Earnings Preview: Zumiez, Inc

Zumiez, Inc (ZUMZ) is expected to report Q4 earnings Wednesday with a conference call scheduled for 5:00 p.m. ET.

Guidance

Analysts are looking for a profit of 38c on revenue of $127.56M. The consensus range is 37c to 39c for EPS, and revenue of $126M to $140.6, according to First Call. The company recently reported February same store sales were down -2.6% vs. consensus of up 1.4%. In January, Zumiez lowered its 2007 EPS view to 82c to 83c from 92c to 94c vs. First Call consensus of 93c. Piper Jaffray said on March 6 that Zumiez faces the most difficult comps among the teen retail group, after posting a roughly 11% gain in the 1H08. The analyst notes that the company faces de-levering and gross margin compression. While initiatives are in place in response to top-line moderation, the firm does not believe Zumiez will be able to sustain its operating margin rates from last year.

Analyst Views

Susquehanna analysts downgraded shares on March 6, to Neutral from Positive. Given the below plan start to the new year, combined with difficult prior year comparisons and a weak consumer environment, the firm indicated it would take a more conservative view for the balance of 2008. The firm believes the mall-based specialty retailer's weak February SSS results stemmed from a drop in average store transactions. However, Susquehanna said Zumiez is positioned well as a strong competitor in the specialty retail sector because it offers brands that are relevant to its sporty shoppers.

DA Davidson analysts believe Zumiez is facing opportunities to deliver robust organic growth and operating margin expansion going forward, despite reporting February comps below the consensus.