Second Quarter 2018 Sales Increased 13.9% to $219.0 Million
Second Quarter 2018 Earnings Per Share Improved to $0.17
August 2018 Comparable Sales Increased 9.5%
LYNNWOOD, Wash., Sept. 06, 2018 (GLOBE NEWSWIRE) -- Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the second quarter ended August 4, 2018.
Total net sales for the second quarter ended August 4, 2018 (13 weeks) increased 13.9% to $219.0 million from $192.2 million in the quarter ended July 29, 2017 (13 weeks). Comparable sales for the thirteen weeks ended August 4, 2018 increased 6.3% compared to a comparable sales increase of 4.7% for the thirteen weeks ended July 29, 2017. Net income for the second quarter of fiscal 2018 was $4.4 million, or $0.17 per diluted share, compared to a net loss of $0.6 million, or $0.02 per diluted share in the second quarter of the prior fiscal year.
Total net sales for the six months (26 weeks) ended August 4, 2018 increased 13.9% to $425.3 million from $373.4 million reported for the six months (26 weeks) ended July 29, 2017. Comparable sales increased 7.2% for the twenty-six weeks ended August 4, 2018 compared to a comparable sales increase of 3.3% for the twenty-six weeks ended July 29, 2017. Net income for the first six months of fiscal 2018 was $1.8 million, or $0.07 per diluted share, compared to a net loss for the first six months of the prior fiscal year of $5.1 million, or $0.21 per diluted share.
At August 4, 2018, the Company had cash and current marketable securities of $132.9 million compared to cash and current marketable securities of $70.7 million at July 29, 2017. The increase in cash and current marketable securities was driven by cash generated through operations partially offset by capital expenditures.
Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “We delivered our strongest second quarter in several years. Our differentiated merchandise offering combined with our authentic brand positioning and seamless multi-channel shopping experience continue to drive robust comparable sales gains. We also expanded product margins by 30 basis points through increased full price selling and meaningfully leveraged our expenses on higher sales. The broad based improvements across our business fueled a marked improvement in profitability compared with a year ago. We are very encouraged by our recent performance, and with the second half of the year off to a solid start, we are heading into our busiest selling season with great momentum.”
August 2018 Sales
Total net sales for the four-week period ended September 1, 2018 increased 9.0% to $107.4 million, compared to $98.6 million for the four-week period ended August 26, 2017. The Company's comparable sales increased 9.5% for the four-week period ended September 1, 2018 compared to a comparable sales increase of 7.4% for the four-week period ended August 26, 2017.
Fiscal 2018 Third Quarter & Full Year Outlook
The Company is introducing guidance for the three months ending November 3, 2018. Net sales are projected to be in the range of $247 to $252 million including anticipated comparable sales growth of between 4.0% and 6.0%. Consolidated operating margins are expected to between 6.5% and 7.0% resulting in net income per diluted share of approximately $0.45 to $0.51. The Company currently intends to open approximately 13 new stores in fiscal 2018, including up to 5 stores in the United States, 7 stores in Europe and 1 store in Australia.
Conference call Information
A conference call will be held today to discuss second quarter fiscal 2018 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (574) 990-9934 followed by the conference identification code of 7348439.
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 September 1, 2018 we operated 703 stores, including 610 in the United States, 50 in Canada, 36 in Europe and 7 in Australia. We operate under the names Zumiez, Blue Tomato and Fast Times. Additionally, we operate ecommerce web sites at zumiez.com, 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 quarterly report on Form 10-Q for the quarter ended May 5, 2018 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 INCOME / (LOSS)
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended | |||||||||||||||
| August 4, 2018 | % of Sales | July 29, 2017 | % of Sales | ||||||||||||
| Net sales | $ | 218,971 | 100.0 | % | $ | 192,245 | 100.0 | % | |||||||
| Cost of goods sold | 146,436 | 66.9 | % | 132,449 | 68.9 | % | |||||||||
| Gross profit | 72,535 | 33.1 | % | 59,796 | 31.1 | % | |||||||||
| Selling, general and administrative expenses | 65,837 | 30.0 | % | 60,558 | 31.5 | % | |||||||||
| Operating profit (loss) | 6,698 | 3.1 | % | (762 | ) | (0.4 | %) | ||||||||
| Interest income, net | 238 | 0.1 | % | 92 | 0.0 | % | |||||||||
| Other income (expense), net | 248 | 0.1 | % | (23 | ) | 0.0 | % | ||||||||
| Earnings (loss) before income taxes | 7,184 | 3.3 | % | (693 | ) | (0.4 | %) | ||||||||
| Provision (benefit) for income taxes | 2,807 | 1.3 | % | (85 | ) | (0.1 | %) | ||||||||
| Net income (loss) | $ | 4,377 | 2.0 | % | $ | (608 | ) | (0.3 | %) | ||||||
| Basic earnings (loss) per share | $ | 0.18 | $ | (0.02 | ) | ||||||||||
| Diluted earnings (loss) per share | $ | 0.17 | $ | (0.02 | ) | ||||||||||
| Weighted average shares used in computation of earnings (loss) per share: | |||||||||||||||
| Basic | 24,955 | 24,689 | |||||||||||||
| Diluted | 25,188 | 24,689 | |||||||||||||
ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME / (LOSS)
(In thousands, except per share amounts)
| Six Months Ended | |||||||||||||||
| August 4, 2018 | % of Sales | July 29, 2017 | % of Sales | ||||||||||||
| Net sales | $ | 425,257 | 100.0 | % | 373,399 | 100.0 | % | ||||||||
| Cost of goods sold | 290,136 | 68.2 | % | 261,555 | 70.0 | % | |||||||||
| Gross profit | 135,121 | 31.8 | % | 111,844 | 30.0 | % | |||||||||
| Selling, general and administrative expenses | 130,133 | 30.6 | % | 118,841 | 31.9 | % | |||||||||
| Operating profit (loss) | 4,988 | 1.2 | % | (6,997 | ) | (1.9 | %) | ||||||||
| Interest income, net | 521 | 0.1 | % | 174 | 0.0 | % | |||||||||
| Other expense, net | (233 | ) | (0.1 | %) | (472 | ) | (0.1 | %) | |||||||
| Earnings (loss) before income taxes | 5,276 | 1.2 | % | (7,295 | ) | (2.0 | %) | ||||||||
| Provision (benefit) for income taxes | 3,506 | 0.8 | % | (2,239 | ) | (0.6 | %) | ||||||||
| Net income (loss) | $ | 1,770 | 0.4 | % | (5,056 | ) | (1.4 | %) | |||||||
| Basic earnings (loss) per share | $ | 0.07 | (0.21 | ) | |||||||||||
| Diluted earnings (loss) per share | $ | 0.07 | (0.21 | ) | |||||||||||
| Weighted average shares used in computation of earnings (loss) per share: | |||||||||||||||
| Basic | 24,894 | 24,635 | |||||||||||||
| Diluted | 25,211 | 24,635 | |||||||||||||
ZUMIEZ INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| August 4, 2018 | February 3, 2018 | July 29, 2017 | |||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||
| Assets | |||||||||||||||
| Current assets | |||||||||||||||
| Cash and cash equivalents | $ | 41,409 | $ | 24,041 | $ | 17,291 | |||||||||
| Marketable securities | 91,500 | 97,864 | 53,433 | ||||||||||||
| Receivables | 20,554 | 17,027 | 16,334 | ||||||||||||
| Inventories | 149,656 | 125,826 | 141,782 | ||||||||||||
| Prepaid expenses and other current assets | 16,169 | 14,405 | 15,378 | ||||||||||||
| Total current assets | 319,288 | 279,163 | 244,218 | ||||||||||||
| Fixed assets, net | 125,141 | 128,852 | 131,934 | ||||||||||||
| Goodwill | 59,336 | 62,912 | 60,057 | ||||||||||||
| Intangible assets, net | 15,470 | 16,696 | 15,903 | ||||||||||||
| Deferred tax assets, net | 4,417 | 4,174 | 9,733 | ||||||||||||
| Other long-term assets | 6,815 | 7,713 | 7,022 | ||||||||||||
| Total long-term assets | 211,179 | 220,347 | 224,649 | ||||||||||||
| Total assets | $ | 530,467 | $ | 499,510 | $ | 468,867 | |||||||||
| Liabilities and Shareholders’ Equity | |||||||||||||||
| Current liabilities | |||||||||||||||
| Trade accounts payable | $ | 79,370 | $ | 37,861 | $ | 60,652 | |||||||||
| Accrued payroll and payroll taxes | 15,640 | 20,650 | 15,684 | ||||||||||||
| Income taxes payable | 2,580 | 5,796 | 68 | ||||||||||||
| Deferred rent and tenant allowances | 7,895 | 8,073 | 8,393 | ||||||||||||
| Short term borrowings | 5,623 | 943 | — | ||||||||||||
| Other liabilities | 21,274 | 25,924 | 23,657 | ||||||||||||
| Total current liabilities | 132,382 | 99,247 | 108,454 | ||||||||||||
| Long-term deferred rent and tenant allowances | 38,265 | 39,275 | 40,795 | ||||||||||||
| Other long-term liabilities | 4,781 | 5,073 | 5,113 | ||||||||||||
| Total long-term liabilities | 43,046 | 44,348 | 45,908 | ||||||||||||
| Total liabilities | 175,428 | 143,595 | 154,362 | ||||||||||||
| Shareholders’ equity | |||||||||||||||
| Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding | — | — | — | ||||||||||||
| Common stock, no par value, 50,000 shares authorized; 25,520 shares issued and outstanding at August 4, 2018, 25,249 shares issued and outstanding at February 3, 2018 and 25,231 shares issued and outstanding at July 29, 2017 | 149,961 | 146,523 | 143,682 | ||||||||||||
| Accumulated other comprehensive (loss) income | (8,101 | ) | 35 | (6,676 | ) | ||||||||||
| Retained earnings | 213,179 | 209,357 | 177,499 | ||||||||||||
| Total shareholders’ equity | 355,039 | 355,915 | 314,505 | ||||||||||||
| Total liabilities and shareholders’ equity | $ | 530,467 | $ | 499,510 | $ | 468,867 | |||||||||
ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Six Months Ended | |||||||||
| August 4, 2018 | July 29, 2017 | ||||||||
| Cash flows from operating activities: | |||||||||
| Net income (loss) | $ | 1,770 | $ | (5,056 | ) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||
| Depreciation, amortization and accretion | 13,920 | 13,520 | |||||||
| Deferred taxes | (990 | ) | (2,456 | ) | |||||
| Stock-based compensation expense | 3,012 | 2,500 | |||||||
| Other | 310 | 621 | |||||||
| Changes in operating assets and liabilities: | |||||||||
| Receivables | (4,099 | ) | (2,092 | ) | |||||
| Inventories | (25,993 | ) | (32,553 | ) | |||||
| Prepaid expenses and other current assets | (1,570 | ) | (995 | ) | |||||
| Trade accounts payable | 40,815 | 34,627 | |||||||
| Accrued payroll and payroll taxes | (4,785 | ) | 561 | ||||||
| Income taxes payable | (2,973 | ) | (3,372 | ) | |||||
| Deferred rent and tenant allowances | (872 | ) | (521 | ) | |||||
| Other liabilities | (2,997 | ) | (1,016 | ) | |||||
| Net cash provided by operating activities | 15,548 | 3,768 | |||||||
| Cash flows from investing activities: | |||||||||
| Additions to fixed assets | (9,061 | ) | (12,461 | ) | |||||
| Purchases of marketable securities and other investments | (35,046 | ) | (37,586 | ) | |||||
| Sales and maturities of marketable securities and other investments | 41,200 | 42,615 | |||||||
| Net cash used in investing activities | (2,907 | ) | (7,432 | ) | |||||
| Cash flows from financing activities: | |||||||||
| Proceeds from revolving credit facilities | 29,227 | 1,791 | |||||||
| Payments on revolving credit facilities | (24,233 | ) | (1,791 | ) | |||||
| Proceeds from issuance and exercise of stock-based awards | 621 | 370 | |||||||
| Payments for tax withholdings on equity awards | (195 | ) | (172 | ) | |||||
| Net cash provided by financing activities | 5,420 | 198 | |||||||
| Effect of exchange rate changes on cash and cash equivalents | (693 | ) | 510 | ||||||
| Net increase (decrease) in cash and cash equivalents | 17,368 | (2,956 | ) | ||||||
| Cash and cash equivalents, beginning of period | 24,041 | 20,247 | |||||||
| Cash and cash equivalents, end of period | $ | 41,409 | $ | 17,291 | |||||
| Supplemental disclosure on cash flow information: | |||||||||
| Cash paid during the period for income taxes | $ | 7,362 | $ | 3,660 | |||||
| Accrual for purchases of fixed assets | 3,496 | 2,550 | |||||||
Company Contact:
Darin White
Director of Finance &
Investor Relations
Zumiez Inc.
(425) 551-1500, ext. 1337
Investor Contact:
ICR
Brendon Frey
(203) 682-8200