Zumiez Inc. Announces Fiscal 2018 Second Quarter Results

Second Quarter 2018 Sales Increased 13.9% to $219.0 Million
Second Quarter 2018 Earnings Per Share Improved to $0.17
August 2018 Comparable Sales Increased 9.5%

LYNNWOOD, Wash., Sept. 06, 2018 (GLOBE NEWSWIRE) -- Zumiez Inc. (NASDAQ:ZUMZ) today reported results for the second quarter ended August 4, 2018.

Total net sales for the second quarter ended August 4, 2018 (13 weeks) increased 13.9% to $219.0 million from $192.2 million in the quarter ended July 29, 2017 (13 weeks). Comparable sales for the thirteen weeks ended August 4, 2018 increased 6.3% compared to a comparable sales increase of 4.7% for the thirteen weeks ended July 29, 2017. Net income for the second quarter of fiscal 2018 was $4.4 million, or $0.17 per diluted share, compared to a net loss of $0.6 million, or $0.02 per diluted share in the second quarter of the prior fiscal year.

Total net sales for the six months (26 weeks) ended August 4, 2018 increased 13.9% to $425.3 million from $373.4 million reported for the six months (26 weeks) ended July 29, 2017. Comparable sales increased 7.2% for the twenty-six weeks ended August 4, 2018 compared to a comparable sales increase of 3.3% for the twenty-six weeks ended July 29, 2017. Net income for the first six months of fiscal 2018 was $1.8 million, or $0.07 per diluted share, compared to a net loss for the first six months of the prior fiscal year of $5.1 million, or $0.21 per diluted share.

At August 4, 2018, the Company had cash and current marketable securities of $132.9 million compared to cash and current marketable securities of $70.7 million at July 29, 2017. The increase in cash and current marketable securities was driven by cash generated through operations partially offset by capital expenditures. 

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "We delivered our strongest second quarter in several years.  Our differentiated merchandise offering combined with our authentic brand positioning and seamless multi-channel shopping experience continue to drive robust comparable sales gains.  We also expanded product margins by 30 basis points through increased full price selling and meaningfully leveraged our expenses on higher sales.  The broad based improvements across our business fueled a marked improvement in profitability compared with a year ago.  We are very encouraged by our recent performance, and with the second half of the year off to a solid start, we are heading into our busiest selling season with great momentum."   

August 2018 Sales
Total net sales for the four-week period ended September 1, 2018 increased 9.0% to $107.4 million, compared to $98.6 million for the four-week period ended August 26, 2017. The Company's comparable sales increased 9.5% for the four-week period ended September 1, 2018 compared to a comparable sales increase of 7.4% for the four-week period ended August 26, 2017.

Fiscal 2018 Third Quarter & Full Year Outlook
The Company is introducing guidance for the three months ending November 3, 2018. Net sales are projected to be in the range of $247 to $252 million including anticipated comparable sales growth of between 4.0% and 6.0%. Consolidated operating margins are expected to between 6.5% and 7.0% resulting in net income per diluted share of approximately $0.45 to $0.51. The Company currently intends to open approximately 13 new stores in fiscal 2018, including up to 5 stores in the United States, 7 stores in Europe and 1 store in Australia.

Conference call Information
A conference call will be held today to discuss second quarter fiscal 2018 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (574) 990-9934 followed by the conference identification code of 7348439.

About Zumiez Inc.

Zumiez is a leading specialty retailer of apparel, footwear, accessories and hardgoods for young men and women who want to express their individuality through the fashion, music, art and culture of action sports, streetwear, and other unique lifestyles. As of September 1, 2018 we operated 703 stores, including 610 in the United States, 50 in Canada, 36 in Europe and 7 in Australia. We operate under the names Zumiez, Blue Tomato and Fast Times. Additionally, we operate ecommerce web sites at zumiez.com, blue-tomato.com and fasttimes.com.au

Safe Harbor Statement

Certain statements in this press release and oral statements relating thereto made from time to time by representatives of the Company may constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements include, without limitation, predictions and guidance relating to the Company's future financial performance, brand and product category diversity, ability to adjust product mix, integration of acquired businesses, growing customer demand for our products and new store openings. In some cases, you can identify forward-looking statements by terminology such as, "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. These forward-looking statements are based on management's current expectations but they involve a number of risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in the forward-looking statements as a result of risks and uncertainties, which include, without limitation, those described in the Company's quarterly report on Form 10-Q for the quarter ended May 5, 2018 as filed with the Securities and Exchange Commission and available at www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements speak only as of the date on which they are made and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME / (LOSS)
(In thousands, except per share amounts)
(Unaudited)

       
    Three Months Ended  
    August 4, 2018    % of Sales       July 29, 2017     % of Sales   
Net sales   $ 218,971     100.0 %   $ 192,245     100.0 %  
Cost of goods sold     146,436     66.9 %     132,449     68.9 %  
Gross profit     72,535     33.1 %     59,796     31.1 %  
Selling, general and administrative expenses     65,837     30.0 %     60,558     31.5 %  
Operating profit (loss)     6,698     3.1 %     (762 )   (0.4 %)  
Interest income, net     238     0.1 %     92     0.0 %  
Other income (expense), net     248     0.1 %     (23 )   0.0 %  
Earnings (loss) before income taxes     7,184     3.3 %     (693 )   (0.4 %)  
Provision (benefit) for income taxes     2,807     1.3 %     (85 )   (0.1 %)  
Net income (loss)   $ 4,377     2.0 %   $ (608 )   (0.3 %)  
Basic earnings (loss) per share   $ 0.18         $ (0.02 )      
Diluted earnings (loss) per share   $ 0.17         $ (0.02 )      
Weighted average shares used in computation of earnings (loss) per share:                  
Basic     24,955           24,689        
Diluted     25,188           24,689        
                           
                           
                           

ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME / (LOSS)
(In thousands, except per share amounts)  

       
     Six Months Ended   
    August 4, 2018    % of Sales       July 29, 2017     % of Sales   
Net sales   $ 425,257     100.0 %     373,399     100.0 %  
Cost of goods sold     290,136     68.2 %     261,555     70.0 %  
Gross profit     135,121     31.8 %     111,844     30.0 %  
Selling, general and administrative expenses     130,133     30.6 %     118,841     31.9 %  
Operating profit (loss)     4,988     1.2 %     (6,997 )   (1.9 %)  
Interest income, net     521     0.1 %     174     0.0 %  
Other expense, net     (233 )   (0.1 %)     (472 )   (0.1 %)  
Earnings (loss) before income taxes     5,276     1.2 %     (7,295 )   (2.0 %)  
Provision (benefit) for income taxes     3,506     0.8 %     (2,239 )   (0.6 %)  
Net income (loss)   $ 1,770     0.4 %     (5,056 )   (1.4 %)  
                       
Basic earnings (loss) per share   $ 0.07           (0.21 )      
Diluted earnings (loss) per share   $ 0.07           (0.21 )      
Weighted average shares used in computation of earnings (loss) per share:                      
Basic     24,894           24,635        
Diluted     25,211           24,635        
                       
                       
                       

ZUMIEZ INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

               
    August 4, 2018   February 3, 2018   July 29, 2017  
    (Unaudited)       (Unaudited)  
Assets              
Current assets              
Cash and cash equivalents   $ 41,409      $   24,041    $   17,291    
Marketable securities     91,500     97,864   53,433    
Receivables     20,554     17,027   16,334    
Inventories     149,656     125,826   141,782    
Prepaid expenses and other current assets     16,169     14,405   15,378    
Total current assets     319,288     279,163   244,218    
Fixed assets, net     125,141     128,852   131,934    
Goodwill     59,336     62,912   60,057    
Intangible assets, net     15,470     16,696   15,903    
Deferred tax assets, net     4,417     4,174   9,733    
Other long-term assets     6,815     7,713   7,022    
Total long-term assets     211,179     220,347   224,649    
Total assets   $ 530,467      $   499,510    $   468,867    
               
Liabilities and Shareholders' Equity              
Current liabilities              
Trade accounts payable   $ 79,370      $   37,861    $   60,652    
Accrued payroll and payroll taxes     15,640     20,650   15,684    
Income taxes payable     2,580         5,796       68    
Deferred rent and tenant allowances     7,895     8,073   8,393    
Short term borrowings     5,623         943          
Other liabilities     21,274     25,924   23,657    
Total current liabilities     132,382     99,247   108,454    
Long-term deferred rent and tenant allowances     38,265     39,275   40,795    
Other long-term liabilities     4,781     5,073   5,113    
Total long-term liabilities     43,046     44,348   45,908    
Total liabilities     175,428     143,595   154,362    
               
Shareholders' equity              
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding                      
Common stock, no par value, 50,000 shares authorized; 25,520 shares issued and
outstanding at August 4, 2018, 25,249 shares issued and outstanding at February 3, 2018
and 25,231 shares issued and outstanding at July 29, 2017
    149,961     146,523   143,682    
Accumulated other comprehensive (loss) income     (8,101 )   35   (6,676 )  
Retained earnings     213,179     209,357   177,499    
Total shareholders' equity     355,039     355,915   314,505    
Total liabilities and shareholders' equity   $ 530,467       499,510     468,867    
                     
                     
                     

 ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) 

       
     Six Months Ended   
     August 4, 2018     July 29, 2017   
Cash flows from operating activities:          
Net income (loss)   $ 1,770     $ (5,056 )  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:          
Depreciation, amortization and accretion     13,920       13,520    
Deferred taxes     (990 )     (2,456 )  
Stock-based compensation expense     3,012       2,500    
Other     310       621    
Changes in operating assets and liabilities:          
Receivables     (4,099 )     (2,092 )  
Inventories     (25,993 )     (32,553 )  
Prepaid expenses and other current assets     (1,570 )     (995 )  
Trade accounts payable     40,815       34,627    
Accrued payroll and payroll taxes     (4,785 )     561    
Income taxes payable     (2,973 )     (3,372 )  
Deferred rent and tenant allowances     (872 )     (521 )  
Other liabilities     (2,997 )     (1,016 )  
Net cash provided by operating activities     15,548       3,768    
Cash flows from investing activities:          
Additions to fixed assets     (9,061 )     (12,461 )  
Purchases of marketable securities and other investments     (35,046 )     (37,586 )  
Sales and maturities of marketable securities and other investments     41,200       42,615    
Net cash used in investing activities     (2,907 )     (7,432 )  
Cash flows from financing activities:          
Proceeds from revolving credit facilities     29,227       1,791    
Payments on revolving credit facilities     (24,233 )     (1,791 )  
Proceeds from issuance and exercise of stock-based awards     621       370    
Payments for tax withholdings on equity awards     (195 )     (172 )  
Net cash provided by financing activities     5,420       198    
Effect of exchange rate changes on cash and cash equivalents     (693 )     510    
Net increase (decrease) in cash and cash equivalents     17,368       (2,956 )  
Cash and cash equivalents, beginning of period     24,041       20,247    
Cash and cash equivalents, end of period   $ 41,409     $ 17,291    
Supplemental disclosure on cash flow information:          
Cash paid during the period for income taxes   $ 7,362     $ 3,660    
Accrual for purchases of fixed assets     3,496       2,550    
           

Company Contact:
Darin White
Director of Finance &
Investor Relations
Zumiez Inc.
(425) 551-1500, ext. 1337

Investor Contact:
ICR
Brendon Frey
(203) 682-8200

 

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