Skate shop rival Zumiez recently reported a challenging third-quarter performance marked by a significant decline in consumer demand, leading to a bleak financial outlook.
According to reports, the company is projecting consolidated operating margins for the third quarter to be negative 1.5% to 2.5%. Additionally, they anticipate a loss of $0.15 to $0.25 per share.
The downturn in earnings is primarily attributed to the deleveraging of the cost structure in the wake of lower sales, which has been further exacerbated by margin pressure.
Zumiez's struggles during this quarter are reminiscent of the challenges faced in the year's first half.
A significant concern for Zumiez is the persistent deleverage of fixed costs.
These costs encompass various facets of the business, including occupancy expenses, base hours tied to mall operating hours, fixed payroll costs, and other corporate fees.
As the company grapples with these unyielding costs, its ability to maintain profitability under challenging market conditions becomes increasingly difficult.
In an official statement, Zumiez acknowledged the ongoing uncertainty and volatility in the macroeconomic environment, which has prompted them to refrain from providing specific annual financial guidance.
The company, however, sought to offer some insights into how they anticipate the business will trend throughout the year.