SOURCE: Zumiez

September 08, 2016 16:05 ET

Zumiez Inc. Announces Fiscal 2016 Second Quarter Results

LYNNWOOD, WA--(Marketwired - Sep 8, 2016) -  Zumiez Inc. (NASDAQ: ZUMZ), a leading lifestyle retailer of apparel, footwear, equipment and accessories, today reported results for the second quarter ended July 30, 2016.

Total net sales for the second quarter ended July 30, 2016 (13 weeks) decreased 0.9% to $178.3 million from $179.8 million in the quarter ended August 1, 2015 (13 weeks). Comparable sales for the thirteen weeks ended July 30, 2016 decreased 4.9% compared to a comparable sales decrease of 4.5% for the thirteen weeks ended August 1, 2015. Net loss for the second quarter of fiscal 2016 was $0.8 million, or $0.03 per diluted share, compared to net income of $3.2 million, or $0.11 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.

Total net sales for the six months (26 weeks) ended July 30, 2016 decreased 1.7% to $351.2 million from $357.4 million reported for the six months (26 weeks) ended August 1, 2015. Comparable sales decreased 6.2% for the twenty-six weeks ended July 30, 2016 compared to a comparable sales decrease of 0.9% for the twenty-six weeks ended August 1, 2015. Net loss for the first six months of fiscal 2016 was $3.0 million, or $0.12 per diluted share, compared to net income for the first six months of the prior fiscal year of $6.0 million, or $0.21 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. 

At July 30, 2016, the Company had cash and current marketable securities of $52.3 million compared to cash and current marketable securities of $80.8 million at August 1, 2015. 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 continue to navigate through the current retail environment with a balanced approach to executing our strategic growth objectives and protecting near-term profitability in the face of challenging consumer demand. While our monthly comparable sales improved as the quarter progressed led by solid gains in our men's category, our overall business continues to underperform versus our long-term expectations. Therefore, we continue to manage our expense structure to better align with current trends, which is what allowed us to exceed our bottom line guidance for the quarter. We are confident that we are making the right decisions that will allow us to best serve our customers and expand our global market share while delivering sustained growth and increased shareholder value well into the future."

Zumiez is also pleased to announce that on August 31, 2016, we acquired 100% of the outstanding stock of Fast Times Skateboarding ("Fast Times") for $6.9 million consisting of $5.5 million in cash and $1.4 million in shares of common stock subject to certain pre-closing and post-closing adjustments. Founded in 2008, Fast Times is an Australian specialty retailer of skateboards, hardware, apparel and footwear and currently operates 5 stores and a website at www.fasttimes.com.au. Rick Brooks, Chief Executive Officer of Zumiez, added, "Fast Times is an important component of the Zumiez global retail network and joins our existing operations in the United States, Canada, and Europe. Our intent is to help the Fast Times team grow their operations across Australia leveraging our proven skills in profitably scaling culture and brand. We are all excited about the opportunity and about having a proven local Australian team to lead the way." Andrew Tebb, one of the co-founders and the General Manager of Fast Times, stated, "We are very excited to be partnering with Zumiez and believe that we have found the right team to help us grow in the Australian marketplace and beyond." Fast Times will continue to operate under the Fast Times name and be headquartered in Melbourne, Australia.

August 2016 Sales

Total net sales for the four-week period ended August 27, 2016 increased 2.6% to $89.5 million, compared to $87.3 million for the four-week period ended August 29, 2015. The Company's comparable sales decreased 1.1% for the four-week period ended August 27, 2016 compared to a comparable sales decrease of 10.7% for the four-week period ended August 29, 2015. 

Fiscal 2016 Third Quarter Outlook

The Company is introducing guidance for the three months ending October 29, 2016. Net sales are projected to be in the range of $209 to $213 million resulting in net income per diluted share of approximately $0.21 to $0.26. This guidance is based upon an anticipated comparable sales range of negative 2% to 0% for the third 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 second 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 66794557. 

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 August 27, 2016 we operated 674 stores, including 605 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 quarterly report on Form 10-Q for the quarter ended April 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 INCOME
 (In thousands, except per share amounts)
 (Unaudited)
 
    Three Months Ended  
    July 30, 2016     % of Sales     August 1, 2015     % of Sales  
Net sales   $ 178,272     100.0 %   $ 179,819     100.0 %
Cost of goods sold     123,428     69.2 %     122,046     67.9 %
Gross profit     54,844     30.8 %     57,773     32.1 %
                             
Selling, general and administrative expenses     55,980     31.5 %     52,461     29.2 %
Operating (loss) profit     (1,136 )   (0.7 %)     5,312     2.9 %
                             
Interest income, net     28     0.0 %     150     0.1 %
Other expense, net     (256 )   (0.1 %)     (271 )   (0.2 %)
(Loss) earnings before income taxes     (1,364 )   (0.8 %)     5,191     2.8 %
                             
(Benefit) provision for income taxes     (526 )   (0.3 %)     1,978     1.1 %
                             
Net (loss) income   $ (838 )   (0.5 %)   $ 3,213     1.7 %
                             
Basic (loss) earnings per share   $ (0.03 )         $ 0.11        
                             
Diluted (loss) earnings per share   $ (0.03 )         $ 0.11        
                             
Weighted average shares used in computation of (loss) earnings per share:                            
  Basic     24,712             28,311        
                             
  Diluted     24,712             28,439        
 
 
ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per share amounts)
 (Unaudited)
 
    Six Months Ended  
    July 30, 2016     % of Sales     August 1, 2015     % of Sales  
Net sales   $ 351,243     100.0 %   $ 357,429     100.0 %
Cost of goods sold     246,440     70.2 %     243,121     68.0 %
Gross profit     104,803     29.8 %     114,308     32.0 %
                             
Selling, general and administrative expenses     109,879     31.2 %     104,870     29.3 %
Operating (loss) profit     (5,076 )   (1.4 %)     9,438     2.7 %
                             
Interest income, net     59     0.0 %     355     0.1 %
Other income (expense), net     242     0.1 %     (156 )   0.0 %
(Loss) earnings before income taxes     (4,775 )   (1.3 %)     9,637     2.8 %
                             
(Benefit) provision for income taxes     (1,800 )   (0.5 %)     3,654     1.0 %
                             
Net (loss) income   $ (2,975 )   (0.8 %)   $ 5,983     1.8 %
                             
Basic (loss) earnings per share   $ (0.12 )         $ 0.21        
                             
Diluted (loss) earnings per share   $ (0.12 )         $ 0.21        
                             
Weighted average shares used in computation of (loss) earnings per share:                            
  Basic     24,957             28,726        
                             
  Diluted     24,957             28,932        
 
 
ZUMIEZ INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
    July 30,     January 30,     August 1,  
2016     2016     2015  
Assets   (Unaudited)           (Unaudited)  
Current assets                  
Cash and cash equivalents   $ 19,600     $ 43,163     $ 22,166  
Marketable securities     32,740       32,391       58,624  
Receivables     14,576       12,840       15,656  
Inventories     131,823       98,299       122,140  
Prepaid expenses and other current assets     13,990       12,204       13,189  
  Total current assets     212,729       198,897       231,775  
                         
Fixed assets, net     136,505       137,233       141,994  
Goodwill     55,082       54,245       54,547  
Intangible assets, net     12,005       11,766       11,863  
Deferred tax assets, net     8,332       4,634       4,713  
Other long-term assets     7,908       7,920       8,124  
  Total long-term assets     219,832       215,798       221,241  
                         
  Total assets   $ 432,561     $ 414,695     $ 453,016  
                         
Liabilities and Shareholders' Equity                        
Current liabilities                        
Trade accounts payable   $ 60,044     $ 21,919     $ 46,715  
Accrued payroll and payroll taxes     12,754       12,466       11,391  
Income taxes payable     507       4,066       1,192  
Deferred rent and tenant allowances     8,384       8,116       7,796  
Other liabilities     22,089       22,575       31,577  
  Total current liabilities     103,778       69,142       98,671  
                         
Long-term deferred rent and tenant allowances     43,721       43,779       44,704  
Other long-term liabilities     4,815       4,817       4,523  
  Total long-term liabilities     48,536       48,596       49,227  
                         
  Total liabilities     152,314       117,738       147,898  
                         
Shareholders' equity                        
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding     -       -       -  
Common stock, no par value, 50,000 shares authorized; 24,931 shares issued and outstanding at July 30, 2016, 25,708 shares issued and outstanding at January 30, 2016 and and 27,377 shares issued and outstanding at August 1, 2015     137,102       135,013       132,379  
Accumulated other comprehensive loss     (12,802 )     (15,247 )     (14,002 )
Retained earnings     155,947       177,191       186,741  
  Total shareholders' equity     280,247       296,957       305,118  
                         
  Total liabilities and shareholders' equity   $ 432,561     $ 414,695     $ 453,016  
 
 
ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unadited)
 
    Six Months Ended  
    July 30, 2016     August 1, 2015  
Cash flows from operating activities:            
Net (loss) income   $ (2,975 )   $ 5,983  
Adjustments to reconcile net (loss) income to net cash provided by operating activities:                
Depreciation, amortization and accretion     14,336       15,644  
Deferred taxes     (3,713 )     (2,703 )
Stock-based compensation expense     2,221       2,710  
Excess tax benefit from stock-based compensation     -       (713 )
Other     95       626  
  Changes in operating assets and liabilities:                
    Receivables     (842 )     (3,377 )
    Inventories     (32,766 )     (28,990 )
    Prepaid expenses and other current assets     (2,690 )     (1,306 )
    Trade accounts payable     38,181       15,684  
    Accrued payroll and payroll taxes     225       (1,613 )
    Income taxes payable     (4,804 )     (2,996 )
    Deferred rent and tenant allowances     (12 )     2,976  
    Other liabilities     (813 )     (948 )
Net cash provided by operating activities     6,443       977  
                 
Cash flows from investing activities:                
Additions to fixed assets     (11,895 )     (20,021 )
Purchases of marketable securities and other investments     (28,353 )     (38,238 )
Sales and maturities of marketable securities and other investments     28,658       112,093  
Net cash (used in) provided by investing activities     (11,590 )     53,834  
                 
Cash flows from financing activities:                
Proceeds from revolving credit facilities     -       20,223  
Payments on revolving credit facilities     -       (15,617 )
Repurchase of common stock     (19,084 )     (58,969 )
Proceeds from exercise of stock-based awards, net of withholding tax     397       379  
Excess tax benefit from stock-based compensation     -       713  
Net cash used in financing activities     (18,687 )     (53,271 )
                 
Effect of exchange rate changes on cash and cash equivalents     271       (236 )
                 
Net (decrease) increase in cash and cash equivalents     (23,563 )     1,304  
  Cash and cash equivalents, beginning of period     43,163       20,862  
  Cash and cash equivalents, end of period   $ 19,600     $ 22,166  
                 
  Supplemental disclosure on cash flow information:                
  Cash paid during the period for income taxes   $ 6,736     $ 14,581  
  Accrual for purchases of fixed assets     1,835       3,107  
  Accrual for repurchase of common stock     254       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