Shares of Zumiez Inc. (ZUMZ Quick QuoteZUMZ - Free Report) have jumped 35.2% year to date, thanks to its robust omni-channel strategies. This renowned apparel, footwear and accessories retailer’s focus on building a customer-centric business model apart from offering differentiated assortments seems quite encouraging. The stock price performance has surpassed the industry’s rally of 28.7% in the said time frame.

Let’s delve deeper to know what’s making this presently Zacks Rank #1 (Strong Buy) stock a compelling investment bet for your portfolio. You can see the complete list of today’s Zacks #1 Rank stocks here.

Well Chalked-out Strategies

Zumiez is building competitive edge by consistently investing in omni-channel solutions and advancing in-store fulfillment capabilities, including Zumiez Delivery. The implementation of advanced technology helped enriching customers’ shopping experience across diverse channels. The company’s investment in logistics, planning and allocation is noteworthy.

The aforementioned areas apart, Zumiez is steadily investing in resources to boost its localized merchandising assortments. The company’s strategy to optimize store base including expansion in the underpenetrated markets looks appealing. Majority of its capital spending is deployed to store remodeling and openings. In fiscal 2021, management intends to open 22 stores comprising about five in North America, 12 in Europe and five in Australia. For the current fiscal year, management expects to incur capital expenditures worth $20-$22 million.

We note that the company is on track to manage costs prudently for margin expansion. In this context, it is striving to reduce shipping and fulfillment costs. During the first quarter of fiscal 2021, gross margin expanded to 37% from 17.2% seen in the first quarter of fiscal 2020. Growth in gross margin was mainly aided by 1200-basis points of leveraged occupancy costs.

For fiscal 2021, gross margin is likely to improve year over year owing to lower shipping costs as web revenues normalize with stores reopening as well as leveraged occupancy costs on higher sales. The product margin will widen in the current fiscal year. On a net basis, operating margins are likely to grow year over year in the ongoing fiscal year, reaching double digits as a rate of sales.

What’s More?

A solid start to fiscal 2021 makes Zumiez bullish for the rest of the period. Apparently, the company put up a stellar first-quarter fiscal 2021 performance wherein both the top and the bottom line surpassed the Zacks Consensus Estimate and grew year over year. Upbeat sales numbers for May 2021 show that net sales in the four-week period ended May 29, 2021 soared 42.4% year over year.

Based on strong first-quarter results as well as May sales, the company's fiscal 2021 net sales are expected to rise in the low-to-mid-teen range from the fiscal 2019 actuals. Earnings per share are predicted to grow meaningfully in fiscal 2021. Management anticipates sales to grow in the low-to-mid-single digits year over year during the third and the fourth quarter of fiscal 2021. For the fiscal second quarter, sales are likely to grow double digits from the fiscal 2019 actuals.

Well, the company’s aforesaid robust strategies, sturdy business model, strong brand presence and a healthy balance sheet poise it well for success.

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