Zumiez sees lacklustre quarterly result on harsh North American market

By

Olivier Guyot

Translated by
Benjamin Fitzgerald

Published
Jun 7, 2016

Sporting goods retail chains are facing problems in the current American market. Sports Chalet, Sports Authority and Pacific Sunwear, have all reported delicate operating environments across hundreds of stores. It's a sign of shift in the sector. 

It's in the this market context that Zumiez, another big-name American sporting goods retailer with 643 stores across North America (of which 599 are in the U.S.) released its first-quarter financial results, ended April.

During the three-month period, the group witnessed a sales drop of 2.6% compared to the same period last year, or $173 million. Comparable sales dropped 7.5%, linked to a decrease in footfall across North American stores.

The American firm, which also owns Blue Tomato in Europe, reported a profit for the same period a year ago, but saw this year's first quarter end with an operational loss of almost $4 million. Net profit was $2.8 million a year ago, compared to a loss of $2.1 million this year's opening quarter.

Talking about the result, Richard Miles Brooks, group CEO and director, said the group had revised down planned store its openings.  

"In light of lower traffic the past 12 months, we are prudent concerning our approach to store openings in 2016," said Brooks, in his quarterly presentation.

The group now expects to open 22 stores in North America compared to previous its plans for 27. The seven Blue Tomato stores slated for Europe are still going ahead. Meanwhile, the group commented on the slight dip in activity but reinforced that activity had progressed beyond expectations during the last year.

Referring to the current retail situation in North America, the director said: "I think as a whole, specialist stores are suffering from a lack of attractive products for the consumer. With two decades experience, I can say that the fashion world, and consommation, is cyclical. I don't think the market's fundamentally changed, but there is a shift in what consumers are willing to spend. (...) I believe we have to understand that a part of the post-recession headache is a level of frugality among all consumers. I think we need to integrate and define how to bring value to the consumer.

"This can be defined in many ways depending on the position of niche retailers in the market.  I think that each niche is going to see one dominant player which will emerge as the winner. In my opinion, the winning model is to create a global lifestyle footprint with a truly differentiating perspective. Again, you work with youth brands and help them grow on a global platform, and as a firm and global partner, you provide a very unique shopping experience, being part of a community."

Despite the complicated situation, the group highlighted the evolution of its menswear. "We are encouraged by the outcome of emerging brands, said the CEO. "And I believe we are seeing still interesting opportunities with emerging brands, while growing our online store and exclusives."

Looking ahead, the group expects to record a revenue decrease of 6-8% in the second quarter, or figure between $172-176 million.