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Is Zumiez Stock a Buy, Hold or Sell Post Holiday Sales Results?
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Zumiez Inc. (ZUMZ - Free Report) released its 2024 holiday sales results last Monday, reigniting discussions about the stock’s prospects. Investors are confronted with an important question: Should they increase their investment, hold their current position or sell their shares? Zumiez’s results offer both successes and challenges, given the decent performance and a revised cautious outlook for the remainder of the fiscal fourth quarter due to softer-than-expected sales during peak holiday weeks.
ZUMZ’s Holiday Performance: Key Takeaways
Zumiez reported a 5.6% year-over-year increase in comparable sales for the nine weeks of the fourth quarter of fiscal 2024, ending on Jan. 4, 2025. In North America, the company saw a stronger performance, with comparable sales rising 6.9% year over year. In contrast, international markets, including Europe and Australia, saw modest growth of 1.1%. (Read: Zumiez Revises Q4 Forecast Amid Lower-Than-Expected Holiday Results)
The company experienced mixed results across its product categories during the holiday season. The Women's category led the rise, posting the highest increase in comparable sales, followed by strong performances from the Men's and Footwear categories. Then again, the Accessories category was the weakest-performing one, with Hardgoods trailing closely behind.
How Consensus Estimates Stack Up for Zumiez
The Zacks Consensus Estimate for earnings per share has been revised downward. Over the past seven days, analysts have adjusted their projections, lowering estimates for the current quarter from earnings of 89 cents to 78 cents. Analysts also cut bottom-line estimates for fiscal 2024 from earnings of 1 cent to an adjusted loss of 10 cents. For fiscal 2025, earnings estimates have been reduced 9.5% to 76 cents.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Image Source: Zacks Investment Research
Reasons Behind Analysts’ Cautious Approach to ZUMZ Stock
Despite solid growth in comparable sales, Zumiez revised its sales and earnings forecasts. For the fiscal fourth quarter, the company expects net sales between $275 million and $277 million, down from the previous guidance of $284-$288 million. Moreover, earnings per share (EPS) are projected between 72 cents and 77 cents, a significant decline from the earlier mentioned 83-93 cents.
The business performed as expected up until early December, but performance during the busiest holiday weeks fell short of expectations. Another factor contributing to this revision is the comparison with the previous-year quarter, which included an additional week. This extra week, which is absent in fiscal 2024, is expected to impact year-over-year net sales growth by 4%.
Despite these adjustments, Zumiez remains confident that its recent changes to merchandise assortments and customer engagement strategies will help drive improvements in revenues and profitability. The company aims to build on this progress in fiscal 2025, with a focus on delivering greater value to its shareholders over the long term.
How Could ZUMZ’s Strategic Focus Shape Its Future in Retail?
ZUMZ has shown a strong commitment to expanding its brand portfolio and product offerings, an initiative designed to drive growth and enhance customer engagement. The continuous addition of brands has resonated well with customers, significantly boosting sales and ensuring Zumiez remains on-trend.
Alongside new brands, the company has expanded its private-label offerings. This increase is a testament to Zumiez's ability to meet the demands of trend-conscious and value-conscious consumers. Private-label products offer higher margins than third-party brands, driving the company's profitability.
ZUMZ continues to invest in people and technology to maintain best-in-class service in stores and online. Enhancing customer engagement through personalized and relevant interactions is a key focus area for the company. These investments are aimed at strengthening customer relationships, driving loyalty and increasing sales.
To improve profitability, ZUMZ implemented several cost-management initiatives. The company has been optimizing its cost structure by closing underperforming stores and executing structural changes to reduce shipping and logistics costs.
ZUMZ’s Stock Valuation
Zumiez is currently trading at a forward 12-month price-to-sales (P/S) multiple of 0.33X, which positions it at a discount compared with the industry’s average of 1.78X. The stock is also trading below its median P/S level of 0.43, observed over the past year. This suggests that the ZUMZ stock is priced attractively relative to its peers and historical levels, positioning it as a potential bargain.
ZUMZ Looks Attractive From a Valuation Standpoint
Image Source: Zacks Investment Research
However, Zumiez's stock has experienced an 18.5% drop over the past month, which may have contributed to its discounted trading status. This decline indicates broader challenges and specific issues affecting the company's performance.
ZUMZ Stock Past One-Month Performance
Image Source: Zacks Investment Research
Final Words on Zumiez
Considering ZUMZ’s holiday performance and a cautious outlook for the fiscal fourth quarter, investors may find it prudent to maintain their current position in the stock. While the company posted solid overall sales gains, it faced softer-than-expected results during the peak holiday shopping weeks.
However, Zumiez’s strategic expansion of private-label products and new brand offerings continue to drive growth and profitability. The company’s focus on improving customer engagement and enhancing operational efficiency, including cost-cutting measures, positions it well for long-term growth. ZUMZ currently carries a Zacks Rank #3 (Hold).
Key Picks
We have highlighted three better-ranked stocks, namely The Gap, Inc. (GAP - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) .
Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It presently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2025 earnings and sales indicates growth of 41.3% and 0.8%, respectively, from the fiscal 2024 reported figures. GAP delivered a trailing four-quarter average earnings surprise of 101.2%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It currently sports a Zacks Rank of 1.
The Zacks Consensus Estimate for ANF’s fiscal 2025 earnings and sales indicates growth of 69.4% and 15.1%, respectively, from the fiscal 2024 reported levels. ANF delivered a trailing four-quarter average earnings surprise of 14.8%.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It flaunts a Zacks Rank of 1 at present.
The Zacks Consensus Estimate for DECK’s fiscal 2024 earnings and sales indicates growth of 14.4% and 14.1%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 41.1%.
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Is Zumiez Stock a Buy, Hold or Sell Post Holiday Sales Results?
Zumiez Inc. (ZUMZ - Free Report) released its 2024 holiday sales results last Monday, reigniting discussions about the stock’s prospects. Investors are confronted with an important question: Should they increase their investment, hold their current position or sell their shares? Zumiez’s results offer both successes and challenges, given the decent performance and a revised cautious outlook for the remainder of the fiscal fourth quarter due to softer-than-expected sales during peak holiday weeks.
ZUMZ’s Holiday Performance: Key Takeaways
Zumiez reported a 5.6% year-over-year increase in comparable sales for the nine weeks of the fourth quarter of fiscal 2024, ending on Jan. 4, 2025. In North America, the company saw a stronger performance, with comparable sales rising 6.9% year over year. In contrast, international markets, including Europe and Australia, saw modest growth of 1.1%. (Read: Zumiez Revises Q4 Forecast Amid Lower-Than-Expected Holiday Results)
The company experienced mixed results across its product categories during the holiday season. The Women's category led the rise, posting the highest increase in comparable sales, followed by strong performances from the Men's and Footwear categories. Then again, the Accessories category was the weakest-performing one, with Hardgoods trailing closely behind.
How Consensus Estimates Stack Up for Zumiez
The Zacks Consensus Estimate for earnings per share has been revised downward. Over the past seven days, analysts have adjusted their projections, lowering estimates for the current quarter from earnings of 89 cents to 78 cents. Analysts also cut bottom-line estimates for fiscal 2024 from earnings of 1 cent to an adjusted loss of 10 cents. For fiscal 2025, earnings estimates have been reduced 9.5% to 76 cents.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Image Source: Zacks Investment Research
Reasons Behind Analysts’ Cautious Approach to ZUMZ Stock
Despite solid growth in comparable sales, Zumiez revised its sales and earnings forecasts. For the fiscal fourth quarter, the company expects net sales between $275 million and $277 million, down from the previous guidance of $284-$288 million. Moreover, earnings per share (EPS) are projected between 72 cents and 77 cents, a significant decline from the earlier mentioned 83-93 cents.
The business performed as expected up until early December, but performance during the busiest holiday weeks fell short of expectations. Another factor contributing to this revision is the comparison with the previous-year quarter, which included an additional week. This extra week, which is absent in fiscal 2024, is expected to impact year-over-year net sales growth by 4%.
Despite these adjustments, Zumiez remains confident that its recent changes to merchandise assortments and customer engagement strategies will help drive improvements in revenues and profitability. The company aims to build on this progress in fiscal 2025, with a focus on delivering greater value to its shareholders over the long term.
How Could ZUMZ’s Strategic Focus Shape Its Future in Retail?
ZUMZ has shown a strong commitment to expanding its brand portfolio and product offerings, an initiative designed to drive growth and enhance customer engagement. The continuous addition of brands has resonated well with customers, significantly boosting sales and ensuring Zumiez remains on-trend.
Alongside new brands, the company has expanded its private-label offerings. This increase is a testament to Zumiez's ability to meet the demands of trend-conscious and value-conscious consumers. Private-label products offer higher margins than third-party brands, driving the company's profitability.
ZUMZ continues to invest in people and technology to maintain best-in-class service in stores and online. Enhancing customer engagement through personalized and relevant interactions is a key focus area for the company. These investments are aimed at strengthening customer relationships, driving loyalty and increasing sales.
To improve profitability, ZUMZ implemented several cost-management initiatives. The company has been optimizing its cost structure by closing underperforming stores and executing structural changes to reduce shipping and logistics costs.
ZUMZ’s Stock Valuation
Zumiez is currently trading at a forward 12-month price-to-sales (P/S) multiple of 0.33X, which positions it at a discount compared with the industry’s average of 1.78X. The stock is also trading below its median P/S level of 0.43, observed over the past year. This suggests that the ZUMZ stock is priced attractively relative to its peers and historical levels, positioning it as a potential bargain.
ZUMZ Looks Attractive From a Valuation Standpoint
Image Source: Zacks Investment Research
However, Zumiez's stock has experienced an 18.5% drop over the past month, which may have contributed to its discounted trading status. This decline indicates broader challenges and specific issues affecting the company's performance.
ZUMZ Stock Past One-Month Performance
Image Source: Zacks Investment Research
Final Words on Zumiez
Considering ZUMZ’s holiday performance and a cautious outlook for the fiscal fourth quarter, investors may find it prudent to maintain their current position in the stock. While the company posted solid overall sales gains, it faced softer-than-expected results during the peak holiday shopping weeks.
However, Zumiez’s strategic expansion of private-label products and new brand offerings continue to drive growth and profitability. The company’s focus on improving customer engagement and enhancing operational efficiency, including cost-cutting measures, positions it well for long-term growth. ZUMZ currently carries a Zacks Rank #3 (Hold).
Key Picks
We have highlighted three better-ranked stocks, namely The Gap, Inc. (GAP - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) .
Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It presently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2025 earnings and sales indicates growth of 41.3% and 0.8%, respectively, from the fiscal 2024 reported figures. GAP delivered a trailing four-quarter average earnings surprise of 101.2%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It currently sports a Zacks Rank of 1.
The Zacks Consensus Estimate for ANF’s fiscal 2025 earnings and sales indicates growth of 69.4% and 15.1%, respectively, from the fiscal 2024 reported levels. ANF delivered a trailing four-quarter average earnings surprise of 14.8%.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It flaunts a Zacks Rank of 1 at present.
The Zacks Consensus Estimate for DECK’s fiscal 2024 earnings and sales indicates growth of 14.4% and 14.1%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 41.1%.