Shares of Zumiez (ZUMZ -4.45%) were down 2.8% as of 12:09 p.m. ET on Friday after the company delivered disappointing results for its fiscal second quarter. For the period that ended July 30, its net sales fell 18% year over year, and were down 3.7% compared to the same quarter in 2019.
Zumiez is in the same boat as many other retailers right now. It faces difficult growth comparisons to 2021, when consumers were still receiving economic stimulus checks, and a shift in consumer spending patterns in 2022 has cut into its sales. These headwinds have taken the stock down 46% year to date.
Zumiez, which focuses on skateboarding gear and related apparel, is feeling mounting pressure from supply chain issues, higher transportation costs, and a tight labor market. Its results highlight how bad it's getting out there for the consumer, and management noted that the company is also seeing sales pressure on its premium (higher-priced) skateboarding products.
The good news is that Zumiez has successfully navigated previous recessionary environments, and management fully expects it will do so this time. Management is actively adjusting operating expenses and inventory levels to shore up profitability. Zumiez's earnings per share fell from $0.94 per share in the year-ago quarter to $0.16 in the most recently reported quarter.
Economic conditions remain fluid right now, so investors should take management's guidance numbers with a grain of salt. That said, Zumiez now expects its sales will decrease by 18% to 19% for the year.
The stock looks cheap on a price-to-earnings basis, but investors should note that it is still within its previous five-year trading range on a price-to-sales basis. As such, it may not be as undervalued as other apparel stocks right now.