SOURCE: Zumiez

September 04, 2014 16:01 ET

Zumiez Inc. Announces Fiscal 2014 Second Quarter Results

Second Quarter 2014 Sales Increased 11.9% to $176.7 Million; Second Quarter 2014 Diluted EPS Increased 62.5% to $0.26; August 2014 Comparable Sales Increased 2.0%

LYNNWOOD, WA--(Marketwired - Sep 4, 2014) - Zumiez Inc. (NASDAQ: ZUMZ) a leading specialty retailer of action sports related apparel, footwear, equipment and accessories, today reported results for the second quarter ended August 2, 2014.

Total net sales for the second quarter ended August 2, 2014 (13 weeks) increased 11.9% to $176.7 million from $157.9 million in the quarter ended August 3, 2013 (13 weeks). Comparable sales for the thirteen weeks ended August 2, 2014 increased 3.4% on top of a comparable sales increase of 0.9% for the thirteen weeks ended August 3, 2013. Net income in the second quarter of fiscal 2014 increased 57.3% to $7.5 million, or $0.26 per diluted share, compared to net income of $4.7 million, or $0.16 per diluted share, in the second quarter of the prior fiscal year. The results for fiscal 2014 include costs of approximately $0.6 million, or $0.01 per diluted share, for charges associated with the acquisition of Blue Tomato, and the results for fiscal 2013 include approximately $1.7 million, or $0.04 per diluted share, of Blue Tomato acquisition related costs.

Total net sales for the six months (26 weeks) ended August 2, 2014 increased 10.9% to $339.6 million from $306.4 million reported for the six months (26 weeks) ended August 3, 2013. Comparable sales increased 2.6% for the twenty six weeks ended August 2, 2014 on top of a comparable sales increase of 0.2% for the twenty six weeks ended August 3, 2013. 

Net income in the first six months of fiscal 2014 increased 37.5% to $10.0 million, or $0.34 per diluted share, compared to net income for the first six months of the prior fiscal year of $7.2 million, or $0.24 per diluted share. Results for the first six months of fiscal 2014 include approximately $1.3 million, or $0.03 per diluted share, for charges associated with the acquisition of Blue Tomato. Results for the first six months of fiscal 2013 include approximately $3.4 million, or $0.09 per diluted share, of Blue Tomato acquisition related costs.

At August 2, 2014, the Company had cash and current marketable securities of $113.4 million compared to cash and current marketable securities of $95.0 million at August 3, 2013. The increase in cash and current marketable securities is a result of cash generated through operations, partially offset by capital expenditures and stock repurchases.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "We are pleased with our second quarter performance. Our ability to connect consumers with our unique assortment of brands drove higher than expected sales which allowed us to better leverage our expense. Our organization continues to get smarter and more efficient at executing our global omni-channel strategy and we believe there is still runway for added improvement in the years ahead."

August 2014 Sales
Total net sales for the four-week period ended August 30, 2014 increased 9.4% to $94.0 million, compared to $85.9 million for the four-week period ended August 31, 2013. The Company's comparable sales increased 2.0% for the four-week period ended August 30, 2014 on top of a comparable sales increase of 3.0% for the four-week period ended August 31, 2013. 

Fiscal 2014 Third Quarter Outlook
The Company is introducing guidance for the three months ending November 1, 2014. Net sales are projected to be in the range $207 to $211 million resulting in net income per diluted share of approximately $0.47 to $0.50, which includes an estimated $0.6 million, or approximately $0.02 per diluted share, for charges associated with the acquisition of Blue Tomato. This guidance is based on anticipated comparable sales increase in the low single digit range for the third quarter of fiscal 2014.

The Company currently intends to open 56 new stores in fiscal 2014, including 7 stores in Canada and 6 stores in Europe.

A conference call will be held today to discuss second quarter fiscal 2014 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (857) 244-7310 followed by the conference identification code of 92759066. 

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 August 30, 2014 we operated 592 stores, included 543 in the United States, 34 in Canada, and 15 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 May 3, 2014 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  
                       
    August 2, 2014   % of Sales     August 3, 2013     % of Sales  
Net sales   $ 176,709   100.0 %   $ 157,858     100.0 %
Cost of goods sold     115,797   65.5 %     102,738     65.1 %
Gross profit     60,912   34.5 %     55,120     34.9 %
                           
Selling, general and administrative expenses     49,307   27.9 %     47,285     29.9 %
Operating profit     11,605   6.6 %     7,835     5.0 %
                           
Interest income, net     146   0.1 %     158     0.1 %
Other income (expense), net     203   0.1 %     (174 )   (0.1 %)
Earnings before income taxes     11,954   6.8 %     7,819     5.0 %
                           
Provision for income taxes     4,498   2.6 %     3,080     2.0 %
                           
Net income   $ 7,456   4.2 %   $ 4,739     3.0 %
                           
Basic earnings per share   $ 0.26         $ 0.16        
                           
Diluted earnings per share   $ 0.26         $ 0.16        
                           
Weighted average shares used in computation of earnings per share:                          
  Basic     28,776           29,842        
                           
  Diluted     29,057           30,232        
                             
                             
                             
ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per share amounts)
 (Unaudited)
 
    Six Months Ended  
                       
    August 2, 2014   % of Sales     August 3, 2013     % of Sales  
Net sales   $ 339,641   100.0 %   $ 306,354     100.0 %
Cost of goods sold     228,196   67.2 %     203,262     66.3 %
Gross profit     111,445   32.8 %     103,092     33.7 %
                           
Selling, general and administrative expenses     96,127   28.3 %     91,228     29.8 %
Operating profit     15,318   4.5 %     11,864     3.9 %
                           
Interest income, net     328   0.1 %     373     0.1 %
Other income (expense), net     289   0.1 %     (320 )   (0.1 %)
Earnings before income taxes     15,935   4.7 %     11,917     3.9 %
                           
Provision for income taxes     5,983   1.8 %     4,680     1.5 %
                           
Net income   $ 9,952   2.9 %   $ 7,237     2.4 %
                           
Basic earnings per share   $ 0.35         $ 0.24        
                           
Diluted earnings per share   $ 0.34         $ 0.24        
                           
Weighted average shares used in computation of earnings per share:                          
  Basic     28,819           29,770        
                             
  Diluted     29,182           30,221        
                             
                             
                             
ZUMIEZ INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
    August 2,   February 1,   August 3,
2014   2014   2013
Assets   (Unaudited)       (Unaudited)
Current assets                  
Cash and cash equivalents   $ 22,037   $ 19,634   $ 19,098
Marketable securities     91,408     97,521     75,901
Receivables     16,611     10,294     15,597
Inventories     119,916     87,182     113,249
Prepaid expenses and other     12,365     10,021     11,474
Deferred tax assets     6,901     5,194     4,849
    Total current assets     269,238     229,846     240,168
                   
Fixed assets, net     138,972     127,343     124,569
Goodwill     63,701     64,195     63,071
Intangible assets, net     16,630     17,970     18,727
Long-term other assets     7,515     4,049     4,428
    Total long-term assets     226,818     213,557     210,795
                   
    Total assets   $ 496,056   $ 443,403   $ 450,963
                   
Liabilities and Shareholders' Equity                  
Current liabilities                  
Trade accounts payable   $ 66,636   $ 18,343   $ 53,596
Accrued payroll and payroll taxes     10,899     10,581     9,674
Income taxes payable     2,147     4,696     111
Deferred rent and tenant allowances     7,091     6,478     5,633
Other liabilities     26,247     21,276     20,546
    Total current liabilities     113,020     61,374     89,560
                   
Long-term deferred rent and tenant allowances     43,627     37,658     41,359
Long-term deferred tax liabilities     2,826     4,649     3,567
Long-term debt and other liabilities     3,977     4,068     7,062
    Total long-term liabilities     50,430     46,375     51,988
                   
    Total liabilities     163,450     107,749     141,548
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; 29,204 shares issued and outstanding at August 2, 2014, 29,619 shares issued and outstanding at February 1, 2014, 30,251 shares issued and outstanding at August 3, 2013     120,060     114,983     113,569
Accumulated other comprehensive income     4,078     4,710     3,238
Retained earnings     208,468     215,961     192,608
    Total shareholders' equity     332,606     335,654     309,415
                   
    Total liabilities and shareholders' equity   $ 496,056   $ 443,403   $ 450,963
                       
                       
                       
ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
    Six Months Ended  
    August 2, 2014     August 3, 2013  
Cash flows from operating activities:                
Net income   $ 9,952     $ 7,237  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation, amortization and accretion     14,099       12,694  
Deferred taxes     (3,659 )     (1,384 )
Stock-based compensation expense     2,106       3,165  
Excess tax benefit from stock-based compensation     (474 )     (1,168 )
Other     251       282  
  Changes in operating assets and liabilities:                
    Receivables     (5,641 )     (5,457 )
    Inventories     (32,791 )     (36,064 )
    Prepaid expenses and other     (5,685 )     (3,057 )
    Trade accounts payable     47,953       35,315  
    Accrued payroll and payroll taxes     320       (1,344 )
    Income taxes payable     (3,255 )     (6,415 )
    Deferred rent and tenant allowances     6,523       5,263  
    Other liabilities     816       809  
Net cash provided by operating activities     30,515       9,876  
                 
Cash flows from investing activities:                
Additions to fixed assets     (18,301 )     (14,505 )
Purchases of marketable securities and other investments     (36,547 )     (38,991 )
Sales and maturities of marketable securities and other investments     41,762       47,760  
Net cash used in investing activities     (13,086 )     (5,736 )
                 
Cash flows from financing activities:                
Proceeds from revolving credit facilities     2,044       -  
Payments on long-term debt and revolving credit facilities     (1,040 )     (153 )
Repurchase of common stock     (19,557 )     (4,310 )
Proceeds from exercise of stock-based compensation, net of withholding tax payments     2,997       876  
Excess tax benefit from stock-based compensation     474       1,168  
Net cash used in financing activities     (15,082 )     (2,419 )
                 
Effect of exchange rate changes on cash and cash equivalents     56       (202 )
                 
Net increase in cash and cash equivalents     2,403       1,519  
  Cash and cash equivalents, beginning of period     19,634       17,579  
  Cash and cash equivalents, end of period   $ 22,037     $ 19,098  
                   
  Supplemental disclosure on cash flow information:                
  Cash paid during the period for income taxes   $ 12,840     $ 12,428  
  Accrual for purchases of fixed assets     6,929       7,514  
                 

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