SOURCE: Zumiez

December 04, 2014 16:01 ET

Zumiez Inc. Announces Fiscal 2014 Third Quarter Results

Third Quarter 2014 Sales Increased 11.6% to $213.3 Million; Third Quarter 2014 Diluted EPS Increased 38.5% to $0.54; November 2014 Comparable Sales Increased 6.3%

LYNNWOOD, WA--(Marketwired - Dec 4, 2014) - 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 1, 2014.

Total net sales for the third quarter ended November 1, 2014 (13 weeks) increased 11.6% to $213.3 million from $191.1 million in the quarter ended November 2, 2013 (13 weeks). Comparable sales for the thirteen weeks ended November 1, 2014 increased 3.7% on top of a comparable sales increase of 1.5% for the thirteen weeks ended November 2, 2013. Net income in the third quarter of fiscal 2014 increased 32.6% to $15.7 million, or $0.54 per diluted share, compared to net income of $11.9 million, or $0.39 per diluted share, in the third quarter of the prior fiscal year. The results for fiscal 2014 include costs of approximately $0.6 million, or $0.02 per diluted share, for charges associated with the acquisition of Blue Tomato, and 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.

Total net sales for the nine months (39 weeks) ended November 1, 2014 increased 11.2% to $553.0 million from $497.5 million reported for the nine months (39 weeks) ended November 2, 2013. Comparable sales increased 3.0% for the thirty nine weeks ended November 1, 2014 on top of a comparable sales increase of 0.7% for the thirty nine weeks ended November 2, 2013. 

Net income in the first nine months of fiscal 2014 increased 34.5% to $25.7 million, or $0.88 per diluted share, compared to net income for the first nine months of the prior fiscal year of $19.1 million, or $0.63 per diluted share. Results for the first nine months of fiscal 2014 include approximately $1.9 million, or $0.05 per diluted share, for charges associated with the acquisition of Blue Tomato. 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.

At November 1, 2014, the Company had cash and current marketable securities of $108.7 million compared to cash and current marketable securities of $94.2 million at November 2, 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 delivered double digit earnings growth in the third quarter driven by higher than expected sales along with lower than planned operating expenses. The merchandising, selling and marketing strategies we've implemented across our global platform are resonating with consumers and strengthening our brand position as a leading lifestyle retailer. We are optimistic about our growth prospects this holiday season and more importantly over the long-term."

November 2014 Sales

Total net sales for the four-week period ended November 29, 2014 increased 12.6% to $70.3 million, compared to $62.4 million for the four-week period ended November 30, 2013. The Company's comparable sales increased 6.3% for the four-week period ended November 29, 2014 on top of a comparable sales increase of 1.7% for the four-week period ended November 30, 2013. 

Fiscal 2014 Fourth Quarter Outlook

The Company is introducing guidance for the three months ending January 31, 2015. Net sales are projected to be in the range $249 to $251 million resulting in net income per diluted share of approximately $0.69 to $0.72, 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 an anticipated comparable sales increase in the 3% to 4% range for the fourth 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 third quarter fiscal 2014 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (857) 244-7312 followed by the conference identification code of 49051764. 

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 29, 2014 we operated 604 stores, included 552 in the United States, 35 in Canada, and 17 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 2, 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  
                         
    November 1, 2014     % of Sales     November 2, 2013     % of Sales  
Net sales   $ 213,341     100.0 %   $ 191,145     100.0 %
Cost of goods sold     135,481     63.5 %     120,356     63.0 %
Gross profit     77,860     36.5 %     70,789     37.0 %
                             
Selling, general and administrative expenses     52,885     24.8 %     50,111     26.2 %
Operating profit     24,975     11.7 %     20,678     10.8 %
                             
Interest income, net     147     0.1 %     171     0.1 %
Other income (expense), net     (220 )   (0.1 %)     (587 )   (0.3 %)
Earnings before income taxes     24,902     11.7 %     20,262     10.6 %
                             
Provision for income taxes     9,175     4.3 %     8,402     4.4 %
                             
Net income   $ 15,727     7.4 %   $ 11,860     6.2 %
                             
Basic earnings per share   $ 0.54           $ 0.40        
                             
Diluted earnings per share   $ 0.54           $ 0.39        
                             
Weighted average shares used in computation of earnings per share:                            
  Basic     28,857             29,895        
                               
  Diluted     29,147             30,257        
                             
                             
 
ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per share amounts)
 (Unaudited)
 
                       
       
    Nine Months Ended  
                       
    November 1, 2014   % of Sales     November 2, 2013     % of Sales  
Net sales   $ 552,982   100.0 %   $ 497,499     100.0 %
Cost of goods sold     363,677   65.8 %     323,618     65.0 %
Gross profit     189,305   34.2 %     173,881     35.0 %
                           
Selling, general and administrative expenses     149,012   26.9 %     141,339     28.5 %
Operating profit     40,293   7.3 %     32,542     6.5 %
                           
Interest income, net     475   0.0 %     544     0.1 %
Other income (expense), net     69   0.0 %     (907 )   (0.1 %)
Earnings before income taxes     40,837   7.3 %     32,179     6.5 %
                           
Provision for income taxes     15,158   2.7 %     13,082     2.7 %
                           
Net income   $ 25,679   4.6 %   $ 19,097     3.8 %
                           
Basic earnings per share   $ 0.89         $ 0.64        
                           
Diluted earnings per share   $ 0.88         $ 0.63        
                           
Weighted average shares used in computation of earnings per share:                          
  Basic     28,832           29,806        
                             
  Diluted     29,177           30,240        
                           
                           
 
ZUMIEZ INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
               
               
               
    November 1,     February 1,   November 2,
2014     2014   2013
Assets   (Unaudited)         (Unaudited)
Current assets                    
Cash and cash equivalents   $ 13,785     $ 19,634   $ 5,315
Marketable securities     94,902       97,521     88,861
Receivables     14,638       10,294     12,844
Inventories     133,411       87,182     126,687
Prepaid expenses and other     12,451       10,021     10,857
Deferred tax assets     6,828       5,194     5,464
  Total current assets     276,015       229,846     250,028
                     
Fixed assets, net     140,364       127,343     129,285
Goodwill     60,551       64,195     64,191
Intangible assets, net     15,047       17,970     18,558
Long-term other assets     7,595       4,049     3,715
  Total long-term assets     223,557       213,557     215,749
                     
  Total assets   $ 499,572     $ 443,403   $ 465,777
                     
Liabilities and Shareholders' Equity                    
Current liabilities                    
Trade accounts payable   $ 61,394     $ 18,343   $ 49,081
Accrued payroll and payroll taxes     10,131       10,581     8,198
Income taxes payable     3,762       4,696     3,768
Deferred rent and tenant allowances     7,176       6,478     5,760
Other liabilities     25,357       21,276     21,076
  Total current liabilities     107,820       61,374     87,883
                     
Long-term deferred rent and tenant allowances     43,264       37,658     41,809
Long-term deferred tax liabilities     1,622       4,649     2,984
Long-term debt and other liabilities     2,666       4,068     7,907
  Total long-term liabilities     47,552       46,375     52,700
                     
  Total liabilities     155,372       107,749     140,583
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; 29,225 shares issued and outstanding at November 1, 2014, 29,619 shares issued and outstanding at February 1, 2014, 30,282 shares issued and outstanding at November 2, 2013     121,703       114,983     115,595
Accumulated other comprehensive income     (1,698 )     4,710     5,131
Retained earnings     224,195       215,961     204,468
  Total shareholders' equity     344,200       335,654     325,194
                       
  Total liabilities and shareholders' equity   $ 499,572     $ 443,403   $ 465,777
                       
                       
 
ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
    Nine Months Ended  
    November 1, 2014     November 2, 2013  
Cash flows from operating activities:                
Net income   $ 25,679     $ 19,097  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation, amortization and accretion     21,556       19,517  
Deferred taxes     (4,735 )     (2,365 )
Stock-based compensation expense     3,258       4,773  
Excess tax benefit from stock-based compensation     (558 )     (1,154 )
Other     431       1,228  
  Changes in operating assets and liabilities:                
    Receivables     (4,259 )     (3,414 )
    Inventories     (47,703 )     (49,206 )
    Prepaid expenses and other     (5,990 )     (2,585 )
    Trade accounts payable     42,971       32,515  
    Accrued payroll and payroll taxes     (377 )     (2,831 )
    Income taxes payable     (1,087 )     (2,015 )
    Deferred rent and tenant allowances     6,355       5,856  
    Other liabilities     (1,106 )     2,247  
Net cash provided by operating activities     34,435       21,663  
                 
Cash flows from investing activities:                
Additions to fixed assets     (28,972 )     (27,179 )
Purchases of marketable securities and other investments     (74,398 )     (78,175 )
Sales and maturities of marketable securities and other investments     75,652       73,674  
Net cash used in investing activities     (27,718 )     (31,680 )
                 
Cash flows from financing activities:                
Proceeds from revolving credit facilities     6,056       -  
Payments on long-term debt and revolving credit facilities     (2,874 )     (233 )
Repurchase of common stock     (19,557 )     (4,310 )
Proceeds from exercise of stock-based compensation, net of withholding tax payments     3,411       1,308  
Excess tax benefit from stock-based compensation     558       1,154  
Net cash used in financing activities     (12,406 )     (2,081 )
                 
Effect of exchange rate changes on cash and cash equivalents     (160 )     (166 )
                 
Net increase in cash and cash equivalents     (5,849 )     (12,264 )
  Cash and cash equivalents, beginning of period     19,634       17,579  
  Cash and cash equivalents, end of period   $ 13,785     $ 5,315  
                 
  Supplemental disclosure on cash flow information:                
  Cash paid during the period for income taxes   $ 20,931     $ 17,368  
  Accrual for purchases of fixed assets     5,046       5,514  
                 

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