November 30, 2012
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 10% today after its quarterly results and guidance disappointed Wall Street.
So what: The company's third-quarter EPS managed to top estimates, but a 4.2% same-store sales decline in November, coupled with downbeat guidance for the current quarter, is forcing analysts to lower their valuation estimates yet again. Management cited softer-than-expected sales trends in Europe for the disappointing results, but even more worrisome to Wall Street is how quickly the brand is losing its appeal here at home.
Now what: Management now sees fourth-quarter EPS of $0.59-$0.62 on revenue of $218 million-$221 million, versus Wall Street's view of $0.71 and $222.9 million. "[W]e are confident that the key components of our long-term growth strategy will allow us to profitably expand our share of the global action sports lifestyle market and deliver increased value to our shareholders," CEO Rick Brooks reassured investors. Of course, when you consider the strong economic and competitive headwinds that continue to work against Zumiez, betting on that bullishness seems particularly risky.
Interested in more info on Zumiez? Add it to your watchlist.
More Expert Advice from The Motley Fool
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013
." I invite you to take a copy, free for a limited time. Just click here
to access the report and find out the name of this under-the-radar company.