Zumiez Inc. Announces Record Fiscal 2012 Fourth Quarter and Full Year Results

Fourth Quarter 2012 Diluted EPS Increased 23.3% to a Record $0.74; Fiscal 2012 Full Year Diluted EPS Increased 12.5% to $1.35

Marketwired

LYNNWOOD, WA--(Marketwire - Mar 14, 2013) - Zumiez Inc. (NASDAQ: ZUMZ) a leading multi-channel specialty retailer of action sports related apparel, footwear, hardgoods and accessories, today reported record results for the fourth quarter and fiscal year ended February 2, 2013.

Fourth Quarter Results

Total net sales for the fourth quarter ended February 2, 2013 (14 weeks) increased 22.1% to $224.4 million from $183.9 million in the quarter ended January 28, 2012 (13 weeks). Comparable store sales for the 14-week period ended February 2, 2013 decreased 1.0% compared to the same 14-week period ended February 4, 2012. Net income in the fourth quarter of fiscal 2012 increased 22.1% to $22.9 million, or $0.74 per diluted share from net income of $18.7 million, or $0.60 per diluted share in the fourth quarter of the prior fiscal year. The results for fiscal 2012 include $0.9 million, or approximately $0.02 per diluted share, of intangible amortization and inventory step-up costs associated with the acquisition of Blue Tomato, and a net benefit of $0.4 million, or approximately $0.01 per diluted share, of contingent earn-out associated with the Blue Tomato transaction.

Full Year Results

Total net sales for fiscal 2012 (53 weeks) increased 20.4% to $669.4 million from $555.9 million in fiscal 2011 (52 weeks). Comparable store sales for the 53-week period ended February 2, 2013 increased 5.0% compared to the same 53-week period ended February 4, 2012. Net income in fiscal 2012 increased 12.9% to $42.2 million, or $1.35 per diluted share compared to net income in the prior fiscal year of $37.4 million, or $1.20 per diluted share. Results for fiscal 2012 include approximately $7.3 million, or $0.19 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.

Share Repurchase Program

During the fourth quarter 2012, the Company repurchased approximately 1.3 million shares of its common stock, at an average cost per share of $20.43, for a total of $25.8 million. As of February 2, 2012, the $22 million repurchase program announced in November 2012 had been completed and the Company had $16 million authorized repurchase funds remaining under its $20 million stock repurchase program announced in December 2012. 

Cash and Current Marketable Securities

At February 2, 2013, the Company had cash and current marketable securities of $103.2 million, compared to cash and current marketable securities of $172.8 million at January 28, 2012. 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 and current marketable securities balance, as well as capital expenditures and stock repurchases, offset by cash generated through operations.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "We are pleased with the quality of our fourth quarter results. Our ability to deliver better than expected sales and earnings underscores the strength of our business model which is rooted in a diverse branded merchandising strategy, highly differentiated shopping experience, and unique culture. It's these principles that have allowed us to consistently drive Zumiez forward. With the consumers use of technology evolving and reshaping the retail landscape we are confident that the investments we continue to make in our people, systems and processes will allow us to build on our position as the global leader in action sports retail for many years to come."

Fiscal 2013 First Quarter Outlook

The Company is introducing guidance for the three months ending May 4, 2013. Net sales are projected to be in the range of $141 to $144 million resulting in net income per diluted share of approximately $0.04 to $0.07, which includes an estimated $1.6 million, or approximately $0.04 per diluted share, for charges associated with the acquisition of Blue Tomato. This guidance is based on an anticipated comparable store sales decrease in the mid single digit range for the first quarter of fiscal 2013. 

The Company currently intends to open approximately 60 new stores in fiscal 2013, including up to 10 stores in Canada and 6 stores in Europe.

A conference call will be held today to discuss fourth quarter and fiscal 2012 year-end results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (617)-213-8841 followed by the conference identification code of 85861294. 

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 March 2, 2013 we operated 501 stores, 472 in the United States, 21 in Canada, and 8 in Europe. We operate under the name Zumiez and Blue Tomato. Additionally, we operate ecommerce web sites at 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 October 27, 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.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
       
    Three Months Ended  
                         
    February 2, 2013     % of Sales     January 28, 2012     % of Sales  
Net sales   $ 224,405     100.0 %   $ 183,859     100.0 %
Cost of goods sold     138,722     61.8 %     112,356     61.1 %
Gross profit     85,683     38.2 %     71,503     38.9 %
                             
Selling, general and administrative expenses     49,582     22.1 %     40,190     21.9 %
Operating profit     36,101     16.1 %     31,313     17.0 %
                             
Interest income, net     258     0.1 %     449     0.2 %
Other expense, net     (116 )   0.0 %     (308 )   (0.1 %)
Earnings before income taxes     36,243     16.2 %     31,454     17.1 %
                             
Provision for income taxes     13,359     6.0 %     12,717     6.9 %
                             
Net income   $ 22,884     10.2 %   $ 18,737     10.2 %
                             
Basic earnings per share   $ 0.75           $ 0.61        
                             
Diluted earnings per share   $ 0.74           $ 0.60        
                             
Weighted average shares used in computation of earnings per share:                            
  Basic     30,348             30,646        
                             
  Diluted     30,774             31,211        
                             
                             
                             
ZUMIEZ INC.
 CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per share amounts)
 
    Twelve Months Ended  
                       
    February 2, 2013   % of Sales     January 28, 2012     % of Sales  
    (unaudited)                  
Net sales   $ 669,393   100.0 %   $ 555,874     100.0 %
Cost of goods sold     428,109   64.0 %     354,198     63.7 %
Gross profit     241,284   36.0 %     201,676     36.3 %
                           
Selling, general and administrative expenses     172,742   25.8 %     141,444     25.5 %
Operating profit     68,542   10.2 %     60,232     10.8 %
                           
Interest income, net     1,410   0.2 %     1,836     0.4 %
Other income (expense), net     327   0.1 %     (379 )   (0.1 %)
Earnings before income taxes     70,279   10.5 %     61,689     11.1 %
                           
Provision for income taxes     28,115   4.2 %     24,338     4.4 %
                           
Net income   $ 42,164   6.3 %   $ 37,351     6.7 %
                           
Basic earnings per share   $ 1.37         $ 1.22        
                           
Diluted earnings per share   $ 1.35         $ 1.20        
                           
Weighted average shares used in computation of earnings per share:                          
  Basic     30,742           30,527        
                           
  Diluted     31,273           31,119        
                             
                             
                             
ZUMIEZ INC.
 CONSOLIDATED BALANCE SHEETS
(In thousands)
 
    February 2,   January 28,
2013   2012
Assets   (unaudited)    
Current assets            
Cash and cash equivalents   $ 17,579   $ 14,779
Marketable securities     85,593     158,019
Receivables     9,467     6,284
Inventories     77,598     65,037
Prepaid expenses and other     9,192     7,907
Deferred tax assets     3,885     1,477
  Total current assets     203,314     253,503
             
Fixed assets, net     115,474     89,478
Goodwill     64,576     13,154
Intangible assets, nets     20,480     -
Long-term other assets     5,254     6,022
  Total long-term assets     205,784     108,654
             
  Total assets   $ 409,098   $ 362,157
             
Liabilities and Shareholders' Equity            
Current liabilities            
Trade accounts payable   $ 16,052   $ 21,743
Accrued payroll and payroll taxes     11,057     9,062
Income taxes payable     6,957     5,835
Deferred rent and tenant allowances     4,901     4,230
Other liabilities     18,232     14,706
  Total current liabilities     57,199     55,576
             
Long-term deferred rent and tenant allowances     36,928     32,321
Long-term deferred tax liabilities     5,544     -
Long-term debt and other liabilities     6,006     1,983
  Total long-term liabilities     48,478     34,304
             
  Total liabilities     105,677     89,880
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; 30,114 shares issued and outstanding at February 2, 2013 and 31,170 shares issued and outstanding at January 28, 2012     108,360     99,412
Accumulated other comprehensive income     6,010     135
Retained earnings     189,051     172,730
  Total shareholders' equity     303,421     272,277
             
  Total liabilities and shareholders' equity   $ 409,098   $ 362,157
               
               
               
ZUMIEZ INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
    Fiscal Year Ended  
    February 3, 2013     January 28, 2012  
    (unaudited)        
Cash flows from operating activities:                
Net income   $ 42,164     $ 37,351  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation, amortization and accretion     22,957       19,744  
Deferred taxes     (1,630 )     3,441  
Stock-based compensation expense     5,996       5,303  
Excess tax benefit from stock-based compensation     (2,094 )     (1,826 )
Lease termination costs     1,397       -  
Other     389       608  
Changes in operating assets and liabilities:                
  Receivables     (2,568 )     (671 )
  Inventories     (2,987 )     (8,833 )
  Prepaid expenses and other     (1,125 )     (607 )
  Trade accounts payable     (5,626 )     4,295  
  Accrued payroll and payroll taxes     1,207       1,485  
  Income taxes payable     1,843       2,868  
  Deferred rent and tenant allowances     5,469       5,334  
  Other liabilities     833       (427 )
Net cash provided by operating activities     66,225       68,065  
                 
Cash flows from investing activities:                
Additions to fixed assets     (41,070 )     (25,508 )
Acqusitions, net of cash acquired     (70,711 )     -  
Purchases of marketable securities and other investments     (121,003 )     (194,531 )
Sales and maturities of marketable securities and other investments     191,705       151,965  
Net cash used in investing activities     (41,079 )     (68,074 )
                 
Cash flows from financing activities:                
Payments on long-term debt     (258 )     -  
Repurchase of common stock     (25,213 )     -  
Proceeds from exercise of stock-based compensation, net of withholding tax payments     858       1,589  
Excess tax benefit from stock-based compensation     2,094       1,826  
Net cash (used in) provided by financing activities     (22,519 )     3,415  
                 
Effect of exchange rate changes on cash and cash equivalents     173       16  
                 
Net increase in cash and cash equivalents     2,800       3,422  
Cash and cash equivalents, beginning of period     14,779       11,357  
Cash and cash equivalents, end of period   $ 17,579     $ 14,779  
                 
Supplemental disclosure on cash flow information:                
Cash paid during the period for income taxes   $ 27,840     $ 18,014  
Accrual for purchases of fixed assets     1,942       3,083  
Accrual for repurchase of common stock     630       -  
                 
                 
                 
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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