Why Zumiez (ZUMZ) Stock Is Nosediving

Kayode Omotosho /
2023/09/08 9:50 am EDT

What Happened:

Shares of clothing and footwear retailer Zumiez (NASDAQ:ZUMZ) fell 8.85% in the morning session after the company reported second quarter results and guided for revenue and EPS for the next quarter to come in below Consensus estimates. On the other hand, revenue and EPS exceeded Wall Street's expectations during the quarter. 

Management called out "continued headwinds facing consumer discretionary spending combined with a heightened promotional marketplace". However, it added that there has been a moderation in some of the sales trends observed in Q2 due to the back-to-school season and higher volumes. Management noted that the trends remained below year-ago levels. The company also continued to burn cash for the second straight quarter. 

In response to the challenges, Zumiez is cutting back on its growth plans. The company now expects to open 19 new stores in fiscal 2023, down from the previous expectation of 23 new stores. The bulk of the cut is expected to come from the North American business, which Zumiez noted "remains under pressure." Overall, it was a weaker quarter for the company, highlighting several headwinds.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Zumiez? Access our full analysis report here, it's free.

What is the market telling us:

Zumiez's shares are somewhat volatile and over the last year have had 19 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.

Zumiez is down 20.8% since the beginning of the year, and at $17.39 per share it is trading 38.4% below its 52-week high of $28.20 from February 2023. Investors who bought $1,000 worth of Zumiez's shares 5 years ago would now be looking at an investment worth $592.69.

Do you want to know what moves the stocks you care about? Add them to your StockStory watchlist and every time a stock we cover moves more than 5%, we provide you with a timely explanation straight to your inbox. It's free and will only take you a second.