High-growth board sports retailer Zumiez
The board sports retailer reported net profit up 66.7% and sales increasing 49%, with a 12% rise in same-store sales. (For the full rundown, see our Fool by Numbers feature, which digs deep into Zumiez's fourth-quarter numbers.)
Zumiez also gave its outlook for 2007, and it was better than analysts were expecting. It forecast earnings of $0.94 per share to $0.96 per share. Of course, the company's balance sheet reveals a positive attribute to keep in mind. Zumiez's cash and short-term investments increased 20.9% to $52 million. A big reason for the jump was that free cash flow increased by 56.3% to $12 million.
It's interesting to note that Volcom's
Among the elements at work for Zumiez is its acquisition of Fast Forward stores last June. According to its conference call, all of the Fast Forward stores now have in-store Zumiez branding, and almost all have been refurbished to allow for greater capacity within the stores. It is still working on converting the outside signage on those stores to the Zumiez name, and expects to have that work complete by the end of this year.
Zumiez does expect impressive 30% growth, and of course, its 55% increase in earnings per share in fiscal 2006 is enough to turn one's head. These are the factors that explain the premium valuation attached to these shares, of course -- they're trading at 42 times next year's earnings. While I do like Zumiez as a company and a concept, and respect its strong growth, surely there will be a more appealing price further down the road.
For more on Zumiez, see the following Foolish articles:
- Here's a recap of Zumiez's third-quarter numbers.
- Zumiez isn't above having a wipe-out once in a while -- remember what happened in Zumiez's second quarter in 2006.
Alyce Lomax does not own shares of any of the companies mentioned.