QUOTE AND NEWS
SeekingAlpha  Mar 14  Comment 
Zumiez Inc. (ZUMZ) Q4 2013 Earnings Conference Call March 13, 2014 17:00 ET Executives Rick Brooks - Chief Executive Officer Chris Work - Chief Financial Officer Analysts Sharon Zackfia - William Blair Edward Yruma -...
Wall Street Journal  Mar 13  Comment 
Zumiez Inc.'s fiscal fourth-quarter earnings rose 17% as the teen-apparel retailer's total revenue improved, though same-store sales slipped amid a weaker-than-expected holiday season.
DailyFinance  Mar 13  Comment 
LYNNWOOD, WA -- (Marketwired) -- 03/13/14 -- Zumiez Inc. (NASDAQ: ZUMZ), a leading multi-channel specialty retailer of action sports related apparel, footwear, hardgoods and accessories, today reported results for the fourth quarter and fiscal...
StreetInsider.com  Mar 13  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/Zumiez%2C+Inc.+%28ZUMZ%29+Posts+Q4+EPS+of+89c/9280166.html for the full story.
Benzinga  Feb 6  Comment 
In a report published Thursday, D.A. Davidson analyst Andrew Burns reiterated a Neutral rating on Zumiez (NASDAQ: ZUMZ), but lowered the price target from $27.00 to $24.00. In the report, D.A. Davidson noted, “January comps decline 7.6%,...
SeekingAlpha  Jan 13  Comment 
By Bill Maurer: Often, I try to take a look at some names that are not widely covered in this market. Sure, I spend plenty of time on the big names, but investors always want and need to broaden their horizons. It's never a bad idea to have a...
Wall Street Journal  Jan 8  Comment 
Zumiez lowered its fourth-quarter outlook as the action-sports apparel and equipment retailer cited weaker-than-expected sales over the holiday season.
DailyFinance  Jan 8  Comment 
LYNNWOOD, WA -- (Marketwired) -- 01/08/14 -- Zumiez Inc. (NASDAQ: ZUMZ), a leading specialty retailer of action sports related apparel, footwear, equipment and accessories, today announced that total net sales for the five-week period ended...
StreetInsider.com  Jan 8  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Guidance/Zumiez+%28ZUMZ%29+Lowers+Q4+Guidance/9037963.html for the full story.
Market Intelligence Center  Jan 7  Comment 
A covered call identified by MarketIntelligececenter.com's patented algorithm on Zumiez (ZUMZ) could yield about 8.46% (23.75% annualized, for comparison purposes only) in 130 days. Pair a long position in the stock with the May. '14 $25.00 call...




 

Zumiez (NASDAQ: ZUMZ) is a mall based specialty retailer of action related sports apparel, footwear, equipment and accessories operating under the Zumiez brand name. As of April 2011, Zumiez owns and operates 400 stores in 37 states nationwide. The company was formed in August 1978 by Thomas D. Campion, the company's Chairman. The current President and CEO, Richard Brooks, joined the company as Chief Financial Officer in 1993.

Business Overview

Zumiez targets young men and women between ages 12 and 24 who look to dress and accessorize their wardrobe by having an interest in extreme sports such as skateboarding, surfing, snowboarding, BMX, and motocross. The company believes in the action sporting lifestyle and successfully markets their brand by recognizing the interests of its customers while increasing their brand image. In each Zumiez location, the store provides a lounge area which provides couches and video games to allow its teenaged based customers the luxury to enjoy their shopping experience and provide a safe hangout. On average, each store location is approximately 2,900 square feet which allows for enough room for the merchandise floor and the lounge area. The goal of the company is to allow customers to spend more time shopping and adapt to the comfort of the store to increase sales. Zumiez operates through in store sales and also provides an online service where consumers are able to purchase products on the company’s website. In the past three fiscal years, online sales were 4.7%, 2.5% and 1.7% of total net sales for 2010, 2009 and 2008.[1]

Economics of Business

A retail company like Zumiez will suffer in bad economic times because most consumers will rely on their parents to purchase their clothing and accessories for them. When in recession, people will be cutting back on discretionary items such as clothing, or even look to other retailers that provide cheaper items or better discounts.

Business Segments

Zumiez offers three main segments in their business plan by supplying items under the apparel, footwear, and hardgoods identity. The apparel consists of tops, bottoms, outerwear, and accessories like hats, bags, belts, jewelry and sunglasses. The footwear segment offers mostly action sports related shoes and sandals to satisfy the target market. Hardgoods consist of items such as skateboards, snowboards, bindings, components, and other equipment. [2] Both of these segments allow the company to intertwine sales. Another advantage it offers is it allocates the brands to strengthen and create more credibility with its customers. If a consumer comes in looking to purchase a new skateboard, he/she may want some new shoes or a t-shirt to go along with it and vice versa.

Revenue Mix

Image:ZUMZ Rev Mix Table.jpg

These percentages are based on the combination of in-store and online sales. Zumiez benefits by having equal diversity between their apparel and hardgoods segments because it gives the company the chance to update product segments around the same time and keep their inventories up to date. [3]

Competitor Analysis

Zumies competes for male and female teenagers and young adult customers for both the apparel/footwear and hardgoods industries. In the apparel industry, Zumiez competes with independent specialty shops, department stores and direct marketers for customers, vendors, store locations, and employees. Hardgood competitors can also range from local snowboard and skate shops to large scale sporting goods stores and chains.

Apparel

Hot Topic (HOTT) – Like Zumiez, Hot Topic is also a mall based retailer that also supplies another source of products. The difference between these companies is Hot Topic uses a more music enthusiastic approach to retrieve customers instead of extreme sports. They approach a target market similar to Zumiez by attracting teenagers to young adults around ages 12 to 22 and of both sexes. They use music and pop culture to influence their product lines which competes against Zumiez focus of sporting influences. [4]

Pacific Sunwear of California (PSUN) – Pacific Sunwear is another company where it locates itself in shopping malls. The company was founded in Southern California and focuses its brand on surfing which is an extreme sport. Pacific Sunwear is a large competitor to teen fashion around the nation. They have a slightly bigger presence to its customers by having more locations and have at least one location in every state. [5]

For more detailed financial information visit: [Zumiez financials versus competitors]

Other apparel competitors - Abercrombie & Fitch, Aeropostale, American Apparel, American Eagle Outfitters, Boathouse, CCS, Forever 21, Hollister, Old Navy, The Buckle, The Wet Seal, Tillys, Urban Outfitters and West 49

Hardgoods

The Sports Authority – One of the top competitors in hardgoods that Zumiez competes with is The Sports Authority. Instead of mall based shopping locations, The Sports Authority has larger individual store locations and is currently one of the leading sporting retail leaders in the industry. [6] Instead of focusing on extreme sporting goods, Sports Authority offers products for all sports. By selling a wide variety of products, it shows that they are experienced in selling the correct merchandise. On the contrary, consumers may notice that they are not experts in every aspect of the company because there are so many divisions to oversee.

Other hardgood competitors - Dick's Sporting Goods (DKS), Big 5 Sporting Goods (BGFV), and Sport Chalet (SPCHA).

Porter's Five Forces

Rivalry among Existing Firms

High – Zumiez competes in a highly competitive retail industry. It is very important for Zumiez to bring in repeat customers because if they lose customers then their sales can decrease drastically. In order to gain a competitive advantage they focus on their differentiated merchandise line and store environment. Compared to the company’s larger competitors, Zumiez is at a disadvantage due to its short company history. Other companies have expanded their brand name for many years before Zumiez was around. Zumiez is less advanced in many aspects of the industry such as size, location, financially, and contains fewer resources. As competition increases, it allows these more financially stable companies to lower prices and continue to profit while it can hurt Zumiez by being unable to lower prices and potentially lose customers. [7]

Threat of New Entrants

Low/Medium – In recent years, the amount of small business retail stores has decreased because of the complexity to compete with established companies. Most of the retail stores in malls consist of chain stores. The barriers to start up a new store are not impractical but independent retailers will find it much more difficult to start up a store location versus a chain store. Although it is not extremely difficult for new entrants, it is very expensive and will have to create supplier relations/contracts immediately. In order to compete with stores in the industry, a company will need to establish competitive advantages quickly and market/advertise their new brand. Also, customer loyalty has made it more difficult for new entrants because consumers may already be attached to a certain brand. [8]

Threat of Substitutes

High – In the retail industry, threat of substitutes are high because there are many different clothing store options that consumers may chose. The most important factors that play a role in substituting products are pricing and customer service. With the economy in a current recession, consumers are cutting back on expensive brands and choosing cheaper alternatives. This will affect Zumiez because they lack the financial strength to fluctuate their prices in correlation with the economy and market prices. Customer service is an advantage to Zumiez as they portray a positive shopping experience and a workforce that is skilled and experienced in extreme sports and current fashion. Zumiez hires employees who can relate to customers and act as a friend instead of a stranger in order to provide a friendly atmosphere and retain customers from going elsewhere.

Buyer Power

Medium – The buyer power at Zumiez has a give or take relationship. There is little bargaining power for an individual customer regarding prices because a store clerk or even store manager will not have authority to budge on set prices in a store chain such as Zumiez. The customers as a whole gain a greater advantage because they are the ones purchasing the product. Depending on the price of the product, they will expect a certain amount of quality. If the quality does not match the products use, overtime the amount of consumers will diminish and sales will decrease dramatically. This also enables the consumers to keep Zumiez honest by maintaining a respectable price. [9]

Supplier Power

Low/Medium – Supplier Buyer for Zumiez is Low to Medium because the suppliers depend on retail companies more than the retail companies depend on the suppliers. In order to gain an advantage like Zumiez has achieved, they have used an international approach to supply their products. It is much cheaper to use foreign manufacturers although it may create a negative impact on the company for not using the country’s resources to boost the economy and GDP. Zumiez continues to stress having good relations with its suppliers and vendors in order to ease the process of receiving its materials. Most of the company’s suppliers also do business with other retail companies, so Zumiez has to compete with them directly. They also tend to work with smaller companies which can be a problem when the economy is down. If the suppliers cannot meet their own needs, it can affect Zumiez of not receiving their merchandise. [10]

SWOT Analysis[11]

Strengths

Differentiated Merchandise Strategy – Zumiez specializes in action sports which focuses on teenagers and young adults that want to look good while engaging in sporting activities. They follow the latest trends which allow consumers to continue to purchase Zumiez products repeatedly according to new trends and seasons.

Distinct Store Experience – Zumiez has created a store that makes shoppers feel comfortable by provided couches, video games, and friendly employees. They also want to keep people in the store longer which will generate more sales. The customer service is also included with the store experience because they center the store around knowledgeable employees who share the same interests.

Management Team – Zumiez has approached an upper level management team that has experience in the industry to drive sales. They are best at training employees, incorporating the “organized chaos” theme, and offering high quality products. They thrive on receiving customer feedback in order to improve the business, experience and customer outlook.

Weaknesses

Financial Resources – Zumiez is not struggling financially, but they do not have excess income it would like for expansion. They have turned in a positive income the past three years and hope to continue that streak.

Expansion – Zumiez has the ability to expand but it is limited due to their strict theme of extreme sports. They are able to expand on their current product lines but the company does not have the ability to move away from this theme now that they have established it. Any slight move away from the extreme sporting theme may decrease the current brand identity.

Opportunities

Innovation – This has been a strength for Zumiez in the past but they need to maintain innovating new products or they will find their customers begin to dwindle. They need to continue to meet and also exceed future expectations with new products lines and clothing styles through innovation.

Acquisitions – Although Zumiez is focusing on expanding its current brand, they also have the opportunity to increase in market share through acquiring smaller companies that will benefit them. Acquiring new companies can also bring in cash which will allow Zumiez to expand and open more store locations sooner.

Threats

Economy – The economy has been a threat in recent years and will continue to be a factor in the future. When the economy is weak, consumers will cut back spending on discretionary items like clothing and hardgoods.

Competitors – Lower cost competitors will be the main threat to Zumiez. As previously stated, when the economy is poor, Zumiez customers will look to cheaper clothing options such as Kohls, Target, TJ Maxx, and Marshalls.

Marketing Analysis

Product

Zumiez offers a wide variety of both products and services. By engaging a knowledgeable core of employees they are able to construct, fix, and design snowboards and skateboards in the store. They welcome customers to bring in the products sold from Zumiez and are willing to tighten their bindings on snowboards or wheel bearings on skateboards. Zumiez continues to keep their product lines consisting of apparel, footwear, and hardgoods fresh and up to date which includes private label brands. They provide a single store location for all of their active lifestyles needs. In apparel, they offer tops, bottoms, outerwear and accessories like hats, bags, belts, jewelry, and sunglasses. The footwear line has both shoes and sandals which range from everyday athletics to lounge shoes. The hardgoods segment offers various kinds of equipment such as skateboards, snowboards, and supplemental goods like boots and bindings. Zumiez also offers extra accessories like extreme sporting DVD’s and other miscellaneous products. [12] [13]

Price

The Price at Zumiez for their merchandise is medium or around the industry average for related products. They offer sales and a clearance section based on left over products from past seasonal lines. The price also depends on the price of cotton. As the price of cotton fluctuates, the clothing products will directly correlate with the cotton prices. [14]

Place

Zumiez locations are located in shopping malls and centers. There are currently 400 store locations in 38 different U.S. locations. The most store locations are in California with 75, Texas with 41 and New York with 30 store locations. Zumiez is headquartered in Washington where they formally used to distribute their products to all their store locations before moving the distribution center to California. There are 22 store locations in Washington which consists of 6 percent of the company stores. [15]

Promotion

Since Zumiez targets teenagers and young adults, promotions are important to the company because this will allow people to interact with each other, meet new friends, receive free products, and relate to new social networking. Zumiez promotes a couch tour which is a series of entertainment events. Consumers are able to watch skateboarding demos from professional skaters, get autographs, have competitions, and listen to live music. In 2010, The Couch Tour went to 12 different cities throughout the nation. Zumiez also participates in new social media networks like Facebook, Twitter, MySpace, and also YouTube videos. [16]

Supply Chain Management

In the recent 2010 fiscal year, Zumiez relocated their distribution center from Everett, Washington to Corona, California. The relocation was due to long-term savings on distribution costs, an increase in facility size, and speedier deliveries because a large majority of retail stores are located in California. At the distribution center, the merchandise is received from suppliers and first inspected to receive accurate inventories. The merchandise is then assorted by store location where it is ticketed and boxed for shipment. By working with suppliers, Zumiez has created relations with suppliers who ticket the merchandise before its arrival to save time and labor costs. Zumiez provides shipments to each store, five times a week in order to maintain sufficient supplies. [17] By expanding its’ distribution center along with teaming up with UPS for shipping, Zumiez has the necessary supply chain tools now and in the future for expected growth and store expansion.

Financial and Operating Metrics

Financial

Error creating thumbnail

This chart shows the comparisons in financial metrics for Zumiez compared to its top competitors. Zumiez had a better fiscal year in 2010 overall compared to the financials of Pacific Sunwear of California and Hot Topic.

Return on Invested Capital (ROIC) – Zumiez has the best Return on Invested Capital with 11.54 followed by Hot Topic at -3.33 and Pacific Sunwear at -34.93. This measure shows their return on what they put into the company. The higher number the company receives the better for the company because it illustrates equity is high and the debt is low for the company. Pacific Sunwear did poorly in recently years because its concentration in California, which has been affected the most by the housing market downturn.[18]

Operating Margin – This is an important measure in the industry because it identifies what proportion of the company’s revenue is left after paying off its variable costs. By having a good operating margin it enables the company to have excess cash left over to pay its fixed costs. Zumiez again has the best operating margin with a positive 7.82 percent. Similar to ROIC, PacSun and Hot Topic are negative with -8.51 and -1.51 percentages respectively. [19]

Asset Turnover – Zumiez currently has the worst asset turnover among its competitors but it is a very close race and all of the companies are positive. Asset turnover is an important measure of profitability and shows the amount of sales earned for every dollar’s worth of assets. Zumiez has an asset turnover of 1.62 which follows Pacific Sunwear at 2.35 and Hot Topic at 2.32. [20]

Operating Metrics

An important measure in retail chains are the operating measures which tell more than financials. It looks at numbers from a different perspective by considering factors such as average store size, revenue per square foot, number of store locations, and revenue per store location. By looking at the smaller factors in the business, it enables a broader company view to decide whether the company should continue to expand or even consolidate.

Image: ZUMZ_avg_store_size.jpg

Compared to competitors Zumiez is in the middle between Pacific Sunwear and Hot Topic based on average store size with 2,900 square feet. PacSun seeks larger store locations of 4,000 square feet while Hot Topic has more condensed locations with an average of 1,760 square feet per store location. A company’s average store size means more when you factor in the sales for each square foot. This measure is taken by net sales per store and dividing it by the average store size in square feet. All three companies have good numbers according to the revenue per square feet. Zumiez has the least with $165.12 and Hot Topic has the most with $388.36 followed by Pacific Sunwear with $256.78. Hot Topic has an advantage over Zumiez and Pacific Sunwear because they have smaller store locations.[21]

Image: ZUMZ_store_locations.jpg

Zumiez has 400 total store locations that they currently operate which is less than half compared to Pacific Sunwear with 894 and Hot Topic with 836. The upside to this is Zumiez returns more revenue per store location than its competitors. They currently return $1.20 million per store. PacSun is closely trailing Zumiez with $1.15 million while Hot Topic receives $0.88 million revenue per store. For Zumiez to be leading this category, it can be directly related with having fewer stores.[22]

Human Resources

The following table represents the top executives at Zumiez. Included are their position title, recent salary, number of common shares owned, and the percentage of shares owned. The numbers are current of the past 2010 fiscal year. [23]

Image:ZUMZ_HR.jpg

References

  1. Zumiez Company Profile
  2. Zumiez 10k Business Section
  3. Zumiez 10k Consolidated Finacial Statements
  4. Hot Topic Company Info
  5. Pacific Sunwear of California Company Info
  6. The Sports Authority Company Info
  7. Zumiez 10k Competition
  8. Investopedia Retail Industry
  9. Investopedia Retail Industry
  10. Zumiez 10k Supplier Relations
  11. Zumiez 10k Business
  12. Zumiez 10k Merchandise & Purchasing
  13. Zumiez Company Website
  14. Zumiez 10k Risk Factors
  15. Zumiez Store Locations
  16. Zumiez 10k Marketing and Advertising
  17. Zumiez 10k Distribution and Fulfillment
  18. Investopedia ROIC
  19. Investopedia Operating Margin
  20. Investopedia Asset Turnover
  21. Zumiez competitor financials
  22. Zumiez competitor financials
  23. Zumiez 10k Owners and Management
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki