Can Zumiez's North American Strength Drive a Lasting Turnaround?

Zumiez Inc. ZUMZ is leaning squarely on its North American engine to power a strong fiscal 2025 comeback. Regional net sales reached $180 million in the second quarter, a 2.1% increase from the prior-year period, while comparable sales (comps) climbed 4.2%, marking a sixth consecutive quarter of positive comps. Momentum accelerated as summer progressed and August U.S. comparable sales grew in the low teens on top of double-digit gains a year earlier. For the 30-day period ending Sept. 1, North American net sales surged 11.7% year over year.

This strength comes from a sharpened merchandising and pricing strategy. The company has continued to refresh assortments, building on more than 120 new brands introduced in 2024 and pushing private-label products to a record 30% of total sales. Average unit retail has also increased through targeted price hikes, favorable mix shifts toward higher-value categories such as denim and apparel, and successful bundling promotions. Importantly, back-to-school season delivered not just higher prices but more transactions, showing that traffic is rising alongside spending.

The financial payoff is clear. Companywide gross profit reached $76 million in the fiscal second quarter, up 5.9% from the prior-year period, while gross margin improved 130 basis points to 35.5%. This increase was driven by product margin gains and better leverage on store occupancy costs, aided by both higher sales and the closure of underperforming locations.

Management expects the North American engine to keep driving results. For the fiscal third quarter, it anticipates comps growth of about 5.5% to 7.5%. During the 30-day period already completed in the fiscal third quarter, North American comps were up 13%, signaling a strong start to the fall season. Even with selective restructuring, five new stores planned and up to 17 U.S. closures along with two in Canada, the company anticipates that North America will deliver the bulk of its targeted 3% to 4% total sales growth for fiscal 2025.

Tariff pressures and uneven non-peak traffic remain risks and footwear continues to trail other categories, but its North America’s operations have proven resilient. With premium-priced private labels, a refreshed brand mix and tight cost control, the region is positioned to sustain its momentum and support a return to full-year profitability in 2025.

Zumiez’s Price Performance, Valuation & Estimates

Shares of Zumiez have gained 4.5% year to date against the industry’s decline of 8.9%.

From a valuation standpoint, ZUMZ trades at a forward price-to-sales ratio of 0.37X, down from the industry’s average of 1.76X. It has a Value Score of A.

The Zacks Consensus Estimate for Zumiez’s fiscal 2025 earnings implies year-over-year growth of 566.7%, whereas the same for fiscal 2026 indicates an uptick of 63.5%. Estimates for fiscal 2025 and 2026 have been revised upward by 26 cents and 23 cents, respectively, in the past 30 days.

ZUMZ currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Key Picks

Some other top-ranked stocks in the retail space are Genesco Inc. GCO, The TJX Companies, Inc. TJX, and Tilly's, Inc. TLYS.

Genesco is a Nashville-based specialty retail and branded company that sells footwear and accessories in retail stores. It currently flaunts a Zacks Rank of 1.

The Zacks Consensus Estimate for GCO’s fiscal 2026 earnings and sales implies growth of 67% and 3%, respectively, from the year-ago actuals. Genesco delivered a trailing four-quarter average earnings surprise of 28.1%.

The TJX Companies is a leading off-price retailer of apparel and home fashions. It carries a Zacks Rank #2 (Buy) at present.

The Zacks Consensus Estimate for The TJX Companies’ current fiscal-year earnings and sales indicates growth of 7% and 5.4%, respectively, from the year-ago actuals. TJX delivered a trailing four-quarter average earnings surprise of 5.4%.

Tilly's is a specialty retailer in the action sports industry, selling clothing, shoes and accessories. It has a Zacks Rank of 2 at present. 

The Zacks Consensus Estimate for Tilly's current fiscal-year earnings indicates growth of 8.8% from the year-ago actual. TLYS delivered a trailing four-quarter average earnings surprise of 60.7%.

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This article originally published on Zacks Investment Research (zacks.com).

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