SOURCE: Zumiez

September 10, 2015 16:01 ET

Zumiez Inc. Announces Fiscal 2015 Second Quarter Results

LYNNWOOD, WA--(Marketwired - Sep 10, 2015) - Zumiez Inc. (NASDAQ: ZUMZ) a leading lifestyle retailer of apparel, footwear, equipment and accessories, today reported results for the second quarter ended August 1, 2015.

Total net sales for the second quarter ended August 1, 2015 (13 weeks) increased 1.8% to $179.8 million from $176.7 million in the quarter ended August 2, 2014 (13 weeks). This comparison includes the negative impact of foreign currency translation in the quarter of approximately $4.4 million. Comparable sales for the thirteen weeks ended August 1, 2015 decreased 4.5% compared to a comparable sales increase of 3.4% for the thirteen weeks ended August 2, 2014. Net income in the second quarter of fiscal 2015 decreased 56.9% to $3.2 million, or $0.11 per diluted share, compared to net income of $7.5 million, or $0.26 per diluted share, in the second quarter of the prior fiscal year. The results for fiscal 2015 include costs of approximately $0.4 million, or $0.01 per diluted share, for charges associated with the acquisition of Blue Tomato, and the results for fiscal 2014 include approximately $0.6 million, or $0.01 per diluted share, of Blue Tomato acquisition related costs.

Total net sales for the six months (26 weeks) ended August 1, 2015 increased 5.2% to $357.4 million from $339.6 million reported for the six months (26 weeks) ended August 2, 2014. This comparison includes the negative impact of foreign currency translation for the 26 week period of approximately $9.5 million. Comparable sales decreased 0.9% for the twenty six weeks ended August 1, 2015 compared to a comparable sales increase of 2.6% for the twenty six weeks ended August 2, 2014. 

Net income in the first six months of fiscal 2015 decreased 39.9% to $6.0 million, or $0.21 per diluted share, compared to net income for the first six months of the prior fiscal year of $10.0 million, or $0.34 per diluted share. Results for the first six months of fiscal 2015 include approximately $1.5 million, or $0.04 per diluted share, for charges associated with the acquisition of Blue Tomato. Results for the first six months of fiscal 2014 include approximately $1.3 million, or $0.03 per diluted share, of Blue Tomato acquisition related costs.

At August 1, 2015, the Company had cash and current marketable securities of $80.8 million compared to cash and current marketable securities of $113.4 million at August 2, 2014. The decrease in cash and current marketable securities is a result of stock repurchases and capital expenditures, partially offset by cash generated through operations.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "We remain confident that our strategic course continues to provide us with compelling opportunities to grow our business and return greater value to our shareholders over the long-term. That said we are disappointed in our recent performance which reflects a slowdown in domestic sales. The response to our merchandise offering fell short of expectations, requiring us to become more promotional than planned to clear slow moving inventory ahead of the back-to-school selling season. We are working hard to quickly address the lack of trend right fashion in our U.S. channels. On a more positive note, the momentum in our European business continues to be strong, reinforcing our confidence in the long-term prospects of this market."

August 2015 Sales
Total net sales for the four-week period ended August 29, 2015 decreased 7.2% to $87.3 million, compared to $94.0 million for the four-week period ended August 30, 2014. The Company's comparable sales decreased 10.7% for the four-week period ended August 29, 2015 compared to a comparable sales increase of 2.0% for the four-week period ended August 30, 2014. 

Fiscal 2015 Third Quarter Outlook
The Company is introducing guidance for the three months ending October 31, 2015. Net sales are projected to be in the range of $202 to $206 million resulting in net income per diluted share of approximately $0.27 to $0.31. This guidance is based on an anticipated comparable sales decrease in the 7% to 9% range for the third quarter of fiscal 2015. The Company currently intends to open approximately 57 new stores in fiscal 2015, including up to 7 stores in Canada and 6 stores in Europe.

A conference call will be held today to discuss second quarter fiscal 2015 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (857) 244-7309 followed by the conference identification code of 75724382. 

About Zumiez Inc.

Zumiez is a leading lifestyle retailer of apparel, footwear, equipment and accessories, focusing on skateboarding, snowboarding, surfing, motocross and BMX for young men and women. As of August 1, 2015 we operated 640 stores, included 578 in the United States, 40 in Canada, and 22 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 2, 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.  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
(In thousands, except per share amounts)  
(Unaudited)  
   
    Three Months Ended  
                       
    August 1, 2015     % of Sales     August 2, 2014   % of Sales  
Net sales   $ 179,819     100.0 %   $ 176,709   100.0 %
Cost of goods sold     122,046     67.9 %     115,797   65.5 %
Gross profit     57,773     32.1 %     60,912   34.5 %
                           
Selling, general and administrative expenses     52,461     29.2 %     49,307   27.9 %
Operating profit     5,312     2.9 %     11,605   6.6 %
                           
Interest income, net     150     0.1 %     146   0.1 %
Other income (expense), net     (271 )   (0.2 %)     203   0.1 %
Earnings before income taxes     5,191     2.8 %     11,954   6.8 %
                           
Provision for income taxes     1,978     1.1 %     4,498   2.6 %
                           
Net income   $ 3,213     1.7 %   $ 7,456   4.2 %
                           
Basic earnings per share   $ 0.11           $ 0.26      
                           
Diluted earnings per share   $ 0.11           $ 0.26      
                           
Weighted average shares used in computation of earnings per share:                          
  Basic     28,311             28,776      
                           
  Diluted     28,439             29,057      
                           
   
ZUMIEZ INC.  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
(In thousands, except per share amounts)  
(Unaudited)  
   
    Six Months Ended  
                       
    August 1, 2015     % of Sales     August 2, 2014   % of Sales  
Net sales   $ 357,429     100.0 %   $ 339,641   100.0 %
Cost of goods sold     243,121     68.0 %     228,196   67.2 %
Gross profit     114,308     32.0 %     111,445   32.8 %
                           
Selling, general and administrative expenses     104,870     29.3 %     96,127   28.3 %
Operating profit     9,438     2.7 %     15,318   4.5 %
                           
Interest income, net     355     0.1 %     328   0.1 %
Other income (expense), net     (156 )   0.0 %     289   0.1 %
Earnings before income taxes     9,637     2.8 %     15,935   4.7 %
                           
Provision for income taxes     3,654     1.0 %     5,983   1.8 %
                           
Net income   $ 5,983     1.8 %   $ 9,952   2.9 %
                           
Basic earnings per share   $ 0.21           $ 0.35      
                           
Diluted earnings per share   $ 0.21           $ 0.34      
                           
Weighted average shares used in computation of earnings per share:                          
  Basic     28,726             28,819      
                           
  Diluted     28,932             29,182      
                           
 
ZUMIEZ INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
    August 1, 2015     January 31, 2015     August 2, 2014
Assets   (Unaudited)           (Unaudited)
Current assets                      
Cash and cash equivalents   $ 22,166     $ 20,862     $ 22,037
Marketable securities     58,624       133,782       91,408
Receivables     15,656       12,653       16,611
Inventories     122,140       93,850       119,916
Prepaid expenses and other     13,189       11,651       12,365
Deferred tax assets     8,210       6,965       6,901
  Total current assets     239,985       279,763       269,238
                       
Fixed assets, net     141,994       135,642       138,972
Goodwill     54,547       55,852       63,701
Intangible assets, net     11,863       13,062       16,630
Long-term other assets     8,966       9,386       7,515
  Total long-term assets     217,370       213,942       226,818
                       
  Total assets   $ 457,355     $ 493,705     $ 496,056
                       
Liabilities and Shareholders' Equity                      
Current liabilities                      
Trade accounts payable   $ 46,715     $ 32,094     $ 66,636
Accrued payroll and payroll taxes     11,391       13,047       10,899
Income taxes payable     1,192       4,651       2,147
Deferred rent and tenant allowances     7,796       7,083       7,091
Other liabilities     31,577       24,572       26,247
  Total current liabilities     98,671       81,447       113,020
                       
Long-term deferred rent and tenant allowances     44,704       42,553       43,627
Long-term deferred tax liabilities     4,339       5,738       2,826
Long-term debt and other liabilities     4,523       4,443       3,977
  Total long-term liabilities     53,566       52,734       50,430
                       
  Total liabilities     152,237       134,181       163,450
                         
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; 27,377 shares issued and outstanding at August 1, 2015, 29,418 shares issued and outstanding at January 31, 2015, and 29,204 shares issued and outstanding at August 2, 2014     132,379       129,094       120,060
Accumulated other comprehensive income     (14,002 )     (11,278 )     4,078
Retained earnings     186,741       241,708       208,468
  Total shareholders' equity     305,118       359,524       332,606
                       
  Total liabilities and shareholders' equity   $ 457,355     $ 493,705     $ 496,056
                       
   
ZUMIEZ INC.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)  
(Unaudited)  
   
    Six Months Ended  
    August 1, 2015     August 2, 2014  
Cash flows from operating activities:                
Net income   $ 5,983     $ 9,952  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation, amortization and accretion     15,644       14,099  
Deferred taxes     (2,703 )     (3,659 )
Stock-based compensation expense     2,710       2,106  
Excess tax benefit from stock-based compensation     (713 )     (474 )
Other     626       251  
  Changes in operating assets and liabilities:                
    Receivables     (3,377 )     (5,641 )
    Inventories     (28,990 )     (32,791 )
    Prepaid expenses and other     (1,306 )     (5,685 )
    Trade accounts payable     15,684       47,953  
    Accrued payroll and payroll taxes     (1,613 )     320  
    Income taxes payable     (2,996 )     (3,255 )
    Deferred rent and tenant allowances     2,976       6,523  
    Other liabilities     (948 )     816  
Net cash provided by operating activities     977       30,515  
                 
Cash flows from investing activities:                
Additions to fixed assets     (20,021 )     (18,301 )
Purchases of marketable securities and other investments     (38,238 )     (36,547 )
Sales and maturities of marketable securities and other investments     112,093       41,762  
Net cash provided by (used in) investing activities     53,834       (13,086 )
                 
Cash flows from financing activities:                
Proceeds from revolving credit facilities     20,223       2,044  
Payments on long-term debt and revolving credit facilities     (15,617 )     (1,040 )
Repurchase of common stock     (58,969 )     (19,557 )
Proceeds from exercise of stock-based compensation, net of withholding tax payments     379       2,997  
Excess tax benefit from stock-based compensation     713       474  
Net cash used in financing activities     (53,271 )     (15,082 )
                 
Effect of exchange rate changes on cash and cash equivalents     (236 )     56  
                 
Net increase in cash and cash equivalents     1,304       2,403  
  Cash and cash equivalents, beginning of period     20,862       19,634  
  Cash and cash equivalents, end of period   $ 22,166     $ 22,037  
                 
  Supplemental disclosure on cash flow information:                
  Cash paid during the period for income taxes, net of refunds   $ 14,581     $ 12,840  
  Accrual for purchases of fixed assets     3,107       6,929  
  Accrual for repurchase of common stock     1,981       -  
                 

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