Zumiez Inc. ZUMZ reported fourth-quarter fiscal 2024 results, wherein sales and earnings lagged the Zacks Consensus Estimate. The top line decreased and the bottom line increased year over year.

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Zumiez's initiatives are focused on expanding product assortments and enhancing customer engagement through training and technology investments. The company introduced more than 120 brands, optimized costs by closing 31 underperforming stores and improved margins through labor and logistics efficiencies in fiscal 2024. These efforts positioned ZUMZ for sustained growth and profitability in a competitive retail landscape.

More on Zumiez’s Q4 Results

ZUMZ posted quarterly earnings of 78 cents per share, which lagged the Zacks Consensus Estimate of 79 cents. The bottom line increased from a loss of $1.73 per share in the year-earlier quarter.

The fourth-quarter fiscal 2023 results included a goodwill impairment charge of $41.1 million, or $2.13 per share after-tax, stemming from the company’s decision to slow store expansion, prioritize profitability in Europe, and reassess cash flow projections for its Blue Tomato business.

Total net sales of $279.2 million marginally missed the Zacks Consensus Estimate of $281 million. Also, net sales decreased 0.9% from $281.8 million in the prior-year quarter. The decrease was primarily due to the additional 53rd week in the prior year, which contributed approximately $12 million to sales.

Comparable sales (comps) rose 5.9% year over year, marking the third consecutive quarter of positive growth. The Zacks Consensus Estimate for comps growth was pegged at 6% for the quarter under review. The overall increase in comps was driven by higher dollars per transaction, partially offset by a decline in the number of transactions.

ZUMZ’s Regional & Category Performance

From a regional perspective, North America’s net sales improved 0.8% year over year to $214.2 million. Other international sales, comprising Europe and Australia, declined 6.4% year over year to $65 million. Excluding the foreign currency translation impacts, North America’s net sales rose 1.2%, while other international net sales slipped 2.7% from the prior-year quarter.

Comps in North America increased 7.2%, marking the fourth consecutive quarter of growth, while international comps rose 1.9%.

Among product categories, the women's category saw the highest comps increase, followed by men's and footwear. Conversely, accessories had the largest decline, followed by hardgoods.

Insights Into Zumiez’s Margins & Costs

Gross profit jumped 4.5% year over year to $101 million, whereas the gross margin expanded 190 bps to 36.2%. The rise in the gross margin stemmed from a 160-basis-point improvement in product margin and a 30-basis-point benefit from lower web shipping costs.

Selling, general and administrative (SG&A) costs of $80.9 million declined 37.5% year over year. As a percentage of sales, SG&A costs decreased significantly from the year-ago quarter to 29%. The decline was primarily led by a benefit from goodwill impairment charges in 2023, along with a 70-basis-point increase in non-wage store operating costs, a 70-basis-point rise in other corporate costs, and a 40-basis-point benefit from both store wages and incentive compensation.

Zumiez reported an operating income of $20.1 million against an operating loss of $32.8 million in the year-ago quarter.

ZUMZ’s Financial Health

As of Feb. 1, 2025, cash and current marketable securities totaled $147.6 million, down from $171.6 million as of Feb. 3, 2024. The decline was primarily due to $25.2 million in common stock repurchases and $15 million in capital expenditure, partially offset by $20.7 million in cash flow from operations. It had no debt at the end of the fiscal fourth quarter.

Total shareholders’ equity was $329 million. The company ended the fiscal fourth quarter with $146.6 million in inventory, up 13.8% from the year-ago quarter.

As of March 1, Zumiez operated 729 stores, including 569 in the United States, 46 in Canada, 87 in Europe and 27 in Australia. Management intends to open nine stores in fiscal 2025, comprising six in North America, two in Europe and one in Australia.

Closer Look at Zumiez’s Other Updates

Net sales increased 1.7% for the 31 days ending March 1, 2025, from the same period in the previous year.

Comps grew 4.3% year over year. Regionally, North America net sales rose 3.9%, whereas other international sales declined 6.5%. Excluding foreign currency translation effects, North America net sales grew 4.2%, while other international sales decreased 3.1%.

Comps in North America increased 6.4% year over year, while comps in other international markets declined 3.7%. Among product categories, women's apparel had the strongest comps rise, followed by men's and footwear. Hardgoods experienced the largest decline, followed by accessories.

ZUMZ Stock Past Three-Month Performance

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ZUMZ’s Q1 Guidance

For the first quarter of fiscal 2025, Zumiez anticipates total sales of $179-$183 million, suggesting year-over-year growth of 1-3%. Comps are expected to increase 3-5%. The product margin is projected to be flat to slightly down from that reported in the first quarter of last year.

The operating loss is expected between $16.5 million and $18.5 million. The loss per share is estimated between 72 cents and 82 cents, whereas it incurred a loss of 86 cents in the prior year. This EPS guidance reflects an expected tax benefit of 10% of pre-tax earnings based on the estimated distribution of earnings across the company’s entities.

Zumiez’s FY25 Outlook

For fiscal 2025, ZUMZ acknowledges the uncertainty and volatility in the macroeconomic environment but expects total sales to grow despite the closure of 33 stores in fiscal 2024 and anticipated 20 store closures in 2025, which will negatively impact growth by $14.7 million. After stabilizing in fiscal 2024 with consistent quarterly comparable sales growth in North America and a return to positive international growth in the fourth quarter, continued progress is anticipated in fiscal 2025.

Zumiez expects product margins to improve, supported by the sustained strength of its higher-margin private label business and a continued focus on full-price selling. Further cost efficiencies are anticipated across occupancy, distribution and logistics, contributing to leverage in the gross margin. While Zumiez remains focused on cost management and operational efficiency, SG&A costs are expected to be relatively flat as a percentage of sales compared with fiscal 2024 while still allowing for investment in key long-term strategic initiatives.

Capital expenditure for the year is expected between $14 million and $16 million, whereas it reported $15 million in fiscal 2024 and $20.4 million in fiscal 2023.

Shares of this Zacks Rank #3 (Hold) company have lost 29.2% in the past three months compared with the industry’s decline of 20.7%.

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