Third Quarter 2018 Comparable Sales increased 4.8%
Third Quarter 2018 Diluted Earnings Per Share Improved to $0.55
November 2018 Comparable Sales Increased 2.3%
LYNNWOOD, Wash., Dec. 06, 2018 (GLOBE NEWSWIRE) — Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the third quarter ended November 3, 2018.
Total net sales for the third quarter ended November 3, 2018 (13 weeks) increased 1.2% to $248.8 million from $245.8 million in the quarter ended October 28, 2017 (13 weeks). Comparable sales for the thirteen weeks ended November 3, 2018 increased 4.8% compared to a comparable sales increase of 7.9% for the thirteen weeks ended October 28, 2017. Net income for the third quarter of fiscal 2018 was $13.8 million, or $0.55 per diluted share, compared to net income of $11.9 million, or $0.48 per diluted share in the third quarter of the prior fiscal year.
Total net sales for the nine months (39 weeks) ended November 3, 2018 increased 8.9% to $674.1 million from $619.2 million reported for the nine months (39 weeks) ended October 28, 2017. Comparable sales increased 6.3% for the thirty-nine weeks ended November 3, 2018 compared to a comparable sales increase of 5.1% for the thirty-nine weeks ended October 28, 2017. Net income for the first nine months of fiscal 2018 was $15.6 million, or $0.62 per diluted share, compared to net income for the first nine months of the prior fiscal year of $6.9 million, or $0.28 per diluted share.
At November 3, 2018, the Company had cash and current marketable securities of $127.9 million compared to cash and current marketable securities of $85.8 million at October 28, 2017. The increase in cash and current marketable securities was primarily driven by cash generated through operations, partially offset by capital expenditures.
Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “We are very pleased with our third quarter performance and strong back-to-school season. The third quarter represented our ninth quarter of positive comparable sales and consisted of meaningful full priced selling throughout the period. With 140 basis points of improvement between product margins and inventory shrink, we were able to offset the loss of a high volume week due to the calendar shift and deliver earnings per share ahead of our expectations. The fourth quarter has gotten off to a positive start driven by robust demand over the Black Friday weekend and Cyber Monday. We are confident that our differentiated product offering, seamless multi-channel shopping experience, and superior customer service has Zumiez well positioned for a strong finish to the year and sustained success over the long-term.”
November 2018 Sales
Total net sales for the four-week period ended December 1, 2018 increased 9.4% to $84.4 million, compared to $77.1 million for the four-week period ended November 25, 2017. The Company’s comparable sales increased 2.3% for the four-week period ended December 1, 2018 compared to a comparable sales increase of 7.8% for the four-week period ended November 25, 2017.
Fiscal 2018 Fourth Quarter Outlook
The Company is introducing guidance for the three months ending February 2, 2019. Net sales are projected to be in the range of $295 to $301 million resulting in net income per diluted share of approximately $1.02 to $1.08. This guidance is based upon anticipated comparable sales growth between 0% and 2% for the fourth quarter of fiscal 2018. The Company has opened 12 new stores this year through December 1, 2018 including 5 stores in North America and 7 stores in Europe. We plan to open one more store in 2018.
A conference call will be held today to discuss third quarter fiscal 2018 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 1995029.
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 December 1, 2018 we operated 708 stores, including 610 in the United States, 50 in Canada, 41 in Europe and 7 in Australia. We operate under the names Zumiez, Blue Tomato and Fast Times. Additionally, we operate ecommerce web sites at zumiez.com, 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 quarterly report on Form 10-Q for the quarter ended August 4, 2018 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 INCOME (In thousands, except per share amounts) (Unaudited) |
||||||||||||||
| Three Months Ended | ||||||||||||||
| November 3, 2018 | % of Sales | October 28, 2017 | % of Sales | |||||||||||
| Net sales | $ | 248,795 | 100.0 | % | $ | 245,756 | 100.0 | % | ||||||
| Cost of goods sold | 161,922 | 65.1 | % | 162,389 | 66.1 | % | ||||||||
| Gross profit | 86,873 | 34.9 | % | 83,367 | 33.9 | % | ||||||||
| Selling, general and administrative expenses | 68,479 | 27.5 | % | 64,559 | 26.2 | % | ||||||||
| Operating profit | 18,394 | 7.4 | % | 18,808 | 7.7 | % | ||||||||
| Interest income, net | 493 | 0.1 | % | 111 | 0.0 | % | ||||||||
| Other expense, net | (74 | ) | 0.1 | % | (326 | ) | (0.1 | %) | ||||||
| Earnings before income taxes | 18,813 | 7.6 | % | 18,593 | 7.6 | % | ||||||||
| Provision for income taxes | 4,990 | 2.0 | % | 6,671 | 2.7 | % | ||||||||
| Net income | $ | 13,823 | 5.6 | % | $ | 11,922 | 4.9 | % | ||||||
| Basic earnings per share | $ | 0.55 | $ | 0.48 | ||||||||||
| Diluted earnings per share | $ | 0.55 | $ | 0.48 | ||||||||||
| Weighted average shares used in computation of earnings per share: | ||||||||||||||
| Basic | 24,974 | 24,712 | ||||||||||||
| Diluted | 25,261 | 24,804 | ||||||||||||
| ZUMIEZ INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) |
||||||||||||||
| Nine Months Ended | ||||||||||||||
| November 3, 2018 | % of Sales | October 28, 2017 | % of Sales | |||||||||||
| Net sales | $ | 674,052 | 100.0 | % | $ | 619,156 | 100.0 | % | ||||||
| Cost of goods sold | 452,057 | 67.1 | % | 423,944 | 68.5 | % | ||||||||
| Gross profit | 221,995 | 32.9 | % | 195,212 | 31.5 | % | ||||||||
| Selling, general and administrative expenses | 198,613 | 29.4 | % | 183,401 | 29.6 | % | ||||||||
| Operating profit | 23,382 | 3.5 | % | 11,811 | 1.9 | % | ||||||||
| Interest income, net | 1,015 | 0.1 | % | 284 | 0.0 | % | ||||||||
| Other expense, net | (308 | ) | 0.0 | % | (798 | ) | (0.1 | %) | ||||||
| Earnings before income taxes | 24,089 | 3.6 | % | 11,297 | 1.8 | % | ||||||||
| Provision for income taxes | 8,496 | 1.3 | % | 4,432 | 0.7 | % | ||||||||
| Net income | $ | 15,593 | 2.3 | % | $ | 6,865 | 1.1 | % | ||||||
| Basic earnings per share | $ | 0.63 | $ | 0.28 | ||||||||||
| Diluted earnings per share | $ | 0.62 | $ | 0.28 | ||||||||||
| Weighted average shares used in computation of earnings per share: | ||||||||||||||
| Basic | 24,920 | 24,660 | ||||||||||||
| Diluted | 25,220 | 24,845 | ||||||||||||
| ZUMIEZ INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) |
||||||||||||||
| November 3, 2018 | February 3, 2018 | October 28, 2017 | ||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||
| Assets | ||||||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | $ | 29,640 | $ | 24,041 | $ | 10,660 | ||||||||
| Marketable securities | 98,236 | 97,864 | 75,109 | |||||||||||
| Receivables | 17,521 | 17,027 | 15,761 | |||||||||||
| Inventories | 186,938 | 125,826 | 156,986 | |||||||||||
| Prepaid expenses and other current assets | 15,853 | 14,405 | 14,372 | |||||||||||
| Total current assets | 348,188 | 279,163 | 272,888 | |||||||||||
| Fixed assets, net | 123,074 | 128,852 | 130,898 | |||||||||||
| Goodwill | 58,619 | 62,912 | 59,544 | |||||||||||
| Intangible assets, net | 15,203 | 16,696 | 15,645 | |||||||||||
| Deferred tax assets, net | 4,438 | 4,174 | 9,842 | |||||||||||
| Other long-term assets | 7,197 | 7,713 | 7,452 | |||||||||||
| Total long-term assets | 208,531 | 220,347 | 223,381 | |||||||||||
| Total assets | $ | 556,719 | $ | 499,510 | $ | 496,269 | ||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||
| Current liabilities | ||||||||||||||
| Trade accounts payable | $ | 90,060 | $ | 37,861 | $ | 61,676 | ||||||||
| Accrued payroll and payroll taxes | 21,724 | 20,650 | 15,782 | |||||||||||
| Income taxes payable | 2,782 | 5,796 | 5,454 | |||||||||||
| Deferred rent and tenant allowances | 7,790 | 8,073 | 8,468 | |||||||||||
| Other liabilities | 24,645 | 26,867 | 33,456 | |||||||||||
| Total current liabilities | 147,001 | 99,247 | 124,836 | |||||||||||
| Long-term deferred rent and tenant allowances | 37,631 | 39,275 | 39,869 | |||||||||||
| Other long-term liabilities | 3,315 | 5,073 | 4,981 | |||||||||||
| Total long-term liabilities | 40,946 | 44,348 | 44,850 | |||||||||||
| Total liabilities | 187,947 | 143,595 | 169,686 | |||||||||||
| Shareholders’ equity | ||||||||||||||
| Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding | — | — | — | |||||||||||
| Common stock, no par value, 50,000 shares authorized; 25,532 shares issued and outstanding at November 3, 2018, 25,249 shares issued and outstanding at February 3, 2018 and 25,252 shares issued and outstanding at October 28, 2017 | 151,658 | 146,523 | 145,230 | |||||||||||
| Accumulated other comprehensive (loss) income | (9,888 | ) | 35 | (8,067 | ) | |||||||||
| Retained earnings | 227,002 | 209,357 | 189,420 | |||||||||||
| Total shareholders’ equity | 368,772 | 355,915 | 326,583 | |||||||||||
| Total liabilities and shareholders’ equity | $ | 556,719 | $ | 499,510 | $ | 496,269 | ||||||||
| ZUMIEZ INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) |
||||||||
| Nine Months Ended | ||||||||
| November 3, 2018 | October 28, 2017 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 15,593 | $ | 6,865 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation, amortization and accretion | 21,249 | 20,338 | ||||||
| Deferred taxes | (919 | ) | (2,625 | ) | ||||
| Stock-based compensation expense | 4,431 | 3,720 | ||||||
| Other | 482 | 1,189 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | (1,680 | ) | (2,449 | ) | ||||
| Inventories | (63,892 | ) | (48,491 | ) | ||||
| Prepaid expenses and other current assets | (1,904 | ) | (578 | ) | ||||
| Trade accounts payable | 53,037 | 35,693 | ||||||
| Accrued payroll and payroll taxes | 1,342 | 699 | ||||||
| Income taxes payable | (2,206 | ) | 2,856 | |||||
| Deferred rent and tenant allowances | (1,564 | ) | (1,240 | ) | ||||
| Other liabilities | (6,845 | ) | (2,108 | ) | ||||
| Net cash provided by operating activities | 17,124 | 13,869 | ||||||
| Cash flows from investing activities: | ||||||||
| Additions to fixed assets | (15,683 | ) | (19,072 | ) | ||||
| Purchases of marketable securities and other investments | (116,430 | ) | (80,198 | ) | ||||
| Sales and maturities of marketable securities and other investments | 115,536 | 63,365 | ||||||
| Net cash used in investing activities | (16,577 | ) | (35,905 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from revolving credit facilities | 32,776 | 19,412 | ||||||
| Payments on revolving credit facilities | (27,651 | ) | (7,841 | ) | ||||
| Proceeds from issuance and exercise of stock-based awards | 899 | 697 | ||||||
| Payments for tax withholdings on equity awards | (195 | ) | (171 | ) | ||||
| Net cash provided by financing activities | 5,829 | 12,097 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (777 | ) | 352 | |||||
| Net increase (decrease) in cash and cash equivalents | 5,599 | (9,587 | ) | |||||
| Cash and cash equivalents, beginning of period | 24,041 | 20,247 | ||||||
| Cash and cash equivalents, end of period | $ | 29,640 | $ | 10,660 | ||||
| Supplemental disclosure on cash flow information: | ||||||||
| Cash paid during the period for income taxes | $ | 11,893 | $ | 4,434 | ||||
| Accrual for purchases of fixed assets | 1,477 | 2,190 | ||||||
Company Contact:
Darin White
Director of Finance &
Investor Relations
Zumiez Inc.
(425) 551-1500, ext. 1337
Investor Contact:
ICR
Brendon Frey
(203) 682-8200