Zumiez Reports 2% Revenue Rise in Q2

Key Points

• Revenue reached $214.3 million for Q2, at the top of prior company guidance and up 1.9% year over year.

• Gross margin improved to 35.5%, adding 1.3 percentage points year over year.

• Operating margin turned slightly positive at 0.1%, though the company still reported a net loss of $0.06 per share.

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Zumiez (NASDAQ:ZUMZ), a specialty retailer known for skate, snow, and youth lifestyle apparel and gear, released its Q2 FY2025 earnings report on Sept. 4, 2025. The most notable news was that revenue reached $214.3 million, slightly above the top end of the company’s own guidance and up from $210.2 million in the same period last year. Gross margin (GAAP) saw a significant improvement, reaching 35.5%. While the company moved its operating margin into positive territory at 0.1% (GAAP), losses continued with EPS at a negative $0.06.

These results outperformed company expectations, especially with North American sales accelerating and contributing to the positive trends observed heading into the important back-to-school period, even as ongoing international challenges and cost pressures weighed on profitability.

Source: Zumiez. Note: Fiscal 2025's second quarter ended Aug. 2, 2025. Fiscal 2024's Q2 ended Aug. 3, 2024.

Zumiez's Business Model and Recent Strategies

Zumiez is a retailer specializing in youth lifestyle apparel, footwear, accessories, and hardgoods like skateboards and snowboards. It operates over 700 stores in the United States, Canada, Europe, and Australia, combining physical retail locations with e‑commerce sites tailored for each region.

The company’s recent focus centers on product curation, creating a unique merchandise assortment, and investing in customer experience. Success depends on its ability to offer exclusive brands and rapid adaptation to evolving fashion trends among young consumers. A key factor for growth is the integration of online and in-store experiences, letting customers shop seamlessly across channels and fulfill online orders locally when possible.

Quarter Review: Sales Momentum and Mixed Profitability Signals

The quarter showed clear improvement in top-line performance, with revenue reaching $214.3 million, up 1.9% year-over-year. Revenue came in slightly above the company’s prior guidance range of $207 million to $214 million. Comparable sales, which measure revenue changes in stores open at least a year plus e‑commerce orders, increased 2.5%. North American comparable sales rose 4.2%, suggesting a strong core market despite flat or negative performance internationally.

Gross margin (GAAP) expanded to 35.5% from 34.2%. Operating margin turned slightly positive at 0.1%, compared to a negative margin last year, but was not enough to translate into net profitability. Net loss (GAAP) widened slightly to $1.0 million from $0.8 million in the prior year period, with diluted earnings per share (GAAP) coming in at negative $0.06, still better than the company’s loss forecast for the period.

Management attributed the strong sales to merchandising and customer experience initiatives, which drove back-to-school season momentum. Early numbers from Q3 FY2025, including a 10.6% year-over-year gain in net sales for the 30 days through Sept. 1, indicate continued strong demand, particularly in North America. International markets, especially Europe, continued to lag and contributed less to sales growth than planned, consistent with issues mentioned in the prior quarter.

A notable one-time event was a $3.6 million legal settlement relating to a wage and hours lawsuit in California, which had a $0.15 per share negative impact on results for the first six months of 2025. Share repurchases continued, with $32.8 million used in buybacks year-to-date through Q2 FY2025. This lower share count is helping future per-share results but pressures current period loss per share.

Back-to-School Results, Segment Details, and Product Line Context

The company reported “acceleration third quarter-to-date led by an 11.2% comparable sales gain during back-to-school,” most of which originated from North America, where comparable sales surged 13% for the 30 days ending Sept. 1, 2025. These results further build on last year’s double-digit back-to-school gains and suggest current merchandising, including private label apparel, has strong appeal with its target audience.

Operationally, Zumiez ended the period with 730 stores, unchanged from the last fiscal year-end. The company currently plans six new openings in fiscal 2025, with five in North America and one in Australia. Capital expenditures totaled $14.1 million for the six months ended Aug. 2, 2025.

Meanwhile, international business continues to face headwinds. In North America, strong sales and sequential improvements contrast with softness elsewhere, as flagged in previous quarters. The company's physical and online platforms such as zumiez.com help support both local and digital sales, but international traction remains an area to monitor.

On the balance sheet, cash and marketable securities declined to $106.7 million from $127.0 million a year ago, largely due to share buybacks and capital expenditures, rather than operational losses. Inventory remained stable at $157.7 million. Operating cash flow improved for the first half of the year compared to last year’s performance, with net cash used in operating activities (GAAP) narrowing by $5.9 million for the first six months of 2025.

Looking Forward: Management Guidance and What’s Ahead

For Q3 FY2025, management projects net sales between $232 million and $237 million, operating margin of 2.3% to 3.3%, and diluted EPS of $0.19 to $0.29. Comparable sales are expected to grow between 5.5% and 7.5%. This represents a step up from the latest quarter, supported by ongoing strength in North America and momentum from the back-to-school season. The company is not providing full-year fiscal 2025 guidance beyond this third-quarter outlook, citing uncertainties tied to tariffs and consumer demand.

Investors should watch how gross margin, operating costs, and sales trends develop, particularly as international weakness and cost pressures continue to create risks. Management continues to highlight merchandising effectiveness, customer experience, and capital allocation as focal points, but cautions that broader economic and policy developments will shape results in future quarters. Zumiez does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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