Why Zumiez Surfs Right Over Rival Pacific Sunwear

A tale of two surf-and-skate lifestyle chains: Dominant player Pacific Sunwear (PSUN) saw its sales wipe out in the fourth quarter with a 17 percent drop. Rival Zumiez (ZUMZ), by contrast, saw sales jump 5.6 percent, and its momentum built with a nearly 20 percent sales jump in February.

Why the difference? It's about the boards, and the style.

With nearly 400 stores, Zumiez sells surfboards, skateboards, snowboards (that's its store at right), and the fashions to wear when you ride them. Coming off megastar Shaun White's Olympic win, it's in a public-awareness sweet spot right now -- likely part of the sales bump it caught in February. It also sells everything you need to repair your skateboard after you trash it, which keeps customers coming back.

PacSun just sells the clothes. Increasingly, it appears boarders are favoring the brand that meets all their needs. While Zumiez doesn't break out the percent of sales it gets in the board department, whatever it is, it's a profit center 900-store PacSun simply doesn't have.

By its own admission, PacSun has had its finger off the pulse of fast-changing teen fashion. Eight months into a turnaround, new CEO Gary Schoenfeld speaks tentatively of adding "a select number of emerging brands," an area where Zumiez has long been sharply focused. PacSun's Schoenfeld observed in the company's quarterly call that young customers today are "more fashion savvy compared to a typical customer in PacSun's heyday five or eight years ago."

Maybe they need an advisory board of teens to help them keep up. Also, when a company says their heyday was in the past, that sends up some red flags.

It's not about price -- Schoenfeld noted that a move to reposition 300 of the chain's stores as value outlets failed to improve results. It's about connecting with the youth boarder crowd. PacSun needs to find out how to do it, or Zumiez will continue to skate right over them.

Photo via Flickr user Jeff Sandquist