Beating analysts’ estimates, Zumiez reported a 5.5 percent increase in net income to $30.7 million for its third quarter ended Oct. 30 on 6.8 percent higher revenues of $289.4 million. The international action sports retailer’s sales were 9.6 percent higher than in the comparable quarter of 2019, when the company generated net income of $19.2 million.
At $257.5 million, sales in North America were up by about 7 percent as compared to a year ago and by 8 percent over 2019. Blue Tomato in Europe and Fast Retailing in Australia had combined sales of $32.0 million in the quarter, posting increases of 5 percent vs. last year and 25 percent vs. 2019, in spite of lockdown in Australia that allowed its local stores to be open for only 42 percent of the operating days. There were some store closures in Europe, which will also affect results in the fourth quarter.
No formal guidance was given for the full financial year, but the management indicated a likely growth of just over 10 percent from the prior year. As Zumiez’ sales went up by 27.0 percent to $837.2 million in the first nine months of the current fiscal year, this would imply a high single-digit increase for the current fourth quarter. In the 31 days through Nov. 30, sales were 11.5 percent higher than a year ago, with growth on a comparable store basis of 8.4 percent.
In terms of product categories, men’s apparel, footwear and accessories recorded gains in North America during the latest quarter, while women’s apparel declined and hardgoods went down even more. Hardgoods remained in negative territory lately also in the rest of the world, in contrast with increases in men’s apparel, followed by women’s and accessories.
The group’s gross margin improved by 0.6 percentage points to 39.6 percent in the third quarter, benefitting from a decrease of 0.6 points in shipping costs due to reduced online sales and an improvement of 0.5 percentage points in product margins. The same factors will lead to a significantly higher gross margin for the full financial year. Operating expenses should go up in line with the revenues.
