First Quarter Earnings Per Share Improved to $0.03
First Quarter Comparable Sales Increased 3.3%
LYNNWOOD, Wash., June 06, 2019 (GLOBE NEWSWIRE) -- Zumiez Inc. ZUMZ a leading specialty retailer of apparel, footwear, equipment and accessories for young men and women, today reported results for the first quarter ended May 4, 2019.
Total net sales for the first quarter ended May 4, 2019 (13 weeks) increased 3.2% to $212.9 million from $206.3 million in the first quarter ended May 5, 2018 (13 weeks). Comparable sales for the thirteen weeks ended May 4, 2019 increased 3.3% on top of a comparable sales increase of 8.3% for the thirteen weeks ended May 5, 2018. Net income in the first quarter of fiscal 2019 was $0.8 million, or $0.03 per diluted share, compared to a net loss of $2.6 million, or $0.10 per diluted share, in the first quarter of the prior fiscal year.
At May 4, 2019, cash and current marketable securities increased 42.4% to $168.0 million, compared to cash and current marketable securities of $118.0 million at May 5, 2018. The increase in cash and current marketable securities was driven by cash generated through operations partially offset by capital expenditures.
"We delivered better than expected results to start the year due to strong performance in the last two months of the first quarter," commented Rick Brooks, Chief Executive Officer of Zumiez Inc. "Our performance reflects a continuation of our strategy focusing on full price, full margin selling and leveraging our broad assortment to service the customer. Our customer-focused execution continues to drive comparable sales gains and margin expansion and the operating model we have built around a singular cost structure continues to generate increased profitability. With our distinct approach to retailing, authentic brand positioning and strong balance sheet, I am confident that Zumiez is poised to capture additional market share and return increased value to shareholders in the near and long-term."
May 2019 Sales
The Company's comparable sales increased 2.4% for the four-week period ended June 1, 2019 compared to a comparable sales increase of 7.5% for the four-week period ended June 2, 2018.
Fiscal 2019 Second Quarter Outlook
The Company is introducing guidance for the three months ending August 3, 2019. Net sales are projected to be in the range of $220 million to $224 million including anticipated comparable sales growth of between 0.0% and 2.0%. Consolidated operating margins are expected to be between 2.2% and 3.2% resulting in net income per share of approximately $0.14 to $0.20. The Company currently intends to open approximately 15 new stores in fiscal 2019, including up to 6 stores in North America, 7 stores in Europe and 2 stores in Australia.
A conference call will be held today to discuss first quarter fiscal 2019 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (570) 990-9934 followed by the conference identification code of 9089741.
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 June 1, 2019, we operated 707 stores, including 606 in the United States, 50 in Canada, 42 in Europe and 9 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 February 2, 2019 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 | ||||||||||
| May 4, 2019 | % of Sales | May 5, 2018 | % of Sales | |||||||
| Net sales | $ | 212,928 | 100.0% | $ | 206,287 | 100.0% | ||||
| Cost of goods sold | 146,464 | 68.8% | 143,700 | 69.7% | ||||||
| Gross profit | 66,464 | 31.2% | 62,587 | 30.3% | ||||||
| Selling, general and administrative expenses | 65,496 | 30.7% | 64,296 | 31.1% | ||||||
| Operating profit (loss) | 968 | 0.5% | (1,709 | ) | (0.8%) | |||||
| Interest income, net | 852 | 0.4% | 283 | 0.0% | ||||||
| Other income (expense), net | 153 | 0.0% | (482 | ) | (0.1%) | |||||
| Earnings (loss) before income taxes | 1,973 | 0.9% | (1,908 | ) | (0.9%) | |||||
| Provision for income taxes | 1,180 | 0.5% | 699 | 0.4% | ||||||
| Net income (loss) | $ | 793 | 0.4% | $ | (2,607 | ) | (1.3%) | |||
| Basic earnings (loss) per share | $ | 0.03 | $ | (0.10 | ) | |||||
| Diluted earnings (loss) per share | $ | 0.03 | $ | (0.10 | ) | |||||
| Weighted average shares used in computation of earnings (loss) per share: | ||||||||||
| Basic | 25,090 | 24,831 | ||||||||
| Diluted | 25,351 | 24,831 | ||||||||
ZUMIEZ INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| May 4, 2019 | February 2, 2019 | May 5, 2018 | |||||||
| (Unaudited) | (Unaudited) | ||||||||
| Assets | |||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | 60,616 | $ | 52,422 | $ | 29,063 | |||
| Marketable securities | 107,364 | 112,912 | 88,918 | ||||||
| Receivables | 15,083 | 17,776 | 18,466 | ||||||
| Inventories | 135,959 | 129,268 | 128,244 | ||||||
| Prepaid expenses and other current assets | 9,616 | 14,797 | 13,898 | ||||||
| Total current assets | 328,638 | 327,175 | 278,589 | ||||||
| Fixed assets, net | 116,830 | 120,503 | 126,047 | ||||||
| Operating lease right-of-use assets | 301,980 | — | — | ||||||
| Goodwill | 57,682 | 58,813 | 60,832 | ||||||
| Intangible assets, net | 14,852 | 15,260 | 15,955 | ||||||
| Deferred tax assets, net | 6,312 | 5,259 | 3,288 | ||||||
| Other long-term assets | 8,442 | 7,180 | 6,993 | ||||||
| Total long-term assets | 506,098 | 207,015 | 213,115 | ||||||
| Total assets | $ | 834,736 | $ | 534,190 | $ | 491,704 | |||
| Liabilities and Shareholders' Equity | |||||||||
| Current liabilities | |||||||||
| Trade accounts payable | $ | 54,454 | $ | 35,293 | $ | 45,980 | |||
| Accrued payroll and payroll taxes | 15,302 | 21,015 | 15,132 | ||||||
| Income taxes payable | 65 | 5,817 | 359 | ||||||
| Deferred rent and tenant allowances | — | 7,489 | 7,873 | ||||||
| Operating lease liabilities | 54,469 | — | 4,696 | ||||||
| Other liabilities | 19,675 | 23,494 | 21,194 | ||||||
| Total current liabilities | 143,965 | 93,108 | 95,234 | ||||||
| Long-term deferred rent and tenant allowances | — | 37,076 | 39,217 | ||||||
| Long-term operating lease liabilities | 293,375 | — | — | ||||||
| Other long-term liabilities | 3,436 | 3,550 | 4,768 | ||||||
| Total long-term liabilities | 296,811 | 40,626 | 43,985 | ||||||
| Total liabilities | 440,776 | 133,734 | 139,219 | ||||||
| Shareholders' equity | |||||||||
| Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding | — | — | — | ||||||
| Common stock, no par value, 50,000 shares authorized; 25,741 shares issued and outstanding at May 4, 2019 and 25,521 shares issued and outstanding at February 2, 2019 and 25,470 shares issued and outstanding at May 5, 2018 | 155,104 | 153,066 | 148,591 | ||||||
| Accumulated other comprehensive loss | (12,275) | (9,224) | (4,908) | ||||||
| Retained earnings | 251,131 | 256,614 | 208,802 | ||||||
| Total shareholders' equity | 393,960 | 400,456 | 352,485 | ||||||
| Total liabilities and shareholders' equity | $ | 834,736 | $ | 534,190 | $ | 491,704 | |||
ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended | |||||||
| May 4, 2019 | May 5, 2018 | ||||||
| Cash flows from operating activities: | |||||||
| Net income (loss) | $ | 793 | $ | (2,607 | ) | ||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
| Depreciation, amortization and accretion | 6,263 | 6,970 | |||||
| Noncash lease expense | 13,371 | — | |||||
| Deferred taxes | 1,249 | 217 | |||||
| Stock-based compensation expense | 1,693 | 1,642 | |||||
| Other | 224 | 588 | |||||
| Changes in operating assets and liabilities: | |||||||
| Receivables | 4,708 | (1,096 | ) | ||||
| Inventories | (7,540 | ) | (3,781 | ) | |||
| Prepaid expenses and other assets | (167 | ) | 857 | ||||
| Trade accounts payable | 19,568 | 7,723 | |||||
| Accrued payroll and payroll taxes | (5,636 | ) | (5,383 | ) | |||
| Income taxes payable | (7,104 | ) | (5,993 | ) | |||
| Deferred rent and tenant allowances | — | (32 | ) | ||||
| Operating lease liabilities | (13,770 | ) | — | ||||
| Other liabilities | (3,790 | ) | (2,997 | ) | |||
| Net cash provided by (used in) operating activities | 9,862 | (3,892 | ) | ||||
| Cash flows from investing activities: | |||||||
| Additions to fixed assets | (3,331 | ) | (3,585 | ) | |||
| Purchases of marketable securities and other investments | (33,385 | ) | (12,932 | ) | |||
| Sales and maturities of marketable securities and other investments | 39,001 | 21,590 | |||||
| Net cash provided by investing activities | 2,285 | 5,073 | |||||
| Cash flows from financing activities: | |||||||
| Proceeds from revolving credit facilities | — | 17,245 | |||||
| Payments on revolving credit facilities | — | (13,347 | ) | ||||
| Proceeds from issuance and exercise of stock-based awards | 583 | 621 | |||||
| Payments for tax withholdings on equity awards | (238 | ) | (195 | ) | |||
| Net cash provided by financing activities | 345 | 4,324 | |||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (466 | ) | (497 | ) | |||
| Net increase in cash, cash equivalents, and restricted cash | 12,026 | 5,008 | |||||
| Cash, cash equivalents, and restricted cash, beginning of period | 54,271 | 25,803 | |||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 66,297 | $ | 30,811 | |||
| Supplemental disclosure on cash flow information: | |||||||
| Cash paid during the period for income taxes | $ | 7,038 | $ | 6,442 | |||
| Accrual for purchases of fixed assets | 1,583 | 2,872 | |||||
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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