Since February 2025, Zumiez has been in a holding pattern, posting a small return of 1.3% while floating around $15.98.

Is now the time to buy Zumiez, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.

Why Do We Think Zumiez Will Underperform?

We're cautious about Zumiez. Here are three reasons why ZUMZ doesn't excite us and a stock we'd rather own.

1. Flat Same-Store Sales Indicate Weak Demand

Same-store sales is an industry measure of whether revenue is growing at existing stores, and it is driven by customer visits (often called traffic) and the average spending per customer (ticket).

Zumiez’s demand within its existing locations has barely increased over the last two years as its same-store sales were flat.

2. Operating Losses Sound the Alarms

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Despite the consumer retail industry’s secular decline, unprofitable public companies are few and far between. Unfortunately, Zumiez was one of them over the last two years as its high expenses contributed to an average operating margin of negative 3.5%.

3. EPS Trending Down

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Sadly for Zumiez, its EPS declined by 57.7% annually over the last six years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.

Final Judgment

We see the value of companies helping consumers, but in the case of Zumiez, we’re out. That said, the stock currently trades at 60.8× forward P/E (or $15.98 per share). At this valuation, there’s a lot of good news priced in - we think there are better opportunities elsewhere. We’d suggest looking at the Amazon and PayPal of Latin America.

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