Zumiez: Results Q1 2023

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On June 2nd, Zumiez published its results for the 13 weeks ending on April 30th and held the correspondent conference call.

Results were in line with the guidance and with the results being reported for the rest of discretionary consumer businesses with significant exposure to the US. The sales were down 20.9% concerning the same period last year, and they incurred a net loss of minus $0.4 million.

The main reasons for the decrease in sales are the comparison with a period when consumers had more available cash due to the pandemic stimulus and the inflation, which restricts the amounts destined for Zumiez’s types of products.


In terms of capital allocation, Zumiez fully completed the repurchasing program. It bought back 1.9 million shares at an average cost of $43.51. There is no current authorization for more share purchases.


During the call, Rick Brooks, CEO of Zumiez, pointed out that if we skip the pandemic, they grew revenue at a cagr of 8% and EPS by 15% from 2011 to 2021. He expects to continue returning value to shareholders based on the strong brand and culture of the company. This quarter, despite the challenging conditions, it is remarkable that they could sell at full price, maintaining margins. It is also important to note that Zumiez carries a strong financial position with cash and equivalents of $173 million.


For 2022, they expect an EPS in the range of $3.55-$3.80. With a capex in the range of $30-$32 million due to the plan to open 34 new stores (15 in the US, 14 in Europe, and 5 in Australia).


My take on Zumiez

It is important to note that the International segment, where they plan to open more shops this year, has grown 13% from last year. This means that, as they say, one of the main reasons is the US stimulus due to the pandemic, but also that its business model and products are being recognized in the international markets where they are operating. So we can expect that this growth can be sustainable there.


What is the intrinsic value of Zumiez?

Analysts’ consensus tells us we can expect an FCF of $94 million for 2024. If, for rough estimation, we apply a multiple of 15 and divide it by the current number of shares (19.46 million), we would get a target price of $72.62 (137% of potential gain).

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