Zumiez loses fuel while Foot Locker strengthens

Zumiez has been a broadly commented stock due to been

highly favoured by investors. However, it seems as the retailer is now losing its fuel and been downgraded by a handful of analysts. Meanwhile, its peer Foot Locker is getting stronger than ever.

On Wednesday, Zumiez (NASDAQ: ZUMZ) was downgraded by Zacks from an “outperform” rating to a “neutral” rating in a note issued to investors. They currently have a 29 dollars target price on the stock.

“We have downgraded our long-term recommendation on Zumiez to Neutral’. Our view is based on the company’s declining comparable store sales transaction in fiscal 2012 so far, except in May. Further, the rate of upside in comparable store sales has been decelerating. Noticing this downward trend, we remain apprehensive about the company’s future comparable store sales performances. However, continuing with its store expansion and e-commerce strategies, Zumiez posted better-than-expected quarterly results for the second quarter of 2012. It posted earnings of $0.17 per share beating the Zacks Consensus Estimate of $0.13 and increasing over two-folds from the year-ago quarterly earnings of $0.08. Further, the acquisition of Blue Tomato facilitates Zumiez to tap the European market,” analysis team at Zacks wrote,

Shares of Zumiez traded down 3.10 percent during mid-day trading on Wednesday, hitting 26.56 dollars. Zumiez has a 52 week low of 20.74 and a 52 week high of 41.96 dollars.

Still in Wall Street, Foot Locker Inc. has strengthened operating results ahead of our expectations because of revenue increases and significant margin gains, advanced NASDAQ. S&P have consequently raised their rating on the stock, lifting its corporate credit rating to 'BB+' from 'BB', “as credit protection metrics have improved ahead of our forecasts.”

In the same vein, the rating agency has stated that “The stable outlook reflects our expectation for further performance growth in the next year because of continued comparable-store sales expansion and operating leverage enhancement.” Closing the American corporate news, True Religion Apparel, Inc. (Nasdaq: TRLG) announced that the company will release its financial results for the third quarter ended September 30, 2012, after the market close on Tuesday, October 30, 2012. Since January 2009 True Religion’s sales have doubled, growing 51 percent. Earlier in October, the coveted jeans brand announced it was exploring its strategic options, including a possible sale.

With regards to this option, Citigroup Inc. says the retailer could draw as much as 35 dollars a share in a takeover, 42 cents above the stock’s level at the end of 2011. That would be a boon for investors after the company’s valuation relative to profit fell to a two-year low. “It’s both an attractive LBO candidate and strategic acquisition candidate,” Jason Ronovech, an Albany, New York- based money manager for Paradigm Capital Management Inc explained in declarations for ‘Businessweek’. “The stock this year had underperformed. Fashion in denim is a finicky type of end market to be in. But it’s a very strong brand. The balance sheet is very liquid,” Ronovech concluded.