Zumiez Is Going Fakie

Recs

15

Panic 2008... Profit 2009!

Fool -- Now's the time to invest! David and Tom Gardner's new book reveals their strategy for million dollar wealth.

In skater jargon, "going fakie" means traveling in reverse, and that appears to be what Zumiez (Nasdaq: ZUMZ) is doing. It may have pulled off a nice skate trick last month, but alas, that isn't going to hold up during the holiday season, judging by the company's having reduced its full-year guidance.

The retailer for skateboarding and snowboarding gear reported that October same-store sales increased 5.1%, versus a 15.9% increase this time last year. Total sales increased 24.6% to $24.7 million.

Zumiez expects to profit far less for the year than Wall Street had expected. It said it's reducing its fiscal 2007 guidance to $0.92 to $0.94 per share, due to its reliance on seasonal merchandise in the fourth quarter. (That sounds like an odd and vague way to describe the fourth quarter; of course it relies on "seasonal" merchandise.)

What a far cry from last month, when Zumiez's results bucked the retail trends so soundly that it made one think skaters and other board sports enthusiasts just don't give a hoot about macroeconomic trends (which is still arguable among that youthful demographic). And Zumiez supplier Volcom (Nasdaq: VLCM) experienced its own face plant last week.

Rivals' news today was mixed. Pacific Sunwear (Nasdaq: PSUN) actually made investors happy (which hasn't happened too often lately) by lifting its third-quarter guidance, despite a drop in October comps. At Abercrombie & Fitch's (NYSE: ANF) Hollister concept, which also competes with Zumiez in apparel, comps dropped 5% for October.

A quick glance at Zumiez's stock price today -- last I checked it was down 30% -- might give investors with a hankering for this traditionally high-growth stock reason to consider it now. (And Zumiez has a history of getting shredded whenever its results are even the least bit disappointing -- part of why I didn't feel particularly compelled by it despite last month's success.)

Bear in mind that the new guidance means Zumiez will grow earnings by only 27% in 2007 -- significantly lower than the 38.5% analysts previously expected. Although caution's definitely in order, Zumiez stock is beginning to look more reasonably priced than just a month ago -- as long as you still believe it will continue to generate high growth for the long term.

"The most exciting development in my lifetime!" 15 years ago, Motley Fool founder David Gardner uncovered a secret that changed how he'd invest forever. It can make you money in up, down, and rollercoaster markets. To learn more, enter your email address now.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 08, 2007, at 7:36 PM, jberry420 wrote:

    It said it's reducing its fiscal 2007 guidance to $0.92 to $0.94 per share, due to its reliance on seasonal merchandise in the fourth quarter. (That sounds like an odd and vague way to describe the fourth quarter; of course it relies on "seasonal" merchandise.)

    Why? Clearly the correlation in seasonal hardgoods sales(snowboards, etc.) and the winter weather, is what the reduction is based on.

  • Report this Comment On November 08, 2007, at 7:41 PM, biobiz wrote:

    Many of us have undergone painful surgery these last few days especially where Volcom and Zumiez are concerned.

    Once again, I have been to greedy, thinking the sun would continue to shine high in the sky, like in summer, forgetting winter is approaching fast.

    Well, here I ( all of us ) am/are with our pants down and showing our "Hidden Gems"

    Luck to all you Fools

Add your comment.

Compare Brokers

TD AMERITRADE
more info
ShareBuilder
more info
Power E*Trade

more info
Scottrade
more info
Fool Disclosure

DocumentId: 539954, ~/articles/articlehandler.aspx, 1/9/2009 6:55:51 AM

Sign up for FREE Motley Fool site access to keep reading:

“Zumiez Is Going Fakie”

Signing up allows you to comment on articles and on the discussion boards.

It's completely FREE and will take only 10 seconds.

Privacy / Legal Information

We will use your email address only to keep you informed about updates to our web site and about other products and services that we think might interest you. The Motley Fool respects your privacy. Please read our Privacy Statement

.

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

What Fools Are Saying

Most Recommended

Jan 8 at 4:06 PM

Market Summary

DJIA 8,742.46 -27.24 -0.31%
S&P 500 909.73 +3.08 +0.34%
NASD 1,617.01 +17.95 +1.12%
Sponsored by:

Related Tickers

Zumiez, Inc.

CAPS Rating 4/5 Stars

$9.18

+0.19 (+2.11%)

Outperform874

Underperform48

Rate This Stock