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12/03/20
Zumiez Inc. Announces Fiscal 2020 Third Quarter Results

Third Quarter 2020 Sales Increased 2.6% to $271.0 Million
Third Quarter 2020 Diluted Earnings Per Share Increased 54.7% to $1.16
Cash and Current Marketable Securities Increased 77.0% to $316.2 Million

LYNNWOOD, Wash., Dec. 03, 2020 (GLOBE NEWSWIRE) -- Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the third quarter ended October 31, 2020.

Total net sales for the third quarter ended October 31, 2020 (13 weeks) increased 2.6% to $271.0 million from $264.0 million in the quarter ended November 2, 2019 (13 weeks). Due to store closures, stores were open for approximately 95% of the third 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 October 31, 2020 increased 8.1% compared to the same period a year ago. Net income for the third quarter of fiscal 2020 was $29.1 million, or $1.16 per diluted share, compared to net income of $19.2 million, or $0.75 per diluted share in the third quarter of the prior fiscal year.

Total net sales for the nine months (39 weeks) ended October 31, 2020 decreased 6.6% to $659.1 million from $705.4 million reported for the nine months (39 weeks) ended November 2, 2019. Net income for the first nine months of fiscal 2020 increased 15.3% to $33.4 million, or $1.32 per diluted share, compared to net income for the first nine months of the prior fiscal year of $29.0 million, or $1.14 per diluted share.

At October 31, 2020, the Company had cash and current marketable securities of $316.2 million compared to cash and current marketable securities of $178.6 million at November 2, 2019. The increase in cash and current marketable securities was driven by cash generated through operations including cash deferment of $53.0 million composed of lower inventory levels, landlord payments, extended vendor terms and 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 in March due to COVID-19 and other planned capital expenditures.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “We once again successfully navigated volatile market conditions and drove strong earnings growth. Following a challenging start to the third quarter due to the delayed start to back to school, sales were positive in both September and October as we capitalized on late season demand. Our performance in 2020 is a testament to the resiliency of our people and their commitment to serving our customers, the strong culture and brand loyalty we’ve fostered over many years, and the ability of our business model to adapt to changes in purchasing behavior. While there is still uncertainty around how the remainder of the holiday season will unfold, we believe we are positioned well to meet the customer’s expectations and drive value for the long-term.”

Fiscal Fourth Quarter-to-Date Sales
Total fourth quarter-to-date sales for the 31 days ended December 1, 2020 were down approximately 3.9%, compared with the same 31 day time period in the prior year ended December 3, 2019. Comparable sales for the 31 days ended December 1, 2020 were down 1.7%. By channel, open store comparable sales decreased 7.8% and e-commerce sales increased 16.7%. During this timeframe we had roughly 3% fewer open store days than last year due to governmental orders and potential safety concerns. We also experienced significant metering of traffic and reduced hours where required by local governments. We expect that the store closures and various other operating restrictions will fluctuate as we move through the quarter.

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 fourth quarter or the year.

Share Repurchase Authorization:

On December 2, 2020, the Company’s Board of Directors approved the repurchase of up to an aggregate of $100 million of its Common Stock (the “Repurchase Program”). The repurchases will be made from time to time on the open market at prevailing market prices. The Repurchase Program is expected to continue through the fiscal year 2021 ending January 29, 2022, unless the time period is extended or shortened by the Board of Directors. The Repurchase Program supersedes all previously approved and authorized stock repurchase programs.

Conference Call Information
A conference call will be held today to discuss third 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 6946677.

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 28, 2020, we operated 726 stores, including 608 in the United States, 52 in Canada, 54 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
    October 31, 2020   % of Sales     November 2, 2019   % of Sales
Net sales   $ 270,952   100.0 %   $ 264,022   100.0 %
Cost of goods sold     165,146   61.0 %     169,446   64.2 %
Gross profit     105,806   39.0 %     94,576   35.8 %
Selling, general and administrative expenses     67,941   25.0 %     70,266   26.6 %
Operating profit     37,865   14.0 %     24,310   9.2 %
Interest income, net     769   0.3 %     1,002   0.4 %
Other income, net     86   0.0 %     275   0.1 %
Earnings before income taxes     38,720   14.3 %     25,587   9.7 %
Provision for income taxes     9,581   3.5 %     6,408   2.4 %
Net income   $ 29,139   10.8 %   $ 19,179   7.3 %
                     
Basic earnings per share   $ 1.17       $ 0.76    
Diluted earnings per share   $ 1.16       $ 0.75    
Weighted average shares used in computation of earnings per share:                
Basic     24,864         25,231    
Diluted     25,219         25,560    
                     
    Nine Months Ended
    October 31, 2020   % of Sales     November 2, 2019   % of Sales
Net sales   $ 659,116   100.0 %     705,376   100.0 %
Cost of goods sold     438,724   66.6 %     467,140   66.2 %
Gross profit     220,392   33.4 %     238,236   33.8 %
Selling, general and administrative expenses     177,263   26.9 %     201,285   28.6 %
Operating profit     43,129   6.5 %     36,951   5.2 %
Interest income, net     2,637   0.4 %     2,652   0.4 %
Other income, net     584   0.1 %     987   0.2 %
Earnings before income taxes     46,350   7.0 %     40,590   5.8 %
Provision for income taxes     12,920   1.9 %     11,593   1.7 %
Net income   $ 33,430   5.1 %     28,997   4.1 %
                     
Basic earnings per share   $ 1.34         1.15    
Diluted earnings per share   $ 1.32         1.14    
Weighted average shares used in computation of earnings per share:                    
Basic     24,913         25,173    
Diluted     25,271         25,480    
                     


ZUMIEZ INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
  October 31, 2020   February 1, 2020   November 2, 2019
  (Unaudited)       (Unaudited)
Assets          
Current assets          
Cash and cash equivalents $ 84,939     $ 52,428     $ 31,929  
Marketable securities   231,234       198,768       146,718  
Receivables   19,301       16,841       16,790  
Inventories   160,961       135,095       183,381  
Prepaid expenses and other current assets   9,240       9,456       10,757  
Total current assets   505,675       412,588       389,575  
Fixed assets, net   101,820       113,051       115,170  
Operating lease right-of-use assets   273,796       301,784       301,736  
Goodwill   59,540       57,099       57,580  
Intangible assets, net   15,329       14,564       14,772  
Deferred tax assets, net   8,192       6,303       7,424  
Other long-term assets   9,802       8,869       8,773  
Total long-term assets   468,479       501,670       505,455  
Total assets $ 974,154     $ 914,258     $ 895,030  
           
Liabilities and Shareholders’ Equity          
Current liabilities          
Trade accounts payable $ 84,069     $ 47,787     $ 73,418  
Accrued payroll and payroll taxes   25,603       23,653       21,929  
Income taxes payable   8,402       4,686       3,430  
Operating lease liabilities   72,526       61,800       59,742  
Other liabilities   25,327       21,784       18,815  
Total current liabilities   215,927       159,710       177,334  
Long-term operating lease liabilities   255,160       284,717       287,400  
Other long-term liabilities   3,881       3,745       3,457  
Total long-term liabilities   259,041       288,462       290,857  
Total liabilities   474,968       448,172       468,191  
                       
Shareholders’ equity                      
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding   —       —       —  
Common stock, no par value, 50,000 shares authorized; 25,472 shares issued and
outstanding at October 31, 2020, 25,828 shares issued and outstanding at February 1, 2020
and 25,805 shares issued and outstanding at November 2, 2019		   167,119       161,458       159,251  
Accumulated other comprehensive loss   (5,165 )     (12,591 )     (11,747 )
Retained earnings   337,232       317,219       279,335  
Total shareholders’ equity   499,186       466,086       426,839  
Total liabilities and shareholders’ equity $ 974,154     $ 914,258     $ 895,030  
                 


ZUMIEZ INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
    Nine Months Ended
    October 31, 2020   November 2, 2019
Cash flows from operating activities:        
Net income   $ 33,430     $ 28,997  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation, amortization and accretion     17,909       18,776  
Noncash lease expense     45,797       42,960  
Deferred taxes     (2,155 )     29  
Stock-based compensation expense     4,795       4,819  
Impairment of long-lived assets     4,443       123  
Other     (430 )     (562 )
Changes in operating assets and liabilities:                
  Receivables     (1,030 )     3,190  
  Inventories     (24,856 )     (54,687 )
  Prepaid expenses and other assets     532       (934 )
  Trade accounts payable     36,196       38,186  
  Accrued payroll and payroll taxes     1,711       971  
  Income taxes payable     2,629       (2,586 )
  Operating lease liabilities     (40,945 )     (45,512 )
  Other liabilities     3,728       (4,316 )
Net cash provided by operating activities     81,754       29,454  
Cash flows from investing activities:                
Additions to fixed assets     (7,488 )     (13,871 )
Purchases of marketable securities and other investments     (135,515 )     (165,912 )
Sales and maturities of marketable securities and other investments     104,742       132,974  
Net cash used in investing activities     (38,261 )     (46,809 )
Cash flows from financing activities:                
Proceeds from issuance and exercise of stock-based awards     959       1,604  
Payments for tax withholdings on equity awards     (93 )     (238 )
Common stock repurchased     (13,417 )     —  
Net cash (used in) provided by financing activities     (12,551 )     1,366  
Effect of exchange rate changes on cash, cash equivalents, and restricted cash     1,899       (242 )
Net increase (decrease) in cash, cash equivalents, and restricted cash     32,841       (16,231 )
Cash, cash equivalents, and restricted cash, beginning of period     58,991       54,271  
Cash, cash equivalents, and restricted cash, end of period   $ 91,832     $ 38,040  
Supplemental disclosure on cash flow information:        
Cash paid during the period for income taxes   $ 11,933     $ 14,024  
Accrual for purchases of fixed assets     346       1,412  

Zumiez Inc