Zumiez Inc. Announces Fiscal 2020 Second Quarter Results
September 10 2020 - 4:05PM
Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the second
quarter ended August 1, 2020.
Total net sales for the second quarter ended August
1, 2020 (13 weeks) increased 9.6% to $250.4 million from $228.4
million in the quarter ended August 3, 2019 (13 weeks). Due to
store closures, stores were open for 73.4% of the second quarter of
2020 measured as the total number of store days open in the quarter
divided by the total number of store days available. For the stores
that were open, comparable sales for the thirteen weeks ended
August 1, 2020 increased 37.3% compared to the same period a year
ago. Net income for the second quarter of fiscal 2020 was
$25.4 million, or $1.01 per diluted share, compared to net income
of $9.0 million, or $0.36 per diluted share in the second quarter
of the prior fiscal year.Total net sales for the six months (26
weeks) ended August 1, 2020 decreased 12.1% to $388.2 million from
$441.4 million reported for the six months (26 weeks) ended August
3, 2019. Net income for the first six months of fiscal 2020 was
$4.3 million, or $0.17 per diluted share, compared to net income
for the first six months of the prior fiscal year of $9.8 million,
or $0.39 per diluted share.At August 1, 2020, the Company had cash
and current marketable securities of $299.1 million compared to
cash and current marketable securities of $188.6 million at August
3, 2019. The increase in cash and current marketable securities was
driven by cash generated through operations including deferment of
$41.5 million composed of landlord payments, lower inventory
levels, extended vendor terms and deferred payroll tax payments as
well as net income improvements related to abatements, credits and
expense reductions. This increase was partially offset by $13.4
million of share repurchases through the Company’s stock buyback
program prior to our stores closing due to COVID-19 and other
planned capital expenditures. Rick Brooks, Chief Executive
Officer of Zumiez Inc., stated, “Our teams did a remarkable job
serving our customers and delivering these second quarter results
during the most challenging operating environment in the Company’s
history. As an organization, we successfully executed a quick and
safe reopening of the majority of our stores in the quarter, while
continuing to lean heavily on our omni platforms to fulfill strong
demand for our distinct merchandise offering. Our recent
performance amidst the pandemic underscores the strength of our
brand and culture and speaks to the ability of our business model
to adapt to changes in purchasing behavior while continuing to
drive strong earnings growth and cash generation. With close
to $300 million in cash and no debt on our balance sheet, we are
set up well to navigate whatever headwinds arise over the coming
quarters and emerge from this crisis positioned to accelerate
market share in each of our geographies.”
Third Quarter-To-Date salesThe Company is providing
quarter-to-date sales through Labor Day, Monday September 7th, as
this time period is more comparable to the prior year given the
shift in the Labor Day holiday. Total third quarter-to-date sales
for the 37 days ending September 7, 2020 were down approximately
14%, compared with the same 37 day time period in the prior year
ended September 9, 2019. Total comparable sales for the 37 day
period ending September 7, 2020 were down 5.1%. By channel, open
store comparable sales decreased 10.7% and e-commerce sales
increased 27.4%.
Store Re-Opening UpdateThe Company ended the second quarter with
645 or 89.6% of our 720 stores open with the primary closures being
in California and Australia due to government mandates. As of Labor
Day September 7, 2020, 35 stores or 4.9% of the store base remained
closed. All stores are operating under enhanced measures to ensure
the health and safety of employees and customers, including
- requiring our employees to wear masks,
- providing hand sanitizer in multiple locations throughout the
store,
- implementing enhanced cleaning and sanitation protocols,
- reconfiguring sales floors to promote physical distancing,
and
- modifying employee and customer interactions to limit
contact.
OutlookDue to the fast-moving nature of this situation and the
uncertainty of impacts on revenue and costs, the Company previously
withdrew its full year fiscal 2020 guidance. The Company is not
providing an updated outlook at this time for the third quarter or
the year.
Conference Call Information A conference call will be held today
to discuss second quarter fiscal 2020 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
8269508.
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 29, 2020, we operated 720 stores, including 607 in the
United States, 52 in Canada, 49 in Europe and 12 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 1, 2020 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.
Company Contact:Darin WhiteDirector of Finance
& Investor RelationsZumiez Inc.(425) 551-1500, ext. 1337
Investor Contact:ICRBrendon Frey (203)
682-8200
ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
|
Three Months Ended |
|
|
August 1, 2020 |
|
% of Sales |
|
|
August 3, 2019 |
|
% of Sales |
|
Net sales |
$ |
250,392 |
|
100.0 |
% |
|
$ |
228,425 |
|
100.0 |
% |
|
Cost of
goods sold |
|
159,542 |
|
63.7 |
% |
|
|
151,229 |
|
66.2 |
% |
|
Gross profit |
|
90,850 |
|
36.3 |
% |
|
|
77,196 |
|
33.8 |
% |
|
Selling,
general and administrative expenses |
|
57,738 |
|
23.1 |
% |
|
|
65,523 |
|
28.7 |
% |
|
Operating profit |
|
33,112 |
|
13.2 |
% |
|
|
11,673 |
|
5.1 |
% |
|
Interest
income, net |
|
794 |
|
0.3 |
% |
|
|
798 |
|
0.4 |
% |
|
Other
income, net |
|
392 |
|
0.2 |
% |
|
|
559 |
|
0.2 |
% |
|
Earnings before income taxes |
|
34,298 |
|
13.7 |
% |
|
|
13,030 |
|
5.7 |
% |
|
Provision
for income taxes |
|
8,906 |
|
3.6 |
% |
|
|
4,005 |
|
1.7 |
% |
|
Net
income |
$ |
25,392 |
|
10.1 |
% |
|
$ |
9,025 |
|
4.0 |
% |
|
Basic
earnings per share |
$ |
1.02 |
|
|
|
$ |
0.36 |
|
|
|
Diluted
earnings per share |
$ |
1.01 |
|
|
|
$ |
0.36 |
|
|
|
Weighted
average shares used in computation of earnings per share: |
|
|
|
|
|
|
|
|
Basic |
|
24,837 |
|
|
|
|
25,199 |
|
|
|
Diluted |
|
25,128 |
|
|
|
|
25,402 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
August 1, 2020 |
|
% of Sales |
|
|
August 3, 2019 |
|
% of Sales |
|
Net
sales |
$ |
388,164 |
|
100.0 |
% |
|
|
441,353 |
|
100.0 |
% |
|
Cost of
goods sold |
|
273,578 |
|
70.5 |
% |
|
|
297,693 |
|
67.5 |
% |
|
Gross profit |
|
114,586 |
|
29.5 |
% |
|
|
143,660 |
|
32.5 |
% |
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses |
|
109,322 |
|
28.1 |
% |
|
|
131,019 |
|
29.6 |
% |
|
Operating profit |
|
5,264 |
|
1.4 |
% |
|
|
12,641 |
|
2.9 |
% |
|
|
|
|
|
|
|
|
|
|
Interest
income, net |
|
1,868 |
|
0.5 |
% |
|
|
1,650 |
|
0.4 |
% |
|
Other
income, net |
|
498 |
|
0.1 |
% |
|
|
711 |
|
0.1 |
% |
|
Earnings before income taxes |
|
7,630 |
|
2.0 |
% |
|
|
15,002 |
|
3.4 |
% |
|
Provision
for income taxes |
|
3,339 |
|
0.9 |
% |
|
|
5,184 |
|
1.2 |
% |
|
Net
income |
$ |
4,291 |
|
1.1 |
% |
|
|
9,818 |
|
2.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share |
$ |
0.17 |
|
|
|
|
0.39 |
|
|
|
Diluted
earnings per share |
$ |
0.17 |
|
|
|
|
0.39 |
|
|
|
Weighted
average shares used in computation of earnings per share: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
24,938 |
|
|
|
|
25,144 |
|
|
|
Diluted |
|
25,277 |
|
|
|
|
25,395 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZUMIEZ INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(In
thousands)
|
|
|
|
|
|
|
August 1, 2020 |
|
February 1, 2020 |
|
August 3, 2019 |
|
(Unaudited) |
|
|
|
(Unaudited) |
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
133,905 |
|
|
$ |
52,428 |
|
|
$ |
63,846 |
|
Marketable
securities |
|
165,227 |
|
|
|
198,768 |
|
|
|
124,803 |
|
Receivables |
|
24,811 |
|
|
|
16,841 |
|
|
|
21,615 |
|
Inventories |
|
126,701 |
|
|
|
135,095 |
|
|
|
151,079 |
|
Prepaid
expenses and other current assets |
|
10,560 |
|
|
|
9,456 |
|
|
|
11,789 |
|
Total current assets |
|
461,204 |
|
|
|
412,588 |
|
|
|
373,132 |
|
Fixed
assets, net |
|
106,151 |
|
|
|
113,051 |
|
|
|
116,219 |
|
Operating
lease right-of-use assets |
|
277,322 |
|
|
|
301,784 |
|
|
|
306,056 |
|
Goodwill |
|
60,225 |
|
|
|
57,099 |
|
|
|
57,306 |
|
Intangible
assets, net |
|
15,577 |
|
|
|
14,564 |
|
|
|
14,672 |
|
Deferred tax
assets, net |
|
7,080 |
|
|
|
6,303 |
|
|
|
6,502 |
|
Other
long-term assets |
|
9,337 |
|
|
|
8,869 |
|
|
|
8,374 |
|
Total long-term assets |
|
475,692 |
|
|
|
501,670 |
|
|
|
509,129 |
|
Total assets |
$ |
936,896 |
|
|
$ |
914,258 |
|
|
$ |
882,261 |
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade
accounts payable |
$ |
75,318 |
|
|
$ |
47,787 |
|
|
$ |
82,859 |
|
Accrued
payroll and payroll taxes |
|
17,816 |
|
|
|
23,653 |
|
|
|
15,582 |
|
Income taxes
payable |
|
5,534 |
|
|
|
4,686 |
|
|
|
2,895 |
|
Operating
lease liabilities |
|
74,558 |
|
|
|
61,800 |
|
|
|
58,646 |
|
Other
liabilities |
|
30,374 |
|
|
|
21,784 |
|
|
|
21,150 |
|
Total current liabilities |
|
203,600 |
|
|
|
159,710 |
|
|
|
181,132 |
|
Long-term
operating lease liabilities |
|
259,412 |
|
|
|
284,717 |
|
|
|
293,450 |
|
Other
long-term liabilities |
|
3,858 |
|
|
|
3,745 |
|
|
|
3,472 |
|
Total long-term liabilities |
|
263,270 |
|
|
|
288,462 |
|
|
|
296,922 |
|
Total liabilities |
|
466,870 |
|
|
|
448,172 |
|
|
|
478,054 |
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
Preferred
stock, no par value, 20,000 shares authorized; none issued and
outstanding |
|
— |
|
|
|
— |
|
|
|
— |
|
Common
stock, no par value, 50,000 shares authorized; 25,450 shares
issued and outstanding at August 1, 2020, 25,828 shares issued and
outstanding at February 1, 2020 and 25,770 shares issued and
outstanding at August 3, 2019 |
|
165,056 |
|
|
|
161,458 |
|
|
|
156,625 |
|
Accumulated
other comprehensive loss |
|
(3,123 |
) |
|
|
(12,591 |
) |
|
|
(12,574 |
) |
Retained
earnings |
|
308,093 |
|
|
|
317,219 |
|
|
|
260,156 |
|
Total shareholders’ equity |
|
470,026 |
|
|
|
466,086 |
|
|
|
404,207 |
|
Total liabilities and shareholders’ equity |
$ |
936,896 |
|
|
$ |
914,258 |
|
|
$ |
882,261 |
|
|
|
|
|
|
|
|
|
|
ZUMIEZ INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands)
|
Six Months Ended |
|
August 1, 2020 |
|
August 3, 2019 |
Cash
flows from operating activities: |
|
|
|
Net income |
$ |
4,291 |
|
|
$ |
9,818 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
Depreciation, amortization and accretion |
|
12,005 |
|
|
|
12,514 |
|
Noncash
lease expense |
|
30,167 |
|
|
|
28,318 |
|
Deferred
taxes |
|
(1,144 |
) |
|
|
935 |
|
Stock-based
compensation expense |
|
3,146 |
|
|
|
3,214 |
|
Impairment
of long-lived assets |
|
2,128 |
|
|
|
123 |
|
Other |
|
(428 |
) |
|
|
(288 |
) |
Changes in operating assets and liabilities: |
|
|
|
Receivables |
|
(5,871 |
) |
|
|
(770 |
) |
Inventories |
|
9,926 |
|
|
|
(22,727 |
) |
Prepaid expenses and other assets |
|
(937 |
) |
|
|
(2,115 |
) |
Trade accounts payable |
|
27,323 |
|
|
|
47,275 |
|
Accrued payroll and payroll taxes |
|
(6,134 |
) |
|
|
(5,345 |
) |
Income taxes payable |
|
(317 |
) |
|
|
(3,857 |
) |
Operating lease liabilities |
|
(20,868 |
) |
|
|
(29,842 |
) |
Other liabilities |
|
8,718 |
|
|
|
(2,090 |
) |
Net
cash provided by operating activities |
|
62,005 |
|
|
|
35,163 |
|
Cash
flows from investing activities: |
|
|
|
Additions to
fixed assets |
|
(5,024 |
) |
|
|
(8,292 |
) |
Purchases of
marketable securities and other investments |
|
(35,720 |
) |
|
|
(93,288 |
) |
Sales and
maturities of marketable securities and other investments |
|
71,387 |
|
|
|
82,123 |
|
Net
cash provided by (used in) investing activities |
|
30,643 |
|
|
|
(19,457 |
) |
Cash
flows from financing activities: |
|
|
|
Proceeds
from issuance and exercise of stock-based awards |
|
545 |
|
|
|
583 |
|
Payments for
tax withholdings on equity awards |
|
(93 |
) |
|
|
(238 |
) |
Common stock
repurchased |
|
(13,417 |
) |
|
|
— |
|
Net
cash (used in) provided by financing activities |
|
(12,965 |
) |
|
|
345 |
|
Effect of exchange rate changes on cash, cash equivalents,
and restricted cash |
|
2,146 |
|
|
|
(504 |
) |
Net
increase in cash, cash equivalents, and restricted
cash |
|
81,829 |
|
|
|
15,547 |
|
Cash, cash equivalents, and restricted cash, beginning of
period |
|
58,991 |
|
|
|
54,271 |
|
Cash, cash equivalents, and restricted cash, end of
period |
$ |
140,820 |
|
|
$ |
69,818 |
|
Supplemental disclosure on cash flow
information: |
|
|
|
Cash paid during the period for income taxes |
$ |
4,630 |
|
|
$ |
8,056 |
|
Accrual for purchases of fixed assets |
|
381 |
|
|
|
2,052 |
|
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