Zumiez Inc.ZUMZ shares jumped nearly 6% in after-hours trading on June 3 after the company reported excellent first quarter fiscal 2021 results. ‘Zacks consensus estimate and have also increased year on year.
Quarterly results are well above pre-COVID levels, even though part of the company’s global store fleet was closed in the first quarter. Additionally, sales trends accelerated as the quarter progressed thanks to the company’s ability to capture a share of discretionary spending in the United States related to government stimulus measures.
Management remains impressed with the start of fiscal 2021 and expects the momentum to continue through the remainder of the current fiscal year. Its healthy balance sheet, strong business model and solid strategies position it well for long-term success.
We note that the shares of this Lynnwood, WA-based company are up 21.1% year-to-date compared to industrygrowth of 27.8%.
Results in detail
Zumiez posted quarterly earnings of $ 1.03 per share which topped Zacks’ consensus estimate by a dime. Net income also reversed the loss of 84 cents per share reported in the comparable quarter of last year and further increased significantly from the 3 cents recorded in the first quarter of fiscal 2019. Net sales more High levels of performance as well as efficient expense management supported the bottom line. growth.
Total net sales increased 102.6% year-on-year to $ 279.1 million and also exceeded Zacks’ consensus estimate of $ 216 million. In addition, the measure improved 31.1% from the first quarter of fiscal 2019, thanks to the net addition of 15 stores and an increase in same-store sales of 34.2%.
In the first fiscal quarter, total sales of all categories increased year over year, with men being the largest positive category, followed by accessories, durable goods, women and footwear.
Regionally, net sales in North America jumped 113.4% year-on-year to $ 248.7 million, while other international net sales, comprised of Europe and Australia, rose 43.2% to $ 30.4 million.
Zumiez Inc. Price, Consensus and Surprise EPS
Zumiez Inc. price-consensus-eps-surprise-chart | Devis Zumiez Inc.
In addition, gross margin increased significantly to $ 103.2 million from $ 23.7 million recorded in the prior year quarter, while gross margin increased to 37% from 17 , 2% in the first quarter of fiscal 2020. The expansion of the gross margin was points (bps) of leveraged occupancy costs, including the impact of rental charges in 2020. In addition, the Product margin increased 390 basis points year-over-year.
We note that SG&A expenses jumped 33.5% to $ 68.9 million in the quarter under review. However, as a percentage of sales, general and administrative expenses decreased significantly to 24.7% from 37.4% recorded in the last quarter of the fiscal year on leveraged fixed costs. In addition, the company reported operating profit of $ 34.3 million compared to the operating loss of $ 27.8 million recorded for the prior year.
Financial and other updates
As of May 1, 2021, this company currently Zacks Rank # 3 (Hold) had current cash and marketable securities of $ 400.4 million, up from $ 217.2 million as of May 2, 2020. The rise was driven by cash generated by operations, offset by capital expenditure.
Total equity at the end of the quarter was $ 581.8 million. The company had no debt at the end of the quarter and was maintaining a fully unused line of credit of $ 35 million. It ended the first fiscal quarter with inventories of $ 136.5 million, flat from the last count of the year.
For fiscal 2021, capital expenditures are projected in the range of $ 20-22 million, compared to $ 9.1 million for fiscal 2020. Most of the capital expenditures will be used for store openings and planned renovations.
Note that as of May 29, 2021, Zumiez operated 723 stores including 602 in the United States, 52 in Canada, 54 in Europe and 15 in Australia. During fiscal 2021, management intends to open 22 stores, of which approximately five are in North America, 12 in Europe and five in Australia. At the same time, it plans to close around five to six outlets during the year.
Things to note
Management provided details regarding the May sales. Net sales for the four-week period ended May 29, 2021 increased 42.4% year-on-year. From a regional perspective, net sales in North America during the same period jumped 45.9% compared to the figure for the comparable period of the previous year, while the metric of other international operations increased 19.9% year over year. From a category perspective, all categories of the business except durable goods increased their total sales year over year. Men were the largest positive category in the business, followed by accessories, footwear and women.
For the four weeks ended May 29, 2021, comparable sales jumped 32.9% from the number posted for the four weeks ended June 1, 2019.
Management has not issued any specific guidance for the second quarter or fiscal year due to the limited visibility of the activity. Regarding revenue for fiscal 2021, management previously expected to exceed 2019 revenue levels. Based on strong first quarter results and May sales, the company now expects an increase in net sales. 2021 in the low to medium range compared to 2019.
On a quarterly basis, year-to-year comparisons will be difficult between fiscal 2020 and fiscal 2021 on seasonal change due to the pandemic. Management expects the effects of the stimulus measures to begin to fade in the second quarter of fiscal 2021. Nonetheless, double-digit sales growth is expected in the second quarter of fiscal 2021 by compared to actual data for fiscal 2019 based on strong May results and current business trends.
Zumiez remains optimistic about the potential for fiscal 2021. He expects sales to increase in the low to mid range year over year in the third and fourth quarters of fiscal 2021. Additionally, the margin gross should improve year over year. due to reduced shipping costs as web revenues normalize with store openings as well as increased occupancy costs on higher sales. In addition, the product margin will increase year on year during fiscal year 2021.
In addition, selling and administrative expenses are expected to increase slightly more than the sales growth achieved in fiscal 2021 for various reasons associated with the pandemic. Nonetheless, on a net basis, operating margins are expected to increase year over year in fiscal 2021, hitting double-digit rates as a sell rate. Therefore, earnings per share are expected to increase significantly in fiscal 2021.
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