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09/08/22
Zumiez Inc. Announces Fiscal 2022 Second Quarter Results

LYNNWOOD, Wash., Sept. 08, 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 second quarter ended July 30, 2022.

Net sales for the second quarter ended July 30, 2022 (13 weeks) decreased 18.1% to $220.0 million from $268.7 million in the second quarter ended July 31, 2021 (13 weeks). Compared to the second quarter ended August 3, 2019 (13 weeks), second quarter 2022 net sales decreased 3.7%. Net income in the second quarter of fiscal 2022 was $3.1 million, or $0.16 per diluted share, compared to net income of $24.0 million, or $0.94 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.

Total net sales for the six months (26 weeks) ended July 30, 2022 decreased 19.5% to $440.7 million from $547.7 million reported for the six months (26 weeks) ended July 31, 2021. Compared to the first six months (26 weeks) ended August 3, 2019, net sales decreased 0.2%. Net income for the first six months of 2022 was $2.7 million, or $0.14 per diluted share, compared to net income for the first six months of fiscal 2021 of $50.4 million, or $1.96 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 30, 2022, the Company had cash and current marketable securities of $166.2 million compared to cash and current marketable securities of $412.0 million at July 31, 2021. The decrease was driven by share repurchases and capital expenditures partially offset by cash generated through operations.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “As the second quarter progressed, we experienced continued pressure on our U.S. business as macroeconomic headwinds, led by inflation weighed on consumer discretionary spending. Our full-price selling model has fueled long cycles of sustained growth and increased profitability during Zumiez’s 44 year history with outsized gains during periods of high disposable income levels such as last year’s stimulus driven demand environment. We are disappointed that our recent performance fell short of expectations and we are making adjustments to our merchandise assortments and managing expenses in order to improve near-term results. While comparisons do begin to moderate in the back half of the year, based on recent trends we believe it is prudent to adopt a more cautious view on the remainder of 2022. We are currently planning our business and inventory levels accordingly while also focusing on what is important for the customer. Longer-term, we remain optimistic that our differentiated strategies and strong balance sheet have the Company well positioned to add to our global market share and return increased value to our shareholders.

Third Quarter To-Date
Total third quarter-to-date sales for the 37 days ending September 5, 2022 decreased 18.1%, compared with the same 37-day time period in the prior year ended September 6, 2021. Compared to the 37-day period ended September 9, 2019, total net sales decreased 12.6%. Total comparable sales for the 37-day period ending September 5, 2022 were down 19.7% from the comparable period in the prior year, and decreased 15.3% from the comparable period in 2019.

Fiscal 2022 Third Quarter Outlook
The Company is introducing guidance for the three months ending October 29, 2022. Net sales are projected to be in the range of $220 to $228 million. Consolidated operating margins are expected to between 0.5% and 2.5% resulting in earnings per diluted share of approximately $0.03 to $0.18. The Company currently intends to open approximately 35 new stores in fiscal 2022, including up to 16 stores in North America, 14 stores in Europe and 5 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 August 27, 2022, we operated 753 stores, including 612 in the United States, 52 in Canada, 70 in Europe and 19 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.

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

    Three Months Ended  
    July 30, 2022   % of Sales     July 31, 2021   % of Sales  
Net sales   $ 219,993   100.0 %   $ 268,666     100.0 %  
Cost of goods sold     144,929   65.9 %     163,701     60.9 %  
Gross profit     75,064   34.1 %     104,965     39.1 %  
Selling, general and administrative expenses     70,109   31.8 %     73,011     27.2 %  
Operating profit     4,955   2.3 %     31,954     11.9 %  
Interest income, net     358   0.1 %     965     0.4 %  
Other income (expense), net     233   0.1 %     (151 )   -0.1 %  
Earnings before income taxes     5,546   2.5 %     32,768     12.2 %  
Provision for income taxes     2,479   1.1 %     8,770     3.3 %  
Net income   $ 3,067   1.4 %   $ 23,998     8.9 %  
Basic earnings per share   $ 0.16       $ 0.95        
Diluted earnings per share   $ 0.16       $ 0.94        
Weighted average shares used in computation of earnings per share:                  
Basic     19,084         25,274        
Diluted     19,262         25,651        
                       
    Six Months Ended  
    July 30, 2022   % of Sales     July 31, 2021   % of Sales  
Net sales   $ 440,679   100.0 %   $ 547,735     100.0 %  
Cost of goods sold     293,242   66.5 %     339,602     62.0 %  
Gross profit     147,437   33.5 %     208,133     38.0 %  
                   
Selling, general and administrative expenses     141,985   32.3 %     141,900     25.9 %  
Operating profit     5,452   1.2 %     66,233     12.1 %  
                   
Interest income, net     850   0.2 %     1,940     0.4 %  
Other income, net     405   0.1 %     103     0.0 %  
Earnings before income taxes     6,707   1.5 %     68,276     12.5 %  
Provision for income taxes     4,037   0.9 %     17,893     3.3 %  
Net income   $ 2,670   0.6 %   $ 50,383     9.2 %  
Basic earnings per share   $ 0.14       $ 2.00        
Diluted earnings per share   $ 0.14       $ 1.96        
Weighted average shares used in computation of earnings per share:                      
Basic     19,308         25,221        
                       
Diluted     19,592         25,675        


ZUMIEZ INC. 
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

    July 30, 2022   January 29, 2022   July 31, 2021  
    (Unaudited)       (Unaudited)  
Assets              
Current assets              
Cash and cash equivalents   $ 59,144     $ 117,223     $ 74,207    
Marketable securities     107,036       177,260       337,772    
Receivables     24,201       14,427       24,834    
Inventories     151,071       128,728       149,368    
Prepaid expenses and other current assets     14,053       10,011       11,656    
Total current assets     355,505       447,649       597,837    
Fixed assets, net     91,196       91,451       92,921    
Operating lease right-of-use assets     228,243       230,187       246,592    
Goodwill     54,017       57,560       60,440    
Intangible assets, net     13,679       14,698       15,629    
Deferred tax assets, net     6,546       8,659       5,879    
Other long-term assets     11,425       11,808       11,444    
Total long-term assets     405,106       414,363       432,905    
Total assets   $ 760,611     $ 862,012     $ 1,030,742    
               
Liabilities and Shareholders’ Equity              
Current liabilities              
Trade accounts payable   $ 72,915     $ 55,638     $ 80,174    
Accrued payroll and payroll taxes     16,970       31,209       23,371    
Operating lease liabilities     67,411       63,577       65,844    
Other liabilities     23,951       34,015       35,764    
Total current liabilities     181,247       184,439       205,153    
Long-term operating lease liabilities     196,073       204,309       223,043    
Other long-term liabilities     4,995       4,946       8,250    
Total long-term liabilities     201,068       209,255       231,293    
Total liabilities     382,315       393,694       436,446    
               
Shareholders’ equity              
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding     —       —       —    
Common stock, no par value, 50,000 shares authorized; 19,474 shares issued and outstanding at July 30, 2022, 21,215 shares issued and outstanding at January 29, 2022, and 25,559 shares issued and outstanding at July 31, 2021     184,619       180,824       176,951    
Accumulated other comprehensive loss     (26,662 )     (13,463 )     (2,144 )  
Retained earnings     220,339       300,957       419,489    
Total shareholders’ equity     378,296       468,318       594,296    
Total liabilities and shareholders’ equity   $ 760,611     $ 862,012     $ 1,030,742    
                     


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

    Six Months Ended  
    July 30, 2022   July 31, 2021  
Cash flows from operating activities:          
Net income   $ 2,670     $ 50,383    
Adjustments to reconcile net income to net cash (used in) provided by operating activities:          
Depreciation, amortization and accretion     10,598       11,639    
Noncash lease expense     33,040       32,044    
Deferred taxes     3,035       4,260    
Stock-based compensation expense     3,513       3,431    
Impairment of long-lived assets     65       2,079    
Other     (115 )     1,064    
Changes in operating assets and liabilities:          
Receivables     (5,496 )     (5,353 )  
Inventories     (24,671 )     (15,408 )  
Prepaid expenses and other assets     (3,946 )     (4,173 )  
Trade accounts payable     17,084       10,178    
Accrued payroll and payroll taxes     (13,958 )     (4,462 )  
Income taxes payable     (4,128 )     (304 )  
Operating lease liabilities     (37,239 )     (40,413 )  
Other liabilities     (4,611 )     7,165    
Net cash (used in) provided by operating activities     (24,159 )     52,130    
Cash flows from investing activities:          
Additions to fixed assets     (10,253 )     (5,418 )  
Purchases of marketable securities and other investments     (1,914 )     (112,888 )  
Sales and maturities of marketable securities and other investments     67,890       75,234    
Net cash provided by (used in) investing activities     55,723       (43,072 )  
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     781       2,452    
Payments for tax withholdings on equity awards     (499 )     (560 )  
Common stock repurchased     (87,860 )     (10,481 )  
Net cash used in financing activities     (87,578 )     (8,589 )  
Effect of exchange rate changes on cash, cash equivalents, and restricted cash     (2,367 )     139    
Net (decrease) increase in cash, cash equivalents, and restricted cash     (58,381 )     608    
Cash, cash equivalents, and restricted cash, beginning of period     124,052       80,690    
Cash, cash equivalents, and restricted cash, end of period   $ 65,671     $ 81,298    
Supplemental disclosure on cash flow information:          
Cash paid during the period for income taxes   $ 5,027     $ 13,542    
Accrual for purchases of fixed assets     2,466       686    
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