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09/09/21
Zumiez Inc. Announces Fiscal 2021 Second Quarter Results

Net Sales Increased 7.3% to $268.7 Million
Diluted Earnings Per Share of $0.94

LYNNWOOD, Wash., Sept. 09, 2021 (GLOBE NEWSWIRE) -- Zumiez Inc. (NASDAQ: ZUMZ) a leading specialty retailer of apparel, footwear, equipment and accessories for young men and women, today reported results for the second quarter ended July 31, 2021.

Net sales for the second quarter ended July 31, 2021 (13 weeks) increased 7.3% to $268.7 million from $250.4 million in the second quarter ended August 1, 2020 (13 weeks). Compared to the second quarter ended August 3, 2019 (13 weeks), second quarter 2021 net sales increased 17.6%. Net income in the second quarter of fiscal 2021 was $24.0 million, or $0.94 per diluted share, compared to net income of $25.4 million, or $1.01 per diluted share, in the second quarter of the prior fiscal year. Net income for the second quarter of 2019 was $9.0 million, or $0.36 per diluted share. Our second quarter 2021 net income was negatively impacted by $2.8 million, or approximately $0.08 per diluted share related to the conditional settlement of a California class action lawsuit.

Total net sales for the six months (26 weeks) ended July 31, 2021 increased 41.1% to $547.7 million from $388.2 million reported for the six months (26 weeks) ended August 1, 2020. Compared to the first six months (26 weeks) ended August 3, 2019, net sales increased 24.1%. Net income for the first six months of 2021 was $50.4 million, or $1.96 per diluted share, compared to net income for the first six months of fiscal 2020 of $4.3 million, or $0.17 per diluted share, and compared to net income for the first six months of fiscal 2019 of $9.8 million, or $0.39 per diluted share.

At July 31, 2021, the Company had cash and current marketable securities of $412.0 million compared to cash and current marketable securities of $299.1 million at August 1, 2020. The increase in cash and current marketable securities was driven by cash generated through operations partially offset by capital expenditures. The Company repurchased 0.2 million shares during the quarter at an average cost of $44.21 per share and a total cost of $10.9 million.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “Our second quarter performance reflects the sustained success our business has experienced over the past several years. After driving solid growth as we reopened our stores in the second quarter of last year, our teams once again did a terrific job adapting to the current environment to fulfill robust demand for our distinct merchandise offering. Stronger than expected full priced selling helped offset a portion of expenses that were reintroduced following temporary cost savings last year during the height of the pandemic, resulting in second quarter profitability that meaningfully exceeded our projections. The third quarter has started off well driven by a more normalized back to school shopping season, and while operating conditions remain volatile, we believe the flexibility of our business model provides us with key competitive advantages that we can leverage to maintain our positive momentum heading into the holidays. With our strong balance sheet and differentiated strategies, we are well positioned to add to our global market share and return increased value to our shareholders over the long-term.”

Third Quarter To-Date
Total third quarter-to-date total sales for the 37 days ending September 6, 2021 increased 23.2%, compared with the same 37-day time period in the prior year ended September 7, 2020. Compared to the 37-day period ended September 9, 2019, total net sales increased 6.7%. Total comparable sales for the 37-day period ending September 6, 2021 were up 10.5% from the comparable period in the prior year, and increased 5.4% from the comparable period in 2019. Third quarter to date as of September 7, 2021, the Company has repurchased an additional 0.5 million shares of stock at an average price of $41.62 and a total cost of $20.5 million. This brings 2021 fiscal year-to-date share repurchases to 0.7 million shares at an average cost of $42.49 per share for a total cost of $31.4 million.

Outlook
Due to the continued fast-moving nature of this situation and the uncertainty of impacts on revenue and costs, the Company is not providing an 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 2021 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (844) 309-0606 (domestic) or (574) 990-9934 (international) followed by the conference identification code of 8085802.

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 28, 2021, we operated 727 stores, including 603 in the United States, 52 in Canada, 55 in Europe and 17 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 January 30, 2021 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  
    July 31, 2021   % of Sales     August 1, 2020   % of Sales  
Net sales   $ 268,666     100.0 %   $ 250,392   100.0 %  
Cost of goods sold     163,701     60.9 %     159,542   63.7 %  
Gross profit     104,965     39.1 %     90,850   36.3 %  
Selling, general and administrative expenses     73,011     27.2 %     57,738   23.1 %  
Operating profit     31,954     11.9 %     33,112   13.2 %  
Interest income, net     965     0.4 %     794   0.3 %  
Other (expense) income, net     (151 )   (0.1 %)     392   0.2 %  
Earnings before income taxes     32,768     12.2 %     34,298   13.7 %  
Provision for income taxes     8,770     3.3 %     8,906   3.6 %  
Net income   $ 23,998     8.9 %   $ 25,392   10.1 %  
Basic earnings per share   $ 0.95         $ 1.02      
Diluted earnings per share   $ 0.94         $ 1.01      
Weighted average shares used in computation of earnings per share:                  
Basic     25,274           24,837      
Diluted     25,651           25,128      
                       
    Six Months Ended  
    July 31, 2021   % of Sales     August 1, 2020   % of Sales  
Net sales   $ 547,735     100.0 %     388,164   100.0 %  
Cost of goods sold     339,602     62.0 %     273,578   70.5 %  
Gross profit     208,133     38.0 %     114,586   29.5 %  
Selling, general and administrative expenses     141,900     25.9 %     109,322   28.1 %  
Operating profit     66,233     12.1 %     5,264   1.4 %  
Interest income, net     1,940     0.4 %     1,868   0.5 %  
Other income, net     103     0.0 %     498   0.1 %  
Earnings before income taxes     68,276     12.5 %     7,630   2.0 %  
Provision for income taxes     17,893     3.3 %     3,339   0.9 %  
Net income   $ 50,383     9.20 %     4,291   1.1 %  
                       
Basic earnings per share   $ 2.00           0.17      
Diluted earnings per share   $ 1.96           0.17      
Weighted average shares used in computation of earnings per share:                      
Basic     25,221           24,938      
Diluted     25,675           25,277      
                       

ZUMIEZ INC. 
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

    July 31, 2021   January 30, 2021   August 1, 2020  
    (Unaudited)       (Unaudited)  
Assets              
Current assets              
Cash and cash equivalents   $ 74,207     $ 73,622   $ 133,905    
Marketable securities     337,772       301,920     165,227    
Receivables     24,834       16,558     24,811    
Inventories     149,368       134,354     126,701    
Prepaid expenses and other current assets     11,656       8,823     10,560    
Total current assets     597,837       535,277     461,204    
Fixed assets, net     92,921       98,352     106,151    
Operating lease right-of-use assets     246,592       267,152     277,322    
Goodwill     60,440       61,470     60,225    
Intangible assets, net     15,629       16,029     15,577    
Deferred tax assets, net     5,879       9,927     7,080    
Other long-term assets     11,444       10,157     9,337    
Total long-term assets     432,905       463,087     475,692    
Total assets   $ 1,030,742     $ 998,364   $ 936,896    
               
Liabilities and Shareholders’ Equity              
Current liabilities              
Trade accounts payable   $ 80,174     $ 69,751   $ 75,318    
Accrued payroll and payroll taxes     23,371       27,911     17,816    
Income taxes payable     7,494       6,317     5,534    
Operating lease liabilities     65,844       66,993     74,558    
Other liabilities     28,270       24,480     30,374    
Total current liabilities     205,153       195,452     203,600    
Long-term operating lease liabilities     223,043       246,123     259,412    
Other long-term liabilities      8,250       4,193     3,858    
Total long-term liabilities     231,293       250,316     263,270    
Total liabilities     436,446       445,768     466,870    
               
Shareholders’ equity              
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding     —       —     —    
Common stock, no par value, 50,000 shares authorized; 25,559 shares issued and outstanding at July 31, 2021, 25,599 shares issued and outstanding at January 30, 2021, and and 25,450 shares issued and outstanding at August 1, 2020     176,951       171,628     165,056    
Accumulated other comprehensive (loss) income     (2,144 )     939     (3,123 )  
Retained earnings     419,489       380,029     308,093    
Total shareholders’ equity     594,296       552,596     470,026    
Total liabilities and shareholders’ equity   $ 1,030,742     $ 998,364   $ 936,896    
                     

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

    Six Months Ended    
    July 31, 2021   August 1, 2020  
Cash flows from operating activities:            
Net income   $ 50,383     $ 4,291      
Adjustments to reconcile net income to net cash provided by operating activities:            
Depreciation, amortization and accretion     11,639       12,005      
Noncash lease expense     32,044       30,167      
Deferred taxes     4,260       (1,144 )    
Stock-based compensation expense     3,431       3,146      
Impairment of long-lived assets     2,079       2,128      
Other     1,064       (428 )    
Changes in operating assets and liabilities:            
Receivables     (5,353 )     (5,871 )    
Inventories     (15,408 )     9,926      
Prepaid expenses and other assets     (4,173 )     (937 )    
Trade accounts payable     10,178       27,323      
Accrued payroll and payroll taxes     (4,462 )     (6,134 )    
Income taxes payable     (304 )     (317 )    
Operating lease liabilities     (40,413 )     (20,868 )    
Other liabilities     7,165       8,718      
Net cash provided by operating activities     52,130       62,005      
Cash flows from investing activities:            
Additions to fixed assets     (5,418 )     (5,024 )    
Purchases of marketable securities and other investments     (112,888 )     (35,720 )    
Sales and maturities of marketable securities and other investments     75,234       71,387      
Net cash (used in) provided by investing activities     (43,072 )     30,643      
Cash flows from financing activities:            
Proceeds from issuance and exercise of stock-based awards     2,452       545      
Payments for tax withholdings on equity awards     (560 )     (93 )    
Common stock repurchased     (10,481 )     (13,417 )    
Net cash used in financing activities     (8,589 )     (12,965 )    
Effect of exchange rate changes on cash, cash equivalents, and restricted cash     139       2,146      
Net increase in cash, cash equivalents, and restricted cash     608       81,829      
Cash, cash equivalents, and restricted cash, beginning of period     80,690       58,991      
Cash, cash equivalents, and restricted cash, end of period   $ 81,298     $ 140,820      
Supplemental disclosure on cash flow information:            
Cash paid during the period for income taxes   $ 13,542     $ 4,630      
Accrual for purchases of fixed assets     686       381      
Accrual for repurchase of common stock     442       —      
             

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