SOURCE: Zumiez

December 01, 2016 16:05 ET

Zumiez Inc. Announces Fiscal 2016 Third Quarter Results

Third Quarter Earnings Per Share Increase to $0.43; November Comparable Sales Increase 5.7%

LYNNWOOD, WA--(Marketwired - Dec 1, 2016) -  Zumiez Inc. (NASDAQ: ZUMZ), a leading lifestyle retailer of apparel, footwear, equipment and accessories, today reported results for the third quarter ended October 29, 2016.

Total net sales for the third quarter ended October 29, 2016 (13 weeks) increased 8.4% to $221.4 million from $204.3 million in the quarter ended October 31, 2015 (13 weeks). Comparable sales for the thirteen weeks ended October 29, 2016 increased 4.0% compared to a comparable sales decrease of 7.3% for the thirteen weeks ended October 31, 2015. Net income for the third quarter of fiscal 2016 increased to $10.7 million, or $0.43 per diluted share, compared to net income of $9.7 million, or $0.36 per diluted share in the third quarter of the prior fiscal year. 

Total net sales for the nine months (39 weeks) ended October 29, 2016 increased 1.9% to $572.6 million from $561.7 million reported for the nine months (39 weeks) ended October 31, 2015. Comparable sales decreased 2.5% for the thirty-nine weeks ended October 29, 2016 compared to a comparable sales decrease of 3.4% for the thirty-nine weeks ended October 31, 2015. Net income for the first nine months of fiscal 2016 was $7.7 million, or $0.31 per diluted share, compared to net income for the first nine months of the prior fiscal year of $15.6 million, or $0.55 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. 

At October 29, 2016, the Company had cash and current marketable securities of $49.2 million compared to cash and current marketable securities of $51.1 million at October 31, 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, "Our monthly comparable sales trend turned positive in September driven by a solid back-to-school selling season and continued to accelerate as the third quarter progressed. We are pleased with the increase in our top-line which included positive growth in our men's, accessories, and junior's categories. Looking ahead, we believe that our current merchandise offering has us positioned to continue with strong results during the important holiday season. That said, we are proceeding prudently and managing expenses tightly in light of the headwinds currently facing the retail industry. Our primary focus remains on executing our strategic multi-year growth objectives and delivering increased shareholder value over the long-term."

November 2016 Sales
Total net sales for the four-week period ended November 26, 2016 increased 10.3% to $69.3 million, compared to $62.8 million for the four-week period ended November 28, 2015. The Company's comparable sales increased 5.7% for the four-week period ended November 26, 2016 compared with a comparable sales decrease of 13.8% for the four-week period ended November 28, 2015. 

Fiscal 2016 Fourth Quarter Outlook
The Company is introducing guidance for the three months ending January 28, 2017. Net sales are projected to be in the range of $258 to $263 million resulting in net income per diluted share of approximately $0.60 to $0.66. This guidance is based upon an anticipated comparable sales range of 3% to 5% for the fourth quarter of fiscal 2016.

A conference call will be held today to discuss third 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 21687742. 

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 26, 2016 we operated 689 stores, including 608 in the United States, 48 in Canada, and 28 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 July 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  
       
    October 29, 2016     % of Sales     October 31, 2015     % of Sales  
Net sales   $ 221,391     100.0 %   $ 204,320     100.0 %
Cost of goods sold     145,213     65.6 %     134,261     65.7 %
Gross profit     76,178     34.4 %     70,059     34.3 %
                             
Selling, general and administrative expenses     59,265     26.8 %     54,835     26.8 %
Operating profit     16,913     7.6 %     15,224     7.5 %
                             
Interest (expense) income, net     (37 )   0.0 %     84     0.0 %
Other income (expense), net     11     0.0 %     (71 )   0.0 %
Earnings before income taxes     16,887     7.6 %     15,237     7.5 %
                             
Provision for income taxes     6,192     2.8 %     5,584     2.7 %
                             
Net income   $ 10,695     4.8 %   $ 9,653     4.8 %
                             
Basic earnings per share   $ 0.44           $ 0.36        
                             
Diluted earnings per share   $ 0.43           $ 0.36        
                             
Weighted average shares used in computation of earnings per share:                            
  Basic     24,485             26,467        
                             
  Diluted     24,622             26,602        
 
 
ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per share amounts)
 (Unaudited)
 
    Nine Months Ended  
       
    October 29, 2016   % of Sales     October 31, 2015     % of Sales  
Net sales   $ 572,634   100.0 %   $ 561,749     100.0 %
Cost of goods sold     391,653   68.4 %     377,382     67.2 %
Gross profit     180,981   31.6 %     184,367     32.8 %
                           
Selling, general and administrative expenses     169,144   29.5 %     159,706     28.4 %
Operating profit     11,837   2.1 %     24,661     4.4 %
                           
Interest income, net     22   0.0 %     440     0.1 %
Other income (expense), net     253   0.0 %     (227 )   0.0 %
Earnings before income taxes     12,112   2.1 %     24,874     4.5 %
                           
Provision for income taxes     4,392   0.8 %     9,238     1.6 %
                           
Net income   $ 7,720   1.3 %   $ 15,636     2.9 %
                           
Basic earnings per share   $ 0.31         $ 0.56        
                           
Diluted earnings per share   $ 0.31         $ 0.55        
                           
Weighted average shares used in computation of earnings per share:                          
  Basic     24,798           27,973        
                           
  Diluted     24,982           28,178        
 
 
ZUMIEZ INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
    October 29,     January 30,     October 31,  
    2016     2016     2015  
Assets   (Unaudited)           (Unaudited)  
Current assets                  
Cash and cash equivalents   $ 18,001     $ 43,163     $ 4,784  
Marketable securities     31,169       32,391       46,342  
Receivables     14,265       12,840       15,316  
Inventories     150,623       98,299       133,565  
Prepaid expenses and other current assets     14,199       12,204       12,987  
  Total current assets     228,257       198,897       212,994  
                         
Fixed assets, net     135,325       137,233       143,856  
Goodwill     56,920       54,245       54,649  
Intangible assets, net     14,900       11,766       11,881  
Deferred tax assets, net     9,533       4,634       7,219  
Other long-term assets     8,093       7,920       8,178  
  Total long-term assets     224,771       215,798       225,783  
                         
  Total assets   $ 453,028     $ 414,695     $ 438,777  
                         
Liabilities and Shareholders' Equity                        
Current liabilities                        
Trade accounts payable   $ 58,088     $ 21,919     $ 47,230  
Accrued payroll and payroll taxes     12,000       12,466       9,765  
Income taxes payable     4,310       4,066       3,235  
Deferred rent and tenant allowances     8,276       8,116       8,040  
Short-term borrowings     11,787       -       1,186  
Other liabilities     21,582       22,575       19,710  
  Total current liabilities     116,043       69,142       89,166  
                         
Long-term deferred rent and tenant allowances     42,715       43,779       45,383  
Other long-term liabilities     4,839       4,817       4,698  
  Total long-term liabilities     47,554       48,596       50,081  
                         
  Total liabilities     163,597       117,738       139,247  
                         
Shareholders' equity                        
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding     -       -       -  
Common stock, no par value, 50,000 shares authorized; 24,899 shares issued and outstanding at October 29, 2016, 25,708 shares issued and outstanding at January 30, 2016, and 26,683 shares issued and outstanding at October 31, 2015     139,758       135,013       133,803  
Accumulated other comprehensive loss     (14,698 )     (15,247 )     (13,920 )
Retained earnings     164,371       177,191       179,647  
  Total shareholders' equity     289,431       296,957       299,530  
                         
  Total liabilities and shareholders' equity   $ 453,028     $ 414,695     $ 438,777  
 
 
ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
    Nine Months Ended  
    October 29, 2016     October 31, 2015  
Cash flows from operating activities:            
Net income   $ 7,720     $ 15,636  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation, amortization and accretion     21,178       23,158  
Deferred taxes     (4,983 )     (5,223 )
Stock-based compensation expense     3,399       3,843  
Excess tax benefit from stock-based compensation     -       (714 )
Other     221       1,222  
  Changes in operating assets and liabilities:                
    Receivables     (1,361 )     (3,211 )
    Inventories     (51,047 )     (40,571 )
    Prepaid expenses and other current assets     (3,183 )     (1,127 )
    Trade accounts payable     35,873       15,951  
    Accrued payroll and payroll taxes     (631 )     (3,231 )
    Income taxes payable     (708 )     (964 )
    Deferred rent and tenant allowances     (1,035 )     3,924  
    Other liabilities     (1,459 )     (8,217 )
Net cash provided by operating activities     3,984       476  
                 
Cash flows from investing activities:                
Additions to fixed assets     (16,829 )     (27,115 )
Acquisition, net of cash acquired     (5,395 )     -  
Purchases of marketable securities and other investments     (48,232 )     (58,641 )
Sales and maturities of marketable securities and other investments     49,986       144,446  
Net cash (used in) provided by investing activities     (20,470 )     58,690  
                 
Cash flows from financing activities:                
Proceeds from revolving credit facilities     17,849       33,504  
Payments on revolving credit facilities     (5,813 )     (32,393 )
Repurchase of common stock     (21,607 )     (77,697 )
Proceeds from exercise of stock-based awards, net of withholding tax     756       678  
Excess tax benefit from stock-based compensation     -       714  
Net cash used in financing activities     (8,815 )     (75,194 )
                 
Effect of exchange rate changes on cash and cash equivalents     139       (50 )
                 
Net decrease in cash and cash equivalents     (25,162 )     (16,078 )
  Cash and cash equivalents, beginning of period     43,163       20,862  
  Cash and cash equivalents, end of period   $ 18,001     $ 4,784  
                 
  Supplemental disclosure on cash flow information:                
  Cash paid during the period for income taxes   $ 10,042     $ 15,348  
  Accrual for purchases of fixed assets     2,236       5,487  
                   

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