Zumiez ((ZUMZ)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The latest earnings call from Zumiez reflects a balanced performance, showcasing strong growth in the North American market and private label sales. However, challenges in international markets and legal costs have impacted the company’s bottom line.
North American Business Resilience
Zumiez demonstrated resilience in its North American operations, with comparable sales growing by 5.5%. This marks the fourth consecutive quarter of positive comparable sales growth. North American net sales increased by 4.9% from 2024, with comparable sales up 7.4%, highlighting the region’s robust performance.
Increase in Private Label Sales
The company’s focus on private label sales has paid off, with these sales reaching nearly 30% of total sales in the first quarter of 2025. This is a significant increase from 28% in 2024 and 23% in 2023, indicating a successful strategy in boosting private label offerings.
Successful Share Repurchase Program
Zumiez’s share repurchase program has been a success, with the company buying back 1.8 million shares, or 9.4% of the company based on year-end 2024 outstanding shares. Additionally, a new buyback plan for an additional $15 million has been announced, reflecting confidence in the company’s future.
Strong Financial Position
The company ended the quarter with a strong financial position, holding $101 million in cash and current marketable securities, and no debt. This solid balance sheet provides a cushion for future investments and growth opportunities.
Challenges in Other International Markets
Despite successes in North America, Zumiez faced challenges in other international markets. Net sales in these regions decreased by 0.2% from last year, with comparable sales down 2.3% in the first quarter and 14.8% in May, indicating areas for improvement.
Legal Settlement Impact
The company’s SG&A expenses increased due to a onetime $2.9 million legal cost associated with a settlement of a wage and hour lawsuit in California. This legal settlement has impacted the company’s financials for the quarter.
Operating Losses
Zumiez reported an operating loss of $19.9 million or 10.8% of net sales for the first quarter of 2025. This is a slight improvement compared to an operating loss of $20.2 million or 11.3% of net sales last year, showing a gradual recovery.
Forward-Looking Guidance
Looking ahead, Zumiez plans to open nine new stores and close approximately 20 stores in 2025. The company expects modest year-over-year growth in product margin and operating margins. Additionally, a new $15 million share repurchase authorization has been announced, indicating continued confidence in the company’s growth prospects.
In summary, Zumiez’s earnings call highlighted a balanced performance with strong growth in North America and private label sales. Despite challenges in international markets and legal costs, the company maintains a strong financial position and has laid out a strategic plan for future growth. The company’s commitment to enhancing shareholder value through share repurchases and strategic store openings and closures reflects a positive outlook for the upcoming fiscal year.