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Company Ended First Quarter with
Company Provides COVID-19 Business Update
Total net sales for the first quarter ended
At
“We came into fiscal 2020 in a strong financial position and the new year was off to a good start with first quarter sales and earnings tracking ahead of expectations through early-March,” commented
Actions Taken In Response to COVID-19
As part of the COVID-19 response, the Company has taken the following actions to preserve financial liquidity and financial flexibility:
- Suspended hiring, laid off virtually all part-time staff, eliminated substantially all planned fiscal 2020 bonuses and delayed majority of merit raises,
- Lowered operating costs, including travel, marketing and other non-essential items,
- Reduced capital spend by delaying or cancelling select projects,
- Reduced planned inventory receipts by cancelling or delaying orders,
- Suspended rent payments while negotiating rent relief with landlords and delayed or canceled planned new store openings,
- Extended payment terms for both merchandise and non-merchandise vendor invoices, and
- Paused share repurchases.
Store Re-Opening Update
Late in the first quarter the Company began reopening some stores with most at reduced hours in accordance with governmental regulations. The company ended the first quarter with 65 or 9% of our 719 stores open. We ended the period ending
- requiring our employees to wear masks,
- providing hand sanitizer in multiple locations throughout the store,
- implementing enhanced cleaning and sanitation protocols,
- reconfiguring sales floors to promote physical distancing, and
- modifying employee and customer interactions to limit contact.
The Company's total net sales decreased 8.6% for the four-week period ended
Outlook
Due to the fast-moving nature of this situation and the uncertainty of impacts on revenue and costs, the Company previously withdrew its full year fiscal 2020 guidance. The Company is not providing an updated outlook at this time for the second quarter or the year.
A conference call will be held today to discuss first quarter fiscal 2020 results and will be webcast at
About
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
ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended | ||||||||||||
% of Sales | % of Sales | |||||||||||
Net sales | $ | 137,772 | 100.0 | % | $ | 212,928 | 100.0 | % | ||||
Cost of goods sold | 114,036 | 82.8 | % | 146,464 | 68.8 | % | ||||||
Gross profit | 23,736 | 17.2 | % | 66,464 | 31.2 | % | ||||||
Selling, general and administrative expenses | 51,584 | 37.4 | % | 65,496 | 30.7 | % | ||||||
Operating (loss) profit | (27,848 | ) | (20.2 | %) | 968 | 0.5 | % | |||||
Interest income, net | 1,074 | 0.8 | % | 852 | 0.4 | % | ||||||
Other income, net | 106 | 0.0 | % | 153 | 0.0 | % | ||||||
(Loss) earnings before income taxes | (26,668 | ) | (19.4 | %) | 1,973 | 0.9 | % | |||||
Provision for income taxes | (5,567 | ) | (4.1 | %) | 1,180 | 0.5 | % | |||||
Net (loss) income | $ | (21,101 | ) | (15.3 | %) | $ | 793 | 0.4 | % | |||
Basic (loss) earnings per share | $ | (0.84 | ) | $ | 0.03 | |||||||
Diluted (loss) earnings per share | $ | (0.84 | ) | $ | 0.03 | |||||||
Weighted average shares used in computation of (loss) earnings per share: | ||||||||||||
Basic | 25,040 | 25,090 | ||||||||||
Diluted | 25,040 | 25,351 | ||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited) | (Unaudited) | ||||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 63,731 | $ | 52,428 | $ | 60,616 | |||||
Marketable securities | 153,494 | 198,768 | 107,364 | ||||||||
Receivables | 16,837 | 16,841 | 15,083 | ||||||||
Inventories | 136,354 | 135,095 | 135,959 | ||||||||
Prepaid expenses and other current assets | 5,179 | 9,456 | 9,616 | ||||||||
Total current assets | 375,595 | 412,588 | 328,638 | ||||||||
Fixed assets, net | 109,573 | 113,051 | 116,830 | ||||||||
Operating lease right-of-use assets | 285,416 | 301,784 | 301,980 | ||||||||
56,706 | 57,099 | 57,682 | |||||||||
Intangible assets, net | 14,366 | 14,564 | 14,852 | ||||||||
Deferred tax assets, net | 11,206 | 6,303 | 6,312 | ||||||||
Other long-term assets | 8,571 | 8,869 | 8,442 | ||||||||
Total long-term assets | 485,838 | 501,670 | 506,098 | ||||||||
Total assets | $ | 861,433 | $ | 914,258 | $ | 834,736 | |||||
Liabilities and Shareholders’ Equity | |||||||||||
Current liabilities | |||||||||||
Trade accounts payable | $ | 49,497 | $ | 47,787 | $ | 54,454 | |||||
Accrued payroll and payroll taxes | 13,173 | 23,653 | 15,302 | ||||||||
Income taxes payable | 4,430 | 4,686 | 65 | ||||||||
Operating lease liabilities | 70,584 | 61,800 | 54,469 | ||||||||
Other liabilities | 19,197 | 21,784 | 19,675 | ||||||||
Total current liabilities | 156,881 | 159,710 | 143,965 | ||||||||
Long-term operating lease liabilities | 269,608 | 284,717 | 293,375 | ||||||||
Other long-term liabilities | 3,790 | 3,745 | 3,436 | ||||||||
Total long-term liabilities | 273,398 | 288,462 | 296,811 | ||||||||
Total liabilities | 430,279 | 448,172 | 440,776 | ||||||||
Shareholders’ equity | |||||||||||
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding | — | — | — | ||||||||
Common stock, no par value, 50,000 shares authorized; 25,431 shares issued and outstanding at |
163,349 | 161,458 | 155,104 | ||||||||
Accumulated other comprehensive loss | (14,896 | ) | (12,591 | ) | (12,275 | ) | |||||
Retained earnings | 282,701 | 317,219 | 251,131 | ||||||||
Total shareholders’ equity | 431,154 | 466,086 | 393,960 | ||||||||
Total liabilities and shareholders’ equity | $ | 861,433 | $ | 914,258 | $ | 834,736 | |||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended | |||||||
Cash flows from operating activities: | |||||||
Net (loss) income | $ | (21,101 | ) | $ | 793 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation, amortization and accretion | 6,096 | 6,263 | |||||
Noncash lease expense | 14,996 | 13,371 | |||||
Deferred taxes | (4,856 | ) | 1,249 | ||||
Stock-based compensation expense | 1,556 | 1,693 | |||||
Impairment of long-lived assets | 1,514 | 123 | |||||
Other | (173 | ) | 101 | ||||
Changes in operating assets and liabilities: | |||||||
Receivables | 1,918 | 4,708 | |||||
Inventories | (2,031 | ) | (7,540 | ) | |||
Prepaid expenses and other assets | 4,354 | (167 | ) | ||||
Trade accounts payable | 1,074 | 19,568 | |||||
Accrued payroll and payroll taxes | (10,423 | ) | (5,636 | ) | |||
Income taxes payable | (1,078 | ) | (7,104 | ) | |||
Operating lease liabilities | (6,948 | ) | (13,770 | ) | |||
Other liabilities | (2,440 | ) | (3,790 | ) | |||
Net cash (used in) provided by operating activities | (17,542 | ) | 9,862 | ||||
Cash flows from investing activities: | |||||||
Additions to fixed assets | (2,504 | ) | (3,331 | ) | |||
Purchases of marketable securities and other investments | (9,106 | ) | (33,385 | ) | |||
Sales and maturities of marketable securities and other investments | 54,344 | 39,001 | |||||
Net cash provided by investing activities | 42,734 | 2,285 | |||||
Cash flows from financing activities: | |||||||
Proceeds from issuance and exercise of stock-based awards | 428 | 583 | |||||
Payments for tax withholdings on equity awards | (93 | ) | (238 | ) | |||
Common stock repurchased | (13,417 | ) | — | ||||
Net cash (used in) provided by financing activities | (13,082 | ) | 345 | ||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (853 | ) | (466 | ) | |||
Net increase in cash, cash equivalents, and restricted cash | 11,257 | 12,026 | |||||
Cash, cash equivalents, and restricted cash, beginning of period | 58,991 | 54,271 | |||||
Cash, cash equivalents, and restricted cash, end of period | $ | 70,248 | $ | 66,297 | |||
Supplemental disclosure on cash flow information: | |||||||
Cash paid during the period for income taxes | $ | 343 | $ | 7,038 | |||
Accrual for purchases of fixed assets | 1,976 | 1,583 |
Company Contact:
Director of Finance &
Investor Relations
(425) 551-1500, ext. 1337
Investor Contact:
ICR
(203) 682-8200
Source: Zumiez Inc