US: Zumiez Q4 profit scores on one-off gains
- Q4 net income of US$26.9m versus $22.9m
- Sales edge up 1.1% to $226.8m
- Comparable store sales drop 2.2%
One-off gains and higher sales helped action sportswear and footwear retailer Zumiez to report a 17.3% hike in fourth-quarter net profit.
This included a $5.8m benefit related to its acquisition of Blue Tomato, a $3.3m gain for the correction of an error related to the accounting for rent expenses. It also included a $800,000 benefit to the provision for income taxes.
But CEO Rick Brooks said the fourth-quarter proved more challenging than expected - at home and abroad.
"Weak mall traffic in December and January created a highly promotional retail environment that pressured our sales and deleveraged our cost structure.
"The steps we have taken to broaden our revenue base, including evolving our digital capabilities, investing in our team and expanding into Europe, have pressured our operating margin in the face of ongoing consumer headwinds, but we believe will fortify our long-term earnings growth."
During the 52 weeks to 1 February, the group's net income increased 9% to $45.9m over $42.2m in the prior year, while sales reached $724.3m, up 8.2% from $669.4m.
For the first quarter, Zumiez expects net sales to be in the range of $156m to $160m, resulting in a net loss per share of $0.02 to net income of $0.03, based on a comparable store sales decline in the low single digit range.
The company also intends to open 55 new stores in fiscal 2014, including up to seven stores in Canada and five stores in Europe.
Stifel analyst Richard Jaffe said: "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.
"However, at the current stock price, we believe much of the good news is in the stock; therefore, we believe the reward potential is limited and risk, given the fashion content, remains significant."
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