Zumiez Inc. Announces Fiscal 2017 Third Quarter Results
November 30 2017 - 4:05PM
Third Quarter 2017 Sales Increased 11.0%
to $245.8 MillionThird Quarter 2017 Diluted
Earnings Per Share Improved to $0.48November 2017
Comparable Sales Increased 7.8%
Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the third
quarter ended October 28, 2017.
Total net sales for the third quarter ended October 28, 2017 (13
weeks) increased 11.0% to $245.8 million from $221.4 million in the
quarter ended October 29, 2016 (13 weeks). Comparable sales for the
thirteen weeks ended October 28, 2017 increased 7.9% compared to a
comparable sales increase of 4.0% for the thirteen weeks ended
October 29, 2016. Net income for the third quarter of fiscal 2017
was $11.9 million, or $0.48 per diluted share, compared to net
income of $10.7 million, or $0.43 per diluted share in the third
quarter of the prior fiscal year.
Total net sales for the nine months (39 weeks) ended October 28,
2017 increased 8.1% to $619.2 million from $572.6 million reported
for the nine months (39 weeks) ended October 29, 2016.
Comparable sales increased 5.1% for the thirty-nine weeks ended
October 28, 2017 compared to a comparable sales decrease of 2.5%
for the thirty-nine weeks ended October 29, 2016. Net income for
the first nine months of fiscal 2017 was $6.9 million, or $0.28 per
diluted share, compared to net income for the first nine months of
the prior fiscal year of $7.7 million, or $0.31 per diluted
share.
At October 28, 2017, the Company had cash and current marketable
securities of $85.8 million compared to cash and current marketable
securities of $49.2 million at October 29, 2016. 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, "Our
top-line performance continues to improve even in the face of more
challenging comparisons. Third quarter comparable sales
increased 7.9% on top of a 4.0% gain in the year ago period and our
momentum has carried over into November. We are confident
that our merchandise strategies, integrated sales channels and best
in class sales team have Zumiez well positioned to deliver strong
holiday results and achieve meaningful earnings growth in the
fourth quarter. Looking ahead, our focus remains centered on
serving the customer while profitably expanding our global market
share and returning increased value to our shareholders over the
long-term.”
November 2017 SalesTotal net sales for the four-week period
ended November 25, 2017 increased 11.3% to $77.1 million, compared
to $69.3 million for the four-week period ended November 26, 2016.
The Company's comparable sales increased 7.8% for the four-week
period ended November 25, 2017 compared to a comparable sales
increase of 5.7% for the four-week period ended November 26,
2016.
Fiscal 2017 Fourth Quarter OutlookThe Company is introducing
guidance for the three months ending February 3, 2018. Net sales
are projected to be in the range of $291 to $297 million resulting
in net income per diluted share of approximately $0.78 to $0.84.
This guidance is based upon anticipated comparable sales growth
between 3% and 5% for the fourth quarter of fiscal 2017. The
Company remains on track to open approximately 19 new stores in
fiscal 2017, including up to 3 stores in Canada and 5 stores in
Europe and 2 stores in Australia.
A conference call will be held today to discuss third 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 3798216.
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 November 25, 2017 we operated 699 stores, including 608 in
the United States, 51 in Canada, 33 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 July 29, 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. |
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME |
(In thousands, except per share
amounts) |
(Unaudited) |
|
|
Three Months Ended |
|
|
October 28, 2017 |
|
% of Sales |
|
October 29, 2016 |
|
% of Sales |
Net sales |
|
$ |
245,756 |
|
|
100.0 |
% |
|
$ |
221,391 |
|
|
100.0 |
% |
Cost of goods sold |
|
|
162,389 |
|
|
66.1 |
% |
|
|
145,213 |
|
|
65.6 |
% |
Gross
profit |
|
|
83,367 |
|
|
33.9 |
% |
|
|
76,178 |
|
|
34.4 |
% |
Selling, general and
administrative expenses |
|
|
64,559 |
|
|
26.2 |
% |
|
|
59,265 |
|
|
26.8 |
% |
Operating
profit |
|
|
18,808 |
|
|
7.7 |
% |
|
|
16,913 |
|
|
7.6 |
% |
Interest income
(expense), net |
|
|
111 |
|
|
0.0 |
% |
|
|
(37 |
) |
|
0.0 |
% |
Other (expense) income,
net |
|
|
(326 |
) |
|
(0.1 |
%) |
|
|
11 |
|
|
0.0 |
% |
Earnings before
income taxes |
|
|
18,593 |
|
|
7.6 |
% |
|
|
16,887 |
|
|
7.6 |
% |
Provision for income
taxes |
|
|
6,671 |
|
|
2.7 |
% |
|
|
6,192 |
|
|
2.8 |
% |
Net
income |
|
$ |
11,922 |
|
|
4.9 |
% |
|
$ |
10,695 |
|
|
4.8 |
% |
Basic earnings per
share |
|
$ |
0.48 |
|
|
|
|
$ |
0.44 |
|
|
|
Diluted earnings per
share |
|
$ |
0.48 |
|
|
|
|
$ |
0.43 |
|
|
|
Weighted average shares
used in computation of earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
24,712 |
|
|
|
|
|
24,485 |
|
|
|
Diluted |
|
|
24,804 |
|
|
|
|
|
24,622 |
|
|
|
ZUMIEZ INC. |
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME |
(In thousands, except per share
amounts) |
|
|
|
Nine Months Ended |
|
|
October 28, 2017 |
|
% of Sales |
|
October 29, 2016 |
|
% of Sales |
Net sales |
|
$ |
619,156 |
|
|
100.0 |
% |
|
$ |
572,634 |
|
100.0 |
% |
Cost of goods sold |
|
|
423,944 |
|
|
68.5 |
% |
|
|
391,653 |
|
68.4 |
% |
Gross
profit |
|
|
195,212 |
|
|
31.5 |
% |
|
|
180,981 |
|
31.6 |
% |
Selling, general and
administrative expenses |
|
|
183,401 |
|
|
29.6 |
% |
|
|
169,144 |
|
29.5 |
% |
Operating
profit |
|
|
11,811 |
|
|
1.9 |
% |
|
|
11,837 |
|
2.1 |
% |
Interest income,
net |
|
|
284 |
|
|
0.0 |
% |
|
|
22 |
|
0.0 |
% |
Other (expense) income,
net |
|
|
(798 |
) |
|
(0.1 |
%) |
|
|
253 |
|
0.0 |
% |
Earnings before
income taxes |
|
|
11,297 |
|
|
1.8 |
% |
|
|
12,112 |
|
2.1 |
% |
Provision for income
taxes |
|
|
4,432 |
|
|
0.7 |
% |
|
|
4,392 |
|
0.8 |
% |
Net
income |
|
$ |
6,865 |
|
|
1.1 |
% |
|
$ |
7,720 |
|
1.3 |
% |
Basic earnings per
share |
|
$ |
0.28 |
|
|
|
|
$ |
0.31 |
|
|
Diluted earnings per
share |
|
$ |
0.28 |
|
|
|
|
$ |
0.31 |
|
|
Weighted average shares
used in computation of earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
24,660 |
|
|
|
|
|
24,798 |
|
|
Diluted |
|
|
24,845 |
|
|
|
|
|
24,982 |
|
|
ZUMIEZ INC. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(In thousands) |
|
|
October 28, 2017 |
|
January 28, 2017 |
|
October 29, 2016 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
10,660 |
|
|
$ |
20,247 |
|
|
$ |
18,001 |
|
Marketable
securities |
|
|
75,109 |
|
|
|
58,579 |
|
|
|
31,169 |
|
Receivables |
|
|
15,761 |
|
|
|
12,538 |
|
|
|
14,265 |
|
Inventories |
|
|
156,986 |
|
|
|
106,924 |
|
|
|
150,623 |
|
Prepaid expenses and
other current assets |
|
|
14,372 |
|
|
|
13,075 |
|
|
|
14,199 |
|
Total current assets |
|
|
272,888 |
|
|
|
211,363 |
|
|
|
228,257 |
|
Fixed assets, net |
|
|
130,898 |
|
|
|
129,651 |
|
|
|
135,325 |
|
Goodwill |
|
|
59,544 |
|
|
|
56,001 |
|
|
|
56,920 |
|
Intangible assets,
net |
|
|
15,645 |
|
|
|
14,610 |
|
|
|
14,900 |
|
Deferred tax assets,
net |
|
|
9,842 |
|
|
|
7,041 |
|
|
|
9,533 |
|
Other long-term
assets |
|
|
7,452 |
|
|
|
8,017 |
|
|
|
8,093 |
|
Total long-term assets |
|
|
223,381 |
|
|
|
215,320 |
|
|
|
224,771 |
|
Total assets |
|
$ |
496,269 |
|
|
$ |
426,683 |
|
|
$ |
453,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts
payable |
|
$ |
61,676 |
|
|
$ |
25,529 |
|
|
$ |
58,088 |
|
Accrued payroll and
payroll taxes |
|
|
15,782 |
|
|
|
14,914 |
|
|
|
12,000 |
|
Income taxes
payable |
|
|
5,454 |
|
|
|
1,866 |
|
|
|
4,310 |
|
Deferred rent and
tenant allowances |
|
|
8,468 |
|
|
|
8,344 |
|
|
|
8,276 |
|
Short-term
borrowings |
|
|
11,391 |
|
|
|
— |
|
|
|
11,787 |
|
Other liabilities |
|
|
22,065 |
|
|
|
22,944 |
|
|
|
21,582 |
|
Total current liabilities |
|
|
124,836 |
|
|
|
73,597 |
|
|
|
116,043 |
|
Long-term deferred rent
and tenant allowances |
|
|
39,869 |
|
|
|
41,066 |
|
|
|
42,715 |
|
Other long-term
liabilities |
|
|
4,981 |
|
|
|
4,969 |
|
|
|
4,839 |
|
Total long-term liabilities |
|
|
44,850 |
|
|
|
46,035 |
|
|
|
47,554 |
|
Total liabilities |
|
|
169,686 |
|
|
|
119,632 |
|
|
|
163,597 |
|
Shareholders’
equity |
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, no par
value, 20,000 shares authorized; none issued and outstanding |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Common stock, no par
value, 50,000 shares authorized; 25,252 shares issued and
outstanding at October 28, 2017, 24,945 shares issued and
outstanding at January 28, 2017, and 24,899 shares issued and
outstanding at October 29, 2016 |
|
|
145,230 |
|
|
|
140,984 |
|
|
|
139,758 |
|
Accumulated other
comprehensive loss |
|
|
(8,067 |
) |
|
|
(16,488 |
) |
|
|
(14,698 |
) |
Retained earnings |
|
|
189,420 |
|
|
|
182,555 |
|
|
|
164,371 |
|
Total shareholders’ equity |
|
|
326,583 |
|
|
|
307,051 |
|
|
|
289,431 |
|
Total liabilities and shareholders’ equity |
|
$ |
496,269 |
|
|
$ |
426,683 |
|
|
$ |
453,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZUMIEZ INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands) |
|
|
Nine Months Ended |
|
|
October 28, 2017 |
|
October 29, 2016 |
Cash flows from
operating activities: |
|
|
|
|
Net income |
|
$ |
6,865 |
|
|
$ |
7,720 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation,
amortization and accretion |
|
|
20,338 |
|
|
|
21,178 |
|
Deferred taxes |
|
|
(2,625 |
) |
|
|
(4,983 |
) |
Stock-based
compensation expense |
|
|
3,720 |
|
|
|
3,399 |
|
Other |
|
|
1,189 |
|
|
|
221 |
|
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Receivables |
|
|
(2,449 |
) |
|
|
(1,361 |
) |
Inventories |
|
|
(48,491 |
) |
|
|
(51,047 |
) |
Prepaid
expenses and other current assets |
|
|
(578 |
) |
|
|
(3,183 |
) |
Trade
accounts payable |
|
|
35,693 |
|
|
|
35,873 |
|
Accrued
payroll and payroll taxes |
|
|
699 |
|
|
|
(631 |
) |
Income
taxes payable |
|
|
2,856 |
|
|
|
(708 |
) |
Deferred
rent and tenant allowances |
|
|
(1,240 |
) |
|
|
(1,035 |
) |
Other
liabilities |
|
|
(2,108 |
) |
|
|
(1,459 |
) |
Net cash
provided by operating activities |
|
|
13,869 |
|
|
|
3,984 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Additions to fixed
assets |
|
|
(19,072 |
) |
|
|
(16,829 |
) |
Acquisition, net of
cash acquired |
|
|
— |
|
|
|
(5,395 |
) |
Purchases of marketable
securities and other investments |
|
|
(80,198 |
) |
|
|
(48,232 |
) |
Sales and maturities of
marketable securities and other investments |
|
|
63,365 |
|
|
|
49,986 |
|
Net cash used
in investing activities |
|
|
(35,905 |
) |
|
|
(20,470 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
Proceeds from revolving
credit facilities |
|
|
19,412 |
|
|
|
17,849 |
|
Payments on revolving
credit facilities |
|
|
(7,841 |
) |
|
|
(5,813 |
) |
Repurchase of common
stock |
|
|
— |
|
|
|
(21,607 |
) |
Proceeds from issuance
and exercise of stock-based awards |
|
|
697 |
|
|
|
851 |
|
Payments for tax
withholdings on equity awards |
|
|
(171 |
) |
|
|
(95 |
) |
Net cash
provided by (used in) financing activities |
|
|
12,097 |
|
|
|
(8,815 |
) |
Effect of
exchange rate changes on cash and cash equivalents |
|
|
352 |
|
|
|
139 |
|
Net decrease in
cash and cash equivalents |
|
|
(9,587 |
) |
|
|
(25,162 |
) |
Cash and cash equivalents, beginning of
period |
|
|
20,247 |
|
|
|
43,163 |
|
Cash and cash equivalents, end of period |
|
$ |
10,660 |
|
|
$ |
18,001 |
|
Supplemental disclosure on cash flow
information: |
|
|
|
|
|
|
|
|
Cash paid
during the period for income taxes |
|
$ |
4,434 |
|
|
$ |
10,042 |
|
Accrual
for purchases of fixed assets |
|
|
2,190 |
|
|
|
2,236 |
|
|
|
|
|
|
|
|
|
|
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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