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.
Terms & Conditions
RSS Headlines
Fool UK