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Zumiez Inc. Announces Fiscal 2017 Fourth Quarter Results

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LYNNWOOD, Wash., March 15, 2018 (GLOBE NEWSWIRE) -- Zumiez Inc. (NASDAQ:ZUMZ) today reported results for the fourth quarter and year ended February 3, 2018. 

Total net sales for the fourth quarter ended February 3, 2018 (14 weeks) increased 16.9% to $308.2 million from $263.6 million in the quarter ended January 28, 2017 (13 weeks). Comparable sales for the 14-week period ended February 3, 2018 increased 7.5% compared to the same fourteen-week period ended February 4, 2017. Net income for the fourth quarter of fiscal 2017 was $19.9 million, or $0.80 per diluted share, compared to net income of $18.2 million, or $0.74 per diluted share in the fourth quarter of the prior fiscal year. Fourth-quarter fiscal 2017 results include $3.8 million in net sales related to the recognition of deferred revenue due to changes in our STASH loyalty program estimated redemption rate and $3.4 million of charges in our provision for income taxes due to a valuation allowance against certain deferred tax assets in Europe, partially offset by a $0.5 million benefit related to U.S. federal tax legislation.  The combined impact of these items reduced net income and earnings per share by $0.5 million and $0.02 respectively.

Total net sales for fiscal 2017 (53 weeks) increased 10.9% to $927.4 million from $836.3 million in fiscal 2016 (52 weeks).  Comparable sales for the fifty-three-week period ended February 3, 2018 increased 5.9% compared to the same fifty-three-week period ended February 4, 2017.  Net income in fiscal 2017 increased to $26.8 million, or $1.08 per diluted share, compared to net income in the prior fiscal year of $25.9 million, or $1.04 per diluted share.  Fiscal 2017 was also impacted by the deferred revenue and tax items referred to above in our fourth quarter results. The combined impact of these items reduced net income and earnings per share by $0.5 million and $0.02 respectively for fiscal 2017.  At February 3, 2018, the Company had cash and current marketable securities of $121.9 million, an increase of 54.7% compared to cash and current marketable securities of $78.8 million at January 28, 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 concluded 2017 with strong fourth quarter comparable sales performance which came on top of a successful holiday selling period in the prior year fourth quarter.  The top-line momentum exhibited by our business underscores the benefits of our differentiated merchandising strategies, integrated sales channels, and best in class customer service.  While we are pleased with our recent top-line results, we believe the company is positioned to deliver accelerated earnings growth in 2018 through a combination of positive comparable sales, margin enhancement programs, improved expense leverage, and lower taxes.  I am optimistic about Zumiez future prospects and I'm confident that our approach to expanding market share will lead to increased value for our shareholders over the long-term."

February 2018 Sales

Total net sales for the four-week period ended March 3, 2018 increased 23.2% to $63.4 million, compared to $51.5 million for the four-week period ended February 25, 2017. The Company's comparable sales increased 9.2% for the four-week period ended March 3, 2018 compared to a comparable sales decrease of 3.1% for the four-week period ended February 25, 2017.

Fiscal 2018 First Quarter Outlook

The Company is introducing guidance for the three months ending May 5, 2018.  Net sales are projected to be in the range of $198 million to $202 million including anticipated comparable sales growth of between 4.0% and 6.0%.  Consolidated operating margins are expected to be between negative 2.6% and negative 1.7% resulting in a net loss per share of approximately $0.18 to $0.13.  The Company currently intends to open approximately 13 new stores in fiscal 2018, including up to 6 stores in the United States, 5 stores in Europe and 2 stores in Australia.

A conference call will be held today to discuss fourth quarter fiscal 2017 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 7259038.

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 March 3, 2018 we operated 698 stores, including 607 in the United States, 50 in Canada, 34 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 December 4, 2017 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 3,   % of    January 28,   % of   
      2018     Sales    2017   Sales  
      (Unaudited)              
Net sales   $   308,245     100.0 %   $   263,635   100.0 %  
Cost of goods sold       193,583     62.8 %     169,613   64.3 %  
Gross profit     114,662     37.2 %     94,022   35.7 %  
Selling, general and administrative expenses     77,714     25.2 %     66,115   25.0 %  
Operating profit     36,948     12.0 %     27,907   10.7 %  
Interest income, net     211     0.1 %     11   0.0 %  
Other (expense) income, net       (53 )   0.0 %       195   0.1 %  
Earnings before income taxes     37,106     12.1 %     28,113   10.8 %  
Provision for income taxes     17,170     5.6 %     9,929   3.8 %  
Net income   $   19,936     6.5 %   $   18,184   7.0 %  
Basic earnings per share   $   0.81         $   0.74      
Diluted earnings per share   $   0.80         $   0.74      
Weighted average shares used in computation of earnings per share:                
Basic     24,729           24,506      
Diluted     24,953           24,691      
                     


ZUMIEZ INC.
 CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)

      Fiscal Year Ended  
      February 3,   % of    January 28,   % of   
      2018     Sales    2017   Sales  
      (Unaudited)              
Net sales   $   927,401     100.0 %   $   836,268   100.0 %  
Cost of goods sold       617,527     66.6 %     561,266   67.1 %  
Gross profit     309,874     33.4 %     275,002   32.9 %  
Selling, general and administrative expenses     261,114     28.2 %     235,259   28.1 %  
Operating profit     48,760     5.2 %     39,743   4.8 %  
Interest income, net     495     0.0 %     32   0.0 %  
Other (expense) income, net       (852 )   0.0 %       449   0.0 %  
Earnings before income taxes     48,403     5.2 %     40,224   4.8 %  
Provision for income taxes     21,601     2.3 %     14,320   1.7 %  
Net income   $   26,802     2.9 %   $   25,904   3.1 %  
Basic earnings per share   $   1.09         $   1.05      
Diluted earnings per share   $   1.08         $   1.04      
Weighted average shares used in computation of earnings per share:                
Basic     24,679           24,727      
Diluted     24,878           24,908      
                     

           
ZUMIEZ INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)

    February 3,
2018
  January 28,
2017
 
    (Unaudited)      
Assets          
Current assets          
Cash and cash equivalents   $   24,041   $   20,247    
Marketable securities       97,864       58,579    
Receivables       17,027       12,538    
Inventories       125,826       106,924    
Prepaid expenses and other current assets       14,405       13,075    
Total current assets       279,163       211,363    
Fixed assets, net       128,852       129,651    
Goodwill       62,912       56,001    
Intangible assets, net       16,696       14,610    
Deferred tax assets, net       4,174       7,041    
Other long-term assets       7,713       8,017    
Total long-term assets       220,347       215,320    
Total assets   $   499,510   $   426,683    
           
Liabilities and Shareholders' Equity          
Current liabilities          
Trade accounts payable   $   37,861   $   25,529    
Accrued payroll and payroll taxes       20,650       14,914    
Income taxes payable       5,796       1,866    
Deferred rent and tenant allowances       8,073       8,344    
Other liabilities       26,867       22,944    
Total current liabilities       99,247       73,597    
Long-term deferred rent and tenant allowances       39,275       41,066    
Other long-term liabilities        5,073       4,969    
Total long-term liabilities       44,348       46,035    
Total liabilities       143,595       119,632    
           
Shareholders' equity          
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding       —       —    
Common stock, no par value, 50,000 shares authorized; 25,249 shares issued and outstanding at February 3, 2018 and 24,945 shares issued and outstanding at January 28, 2017       146,523       140,984    
Accumulated other comprehensive income (loss)       35       (16,488 )  
Retained earnings       209,357       182,555    
Total shareholders' equity       355,915       307,051    
Total liabilities and shareholders' equity   $   499,510   $   426,683    
           


ZUMIEZ INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

    Fiscal Year Ended  
    February 3,
2018
  January 28,
2017
 
    (Unaudited)      
Cash flows from operating activities:          
Net income    $   26,802     $   25,904    
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation, amortization and accretion       27,288         27,916    
Deferred taxes       3,282         (2,555 )  
Stock-based compensation expense       5,032         4,578    
Other       2,344         1,564    
Changes in operating assets and liabilities:          
Receivables       (3,216 )       413    
Inventories       (14,848 )       (7,984 )  
Prepaid expenses and other current assets       (960 )       (1,793 )  
Trade accounts payable       11,584         3,261    
Accrued payroll and payroll taxes       5,359         2,313    
Income taxes payable       3,575         (3,713 )  
Deferred rent and tenant allowances       (2,494 )       (2,673 )  
Other liabilities       1,766         1,227    
Net cash provided by operating activities       65,514         48,458    
Cash flows from investing activities:          
Additions to fixed assets       (24,062 )       (20,400 )  
Acquisitions, net of cash acquired       —         (5,395 )  
Purchases of marketable securities and other investments       (129,036 )       (86,826 )  
Sales and maturities of marketable securities and other investments       89,128         61,106    
Net cash used in investing activities       (63,970 )       (51,515 )  
Cash flows from financing activities:          
Proceeds from revolving credit facilities       21,466         23,079    
Payments on revolving credit facilities       (20,700 )       (22,429 )  
Repurchase of common stock       —         (21,607 )  
Proceeds from issuance and exercise of stock-based awards       698         1,014    
Payments for tax withholdings on equity awards       (191 )       (134 )  
Net cash provided by (used in) financing activities       1,273         (20,077 )  
Effect of exchange rate changes on cash and cash equivalents       977         218    
Net increase (decrease) in cash and cash equivalents       3,794         (22,916 )  
Cash and cash equivalents, beginning of period       20,247         43,163    
Cash and cash equivalents, end of period   $   24,041     $   20,247    
Supplemental disclosure on cash flow information:          
Cash paid during the period for income taxes   $   14,851     $   20,462    
Accrual for purchases of fixed assets       1,300         1,191    
Accrual for repurchase of common stock      —        —    

Company Contact: 
Darin White
Director of Finance & 
Investor Relations
Zumiez Inc.
(425) 551-1500, ext. 1337

Investor Contact:
ICR
Brendon Frey
(203) 682-8200

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