SOURCE: Zumiez

March 10, 2016 16:05 ET

Zumiez Inc. Announces Fiscal 2015 Fourth Quarter and Full Year Results

LYNNWOOD, WA--(Marketwired - Mar 10, 2016) -  Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the fourth quarter and fiscal year ended January 30, 2016.

Total net sales for the fourth quarter ended January 30, 2016 (13 weeks) decreased 6.2% to $242.4 million from $258.6 million in the quarter ended January 31, 2015 (13 weeks). Comparable sales for the 13-week period ended January 30, 2016 decreased 9.5% compared to an 8.3% increase for the 13-week period ended January 31, 2015. Net income in the fourth quarter of fiscal 2015 decreased 24.9% to $13.1 million, or $0.50 per diluted share, from net income of $17.5 million, or $0.60 per diluted share, in the fourth quarter of the prior fiscal year. The results for fiscal 2015 include charges of $1.2 million, or approximately $0.03 per diluted share for exit costs associated with the shutdown of the Company's fulfillment facility in Edwardsville, Kansas. The results for fiscal 2014 include Blue Tomato acquisition charges of $6.9 million, or approximately $0.20 per diluted share, including $6.4 million for the accrual of contingent earn-out payments and $0.5 million for the amortization of intangible assets. 

Total net sales for fiscal 2015 (52 weeks) decreased 0.9% to $804.2 million from $811.6 million in fiscal 2014 (52 weeks). Comparable sales for the 52-week period ended January 30, 2016 decreased 5.3% compared to a 4.6% increase for the 52-week period ended January 31, 2015. Net income in fiscal 2015 decreased 33.4% to $28.8 million, or $1.04 per diluted share compared to net income in the prior fiscal year of $43.2 million, or $1.47 per diluted share. Results for the fiscal year 2015 include approximately $1.5 million, or $0.04 per diluted share, for charges associated with the acquisition of Blue Tomato, and $1.2 million, or approximately $0.03 per diluted share for exit costs associated with the shutdown of the Company's fulfillment facility in Edwardsville, Kansas. Results for the fiscal year 2014 include $6.4 million, or approximately $0.19 per diluted share, for the accrual of contingent earn-out payments associated with the acquisition of Blue Tomato, and $2.3 million, or approximately $0.06 per diluted share, for the amortization of intangible assets.

Cash and Current Marketable Securities

At January 30, 2016, the Company had cash and current marketable securities of $75.6 million, compared to cash and current marketable securities of $154.6 million at January 31, 2015. The decrease in cash and current marketable securities is primarily a result of stock repurchases of $92.2 million and capital expenditures of $34.8 million, partially offset by cash generated through operations of $48.6 million.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "The retail environment in North America over the past several months remained challenging. While we are pleased that our fourth quarter operating results came in ahead of our initial expectations, we are disappointed with our recent performance, particularly the decline in comparable store sales. In addition to our continued efforts to improve our merchandise assortments, we are taking actions to better position our Company for sustained, profitable growth, including implementing a new fully integrated point-of-sale system and optimizing our supply chain. We believe these changes will create a more seamless brand experience across all channels and help drive long-term market share gains. At the same time, we are investing in expanding our European business where sales momentum is strong and our footprint is underpenetrated."

February 2016 Sales

Total net sales for the four-week period ended February 27, 2016 decreased 3.9% to $51.9 million, compared to $54.0 million for the four-week period ended February 28, 2015. The Company's comparable sales decreased 8.6% for the four-week period ended February 27, 2016 compared with a comparable sales increase of 6.9% for the four-week period ended February 28, 2015. 

Fiscal 2016 First Quarter Outlook

The Company is introducing guidance for the three months ending April 30, 2016. Net sales are projected to be in the range of $172 to $175 million resulting in a net loss per diluted share of approximately -$0.07 to -$0.11. This guidance is based upon anticipated comparable sales decrease in the -5% to -7% range for the first quarter of fiscal 2016. The Company currently intends to open approximately 34 new stores in fiscal 2016, including up to 7 stores in Canada and 7 stores in Europe.

A conference call will be held today to discuss fourth quarter and fiscal 2015 year-end results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (617) 399-3483 followed by the conference identification code of 22609060.

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 February 27, 2016 we operated 657 stores, including 592 in the United States, 42 in Canada, and 23 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 October 31, 2015 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.  
CONSOLIDATED STATEMENTS OF INCOME  
(In thousands, except per share amounts)  
(Unaudited)  
   
    Three Months Ended  
                         
    January 30, 2016     % of Sales     January 31, 2015     % of Sales  
Net sales   $ 242,434     100.0 %   $ 258,569     100.0 %
Cost of goods sold     158,177     65.2 %     160,791     62.2 %
Gross profit     84,257     34.8 %     97,778     37.8 %
                             
Selling, general and administrative expenses     62,754     25.9 %     66,500     25.7 %
Operating profit     21,503     8.9 %     31,278     12.1 %
                             
Interest income, net     90     0.0 %     162     0.1 %
Other expense, net     (606 )   (0.2 %)     (626 )   (0.3 %)
Earnings before income taxes     20,987     8.7 %     30,814     11.9 %
                             
Provision for income taxes     7,838     3.2 %     13,301     5.1 %
                             
Net income   $ 13,149     5.5 %   $ 17,513     6.8 %
                             
Basic earnings per share   $ 0.50           $ 0.60        
                             
Diluted earnings per share   $ 0.50           $ 0.60        
                             
Weighted average shares used in computation of earnings per share:                            
  Basic     26,071             28,989        
                             
  Diluted     26,200             29,295        
                             
                             
                             
ZUMIEZ INC.  
CONSOLIDATED STATEMENTS OF INCOME  
(In thousands, except per share amounts)  
   
    Twelve Months Ended  
                         
    January 30, 2016     % of Sales     January 31, 2015     % of Sales  
Net sales   $ 804,183     100.0 %   $ 811,551     100.0 %
Cost of goods sold     535,559     66.6 %     524,468     64.6 %
Gross profit     268,624     33.4 %     287,083     35.4 %
                             
Selling, general and administrative expenses     222,459     27.7 %     215,512     26.6 %
Operating profit     46,165     5.7 %     71,571     8.8 %
                             
Interest income, net     529     0.1 %     637     0.1 %
Other expense, net     (833 )   (0.1 %)     (557 )   (0.1 %)
Earnings before income taxes     45,861     5.7 %     71,651     8.8 %
                             
Provision for income taxes     17,076     2.1 %     28,459     3.5 %
                             
Net income   $ 28,785     3.6 %   $ 43,192     5.3 %
                             
Basic earnings per share   $ 1.05           $ 1.50        
                             
Diluted earnings per share   $ 1.04           $ 1.47        
                             
Weighted average shares used in computation of earnings per share:                            
  Basic     27,497             28,871        
                             
  Diluted     27,673             29,288        
                             
                             
                             
ZUMIEZ INC.  
CONSOLIDATED BALANCE SHEETS  
(In thousands)  
   
    January 30,     January 31,  
2016     2015  
Assets            
Current assets                
Cash and cash equivalents   $ 43,163     $ 20,862  
Marketable securities     32,391       133,782  
Receivables     12,840       12,653  
Inventories     98,299       93,850  
Prepaid expenses and other     12,204       11,651  
    Total current assets     198,897       272,798  
                 
Fixed assets, net     137,233       135,642  
Goodwill     54,245       55,852  
Intangible assets, net     11,766       13,062  
Deferred tax asset     4,634       7,734  
Other long-term assets     7,920       8,617  
    Total long-term assets     215,798       220,907  
                 
    Total assets   $ 414,695     $ 493,705  
                 
Liabilities and Shareholders' Equity                
Current liabilities                
Trade accounts payable   $ 21,919     $ 32,094  
Accrued payroll and payroll taxes     12,466       13,047  
Income taxes payable     4,066       4,651  
Deferred rent and tenant allowances     8,116       7,083  
Other liabilities     22,575       24,572  
    Total current liabilities     69,142       81,447  
                 
Long-term deferred rent and tenant allowances     43,779       42,553  
Deferred tax liabilities     -       5,738  
Other long-term liabilities     4,817       4,443  
    Total long-term liabilities     48,596       52,734  
                 
    Total liabilities     117,738       134,181  
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; 25,708 shares issued and outstanding at January 30, 2016 and 29,418 shares issued and outstanding at January 31, 2015     135,013       129,094  
Accumulated other comprehensive loss     (15,247 )     (11,278 )
Retained earnings     177,191       241,708  
    Total shareholders' equity     296,957       359,524  
                     
    Total liabilities and shareholders' equity   $ 414,695     $ 493,705  
                 
                 
                 
ZUMIEZ INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)  
   
    Twelve Months Ended  
    January 30, 2016     January 31, 2015  
Cash flows from operating activities:                
Net income   $ 28,785     $ 43,192  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation, amortization and accretion     30,410       29,167  
Deferred taxes     (2,698 )     (610 )
Stock-based compensation expense     4,996       7,520  
Excess tax benefit from stock-based compensation     (714 )     (1,355 )
Other     4,009       1,109  
  Changes in operating assets and liabilities:                
    Receivables     (1,184 )     (2,990 )
    Inventories     (5,953 )     (10,850 )
    Prepaid expenses and other     (133 )     (4,702 )
    Trade accounts payable     (9,103 )     14,744  
    Accrued payroll and payroll taxes     (483 )     2,718  
    Income taxes payable     1       (23 )
    Deferred rent and tenant allowances     2,613       5,937  
    Other liabilities     (1,939 )     6,080  
Net cash provided by operating activities     48,607       89,937  
                 
Cash flows from investing activities:                
Additions to fixed assets     (34,834 )     (35,758 )
Purchases of marketable securities and other investments     (59,286 )     (125,971 )
Sales and maturities of marketable securities and other investments     158,850       87,856  
Net cash provided by (used in) investing activities     64,730       (73,873 )
                 
Cash flows from financing activities:                
Proceeds from long-term debt and revolving credit facilities     43,173       6,943  
Payments on long-term debt and revolving credit facilities     (43,255 )     (9,009 )
Repurchase of common stock     (92,235 )     (19,557 )
Proceeds from exercise of stock-based awards, net of withholding tax     845       6,335  
Excess tax benefit from stock-based compensation     714       1,355  
Net cash used in financing activities     (90,758 )     (13,933 )
                 
Effect of exchange rate changes on cash and cash equivalents     (278 )     (903 )
                 
Net increase in cash and cash equivalents     22,301       1,228  
  Cash and cash equivalents, beginning of period     20,862       19,634  
  Cash and cash equivalents, end of period   $ 43,163     $ 20,862  
                   
  Supplemental disclosure on cash flow information:                
  Cash paid during the period for income taxes   $ 19,630     $ 28,770  
  Accrual for purchases of fixed assets     1,166       2,372  
  Accrual for repurchase of common stock     1,067       -  
                 

Contact Information

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

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