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Zumiez Inc. Announces Fiscal 2020 Third Quarter Results

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Third Quarter 2020 Sales Increased 2.6% to $271.0 Million
Third Quarter 2020 Diluted Earnings Per Share Increased 54.7% to $1.16
Cash and Current Marketable Securities Increased 77.0% to $316.2 Million

LYNNWOOD, Wash., Dec. 03, 2020 (GLOBE NEWSWIRE) -- Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the third quarter ended October 31, 2020.

Total net sales for the third quarter ended October 31, 2020 (13 weeks) increased 2.6% to $271.0 million from $264.0 million in the quarter ended November 2, 2019 (13 weeks). Due to store closures, stores were open for approximately 95% of the third 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 October 31, 2020 increased 8.1% compared to the same period a year ago. Net income for the third quarter of fiscal 2020 was $29.1 million, or $1.16 per diluted share, compared to net income of $19.2 million, or $0.75 per diluted share in the third quarter of the prior fiscal year.

Total net sales for the nine months (39 weeks) ended October 31, 2020 decreased 6.6% to $659.1 million from $705.4 million reported for the nine months (39 weeks) ended November 2, 2019. Net income for the first nine months of fiscal 2020 increased 15.3% to $33.4 million, or $1.32 per diluted share, compared to net income for the first nine months of the prior fiscal year of $29.0 million, or $1.14 per diluted share.

At October 31, 2020, the Company had cash and current marketable securities of $316.2 million compared to cash and current marketable securities of $178.6 million at November 2, 2019. The increase in cash and current marketable securities was driven by cash generated through operations including cash deferment of $53.0 million composed of lower inventory levels, landlord payments, extended vendor terms and 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 in March due to COVID-19 and other planned capital expenditures.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “We once again successfully navigated volatile market conditions and drove strong earnings growth. Following a challenging start to the third quarter due to the delayed start to back to school, sales were positive in both September and October as we capitalized on late season demand. Our performance in 2020 is a testament to the resiliency of our people and their commitment to serving our customers, the strong culture and brand loyalty we’ve fostered over many years, and the ability of our business model to adapt to changes in purchasing behavior. While there is still uncertainty around how the remainder of the holiday season will unfold, we believe we are positioned well to meet the customer’s expectations and drive value for the long-term.”

Fiscal Fourth Quarter-to-Date Sales
Total fourth quarter-to-date sales for the 31 days ended December 1, 2020 were down approximately 3.9%, compared with the same 31 day time period in the prior year ended December 3, 2019. Comparable sales for the 31 days ended December 1, 2020 were down 1.7%. By channel, open store comparable sales decreased 7.8% and e-commerce sales increased 16.7%. During this timeframe we had roughly 3% fewer open store days than last year due to governmental orders and potential safety concerns. We also experienced significant metering of traffic and reduced hours where required by local governments. We expect that the store closures and various other operating restrictions will fluctuate as we move through the quarter.

Outlook
Due 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 fourth quarter or the year.

Share Repurchase Authorization:

On December 2, 2020, the Company’s Board of Directors approved the repurchase of up to an aggregate of $100 million of its Common Stock (the “Repurchase Program”). The repurchases will be made from time to time on the open market at prevailing market prices. The Repurchase Program is expected to continue through the fiscal year 2021 ending January 29, 2022, unless the time period is extended or shortened by the Board of Directors. The Repurchase Program supersedes all previously approved and authorized stock repurchase programs.

Conference Call Information
A conference call will be held today to discuss third 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 6946677.

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 28, 2020, we operated 726 stores, including 608 in the United States, 52 in Canada, 54 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 White
Director of Finance &
Investor Relations
Zumiez Inc.
(425) 551-1500, ext. 1337

Investor Contact:
ICR
Brendon Frey
(203) 682-8200

 
 
ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
 
  Three Months Ended
  October 31, 2020 % of Sales  November 2, 2019 % of Sales
Net sales $270,952 100.0% $264,022 100.0%
Cost of goods sold  165,146 61.0%  169,446 64.2%
Gross profit  105,806 39.0%  94,576 35.8%
Selling, general and administrative expenses  67,941 25.0%  70,266 26.6%
Operating profit  37,865 14.0%  24,310 9.2%
Interest income, net  769 0.3%  1,002 0.4%
Other income, net  86 0.0%  275 0.1%
Earnings before income taxes  38,720 14.3%  25,587 9.7%
Provision for income taxes  9,581 3.5%  6,408 2.4%
Net income $29,139 10.8% $19,179 7.3%
           
Basic earnings per share $1.17   $0.76  
Diluted earnings per share $1.16   $0.75  
Weighted average shares used in computation of earnings per share:        
Basic  24,864    25,231  
Diluted  25,219    25,560  
           
  Nine Months Ended
  October 31, 2020 % of Sales  November 2, 2019 % of Sales
Net sales $659,116 100.0%  705,376 100.0%
Cost of goods sold  438,724 66.6%  467,140 66.2%
Gross profit  220,392 33.4%  238,236 33.8%
Selling, general and administrative expenses  177,263 26.9%  201,285 28.6%
Operating profit  43,129 6.5%  36,951 5.2%
Interest income, net  2,637 0.4%  2,652 0.4%
Other income, net  584 0.1%  987 0.2%
Earnings before income taxes  46,350 7.0%  40,590 5.8%
Provision for income taxes  12,920 1.9%  11,593 1.7%
Net income $33,430 5.1%  28,997 4.1%
           
Basic earnings per share $1.34    1.15  
Diluted earnings per share $1.32    1.14  
Weighted average shares used in computation of earnings per share:          
Basic  24,913    25,173  
Diluted  25,271    25,480  
           


ZUMIEZ INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
 October 31, 2020 February 1, 2020 November 2, 2019
 (Unaudited)   (Unaudited)
Assets     
Current assets     
Cash and cash equivalents$84,939  $52,428  $31,929 
Marketable securities 231,234   198,768   146,718 
Receivables 19,301   16,841   16,790 
Inventories 160,961   135,095   183,381 
Prepaid expenses and other current assets 9,240   9,456   10,757 
Total current assets 505,675   412,588   389,575 
Fixed assets, net 101,820   113,051   115,170 
Operating lease right-of-use assets 273,796   301,784   301,736 
Goodwill 59,540   57,099   57,580 
Intangible assets, net 15,329   14,564   14,772 
Deferred tax assets, net 8,192   6,303   7,424 
Other long-term assets 9,802   8,869   8,773 
Total long-term assets 468,479   501,670   505,455 
Total assets$974,154  $914,258  $895,030 
      
Liabilities and Shareholders’ Equity     
Current liabilities     
Trade accounts payable$84,069  $47,787  $73,418 
Accrued payroll and payroll taxes 25,603   23,653   21,929 
Income taxes payable 8,402   4,686   3,430 
Operating lease liabilities 72,526   61,800   59,742 
Other liabilities 25,327   21,784   18,815 
Total current liabilities 215,927   159,710   177,334 
Long-term operating lease liabilities 255,160   284,717 
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LYNNWOOD