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Zumiez Inc. ZUMZ has demonstrated strong upward momentum, consistently trading above both its 200-day and 100-day simple moving averages (SMA), which are important indicators of price stability and long-term bullish trends. As of Friday, ZUMZ was trading at $22.44, which surpassed both its 200-day SMA of $19.36 and its 100-day SMA of $21.51, highlighting a continued uptrend.
SMA is a key tool in technical analysis used to assess price trends by smoothing out short-term fluctuations, offering a clearer view of the stock's longer-term direction. This technical strength, along with the stock's sustained momentum, reflects positive market sentiment and investor confidence in Zumiez's financial health and growth prospects.
The company has seen a substantial 36.2% jump in its stock price over the past year compared with the Zacks Retail-Apparel and Shoes industry’s 27.2% growth. Also, it outpaced the broader Retail-Wholesale sector's 24.2% growth and the S&P 500 index's 25.7% rise over the said period. Currently, ZUMZ is trading 28.5% below its 52-week high of $31.37, reached on Sept. 6, 2024.
From a valuation perspective, Zumiez’s shares present an attractive opportunity, trading at a discount relative to industry benchmarks. With a forward 12-month price-to-sales ratio of 0.47, which is below the five-year median of 0.58 and the industry’s average of 1.12, the stock offers value for investors seeking exposure to the sector. Moreover, ZUMZ’s current Value Score of A bodes well.
Zumiez Gains on Customer-Centric Focus, Cost Management
Zumiez’s strategic emphasis on a customer-centric business model, strong brand partnerships and careful cost management drove positive results in the second quarter of fiscal 2024. The company has invested in advanced technology to improve the shopping experience across all channels, enhancing its logistics and omnichannel capabilities, which has further solidified its competitive position.
In the second quarter, total sales grew 8.1% year over year to $210.2 million, primarily fueled by the strength of the North American market, where sales rose 10.4%. Comparable sales increased 3.6%, supported by higher average unit retail prices and a greater number of units sold per transaction. The early back-to-school season also played a role, contributing around 530 basis points to net sales growth.
Zumiez’s private label brands, which made up 23% of sales in fiscal 2023, continue to capture market share, appealing to value-conscious consumers. With plans to expand its private-label offerings in 2024, the company is well-positioned for sustained revenue growth. Gross profit improved to $71.8 million in the second quarter. The gross margin was 34.2%, up 250 basis points from the previous year, due to reduced store occupancy and distribution costs, among other factors.
In Europe, Zumiez has shifted from rapid store expansion to existing store productivity optimization, with a strategic push toward full-price selling. This change has already improved merchandising margins in the region. Additionally, the company has been closing underperforming stores in North America while expanding in key markets globally, alongside initiatives to optimize labor and reduce logistics costs to enhance long-term profitability.
ZUMZ’s International Sales Under Pressure
Despite strong results in North America, Zumiez's international sales, particularly in Europe, declined 2.6% year over year to $33.9 million in the second quarter, with a 7.6% drop in international comparable sales. The shift to full-price selling in a tough retail environment has pressured growth, raising concerns about the company's ability to improve performance in key international markets. Continued weakness is likely to impact overall revenue growth.
Zumiez Q3 & Fiscal 2024 Guidance
Nonetheless, Zumiez remains optimistic about its third-quarter and full-year performance. The company forecasts third-quarter sales to be between $221 million and $225 million, reflecting a 2-4% year-over-year increase, with comparable sales up 12.1% through Sept. 2. Despite macroeconomic uncertainties, it anticipates low single-digit sales growth for fiscal 2024, driven by stable revenue and ongoing cost efficiencies, supporting positive operating margins.
Final Thoughts
Investors should consider ZUMZ as a promising stock due to its strong technical performance and positive financial outlook. The company's ability to trade above key moving averages, along with consistent growth in North American sales and expansion in private label offerings, positions it well for growth.
While international sales, particularly in Europe, remain a challenge, Zumiez’s strategic focus on cost management, efficiency improvements and omnichannel capability expansion provides a solid foundation for sustained profitability. Trading at a discount relative to industry benchmarks and with a strong Value Score, ZUMZ offers an attractive opportunity for investors seeking both stability and growth potential. The company currently carries a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks are Boot Barn Holdings, Inc. BOOT, Abercrombie & Fitch Co. ANF and Steven Madden, Ltd. SHOO.
Boot Barn operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 10.7% and 11.6%, respectively, from the fiscal 2024 reported figures. BOOT has a trailing four-quarter average earnings surprise of 7.1%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 12.6%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.
Steven Madden designs, sources, markets and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.
Zacks Investment Research
Steven Madden, Ltd. SHOO is currently trading at a notably low price-to-earnings (P/E) multiple, which is below the Zacks Shoes and Retail Apparel industry and broader Consumer Discretionary averages. SHOO's forward 12-month P/E ratio is 16.20, lower than the industry average of 21.78 and the sector average of 17.27.
The stock is undervalued compared with its industry peers, thereby offering compelling value to investors looking for exposure to the retail apparel sector. Furthermore, SHOO's Value Score of A underscores its appeal as a potential investment.
SHOO gained 45.6% against the industry’s sharp 15.4% decline in the past year. The company’s strategic approach, along with its market expansion and product diversification endeavors, has helped it outperform the broader sector and the S&P 500 index, which grew 8.5% and 25.7%, respectively, during the same period. Closing at $45.76 on Monday, Steven Madden’s stock is currently trading 3% below its 52-week high of $47.24, attained on July 31, 2024.
Moreover, technical indicators are supportive of Steven Madden’s strong performance. The stock is trading above both its 50-day and 200-day moving averages, thus indicating robust upward momentum and price stability. This technical strength reflects positive market perception and confidence in the company’s financial health and prospects.
SHOO's Strategic Growth Driven by Diversification, Expansion
Steven Madden has successfully implemented a strategic approach to drive growth across multiple segments, with a strong emphasis on its direct-to-consumer (DTC) business and international markets. The company's expansion beyond footwear into categories such as handbags and apparel, along with investments in digital capabilities, resulted in substantial revenue gains across these segments during the second quarter. The acquisition of Almost Famous has further strengthened Steven Madden's apparel offerings, contributing to the its robust growth trajectory.
The wholesale segment delivered strong results, with revenues increasing 22.5% year over year to $385.3 million in the second quarter. Notably, wholesale accessories and apparel revenues surged 86%, showcasing the company’s successful diversification beyond its core footwear segment. Excluding the Almost Famous acquisition, wholesale revenues grew 8.2% while accessories and apparel revenues rose 29.8%.
The DTC segment also displayed resilience, with revenues increasing 6.4% year over year to $136.4 million. Comparable DTC sales grew 4.1%, driven by strong product assortments and effective inventory management, which minimized the need for promotional discounts.
In addition to product diversification, Steven Madden has been aggressively expanding its international presence, identifying it as a key long-term growth driver. International revenues grew 13% year over year in the second quarter, with the EMEA region emerging as a standout performer. The company expects EMEA revenues to grow more than 20% in 2024.
Steven Madden's Financial Strength and Promising Outlook
Steven Madden's second-quarter financials highlight its strong fiscal health and prudent capital management. As of June 30, 2024, the company held $180.5 million in cash and cash equivalents, along with $11.8 million in short-term investments, demonstrating a solid liquidity position. Notably, it had no outstanding debt, reflecting its careful financial stewardship.
The repurchase of $38.2 million in common stock, including shares acquired through employee stock award settlements, underscores the company’s confidence in its valuation and its commitment to returning value to shareholders. Additionally, the approval of a 21-cent quarterly dividend, payable on Sept. 23, 2024, to shareholders of record as of Sept. 13, further reinforces its strong financial footing and shareholder-friendly policies.
Looking ahead, Steven Madden is well-positioned to capitalize on growth opportunities in both domestic and international markets. The recovery in the U.S. wholesale footwear business is a positive sign of inventory normalization and improved relationships with key retail partners. The company expects 2024 revenues to increase in the band of 11-13% from 2023, with adjusted earnings per share (EPS) projected to be in the range of $2.55-$2.65 compared with $2.30 in 2023.
Conclusion
Investors should consider Steven Madden stock due to its strong financial position, strategic growth initiatives and attractive valuation. The company's focus on expanding its product offerings, particularly in apparel and accessories, coupled with its successful international expansion, positions it well for continued growth.
In addition, SHOO's strong liquidity, debt-free balance sheet and commitment to returning value to shareholders through stock buybacks and dividends further enhance its appeal. With a Zacks Rank #2 (Buy), the stock is well-positioned for long-term growth and value creation, making it an attractive investment opportunity.
Other Key Picks
Other top-ranked stocks are Boot Barn Holdings, Inc. BOOT, Abercrombie & Fitch Co. ANF and Deckers Outdoor Corporation DECK.
Boot Barn operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 10.7% and 11.6%, respectively, from the fiscal 2024 reported figures. BOOT has a trailing four-quarter average earnings surprise of 7.1%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 12.6%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.
Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Deckers’ fiscal 2025 earnings and sales indicates growth of 8.4% and 11.5%, respectively, from the year-ago actuals. DECK has a trailing four-quarter average earnings surprise of 47.2%.
Zacks Investment Research
Boot Barn Holdings Inc. is a leading specialty retailer of western and work apparel, footwear, and accessories. Customers include outdoor enthusiasts, ranchers, farmers, hunters, anglers, fashionistas, and rugged western country lifestyle enthusiasts. The company started with one store in 1978 and has grown to become the largest western lifestyle and workwear retailer in the nation, with 411 stores across the United States. The company's vision is "to offer a piece of the American spirit."
Boot Barn competes with footwear and workwear retailers in the retail/wholesale sector, which includes companies like Wolverine World Wide Inc. , Tractor Supply Co. , V.F. Corp. and Columbia Sportswear Co. .
Boot Barn’s Competitive Advantages
The company possesses a number of competitive advantages:
Solid Growth Metrics in Fiscal Q1 2025
Boot Barn has an average of 9% in-store sales (SSS) between fiscal 2020 and 2025 estimates. The company reported fiscal Q1 2025 EPS of $1.26, beating consensus estimates by 19 cents. Net income was $38.9 million, up from $34.3 million in the year-ago period. Merchandise margin rose 100 bps, offset by 100 bps, deleveraging in buying, occupancy, and distribution center costs. The merchandise margin rate was due to supply chain efficiencies, while the deleveraging was due to costs driven by the addition of new stores. Revenues rose 10.3% YoY to $423.4 million, beating $415.04 million consensus estimates. SSS grew 1.4% YoY, which was comprised of 0.8% growth in its retail stores and 6.7% YoY growth in e-commerce sales.
Raising the Full Year 2025 Guidance
Boot Barn raises its fiscal full year 2025 forecasts for EPS of $5.05 to $5.35, up from previous guidance of $4.55 to $4.85 versus $4.99 consensus estimates. Full-year 2025 revenue of $1.816 billion to $1.85 billion, up from the previous estimate of $1.766 billion to $1.800 billion versus $1.82 billion consensus analyst estimates. The company plans on opening 60 new stores in fiscal 2025, with SSS to range from down 1% to up 1.2% YoY. Gross profit is expected between $672 million to $688.8 million or 37% to 37.2% of sales.
Boot Barn CEO Jim Conroy commented, “During the first quarter, we grew merchandise margin by 100 basis points. Exclusive brand penetration increased slightly over last year to 38.1%, wrapping an outsized 630 basis points of growth in the prior year period.”
Surprise Comp SSS Update
On Sept. 10, 2024, Boot Barn provided a surprise update stating that quarter-to-date (QTD) comps for fiscal Q2 2025 indicated SSS growth of 4%. This was comprised of 3.4% retail comps and 9.2% e-commerce comps for the first 10 weeks of fiscal Q2 2025. While it is 10 weeks into the second quarter, the 4% YoY SSS growth is a vast improvement over its previous guidance of negative 1% to position 1% in Q2 2025.
This acceleration of the improving SSS trend, which had negative 0.3% in July, 6% in August, and 8.2% in the first part of September, sent shares surging to new all-time highs.
BOOT Triggers a Rare Bullish Megaphone Breakout
A bullish megaphone is comprised of an ascending upper trendline resistance comprised of higher highs and a descending trendline support comprised of lower lows. This forms the shape of a megaphone. The breakout occurs when the stock surges above the upper trendline.
BOOT triggered the bullish megaphone breakout on the SSS update, indicating 4% YoY growth, which was a significant improvement from previously forecast SSS growth of negative 1% to positive 1%. This caused a gap from $140.47 to 148.32, the gap fill range. Shares peaked at $162.16 before retesting the upper gap fill. The daily relative strength index (RSI) turned back up towards the 68-band. Fibonacci (Fib) pullback support levels are at $148.32, $140.47, $128.69 and $123.49.
Boot Barn’s average consensus price target is $141.10, and its highest analyst price target sits at $165.00.
Actionable Options Strategies
Bullish investors can buy on pullbacks using cash-secured puts at the fib pullback support levels to buy the dip and write covered calls to execute a wheel strategy for income.
A Poor Man’s Covered Call (PWCC) strategy is less capital intensive on this speculation, which involves buying a deep in-the-money (ITM) back-month call and selling out-of-the-money (OTM) front-month calls.
Despite recent market turbulence fueled by weak economic data and concerns over a potential recession, U.S. markets have maintained their upward trajectory in 2024, extending the impressive rally seen in 2023.
Year to date, the S&P 500 has advanced more than 16%, driven by optimism as the annual inflation rate dropped to its lowest level since early 2021. This decline in inflation is encouraging news ahead of anticipated rate cuts, with market participants confident about a 25-basis point cut this month following Federal Reserve Chairman Jerome Powell's recent comments signaling cuts on the horizon. The Fed’s dovish stance reflects steady declines in inflation, putting it on track to meet the 2% target. Any rate cut size bodes well for the broader economy, creating a favorable environment for stocks.
At this stage, investors would be wise to consider stocks like Limbach Holdings LMB, Ubiquiti UI, Royal Caribbean Cruises RCL, DaVita DVA and Boot Barn Holdings BOOT based on their relative price strength.
Relative Price Strength Strategy
Investors generally gauge a stock’s potential returns by examining earnings growth and valuation multiples. At the same time, it’s essential to measure the performance of such a stock relative to its industry or peers or an appropriate benchmark.
If you see that a stock is underperforming on fundamental factors, it would be prudent to move on and find a better alternative. However, those outperforming their respective sectors in terms of price should be selected because they stand a better chance of providing considerable returns.
Then again, it is imperative that you determine whether or not an investment has relevant upside potential when considering stocks with significant relative price strength. Stocks delivering better than the S&P 500 for 1 to 3 months, at least, and having solid fundamentals indicate room for growth and are the best ways to go about this strategy.
Finally, it is crucial to find out whether analysts are optimistic about the upcoming earnings of these companies. In order to do this, we have added positive estimate revisions for the current quarter’s (Q1) earnings to our screen. When a stock undergoes an upward revision, it leads to additional price gains.
Screening Parameters
Relative % Price change – 12 weeks greater than 0Relative % Price change – 4 weeks greater than 0Relative % Price change – 1 week greater than 0
(We have considered those stocks that have been outperforming the S&P 500 over the last 12 weeks, four weeks and one week.)
% Change (Q1) Est. over 4 Weeks greater than 0: Positive current-quarter estimate revisions over the last four weeks.
Zacks Rank equal to 1: Only Zacks Rank #1 (Strong Buy) stocks — that have returned more than 26% annually over the last 26 years and surpassed the S&P 500 in 23 of the last 26 years — can get through. You can see the complete list of today’s Zacks #1 Rank stocks here.
Current Price greater than or equal to $5 and Average 20-day Volume greater than or equal to 50,000: A minimum price of $5 is a good standard to screen low-priced stocks, while a high trading volume would imply adequate liquidity.
VGM Score less than or equal to B: Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.
Here are five of the 10 stocks that made it through the screen:
Limbach Holdings: Based in Warrendale, PA, the company specializes in providing mechanical, plumbing and electrical services crucial for the upkeep of mission-critical systems. Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has improved 8%. LMB has a VGM Score of B.
Notably, the Zacks Consensus Estimate for Limbach Holdings’ 2024 earnings per share indicates 38.1% year-over-year growth. The firm has a market capitalization of $772.8 million. LMB shares have surged 115.7% in a year.
Ubiquiti Inc.: The company offers a comprehensive portfolio of networking products and solutions for service providers and enterprises. The Zacks Consensus Estimate for fiscal 2025 earnings of Ubiquiti indicates 22.2% growth. Headquartered in New Tork, UI has a VGM Score of B.
The firm has a market capitalization of $12 billion. Over the past 60 days, the Zacks Consensus Estimate for Ubiquiti’s fiscal 2025 earnings has moved up 11%. UI shares have gained 25.2% in a year.
Royal Caribbean Cruises: It is a cruise company whose brands primarily serve the contemporary, premium and deluxe segments. The 2024 Zacks Consensus Estimate for Miami, FL-based RCL indicates 71.1% year-over-year earnings per share growth. Royal Caribbean Group has a VGM Score of B.
Over the past 60 days, RCL saw the Zacks Consensus Estimate for 2024 move up 4.2%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 18.5%. Royal Caribbean Cruises shares have moved up 66% in a year.
DaVita Inc.: Based in Denver, CO, the company is a leading provider of dialysis services in the United States to patients suffering from chronic kidney failure. DVA’s expected EPS growth rate for three to five years is currently 17.5%, which compares favorably with the industry's growth rate of 12.4%. The company has a VGM Score of B.
Notably, over the past 60 days, the Zacks Consensus Estimate for DaVita’s 2024 earnings has moved up 3.8%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 24.2%. DVA shares have gone up 60.2% in a year.
Boot Barn Holdings: Based in Irvine, CA, the company is a retailer of men’s and women’s footwear, apparel, and accessories. BOOT’s current market capitalization is $4.5 billion. The company has a VGM Score of A.
Notably, over the past 60 days, the Zacks Consensus Estimate for Boot Barn Holdings’ fiscal 2025 earnings has moved up 11.2%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 7.1%. BOOT shares have jumped 69.5% in a year.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.
Zacks Investment Research
The Lovesac Company LOVE reported better-than-expected results in second-quarter fiscal 2025 (ended Aug. 4, 2024), with earnings and net sales beating the Zacks Consensus Estimate. On a year-over-year basis, net sales increased and the adjusted loss widened.
The company's quarterly results benefited from the net addition of 31 new showrooms and a 7% increase in internet sales. This was partially offset by a 5.4% decline in omnichannel comparable net sales. During the quarter, the company opened 10 new showrooms and closed two.
An increase in outbound transportation and warehousing costs accompanied by a rise in overhead expenses, payroll, rent and selling-related expenses marred the bottom line.
The company saw a strong reception to recent product innovations, including the PillowSac Accent Chair and the newly-launched AnyTable. LOVE plans to build on this momentum by expanding its offerings. While it is cautiously planning for the second half of the year due to industry challenges, Lovesac believes it is well-positioned to meet short- and long-term goals.
Following the earnings release, Lovesac’s shares appreciated 21.3% during trading hours on Sept. 12, 2024.
Inside the Numbers
In the fiscal second quarter, the company reported an adjusted loss of 38 cents per share, narrower than the Zacks Consensus Estimate of loss of 46 cents. Lovesac reported an adjusted loss per share of 4 cents in the prior-year quarter.
The Lovesac Company Price, Consensus and EPS Surprise
The Lovesac Company price-consensus-eps-surprise-chart | The Lovesac Company Quote
Net sales of $156.6 million topped the consensus estimate of $154 million by 1.7%. The metric increased 1.3% from the year-ago quarter’s figure.
Operating Highlights of LOVE
The gross margin contracted 80 basis points (bps) year over year to 59%, mainly due to a 110 bps decline in product margin from higher promotional discounting. This was partly offset by an 80-bps decline in inbound transportation costs, while outbound transportation and warehousing costs expanded by 50 bps.
Selling, general and administrative expenses, as a percentage of net sales, increased 570 bps to 47% year over year. Advertising & marketing expenses, as a percentage of net sales, depreciated by 230 bps year over year to 14.9%.
Adjusted EBITDA was $1.5 million, down from $5.3 million reported a year ago.
Lovesac’s Financial Highlights
As of Aug. 4, 2024, Lovesac had cash and cash equivalents of $72.1 million compared with $87 million at the end of fiscal 2024.
Net cash used in operating activities totaled $0.8 million as of second-quarter fiscal 2025 end against net cash provided of $27.3 million reported in the year-ago comparable period.
LOVE’s Q3 Guidance
For third-quarter fiscal 2025, LOVE expects net sales to be in the range of $152-$160 million and adjusted EBITDA loss in the range of $3 to income of $1 million. In third-quarter fiscal 2024, it reported net sales of $154 million and an adjusted EBITDA of $2.5 million.
The company expects net loss to be in the range of $4-$8 million. In the year-ago period, it reported a net loss of $2.3 million.
LOVE’s Fiscal 2025 Guidance Updated
For the fiscal 2025, the company now expects net sales to be in the range of $700-$735 million compared with $700-$770 million expected earlier.
Adjusted EBITDA is now expected to be in the range of $52-$59 million compared with the prior projection of $46-$60 million. Net income is expected to be in the band of $17-$21 million, down from $18-$27 million expected earlier.
Diluted income per common share is expected to be in the band of $1.01- $1.26, down from $1.06-$1.59 expected earlier, on approximately 16.9 million estimated diluted weighted average shares outstanding.
Zacks Rank & Key Picks
Lovesac currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Zacks Retail-Wholesale sector.
Abercrombie & Fitch Co. ANF flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The company has a trailing four-quarter earnings surprise of 28%, on average. Shares of ANF have surged 168.3% in the past year.
The Zacks Consensus Estimate for ANF’s fiscal 2024 sales and earnings per share (EPS) indicates an increase of 12.6% and 61%, respectively, from the year-ago period’s levels.
Texas Roadhouse, Inc. TXRH currently carries a Zacks Rank #2 (Buy). TXRH has a trailing four-quarter earnings surprise of 0.4%, on average. Shares of TXRH have surged 58.7% in the past year.
The Zacks Consensus Estimate for TXRH’s 2024 sales and EPS indicates a rise of 15.6% and 39.2%, respectively, from the year-ago period’s levels.
El Pollo Loco Holdings, Inc. LOCO carries a Zacks Rank #2 at present. The company has a trailing four-quarter earnings surprise of 21.6%, on average. Shares of LOCO have increased 44.3% in the past year.
The Zacks Consensus Estimate for LOCO’s 2024 sales and EPS indicates 2% and 12.7% growth, respectively, from the year-ago period’s levels.
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Signet Jewelers Limited SIG posted second-quarter fiscal 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. However, both revenues and earnings declined year over year. Also, same-store sales fell 3.4% from the year-ago period. Same-store sales are being impacted by Digital Banners, resulting in a decline of approximately 150 basis points (bps).
In the second quarter of fiscal 2025, Signet focused on several strategic initiatives. The company emphasized increasing its merchandise margin and average transaction value (ATV) by introducing innovative and trendy products, leading to a 50% rise in new merchandise revenues.
Signet expanded its Fashion and Bridal categories while maintaining inventory discipline. It also saw continued growth in its services sector, particularly with extended service agreements. Engagement recovery gained traction, with units improving by approximately 400 basis points. Investments in marketing, e-commerce enhancements and store renovations were the key elements to drive growth heading into the holiday season.
This Zacks Rank #4 (Sell) player’s shares have lost 0.3% in the past three months compared with the industry’s 13% decline.
Signet Jewelers Limited Price, Consensus and EPS Surprise
Signet Jewelers Limited price-consensus-eps-surprise-chart | Signet Jewelers Limited Quote
More on Signet’s Q2 Results
Signet reported adjusted earnings of $1.25 per share, beating the Zacks Consensus Estimate of $1.13. The bottom line decreased 19.4% from $1.55 in the year-ago quarter.
This jewelry retailer generated total sales of $1,491 million, surpassing the consensus estimate of $1,490 million. However, the top line fell 7.6% year over year. The metric also declined 7.6% at constant currency.
Insight Into SIG’s Margins & Expenses
The gross profit in the fiscal second quarter amounted to $533.6 million, down 7.3% from $610.8 million in the year-ago quarter. The gross margin increased 10 bps year over year to 38% in the quarter under review.
This increase was driven by a 120-bps improvement in the merchandise margin due to a higher mix of Services and Fashion revenues, partially offset by increased fixed costs like store occupancy.
Selling, general and administrative (SG&A) expenses were $498.4 million, down 2.5% from $511.2 million in the prior-year quarter. Meanwhile, SG&A expenses, as a percentage of sales, stood at 33.4%, which rose 170 bps year over year. This change resulted from fixed cost deleverage.
SIG reported adjusted operating income of $68.6 million, down from $102.7 million in the year-ago quarter. As a rate of sales, the adjusted operating margin decreased 180 basis points to 4.6%.
Update on Signet’s Segmental Performance
Sales in the North American segment fell 6.9% year over year to $1.4 billion. This decline was caused by a 1.6% year-over-year rise in the ATV on a lower number of transactions. Same-store sales tumbled 3.7% year over year.
Sales in the International segment decreased 15.2% year over year to $86.5 million due to a 13.4% reduction in ATV, influenced by the sale of prestige watch stores, coupled with fewer transactions. Same-store sales slipped 1.7% year over year. Sales fell 15.8% on a constant-currency basis.
The Zacks Consensus Estimate of net sales for the North American and International segments was pegged at $1.3 billion and $73 million, respectively, in the quarter under review.
Update on SIG's Stores
As of Aug. 3, 2024, the North American segment had 2,401 stores, a decrease from 2,411 in February 2024 due to 3 openings and 13 closures. The International segment had 267 stores, down from 287 after 20 closures and no openings. Overall, Signet had 2,668 stores, down from 2,698 following 3 openings and 33 closures.
SIG’s Financial Snapshot: Cash, Debt & Equity Overview
Signet ended the fiscal second quarter with cash and cash equivalents of $403.1 million, and inventories of $1.98 billion. Total shareholders’ equity was $1.92 billion at the end of the fiscal second quarter.
As of Aug. 3, 2024, it used net cash of $114.4 million in operating activities.
In the second quarter, it repurchased approximately 441,000 common shares at an average price of $90.35 per share, totaling $39.8 million. At the end of the second quarter, the company had $813.8 million remaining under its share repurchase authorization.
Signet’s FY25 Guidance
For the third quarter of fiscal 2025, the company projects total sales between $1.345 billion and $1.380 billion, with same-store sales between a decline of 1% and an increase of 1.5%. Adjusted operating income is forecast between $8 million and $25 million, while adjusted EBITDA is anticipated between $55 million and $72 million.
The gross margin is expected to expand modestly, while SG&A is likely to experience some deleveraging due to the shift of marketing spend into the third quarter ahead of the upcoming election.
For fiscal 2025, the company expects total sales of $6.66-$7.02 billion and same-store sales between a decline of 4.5% and an increase of 0.5%. Adjusted operating income is projected between $590 million and $675 million, with adjusted EBITDA between $780 million and $865 million. Adjusted diluted EPS is forecast at $9.90-$11.52.
The guidance assumes up to 5% growth in engagements, robust fashion sales and a modest improvement in digital trends. The company plans to save up to $200 million in costs, allocate $160-$180 million for capital expenditure, and use up to $1.1 billion for debt retirement, preferred share redemption and share repurchases. Non-comparable sales headwinds are expected to be $225 million and a net square footage decline is likely to be up to 1% for the year.
Stocks to Consider
Some better-ranked companies are Boot Barn Holdings, Inc. BOOT, Abercrombie & Fitch Co. ANF and Steven Madden, Ltd. SHOO.
Boot Barn operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn’s fiscal 2025 earnings and sales indicates growth of 10.5% and 11.3%, respectively, from the fiscal 2023 reported figures. BOOT has a trailing four-quarter average earnings surprise of 7.1%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It flaunts a Zacks Rank of 1 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 61% and 12.6%, respectively, from the fiscal 2024 reported levels. ANF has a trailing four-quarter average earnings surprise of 28%.
Steven Madden designs, sources, markets, and sells fashion-forward name-brand and private-label footwear. It currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Steven Madden’s 2024 earnings and sales indicates growth of 6.9% and 12.6%, respectively, from the year-ago actuals. SHOO has a trailing four-quarter average earnings surprise of 9.5%.
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