Zumiez: Big brands hurting our sales and margins

As reported by Tiffany Montgomery of Shop Eat Surf http://www.shop-eat-surf.com Zumiez CEO Rick Brooks said Thursday that the trend of new and smaller action sports brands performing better than large national brands continued in the third quarter. During Zumiez’s third quarter conference call, Brooks said the larger, more widely-distributed apparel brands continue to negatively impact Zumiez overall sales and margins, especially as Zumiez has increased promotions to compete with other teen retailers at the mall that are lowering prices on the big brands. Apparel accounts for about 50 percent of Zumiez overall sales and continues to be the most challenging category, Brooks said. An analyst asked if the company was going back to the big brands and asking for help. Brooks said those conversations are steady and constant. Total sales in the third quarter rose 7.9 percent to $112.2 million. Same-store sales fell 5.8 percent. Net income fell 16 percent to $6.8 million. Zumiez executives sounded quite pessimistic during the call. Brooks called October the worst month in company history. As a result of the tough environment, the company slashed expenses, reduced capital expenditures for the rest of this year and next, and lowered full year sales and earnings guidance. The company is now forecasting revenue of $406 million to $410 million for the year vs. the previous estimate of $418 million to $425 million. It anticipates a same-store sales decline in the mid teens for the fourth quarter. Zumiez has slowed its square footage growth for 2009 and is also holding off on signing new leases for 2010 until it sees how this holiday season turns out. The...