UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 17, 2005
ZUMIEZ INC.
(Exact Name of Registrant as Specified in Its Charter)
Washington
(State or Other Jurisdiction of Incorporation)
000-51300 |
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91-1040022 |
(Commission File Number) |
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(IRS Employer Identification No.) |
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6300 Merrill Creek Parkway, Suite B, Everett, Washington |
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98203 |
(Address of Principal Executive Offices) |
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(Zip Code) |
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(425) 551-1500 |
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(Registrants Telephone Number, Including Area Code) |
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Not Applicable |
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(Former Name or Former Address, if Changed Since Last Report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. |
Results of Operations and Financial Condition. |
On August 17, 2005, the Company issued a press release (the Press Release) reporting its financial results for the second quarter ended July 30, 2005, a copy of which is attached hereto as Exhibit 99.1 and the contents of which are incorporated herein by this reference.
In accordance with General Instruction B.2. of Form 8-K, the information contained in the Press Release shall not be deemed Filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. |
Financial Statements and Exhibits. |
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(c) |
Exhibits |
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99.1. |
Press Release of Zumiez Inc., dated August 17, 2005. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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ZUMIEZ INC. |
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(Registrant) |
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Date: August 17, 2005 |
By: |
/s/ Richard M. Brooks |
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Richard M. Brooks |
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President and Chief Executive Officer |
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EXHIBIT 99.1
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Company Contact: |
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Brenda Morris |
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Chief Financial Officer |
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Zumiez Inc. |
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(425) 551-1564 |
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Investor Contact: |
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Integrated Corporate Relations |
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Chad Jacobs/David Griffith |
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(203) 682-8200 |
ZUMIEZ INC. ANNOUNCES RECORD FISCAL 2005
SECOND QUARTER RESULTS
Q2-05 Net Sales Increased 28.7% to $39.4 Million;
Comparable Store Sales Increased 11.3% in Second Quarter and 11.6% in the First Half;
Q2-05 Diluted EPS Increased 200% to $0.06;
Company Outlines FY-05 EPS Guidance Range of $0.80 to $0.82
Everett, WA August 17, 2005 Zumiez Inc. (NASDAQ: ZUMZ) today reported record results for the second quarter and six months ended July 30, 2005.
Total net sales for the second quarter (13 weeks) ended July 30, 2005 increased by 28.7% to $39.4 million from $30.6 million reported in the second quarter of the prior year. The company posted net income for the quarter of $848,000 or $0.06 per diluted share versus net income of $239,000 or $0.02 per diluted share in the second quarter of the prior year. Comparable store sales increased 11.3% for the second quarter of fiscal 2005 compared to 6.8% in the second quarter of fiscal 2004.
Total net sales for the first six months (26 week period) of fiscal 2005 increased by 31.3% to $72.8 million from $55.4 million reported in the first six months of the prior year. The company posted net income of $808,000 or $0.06 per diluted share in the first six months of 2005 versus a net loss of $(439,000) or $(0.04) per diluted share in the prior year. Comparable store sales increased 11.6% for the first six months of fiscal 2005 compared to 7.5% for the first six months of fiscal 2004.
Rick Brooks, President and Chief Executive Officer of Zumiez Inc., stated, Our results for the second quarter, which exceeded expectations, were driven by new store openings, double digit
comparable store sales gains and continued operating margin expansion. We were pleased with the strong performance of our new stores, further highlighting the expansion opportunities that exist for Zumiez on a national basis.
Mr. Brooks continued, Our store sales team, store management teams, and product teams all made contributions to our performance. Our entire organization continues to focus on creating a unique experience and we believe this is resonating with our customers.
For fiscal 2005, the company plans to open 35 new stores. In the first two quarters of fiscal 2005, Zumiez opened 11 new stores and remains on plan for its store openings for the remainder of the year.
Mr. Brooks concluded, We believe that Zumiez is a leading lifestyle retailer with a compelling mix of branded merchandise, a strong hard goods assortment and a controlled chaos environment that appeals to teenagers and young adults. Additionally, we feel that our unique culture allows us to react quickly to product and fashion cycles to meet the needs of todays youthful minded consumer. We continue to believe that we have considerable growth prospects and we are dedicated to fully capitalizing on the many opportunities that lie ahead.
2005 Outlook
The company stated that it expects diluted earnings per share to range from $0.80 to $0.82 in fiscal 2005 and that weighted average diluted shares for the remainder of the year are expected to be approximately 15,050,000 shares. The company also stated that it believes that its projected long-term earnings growth rate of 30% continues to be very achievable.
In putting forth this outlook, the company reminds investors of the complexity of accurately assessing future growth given the difficulty in predicting fashion trends and consumer preferences, boardsports popularity and participation rates, general economic conditions and the impact of other business variables.
A conference call will be held today to discuss second quarter results and will be web cast at 5:00 p.m. ET on http://ir.zumiez.com.
About Zumiez Inc.
Zumiez is a leading specialty retailer of action sports related apparel, footwear, equipment and accessories. Our stores cater to young men and women between ages 12-24, focusing on skateboarding, surfing, snowboarding, motocross and BMX. We currently operate 150 stores, which are primarily located in shopping malls and our web site address is www.zumiez.com.
Safe Harbor Statement
Certain statements in this press release and oral statements made from time to time by representatives of the company 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 companys future financial performance, 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 managements current expectations but they involve a number of risks and uncertainties. Our 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, risks related to our ability to open and operate new stores successfully, our ability to anticipate, identify and respond to fashion trends and customer preferences, our dependence on mall traffic for our sales, seasonal fluctuations in our business, unseasonable weather conditions, competition, including promotional and pricing competition, changes in the availability or cost of merchandise, labor or delivery services, and other risks detailed in our filings with the Securities and Exchange Commission, including the Risk Factors contained in our final prospectus relating to our initial public offering filed pursuant to Rule 424(b) under the Securities Act of 1933, 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 made herein speak only as of the date of this press release and the company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
ZUMIEZ INC.
CONDENSED STATEMENT OF INCOME
(in thousands, except share and per share data)
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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July 30, 2005 |
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July 31, 2004 |
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July 30, 2005 |
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July 31, 2004 |
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Net sales |
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$ |
39,407 |
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$ |
30,615 |
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$ |
72,776 |
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$ |
55,444 |
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Cost of goods sold |
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26,636 |
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21,519 |
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50,162 |
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40,222 |
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Gross margin |
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12,771 |
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9,096 |
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22,614 |
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15,222 |
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Selling, general and administrative expenses |
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11,499 |
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8,573 |
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21,324 |
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15,629 |
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Operating profit (loss) |
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1,272 |
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523 |
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1,290 |
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(407 |
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Interest income (expense), net |
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78 |
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(110 |
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48 |
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(156 |
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Other income |
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1 |
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2 |
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1 |
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2 |
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Earnings (loss) before income taxes |
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1,351 |
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415 |
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1,339 |
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(561 |
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Provision (benefit) for income taxes |
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503 |
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176 |
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531 |
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(122 |
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Net income (loss) |
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$ |
848 |
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$ |
239 |
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$ |
808 |
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$ |
(439 |
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Basic net income (loss) per share |
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$ |
0.06 |
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$ |
0.02 |
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$ |
0.07 |
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$ |
(0.04 |
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Diluted net income (loss) per share |
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$ |
0.06 |
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$ |
0.02 |
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$ |
0.06 |
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$ |
(0.04 |
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Weighted average shares outstanding, Basic |
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13,286,892 |
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11,305,260 |
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12,296,076 |
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11,305,260 |
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Weighted average shares outstanding, Diluted |
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14,932,635 |
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12,785,161 |
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14,046,646 |
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12,794,916 |
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ZUMIEZ INC.
CONDENSED BALANCE SHEETS
(in thousands, except share amounts)
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July 30, |
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January 29, |
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July 31, |
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(Unaudited) |
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(Audited) |
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(Unaudited) |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
17,844 |
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$ |
1,026 |
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$ |
1,745 |
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Receivables |
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4,863 |
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1,911 |
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1,420 |
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Inventory |
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42,226 |
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23,230 |
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33,158 |
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Prepaid expenses and other |
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2,820 |
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1,166 |
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495 |
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Deferred tax assets |
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1,059 |
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859 |
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858 |
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Total current assets |
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68,812 |
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28,192 |
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37,676 |
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Leasehold improvements and equipment, net |
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30,854 |
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26,619 |
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22,630 |
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Total assets |
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$ |
99,666 |
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$ |
54,811 |
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$ |
60,306 |
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Liabilities and Shareholders Equity |
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Current liabilities |
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Trade accounts payable |
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$ |
25,168 |
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$ |
11,240 |
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$ |
17,140 |
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Revolving credit facility |
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12,629 |
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Book overdraft |
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429 |
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3,296 |
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Accrued payroll and payroll taxes |
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2,481 |
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2,561 |
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2,072 |
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Income taxes payable |
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2,611 |
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(851 |
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Current portion of deferred rent and tenant allowances |
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960 |
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1,045 |
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816 |
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Other accrued liabilities |
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4,828 |
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5,550 |
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2,529 |
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Total current liabilities |
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33,437 |
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23,436 |
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37,631 |
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Long-term deferred rent and tenant allowances, less current portion |
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5,794 |
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4,065 |
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3,266 |
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Deferred tax liabilities |
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1,182 |
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1,511 |
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1,411 |
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Total long term liabilities |
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6,976 |
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5,576 |
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4,677 |
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Commitments and contingencies (Note 4) |
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Shareholders equity |
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Preferred stock, no par value, 20,000,000 shares authorized; none issued and outstanding |
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Common stock, no par value, 50,000,000 shares authorized; 13,457,330 shares issued and outstanding at July 30, 2005 and 11,305,261 shares issued and outstanding at January 29, 2005 and July 31, 2004 |
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32,460 |
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44 |
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44 |
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Employee stock options |
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177 |
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95 |
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Retained earnings |
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26,616 |
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25,808 |
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18,102 |
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Receivable from parent |
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(148 |
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(148 |
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Total shareholders equity |
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59,253 |
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25,799 |
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17,998 |
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Total liabilities and shareholders equity |
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$ |
99,666 |
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$ |
54,811 |
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$ |
60,306 |
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ZUMIEZ INC.
CONDENSED CASH FLOWS
(in thousands)
(Unaudited)
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For the Six Months Ended |
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July 30, 2005 |
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July 31, 2004 |
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Cash flows from operating activities |
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Net income (loss) |
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$ |
808 |
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$ |
(439 |
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Adjustments to reconcile net loss to net cash provided by operating activities |
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Depreciation |
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3,466 |
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2,569 |
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Deferred tax expense |
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(528 |
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(116 |
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Stock compensation expense |
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82 |
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Loss on disposal of assets |
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19 |
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3 |
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Changes in operating assets and liabilities |
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Receivables |
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(2,952 |
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(381 |
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Inventory |
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(13,581 |
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(10,056 |
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Prepaid expenses |
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(1,654 |
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(99 |
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Trade accounts payable |
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8,513 |
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5,567 |
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Accrued payroll and payroll taxes |
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(80 |
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464 |
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Income taxes payable |
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(2,611 |
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(2,697 |
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Other accrued liabilities |
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(575 |
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376 |
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Deferred rent |
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306 |
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176 |
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Net cash used in operating activities |
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$ |
(8,787 |
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$ |
(4,633 |
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Cash flows from investing activities |
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Additions to leasehold improvements and equipment |
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$ |
(6,382 |
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$ |
(4,817 |
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Net cash used in investing activities |
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$ |
(6,382 |
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$ |
(4,817 |
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Cash flows from financing activities |
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Change in book overdraft |
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$ |
(429 |
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$ |
(1,168 |
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Borrowings on revolving credit facility |
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16,450 |
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24,373 |
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Payments on revolving credit facility |
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(16,450 |
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(12,044 |
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Proceeds from sale of stock |
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32,416 |
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Proceeds from issuance of long-term debt |
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Principal payments on long-term debt |
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(544 |
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Net cash provided by financing activities |
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$ |
31,987 |
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$ |
10,617 |
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Net increase in cash and cash equivalents |
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$ |
16,818 |
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$ |
1,167 |
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Cash and cash equivalents, Beginning of period |
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1,026 |
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578 |
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Cash and cash equivalents, End of period |
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$ |
17,844 |
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$ |
1,745 |
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Supplemental disclosure of cash flow information |
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Cash paid during the period for interest |
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$ |
59 |
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$ |
103 |
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Cash paid during the period for income taxes |
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2,605 |
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2,752 |
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