Why Zumiez lowered its Q3 forecast

In an unusual result, Zumiez said same store sales in October and total sales for the third quarter came in below plan, causing the company to lower its earnings guidance.

Zumiez has been leading the retail sector with its continuously strong performance quarter after quarter.

Same store sales in October rose 0.6%.

The stock market did not like the news, and the Zumiez's stock price is down more than 13% to $21.90 in trading this morning.

The company said the sales shortfall for the quarter was mainly due to the challenging conditions in Europe, where it recently acquired Blue Tomato, an online action sports operation that also has five brick-and-mortar stores.

Some Zumiez categories, like footwear, that typically perform strongly moved into negative territory during the month.

Positive categories were men’s and junior’s.

Negative categories included footwear, boys, accessories and hardgoods.

Weeks by comp were:

1. -3.4%

2. +4.9

3. +2.0

4. -1.2

Dollars per transactions rose while the number of transactions declined.

Comps for Q3 rose 3.7%, while year-do-to-date comps increased 8%.

As a result of the softer than expected sales, Zumiez expects earnings per share to come in between 38 cents to 39 cents vs. the 42 cents to 45 cents previously expected.

Zumiez operates a total of 495 stores, including 471 in the U.S., 19 in Canada, and five in Europe.