Zumiez stock plunged 20 percent in after-hours trading to $17.29 after delivering comp sales that missed analyst expectations.
Zumiez reported net income for the second quarter of $3.2 million, a decrease of 56.9 percent from last year’s $7.5 million. Earnings came in at 11 cents a share, in line with analyst expectations. Total net sales of $179.8 million were light of the FactSet consensus of $180 million, but an increase of 1.8 percent over last year.
Rick Brooks, chief executive officer of Zumiez Inc., stated, “We remain confident that our strategic course continues to provide us with compelling opportunities to grow our business and return greater value to our shareholders over the long-term. That said, we are disappointed in our recent performance, which reflects a slowdown in domestic sales. The response to our merchandise offering fell short of expectations, requiring us to become more promotional than planned to clear slow-moving inventory ahead of the back-to-school selling season.”
August total net sales dropped 7.2 percent to $87.3 million compared to $94 million last year. Comparable sales dropped 10.7 percent for August as compared with the same period for last year.
Zumiez blamed its problems on lackluster consumer traffic due to a lack of a clear trend, the impact of a strong dollar on tourist locations and the shift in Labor Day.
Zumiez gave guidance for the third quarter for net sales in the range of $202 million to $206 million and expects that comparable sales will decrease 7 percent to 9 percent.
Brooks said in a statement, “We are working hard to quickly address the lack of trend-right fashion in our U.S. channels. On a more positive note, the momentum in our European business continues to be strong, reinforcing our confidence in the long-term prospects of this market.”
Zumiez stock has lost 43 percent of its value in 2015 as the skateboard lifestyle brand has gone out of favor with teens. In addition to that, most of the stores are located in malls, which have experienced declines in traffic.