Zumiez shares jumped in after-hours trading today after the company said its comparable sales declines were not as bad as feared in December.
The stock is up over 14 percent to $17.25 after a dismal day in the broader market.
Comparable sales decreased 8.9 percent for the five-week period ended Jan. 2. The company now expects a comparable sales decline of 11 percent for the fourth quarter, better than the previous guidance calling for a drop of 14 percent to 16 percent. Net sales for the month fell 6.2 percent to $134.5 million from $143.4 million a year earlier.
Zumiez said it had a better-than-expected December and, based on the results, now projects net sales for the fourth quarter to come in between $237 million to $239 million. That compares with previous net sales guidance of $226 million to $231 million. The company revised its earnings estimates for the quarter to a range of 45 cents to 47 cents a diluted share, compared with previously issued guidance of 40 cents to 46 cents.
The most-recent estimate includes $1.3 million, or 3 cents a share, in costs associated with closing its fulfillment center in Kansas. Zumiez is closing the fulfillment center in a plan to process online orders from the stores. The company expects that it will spend another $1 million in 2016 to integrate the online and in-store sales management systems.
Shares of the retailer have plunged 63 percent over the past 12 months, but seem to be rising from their 12-month low of $11.53. Guggenheim initiated coverage on the company on Tuesday with a neutral rating.
Chief financial officer Chris Work cited a challenging environment in a number of categories for the retailer, including men’s, juniors, accessories and footwear, all of which saw negative comps in December.
The company’s portfolio consists of 659 stores, mostly in the U.S., along with Canada and Europe operating under its namesake Zumiez and the European action sports chain Blue Tomato.