Zumiez Inc. Announces Fiscal 2018 Third Quarter Results

 

 

Third Quarter 2018 Comparable Sales increased 4.8% 
Third Quarter 2018 Diluted Earnings Per Share Improved to $0.55 
November 2018 Comparable Sales Increased 2.3%

LYNNWOOD, Wash., Dec. 06, 2018 (GLOBE NEWSWIRE) -- Zumiez Inc. (NASDAQ:ZUMZ) today reported results for the third quarter ended November 3, 2018.

Total net sales for the third quarter ended November 3, 2018 (13 weeks) increased 1.2% to $248.8 million from $245.8 million in the quarter ended October 28, 2017 (13 weeks). Comparable sales for the thirteen weeks ended November 3, 2018 increased 4.8% compared to a comparable sales increase of 7.9% for the thirteen weeks ended October 28, 2017. Net income for the third quarter of fiscal 2018 was $13.8 million, or $0.55 per diluted share, compared to net income of $11.9 million, or $0.48 per diluted share in the third quarter of the prior fiscal year.

Total net sales for the nine months (39 weeks) ended November 3, 2018 increased 8.9% to $674.1 million from $619.2 million reported for the nine months (39 weeks) ended October 28, 2017.  Comparable sales increased 6.3% for the thirty-nine weeks ended November 3, 2018 compared to a comparable sales increase of 5.1% for the thirty-nine weeks ended October 28, 2017. Net income for the first nine months of fiscal 2018 was $15.6 million, or $0.62 per diluted share, compared to net income for the first nine months of the prior fiscal year of $6.9 million, or $0.28 per diluted share.

At November 3, 2018, the Company had cash and current marketable securities of $127.9 million compared to cash and current marketable securities of $85.8 million at October 28, 2017. The increase in cash and current marketable securities was primarily driven by cash generated through operations, partially offset by capital expenditures.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "We are very pleased with our third quarter performance and strong back-to-school season.  The third quarter represented our ninth quarter of positive comparable sales and consisted of meaningful full priced selling throughout the period.  With 140 basis points of improvement between product margins and inventory shrink, we were able to offset the loss of a high volume week due to the calendar shift and deliver earnings per share ahead of our expectations. The fourth quarter has gotten off to a positive start driven by robust demand over the Black Friday weekend and Cyber Monday. We are confident that our differentiated product offering, seamless multi-channel shopping experience, and superior customer service has Zumiez well positioned for a strong finish to the year and sustained success over the long-term."

November 2018 Sales
Total net sales for the four-week period ended December 1, 2018 increased 9.4% to $84.4 million, compared to $77.1 million for the four-week period ended November 25, 2017. The Company's comparable sales increased 2.3% for the four-week period ended December 1, 2018 compared to a comparable sales increase of 7.8% for the four-week period ended November 25, 2017.

Fiscal 2018 Fourth Quarter Outlook
The Company is introducing guidance for the three months ending February 2, 2019. Net sales are projected to be in the range of $295 to $301 million resulting in net income per diluted share of approximately $1.02 to $1.08. This guidance is based upon anticipated comparable sales growth between 0% and 2% for the fourth quarter of fiscal 2018. The Company has opened 12 new stores this year through December 1, 2018 including 5 stores in North America and 7 stores in Europe.  We plan to open one more store in 2018.

A conference call will be held today to discuss third 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 1995029.

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 December 1, 2018 we operated 708 stores, including 610 in the United States, 50 in Canada, 41 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 August 4, 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
(In thousands, except per share amounts)
(Unaudited)
 
    Three Months Ended
    November 3, 2018    % of Sales      October 28, 2017    % of Sales
Net sales   $ 248,795     100.0 %   $ 245,756     100.0 %
Cost of goods sold     161,922     65.1 %     162,389     66.1 %
Gross profit     86,873     34.9 %     83,367     33.9 %
Selling, general and administrative expenses     68,479     27.5 %     64,559     26.2 %
Operating profit     18,394     7.4 %     18,808     7.7 %
Interest income, net     493     0.1 %     111     0.0 %
Other expense, net     (74 )   0.1 %     (326 )   (0.1 %)
Earnings before income taxes     18,813     7.6 %     18,593     7.6 %
Provision for income taxes     4,990     2.0 %     6,671     2.7 %
Net income   $ 13,823     5.6 %   $ 11,922     4.9 %
Basic earnings per share   $ 0.55         $ 0.48      
Diluted earnings per share   $ 0.55         $ 0.48      
Weighted average shares used in computation of earnings per share:                
Basic     24,974           24,712      
Diluted     25,261           24,804      
                     
ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
 
     Nine Months Ended
    November 3, 2018    % of Sales      October 28, 2017    % of Sales
Net sales   $ 674,052     100.0 %   $ 619,156     100.0 %
Cost of goods sold     452,057     67.1 %     423,944     68.5 %
Gross profit     221,995     32.9 %     195,212     31.5 %
Selling, general and administrative expenses     198,613     29.4 %     183,401     29.6 %
Operating profit     23,382     3.5 %     11,811     1.9 %
Interest income, net     1,015     0.1 %     284     0.0 %
Other expense, net     (308 )   0.0 %     (798 )   (0.1 %)
Earnings before income taxes     24,089     3.6 %     11,297     1.8 %
Provision for income taxes     8,496     1.3 %     4,432     0.7 %
Net income   $ 15,593     2.3 %   $ 6,865     1.1 %
Basic earnings per share   $ 0.63         $ 0.28      
Diluted earnings per share   $ 0.62         $ 0.28      
Weighted average shares used in computation of earnings per share:                    
Basic     24,920           24,660      
Diluted     25,220           24,845      
                     
ZUMIEZ INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
    November 3, 2018   February 3, 2018   October 28, 2017
    (Unaudited)       (Unaudited)
Assets            
Current assets            
Cash and cash equivalents   $ 29,640       $ 24,041     $ 10,660  
Marketable securities     98,236     97,864   75,109  
Receivables     17,521     17,027   15,761  
Inventories     186,938     125,826   156,986  
Prepaid expenses and other current assets     15,853     14,405   14,372  
Total current assets     348,188     279,163   272,888  
Fixed assets, net     123,074     128,852   130,898  
Goodwill     58,619     62,912   59,544  
Intangible assets, net     15,203     16,696   15,645  
Deferred tax assets, net     4,438     4,174   9,842  
Other long-term assets     7,197     7,713   7,452  
Total long-term assets     208,531     220,347   223,381  
Total assets   $ 556,719       $ 499,510     $ 496,269  
             
Liabilities and Shareholders' Equity            
Current liabilities            
Trade accounts payable   $ 90,060       $ 37,861     $ 61,676  
Accrued payroll and payroll taxes     21,724     20,650   15,782  
Income taxes payable     2,782         5,796       5,454  
Deferred rent and tenant allowances     7,790     8,073   8,468  
Other liabilities     24,645     26,867   33,456  
Total current liabilities     147,001     99,247   124,836  
Long-term deferred rent and tenant allowances     37,631     39,275   39,869  
Other long-term liabilities     3,315     5,073   4,981  
Total long-term liabilities     40,946     44,348   44,850  
Total liabilities     187,947     143,595   169,686  
             
Shareholders' equity            
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding                    
Common stock, no par value, 50,000 shares authorized; 25,532 shares issued and outstanding at November 3, 2018, 25,249 shares issued and outstanding at February 3, 2018 and 25,252 shares issued and outstanding at October 28, 2017     151,658     146,523   145,230  
Accumulated other comprehensive (loss) income     (9,888 )   35   (8,067 )
Retained earnings     227,002     209,357   189,420  
Total shareholders' equity     368,772     355,915   326,583  
Total liabilities and shareholders' equity   $ 556,719       $ 499,510     $ 496,269  
                   
ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
     Nine Months Ended
     November 3, 2018    October 28, 2017
Cash flows from operating activities:        
Net income   $ 15,593     $ 6,865  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation, amortization and accretion     21,249       20,338  
Deferred taxes     (919 )     (2,625 )
Stock-based compensation expense     4,431       3,720  
Other     482       1,189  
Changes in operating assets and liabilities:        
Receivables     (1,680 )     (2,449 )
Inventories     (63,892 )     (48,491 )
Prepaid expenses and other current assets     (1,904 )     (578 )
Trade accounts payable     53,037       35,693  
Accrued payroll and payroll taxes     1,342       699  
Income taxes payable     (2,206 )     2,856  
Deferred rent and tenant allowances     (1,564 )     (1,240 )
Other liabilities     (6,845 )     (2,108 )
Net cash provided by operating activities     17,124       13,869  
Cash flows from investing activities:        
Additions to fixed assets     (15,683 )     (19,072 )
Purchases of marketable securities and other investments     (116,430 )     (80,198 )
Sales and maturities of marketable securities and other investments     115,536       63,365  
Net cash used in investing activities     (16,577 )     (35,905 )
Cash flows from financing activities:        
Proceeds from revolving credit facilities     32,776       19,412  
Payments on revolving credit facilities     (27,651 )     (7,841 )
Proceeds from issuance and exercise of stock-based awards     899       697  
Payments for tax withholdings on equity awards     (195 )     (171 )
Net cash provided by financing activities     5,829       12,097  
Effect of exchange rate changes on cash and cash equivalents     (777 )     352  
Net increase (decrease) in cash and cash equivalents     5,599       (9,587 )
Cash and cash equivalents, beginning of period     24,041       20,247  
Cash and cash equivalents, end of period   $ 29,640     $ 10,660  
Supplemental disclosure on cash flow information:        
Cash paid during the period for income taxes   $ 11,893     $ 4,434  
Accrual for purchases of fixed assets     1,477       2,190  

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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This article was written by cool news network.

 

 

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