ZUMZ Zumiez Inc

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 28, 2023.

Net sales for the third quarter ended October 28, 2023 (13 weeks) decreased 8.9% to $216.3 million from $237.6 million in the third quarter ended October 29, 2022 (13 weeks). Net loss in the third quarter of fiscal 2023 was $2.2 million, or $0.12 per diluted share, compared to net income of $6.9 million, or $0.36 per diluted share, in the third quarter of the prior fiscal year.

Total net sales for the nine months (39 weeks) ended October 28, 2023 decreased 12.5% to $593.7 million from $678.3 million reported for the nine months (39 weeks) ended October 29, 2022. Net loss for the first nine months of fiscal 2023 was $29.1 million, or $1.51 per diluted share, compared to net income for the first nine months of fiscal 2022 of $9.6 million, or $0.49 per diluted share.

At October 28, 2023, the Company had cash and current marketable securities of $135.8 million compared to cash and current marketable securities of $141.1 million at October 29, 2022. The decrease was primarily driven by capital expenditures partially offset by cash flow from operating activities.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “Third quarter results came in just ahead of our guidance for sales and earnings as we saw sequential improvement in the year-over-year sales comparisons from the first two quarters of 2023. Given the challenging macroeconomic backdrop, we are encouraged by the strength of newer brand introductions and fashion trends that we look to capitalize upon in the important holiday season. While 2023 has certainly been difficult, the adjustments we’ve made to our merchandise assortment and our steadfast commitment to providing consumers with superior service and a highly differentiated shopping experience will continue to separate us from the competition and position Zumiez to recapture operating margin as our sales recover.”

Fourth Quarter To-DateTotal fourth quarter-to-date total sales for the 31 days ending November 28, 2023 decreased 4.6%, compared with the same 31-day time period in the prior year ended November 29, 2022. Total comparable sales for the 31-day period ending November 28, 2023 decreased 6.0% from the comparable period in the prior year.

Fiscal 2023 Fourth Quarter OutlookThe Company is introducing guidance for the three months ending February 3, 2024. Net sales are projected to be in the range of $275 to $281 million inclusive of the 53rd week. Consolidated operating margins are expected to between 1.5% and 2.5% resulting in earnings per diluted share of approximately $0.24 to $0.34. The Company currently intends to open 19 new stores in fiscal 2023, including up to 5 stores in North America, 10 stores in Europe and 4 stores in Australia.

Conference call Information To access the conference call, please pre-register (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 25, 2023, we operated 771 stores, including 610 in the United States, 49 in Canada, 87 in Europe and 25 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 28, 2023 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
		October 28, 2023				% of Sales				October 29, 2022			% of Sales
Net sales		$	216,339			100.0	%		$	237,591			100.0	%
Cost of goods sold			143,135			66.2	%			155,608			65.5	%
Gross profit			73,204			33.8	%			81,983			34.5	%
Selling, general and administrative expenses			73,361			33.9	%			71,544			30.1	%
Operating (loss) profit			(157	)		-0.1	%			10,439			4.4	%
Interest income, net			948			0.4	%			428			0.1	%
Other income, net			(1,037	)		-0.4	%			(1,256	)		-0.5	%
(Loss) earnings before income taxes			(246	)		-0.1	%			9,611			4.0	%
Provision for (Benefit from) income taxes			1,985			0.9	%			2,679			1.1	%
Net (loss) income		$	(2,231	)		-1.0	%		$	6,932			2.9	%
Basic (loss) earnings per share		$	(0.12	)					$	0.36
Diluted (loss) earnings per share		$	(0.12	)					$	0.36
Weighted average shares used in computation of (loss) earnings per share:
Basic			19,327							19,101
Diluted			19,327							19,248
		Nine Months Ended
		October 28, 2023				% of Sales				October 29, 2022			% of Sales
Net sales		$	593,664			100.0	%		$	678,270			100.0	%
Cost of goods sold			409,425			69.0	%			448,861			66.2	%
Gross profit			184,239			31.0	%			229,409			33.8	%
Selling, general and administrative expenses			216,243			36.3	%			213,519			31.5	%
Operating (loss) profit			(32,004	)		-5.3	%			15,890			2.3	%
Interest income, net			2,581			0.4	%			1,279			0.2	%
Other (expense) income, net			(1,156	)		-0.2	%			(850	)		-0.1	%
(Loss) earnings before income taxes			(30,579	)		-5.1	%			16,319			2.4	%
Provision for (Benefit from) income taxes			(1,456	)		-0.2	%			6,717			1.0	%
Net (loss) income		$	(29,122	)		-4.9	%		$	9,602			1.4	%
Basic (loss) earnings per share		$	(1.51	)					$	0.50
Diluted (loss) earnings per share		$	(1.51	)					$	0.49
Weighted average shares used in computation of (loss) earnings per share:
Basic			19,278							19,239
Diluted			19,278							19,490

ZUMIEZ INC. CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)
		October 28, 2023					January 28, 2023					October 29, 2022
		(Unaudited)										(Unaudited)
Assets
Current assets
Cash and cash equivalents		$	48,968				$	81,503				$	49,336
Marketable securities			86,857					91,986					91,776
Receivables			23,022					20,613					19,824
Inventories			175,882					134,824					177,205
Prepaid expenses and other current assets			11,315					11,252					15,166
Total current assets			346,044					340,178					353,307
Fixed assets, net			92,925					93,746					91,590
Operating lease right-of-use assets			212,984					222,240					220,420
Goodwill			55,145					56,566					52,899
Intangible assets, net			13,819					14,443					13,199
Deferred tax assets, net			10,788					8,205					6,794
Other long-term assets			11,321					12,525					11,598
Total long-term assets			396,982					407,725					396,500
Total assets		$	743,026				$	747,903				$	749,807
Liabilities and Shareholders’ Equity
Current liabilities
Trade accounts payable		$	74,337				$	40,379				$	69,076
Accrued payroll and payroll taxes			18,756					16,321					20,557
Operating lease liabilities			69,084					65,460					65,236
Other liabilities			19,602					23,649					20,677
Total current liabilities			181,779					145,809					175,546
Long-term operating lease liabilities			176,233					188,835					188,818
Other long-term liabilities			5,550					5,931					4,773
Total long-term liabilities			181,783					194,766					193,591
Total liabilities			363,562					340,575					369,137
Shareholders’ equity
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding			—					—					—
Common stock, no par value, 50,000 shares authorized; 19,836 shares issued and outstanding at October 28, 2023, 19,489 shares issued and outstanding at January 28, 2023, and 19,490 shares issued and outstanding at October 29, 2022			194,230					188,418					186,684
Accumulated other comprehensive loss			(24,347		)			(19,793		)			(33,285		)
Retained earnings			209,581					238,703					227,271
Total shareholders’ equity			379,464					407,328					380,670
Total liabilities and shareholders’ equity		$	743,026				$	747,903				$	749,807

ZUMIEZ INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)
		Nine Months Ended
		October 28, 2023				October 29, 2022
Cash flows from operating activities:
Net (loss) income		$	(29,122	)		$	9,602
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation, amortization and accretion			16,209				15,802
Noncash lease expense			51,607				50,074
Deferred taxes			(3,014	)			3,441
Stock-based compensation expense			5,108				5,249
Impairment of long-lived assets			925				372
Other			943				1,331
Changes in operating assets and liabilities:
Receivables			(1,767	)			(2,317	)
Inventories			(43,186	)			(52,020	)
Prepaid expenses and other assets			(273	)			(5,365	)
Trade accounts payable			34,270				14,570
Accrued payroll and payroll taxes			2,684				(10,191	)
Income taxes payable			252				(1,790	)
Operating lease liabilities			(52,656	)			(56,796	)
Other liabilities			(4,902	)			(8,374	)
Net cash used in operating activities			(22,922	)			(36,412	)
Cash flows from investing activities:
Additions to fixed assets			(16,210	)			(17,720	)
Purchases of marketable securities and other investments			(28,679	)			(1,914	)
Sales and maturities of marketable securities and other investments			34,506				80,051
Net cash (used in) provided by investing activities			(10,383	)			60,417
Cash flows from financing activities:
Proceeds from revolving credit facilities			25,682				19,844
Payments on revolving credit facilities			(25,682	)			(19,844	)
Proceeds from issuance and exercise of stock-based awards			890				1,110
Payments for tax withholdings on equity awards			(185	)			(499	)
Common stock repurchased			—				(87,860	)
Net cash provided by (used in) financing activities			705				(87,249	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash			(1,643	)			(4,978	)
Net decrease in cash, cash equivalents, and restricted cash			(34,243	)			(68,222	)
Cash, cash equivalents, and restricted cash, beginning of period			88,453				124,052
Cash, cash equivalents, and restricted cash, end of period		$	54,210			$	55,830
Supplemental disclosure on cash flow information:
Cash paid during the period for income taxes		$	1,686			$	5,166
Accrual for purchases of fixed assets			2,780				1,802

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

Investor Contact:ICRBrendon Frey (203) 682-8200