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

 

91-1040022

(Commission File Number)

 

(IRS Employer Identification No.)

 

 

 

6300 Merrill Creek Parkway, Suite B, Everett, Washington

 

98203

(Address of Principal Executive Offices)

 

(Zip Code)

 

 

 

(425) 551-1500

(Registrant’s Telephone Number, Including Area Code)

 

 

 

Not Applicable

(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.

 

 

 

(c)

Exhibits

 

 

 

 

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.

 

 

ZUMIEZ INC.

 

(Registrant)

 

 

 

Date: August 17, 2005

By:

/s/ Richard M. Brooks

 

 

Richard M. Brooks

 

President and Chief Executive Officer

 

2


 

EXHIBIT 99.1

 

 

Company Contact:

 

Brenda Morris

 

Chief Financial Officer

 

Zumiez Inc.

 

(425) 551-1564

 

 

 

Investor Contact:

 

Integrated Corporate Relations

 

Chad Jacobs/David Griffith

 

(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 today’s 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 company’s 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 management’s 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)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

July 30, 2005

 

July 31, 2004

 

July 30, 2005

 

July 31, 2004

 

Net sales

 

$

39,407

 

$

30,615

 

$

72,776

 

$

55,444

 

Cost of goods sold

 

26,636

 

21,519

 

50,162

 

40,222

 

Gross margin

 

12,771

 

9,096

 

22,614

 

15,222

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

11,499

 

8,573

 

21,324

 

15,629

 

Operating profit (loss)

 

1,272

 

523

 

1,290

 

(407

)

 

 

 

 

 

 

 

 

 

 

Interest income (expense), net

 

78

 

(110

)

48

 

(156

)

Other income

 

1

 

2

 

1

 

2

 

Earnings (loss) before income taxes

 

1,351

 

415

 

1,339

 

(561

)

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes

 

503

 

176

 

531

 

(122

)

Net income (loss)

 

$

848

 

$

239

 

$

808

 

$

(439

)

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share

 

$

0.06

 

$

0.02

 

$

0.07

 

$

(0.04

)

 

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per share

 

$

0.06

 

$

0.02

 

$

0.06

 

$

(0.04

)

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, Basic

 

13,286,892

 

11,305,260

 

12,296,076

 

11,305,260

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, Diluted

 

14,932,635

 

12,785,161

 

14,046,646

 

12,794,916

 

 



 

ZUMIEZ INC.

CONDENSED BALANCE SHEETS

(in thousands, except share amounts)

 

 

 

July 30,
2005

 

January 29,
2005

 

July 31,
2004

 

 

 

(Unaudited)

 

(Audited)

 

(Unaudited)

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

17,844

 

$

1,026

 

$

1,745

 

Receivables

 

4,863

 

1,911

 

1,420

 

Inventory

 

42,226

 

23,230

 

33,158

 

Prepaid expenses and other

 

2,820

 

1,166

 

495

 

Deferred tax assets

 

1,059

 

859

 

858

 

Total current assets

 

68,812

 

28,192

 

37,676

 

 

 

 

 

 

 

 

 

Leasehold improvements and equipment, net

 

30,854

 

26,619

 

22,630

 

Total assets

 

$

99,666

 

$

54,811

 

$

60,306

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Trade accounts payable

 

$

25,168

 

$

11,240

 

$

17,140

 

Revolving credit facility

 

 

 

12,629

 

Book overdraft

 

 

429

 

3,296

 

Accrued payroll and payroll taxes

 

2,481

 

2,561

 

2,072

 

Income taxes payable

 

 

2,611

 

(851

)

Current portion of deferred rent and tenant allowances

 

960

 

1,045

 

816

 

Other accrued liabilities

 

4,828

 

5,550

 

2,529

 

Total current liabilities

 

33,437

 

23,436

 

37,631

 

 

 

 

 

 

 

 

 

Long-term deferred rent and tenant allowances, less current portion

 

5,794

 

4,065

 

3,266

 

Deferred tax liabilities

 

1,182

 

1,511

 

1,411

 

Total long term liabilities

 

6,976

 

5,576

 

4,677

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

Preferred stock, no par value, 20,000,000 shares authorized; none issued and outstanding

 

 

 

 

 

 

 

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

 

32,460

 

44

 

44

 

Employee stock options

 

177

 

95

 

 

Retained earnings

 

26,616

 

25,808

 

18,102

 

Receivable from parent

 

 

(148

)

(148

)

Total shareholders’ equity

 

59,253

 

25,799

 

17,998

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

99,666

 

$

54,811

 

$

60,306

 

 



 

ZUMIEZ INC.

CONDENSED CASH FLOWS

(in thousands)

(Unaudited)

 

 

 

For the Six Months Ended

 

 

 

July 30, 2005

 

July 31, 2004

 

Cash flows from operating activities

 

 

 

 

 

Net income (loss)

 

$

808

 

$

(439

)

Adjustments to reconcile net loss to net cash provided by operating activities

 

 

 

 

 

Depreciation

 

3,466

 

2,569

 

Deferred tax expense

 

(528

)

(116

)

Stock compensation expense

 

82

 

 

Loss on disposal of assets

 

19

 

3

 

Changes in operating assets and liabilities

 

 

 

 

 

Receivables

 

(2,952

)

(381

)

Inventory

 

(13,581

)

(10,056

)

Prepaid expenses

 

(1,654

)

(99

)

Trade accounts payable

 

8,513

 

5,567

 

Accrued payroll and payroll taxes

 

(80

)

464

 

Income taxes payable

 

(2,611

)

(2,697

)

Other accrued liabilities

 

(575

)

376

 

Deferred rent

 

306

 

176

 

Net cash used in operating activities

 

$

(8,787

)

$

(4,633

)

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Additions to leasehold improvements and equipment

 

$

(6,382

)

$

(4,817

)

Net cash used in investing activities

 

$

(6,382

)

$

(4,817

)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Change in book overdraft

 

$

(429

)

$

(1,168

)

Borrowings on revolving credit facility

 

16,450

 

24,373

 

Payments on revolving credit facility

 

(16,450

)

(12,044

)

Proceeds from sale of stock

 

32,416

 

 

Proceeds from issuance of long-term debt

 

 

 

Principal payments on long-term debt

 

 

(544

)

Net cash provided by financing activities

 

$

31,987

 

$

10,617

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

$

16,818

 

$

1,167

 

Cash and cash equivalents, Beginning of period

 

1,026

 

578

 

Cash and cash equivalents, End of period

 

$

17,844

 

$

1,745

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

 

 

Cash paid during the period for interest

 

$

59

 

$

103

 

Cash paid during the period for income taxes

 

2,605

 

2,752