News Release

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