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ROTH CAPITAL PARTNERS: Zumiez comps exceed estimates.
Details on Industry Insight.
Last year, private label comprised 14.3 percent of the business. That number will be flat for 2007.
The company has hired "strong talent" in private label.
Zumiez introduced a new private label line for juniors during back-to-school. It was small in quantity, some things worked and some didn't. The company made adjustments and is continuing to roll it out for holiday. Juniors apparel accounts for 16 to 17 percent of sales (both private label and branded).
Overall, Zumiez is continuing to have great success on product margin side of the business with both branded goods as well as private label, CEO Rich Brooks said.
Starts in October and is 20 percent of the business, including both hard and soft goods.
Zumiez has been repositioning its inventory over the last two months and "canceling orders on the back end," Brooks said.
The later the snow season hits, people will most likely buy less new gear because the season will be short.
If snow does hit, Zumiez is concerned the macro economic environment will lead consumers to buy less gear.
17 new stores opened in the third quarter
Total store count at end of quarter: 238.
Total new stores for fiscal 2007: 50
For fiscal 2008, 55 new stores are planned.
New states include Virginia and Massachusetts. Balance of new stores will open in California, Florida, Texas and other existing markets.
Ultimate store count goal: 800
Sales up 26.5 percent to $104 million
Net income up 19 percent to $8.1 million
Same-stores sales up 17.4 percent in August, 13.9 percent in September and 5.1 percent in October.
Comps over Thanksgiving holiday weekend were up in the mid-teens.
For fiscal 2007, sales should reach $384 million to $388 million, with earnings of 92 cents to 94 cents per share. Previously, the company had forecast earnings of 94 cents to 96 per share.
The lower guidance is based on the macro economic climate, the uncertainty around the snow business and stock option compensation expenses.
California, Arizona and Florida have been "tougher markets" from a macro economic standpoint.
For fiscal 2008, sales should grow in the 20 percent range and earnings in the 25 percent range.