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Zumiez (ZUMZ) Queued Up for Q2 Earnings: What's in the Cards?

Zumiez (ZUMZ) second-quarter fiscal 2021 earnings results might show the ill impacts of higher costs including SG&A. Nonetheless, its omni-channel cap...

This story originally appeared on Zacks

Zumiez Inc. ZUMZ is likely to post a year-over-year decrease in its bottom line when it reports second-quarter fiscal 2021 earnings on Sep 9, after the closing bell. Although the Zacks Consensus Estimate for second-quarter earnings has increased 3.7% to 84 cents over the past 30 days, the figure suggests a plunge of about 17% from the year-ago period’s tally.

A glimpse of this Lynnwood, WA-based company’s performance shows that it delivered a significant trailing four-quarter earnings surprise, on average.

For the quarterly revenues, the Zacks Consensus Estimate is pegged at $280.8 million, indicating an increase of around 12% from the prior-year quarter’s reported figure.

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Key Factors to Note

Zumiez’s customer-centric business model, differentiated product assortments, improved omni-channel solutions and enhanced in-store fulfillment capabilities are likely to have favorably impacted its top-line performance in the fiscal second quarter. The top line is expected to have gained further from back-to-school sales. The company is steadily investing in resources to boost its localized merchandising assortments. Its strategy to optimize store base including expansion in the underpenetrated markets looks appealing.

On its last earnings call on Jun 3, 2021, management projected sales for the fiscal second quarter to grow in double digits from the fiscal 2019 actuals. It also said that this indicates a high single-digit to low double-digit increase from the second-quarter fiscal 2020 reading. We note that the company recorded total net sales worth $250.4 million in the second quarter of fiscal 2020 and $228.4 million in the same quarter of fiscal 2019.

Management had issued encouraging sales numbers for May 2021. Net sales in the four-week period ended May 29, 2021 grew 42.4% year over year. From a regional perspective, net sales at North America during the same period jumped 45.9% from the year-earlier comparable period’s reported figure while the metric at other International business rose 19.9% year over year. From a category perspective, all except hard goods registered year-over-year increase in sales. Men's was the company’s largest positive category followed by accessories, footwear and women's. For the four weeks ended May 29, 2021, comparable sales surged 32.9% from the number posted for the four weeks ended Jun 1, 2019.

On the flip side, management had earlier anticipated the stimulus impacts to start waning in the second quarter of fiscal 2021. Any deleverage in SG&A costs might have also affected the bottom line during the quarter under review. Management had envisioned earnings per share to decline for the to-be-reported quarter from the year-ago quarter’s actuals.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Zumiez this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zumiez Inc. Price and EPS Surprise

Zumiez Inc. Price and EPS Surprise

Zumiez Inc. price-eps-surprise | Zumiez Inc. Quote

Although Zumiez has a Zacks Rank #2 at present, its Earnings ESP of -3.57% leaves surprise prediction inconclusive.

Stocks With Favorable Combination

Here are some companies worth considering as our model shows that these have the right combination of elements to beat on earnings:

Kroger KR presently has an Earnings ESP of +2.84% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco COST has an Earnings ESP of +0.58% and is currently Zacks #2 Ranked.

Dave & Buster's Entertainment PLAY has an Earnings ESP of +21.65% and a Zacks Rank #3 at present.

5 Stocks Set to Double

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