Zumiez Inc. (NASDAQ: ZUMZ) a leading specialty retailer of apparel, footwear, equipment and accessories for young men and women, today reported results for the fourth quarter and fiscal year ended January 28, 2023.

Net sales for the fourth quarter ended January 28, 2023 (13 weeks) decreased 19.2% to $280.1 million from $346.7 million in the fourth quarter ended January 29, 2022 (13 weeks). Net income in the fourth quarter of fiscal 2022 was $11.4 million, or $0.59 per diluted share, compared to net income of $38.2 million, or $1.70 per diluted share, in the fourth quarter of the prior fiscal year.

Total net sales for the twelve months (52 weeks) ended January 28, 2023 decreased 19.0% to $958.4 million from $1,183.9 million reported for the twelve months (52 weeks) ended January 29, 2022. Net income for fiscal 2022 was $21.0 million, or $1.08 per diluted share, compared to net income for fiscal 2021 of $119.3 million, or $4.85 per diluted share.

At January 28, 2023, the Company had cash and current marketable securities of $173.5 million compared to cash and current marketable securities of $294.5 million at January 29, 2022. The decrease was driven by share repurchases of $87.9 million and capital expenditures of $25.6 million over this time period.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “We concluded a challenging fiscal 2022 with fourth quarter results that were ahead of our guidance, but below year ago levels. While the operating environment has been difficult and our recent financial performance disappointing, our commitment to serving consumers with world class service and highly differentiated, sought-after merchandise, is as strong as ever and has the business positioned to recover quickly when the macroeconomic conditions improve. I am confident that the channel-less retail model and strong corporate culture we have built and evolved over Zumiez’s 45-year history and brought to Canada, Europe and Australia will continue to separate our banners from the competition and drive profitable growth for our shareholders over the long-term.”

Fiscal First Quarter-to-Date Sales Total first quarter-to-date sales for the 35 days ended March 4, 2023 decreased 15.5%, compared with the same 35-day time period in the prior year ended March 5, 2022. Total comparable sales for the 35-day period ending March 4, 2023 decreased 16.6% from the comparable period in the prior year.

OutlookFiscal 2023 First Quarter OutlookThe Company is introducing guidance for the three months ending April 29, 2023. Net sales are projected to be in the range of $178 to $184 million. Earnings per share are expected to be between a loss of $0.85 and a loss of $0.95.

The Company currently intends to open approximately 23 new stores in fiscal 2023, including up to 8 stores in North America, 10 stores in Europe and 5 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 February 25, 2023, we operated 756 stores, including 607 in the United States, 50 in Canada, 78 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.

ZUMIEZ INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)

      Three Months Ended
      January 28,   % of   January 29,   % of
      2023     Sales     2022     Sales
      (Unaudited)       (Unaudited)    
Net sales   $ 280,110     100.0 %     346,677     100.0 %
Cost of goods sold     184,841     66.0 %     212,744     61.4 %
Gross profit     95,269     34.0 %     133,933     38.6 %
Selling, general and administrative expenses     80,059     28.6 %     82,198     23.7 %
Operating profit     15,210     5.4 %     51,735     14.9 %
Interest income, net     645     0.2 %     759     0.2 %
Other income (expense), net     293     0.1 %     (1,462 )   -0.4 %
Earnings before income taxes     16,148     5.7 %     51,032     14.7 %
Provision for income taxes     4,716     1.7 %     12,828     3.7 %
Net income   $ 11,432     4.0 %   $ 38,204     11.0 %
Basic earnings per share   $ 0.60         $ 1.73      
Diluted earnings per share   $ 0.59         $ 1.70      
Weighted average shares used in computation of earnings per share:              
Basic     19,114           22,056      
Diluted     19,255           22,451      
                   
                   
      Fiscal Year Ended
      January 28,   % of   January 29,   % of
      2023     Sales     2022     Sales
      (Unaudited)            
Net sales   $ 958,380     100.0 %   $ 1,183,867     100.0 %
Cost of goods sold     633,702     66.1 %     727,137     61.4 %
Gross profit     324,678     33.9 %     456,730     38.6 %
Selling, general and administrative expenses     293,578     30.7 %     298,920     25.3 %
Operating profit     31,100     3.2 %     157,810     13.3 %
Interest income, net     1,924     0.3 %     3,592     0.4 %
Other expense, net     (557 )   -0.1 %     (891 )   -0.1 %
Earnings before income taxes     32,467     3.4 %     160,511     13.6 %
Provision for income taxes     11,433     1.2 %     41,222     3.5 %
Net income   $ 21,034     2.2 %   $ 119,289     10.1 %
Basic earnings per share   $ 1.10         $ 4.93      
Diluted earnings per share   $ 1.08         $ 4.85      
Weighted average shares used in computation of earnings per share:              
Basic     19,208           24,187      
Diluted     19,428           24,593      

 

ZUMIEZ INC. CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)

    January 28, 2023   January 29, 2022
    (Unaudited)    
Assets        
Current assets        
Cash and cash equivalents   $ 81,503     $ 117,223  
Marketable securities     91,986       177,260  
Receivables     20,613       14,427  
Inventories     134,824       128,728  
Prepaid expenses and other current assets     11,252       10,011  
Total current assets     340,178       447,649  
Fixed assets, net     93,746       91,451  
Operating lease right-of-use assets     222,240       230,187  
Goodwill     56,566       57,560  
Intangible assets, net     14,443       14,698  
Deferred tax assets, net     8,205       8,659  
Other long-term assets     12,525       11,808  
Total long-term assets     407,725       414,363  
Total assets   $ 747,903     $ 862,012  
         
Liabilities and Shareholders’ Equity        
Current liabilities        
Trade accounts payable   $ 40,379     $ 55,638  
Accrued payroll and payroll taxes     16,321       31,209  
Operating lease liabilities     65,460       63,577  
Other liabilities     23,649       34,015  
Total current liabilities     145,809       184,439  
Long-term operating lease liabilities     188,835       204,309  
Other long-term liabilities     5,931       4,946  
Total long-term liabilities     194,766       209,255  
Total liabilities     340,575       393,694  
         
Shareholders’ equity        
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding            
Common stock, no par value, 50,000 shares authorized; 19,489 shares issued and outstanding at January 28, 2023 and 21,215 shares issued and outstanding at January 29, 2022     188,418       180,824  
Accumulated other comprehensive loss     (19,793 )     (13,463 )
Retained earnings     238,703       300,957  
Total shareholders’ equity     407,328       468,318  
Total liabilities and shareholders’ equity   $ 747,903     $ 862,012  
         

 

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

    Fiscal Year Ended
    January 28, 2023   January 29, 2022
    (Unaudited)    
Cash flows from operating activities:        
Net income   $ 21,034     $ 119,289  
Adjustments to reconcile net income to net cash (used in) provided by operating activities:        
Depreciation, amortization and accretion     21,626       22,930  
Noncash lease expense     67,394       64,466  
Deferred taxes     2,485       2,374  
Stock-based compensation expense     6,991       6,816  
Impairment of long-lived assets     2,081       2,229  
Other     1,176       2,728  
Changes in operating assets and liabilities:        
Receivables     (1,716 )     2,884  
Inventories     (5,279 )     2,587  
Prepaid expenses and other assets     (1,082 )     (2,824 )
Trade accounts payable     (15,484 )     (14,060 )
Accrued payroll and payroll taxes     (14,895 )     3,649  
Income taxes payable     (2,320 )     (5,101 )
Operating lease liabilities     (76,605 )     (77,657 )
Other liabilities     (5,785 )     4,640  
Net cash (used in) provided by operating activities     (379 )     134,950  
Cash flows from investing activities:        
Additions to fixed assets     (25,627 )     (15,749 )
Purchases of marketable securities and other investments     (1,914 )     (160,328 )
Sales and maturities of marketable securities and other investments     81,750       277,720  
Net cash provided by investing activities     54,209       101,643  
Cash flows from financing activities:        
Proceeds from revolving credit facilities     3,979        
Payments on revolving credit facilities     (3,979 )      
Proceeds from issuance and exercise of stock-based awards     1,111       3,001  
Payments for tax withholdings on equity awards     (508 )     (621 )
Common stock repurchased     (87,860 )     (193,789 )
Net cash used in financing activities     (87,257 )     (191,409 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash     (2,172 )     (1,822 )
Net (decrease) increase in cash, cash equivalents, and restricted cash     (35,599 )     43,362  
Cash, cash equivalents, and restricted cash, beginning of period     124,052       80,690  
Cash, cash equivalents, and restricted cash, end of period   $ 88,453     $ 124,052  
Supplemental disclosure on cash flow information:        
Cash paid during the period for income taxes   $ 11,309     $ 42,767  
Accrual for repurchase of common stock     -       4,572  
Accrual for purchases of fixed assets     1,433       984  

 

Company Contact:Darin WhiteDirector of Finance & Investor RelationsZumiez Inc.(425) 551-1500, ext. 1337

Investor Contact:ICRBrendon Frey (203) 682-8200

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