Zumiez Inc. Announces Fiscal 2017 Third Quarter Results
Zumiez Inc. Announces Fiscal 2017 Third Quarter Results
Third Quarter 2017 Sales Increased 11.0% to $245.8 Million
Third Quarter 2017 Diluted Earnings Per Share Improved to $0.48
November 2017 Comparable Sales Increased 7.8%
LYNNWOOD, Wash., Nov. 30, 2017 (GLOBE NEWSWIRE) -- Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the third quarter ended October 28, 2017.
Total net sales for the third quarter ended October 28, 2017 (13 weeks) increased 11.0% to $245.8 million from $221.4 million in the quarter ended October 29, 2016 (13 weeks). Comparable sales for the thirteen weeks ended October 28, 2017 increased 7.9% compared to a comparable sales increase of 4.0% for the thirteen weeks ended October 29, 2016. Net income for the third quarter of fiscal 2017 was $11.9 million, or $0.48 per diluted share, compared to net income of $10.7 million, or $0.43 per diluted share in the third quarter of the prior fiscal year.
Total net sales for the nine months (39 weeks) ended October 28, 2017 increased 8.1% to $619.2 million from $572.6 million reported for the nine months (39 weeks) ended October 29, 2016. Comparable sales increased 5.1% for the thirty-nine weeks ended October 28, 2017 compared to a comparable sales decrease of 2.5% for the thirty-nine weeks ended October 29, 2016. Net income for the first nine months of fiscal 2017 was $6.9 million, or $0.28 per diluted share, compared to net income for the first nine months of the prior fiscal year of $7.7 million, or $0.31 per diluted share.
At October 28, 2017, the Company had cash and current marketable securities of $85.8 million compared to cash and current marketable securities of $49.2 million at October 29, 2016. The increase in cash and current marketable securities was driven by cash generated through operations, partially offset by capital expenditures. Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "Our top-line performance continues to improve even in the face of more challenging comparisons. Third quarter comparable sales increased 7.9% on top of a 4.0% gain in the year ago period and our momentum has carried over into November. We are confident that our merchandise strategies, integrated sales channels and best in class sales team have Zumiez well positioned to deliver strong holiday results and achieve meaningful earnings growth in the fourth quarter. Looking ahead, our focus remains centered on serving the customer while profitably expanding our global market share and returning increased value to our shareholders over the long-term.”
November 2017 Sales
Total net sales for the four-week period ended November 25, 2017 increased 11.3% to $77.1 million, compared to $69.3 million for the four-week period ended November 26, 2016. The Company's comparable sales increased 7.8% for the four-week period ended November 25, 2017 compared to a comparable sales increase of 5.7% for the four-week period ended November 26, 2016.
Fiscal 2017 Fourth Quarter Outlook
The Company is introducing guidance for the three months ending February 3, 2018. Net sales are projected to be in the range of $291 to $297 million resulting in net income per diluted share of approximately $0.78 to $0.84. This guidance is based upon anticipated comparable sales growth between 3% and 5% for the fourth quarter of fiscal 2017. The Company remains on track to open approximately 19 new stores in fiscal 2017, including up to 3 stores in Canada and 5 stores in Europe and 2 stores in Australia.
A conference call will be held today to discuss third quarter fiscal 2017 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 3798216.
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, 2017 we operated 699 stores, including 608 in the United States, 51 in Canada, 33 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 July 29, 2017 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 | ||||||||||||||
| October 28, 2017 | % of Sales | October 29, 2016 | % of Sales | |||||||||||
| Net sales | $ | 245,756 | 100.0 | % | $ | 221,391 | 100.0 | % | ||||||
| Cost of goods sold | 162,389 | 66.1 | % | 145,213 | 65.6 | % | ||||||||
| Gross profit | 83,367 | 33.9 | % | 76,178 | 34.4 | % | ||||||||
| Selling, general and administrative expenses | 64,559 | 26.2 | % | 59,265 | 26.8 | % | ||||||||
| Operating profit | 18,808 | 7.7 | % | 16,913 | 7.6 | % | ||||||||
| Interest income (expense), net | 111 | 0.0 | % | (37 | ) | 0.0 | % | |||||||
| Other (expense) income, net | (326 | ) | (0.1 | %) | 11 | 0.0 | % | |||||||
| Earnings before income taxes | 18,593 | 7.6 | % | 16,887 | 7.6 | % | ||||||||
| Provision for income taxes | 6,671 | 2.7 | % | 6,192 | 2.8 | % | ||||||||
| Net income | $ | 11,922 | 4.9 | % | $ | 10,695 | 4.8 | % | ||||||
| Basic earnings per share | $ | 0.48 | $ | 0.44 | ||||||||||
| Diluted earnings per share | $ | 0.48 | $ | 0.43 | ||||||||||
| Weighted average shares used in computation of earnings per share: | ||||||||||||||
| Basic | 24,712 | 24,485 | ||||||||||||
| Diluted | 24,804 | 24,622 | ||||||||||||
| ZUMIEZ INC. | |||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||
| (In thousands, except per share amounts) | |||||||||||||
| Nine Months Ended | |||||||||||||
| October 28, 2017 | % of Sales | October 29, 2016 | % of Sales | ||||||||||
| Net sales | $ | 619,156 | 100.0 | % | $ | 572,634 | 100.0 | % | |||||
| Cost of goods sold | 423,944 | 68.5 | % | 391,653 | 68.4 | % | |||||||
| Gross profit | 195,212 | 31.5 | % | 180,981 | 31.6 | % | |||||||
| Selling, general and administrative expenses | 183,401 | 29.6 | % | 169,144 | 29.5 | % | |||||||
| Operating profit | 11,811 | 1.9 | % | 11,837 | 2.1 | % | |||||||
| Interest income, net | 284 | 0.0 | % | 22 | 0.0 | % | |||||||
| Other (expense) income, net | (798 | ) | (0.1 | %) | 253 | 0.0 | % | ||||||
| Earnings before income taxes | 11,297 | 1.8 | % | 12,112 | 2.1 | % | |||||||
| Provision for income taxes | 4,432 | 0.7 | % | 4,392 | 0.8 | % | |||||||
| Net income | $ | 6,865 | 1.1 | % | $ | 7,720 | 1.3 | % | |||||
| Basic earnings per share | $ | 0.28 | $ | 0.31 | |||||||||
| Diluted earnings per share | $ | 0.28 | $ | 0.31 | |||||||||
| Weighted average shares used in computation of earnings per share: | |||||||||||||
| Basic | 24,660 | 24,798 | |||||||||||
| Diluted | 24,845 | 24,982 | |||||||||||
| ZUMIEZ INC. | ||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||
| (In thousands) | ||||||||||||
| October 28, 2017 | January 28, 2017 | October 29, 2016 | ||||||||||
| Assets | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | $ | 10,660 | $ | 20,247 | $ | 18,001 | ||||||
| Marketable securities | 75,109 | 58,579 | 31,169 | |||||||||
| Receivables | 15,761 | 12,538 | 14,265 | |||||||||
| Inventories | 156,986 | 106,924 | 150,623 | |||||||||
| Prepaid expenses and other current assets | 14,372 | 13,075 | 14,199 | |||||||||
| Total current assets | 272,888 | 211,363 | 228,257 | |||||||||
| Fixed assets, net | 130,898 | 129,651 | 135,325 | |||||||||
| Goodwill | 59,544 | 56,001 | 56,920 | |||||||||
| Intangible assets, net | 15,645 | 14,610 | 14,900 | |||||||||
| Deferred tax assets, net | 9,842 | 7,041 | 9,533 | |||||||||
| Other long-term assets | 7,452 | 8,017 | 8,093 | |||||||||
| Total long-term assets | 223,381 | 215,320 | 224,771 | |||||||||
| Total assets | $ | 496,269 | $ | 426,683 | $ | 453,028 | ||||||
| Liabilities and Shareholders’ Equity | ||||||||||||
| Current liabilities | ||||||||||||
| Trade accounts payable | $ | 61,676 | $ | 25,529 | $ | 58,088 | ||||||
| Accrued payroll and payroll taxes | 15,782 | 14,914 | 12,000 | |||||||||
| Income taxes payable | 5,454 | 1,866 | 4,310 | |||||||||
| Deferred rent and tenant allowances | 8,468 | 8,344 | 8,276 | |||||||||
| Short-term borrowings | 11,391 | — | 11,787 | |||||||||
| Other liabilities | 22,065 | 22,944 | 21,582 | |||||||||
| Total current liabilities | 124,836 | 73,597 | 116,043 | |||||||||
| Long-term deferred rent and tenant allowances | 39,869 | 41,066 | 42,715 | |||||||||
| Other long-term liabilities | 4,981 | 4,969 | 4,839 | |||||||||
| Total long-term liabilities | 44,850 | 46,035 | 47,554 | |||||||||
| Total liabilities | 169,686 | 119,632 | 163,597 | |||||||||
| Shareholders’ equity | ||||||||||||
| Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding | — | — | — | |||||||||
| Common stock, no par value, 50,000 shares authorized; 25,252 shares issued and outstanding at October 28, 2017, 24,945 shares issued and outstanding at January 28, 2017, and 24,899 shares issued and outstanding at October 29, 2016 | 145,230 | 140,984 | 139,758 | |||||||||
| Accumulated other comprehensive loss | (8,067 | ) | (16,488 | ) | (14,698 | ) | ||||||
| Retained earnings | 189,420 | 182,555 | 164,371 | |||||||||
| Total shareholders’ equity | 326,583 | 307,051 | 289,431 | |||||||||
| Total liabilities and shareholders’ equity | $ | 496,269 | $ | 426,683 | $ | 453,028 | ||||||
| ZUMIEZ INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In thousands) | ||||||||
| Nine Months Ended | ||||||||
| October 28, 2017 | October 29, 2016 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 6,865 | $ | 7,720 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation, amortization and accretion | 20,338 | 21,178 | ||||||
| Deferred taxes | (2,625 | ) | (4,983 | ) | ||||
| Stock-based compensation expense | 3,720 | 3,399 | ||||||
| Other | 1,189 | 221 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | (2,449 | ) | (1,361 | ) | ||||
| Inventories | (48,491 | ) | (51,047 | ) | ||||
| Prepaid expenses and other current assets | (578 | ) | (3,183 | ) | ||||
| Trade accounts payable | 35,693 | 35,873 | ||||||
| Accrued payroll and payroll taxes | 699 | (631 | ) | |||||
| Income taxes payable | 2,856 | (708 | ) | |||||
| Deferred rent and tenant allowances | (1,240 | ) | (1,035 | ) | ||||
| Other liabilities | (2,108 | ) | (1,459 | ) | ||||
| Net cash provided by operating activities | 13,869 | 3,984 | ||||||
| Cash flows from investing activities: | ||||||||
| Additions to fixed assets | (19,072 | ) | (16,829 | ) | ||||
| Acquisition, net of cash acquired | — | (5,395 | ) | |||||
| Purchases of marketable securities and other investments | (80,198 | ) | (48,232 | ) | ||||
| Sales and maturities of marketable securities and other investments | 63,365 | 49,986 | ||||||
| Net cash used in investing activities | (35,905 | ) | (20,470 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from revolving credit facilities | 19,412 | 17,849 | ||||||
| Payments on revolving credit facilities | (7,841 | ) | (5,813 | ) | ||||
| Repurchase of common stock | — | (21,607 | ) | |||||
| Proceeds from issuance and exercise of stock-based awards | 697 | 851 | ||||||
| Payments for tax withholdings on equity awards | (171 | ) | (95 | ) | ||||
| Net cash provided by (used in) financing activities | 12,097 | (8,815 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents | 352 | 139 | ||||||
| Net decrease in cash and cash equivalents | (9,587 | ) | (25,162 | ) | ||||
| Cash and cash equivalents, beginning of period | 20,247 | 43,163 | ||||||
| Cash and cash equivalents, end of period | $ | 10,660 | $ | 18,001 | ||||
| Supplemental disclosure on cash flow information: | ||||||||
| Cash paid during the period for income taxes | $ | 4,434 | $ | 10,042 | ||||
| Accrual for purchases of fixed assets | 2,190 | 2,236 | ||||||
Company Contact: Darin White Director of Finance Investor Relations Zumiez Inc. (425) 551-1500, ext. 1337 Investor Contact: ICR Brendon Frey (203) 682-8200
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