NEW YORK (AP) — Zumiez Inc.'s shares fell nearly 8 percent on Friday, after the company's second-quarter earnings outlook fell short of Wall Street's expectations.
THE SPARK: Late Thursday Zumiez, which sells skate- and surf-inspired clothing and gear for teenagers, said that its second-quarter earnings are likely to come in between 4 cents and 6 cents per share, with revenue between $128 million to $130 million. Analysts polled by FactSet forecast earnings of 10 cents per share on revenue of $128.5 million.
Zumiez said that its quarterly guidance accounts for about $1.8 million, or 3 cents per share, in costs related to the relocation of its online fulfillment center and the relocation of its corporate offices to Lynnwood, Wash. from Everett, Wash.
THE ANALYSIS: Adrienne Tennant of Janney Capital Markets seemed comfortable with the guidance, saying in a client note that Zumiez tends to be conservative with its outlook at the beginning of a quarter.
The company also reported that its fiscal first-quarter net income more than doubled to $4.5 million, or 14 cents per share, from $1.9 million, or 6 cents per share. Revenue increased 23 percent to $129.9 million from $105.9 million. Wall Street expected earnings of 11 cents per share on revenue of $128.3 million.
Jefferies & Co.'s Randal Konik said Zumiez's first-quarter results were a solid start to the year, with strong sales.
"First-quarter results show that Zumiez continues to have great market positioning with few competitive threats, strong growth opportunities and a loyal customer base," he said.
Tennant believes Zumiez will continue to capitalize on its position in the sector.
"We continue to believe Zumiez is a 'go to' store for its target market and is taking market share, especially as its most direct competitor, Pacific Sunwear of California Inc., is shrinking its footprint," Tennant wrote.
SHARE ACTION: Shares of Zumiez fell $2.76, or 7.9 percent, to $32.40 in morning trading. The stock has traded between $15.85 and $38.99 over the past 52 weeks.