Zumiez wants a white winter

Published 7:49 pm Thursday, November 29, 2007

EVERETT — Zumiez Inc.’s operating profit rose 16 percent during the third quarter amid higher sales, but a warm winter could spell trouble for the seller of snowboarding gear.

Through the end of September, the Everett-based action sports chain racked up nearly $255 million in sales, 37 percent higher than the same period last year.

In the third quarter alone, which includes the busy back-to-school shopping season, Zumiez exceeded $104 million in sales. That was more than 26 percent higher than last year, including same-store sales growth of 13 percent.

That resulted in net income of $8.1 million, or 28 cents a share, during the quarter, up from $6.8 million in the prior-year period.

Rick Brooks, Zumiez’s chief executive officer, called it “another strong quarter.”

But analysts listening to his comments Thursday mostly tried to gain clues as to how fourth-quarter sales are trending. Three weeks ago, when Zumiez reported sales growth slowing in October and reduced its revenue forecast, the company’s shares lost 27 percent — or nearly $11 per share — of their value in one day.

While the overall state of the economy and shoppers’ moods about spending are still uncertain, Brooks said the weather could affect Zumiez’s fourth-quarter sales. Snowless mountains and relatively warm weather in most parts of the country mean slow sales for Zumiez’s winter sports clothing and equipment.

“As we know from past seasons, if it doesn’t happen, it just doesn’t happen,” Brooks said.

He and Trevor Lang, Zumiez’s chief financial officer, said they’re expecting the company will grow its sales by a percentage “in the low 20s” next year, while earnings could grow by 25 percent. The chain is aiming again to add to its store count by another 20 percent in 2008, with the first stores for Virginia and Massachusetts planned.

In trading Thursday before the third-quarter earnings release, Zumiez’s shares dropped $1.37 to close at $27.10.

Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.