Why Zumiez Shares Got Zapped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of action sports apparel retailer Zumiez (Nasdaq: ZUMZ  ) plunged 17% today, after its monthly same-store sales and current-quarter guidance missed Wall Street expectations.

So what: Total revenue for October rose a seemingly solid 20%, but weak same-store sales growth -- 0.6% versus the consensus of 4.6% -- coupled with downbeat guidance for the third quarter, reinforces concerns over slowing growth going forward. Management blamed the weak global economy for the dismal outlook, but investors are even more worried that the once wildly popular brand seems to be quickly losing its appeal.

Now what: Management now sees third-quarter EPS of $0.38-$0.39, down from its prior view of $0.42-$0.45, and well below Wall Street's forecast of $0.46. "Based on total sales results for the quarter that were below planned sales, primarily due to a challenging sales environment in Europe, the Company is revising guidance," said Zumiez in a statement. Unfortunately, given the strong economic and competitive headwinds working against the company right now, I wouldn't bet on sales to turnaround anytime soon.

Interested in more info on Zumiez? Add it to your watchlist.

Fool contributor Brian Pacampara has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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