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12/01/22
Zumiez Inc. Announces Fiscal 2022 Third Quarter Results

LYNNWOOD, Wash., Dec. 01, 2022 (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 third quarter ended October 29, 2022.

Net sales for the third quarter ended October 29, 2022 (13 weeks) decreased 17.9% to $237.6 million from $289.5 million in the third quarter ended October 30, 2021 (13 weeks). Net income in the third quarter of fiscal 2022 was $6.9 million, or $0.36 per diluted share, compared to net income of $30.7 million, or $1.25 per diluted share, in the third quarter of the prior fiscal year.

Total net sales for the nine months (39 weeks) ended October 29, 2022 decreased 19.0% to $678.3 million from $837.2 million reported for the nine months (39 weeks) ended October 30, 2021. Net income for the first nine months of 2022 was $9.6 million, or $0.49 per diluted share, compared to net income for the first nine months of fiscal 2021 of $81.1 million, or $3.20 per diluted share.

At October 29, 2022, the Company had cash and current marketable securities of $141.1 million compared to cash and current marketable securities of $338.1 million at October 30, 2021. The decrease was driven by share repurchases of $183.1 million and capital expenditures of $24.7 million over this time period, partially offset by cash generated through operations.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “We are managing through a challenging operating environment and our recent performance reflects the emergence of multiple headwinds since the year ago period led by a pullback in consumer discretionary spending, inflation driven cost and expense pressures, an increasingly promotional marketplace, a war in Eastern Europe and the anniversary of some strong trends that drove our business during the pandemic. At the same time, our growth in Europe and Australia is being offset on a reported basis due to unfavorable movements in foreign currency. While we are disappointed with the change in our results year-over-year, I am encouraged with how our teams are managing the business in light of the current challenges. Like we have done during similar economic times, we are prudently balancing the protection of near-term profitability while investing in our people and the key projects that will continue to deliver our distinct merchandise and world-class customer service that has been the foundation of Zumiez’ long-term success.”

Fourth Quarter To-Date
Total fourth quarter-to-date total sales for the 31 days ending November 29, 2022 decreased 23.9%, compared with the same 31-day time period in the prior year ended November 30, 2021. Total comparable sales for the 31-day period ending November 29, 2022 decreased 24.8% from the comparable period in the prior year.

Fiscal 2022 Fourth Quarter Outlook
The Company is introducing guidance for the three months ending January 28, 2023. Net sales are projected to be in the range of $258 to $265 million. Consolidated operating margins are expected to between 3.4% and 4.7% resulting in earnings per diluted share of approximately $0.36 to $0.51. The Company currently intends to open approximately 33 new stores in fiscal 2022, including up to 16 stores in North America, 13 stores in Europe and 4 stores in Australia.

Conference call Information
To access the conference call, please pre-register using this link (registration link). Registrants will receive confirmation with dial-in details. The conference call will also be available to interested parties through a live webcast at https://ir.zumiez.com. To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time. A replay of the webcast will also be available for a limited time at https://ir.zumiez.com.

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 26, 2022, we operated 763 stores, including 615 in the United States, 52 in Canada, 75 in Europe and 21 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 29, 2022 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 OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

  Three Months Ended
  October 29, 2022   % of Sales     October 30, 2021   % of Sales
Net sales $ 237,591     100.0 %   $ 289,455   100.0 %
Cost of goods sold   155,608     65.5 %     174,791   60.4 %
Gross profit   81,983     34.5 %     114,664   39.6 %
Selling, general and administrative expenses   71,544     30.1 %     74,822   25.8 %
Operating profit   10,439     4.4 %     39,842   13.8 %
Interest income, net   428     0.1 %     893   0.3 %
Other (expense) income, net   (1,256 )   -0.5 %     468   0.1 %
Earnings before income taxes   9,611     4.0 %     41,203   14.2 %
Provision for income taxes   2,679     1.1 %     10,501   3.6 %
Net income $ 6,932     2.9 %   $ 30,702   10.6 %
Basic earnings per share $ 0.36         $ 1.26    
Diluted earnings per share $ 0.36         $ 1.25    
Weighted average shares used in computation of earnings per share:              
Basic   19,101           24,284    
Diluted   19,248           24,629    
                   
  Nine Months Ended
  October 29, 2022   % of Sales     October 30, 2021   % of Sales
Net sales $ 678,270     100.0 %   $ 837,190   100.0 %
Cost of goods sold   448,861     66.2 %     514,393   61.4 %
Gross profit   229,409     33.8 %     322,797   38.6 %
               
Selling, general and administrative expenses   213,519     31.5 %     216,722   25.9 %
Operating profit   15,890     2.3 %     106,075   12.7 %
               
Interest income, net   1,279     0.2 %     2,833   0.3 %
Other (expense) income, net   (850 )   -0.1 %     571   0.1 %
Earnings before income taxes   16,319     2.4 %     109,479   13.1 %
Provision for income taxes   6,717     1.0 %     28,394   3.4 %
Net income $ 9,602     1.4 %   $ 81,085   9.7 %
Basic earnings per share $ 0.50         $ 3.26    
Diluted earnings per share $ 0.49         $ 3.20    
Weighted average shares used in computation of earnings per share:                  
Basic   19,239           24,905    
Diluted   19,490           25,325    
                     

ZUMIEZ INC. 
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

  October 29, 2022   January 29, 2022   October 30, 2021
  (Unaudited)       (Unaudited)
Assets          
Current assets          
Cash and cash equivalents $ 49,336     $ 117,223     $ 75,545  
Marketable securities   91,776       177,260       262,541  
Receivables   19,824       14,427       22,107  
Inventories   177,205       128,728       175,108  
Prepaid expenses and other current assets   15,166       10,011       11,633  
Total current assets   353,307       447,649       546,934  
Fixed assets, net   91,590       91,451       91,956  
Operating lease right-of-use assets   220,420       230,187       244,777  
Goodwill   52,899       57,560       59,525  
Intangible assets, net   13,199       14,698       15,409  
Deferred tax assets, net   6,794       8,659       7,784  
Other long-term assets   11,598       11,808       11,804  
Total long-term assets   396,500       414,363       431,255  
Total assets $ 749,807     $ 862,012     $ 978,189  
           
Liabilities and Shareholders’ Equity          
Current liabilities          
Trade accounts payable $ 69,076     $ 55,638     $ 84,609  
Accrued payroll and payroll taxes   20,557       31,209       27,436  
Operating lease liabilities   65,236       63,577       64,389  
Other liabilities   20,677       34,015       41,207  
Total current liabilities   175,546       184,439       217,641  
Long-term operating lease liabilities   188,818       204,309       220,524  
Other long-term liabilities    4,773       4,946       8,282  
Total long-term liabilities   193,591       209,255       228,806  
Total liabilities   369,137       393,694       446,447  
           
Shareholders’ equity          
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding   —       —       —  
Common stock, no par value, 50,000 shares authorized; 19,490 shares issued and outstanding at October 29, 2022, 21,215 shares issued and outstanding at January 29, 2022, and 23,319 shares issued and outstanding at October 30, 2021   186,684       180,824       179,049  
Accumulated other comprehensive loss   (33,285 )     (13,463 )     (5,867 )
Retained earnings   227,271       300,957       358,560  
Total shareholders’ equity   380,670       468,318       531,742  
Total liabilities and shareholders’ equity $ 749,807     $ 862,012     $ 978,189  
                 

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

  Nine Months Ended
  October 29, 2022   October 30, 2021
Cash flows from operating activities:      
Net income $ 9,602     $ 81,085  
Adjustments to reconcile net income to net cash (used in) provided by operating activities:      
Depreciation, amortization and accretion   15,802       17,318  
Noncash lease expense   50,074       48,131  
Deferred taxes   3,441       2,772  
Stock-based compensation expense   5,249       5,118  
Impairment of long-lived assets   372       2,079  
Other   1,331       1,204  
Changes in operating assets and liabilities:      
Receivables   (2,317 )     (3,681 )
Inventories   (52,020 )     (41,702 )
Prepaid expenses and other assets   (5,365 )     (4,275 )
Trade accounts payable   14,570       14,276  
Accrued payroll and payroll taxes   (10,191 )     (351 )
Income taxes payable   (1,790 )     4,253  
Operating lease liabilities   (56,796 )     (59,099 )
Other liabilities   (8,374 )     4,808  
Net cash (used in) provided by operating activities   (36,412 )     71,936  
Cash flows from investing activities:      
Additions to fixed assets   (17,720 )     (8,808 )
Purchases of marketable securities and other investments   (1,914 )     (151,089 )
Sales and maturities of marketable securities and other investments   80,051       186,116  
Net cash provided by investing activities   60,417       26,219  
Cash flows from financing activities:      
Proceeds from revolving credit facilities   2,430       —  
Payments on revolving credit facilities   (2,430 )     —  
Proceeds from issuance and exercise of stock-based awards   1,110       2,863  
Payments for tax withholdings on equity awards   (499 )     (560 )
Common stock repurchased   (87,860 )     (98,520 )
Net cash used in financing activities   (87,249 )     (96,217 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash   (4,978 )     (66 )
Net (decrease) increase in cash, cash equivalents, and restricted cash   (68,222 )     1,872  
Cash, cash equivalents, and restricted cash, beginning of period   124,052       80,690  
Cash, cash equivalents, and restricted cash, end of period $ 55,830     $ 82,562  
Supplemental disclosure on cash flow information:      
Cash paid during the period for income taxes $ 5,166     $ 20,507  
Accrual for purchases of fixed assets   1,802       1,851  
Accrual for repurchase of common stock   -       4,034  
       




Zumiez Inc