• Q2 profit jumps 57.3% to $7.5m 
  • Sales up 11.9% to $176.7m
  • Company "pleased" with performance

Action sportswear and footwear retailer Zumiez has said it is "pleased" with its 57.3% increase in second-quarter net profit, driven by higher-than-expected sales.

Net income reached US$7.5m for the 13 weeks to 3 August, compared to $4.7m in the same period of last year. Sales, meanwhile, increased 11.9% to $176.7m from $157.9m a year ago, while comparable store sales edged up rose 3.4%.

"We are pleased with our second quarter performance," said CEO Rick Brooks. "Our ability to connect consumers with our unique assortment of brands drove higher than expected sales which allowed us to better leverage our expense."

He added that the company continues to get smarter and more efficient at executing its global omni-channel strategy", and "there is still runway for added improvement in the years ahead".

Stifel analyst Richard Jaffe believes these investments will play out favourably in the long term. But, he said, selling, general and administrative expenses will likely outpace sales in the near term, due to company investments and possibly more cautious spending by the targeted teen consumer.

"We believe that Zumiez is a well-run business with a corporate culture that is engaging for the consumer and effective in generating earnings growth," he added.

"However, at the current stock price, we believe much of the good news is in the stock, therefore the reward potential is limited and risk, given the fashion content, remains significant."

The company said it expects third-quarter net sales to range from $207-211m, resulting in net income per share of around $0.47-0.50.

Jaffe said the lower-than-expected earnings guidance is due to continued gross margin pressure as well as a faster rate of selling, general and administrative expense growth in the second half.