Zumiez Inc. Announces Fiscal 2012 Third Quarter Results

Marketwired

LYNNWOOD, WA--(Marketwire - Nov 29, 2012) -  Zumiez Inc. (NASDAQ: ZUMZ) a leading specialty retailer of action sports related apparel, footwear, equipment and accessories, today reported results for the third quarter ended October 27, 2012.

Total net sales for the third quarter ended October 27, 2012 (13 weeks) increased 16.9% to $180.0 million from $154.0 million in the quarter ended October 29, 2011 (13 weeks). Comparable store sales for the third quarter of fiscal 2012 increased 3.7% on top of a comparable store sales increase of 6.0% in the third quarter of fiscal 2011. Net income in the third quarter of fiscal 2012 was $12.7 million, or $0.40 per diluted share, compared to net income of $14.1 million, or $0.45 per diluted share, in the third quarter of the prior fiscal year. The results for fiscal 2012 include $4.0 million, or approximately $0.10 per diluted share, of Blue Tomato acquisition related costs and operations, and $0.5 million, or approximately $0.01 per diluted share, of exit costs associated with the relocation of our corporate offices to Lynnwood, Washington.

Total net sales for the nine months (39 weeks) ended October 27, 2012 increased 19.6% to $445.0 million from $372.0 million reported for the nine months (39 weeks) ended October 29, 2011. Comparable store sales increased 8.0% in the first nine months of fiscal 2012 on top of 8.3% for the first nine months of 2011.

The Company reported net income of $19.3 million or $0.61 per diluted share in the first nine months of fiscal 2012 compared to net income for the first nine months of the prior fiscal year of $18.6 million or $0.60 per diluted share. Results for the first nine months of fiscal 2012 include approximately $6.8 million, or $0.18 per diluted share, of Blue Tomato acquisition related costs and operations, and approximately $2.1 million, or $0.04 per diluted share, of costs associated with the relocation the Company's ecommerce fulfillment center to Edwardsville, Kansas and corporate offices to Lynnwood, Washington from Everett, Washington.

At October 27, 2012, the Company had cash and current marketable securities of $98.3 million, compared to cash and current marketable securities of $137.1 million at October 29, 2011. The decrease in cash and current marketable securities is a result of the acquisition of Blue Tomato, which was funded by the Company's cash balance, offset by cash generated through operations.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "Our third quarter operating results reflect softer than expected sales trends in Europe and modest comparable store sales for the post back to school period. Comp trends remained challenging in November, particularly early in the month in part due to Hurricane Sandy, however we are encouraged by the more recent sales results, with positive comps over the Black Friday weekend. We believe the combination of our merchandise assortments and enhanced omni-channel capabilities, along with best in class customer service, have us well positioned to execute through the holiday season. Looking further ahead, we are confident that the key components of our long-term growth strategy will allow us to profitably expand our share of the global action sports lifestyle market and deliver increased value to our shareholders."

November 2012 Sales
Total net sales for the four-week period ended November 24, 2012 increased 14.3% to $53.6 million, compared to $46.9 million for the four-week period ended November 26, 2011. The Company's comparable store sales decreased 4.2% for the four-week period on top of a comparable store sales increase of 8.4% in the year ago period. 

Fiscal 2012 Fourth Quarter Outlook
The Company is introducing guidance for the three months ending February 2, 2013. Net sales are projected to be in the range of $218 to $221 million resulting in net income per diluted share of approximately $0.59 to $0.62. This guidance is based on an anticipated comparable store sales decrease in the range of 3% to 4% for the fourth quarter of fiscal 2012 and includes approximately $3.0 million, or $0.08 per diluted share, of costs associated with the acquisition of Blue Tomato. The Company has opened 56 new stores in fiscal 2012, including 10 in Canada and 3 in Germany.

A conference call will be held today to discuss third quarter fiscal 2012 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (617)-801-9715 followed by the conference identification code of 15611934. 

About Zumiez Inc.

Zumiez is a leading multi-channel specialty retailer of action sports related apparel, footwear, equipment and accessories, focusing on skateboarding, snowboarding, surfing, motocross and BMX for young men and women. As of November 24, 2012 we operated 502 stores, 474 in the United States, 20 in Canada, and 8 in Europe. In the United States and Canada we operate under the name Zumiez and in Europe we operate under the name Blue Tomato. Additionally, we operate ecommerce web sites under www.zumiez.com and www.blue-tomato.com.

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 quarterly report on Form 10-Q for the quarter ended July 28, 2012 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  
                         
    October 27, 2012     % of Sales     October 29, 2011     % of Sales  
Net sales   $ 180,023     100.0 %   $ 153,951     100.0 %
Cost of goods sold     112,948     62.7 %     94,030     61.1 %
Gross profit     67,075     37.3 %     59,921     38.9 %
                             
Selling, general and administrative expenses     45,674     25.4 %     37,104     24.1 %
Operating profit     21,401     11.9 %     22,817     14.8 %
                             
Interest income, net     235     0.1 %     440     0.3 %
Other expense, net     (185 )   (0.1 %)     (129 )   (0.1 %)
Earnings before income taxes     21,451     11.9 %     23,128     15.0 %
                             
Provision for income taxes     8,784     4.9 %     8,991     5.8 %
                             
Net income   $ 12,667     7.0 %   $ 14,137     9.2 %
                             
Basic earnings per share   $ 0.41           $ 0.46        
                             
Diluted earnings per share   $ 0.40           $ 0.45        
                             
Weighted average shares used in computation of earnings per share:                            
  Basic     30,957             30,599        
                             
  Diluted     31,416             31,122        
                             
                             
                             
ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share amounts)
 (Unaudited)
 
    Nine Months Ended  
                       
    October 27, 2012   % of Sales     October 29, 2011     % of Sales  
Net sales   $ 444,988   100.0 %   $ 372,015     100.0 %
Cost of goods sold     289,387   65.0 %     241,842     65.0 %
Gross profit     155,601   35.0 %     130,173     35.0 %
                           
Selling, general and administrative expenses     123,160   27.7 %     101,254     27.2 %
Operating profit     32,441   7.3 %     28,919     7.8 %
                           
Interest income, net     1,152   0.2 %     1,387     0.4 %
Other income (expense), net     443   0.1 %     (71 )   (0.1 %)
Earnings before income taxes     34,036   7.6 %     30,235     8.1 %
                           
Provision for income taxes     14,756   3.3 %     11,621     3.1 %
                           
Net income   $ 19,280   4.3 %   $ 18,614     5.0 %
                           
Basic earnings per share   $ 0.62         $ 0.61        
                           
Diluted earnings per share   $ 0.61         $ 0.60        
                           
Weighted average shares used in computation of earnings per share:                          
  Basic     30,884           30,487        
                             
  Diluted     31,425           31,093        
                             
                             
                             
ZUMIEZ INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
    October 27,   January 28,   October 29,
2012   2012   2011
Assets   (Unaudited)       (Unaudited)
Current assets                  
Cash and cash equivalents   $ 10,580   $ 14,779   $ 13,881
Marketable securities     87,751     158,019     123,177
Receivables     11,864     6,284     8,717
Inventories     109,786     65,037     93,839
Prepaid expenses and other     9,560     7,907     8,235
Deferred tax assets     4,881     1,477     2,599
    Total current assets     234,422     253,503     250,448
                   
Fixed assets, net     116,547     89,478     87,597
Goodwill     61,926     13,154     13,154
Intangible assets, net     19,828     -     -
Long-term other assets     5,413     6,022     6,606
    Total long-term assets     203,714     108,654     107,357
                   
    Total assets   $ 438,136   $ 362,157   $ 357,805
                   
Liabilities and Shareholders' Equity                  
Current liabilities                  
Trade accounts payable   $ 47,331   $ 21,743   $ 40,296
Accrued payroll and payroll taxes     9,996     9,062     8,489
Income taxes payable     7,354     5,835     6,224
Deferred rent and tenant allowances     4,797     4,230     4,225
Other liabilities     18,929     14,706     12,410
    Total current liabilities     88,407     55,576     71,644
                   
Long-term deferred rent and tenant allowances     37,190     32,321     32,506
Long-term deferred tax liabilities     5,407     -     -
Long-term debt and other liabilities     6,773     1,983     1,942
    Total long-term liabilities     49,370     34,304     34,448
                   
    Total liabilities     137,777     89,880     106,092
Commitments and contingencies                  
                   
Shareholders' equity                  
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding     -     -     -
Common stock, no par value, 50,000 shares authorized; 31,352 shares issued and outstanding at October 27, 2012, 31,170 shares issued and outstanding at January 28, 2012 and 31,129 shares issued and outstanding at October 29, 2011     106,509     99,412     97,647
Accumulated other comprehensive income     1,840     135     73
Retained earnings     192,010     172,730     153,993
    Total shareholders' equity     300,359     272,277     251,713
                   
    Total liabilities and shareholders' equity   $ 438,136   $ 362,157   $ 357,805
                       
                       
                       
ZUMIEZ INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 (Unaudited) 
 
    Nine Months Ended  
    October 27, 2012     October 29, 2011  
Cash flows from operating activities:                
Net income   $ 19,280     $ 18,614  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation, amortization and accretion     16,661       14,587  
Deferred taxes     (2,767 )     2,052  
Stock-based compensation expense     4,347       4,007  
Excess tax benefit from stock-based compensation     (2,215 )     (1,677 )
Lease termination costs     1,404       -  
Other     217       70  
  Changes in operating assets and liabilities:                
    Receivables     (5,007 )     (3,046 )
    Inventories     (36,504 )     (37,587 )
    Prepaid expenses and other     (1,506 )     (939 )
    Trade accounts payable     25,578       23,032  
    Accrued payroll and payroll taxes     183       912  
    Income taxes payable     2,425       3,115  
    Deferred rent and tenant allowances     5,622       5,468  
    Other liabilities     468       (3,430 )
Net cash provided by operating activities     28,186       25,178  
                 
Cash flows from investing activities:                
Additions to fixed assets     (34,028 )     (18,376 )
Acquisitions, net of cash acquired     (69,685 )     -  
Purchases of marketable securities and other investments     (95,268 )     (119,352 )
Sales and maturities of marketable securities and other investments     164,231       112,106  
Net cash used in investing activities     (34,750 )     (25,622 )
                 
Cash flows from financing activities:                
Payments on long-term debt     (183 )     -  
Proceeds from exercise of stock-based compensation, net of withholding tax payments     534       1,269  
Excess tax benefit from stock-based compensation     2,215       1,677  
Net cash provided by financing activities     2,566       2,946  
                 
Effect of exchange rate changes on cash and cash equivalents     (201 )     22  
                 
Net (decrease) increase in cash and cash equivalents     (4,199 )     2,524  
  Cash and cash equivalents, beginning of period     14,779       11,357  
  Cash and cash equivalents, end of period   $ 10,580     $ 13,881  
                   
  Supplemental disclosure on cash flow information:                
  Cash paid during the period for income taxes     15,077       6,438  
  Accrual for purchases of fixed assets     5,154       3,527  
                 
See accompanying notes to condensed consolidated financial statements  
                 
Contact:
Company
Brian Leith
Director of Finance &
Investor Relations
Zumiez Inc.
(425) 551-1500, ext. 1610

Investor
ICR
Brendon Frey
(203) 682-8200

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