Zumiez Projects Disappointing Results for Current Quarter

Zumiez Inc. issued disappointing financial projections for the May quarter citing domestic weakness, even as growth in Europe continued.

The teen-apparel retailer said it expects a profit of 12 cents to 15 cents a share on $179 million to $183 million in sales for the quarter ended May 30, compared with the consensus of 30 cents a share on $193.7 million in sales.

Sales at established stores, a key metric that looks at sales across stores open for at least a year along with online sales, are expected to fall 3% to 5%.

Shares, which had been temporarily halted for trade, fell 10% to $26.75 in after-hours trading. The stock set a 52-week low on June 20, 2014, at $26.56.

The Lynwood, Wash., company sells action-sports equipment, such as snowboarding and skateboarding gear, under the names of Zumiez and Blue Tomato, an Australian-based action-sports retailer it bought in 2012. As of May 30, it had 627 stores, including 567 in the U.S., 38 in Canada and 22 in Europe.

Zumiez projects to open 57 stores this year.

In March, the company warned that while it was encouraged by improved performance in the holiday quarter, it didn't see enough evidence to suggest the beginning of a sustained retail trend.

Overall, for the 13 weeks ended May 2, Zumiez reported net profit of $2.8 million, or nine cents a share, compared with $2.5 million, or nine cents a share, a year earlier.

Net sales, which includes sales and shipping revenue less returns and promotions, rose 9% to $177.6 million, while sales at established stores rose 3%.

Zumiez had projected profit of eight cents to 10 cents a share $176 million to $178 million in sales, with sales at established stores rising 3% to 4%.

Gross margin improved to 31.8% from 31% a year earlier.

Write to Maria Armental at [e-mail]

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