Zumiez loses fuel and gets downgraded
Monday, 03 September 2012
Zumiez (Nasdaq:ZUMZ) has been progressively losing fuel I the past days until it has been downgraded by TheStreet Ratings from “buy” to “hold”. The weak outlook offered by the retailer last Friday has also affected its quote, placing Zumiez at the
bottom of the S&P 600 Smallcap Index.“The
company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow,” analysts at TheStreet Ratings summarized.A weak outlook drove shares of teen-apparel retailer Zumiez (US:zumz) down 9percent to $29.20 Friday morning. The stock led decliners on the S&P 600 Smallcap Index. Zumiez late Thursday issued a soft outlook for the third quarter, while its 3.7percent same-store sales growth in August also fell short. "Missing August comp estimates will weigh on shares, but we do not believe this is indicative of a longer term competitive issue," wrote D.A. Davidson analyst Andrew Burns, who rates Zumiez shares neutral. Despite Friday's sell off, Zumiez shares have gained 58percent over the past 12 months. Broadly speaking, retailers have led gainers the past five trading sessions, with the S&P Retail Index up 0.8percent for the week.
It was a surprising outlook given the fact that the company announced their second quarter results with EPS of 17 cents on revenue of 135.1 million dollars and both earnings and revenue were higher than the average analyst estimate of 13 cents on revenue of 135 million dollars. However, Zumiez waits for a third quarter EPS of 42 to 45 cents on revenue between 181 million to 185 million. This compares to a more demanding Wall Street's expectation of 56 cents on revenue of 183.79 million dollars.
Janney Capital Markets, which had a price of 32.22 dollars per share on 31st, commented: “On Aug. 30 after market close, Zumiez reported second-quarter pro forma earnings per share of 17 cents (which excludes three cents associated with relocation of the company's e-commerce fulfillment center as well as seven cents associated with the acquisition of Blue Tomato) versus the Street at 13 cents, our estimate of 14 cents, and management guidance of 12 cents to 14 cents pro forma.”
