SOURCE: Zumiez

March 09, 2017 16:05 ET

Zumiez Inc. Announces Fiscal 2016 Fourth Quarter and Full Year Results

Fourth Quarter Earnings Per Share of $0.74

LYNNWOOD, WA--(Marketwired - Mar 9, 2017) -  Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the fourth quarter and fiscal year ended January 28, 2017.

Total net sales for the fourth quarter ended January 28, 2017 (13 weeks) increased 8.7% to $263.6 million from $242.4 million in the quarter ended January 30, 2016 (13 weeks). Comparable sales for the 13-week period ended January 28, 2017 increased 5.1% compared to a 9.5% decrease for the 13-week period ended January 30, 2016. Net income in the fourth quarter of fiscal 2016 increased 38.3% to $18.2 million, or $0.74 per diluted share, from net income of $13.1 million, or $0.50 per diluted share, in the fourth quarter of fiscal 2015. 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.

Total net sales for fiscal 2016 (52 weeks) increased 4.0% to $836.3 million from $804.2 million in fiscal 2015 (52 weeks). Comparable sales for the 52-week period ended January 28, 2017 decreased 0.2% compared to a 5.3% decrease for the 52-week period ended January 30, 2016. Net income in fiscal 2016 decreased 10.0% to $25.9 million, or $1.04 per diluted share compared to net income in the prior fiscal year of $28.8 million, or $1.04 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. 

Cash and Current Marketable Securities
At January 28, 2017, the Company had cash and current marketable securities of $78.8 million, compared to cash and current marketable securities of $75.6 million at January 30, 2016. The increase in cash and current marketable securities was driven by cash generated through operations of $48.5 million partially offset by stock repurchases of $21.6 million and capital expenditures of $20.4 million.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "Our fourth quarter earnings performance exceeded expectations driven by efficiencies realized as we continued to execute on our omni-channel and localization efforts combined with a more favorable tax rate. The investments we've made in our merchandise offering, sales teams and omnichannel capabilities generated solid top-line momentum during the holiday season and continue to further distinguish Zumiez, Blue Tomato and Fast Times from the competition. We are pleased with our finish to the year especially in light of the headwinds facing the retail industry. Looking ahead, our primary focus remains on executing the strategic multi-year growth objectives that we believe will deliver increased profitability and greater shareholder value over the long-term. We believe that it is this focus that will allow us to successfully navigate through the current environment, including the impact that certain events are having on our monthly sales cadence in early 2017."

February 2017 Sales
Total net sales for the four-week period ended February 25, 2017 decreased 0.8% to $51.5 million, compared to $51.9 million for the four-week period ended February 27, 2016. The Company's comparable sales decreased 3.1% for the four-week period ended February 25, 2017 compared with a comparable sales decrease of 8.6% for the four-week period ended February 27, 2016. 

Fiscal 2017 First Quarter Outlook
The Company is introducing guidance for the three months ending April 29, 2017. Net sales are projected to be in the range of $178 million to $182 million resulting in a net loss per share of approximately -$0.17 to -$0.21. This guidance is based upon anticipated comparable sales growth of between 0% and positive 2% for the first quarter of fiscal 2017 compared to the prior year. The Company currently intends to open approximately 18 new stores in fiscal 2017, including up to 3 stores in Canada, 4 stores in Europe and 2 stores in Australia.

A conference call will be held today to discuss fourth quarter and fiscal 2016 year-end 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 80527207.

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 25, 2017 we operated 684 stores, including 602 in the United States, 48 in Canada, and 29 in Europe and 5 in Australia. We operate under the names Zumiez, Blue Tomato and Fast Times. Additionally, we operate ecommerce web sites at www.zumiez.com, www.blue-tomato.com and www.fasttimes.com.au

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 29, 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.
 CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per share amounts)
 (Unaudited)
       
    Three Months Ended  
                       
    January 28, 2017   % of Sales     January 30, 2016     % of Sales  
Net sales   $ 263,635   100.0 %   $ 242,434     100.0 %
Cost of goods sold     169,613   64.3 %     158,177     65.2 %
Gross profit     94,022   35.7 %     84,257     34.8 %
                           
Selling, general and administrative expenses     66,115   25.0 %     62,754     25.9 %
Operating profit     27,907   10.7 %     21,503     8.9 %
                           
Interest income, net     11   0.0 %     90     0.0 %
Other income (expense), net     195   0.1 %     (606 )   (0.2 %)
Earnings before income taxes     28,113   10.8 %     20,987     8.7 %
                           
Provision for income taxes     9,929   3.8 %     7,838     3.2 %
                           
Net income   $ 18,184   7.0 %   $ 13,149     5.5 %
                           
Basic earnings per share   $ 0.74         $ 0.50        
                           
Diluted earnings per share   $ 0.74         $ 0.50        
                           
Weighted average shares used in computation of earnings per share:                          
  Basic     24,506           26,071        
                           
  Diluted     24,691           26,200        
                           
 
ZUMIEZ INC.
 CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per share amounts)
                       
    Twelve Months Ended  
                       
    January 28, 2017   % of Sales     January 30, 2016     % of Sales  
    (unaudited)                  
Net sales   $ 836,268   100.0 %   $ 804,183     100.0 %
Cost of goods sold     561,266   67.1 %     535,559     66.6 %
Gross profit     275,002   32.9 %     268,624     33.4 %
                           
Selling, general and administrative expenses     235,259   28.1 %     222,459     27.7 %
Operating profit     39,743   4.8 %     46,165     5.7 %
                           
Interest income, net     32   0.0 %     529     0.1 %
Other income (expense), net     449   0.0 %     (833 )   (0.1 %)
Earnings before income taxes     40,224   4.8 %     45,861     5.7 %
                           
Provision for income taxes     14,320   1.7 %     17,076     2.1 %
                           
Net income   $ 25,904   3.1 %   $ 28,785     3.6 %
                           
Basic earnings per share   $ 1.05         $ 1.05        
                           
Diluted earnings per share   $ 1.04         $ 1.04        
                           
Weighted average shares used in computation of earnings per share:                          
  Basic     24,727           27,497        
                           
  Diluted     24,908           27,673        
                           
 
ZUMIEZ INC.
 CONSOLIDATED BALANCE SHEETS
(In thousands)
             
    January 28,     January 30,  
2017     2016  
Assets                
Current assets                
Cash and cash equivalents   $ 20,247     $ 43,163  
Marketable securities     58,579       32,391  
Receivables     12,538       12,840  
Inventories     106,924       98,299  
Prepaid expenses and other current assets     13,075       12,204  
  Total current assets     211,363       198,897  
                 
Fixed assets, net     129,651       137,233  
Goodwill     56,001       54,245  
Intangible assets, net     14,610       11,766  
Deferred tax assets, net     7,041       4,634  
Other long-term assets     8,017       7,920  
  Total long-term assets     215,320       215,798  
                 
  Total assets   $ 426,683     $ 414,695  
                 
Liabilities and Shareholders' Equity                
Current liabilities                
Trade accounts payable   $ 25,529     $ 21,919  
Accrued payroll and payroll taxes     14,914       12,466  
Income taxes payable     1,866       4,066  
Deferred rent and tenant allowances     8,344       8,116  
Other liabilities     22,944       22,575  
  Total current liabilities     73,597       69,142  
                 
Long-term deferred rent and tenant allowances     41,066       43,779  
Other long-term liabilities     4,969       4,817  
  Total long-term liabilities     46,035       48,596  
                 
  Total liabilities     119,632       117,738  
                 
Shareholders' equity                
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding     -       -  
Common stock, no par value, 50,000 shares authorized; 24,945 shares issued and outstanding at January 28, 2017 and 25,708 shares issued and outstanding at January 30, 2016     140,984       135,013  
Accumulated other comprehensiv loss     (16,488 )     (15,247 )
Retained earnings     182,555       177,191  
  Total shareholders' equity     307,051       296,957  
                 
  Total liabilities and shareholders' equity   $ 426,683     $ 414,695  
                 
 
ZUMIEZ INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
         
    Fiscal Year Ended    
    January 28, 2017     January 30, 2016    
    (unaudited)     (unaudited)    
Cash flows from operating activities:                  
Net income   $ 25,904     $ 28,785    
Adjustments to reconcile net income to net cash provided by operating activities:                  
Depreciation, amortization and accretion     27,916       30,410    
Deferred taxes     (2,555 )     (2,698 )  
Stock-based compensation expense     4,578       4,996    
Excess tax benefit from stock-based compensation     (3 )     (714 )  
Other     1,564       4,009    
Changes in operating assets and liabilities:                  
  Receivables     413       (1,184 )  
  Inventories     (7,984 )     (5,953 )  
  Prepaid expenses and other current assets     (1,793 )     (133 )  
  Trade accounts payable     3,261       (9,103 )  
  Accrued payroll and payroll taxes     2,313       (483 )  
  Income taxes payable     (3,713 )     1    
  Deferred rent and tenant allowances     (2,673 )     2,613    
  Other liabilities     1,227       (1,939 )  
Net cash provided by operating activities     48,455       48,607   `
                   
Cash flows from investing activities:                  
Additions to fixed assets     (20,400 )     (34,834 )  
Acquisitions, net of cash acquired     (5,395 )     -    
Purchases of marketable securities and other investments     (86,826 )     (59,286 )  
Sales and maturities of marketable securities and other investments     61,106       158,850    
Net cash (used in) provided by investing activities     (51,515 )     64,730    
                   
Cash flows from financing activities:                  
Proceeds from revolving credit facilities     23,079       43,173    
Payments on revolving credit facilities     (22,429 )     (43,255 )  
Repurchase of common stock     (21,607 )     (92,235 )  
Proceeds from exercise of stock-based compensation, net of withholding tax     880       845    
Excess tax benefit from stock-based compensation     3       714    
Net cash used in financing activities     (20,074 )     (90,758 )  
                   
Effect of exchange rate changes on cash and cash equivalents     218       (278 )  
                   
Net (decrease) increase in cash and cash equivalents     (22,916 )     22,301    
Cash and cash equivalents, beginning of period     43,163       20,862    
Cash and cash equivalents, end of period   $ 20,247     $ 43,163    
                   
Supplemental disclosure on cash flow information:                  
Cash paid during the period for income taxes   $ 20,462     $ 19,630    
Accrual for purchases of fixed assets     1,191       1,166    
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