Zumiez Inc. (NASDAQ: ZUMZ) a leading specialty retailer of apparel,
footwear, equipment and accessories for young men and women, today
reported results for the third quarter ended October 29, 2022.
Net sales for the third quarter ended October 29, 2022 (13
weeks) decreased 17.9% to $237.6 million from $289.5 million in the
third quarter ended October 30, 2021 (13 weeks). Net income in the
third quarter of fiscal 2022 was $6.9 million, or $0.36 per diluted
share, compared to net income of $30.7 million, or $1.25 per
diluted share, in the third quarter of the prior fiscal year.
Total net sales for the nine months (39 weeks) ended October 29,
2022 decreased 19.0% to $678.3 million from $837.2 million reported
for the nine months (39 weeks) ended October 30, 2021. Net income
for the first nine months of 2022 was $9.6 million, or $0.49 per
diluted share, compared to net income for the first nine months of
fiscal 2021 of $81.1 million, or $3.20 per diluted share.
At October 29, 2022, the Company had cash and current marketable
securities of $141.1 million compared to cash and current
marketable securities of $338.1 million at October 30, 2021. The
decrease was driven by share repurchases of $183.1 million and
capital expenditures of $24.7 million over this time period,
partially offset by cash generated through operations.
Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “We
are managing through a challenging operating environment and our
recent performance reflects the emergence of multiple headwinds
since the year ago period led by a pullback in consumer
discretionary spending, inflation driven cost and expense
pressures, an increasingly promotional marketplace, a war in
Eastern Europe and the anniversary of some strong trends that drove
our business during the pandemic. At the same time, our growth in
Europe and Australia is being offset on a reported basis due to
unfavorable movements in foreign currency. While we are
disappointed with the change in our results year-over-year, I am
encouraged with how our teams are managing the business in light of
the current challenges. Like we have done during similar economic
times, we are prudently balancing the protection of near-term
profitability while investing in our people and the key projects
that will continue to deliver our distinct merchandise and
world-class customer service that has been the foundation of
Zumiez’ long-term success.”
Fourth Quarter To-DateTotal fourth quarter-to-date total sales
for the 31 days ending November 29, 2022 decreased 23.9%, compared
with the same 31-day time period in the prior year ended November
30, 2021. Total comparable sales for the 31-day period ending
November 29, 2022 decreased 24.8% from the comparable period in the
prior year.
Fiscal 2022 Fourth Quarter OutlookThe Company is introducing
guidance for the three months ending January 28, 2023. Net sales
are projected to be in the range of $258 to $265 million.
Consolidated operating margins are expected to between 3.4% and
4.7% resulting in earnings per diluted share of approximately $0.36
to $0.51. The Company currently intends to open approximately 33
new stores in fiscal 2022, including up to 16 stores in North
America, 13 stores in Europe and 4 stores in Australia.
Conference call Information To access the conference call,
please pre-register using this link (registration link).
Registrants will receive confirmation with dial-in details. The
conference call will also be available to interested parties
through a live webcast at https://ir.zumiez.com. To avoid delays,
we encourage participants to dial into the conference call fifteen
minutes ahead of the scheduled start time. A replay of the webcast
will also be available for a limited time
at https://ir.zumiez.com.
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 26, 2022, we operated 763 stores, including 615 in
the United States, 52 in Canada, 75 in Europe and 21 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 January 29, 2022 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 OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
|
Three Months Ended |
|
October 29, 2022 |
|
% of Sales |
|
|
October 30, 2021 |
|
% of Sales |
Net sales |
$ |
237,591 |
|
|
100.0 |
% |
|
$ |
289,455 |
|
100.0 |
% |
Cost of
goods sold |
|
155,608 |
|
|
65.5 |
% |
|
|
174,791 |
|
60.4 |
% |
Gross profit |
|
81,983 |
|
|
34.5 |
% |
|
|
114,664 |
|
39.6 |
% |
Selling,
general and administrative expenses |
|
71,544 |
|
|
30.1 |
% |
|
|
74,822 |
|
25.8 |
% |
Operating profit |
|
10,439 |
|
|
4.4 |
% |
|
|
39,842 |
|
13.8 |
% |
Interest
income, net |
|
428 |
|
|
0.1 |
% |
|
|
893 |
|
0.3 |
% |
Other
(expense) income, net |
|
(1,256 |
) |
|
-0.5 |
% |
|
|
468 |
|
0.1 |
% |
Earnings before income taxes |
|
9,611 |
|
|
4.0 |
% |
|
|
41,203 |
|
14.2 |
% |
Provision
for income taxes |
|
2,679 |
|
|
1.1 |
% |
|
|
10,501 |
|
3.6 |
% |
Net
income |
$ |
6,932 |
|
|
2.9 |
% |
|
$ |
30,702 |
|
10.6 |
% |
Basic
earnings per share |
$ |
0.36 |
|
|
|
|
$ |
1.26 |
|
|
Diluted
earnings per share |
$ |
0.36 |
|
|
|
|
$ |
1.25 |
|
|
Weighted
average shares used in computation of earnings per share: |
|
|
|
|
|
|
|
Basic |
|
19,101 |
|
|
|
|
|
24,284 |
|
|
Diluted |
|
19,248 |
|
|
|
|
|
24,629 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
October 29, 2022 |
|
% of Sales |
|
|
October 30, 2021 |
|
% of Sales |
Net
sales |
$ |
678,270 |
|
|
100.0 |
% |
|
$ |
837,190 |
|
100.0 |
% |
Cost of
goods sold |
|
448,861 |
|
|
66.2 |
% |
|
|
514,393 |
|
61.4 |
% |
Gross profit |
|
229,409 |
|
|
33.8 |
% |
|
|
322,797 |
|
38.6 |
% |
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses |
|
213,519 |
|
|
31.5 |
% |
|
|
216,722 |
|
25.9 |
% |
Operating profit |
|
15,890 |
|
|
2.3 |
% |
|
|
106,075 |
|
12.7 |
% |
|
|
|
|
|
|
|
|
Interest
income, net |
|
1,279 |
|
|
0.2 |
% |
|
|
2,833 |
|
0.3 |
% |
Other
(expense) income, net |
|
(850 |
) |
|
-0.1 |
% |
|
|
571 |
|
0.1 |
% |
Earnings before income taxes |
|
16,319 |
|
|
2.4 |
% |
|
|
109,479 |
|
13.1 |
% |
Provision
for income taxes |
|
6,717 |
|
|
1.0 |
% |
|
|
28,394 |
|
3.4 |
% |
Net
income |
$ |
9,602 |
|
|
1.4 |
% |
|
$ |
81,085 |
|
9.7 |
% |
Basic
earnings per share |
$ |
0.50 |
|
|
|
|
$ |
3.26 |
|
|
Diluted
earnings per share |
$ |
0.49 |
|
|
|
|
$ |
3.20 |
|
|
Weighted
average shares used in computation of earnings per share: |
|
|
|
|
|
|
|
|
|
Basic |
|
19,239 |
|
|
|
|
|
24,905 |
|
|
Diluted |
|
19,490 |
|
|
|
|
|
25,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
ZUMIEZ INC. CONDENSED
CONSOLIDATED BALANCE SHEETS(In
thousands)
|
October 29, 2022 |
|
January 29, 2022 |
|
October 30, 2021 |
|
(Unaudited) |
|
|
|
(Unaudited) |
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
49,336 |
|
|
$ |
117,223 |
|
|
$ |
75,545 |
|
Marketable
securities |
|
91,776 |
|
|
|
177,260 |
|
|
|
262,541 |
|
Receivables |
|
19,824 |
|
|
|
14,427 |
|
|
|
22,107 |
|
Inventories |
|
177,205 |
|
|
|
128,728 |
|
|
|
175,108 |
|
Prepaid
expenses and other current assets |
|
15,166 |
|
|
|
10,011 |
|
|
|
11,633 |
|
Total current assets |
|
353,307 |
|
|
|
447,649 |
|
|
|
546,934 |
|
Fixed
assets, net |
|
91,590 |
|
|
|
91,451 |
|
|
|
91,956 |
|
Operating
lease right-of-use assets |
|
220,420 |
|
|
|
230,187 |
|
|
|
244,777 |
|
Goodwill |
|
52,899 |
|
|
|
57,560 |
|
|
|
59,525 |
|
Intangible
assets, net |
|
13,199 |
|
|
|
14,698 |
|
|
|
15,409 |
|
Deferred tax
assets, net |
|
6,794 |
|
|
|
8,659 |
|
|
|
7,784 |
|
Other
long-term assets |
|
11,598 |
|
|
|
11,808 |
|
|
|
11,804 |
|
Total long-term assets |
|
396,500 |
|
|
|
414,363 |
|
|
|
431,255 |
|
Total assets |
$ |
749,807 |
|
|
$ |
862,012 |
|
|
$ |
978,189 |
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade
accounts payable |
$ |
69,076 |
|
|
$ |
55,638 |
|
|
$ |
84,609 |
|
Accrued
payroll and payroll taxes |
|
20,557 |
|
|
|
31,209 |
|
|
|
27,436 |
|
Operating
lease liabilities |
|
65,236 |
|
|
|
63,577 |
|
|
|
64,389 |
|
Other
liabilities |
|
20,677 |
|
|
|
34,015 |
|
|
|
41,207 |
|
Total current liabilities |
|
175,546 |
|
|
|
184,439 |
|
|
|
217,641 |
|
Long-term
operating lease liabilities |
|
188,818 |
|
|
|
204,309 |
|
|
|
220,524 |
|
Other
long-term liabilities |
|
4,773 |
|
|
|
4,946 |
|
|
|
8,282 |
|
Total long-term liabilities |
|
193,591 |
|
|
|
209,255 |
|
|
|
228,806 |
|
Total liabilities |
|
369,137 |
|
|
|
393,694 |
|
|
|
446,447 |
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
Preferred
stock, no par value, 20,000 shares authorized; none issued and
outstanding |
|
— |
|
|
|
— |
|
|
|
— |
|
Common
stock, no par value, 50,000 shares authorized; 19,490 shares
issued and outstanding at October 29, 2022, 21,215 shares issued
and outstanding at January 29, 2022, and 23,319 shares issued and
outstanding at October 30, 2021 |
|
186,684 |
|
|
|
180,824 |
|
|
|
179,049 |
|
Accumulated
other comprehensive loss |
|
(33,285 |
) |
|
|
(13,463 |
) |
|
|
(5,867 |
) |
Retained
earnings |
|
227,271 |
|
|
|
300,957 |
|
|
|
358,560 |
|
Total shareholders’ equity |
|
380,670 |
|
|
|
468,318 |
|
|
|
531,742 |
|
Total liabilities and shareholders’ equity |
$ |
749,807 |
|
|
$ |
862,012 |
|
|
$ |
978,189 |
|
|
|
|
|
|
|
|
|
|
ZUMIEZ INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands)(Unaudited)
|
Nine Months Ended |
|
October 29, 2022 |
|
October 30, 2021 |
Cash
flows from operating activities: |
|
|
|
Net income |
$ |
9,602 |
|
|
$ |
81,085 |
|
Adjustments
to reconcile net income to net cash (used in) provided by operating
activities: |
|
|
|
Depreciation, amortization and accretion |
|
15,802 |
|
|
|
17,318 |
|
Noncash
lease expense |
|
50,074 |
|
|
|
48,131 |
|
Deferred
taxes |
|
3,441 |
|
|
|
2,772 |
|
Stock-based
compensation expense |
|
5,249 |
|
|
|
5,118 |
|
Impairment
of long-lived assets |
|
372 |
|
|
|
2,079 |
|
Other |
|
1,331 |
|
|
|
1,204 |
|
Changes in operating assets and liabilities: |
|
|
|
Receivables |
|
(2,317 |
) |
|
|
(3,681 |
) |
Inventories |
|
(52,020 |
) |
|
|
(41,702 |
) |
Prepaid expenses and other assets |
|
(5,365 |
) |
|
|
(4,275 |
) |
Trade accounts payable |
|
14,570 |
|
|
|
14,276 |
|
Accrued payroll and payroll taxes |
|
(10,191 |
) |
|
|
(351 |
) |
Income taxes payable |
|
(1,790 |
) |
|
|
4,253 |
|
Operating lease liabilities |
|
(56,796 |
) |
|
|
(59,099 |
) |
Other liabilities |
|
(8,374 |
) |
|
|
4,808 |
|
Net
cash (used in) provided by operating activities |
|
(36,412 |
) |
|
|
71,936 |
|
Cash
flows from investing activities: |
|
|
|
Additions to
fixed assets |
|
(17,720 |
) |
|
|
(8,808 |
) |
Purchases of
marketable securities and other investments |
|
(1,914 |
) |
|
|
(151,089 |
) |
Sales and
maturities of marketable securities and other investments |
|
80,051 |
|
|
|
186,116 |
|
Net
cash provided by investing activities |
|
60,417 |
|
|
|
26,219 |
|
Cash
flows from financing activities: |
|
|
|
Proceeds
from revolving credit facilities |
|
2,430 |
|
|
|
— |
|
Payments on
revolving credit facilities |
|
(2,430 |
) |
|
|
— |
|
Proceeds
from issuance and exercise of stock-based awards |
|
1,110 |
|
|
|
2,863 |
|
Payments for
tax withholdings on equity awards |
|
(499 |
) |
|
|
(560 |
) |
Common stock
repurchased |
|
(87,860 |
) |
|
|
(98,520 |
) |
Net
cash used in financing activities |
|
(87,249 |
) |
|
|
(96,217 |
) |
Effect of exchange rate changes on cash, cash equivalents,
and restricted cash |
|
(4,978 |
) |
|
|
(66 |
) |
Net
(decrease) increase in cash, cash equivalents, and restricted
cash |
|
(68,222 |
) |
|
|
1,872 |
|
Cash, cash equivalents, and restricted cash, beginning of
period |
|
124,052 |
|
|
|
80,690 |
|
Cash, cash equivalents, and restricted cash, end of
period |
$ |
55,830 |
|
|
$ |
82,562 |
|
Supplemental disclosure on cash flow
information: |
|
|
|
Cash paid during the period for income taxes |
$ |
5,166 |
|
|
$ |
20,507 |
|
Accrual for purchases of fixed assets |
|
1,802 |
|
|
|
1,851 |
|
Accrual for repurchase of common stock |
|
- |
|
|
|
4,034 |
|
|
|
|
|
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