Zumiez Shares Plunged: What You Need to Know


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of teen retailer Zumiez (NAS: ZUMZ) went out of style quickly Thursday and fell 16% in intraday trading.

So what: July same-store sales increased 4.9% but fell short of the 7.5% investors were expecting. There were high expectations partly because same-store sales grew 9.4% last year, and investors were hoping for a repeat performance.

Now what: On the plus side, total sales grew 12.3% to $38.7 million, so the business is growing at a healthy level. Investors may be worried about the growth today, but with shares trading at 17 times forward earnings, I think this is a nice discount for those looking to buy. Worries might persist in the coming weeks about economic growth that could put pressure on shares, but I think we're reaching buying territory.

Interested in more info on Zumiez? Add it to your watchlist.

At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Motley Fool newsletter services have recommended shorting Zumiez. 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.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Originally published