What Happened?
Shares of clothing and footwear retailer Zumiez (NASDAQ: ZUMZ) jumped 13.7% in the morning session after the company reported better-than-expected second-quarter results and issued a strong forecast for the third quarter.
The company announced second-quarter net sales of $214.3 million, a 1.9% increase year-over-year, which surpassed analyst estimates. While Zumiez posted a net loss of $0.06 per share, this result represented a significant earnings surprise, beating the consensus estimate for a loss of $0.11 per share. The primary catalyst for the stock's jump was the company's optimistic outlook. For the third quarter, Zumiez expects revenue between $232 million and $237 million and earnings per share from $0.19 to $0.29. Both projections were well above Wall Street's consensus of $224.1 million in revenue and $0.15 in earnings per share.
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What Is The Market Telling Us
Zumiez’s shares are extremely volatile and have had 35 moves greater than 5% over the last year. But moves this big are rare even for Zumiez and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 3.1% on the news that markets pulled back with the decline concentrated in the tech space as investors engaged in profit-taking following a robust week that saw the S&P 500 hit a new record.
Adding to the pressure, new inflation data, specifically the Core PCE, showed an acceleration in July, signaling that rising prices remain a risk despite being in line with expectations. This confluence of factors, including market highs heading into a historically weak September, led to a pullback, with the Nasdaq Composite shedding 1.15%. While the Federal Reserve has hinted at potential rate cuts, the focus on inflation and the jobs market continues to influence investor sentiment.
Zumiez is up 12.7% since the beginning of the year, but at $21.37 per share, it is still trading 19.9% below its 52-week high of $26.69 from September 2024. Investors who bought $1,000 worth of Zumiez’s shares 5 years ago would now be looking at an investment worth $769.16.
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