Zumiez (ZUMZ) to Acquire Blue Tomato in EUR 59.5M Deal; Has Contingent Payments of EUR 2.1M; Boosts Q2 Outlook

June 19, 2012 6:35 AM EDT
Zumiez Inc. (Nasdaq: ZUMZ), announced that it has signed a definitive purchase agreement to acquire Blue Tomato, a leading European action sports retailer based in Austria. The total purchase price for Blue Tomato will be EUR 59.5 million, subject to certain pre-closing and post-closing adjustments. In addition to the purchase price, the agreement provides for an additional EUR 22.1 million of contingent future payments based upon achieving certain performance objectives related to growth over the next three years. The acquisition, which will be funded by Zumiez's existing cash balances, is expected to be modestly accretive to earnings per share in fiscal 2012, excluding all acquisition and integration expenses. The acquisition is projected to close prior to the end of the second quarter of 2012. A portion of the contingent future payments are to be in the form of Zumiez stock.

Updated Outlook

The Company also updated its current outlook. Based on better than planned sales, the Company has increased its guidance and now expects fiscal 2012 second quarter total sales of $134 to $136 million, which includes approximately $2 million in sales of Blue Tomato assuming the acquisition is completed by July 1. Net income per diluted share is projected at approximately $0.04 to $0.06, inclusive of acquisition related costs and expenses compared to the previously issued guidance of net income per diluted share of approximately $0.04 to $0.06, which excluded the acquisition.

The Street is currently modeling EPS of $0.10 and sales of $131.9 million.

This guidance is predicated on a 8-10% comparable store sales increase for the second quarter and includes costs of approximately $1.6 million, or $0.03 per diluted share, associated with the relocation the Company's ecommerce fulfillment center to Edwardsville, Kansas and corporate offices to Lynnwood, Washington from Everett, Washington as well as costs, expenses, and operating impact of approximately $2.3 million in the quarter, or approximately $0.05 associated with the acquisition of Blue Tomato.

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