, pulled back 9.2 percent to $27 in the first hour after the figures were released following the close of the equity markets.
In the three months ended May 2, the Lynnwood, Wash.-based action sports retailer generated net income of $2.8 million, or 9 cents a diluted share, 11 percent above the $2.5 million, also 9 cents, recorded in the comparable 2014 period.
Eliminating 3 cents in costs related to the acquisition of Austria’s Blue Tomato in 2012, adjusted EPS was 12 cents, matching the estimates of analysts covering the firm.
Revenues rose 9 percent to $177.6 million from $162.9 million, and increased 3 percent on a comparable-sales basis, while gross margin was up to 31.8 percent of sales from 31 percent a year ago.
“While the pace of our domestic business slowed more than anticipated in April, this was offset by strong sales gains in Europe where growth momentum continues,” said Rick Brooks, chief executive officer. “Overall, we remain confident that our omnichannel strategy, authentic lifestyle position and commitment to customer service provide us with strong competitive advantages that will deliver increased profitability and greater shareholder value over the long-term.”
In April, comparable sales at Zumiez declined 4 percent after rising 5.5 percent in March and 6.9 percent in February.
The company reported May sales results as it released earnings data on Thursday. Comps last month were down 2.2 percent versus a 3 percent increase in May 2014. Analysts polled by Thomson Reuters had expected them to rise 1.8 percent and the 4 percent “miss” was the largest such disappointment among the stores still reporting comps on a monthly basis. The other teen retailer in the sample, The Buckle Inc., reported a 2.4 percent comps increase against expectations of a 0.9 percent drop, making for the biggest upside surprise among the stores reporting.
Against this background, Zumiez projected second-quarter earnings of 12 to 15 cents a share, or 13 to 16 cents excluding acquisition-related charges, well below the 30-cent result expected, on average, by analysts. Sales are expected to total $179 million to $183 million in the quarter, below the $193.7 million estimate, with comps expected to decline between 3 and 5 percent.
Zumiez operates 627 stores, including 22 in Europe, and the e-commerce sites zumiez.com and blue-tomato.com.