UPDATE 2-Zumiez cuts FY'07 earnings outlook; shares down

(Adds CFO and analyst comments)

BANGALORE, Nov 7 (Reuters) - Specialty retailer Zumiez Inc (ZUMZ.O) lowered its fiscal 2007 earnings outlook, as it expects a warmer winter to hurt sales of its seasonal merchandise, sending shares down more than 28 percent.

The retailer of action sports clothes, footwear, equipment and accessories also forecast third-quarter earnings below analysts' estimates.

Shares of the company, which also sells snow skates, goggles, snow boots and snowboards, fell to $28.30 in late electronic trade after closing at $39.45 Wednesday on the Nasdaq.

Many retailers are facing the heat this fall season as the warm weather has allowed consumers to put off buying cold-weather items like sweaters and jackets.

For the third quarter, Zumiez forecast earnings of 27 cents to 28 cents a share. Analysts were expecting 33 cents a share, before exceptional items, according to Reuters Estimates.

Third-quarter earnings outlook was below the company's internal projections primarily due to the timing of certain non-equity incentive compensation accrual and higher operational costs, Chief Financial Officer Trevor Lang said in a pre-recorded call.

For 2007, the company expects earnings of 92 cents to 94 cents a share, down from its prior view of 97 cents to 99 cents.

Analysts were expecting earnings of $1.01 a share for the year.

Seasonally, the company derives a large part of its revenue from snow-related products in the fourth quarter, Wedbush Morgan Securities analyst Betty Chen said by phone.

The company is being more conservative about how the warm weather could impact sales of snow products during the fourth quarter, she said.

Zumiez posted a 5.1 percent rise in October sales at stores open at least a year, and said total net sales for the four-week period ended Nov. 3 rose 24.6 percent to $24.7 million. (Reporting by Dilipp S. Nag in Bangalore; Editing by Saumyadeb Chakrabarty)