Zumiez has been performing well, in spite of ongoing retail lockdowns in Europe and Australia. The American action sports retailer, whose holdings include Blue Tomato in Europe and Fast Company in Australia, reported a sales increase of 7.3 percent to $268.7 million for second quarter ended July 31. The turnover was even 17.6 percent higher than in the same quarter of 2019, before the Covid pandemic struck.
Net sales rose in North America by 6.3 percent to $237.5 million, and they were 14.8 percent above the same period of 2019. In the rest of the world, they reached $31.1 million, up 15.7 percent from last year and up 45.1 percent from two years ago in terms of dollars. On a currency-neutral basis, the sales increase outside North America was limited to 8 percent year-on-year.
Globally, the company’s physical stores were open for around 96 percent of potential operating days during the second quarter of 2021 as compared to 73 percent a year ago, but in Canada, Australia and Europe its stores were open for only about 68 percent, 77 percent and 88 percent of the time, respectively. E-commerce helped fill the gap here and there, but overall, it returned to a normal penetration rate of 15 percent, compared with 27 percent in the year-ago period and 16 percent in 2019.
Skate sales soared during the lockdowns last year, making comparisons difficult, and according to the management, the category may be nearing the end of a positive trend cycle. Men’s products led the gains in the latest quarter. Hardgoods were the only type of product that registered a decline.
The gross margin rose to 39.1 percent for the quarter, 2.8 percentage points better than a year earlier. An increase of 0.6 points in inbound shipping costs was offset by decrease of 1.7 points in web shipping costs and 0.7 points in shrinkage. Product margins were 1.0 points better, due to less discounting.
Net income fell to $24 million from $25.4 million a year ago but was up from $9 million in the second quarter of 2019. The drop was largely due to the $2.8 million cost of settling a legal dispute in California.
Total net sales for the first half of this year rose by 41.1 percent to $547.7 million. Net income was $50.4 million for the period compared to $4.3 million a year ago and $9.8 million in 2019.
“Stronger than expected full-priced selling helped offset a portion of expenses that were reintroduced following temporary cost savings last year during the height of the pandemic, resulting in second-quarter profitability that meaningfully exceeded our projections,” said the company’s CEO, Rick Brooks.
He added that the third quarter had started well, driven by a more normalized back-to-school shopping season, although operating conditions were still volatile.
The management lauded Zumiez’ buying teams for getting needed products into the stores in spite of continued supply chain problems. Inventory levels were up by 18 percent year-on-year at the end of the second quarter.
Looking ahead, full-year revenues are expected to grow in the low-to-mid teens from fiscal 2019, translating into net sales growth from 2020 of just below or just over 20 percent, the company said. The gross margin is expected to improve.
