Zumiez’s second quarter saw a positive market reaction, driven by stronger-than-expected revenue and earnings. Management attributed the quarter’s outperformance to a robust back-to-school season, with North America delivering its fifth consecutive quarter of positive comparable sales growth. CEO Rick Brooks pointed to the increasing effectiveness of customer-focused merchandise initiatives, noting, “Our momentum continued to build into August, with low teens comparable sales growth in the United States.” The period also saw a significant rise in private label penetration, which management credited for supporting both top-line results and margin improvement.
Is now the time to buy ZUMZ? Find out in our full research report (it’s free).
Zumiez (ZUMZ) Q2 CY2025 Highlights:
- Revenue: $214.3 million vs analyst estimates of $211.2 million (1.9% year-on-year growth, 1.4% beat)
- EPS (GAAP): -$0.06 vs analyst estimates of -$0.11 (43.7% beat)
- Adjusted EBITDA: $7.22 million vs analyst estimates of $3.23 million (3.4% margin, significant beat)
- Revenue Guidance for Q3 CY2025 is $234.5 million at the midpoint, above analyst estimates of $224.1 million
- EPS (GAAP) guidance for Q3 CY2025 is $0.24 at the midpoint, beating analyst estimates by 60%
- Operating Margin: 0%, in line with the same quarter last year
- Locations: 731 at quarter end, down from 750 in the same quarter last year
- Same-Store Sales rose 2.5% year on year (3.6% in the same quarter last year)
- Market Capitalization: $356.5 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Zumiez’s Q2 Earnings Call
- Mitch Kummetz (Seaport Research Partners) asked how much of the comparable sales growth is driven by price increases versus product mix. CEO Rick Brooks explained that both higher average unit retails from pricing actions and mix shifts toward apparel and private label contributed, with bundling promotions also playing a role.
- Kummetz (Seaport Research Partners) inquired about the durability of private label’s 30% penetration and its impact on margins. Brooks highlighted strong performance in core categories like denim and emphasized that private label’s trend responsiveness and premium positioning underpin sustained growth and margin upside.
- Kummetz (Seaport Research Partners) sought clarification on whether the challenges in skate and footwear had bottomed out. Brooks responded that skate hardgoods trends had turned positive, while footwear remains a challenging category, but recent resilience in overall comps was noted.
- Jeff Fan Sinderen (B. Riley Securities) asked about the long-term operating margin target and drivers to achieve it. CFO Chris Work stated that high single-digit margins are possible over time, with sales recovery, product margin gains, and international turnaround as key levers.
- Fan Sinderen (B. Riley Securities) also questioned the timeline for improving the European business. Brooks described a multi-year plan focused on better trend execution and store experience, while hoping for macroeconomic recovery in Germany to support results.
Catalysts in Upcoming Quarters
Over the coming quarters, our team will be closely monitoring (1) whether private label and exclusive brands sustain their current growth trajectory, (2) signs of stabilization or improvement in the European business, and (3) the company’s ability to manage through macroeconomic uncertainty and tariff changes. Progress on store optimization and technology investments will also be key indicators of execution.
Zumiez currently trades at $20.43, up from $18.45 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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