Zumiez Inc. (NASDAQ: ZUMZ) a leading specialty retailer of apparel,
footwear, equipment and accessories for young men and women, today
reported results for the second quarter ended July 30, 2022.
Net sales for the second quarter ended July 30, 2022 (13 weeks)
decreased 18.1% to $220.0 million from $268.7 million in the second
quarter ended July 31, 2021 (13 weeks). Compared to the second
quarter ended August 3, 2019 (13 weeks), second quarter 2022 net
sales decreased 3.7%. Net income in the second quarter of fiscal
2022 was $3.1 million, or $0.16 per diluted share, compared to net
income of $24.0 million, or $0.94 per diluted share, in the second
quarter of the prior fiscal year. Net income for the second quarter
of 2019 was $9.0 million, or $0.36 per diluted share.
Total net sales for the six months (26 weeks) ended July 30,
2022 decreased 19.5% to $440.7 million from $547.7 million reported
for the six months (26 weeks) ended July 31, 2021. Compared to the
first six months (26 weeks) ended August 3, 2019, net sales
decreased 0.2%. Net income for the first six months of 2022 was
$2.7 million, or $0.14 per diluted share, compared to net income
for the first six months of fiscal 2021 of $50.4 million, or $1.96
per diluted share, and compared to net income for the first six
months of fiscal 2019 of $9.8 million, or $0.39 per diluted
share.
At July 30, 2022, the Company had cash and current marketable
securities of $166.2 million compared to cash and current
marketable securities of $412.0 million at July 31, 2021. The
decrease was driven by share repurchases and capital expenditures
partially offset by cash generated through operations.
Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “As
the second quarter progressed, we experienced continued pressure on
our U.S. business as macroeconomic headwinds, led by inflation
weighed on consumer discretionary spending. Our full-price selling
model has fueled long cycles of sustained growth and increased
profitability during Zumiez’s 44 year history with outsized gains
during periods of high disposable income levels such as last year’s
stimulus driven demand environment. We are disappointed that our
recent performance fell short of expectations and we are making
adjustments to our merchandise assortments and managing expenses in
order to improve near-term results. While comparisons do begin to
moderate in the back half of the year, based on recent trends we
believe it is prudent to adopt a more cautious view on the
remainder of 2022. We are currently planning our business and
inventory levels accordingly while also focusing on what is
important for the customer. Longer-term, we remain optimistic that
our differentiated strategies and strong balance sheet have the
Company well positioned to add to our global market share and
return increased value to our shareholders.
Third Quarter To-DateTotal third quarter-to-date sales for the
37 days ending September 5, 2022 decreased 18.1%, compared with the
same 37-day time period in the prior year ended September 6, 2021.
Compared to the 37-day period ended September 9, 2019, total net
sales decreased 12.6%. Total comparable sales for the 37-day period
ending September 5, 2022 were down 19.7% from the comparable period
in the prior year, and decreased 15.3% from the comparable period
in 2019.
Fiscal 2022 Third Quarter OutlookThe Company is introducing
guidance for the three months ending October 29, 2022. Net sales
are projected to be in the range of $220 to $228 million.
Consolidated operating margins are expected to between 0.5% and
2.5% resulting in earnings per diluted share of approximately $0.03
to $0.18. The Company currently intends to open approximately 35
new stores in fiscal 2022, including up to 16 stores in North
America, 14 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 August 27, 2022, we operated 753 stores, including 612 in the
United States, 52 in Canada, 70 in Europe and 19 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 |
|
|
|
July 30, 2022 |
|
% of Sales |
|
|
July 31, 2021 |
|
% of Sales |
|
Net sales |
|
$ |
219,993 |
|
100.0 |
% |
|
$ |
268,666 |
|
|
100.0 |
% |
|
Cost of
goods sold |
|
|
144,929 |
|
65.9 |
% |
|
|
163,701 |
|
|
60.9 |
% |
|
Gross profit |
|
|
75,064 |
|
34.1 |
% |
|
|
104,965 |
|
|
39.1 |
% |
|
Selling,
general and administrative expenses |
|
|
70,109 |
|
31.8 |
% |
|
|
73,011 |
|
|
27.2 |
% |
|
Operating profit |
|
|
4,955 |
|
2.3 |
% |
|
|
31,954 |
|
|
11.9 |
% |
|
Interest
income, net |
|
|
358 |
|
0.1 |
% |
|
|
965 |
|
|
0.4 |
% |
|
Other income
(expense), net |
|
|
233 |
|
0.1 |
% |
|
|
(151 |
) |
|
-0.1 |
% |
|
Earnings before income taxes |
|
|
5,546 |
|
2.5 |
% |
|
|
32,768 |
|
|
12.2 |
% |
|
Provision
for income taxes |
|
|
2,479 |
|
1.1 |
% |
|
|
8,770 |
|
|
3.3 |
% |
|
Net
income |
|
$ |
3,067 |
|
1.4 |
% |
|
$ |
23,998 |
|
|
8.9 |
% |
|
Basic
earnings per share |
|
$ |
0.16 |
|
|
|
$ |
0.95 |
|
|
|
|
Diluted
earnings per share |
|
$ |
0.16 |
|
|
|
$ |
0.94 |
|
|
|
|
Weighted
average shares used in computation of earnings per share: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
19,084 |
|
|
|
|
25,274 |
|
|
|
|
Diluted |
|
|
19,262 |
|
|
|
|
25,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
July 30, 2022 |
|
% of Sales |
|
|
July 31, 2021 |
|
% of Sales |
|
Net
sales |
|
$ |
440,679 |
|
100.0 |
% |
|
$ |
547,735 |
|
|
100.0 |
% |
|
Cost of
goods sold |
|
|
293,242 |
|
66.5 |
% |
|
|
339,602 |
|
|
62.0 |
% |
|
Gross profit |
|
|
147,437 |
|
33.5 |
% |
|
|
208,133 |
|
|
38.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses |
|
|
141,985 |
|
32.3 |
% |
|
|
141,900 |
|
|
25.9 |
% |
|
Operating profit |
|
|
5,452 |
|
1.2 |
% |
|
|
66,233 |
|
|
12.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
Interest
income, net |
|
|
850 |
|
0.2 |
% |
|
|
1,940 |
|
|
0.4 |
% |
|
Other
income, net |
|
|
405 |
|
0.1 |
% |
|
|
103 |
|
|
0.0 |
% |
|
Earnings before income taxes |
|
|
6,707 |
|
1.5 |
% |
|
|
68,276 |
|
|
12.5 |
% |
|
Provision
for income taxes |
|
|
4,037 |
|
0.9 |
% |
|
|
17,893 |
|
|
3.3 |
% |
|
Net
income |
|
$ |
2,670 |
|
0.6 |
% |
|
$ |
50,383 |
|
|
9.2 |
% |
|
Basic
earnings per share |
|
$ |
0.14 |
|
|
|
$ |
2.00 |
|
|
|
|
Diluted
earnings per share |
|
$ |
0.14 |
|
|
|
$ |
1.96 |
|
|
|
|
Weighted
average shares used in computation of earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
19,308 |
|
|
|
|
25,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
19,592 |
|
|
|
|
25,675 |
|
|
|
|
ZUMIEZ INC. CONDENSED
CONSOLIDATED BALANCE SHEETS(In
thousands)
|
|
July 30, 2022 |
|
January 29, 2022 |
|
July 31, 2021 |
|
|
|
(Unaudited) |
|
|
|
(Unaudited) |
|
Assets |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
59,144 |
|
|
$ |
117,223 |
|
|
$ |
74,207 |
|
|
Marketable
securities |
|
|
107,036 |
|
|
|
177,260 |
|
|
|
337,772 |
|
|
Receivables |
|
|
24,201 |
|
|
|
14,427 |
|
|
|
24,834 |
|
|
Inventories |
|
|
151,071 |
|
|
|
128,728 |
|
|
|
149,368 |
|
|
Prepaid
expenses and other current assets |
|
|
14,053 |
|
|
|
10,011 |
|
|
|
11,656 |
|
|
Total current assets |
|
|
355,505 |
|
|
|
447,649 |
|
|
|
597,837 |
|
|
Fixed
assets, net |
|
|
91,196 |
|
|
|
91,451 |
|
|
|
92,921 |
|
|
Operating
lease right-of-use assets |
|
|
228,243 |
|
|
|
230,187 |
|
|
|
246,592 |
|
|
Goodwill |
|
|
54,017 |
|
|
|
57,560 |
|
|
|
60,440 |
|
|
Intangible
assets, net |
|
|
13,679 |
|
|
|
14,698 |
|
|
|
15,629 |
|
|
Deferred tax
assets, net |
|
|
6,546 |
|
|
|
8,659 |
|
|
|
5,879 |
|
|
Other
long-term assets |
|
|
11,425 |
|
|
|
11,808 |
|
|
|
11,444 |
|
|
Total long-term assets |
|
|
405,106 |
|
|
|
414,363 |
|
|
|
432,905 |
|
|
Total assets |
|
$ |
760,611 |
|
|
$ |
862,012 |
|
|
$ |
1,030,742 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Trade
accounts payable |
|
$ |
72,915 |
|
|
$ |
55,638 |
|
|
$ |
80,174 |
|
|
Accrued
payroll and payroll taxes |
|
|
16,970 |
|
|
|
31,209 |
|
|
|
23,371 |
|
|
Operating
lease liabilities |
|
|
67,411 |
|
|
|
63,577 |
|
|
|
65,844 |
|
|
Other
liabilities |
|
|
23,951 |
|
|
|
34,015 |
|
|
|
35,764 |
|
|
Total current liabilities |
|
|
181,247 |
|
|
|
184,439 |
|
|
|
205,153 |
|
|
Long-term
operating lease liabilities |
|
|
196,073 |
|
|
|
204,309 |
|
|
|
223,043 |
|
|
Other
long-term liabilities |
|
|
4,995 |
|
|
|
4,946 |
|
|
|
8,250 |
|
|
Total long-term liabilities |
|
|
201,068 |
|
|
|
209,255 |
|
|
|
231,293 |
|
|
Total liabilities |
|
|
382,315 |
|
|
|
393,694 |
|
|
|
436,446 |
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
|
|
Preferred
stock, no par value, 20,000 shares authorized; none issued and
outstanding |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Common
stock, no par value, 50,000 shares authorized; 19,474 shares
issued and outstanding at July 30, 2022, 21,215 shares issued and
outstanding at January 29, 2022, and 25,559 shares issued and
outstanding at July 31, 2021 |
|
|
184,619 |
|
|
|
180,824 |
|
|
|
176,951 |
|
|
Accumulated
other comprehensive loss |
|
|
(26,662 |
) |
|
|
(13,463 |
) |
|
|
(2,144 |
) |
|
Retained
earnings |
|
|
220,339 |
|
|
|
300,957 |
|
|
|
419,489 |
|
|
Total shareholders’ equity |
|
|
378,296 |
|
|
|
468,318 |
|
|
|
594,296 |
|
|
Total liabilities and shareholders’ equity |
|
$ |
760,611 |
|
|
$ |
862,012 |
|
|
$ |
1,030,742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
ZUMIEZ INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands)(Unaudited)
|
|
Six Months Ended |
|
|
|
July 30, 2022 |
|
July 31, 2021 |
|
Cash
flows from operating activities: |
|
|
|
|
|
Net income |
|
$ |
2,670 |
|
|
$ |
50,383 |
|
|
Adjustments
to reconcile net income to net cash (used in) provided by operating
activities: |
|
|
|
|
|
Depreciation, amortization and accretion |
|
|
10,598 |
|
|
|
11,639 |
|
|
Noncash
lease expense |
|
|
33,040 |
|
|
|
32,044 |
|
|
Deferred
taxes |
|
|
3,035 |
|
|
|
4,260 |
|
|
Stock-based
compensation expense |
|
|
3,513 |
|
|
|
3,431 |
|
|
Impairment
of long-lived assets |
|
|
65 |
|
|
|
2,079 |
|
|
Other |
|
|
(115 |
) |
|
|
1,064 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
Receivables |
|
|
(5,496 |
) |
|
|
(5,353 |
) |
|
Inventories |
|
|
(24,671 |
) |
|
|
(15,408 |
) |
|
Prepaid expenses and other assets |
|
|
(3,946 |
) |
|
|
(4,173 |
) |
|
Trade accounts payable |
|
|
17,084 |
|
|
|
10,178 |
|
|
Accrued payroll and payroll taxes |
|
|
(13,958 |
) |
|
|
(4,462 |
) |
|
Income taxes payable |
|
|
(4,128 |
) |
|
|
(304 |
) |
|
Operating lease liabilities |
|
|
(37,239 |
) |
|
|
(40,413 |
) |
|
Other liabilities |
|
|
(4,611 |
) |
|
|
7,165 |
|
|
Net
cash (used in) provided by operating activities |
|
|
(24,159 |
) |
|
|
52,130 |
|
|
Cash
flows from investing activities: |
|
|
|
|
|
Additions to
fixed assets |
|
|
(10,253 |
) |
|
|
(5,418 |
) |
|
Purchases of
marketable securities and other investments |
|
|
(1,914 |
) |
|
|
(112,888 |
) |
|
Sales and
maturities of marketable securities and other investments |
|
|
67,890 |
|
|
|
75,234 |
|
|
Net
cash provided by (used in) investing activities |
|
|
55,723 |
|
|
|
(43,072 |
) |
|
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 |
|
|
781 |
|
|
|
2,452 |
|
|
Payments for
tax withholdings on equity awards |
|
|
(499 |
) |
|
|
(560 |
) |
|
Common stock
repurchased |
|
|
(87,860 |
) |
|
|
(10,481 |
) |
|
Net
cash used in financing activities |
|
|
(87,578 |
) |
|
|
(8,589 |
) |
|
Effect of exchange rate changes on cash, cash equivalents,
and restricted cash |
|
|
(2,367 |
) |
|
|
139 |
|
|
Net
(decrease) increase in cash, cash equivalents, and restricted
cash |
|
|
(58,381 |
) |
|
|
608 |
|
|
Cash, cash equivalents, and restricted cash, beginning of
period |
|
|
124,052 |
|
|
|
80,690 |
|
|
Cash, cash equivalents, and restricted cash, end of
period |
|
$ |
65,671 |
|
|
$ |
81,298 |
|
|
Supplemental disclosure on cash flow
information: |
|
|
|
|
|
Cash paid during the period for income taxes |
|
$ |
5,027 |
|
|
$ |
13,542 |
|
|
Accrual for purchases of fixed assets |
|
|
2,466 |
|
|
|
686 |
|
|
Accrual for repurchase of common stock |
|
|
- |
|
|
|
442 |
|
|
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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