SOURCE: Zumiez

December 05, 2013 16:00 ET

Zumiez Inc. Announces Fiscal 2013 Third Quarter Results

Company Reports November Sales; Announces New Share Repurchase Program

LYNNWOOD, WA--(Marketwired - Dec 5, 2013) -  Zumiez Inc. (NASDAQ: ZUMZ), a leading specialty retailer of action sports related apparel, footwear, equipment and accessories, today reported results for the third quarter ended November 2, 2013.

Total net sales for the third quarter ended November 2, 2013 (13 weeks) increased 6.2% to $191.1 million from $180.0 million in the quarter ended October 27, 2012 (13 weeks). Comparable store sales for the thirteen weeks ended November 2, 2013 increased 1.5% on top of a comparable store sales increase of 3.7% for the thirteen weeks ended October 27, 2012. Net income in the third quarter of fiscal 2013 was $11.9 million, or $0.39 per diluted share, compared to net income of $12.7 million, or $0.40 per diluted share, in the third quarter of the prior fiscal year. The results for fiscal 2013 include costs of $1.7 million for charges associated with the acquisition of Blue Tomato and $1.3 million for the conditional settlement of a previously disclosed California class action wage and hour lawsuit, or $0.07 per diluted share in total. The results for fiscal 2012 include $4.0 million of Blue Tomato acquisition related costs and operations and $0.5 million of exit costs associated with the relocation of our corporate offices to Lynnwood, Washington, or $0.11 per diluted share in total.

Total net sales for the nine months (39 weeks) ended November 2, 2013 increased 11.8% to $497.5 million from $445.0 million reported for the nine months (39 weeks) ended October 27, 2012. Comparable store sales increased 0.7% for the thirty nine weeks ended November 2, 2013 on top of a comparable store sales increase of 8.0% for the thirty nine weeks ended October 27, 2012. 

The Company reported net income of $19.1 million or $0.63 per diluted share in the first nine months of fiscal 2013 compared to net income for the first nine months of the prior fiscal year of $19.3 million or $0.61 per diluted share. Results for the first nine months of fiscal 2013 include approximately $6.3 million, or $0.16 per diluted share, for charges associated with the acquisition of Blue Tomato and the conditional settlement of a California class action wage and hour lawsuit. Results for the first nine months of fiscal 2012 included approximately $8.9 million, or $0.22 per diluted share, of Blue Tomato acquisition related costs and operations and costs associated with the relocation the Company's ecommerce fulfillment center to Edwardsville, Kansas and corporate offices to Lynnwood, Washington from Everett, Washington.

At November 2, 2013, the Company had cash and current marketable securities of $94.2 million compared to cash and current marketable securities of $98.3 million at October 27, 2012. The decrease in cash and current marketable securities is a result of capital expenditures and stock repurchases, offset by cash generated through operations.

Rick Brooks, the Company's Chief Executive Officer, stated, "The quarter began with a solid Back to School season, and while softer traffic trends returned, we were able to maintain a positive comparable store sales result for the quarter. We believe the investments in our people, merchandise assortment planning and omni-channel capabilities are helping to further distinguish our concept and enabling us to gain market share. We are committed to selling the most compelling mix of brands and products coveted by our customer in a unique, personalized and efficient manner across all channels, and we believe our business is well positioned for the upcoming holiday season and more importantly the long-term."

November 2013 Sales

Total net sales for the four-week period ended November 30, 2013 increased 16.3% to $62.4 million, compared to $53.6 million for the four-week period ended November 24, 2012. The Company's comparable store sales increased 1.7% for the four-week period ended November 30, 2013 compared to a comparable store sales decrease of 4.2% for the four-week period ended November 24, 2012. 

Fiscal 2013 Fourth Quarter Outlook

The Company is introducing guidance for the three months ending February 1, 2014. Net sales are projected to be in the range of $230 to $237 million resulting in net income per diluted share of approximately $0.60 to $0.66, which includes an estimated $1.7 million, or approximately $0.05 per diluted share, for charges associated with the acquisition of Blue Tomato. This guidance is based on anticipated comparable store sales in the range of (1%) to 2% for the fourth quarter of fiscal 2013. The Company is planning to open 59 new stores in fiscal 2013, including 9 in Canada and 6 in Europe.

New Share Repurchase Program

The Company is also announcing that, effective December 4, 2013, the Board of Directors of Zumiez Inc. has approved the repurchase of up to $30 million of its Common Stock. The repurchases will be made from time to time on the open market at prevailing market prices and is expected to continue through the fiscal year 2014 that will end on January 31, 2015, unless the time period is extended or shortened by the Board of Directors. The new repurchase program supersedes the previously approved repurchase program approved on December 17, 2012, which as of December 4, 2013 had $12.5 million of stock repurchase authorization.

A conference call will be held today to discuss third quarter fiscal 2013 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (617) 399-5124 followed by the conference identification code of 42688272. 

About Zumiez Inc.

Zumiez is a leading multi-channel specialty retailer of action sports related apparel, footwear, equipment and accessories, focusing on skateboarding, snowboarding, surfing, motocross and BMX for young men and women. As of November 30, 2013 we operated 551 stores including, 513 in the United States, 28 in Canada, and 10 in Europe. We operate under the name Zumiez and Blue Tomato. Additionally, we operate ecommerce web sites at www.zumiez.com and www.blue-tomato.com.

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 3, 2013 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 2, 2013     % of Sales     October 27, 2012     % of Sales  
Net sales   $ 191,145     100.0 %   $ 180,023     100.0 %
Cost of goods sold     120,356     63.0 %     112,948     62.7 %
Gross profit     70,789     37.0 %     67,075     37.3 %
                             
Selling, general and administrative expenses     50,111     26.2 %     45,674     25.4 %
Operating profit     20,678     10.8 %     21,401     11.9 %
                             
Interest income, net     171     0.1 %     235     0.1 %
Other expense, net     (587 )   (0.3 %)     (185 )   (0.1 %)
Earnings before income taxes     20,262     10.6 %     21,451     11.9 %
                             
Provision for income taxes     8,402     4.4 %     8,784     4.9 %
                             
Net income   $ 11,860     6.2 %   $ 12,667     7.0 %
                             
Basic earnings per share   $ 0.40           $ 0.41        
                             
Diluted earnings per share   $ 0.39           $ 0.40        
                             
Weighted average shares used in computation of earnings per share:                            
  Basic     29,895             30,957        
                             
  Diluted     30,257             31,416        
                             
                             
                             
ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per share amounts)
 (Unaudited)
 
    Nine Months Ended  
                       
    November 2, 2013     % of Sales     October 27,
2012
  % of Sales  
Net sales   $ 497,499     100.0 %   $ 444,988   100.0 %
Cost of goods sold     323,618     65.0 %     289,387   65.0 %
Gross profit     173,881     35.0 %     155,601   35.0 %
                           
Selling, general and administrative expenses     141,339     28.5 %     123,160   27.7 %
Operating profit     32,542     6.5 %     32,441   7.3 %
                           
Interest income, net     544     0.1 %     1,152   0.2 %
Other (expense) income, net     (907 )   (0.1 %)     443   0.1 %
Earnings before income taxes     32,179     6.5 %     34,036   7.6 %
                           
Provision for income taxes     13,082     2.7 %     14,756   3.3 %
                           
Net income   $ 19,097     3.8 %   $ 19,280   4.3 %
                           
Basic earnings per share   $ 0.64           $ 0.62      
                           
Diluted earnings per share   $ 0.63           $ 0.61      
                           
Weighted average shares used in computation of earnings per share:                          
  Basic     29,806             30,884      
                           
  Diluted     30,240             31,425      
                             
                             
                             
ZUMIEZ INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
    November 2,   February 2,   October 27,
2013   2013   2012
Assets   (Unaudited)       (Unaudited)
Current assets            
Cash and cash equivalents   $ 5,315   $ 17,579   $ 10,580
Marketable securities     88,861     85,593     87,751
Receivables     12,844     9,467     11,864
Inventories     126,687     77,598     109,786
Prepaid expenses and other     10,857     9,192     9,560
Deferred tax assets     5,464     3,885     4,881
  Total current assets     250,028     203,314     234,422
                   
Fixed assets, net     129,285     115,474     116,547
Goodwill     64,191     64,576     61,926
Intangible assets, net     18,558     20,480     19,828
Long-term other assets     3,715     5,254     5,413
  Total long-term assets     215,749     205,784     203,714
                   
  Total assets   $ 465,777   $ 409,098   $ 438,136
                   
Liabilities and Shareholders' Equity                  
Current liabilities                  
Trade accounts payable   $ 49,081   $ 16,052   $ 47,331
Accrued payroll and payroll taxes     8,198     11,057     9,996
Income taxes payable     3,768     6,957     7,354
Deferred rent and tenant allowances     5,760     4,901     4,797
Other liabilities     21,076     18,232     18,929
  Total current liabilities     87,883     57,199     88,407
                   
Long-term deferred rent and tenant allowances     41,809     36,928     37,190
Long-term deferred tax liabilities     2,984     5,544     5,407
Long-term debt and other liabilities     7,907     6,006     6,773
  Total long-term liabilities     52,700     48,478     49,370
                   
  Total liabilities     140,583     105,677     137,777
Commitments and contingencies                  
                   
Shareholders' equity                  
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding     -     -     -
Common stock, no par value, 50,000 shares authorized; 30,282 shares issued and outstanding at November 2, 2013, 30,114 shares issued and outstanding at February 2, 2013 and 31,352 shares issued and outstanding at October 27, 2012     115,595     108,360     106,509
Accumulated other comprehensive income     5,131     6,010     1,840
Retained earnings     204,468     189,051     192,010
  Total shareholders' equity     325,194     303,421     300,359
                   
  Total liabilities and shareholders' equity   $ 465,777   $ 409,098   $ 438,136
                     
                     
                     
ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
    Nine Months Ended  
    November 2, 2013     October 27, 2012  
Cash flows from operating activities:            
Net income   $ 19,097     $ 19,280  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation, amortization and accretion     19,517       16,661  
Deferred taxes     (2,365 )     (2,767 )
Stock-based compensation expense     4,773       4,347  
Excess tax benefit from stock-based compensation     (1,154 )     (2,215 )
Lease termination costs     193       1,404  
Other     1,035       217  
  Changes in operating assets and liabilities:                
  Receivables     (3,414 )     (5,007 )
  Inventories     (49,206 )     (36,504 )
  Prepaid expenses and other     (2,585 )     (1,506 )
  Trade accounts payable     32,515       25,578  
  Accrued payroll and payroll taxes     (2,831 )     183  
  Income taxes payable     (2,015 )     2,425  
  Deferred rent and tenant allowances     5,856       5,622  
  Other liabilities     2,247       468  
Net cash provided by operating activities     21,663       28,186  
                 
Cash flows from investing activities:                
Additions to fixed assets     (27,179 )     (34,028 )
Acquisitions, net of cash acquired     -       (69,685 )
Purchases of marketable securities and other investments     (78,175 )     (95,268 )
Sales and maturities of marketable securities and other investments     73,674       164,231  
Net cash used in investing activities     (31,680 )     (34,750 )
                 
Cash flows from financing activities:                
Payments on long-term debt     (233 )     (183 )
Repurchase of common stock     (4,310 )     -  
Proceeds from exercise of stock-based compensation, net of withholding tax payments     1,308       534  
Excess tax benefit from stock-based compensation     1,154       2,215  
Net cash (used in) provided by financing activities     (2,081 )     2,566  
                 
Effect of exchange rate changes on cash and cash equivalents     (166 )     (201 )
                 
Net decrease in cash and cash equivalents     (12,264 )     (4,199 )
  Cash and cash equivalents, beginning of period     17,579       14,779  
  Cash and cash equivalents, end of period   $ 5,315     $ 10,580  
                 
  Supplemental disclosure on cash flow information:                
  Cash paid during the period for income taxes   $ 17,368     $ 15,077  
  Accrual for purchases of fixed assets     5,514       5,154  
   

Contact Information

  • Company Contact:
    Brian Leith
    Director of Finance &
    Investor Relations
    Zumiez Inc.
    (425) 551-1500, ext. 1610

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