Shares of Zumiez Inc. advanced almost 10 percent Friday, a day after the teen retailer reported a lower-than-expected decline in third-quarter earnings but issued fourth-quarter guidance that was less than Wall Street anticipated.
This story first appeared in the November 23, 2009 issue of WWD. Subscribe Today.
For the three months ended Oct. 31, the Everett, Wash.-based boardsports specialist said net income fell 25.6 percent to $5.1 million, or 17 cents a diluted share, from $6.8 million, or 23 cents a share, last year. Sales in the quarter increased 0.8 percent, to $113.2 million from $112.2 million, but declined 8 percent on a comparable-store basis.
On average, analysts polled by Yahoo Finance expected earnings per share of 15 cents on revenues of $112.1 million.
Gross margin increased to 35.4 percent of sales, from 35 percent a year ago, but operating margin dropped to 7.4 percent of sales from 9.3 percent as selling, general and administrative expenses expanded 9.9 percent, to $31.7 million, or 28 percent of sales. SG&A represented 25.7 percent of sales in the 2008 quarter.
“Our results are particularly encouraging given that overall traffic and spending patterns continued to be volatile and the difficult macroeconomic environment continues,” said Rick Brooks, chief executive officer.
The firm said it expects EPS of between 18 cents and 22 cents and a comps decline in the mid- to high-single-digit range in its fourth quarter. Before Zumiez initiated guidance, analysts had expected the firm’s fourth-quarter EPS to total 25 cents on average.
Shares of Zumiez closed up $1.09, or 9.8 percent, at $12.21 on Friday, the first trading session after its earning announcement.
For the three quarters, Zumiez’s profits dove to $329,000, or 1 cent a share, including a 3 cent charge related to a lawsuit settlement, from $10.9 million, or 37 cents a share, a year ago. Sales fell 2.8 percent to $275.2 million from $283.2 million a year ago.