These 2 Retail Stocks Are Falling Hard Late Thursday

Thursday brought a measure of calm to the stock market, although those who were hoping for continued upward momentum after Wednesday's strong performance were disappointed. Major market benchmarks were lower, but even the volatile Nasdaq Composite (^IXIC 0.10%) was down less than 1%, and the Dow Jones Industrial Average (^DJI -0.11%) and the S&P 500 (^GSPC 0.02%) had even more modest moves lower.

Data source: Yahoo! Finance.

After the market closed, a couple of specialty retail stocks reported results that sent shareholders into a near-panic. Both Zumiez (ZUMZ 1.77%) and Tilly's (TLYS -2.80%) had significant declines, and it's apparent that those following the companies are starting to question the long-term prospects for their respective businesses on a fundamental level.

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1. Zumiez can't satisfy its shareholders

Shares of Zumiez were down more than 16% in after-hours trading on Thursday. The move came as the retailer's recovery seemed to slow, even though the company finished 2021 strong as it bounced back from one of the toughest periods in the entire retail industry.

Zumiez's fourth-quarter numbers were still positive. Revenue was up 4.6% year over year to $347 million, and that was up about 5.5% from pre-pandemic levels two years ago. However, net income fell from year-ago levels, and it took a significant drop in outstanding share count to boost earnings per share by 1% to $1.70. That closed a year in which Zumiez's revenue was up nearly 20%, and earnings of $4.85 per share were up more than 60% from the previous fiscal year.

However, Zumiez anticipates things won't look as good in fiscal 2022. Because of government stimulus payments in the year-ago period, Zumiez expects revenue of just $215 million to $221 million, with earnings of $0 to $0.10 per share. That would represent a significant drop in sales from fiscal 2021.

Zumiez is still bullish in its long-term prospects, with plans to open 34 new stores in fiscal 2022. However, investors had hoped that the retail stock's rebound could keep up more steam for a bit longer.

2. Tilly's takes a tumble

Meanwhile, shares of Tilly's fell even more sharply, with a decline of 21% after hours. Again, the stock dropped even as the casual apparel retailer had solid holiday-period results.

Tilly's posted net revenue of $205 million, up 155 from year-earlier levels. Comparable sales climbed 12.5%, as a huge bounce in in-person shopping overcame declines in Tilly's e-commerce channel. Net income jumped 36% to $12.1 million, producing earnings of $0.38 per share. That closed a fiscal year that included a 46% rise in total sales and reversed a year-earlier net loss with earnings of $2.06 per share.

As with Zumiez, though, Tilly's expects that the first quarter of 2022 won't look as good on a year-over-year basis because stimulus payments led to a big acceleration in sales growth in March 2021. As a result, guidance for $143 million to $148 million in sales would work out to a 10% to 13% decrease, and earnings could fall to between $0 and $0.05 per share. That disappointed more optimistic shareholders.

Retail has had a tough time, but now, the industry faces some tough comparisons due to macroeconomic factors. If inflation and other pressures eat into discretionary income, then Tilly's and Zumiez could see even more headwinds than they expect.