The apparel retailer delivered a better-than-expected earnings report.
Shares of Zumiez (ZUMZ 9.76%), the surf-and-skate apparel retailer, were surging today after the company delivered better-than-expected results in its second-quarter earnings report.
As of 9:53 a.m. ET, the stock was up 12.2% on the news.
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Zumiez impresses
At a time when much of the apparel sector is struggling with weak consumer demand, Zumiez delivered strong results with comparable sales up 3.6%, driving revenue up 8.1% to $210.2 million, though the company said a shift in the retail calendar boosted sales by 530 basis points. That result beat estimates at $202 million.
Gross margin also expanded 250 basis points to 34.2%, which helped narrow the loss from $0.44 per share in the quarter a year ago to just $0.04, which was much better than expectations of $0.33.
CEO Rick Brooks said, “We experienced a noticeable acceleration in our sales trend as the second quarter unfolded, with July North America comparable sales increasing in the high single digits.”
He also said that fresh apparel and footwear assortments and improved customer engagement had helped drive growth in the business.
Momentum is building
Looking ahead to the third quarter, the company said quarter-to-date comparable sales were up 12.1% and net sales for the first 30 days of the quarter were up 6.8%, accounting for the shift in the calendar. Management also said the company had a strong back-to-school season.
For the full third quarter, it expects revenue of $221 million-$225 million, up 2%-4%, or up 7%-9% when adjusted for the shift in the calendar. On the bottom line, the company expects a per-share result between a loss of $0.04 and a profit of $0.06.
That forecast was better than revenue estimates at $218.8 million, though analysts also expected earnings per share of $0.23, but that gap may be explained by the shift in the calendar.
Overall, the results show the company’s growth accelerating into the key holiday season. While Zumiez has struggled to deliver consistent profitability, it’s clear the business is heading in the right direction.
Still, I’d wait for clearer signs of profitability before calling the stock a buy.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.