SOURCE: Zumiez

June 02, 2016 16:05 ET

Zumiez Inc. Announces Fiscal 2016 First Quarter Results

LYNNWOOD, WA--(Marketwired - Jun 2, 2016) - Zumiez Inc. (NASDAQ: ZUMZ), a leading specialty retailer of apparel, footwear, equipment and accessories for young men and women, today reported results for the first quarter ended April 30, 2016.

Total net sales for the first quarter ended April 30, 2016 (13 weeks) decreased 2.6% to $173.0 million from $177.6 million in the first quarter ended May 2, 2015 (13 weeks). Comparable sales for the thirteen weeks ended April 30, 2016 decreased 7.5% compared to a comparable sales increase of 3.0% in the first quarter of 2015. Net loss in the first quarter of fiscal 2016 was $2.1 million, or ($0.08) per diluted share, compared to net income of $2.8 million, or $0.09 per diluted share, in the first quarter of the prior fiscal year. The results for the first quarter of 2015 include approximately $1.1 million, or $0.03 per diluted share, for charges associated with the acquisition of Blue Tomato.

At April 30, 2016, the Company had cash and current marketable securities of $62.1 million, compared to cash and current marketable securities of $150.9 million at May 2, 2015. The decrease in cash and current marketable securities is primarily a result of stock repurchases and capital expenditures, partially offset by cash generated through operations.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "While our monthly comparable sales trends improved as the quarter progressed, the quarter was more challenging than expected. We did experience pockets of strength within our merchandise assortments, however it wasn't enough to offset the general weakness in consumer demand for our major categories. During this period of instability for the retail industry, we are taking actions aimed at preserving near-term profitability while continuing to make the necessary investments in the business to best position the company for future success. We remain confident that we have the right strategies in place to capitalize on the domestic and international growth opportunities that lie ahead and return greater value to our shareholders over the long-term."

May 2016 Sales
Total net sales for the four-week period ended May 28, 2016 decreased 2.9% to $50.0 million, compared to $51.5 million for the four-week period ended May 30, 2015. The Company's comparable sales decreased 7.6% for the four-week period ended May 28, 2016 compared to a comparable sales decrease of 2.2% for the four-week period ended May 30, 2015. 

Fiscal 2016 Second Quarter Outlook
The Company is introducing guidance for the three months ending July 30, 2016. Net sales are projected to be in the range of $172 to $176 million resulting in net loss per diluted share of approximately -$0.09 to -$0.13. This guidance is based on an anticipated comparable sales decrease in the 6% to 8% range for the second quarter of fiscal 2016. The Company currently intends to open approximately 29 new stores in fiscal 2016, including up to 6 stores in Canada and 7 stores in Europe.

A conference call will be held today to discuss first quarter fiscal 2016 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (574) 990-9934 followed by the conference identification code of 15050707. 

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 May 28, 2016 we operated 668 stores, including 599 in the United States, 44 in Canada, and 25 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 annual report on Form 10-K for the fiscal year ended January 30, 2016 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 OPERATIONS
 (In thousands, except per share amounts)
 (Unaudited)
     
  Three Months Ended  
                     
  April 30, 2016     % of Sales     May 2, 2015   % of Sales  
Net sales $ 172,970     100.0 %   $ 177,610   100.0 %
Cost of goods sold   123,012     71.1 %     121,075   68.2 %
Gross profit   49,958     28.9 %     56,535   31.8 %
                         
Selling, general and administrative expenses   53,899     31.2 %     52,409   29.5 %
Operating (loss) profit   (3,941 )   (2.3 %)     4,126   2.3 %
                         
Interest income, net   31     0.0 %     205   0.1 %
Other income, net   499     0.3 %     115   0.1 %
(Loss) earnings before income taxes   (3,411 )   (2.0 %)     4,446   2.5 %
                         
(Benefit) provision for income taxes   (1,274 )   (0.7 %)     1,676   0.9 %
                         
Net (loss) income $ (2,137 )   (1.3 %)   $ 2,770   1.6 %
                         
Basic (loss) earnings per share $ (0.08 )         $ 0.10      
                         
Diluted (loss) earnings per share $ (0.08 )         $ 0.09      
                         
Weighted average shares used in computation of (loss) earnings per share:                        
  Basic   25,185             29,141      
                           
  Diluted   25,185             29,486      
                           
 
 
ZUMIEZ INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
                   
    April 30,     January 30,     May 2,  
2016     2016     2015  
Assets   (Unaudited)           (Unaudited)  
Current assets                        
Cash and cash equivalents   $ 16,890     $ 43,163     $ 11,806  
Marketable securities     45,236       32,391       139,048  
Receivables     13,234       12,840       14,401  
Inventories     112,971       98,299       104,091  
Prepaid expenses and other     12,282       12,204       11,117  
  Total current assets     200,613       198,897       280,463  
                         
Fixed assets, net     138,156       137,233       140,320  
Goodwill     56,157       54,245       55,478  
Intangible assets, net     12,313       11,766       12,460  
Deferred tax asset     6,362       4,634       2,831  
Other long-term assets     8,547       7,920       8,482  
  Total long-term assets     221,535       215,798       219,571  
                           
  Total assets   $ 422,148     $ 414,695     $ 500,034  
                         
Liabilities and Shareholders' Equity                        
Current liabilities                        
Trade accounts payable   $ 44,922     $ 21,919     $ 39,525  
Accrued payroll and payroll taxes     10,074       12,466       9,168  
Income taxes payable     28       4,066       732  
Deferred rent and tenant allowances     8,229       8,116       7,448  
Other liabilities     20,863       22,575       29,276  
  Total current liabilities     84,116       69,142       86,149  
                         
Long-term deferred rent and tenant allowances     43,932       43,779       44,761  
Other long-term liabilities     4,800       4,817       4,698  
  Total long-term liabilities     48,732       48,596       49,459  
                           
  Total liabilities     132,848       117,738       135,608  
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; 25,330 shares issued and outstanding at April 30, 2016, 25,708 shares issued and outstanding at January 30, 2016 and 29,535 shares issued and outstanding at May 2, 2015.     136,028       135,013       131,715  
Accumulated other comprehensive loss     (10,260 )     (15,247 )     (11,767 )
Retained earnings     163,532       177,191       244,478  
  Total shareholders' equity     289,300       296,957       364,426  
                           
  Total liabilities and shareholders' equity   $ 422,148     $ 414,695     $ 500,034  
                           
                           
 
ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
       
    Three Months Ended  
    April 30, 2016     May 2, 2015  
Cash flows from operating activities:                
Net (loss) income   $ (2,137 )   $ 2,770  
Adjustments to reconcile net (loss) income to net cash provided by operating activities:                
Depreciation, amortization and accretion     7,222       7,797  
Deferred taxes     (1,586 )     (622 )
Stock-based compensation expense     1,035       1,572  
Excess tax benefit from stock-based compensation     425       (689 )
Other     (176 )     (76 )
  Changes in operating assets and liabilities:                
    Receivables     548       (1,617 )
    Inventories     (13,125 )     (10,187 )
    Prepaid expenses and other     (545 )     605  
    Trade accounts payable     22,617       7,726  
    Accrued payroll and payroll taxes     (2,523 )     (3,891 )
    Income taxes payable     (5,145 )     (3,355 )
    Deferred rent and tenant allowances     (139 )     2,444  
    Other liabilities     (3,341 )     (789 )
Net cash provided by operating activities     3,130       1,688  
                 
Cash flows from investing activities:                
Additions to fixed assets     (4,485 )     (8,818 )
Purchases of marketable securities and other investments     (26,854 )     (35,037 )
Sales and maturities of marketable securities and other investments     13,761       29,074  
Net cash used in investing activities     (17,578 )     (14,781 )
                 
Cash flows from financing activities:                
Proceeds from long-term debt and revolving credit facilities     -       4,310  
Payments on long-term debt and revolving credit facilities     -       (1,271 )
Repurchase of common stock     (12,248 )     -  
Proceeds from exercise of stock-based awards, net of withholding tax     405       367  
Excess tax benefit from stock-based compensation     (425 )     689  
Net cash (used in) provided by financing activities     (12,268 )     4,095  
                 
Effect of exchange rate changes on cash and cash equivalents     443       (58 )
                 
Net decrease in cash and cash equivalents     (26,273 )     (9,056 )
  Cash and cash equivalents, beginning of period     43,163       20,862  
  Cash and cash equivalents, end of period   $ 16,890     $ 11,806  
                   
  Supplemental disclosure on cash flow information:                
  Cash paid during the period for income taxes   $ 5,470     $ 5,667  
  Accrual for purchases of fixed assets     3,309       4,489  
  Accrual for repurchase of common stock     341       -  

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