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CST: 22/09/2019 11:58:19   

Zumiez Inc. Announces Fiscal 2019 Second Quarter Results

16 Days ago

Second Quarter 2019 Sales Increased 4.3% to $228.4 Million
Second Quarter 2019 Diluted Earnings Per Share Increased 111.8% to $0.36
August 2019 Comparable Sales Increased 7.1%
Company Raises Full Year Outlook

LYNNWOOD, Wash., Sept. 05, 2019 (GLOBE NEWSWIRE) -- Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the second quarter ended August 3, 2019.

Total net sales for the second quarter ended August 3, 2019 (13 weeks) increased 4.3% to $228.4 million from $219.0 million in the quarter ended August 4, 2018 (13 weeks). Comparable sales for the thirteen weeks ended August 3, 2019 increased 3.6% compared to a comparable sales increase of 6.3% for the thirteen weeks ended August 4, 2018. Net income for the second quarter of fiscal 2019 was $9.0 million, or $0.36 per diluted share, compared to net income of $4.4 million, or $0.17 per diluted share in the second quarter of the prior fiscal year.

Total net sales for the six months (26 weeks) ended August 3, 2019 increased 3.8% to $441.4 million from $425.3 million reported for the six months (26 weeks) ended August 4, 2018. Comparable sales increased 3.5% for the twenty-six weeks ended August 3, 2019 compared to a comparable sales increase of 7.2% for the twenty-six weeks ended August 4, 2018. Net income for the first six months of fiscal 2019 was $9.8 million, or $0.39 per diluted share, compared to net income for the first six months of the prior fiscal year of $1.8 million, or $0.07 per diluted share.

At August 3, 2019, the Company had cash and current marketable securities of $188.6 million compared to cash and current marketable securities of $132.9 million at August 4, 2018. The increase in cash and current marketable securities was driven by cash generated through operations partially offset by capital expenditures. 

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “Our relentless attention to serving our customers combined with the power of our operating model once again fueled solid comparable sales growth and a significant improvement in profitability. Despite tougher two-year stacked comparisons, we continued to experience strong full price selling driven by our differentiated merchandise offering, authentic brand positioning and seamless shopping experience in whatever channel the customer wants to experience us. Additionally, we are starting to witness the benefits of our work aimed at executing our distinct approach to retailing in markets outside of North America. Our better than expected second quarter performance, combined with a good start to the third quarter, provides us with great momentum heading into the back half of the year and puts us into a position to deliver another year of record profitability.”

August 2019 Sales
The Company's comparable sales increased 7.1% for the four-week period ended August 31, 2019 compared to a comparable sales increase of 9.5% for the four-week period ended September 1, 2018.

Outlook
The Company is introducing guidance for the three months ending November 2, 2019. Net sales are projected to be in the range of $258 to $263 million including anticipated comparable sales growth of between 3.0% and 5.0%. Consolidated operating margins are expected to between 7.0% and 7.7% resulting in net income per diluted share of approximately $0.55 to $0.61.  

Based on better than anticipated trends and performance year-to-date, the Company is raising its annual guidance. Fiscal 2019 comparable sales are now expected to increase between 2.0% and 4.0% compared to prior guidance of low single digits. Diluted earnings per share are now projected to range from $2.10 to $2.20, up from previous guidance of $1.84 to $1.94. The Company currently intends to open approximately 16 new stores in fiscal 2019, including up to 6 stores in North America, 7 stores in Europe and 3 stores in Australia. 

Conference call Information
A conference call will be held today to discuss second quarter fiscal 2019 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 3882277.

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 31, 2019, we operated 711 stores, including 607 in the United States, 51 in Canada, 43 in Europe and 10 in Australia. We operate under the names Zumiez, Blue Tomato and Fast Times. Additionally, we operate ecommerce web sites at zumiez.com, blue-tomato.com and 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 annual report on Form 10-K for the fiscal year ended February 2, 2019 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  
    August 3, 2019     % of Sales         August 4, 2018       % of Sales    
Net sales   $   228,425   100.0 %   $   218,971     100.0 %  
Cost of goods sold       151,229   66.2 %       146,436     66.9 %  
Gross profit       77,196   33.8 %       72,535     33.1 %  
Selling, general and administrative expenses       65,523   28.7 %       65,837     30.0 %  
Operating profit       11,673   5.1 %       6,698     3.1 %  
Interest income, net       798   0.3 %       238     0.1 %  
Other income, net       559   0.3 %       248     0.1 %  
Earnings before income taxes       13,030   5.7 %       7,184     3.3 %  
Provision for income taxes       4,005   1.7 %       2,807     1.3 %  
Net income   $   9,025   4.0 %   $   4,377     2.0 %  
Basic earnings per share   $   0.36       $   0.18        
Diluted earnings per share   $   0.36       $   0.17        
Weighted average shares used in computation of earnings per share:                  
Basic       25,199           24,955        
Diluted       25,402           25,188        
                       
 
ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
 
      Six Months Ended    
    August 3, 2019     % of Sales         August 4, 2018       % of Sales    
Net sales   $   441,353   100.0 %       425,257     100.0 %  
Cost of goods sold       297,693   67.5 %       290,136     68.2 %  
Gross profit       143,660   32.5 %       135,121     31.8 %  
Selling, general and administrative expenses       131,019   29.6 %       130,133     30.6 %  
Operating profit       12,641   2.9 %       4,988     1.2 %  
Interest income, net       1,650   0.3 %       521     0.1 %  
Other income (expense), net       711   0.2 %       (233 )   (0.1 %)  
Earnings before income taxes       15,002   3.4 %       5,276     1.2 %  
Provision for income taxes       5,184   1.2 %       3,506     0.8 %  
Net income   $   9,818   2.2 %       1,770     0.4 %  
Basic earnings per share   $   0.39           0.07        
Diluted earnings per share   $   0.39           0.07        
Weighted average shares used in computation of earnings per share:                      
Basic       25,144           24,894        
Diluted       25,395           25,211        
                       

 

   
ZUMIEZ INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
   
    August 3, 2019   February 2, 2019   August 4, 2018  
    (Unaudited)       (Unaudited)  
Assets              
Current assets              
Cash and cash equivalents   $   63,846       $   52,422       $   41,409    
Marketable securities       124,803       112,912       91,500    
Receivables       21,615       17,776       20,554    
Inventories       151,079       129,268       149,656    
Prepaid expenses and other current assets       11,789       14,797       16,169    
Total current assets       373,132       327,175       319,288    
Fixed assets, net       116,219       120,503       125,141    
Operating lease right-of-use assets       306,056           —           —    
Goodwill       57,306       58,813       59,336    
Intangible assets, net       14,672       15,260       15,470    
Deferred tax assets, net       6,502       5,259       4,417    
Other long-term assets       8,374       7,180       6,815    
Total long-term assets       509,129       207,015       211,179    
Total assets   $   882,261       $   534,190       $   530,467    
               
Liabilities and Shareholders’ Equity              
Current liabilities              
Trade accounts payable   $   82,859       $   35,293       $   79,370    
Accrued payroll and payroll taxes       15,582       21,015       15,640    
Income taxes payable       2,895           5,817           2,580    
Deferred rent and tenant allowances       —       7,489       7,895    
Operating lease liabilities       58,646           —           —    
Short term borrowings       —       —       5,623    
Other liabilities       21,150       23,494       21,274    
Total current liabilities       181,132       93,108       132,382    
Long-term deferred rent and tenant allowances       —       37,076       38,265    
Long-term operating lease liabilities       293,450           —           —    
Other long-term liabilities        3,472       3,550       4,781    
Total long-term liabilities       296,922       40,626       43,046    
Total liabilities       478,054       133,734       175,428    
               
Shareholders’ equity              
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding       —           —           —    
Common stock, no par value, 50,000 shares authorized; 25,770 shares issued and outstanding at August 3, 2019 and 25,521 shares issued and outstanding at February 2, 2019 and 25,520 shares issued and outstanding at August 4, 2018       156,625       153,066       149,961    
Accumulated other comprehensive loss       (12,574 )     (9,224 )     (8,101 )  
Retained earnings       260,156       256,614       213,179    
Total shareholders’ equity       404,207       400,456       355,039    
Total liabilities and shareholders’ equity   $   882,261       $   534,190       $   530,467    
                     

 

   
ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
   
      Six Months Ended    
      August 3, 2019       August 4, 2018    
Cash flows from operating activities:          
Net income   $   9,818     $   1,770    
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation, amortization and accretion       12,514         13,920    
Noncash lease expense       28,318         —    
Deferred taxes       935         (990 )  
Stock-based compensation expense       3,214         3,012    
Other       (165 )       310    
Changes in operating assets and liabilities:          
Receivables       (770 )       (4,099 )  
Inventories       (22,727 )       (25,993 )  
Prepaid expenses and other assets       (2,115 )       (1,814 )  
Trade accounts payable       47,275         40,815    
Accrued payroll and payroll taxes       (5,345 )       (4,785 )  
Income taxes payable       (3,857 )       (2,973 )  
Deferred rent and tenant allowances       —         (872 )  
Operating lease liabilities       (29,842 )       —    
Other liabilities       (2,090 )       (2,997 )  
Net cash provided by operating activities       35,163         15,304    
Cash flows from investing activities:          
Additions to fixed assets       (8,292 )       (9,061 )  
Purchases of marketable securities and other investments       (93,288 )       (35,046 )  
Sales and maturities of marketable securities and other investments       82,123         41,200    
Net cash used in investing activities       (19,457 )       (2,907 )  
Cash flows from financing activities:          
Proceeds from revolving credit facilities       —         29,227    
Payments on revolving credit facilities       —         (24,233 )  
Proceeds from issuance and exercise of stock-based awards       583         621    
Payments for tax withholdings on equity awards       (238 )       (195 )  
Net cash provided by financing activities       345         5,420    
Effect of exchange rate changes on cash, cash equivalents, and restricted cash       (504 )       (693 )  
Net increase in cash, cash equivalents, and restricted cash       15,547         17,124    
Cash, cash equivalents, and restricted cash, beginning of period       54,271         25,803    
Cash, cash equivalents, and restricted cash, end of period   $   69,818     $   42,927    
Supplemental disclosure on cash flow information:          
Cash paid during the period for income taxes   $   8,056     $   7,362    
Accrual for purchases of fixed assets       2,052         3,496    
           


Company Contact:

Darin White
Director of Finance &
Investor Relations
Zumiez Inc.
(425) 551-1500, ext. 1337

Investor Contact:
ICR
Brendon Frey
(203) 682-8200

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