SOURCE: Zumiez

December 03, 2015 16:05 ET

Zumiez Inc. Announces Fiscal 2015 Third Quarter Results

Third Quarter Earnings per Share of $0.36; Company Announces $70 Million Buy-Back Authorization

LYNNWOOD, WA--(Marketwired - Dec 3, 2015) -  Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the third quarter ended October 31, 2015.

Total net sales for the third quarter ended October 31, 2015 (13 weeks) decreased 4.2% to $204.3 million from $213.3 million in the quarter ended November 1, 2014 (13 weeks). Comparable sales for the thirteen weeks ended October 31, 2015 decreased 7.3% compared with a comparable sales increase of 3.7% for the thirteen weeks ended November 1, 2014. Net income in the third quarter of fiscal 2015 decreased to $9.7 million, or $0.36 per diluted share, compared to net income of $15.7 million, or $0.54 per diluted share in the third quarter of the prior fiscal year. The results for fiscal 2014 include costs of $0.6 million, or $0.02 for charges associated with the acquisition of Blue Tomato

Total net sales for the nine months (39 weeks) ended October 31, 2015 increased 1.6% to $561.7 million from $553.0 million reported for the nine months (39 weeks) ended November 1, 2014. Comparable sales decreased 3.4% for the thirty nine weeks ended October 31, 2015 compared with a comparable sales increase of 3.0% for the thirty nine weeks ended November 1, 2014. Net income in the first nine months of fiscal 2015 decreased to $15.6 million, or $0.55 per diluted share, compared to net income for the first nine months of the prior fiscal year of $25.7 million, or $0.88 per diluted share. Results for the first nine 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 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.

At October 31, 2015, the Company had cash and current marketable securities of $51.1 million compared to cash and current marketable securities of $108.7 million at November 1, 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.

During the quarter, the Company repurchased 0.7 million shares on the open market for a total of $16.7 million. Year to date through November, we have purchased 3.0 million shares on the open market for a total $77.7 million. Today the company announced that the Board of Directors of Zumiez Inc. has authorized the repurchase of up to an additional $70 million of its Common Stock. 

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "We've moved quickly to reduce expenses to protect profitability in the face of challenging sales trends, which helped us exceed our bottom line guidance for the third quarter. With the fourth quarter off to a slow start combined with tougher sales comparisons ahead, we believe it's prudent to maintain a cautious outlook for the remainder of fiscal 2015 and we are focused on managing expenses and inventory levels during this difficult time. Long-term we remain confident that the strategic course we have set for the company will deliver increased shareholder value in the years ahead."

November 2015 Sales

Total net sales for the four-week period ended November 28, 2015 decreased 10.6% to $62.8 million, compared to $70.3 million for the four-week period ended November 29, 2014. The Company's comparable sales decreased 13.8% for the four-week period ended November 28, 2015 compared with a comparable sales increase of 6.3% for the four-week period ended November 29, 2014. 

Fiscal 2015 Fourth Quarter Outlook

The Company is introducing guidance for the three months ending January 30, 2016. Net sales are projected to be in the range $226 to $231 million resulting in net income per diluted share of approximately $0.40 to $0.46. This guidance is based on an anticipated comparable sales decrease in the 14% to 16% range for the fourth quarter of fiscal 2015.

A conference call will be held today to discuss third quarter fiscal 2015 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (617) 614-6206 followed by the conference identification code of 28648169. 

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 November 28, 2015 we operated 659 stores, including 593 in the United States, 42 in Canada, and 24 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 1, 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  
    October 31, 2015     % of Sales     November 1, 2014     % of Sales  
Net sales   $ 204,320     100.0 %   $ 213,341     100.0 %
Cost of goods sold     134,261     65.7 %     135,481     63.5 %
Gross profit     70,059     34.3 %     77,860     36.5 %
                             
Selling, general and administrative expenses     54,835     26.8 %     52,885     24.8 %
Operating profit     15,224     7.5 %     24,975     11.7 %
                             
Interest income, net     84     0.0 %     147     0.1 %
Other expense, net     (71 )   0.0 %     (220 )   (0.1 %)
Earnings before income taxes     15,237     7.5 %     24,902     11.7 %
                             
Provision for income taxes     5,584     2.7 %     9,175     4.3 %
                             
Net income   $ 9,653     4.8 %   $ 15,727     7.4 %
                             
Basic earnings per share   $ 0.36           $ 0.54        
                             
Diluted earnings per share   $ 0.36           $ 0.54        
                             
Weighted average shares used in computation of earnings per share:                            
  Basic     26,467             28,857        
                               
  Diluted     26,602             29,147        
                               
                               
                               
ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per share amounts)
 (Unaudited)
 
    Nine Months Ended  
    October 31, 2015     % of Sales     November 1, 2014   % of Sales  
Net sales   $ 561,749     100.0 %   $ 552,982   100.0 %
Cost of goods sold     377,382     67.2 %     363,677   65.8 %
Gross profit     184,367     32.8 %     189,305   34.2 %
                           
Selling, general and administrative expenses     159,706     28.4 %     149,012   26.9 %
Operating profit     24,661     4.4 %     40,293   7.3 %
                           
Interest income, net     440     0.1 %     475   0.0 %
Other income (expense), net     (227 )   0.0 %     69   0.0 %
Earnings before income taxes     24,874     4.5 %     40,837   7.3 %
                           
Provision for income taxes     9,238     1.6 %     15,158   2.7 %
                           
Net income   $ 15,636     2.9 %   $ 25,679   4.6 %
                           
Basic earnings per share   $ 0.56           $ 0.89      
                           
Diluted earnings per share   $ 0.55           $ 0.88      
                           
Weighted average shares used in computation of earnings per share:                          
  Basic     27,973             28,832      
                             
  Diluted     28,178             29,177      
                           
                           
                           
ZUMIEZ INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
    October 31,     January 31,     November 1,  
2015     2015     2014  
Assets   (Unaudited)           (Unaudited)  
Current assets                        
Cash and cash equivalents   $ 4,784     $ 20,862     $ 13,785  
Marketable securities     46,342       133,782       94,902  
Receivables     15,316       12,653       14,638  
Inventories     133,565       93,850       133,411  
Prepaid expenses and other     12,987       11,651       12,451  
Deferred tax assets     7,686       6,965       6,828  
  Total current assets     220,680       279,763       276,015  
                         
Fixed assets, net     143,856       135,642       140,364  
Goodwill     54,649       55,852       60,551  
Intangible assets, net     11,881       13,062       15,047  
Long-term other assets     10,004       9,386       7,595  
  Total long-term assets     220,390       213,942       223,557  
                         
  Total assets   $ 441,070     $ 493,705     $ 499,572  
                         
Liabilities and Shareholders' Equity                        
Current liabilities                        
Trade accounts payable   $ 47,230     $ 32,094     $ 61,394  
Accrued payroll and payroll taxes     9,765       13,047       10,131  
Income taxes payable     3,235       4,651       3,762  
Deferred rent and tenant allowances     8,040       7,083       7,176  
Other liabilities     20,896       24,572       25,357  
  Total current liabilities     89,166       81,447       107,820  
                         
Long-term deferred rent and tenant allowances     45,383       42,553       43,264  
Long-term deferred tax liabilities     2,293       5,738       1,622  
Other long-term liabilities     4,698       4,443       2,666  
  Total long-term liabilities     52,374       52,734       47,552  
                         
  Total liabilities     141,540       134,181       155,372  
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; 26,683 shares issued and outstanding at October 31, 2015, 29,418 shares issued and outstanding at January 31, 2015, and 29,225 shares issued and outstanding at November 1, 2014     133,803       129,094       121,703  
Accumulated other comprehensive loss     (13,920 )     (11,278 )     (1,698 )
Retained earnings     179,647       241,708       224,195  
  Total shareholders' equity     299,530       359,524       344,200  
                         
  Total liabilities and shareholders' equity   $ 441,070     $ 493,705     $ 499,572  
                           
                           
                           
ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
    Nine Months Ended  
    October 31, 2015     November 1, 2014  
Cash flows from operating activities:                
Net income   $ 15,636     $ 25,679  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation, amortization and accretion     23,158       21,556  
Deferred taxes     (5,223 )     (4,735 )
Stock-based compensation expense     3,843       3,258  
Excess tax benefit from stock-based compensation     (714 )     (558 )
Other     1,222       431  
  Changes in operating assets and liabilities:                
    Receivables     (3,211 )     (4,259 )
    Inventories     (40,571 )     (47,703 )
    Prepaid expenses and other     (1,127 )     (5,990 )
    Trade accounts payable     15,951       42,971  
    Accrued payroll and payroll taxes     (3,231 )     (377 )
    Income taxes payable     (964 )     (1,087 )
    Deferred rent and tenant allowances     3,924       6,355  
    Other liabilities     (8,217 )     (1,106 )
Net cash provided by operating activities     476       34,435  
                 
Cash flows from investing activities:                
Additions to fixed assets     (27,115 )     (28,972 )
Purchases of marketable securities and other investments     (58,641 )     (74,398 )
Sales and maturities of marketable securities and other investments     144,446       75,652  
Net cash provided by (used in) investing activities     58,690       (27,718 )
                 
Cash flows from financing activities:                
Proceeds from revolving credit facilities     33,504       6,056  
Payments on long-term debt and revolving credit facilities     (32,393 )     (2,874 )
Repurchase of common stock     (77,697 )     (19,557 )
Proceeds from exercise of stock-based compensation, net of withholding tax payments     678       3,411  
Excess tax benefit from stock-based compensation     714       558  
Net cash used in financing activities     (75,194 )     (12,406 )
                 
Effect of exchange rate changes on cash and cash equivalents     (50 )     (160 )
                 
Net decrease in cash and cash equivalents     (16,078 )     (5,849 )
  Cash and cash equivalents, beginning of period     20,862       19,634  
  Cash and cash equivalents, end of period   $ 4,784     $ 13,785  
                   
  Supplemental disclosure on cash flow information:                
  Cash paid during the period for income taxes, net of refunds   $ 15,348     $ 20,931  
  Accrual for purchases of fixed assets     5,487       5,046  

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