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09/10/20
Zumiez Inc. Announces Fiscal 2020 Second Quarter Results

Second Quarter 2020 Sales Increased 9.6% to $250.4 Million
Second Quarter 2020 Diluted Earnings Per Share Increased 184.4% to $1.01
Cash and Current Marketable Securities Increased 58.6% to $299.1 Million

LYNNWOOD, Wash., Sept. 10, 2020 (GLOBE NEWSWIRE) -- Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the second quarter ended August 1, 2020.

Total net sales for the second quarter ended August 1, 2020 (13 weeks) increased 9.6% to $250.4 million from $228.4 million in the quarter ended August 3, 2019 (13 weeks). Due to store closures, stores were open for 73.4% of the second quarter of 2020 measured as the total number of store days open in the quarter divided by the total number of store days available. For the stores that were open, comparable sales for the thirteen weeks ended August 1, 2020 increased 37.3% compared to the same period a year ago.  Net income for the second quarter of fiscal 2020 was $25.4 million, or $1.01 per diluted share, compared to net income of $9.0 million, or $0.36 per diluted share in the second quarter of the prior fiscal year.

Total net sales for the six months (26 weeks) ended August 1, 2020 decreased 12.1% to $388.2 million from $441.4 million reported for the six months (26 weeks) ended August 3, 2019. Net income for the first six months of fiscal 2020 was $4.3 million, or $0.17 per diluted share, compared to net income for the first six months of the prior fiscal year of $9.8 million, or $0.39 per diluted share.

At August 1, 2020, the Company had cash and current marketable securities of $299.1 million compared to cash and current marketable securities of $188.6 million at August 3, 2019. The increase in cash and current marketable securities was driven by cash generated through operations including deferment of $41.5 million composed of landlord payments, lower inventory levels, extended vendor terms and deferred payroll tax payments as well as net income improvements related to abatements, credits and expense reductions. This increase was partially offset by $13.4 million of share repurchases through the Company’s stock buyback program prior to our stores closing due to COVID-19 and other planned capital expenditures.
 
Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “Our teams did a remarkable job serving our customers and delivering these second quarter results during the most challenging operating environment in the Company’s history. As an organization, we successfully executed a quick and safe reopening of the majority of our stores in the quarter, while continuing to lean heavily on our omni platforms to fulfill strong demand for our distinct merchandise offering. Our recent performance amidst the pandemic underscores the strength of our brand and culture and speaks to the ability of our business model to adapt to changes in purchasing behavior while continuing to drive strong earnings growth and cash generation.  With close to $300 million in cash and no debt on our balance sheet, we are set up well to navigate whatever headwinds arise over the coming quarters and emerge from this crisis positioned to accelerate market share in each of our geographies.”

Third Quarter-To-Date sales
The Company is providing quarter-to-date sales through Labor Day, Monday September 7th, as this time period is more comparable to the prior year given the shift in the Labor Day holiday. Total third quarter-to-date sales for the 37 days ending September 7, 2020 were down approximately 14%, compared with the same 37 day time period in the prior year ended September 9, 2019. Total comparable sales for the 37 day period ending September 7, 2020 were down 5.1%. By channel, open store comparable sales decreased 10.7% and e-commerce sales increased 27.4%.

Store Re-Opening Update
The Company ended the second quarter with 645 or 89.6% of our 720 stores open with the primary closures being in California and Australia due to government mandates. As of Labor Day September 7, 2020, 35 stores or 4.9% of the store base remained closed. All stores are operating under enhanced measures to ensure the health and safety of employees and customers, including

  • 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.

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 third quarter or the year.

Conference Call Information
A conference call will be held today to discuss second quarter fiscal 2020 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 8269508.

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 29, 2020, we operated 720 stores, including 607 in the United States, 52 in Canada, 49 in Europe and 12 in Australia. We operate under the names Zumiez, Blue Tomato and Fast Times. Additionally, we operate ecommerce web sites at zumiez.com, zumiez.ca, 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 1, 2020 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.

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

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

 

ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)

  Three Months Ended  
  August 1, 2020   % of Sales     August 3, 2019   % of Sales  
Net sales $ 250,392   100.0 %   $ 228,425   100.0 %  
Cost of goods sold   159,542   63.7 %     151,229   66.2 %  
Gross profit   90,850   36.3 %     77,196   33.8 %  
Selling, general and administrative expenses   57,738   23.1 %     65,523   28.7 %  
Operating profit   33,112   13.2 %     11,673   5.1 %  
Interest income, net   794   0.3 %     798   0.4 %  
Other income, net   392   0.2 %     559   0.2 %  
Earnings before income taxes   34,298   13.7 %     13,030   5.7 %  
Provision for income taxes   8,906   3.6 %     4,005   1.7 %  
Net income $ 25,392   10.1 %   $ 9,025   4.0 %  
Basic earnings per share $ 1.02       $ 0.36      
Diluted earnings per share $ 1.01       $ 0.36      
Weighted average shares used in computation of earnings per share:                
Basic   24,837         25,199      
Diluted   25,128         25,402      
                     
  Six Months Ended  
  August 1, 2020   % of Sales     August 3, 2019   % of Sales  
Net sales $ 388,164   100.0 %     441,353   100.0 %  
Cost of goods sold   273,578   70.5 %     297,693   67.5 %  
Gross profit   114,586   29.5 %     143,660   32.5 %  
                 
Selling, general and administrative expenses   109,322   28.1 %     131,019   29.6 %  
Operating profit   5,264   1.4 %     12,641   2.9 %  
                 
Interest income, net   1,868   0.5 %     1,650   0.4 %  
Other income, net   498   0.1 %     711   0.1 %  
Earnings before income taxes   7,630   2.0 %     15,002   3.4 %  
Provision for income taxes   3,339   0.9 %     5,184   1.2 %  
Net income $ 4,291   1.1 %     9,818   2.2 %  
                     
Basic earnings per share $ 0.17         0.39      
Diluted earnings per share $ 0.17         0.39      
Weighted average shares used in computation of earnings per share:                    
Basic   24,938         25,144      
Diluted   25,277         25,395      
                     

ZUMIEZ INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

           
  August 1, 2020   February 1, 2020   August 3, 2019
  (Unaudited)       (Unaudited)
Assets          
Current assets          
Cash and cash equivalents $ 133,905     $ 52,428     $ 63,846  
Marketable securities   165,227       198,768       124,803  
Receivables   24,811       16,841       21,615  
Inventories   126,701       135,095       151,079  
Prepaid expenses and other current assets   10,560       9,456       11,789  
Total current assets   461,204       412,588       373,132  
Fixed assets, net   106,151       113,051       116,219  
Operating lease right-of-use assets   277,322       301,784       306,056  
Goodwill   60,225       57,099       57,306  
Intangible assets, net   15,577       14,564       14,672  
Deferred tax assets, net   7,080       6,303       6,502  
Other long-term assets   9,337       8,869       8,374  
Total long-term assets   475,692       501,670       509,129  
Total assets $ 936,896     $ 914,258     $ 882,261  
           
Liabilities and Shareholders’ Equity          
Current liabilities          
Trade accounts payable $ 75,318     $ 47,787     $ 82,859  
Accrued payroll and payroll taxes   17,816       23,653       15,582  
Income taxes payable   5,534       4,686       2,895  
Operating lease liabilities   74,558       61,800       58,646  
Other liabilities   30,374       21,784       21,150  
Total current liabilities   203,600       159,710       181,132  
Long-term operating lease liabilities   259,412       284,717       293,450  
Other long-term liabilities   3,858       3,745       3,472  
Total long-term liabilities   263,270       288,462       296,922  
Total liabilities   466,870       448,172       478,054  
           
Shareholders’ equity          
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding   —       —       —  
Common stock, no par value, 50,000 shares authorized; 25,450 shares issued and outstanding at August 1, 2020, 25,828 shares issued and outstanding at February 1, 2020 and 25,770 shares issued and outstanding at August 3, 2019   165,056       161,458       156,625  
Accumulated other comprehensive loss   (3,123 )     (12,591 )     (12,574 )
Retained earnings   308,093       317,219       260,156  
Total shareholders’ equity   470,026       466,086       404,207  
Total liabilities and shareholders’ equity $ 936,896     $ 914,258     $ 882,261  
                 

ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

  Six Months Ended
  August 1, 2020   August 3, 2019
Cash flows from operating activities:      
Net income $ 4,291     $ 9,818  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation, amortization and accretion   12,005       12,514  
Noncash lease expense   30,167       28,318  
Deferred taxes   (1,144 )     935  
Stock-based compensation expense   3,146       3,214  
Impairment of long-lived assets   2,128       123  
Other   (428 )     (288 )
Changes in operating assets and liabilities:      
Receivables   (5,871 )     (770 )
Inventories   9,926       (22,727 )
Prepaid expenses and other assets   (937 )     (2,115 )
Trade accounts payable   27,323       47,275  
Accrued payroll and payroll taxes   (6,134 )     (5,345 )
Income taxes payable   (317 )     (3,857 )
Operating lease liabilities   (20,868 )     (29,842 )
Other liabilities   8,718       (2,090 )
Net cash provided by operating activities   62,005       35,163  
Cash flows from investing activities:      
Additions to fixed assets   (5,024 )     (8,292 )
Purchases of marketable securities and other investments   (35,720 )     (93,288 )
Sales and maturities of marketable securities and other investments   71,387       82,123  
Net cash provided by (used in) investing activities   30,643       (19,457 )
Cash flows from financing activities:      
Proceeds from issuance and exercise of stock-based awards   545       583  
Payments for tax withholdings on equity awards   (93 )     (238 )
Common stock repurchased   (13,417 )     —  
Net cash (used in) provided by financing activities   (12,965 )     345  
Effect of exchange rate changes on cash, cash equivalents, and restricted cash   2,146       (504 )
Net increase in cash, cash equivalents, and restricted cash   81,829       15,547  
Cash, cash equivalents, and restricted cash, beginning of period   58,991       54,271  
Cash, cash equivalents, and restricted cash, end of period $ 140,820     $ 69,818  
Supplemental disclosure on cash flow information:      
Cash paid during the period for income taxes $ 4,630     $ 8,056  
Accrual for purchases of fixed assets   381       2,052  

Source: Zumiez Inc