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Zumiez Inc. Announces Fiscal 2022 Second Quarter Results

·11 min read

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