ZUMZ - Zumiez: Time To Buy
2024-02-06 04:21:38 ET
Summary
- Zumiez's revenues decreased in 2022 and 2023, but are expected to return to the growth path in 2024.
- Margins are currently depressed and could take some time to start recovering.
- The balance sheet is very strong as cash is high and debt non-existent.
- The company is prepared to withstand current headwinds, and these are in my opinion temporary due to their direct link to the current macroeconomic picture.
- The recent share price decline represents a good opportunity for investors with enough patience and risk-tolerance.
Investment thesis
Zumiez ( ZUMZ ) shareholders have been exposed to continuous ups and downs over the years, and the company is highly cyclical for two main reasons. First, the type of clothing and accessory products it sells are not particularly characterized by having low prices, but rather by being designed for specific styles, which is why these are considered discretionary goods. The purchase of these goods tends to be postponed in lean times, and this is aggravated by the fact that Zumiez's target customers are the younger generations, who tend to be the ones who see their purchasing power decrease the most during economic downturns. Second, changes in fashion trends have remained in flux over the years, which adds another cyclical component to the company....
Zumiez: Time To Buy