The Q3 figure aligned with its projected guidance despite the impact of unseasonably warm weather in Europe, which reduced the demand for Zumiez's winter sports clothing and equipment towards the end of the period.
Despite the negative influence of the retail calendar's shift, which detracted approximately 510 basis points from net sales growth, the company still managed to report an increase.
For the period concluding on 2 November 2024, Zumiez reported a robust 7.5% rise in comparable sales. This metric of comparable sales growth remains unaffected by the calendar shift, offering a more precise gauge of the company's operational efficacy.
Key figures from Q3 FY24
Zumiez transitioned from a net loss of $2.23m in the previous year to a net income of $1.15m in Q3 FY24. Its earnings per share (EPS) also reflected this positive turnaround, registering at $0.06 compared to the prior year's loss per share of $0.12.
The retailer’s operating income reached $2.36m in Q3 FY24, marking a significant recovery from an operating loss of $0.15m in Q3 FY23.
Gross profit of Zumiez also saw an uptick, climbing from $73.20m to $78.31m.
Zumiez chief executive officer Rick Brooks noted in the earnings call that the men's segment sustained its growth trajectory, marking its fourth quarter of year-over-year increases at an enhanced rate. The women's segment, having returned to growth in the first quarter, continued this trend with significant year-over-year gains in the second quarter. Additionally, there was a marked rise in demand for footwear compared to previous periods.
In terms of category performance, men's apparel led with the highest positive comparative sales, followed by women's apparel and then footwear.
Brooks said: “We experienced strong gains in our apparel and footwear categories as consumers have responded favourably to our refined product assortments and enhanced customer engagement tactics.
“We still have much work to do improving profitability and capitalising on the opportunities we have created for the company. Our results during back-to-school and the start of the holiday season represent solid progress toward these goals and we are committed to building on our momentum to deliver greater value for our shareholders next year and over the long term.”
Year to date performance
For the 39 weeks ended 2 November 2024, Zumiez's progressed with total net sales rising by 2.8% to reach $610.0m, up from $593.7m in the corresponding period of fiscal 2023. Comparable sales within this timeframe improved by 3.2%.
Despite these gains, net loss for the first nine months stood at $16.5m or $0.86 per share; however, this was an improvement over the previous year's net loss of $29.1m or $1.51 per share.
Fourth quarter to-date and outlook
In terms of recent performance, preliminary data for the fourth quarter-to-date (a 31-day period ending 3 December 2024) indicates a substantial 10.0% surge in total sales compared to the same period last year. Comparable sales for this interval also grew by 2.9%.
Looking ahead to its fiscal 2024 fourth-quarter forecast, Zumiez anticipates net sales ranging between $284 and $288m with consolidated operating margins expected to be between 6% and 7.5%, potentially yielding earnings per diluted share in the vicinity of $0.83 to $0.93.
The company has been actively expanding its footprint with six new store openings throughout fiscal 2024 and plans for one more in the fourth quarter totalling seven new outlets comprising three in North America, two in Europe, and two in Australia.
The company is poised to debut over 100 new brands in 2024. This follows the successful introduction of 150 brands in the previous year.
Conversely, Zumiez is also planning to shutter approximately 33 stores by fiscal year-end as part of its ongoing optimisation efforts.
