Why Shares of Zumiez Inc. Tumbled Today

By Markets Fool.com

What:Shares of surf-and-skate apparel retailerZumiezgot dinged today, following disappointing guidance in its earnings report. As of 11:33 a.m. ET, the stock had fallen 10.9%.

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So what:The retailer actually beat earnings estimates, posting a per-share profit of $0.53, down from $0.60 a year in the quarter a year ago, but that was better than the $0.50 analysts had expected. Revenue also fell 6.2% to $242.4 million, edging out the consensus estimate at $241.8 million.

Same-store sales declined 9.5% in the quarter, following an 8.3% jump in the quarter a year ago, as the company continues to struggle with inventory and merchandise issues. CEO Rick Brooks summed up the quarter, saying, "The retail environment in North America remained challenging," adding that the company was working on improving its merchandise assortments as well as systems like point-of-sale and supply chain in order to increase profitability. He also said it would expand in Europe to take advantage of strong demand and sales momentum.

February monthly sales, which occurred after the fourth quarter ended, continued on a similar trajectory as comparable sales fell 8.6% in the period.

Now what:For the current quarter, management projected a per-share loss of -$0.07 to -$0.11, and saw net sales at $172-$175 million with comparable sales falling 5-7%. Analysts had expected revenue at $177.8 million and a loss of a penny per share.

This year, Zumiez also plans to open 34 new stores, expanding its footprint by about 5%.

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Considering the weak guidance above, it's not surprising to see the stock tumble today. Management has been promising to fix its merchandise assortment issues for several months, yet same-store sales continue to decline. Fashion is fickle, especially in today's retail environment where traditional powerhouses are falling behind fast fashion chains like H&M and Zara. Zumiez seems no different. I wouldn't buy into its comeback until the same-store sales slide reverses.

The article Why Shares of Zumiez Inc. Tumbled Today originally appeared on Fool.com.

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.