Zumiez Profit Halves, Outlook Weak; Shares Tank 19%

(RTTNews) - Sports apparel retailer Zumiez Inc. (ZUMZ), Thursday said its second-quarter profit more-than-halved, hurt largely by lower same-store sales, weak margins and higher operating costs.

Moving ahead, the company detailed a poor outlook for the third quarter, sending its shares plunging a near 19 percent in after-hours trade on the Nasdaq.

Lynnwood, Washington-based Zumiez's second-quarter profit dropped to $3.2 million or $0.11 per share from $7.5 million or $0.26 per share last year.

Results for the quarter include costs of $0.4 million for charges associated with the acquisition of Blue Tomato, while last year results included charges of $0.6 million.

On average, 16 analysts polled by Thomson Reuters expected earnings of $0.12 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the second quarter grew 1.8 percent to $179.8 million from $176.7 million last year. Analysts had a consensus revenue estimate $180.0 million for the quarter.

Same-store sales for the quarter decreased 4.5 percent compared to an increase of 3.4 percent last year.

Gross margin for the quarter dropped to 32.1 percent from 34.5 percent last year, while selling, general and administrative costs rose to $52.5 million from $49.3 million a year ago.

Commenting on the results, Rick Brooks said, "We are disappointed in our recent performance which reflects a slowdown in domestic sales. The response to our merchandise offering fell short of expectations, requiring us to become more promotional than planned to clear slow moving inventory ahead of the back-to-school selling season."

Looking forward to the third quarter, the company expects earnings of $0.27 to $0.31 per share and net sales of $202 million to $206 million. Analysts currently expect earnings of $0.53 per share on revenues of $224.7 million for the quarter.

Zumiez expects third-quarter same-store sales to decrease 7 to 9 percent.

ZUMZ closed Thursday's trading at $21.66, down $0.80 or 3.56% on the Nasdaq. The stock further dropped $3.93 or 18.14%, in the after-hours trade.