Zumiez Inc. Announces Fiscal 2015 Third Quarter Results
Third Quarter Earnings per Share of $0.36; Company Announces $70 Million Buy-Back Authorization
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LYNNWOOD, WA -- (Marketwired) -- 12/03/15 -- Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the third quarter ended October 31, 2015.
Total net sales for the third quarter ended October 31, 2015 (13 weeks) decreased 4.2% to $204.3 million from $213.3 million in the quarter ended November 1, 2014 (13 weeks). Comparable sales for the thirteen weeks ended October 31, 2015 decreased 7.3% compared with a comparable sales increase of 3.7% for the thirteen weeks ended November 1, 2014. Net income in the third quarter of fiscal 2015 decreased to $9.7 million, or $0.36 per diluted share, compared to net income of $15.7 million, or $0.54 per diluted share in the third quarter of the prior fiscal year. The results for fiscal 2014 include costs of $0.6 million, or $0.02 for charges associated with the acquisition of Blue Tomato
Total net sales for the nine months (39 weeks) ended October 31, 2015 increased 1.6% to $561.7 million from $553.0 million reported for the nine months (39 weeks) ended November 1, 2014. Comparable sales decreased 3.4% for the thirty nine weeks ended October 31, 2015 compared with a comparable sales increase of 3.0% for the thirty nine weeks ended November 1, 2014. Net income in the first nine months of fiscal 2015 decreased to $15.6 million, or $0.55 per diluted share, compared to net income for the first nine months of the prior fiscal year of $25.7 million, or $0.88 per diluted share. Results for the first nine months of fiscal 2015 include approximately $1.5 million, or $0.04 per diluted share, for charges associated with the acquisition of Blue Tomato. Results for the first nine months of fiscal 2014 include approximately $1.9 million, or $0.05 per diluted share, for charges associated with the acquisition of Blue Tomato.
At October 31, 2015, the Company had cash and current marketable securities of $51.1 million compared to cash and current marketable securities of $108.7 million at November 1, 2014. The decrease in cash and current marketable securities is a result of stock repurchases and capital expenditures, partially offset by cash generated through operations.
During the quarter, the Company repurchased 0.7 million shares on the open market for a total of $16.7 million. Year to date through November, we have purchased 3.0 million shares on the open market for a total $77.7 million. Today the company announced that the Board of Directors of Zumiez Inc. has authorized the repurchase of up to an additional $70 million of its Common Stock.
Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "We've moved quickly to reduce expenses to protect profitability in the face of challenging sales trends, which helped us exceed our bottom line guidance for the third quarter. With the fourth quarter off to a slow start combined with tougher sales comparisons ahead, we believe it's prudent to maintain a cautious outlook for the remainder of fiscal 2015 and we are focused on managing expenses and inventory levels during this difficult time. Long-term we remain confident that the strategic course we have set for the company will deliver increased shareholder value in the years ahead."
November 2015 Sales
Total net sales for the four-week period ended November 28, 2015 decreased 10.6% to $62.8 million, compared to $70.3 million for the four-week period ended November 29, 2014. The Company's comparable sales decreased 13.8% for the four-week period ended November 28, 2015 compared with a comparable sales increase of 6.3% for the four-week period ended November 29, 2014.
Fiscal 2015 Fourth Quarter Outlook
The Company is introducing guidance for the three months ending January 30, 2016. Net sales are projected to be in the range $226 to $231 million resulting in net income per diluted share of approximately $0.40 to $0.46. This guidance is based on an anticipated comparable sales decrease in the 14% to 16% range for the fourth quarter of fiscal 2015.
A conference call will be held today to discuss third quarter fiscal 2015 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (617) 614-6206 followed by the conference identification code of 28648169.
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, 2015 we operated 659 stores, including 593 in the United States, 42 in Canada, and 24 in Europe. We operate under the name Zumiez and Blue Tomato. Additionally, we operate ecommerce web sites at www.zumiez.com and www.blue-tomato.com.
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 1, 2015 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 31, % of November 1, % of
2015 Sales 2014 Sales
----------- -------- ----------- -------
Net sales $ 204,320 100.0% $ 213,341 100.0%
Cost of goods sold 134,261 65.7% 135,481 63.5%
----------- -------- ----------- -------
Gross profit 70,059 34.3% 77,860 36.5%
Selling, general and
administrative expenses 54,835 26.8% 52,885 24.8%
----------- -------- ----------- -------
Operating profit 15,224 7.5% 24,975 11.7%
Interest income, net 84 0.0% 147 0.1%
Other expense, net (71) 0.0% (220) (0.1%)
----------- -------- ----------- -------
Earnings before income taxes 15,237 7.5% 24,902 11.7%
Provision for income taxes 5,584 2.7% 9,175 4.3%
----------- -------- ----------- -------
Net income $ 9,653 4.8% $ 15,727 7.4%
=========== ======== =========== =======
Basic earnings per share $ 0.36 $ 0.54
=========== ===========
Diluted earnings per share $ 0.36 $ 0.54
=========== ===========
Weighted average shares used
in computation of earnings
per share:
Basic 26,467 28,857
Diluted 26,602 29,147
ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Nine Months Ended
--------------------------------------------
October 31, % of November 1, % of
2015 Sales 2014 Sales
----------- -------- ------------ --------
Net sales $ 561,749 100.0% $ 552,982 100.0%
Cost of goods sold 377,382 67.2% 363,677 65.8%
----------- -------- ------------ --------
Gross profit 184,367 32.8% 189,305 34.2%
Selling, general and
administrative expenses 159,706 28.4% 149,012 26.9%
----------- -------- ------------ --------
Operating profit 24,661 4.4% 40,293 7.3%
Interest income, net 440 0.1% 475 0.0%
Other income (expense), net (227) 0.0% 69 0.0%
----------- -------- ------------ --------
Earnings before income taxes 24,874 4.5% 40,837 7.3%
Provision for income taxes 9,238 1.6% 15,158 2.7%
----------- -------- ------------ --------
Net income $ 15,636 2.9% $ 25,679 4.6%
=========== ======== ============ ========
Basic earnings per share $ 0.56 $ 0.89
=========== ============
Diluted earnings per share $ 0.55 $ 0.88
=========== ============
Weighted average shares used
in computation of earnings
per share:
Basic 27,973 28,832
Diluted 28,178 29,177
ZUMIEZ INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
October 31, January 31, November 1,
2015 2015 2014
----------- ----------- -----------
Assets (Unaudited) (Unaudited)
Current assets
Cash and cash equivalents $ 4,784 $ 20,862 $ 13,785
Marketable securities 46,342 133,782 94,902
Receivables 15,316 12,653 14,638
Inventories 133,565 93,850 133,411
Prepaid expenses and other 12,987 11,651 12,451
Deferred tax assets 7,686 6,965 6,828
----------- ----------- -----------
Total current assets 220,680 279,763 276,015
Fixed assets, net 143,856 135,642 140,364
Goodwill 54,649 55,852 60,551
Intangible assets, net 11,881 13,062 15,047
Long-term other assets 10,004 9,386 7,595
----------- ----------- -----------
Total long-term assets 220,390 213,942 223,557
Total assets $ 441,070 $ 493,705 $ 499,572
=========== =========== ===========
Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable $ 47,230 $ 32,094 $ 61,394
Accrued payroll and payroll taxes 9,765 13,047 10,131
Income taxes payable 3,235 4,651 3,762
Deferred rent and tenant allowances 8,040 7,083 7,176
Other liabilities 20,896 24,572 25,357
----------- ----------- -----------
Total current liabilities 89,166 81,447 107,820
Long-term deferred rent and tenant
allowances 45,383 42,553 43,264
Long-term deferred tax liabilities 2,293 5,738 1,622
Other long-term liabilities 4,698 4,443 2,666
----------- ----------- -----------
Total long-term liabilities 52,374 52,734 47,552
----------- ----------- -----------
Total liabilities 141,540 134,181 155,372
----------- ----------- -----------
Commitments and contingencies
Shareholders' equity
Preferred stock, no par value, 20,000
shares authorized; none issued and
outstanding - - -
Common stock, no par value, 50,000
shares authorized; 26,683 shares
issued and outstanding at October
31, 2015, 29,418 shares issued and
outstanding at January 31, 2015, and
29,225 shares issued and outstanding
at November 1, 2014 133,803 129,094 121,703
Accumulated other comprehensive loss (13,920) (11,278) (1,698)
Retained earnings 179,647 241,708 224,195
----------- ----------- -----------
Total shareholders' equity 299,530 359,524 344,200
----------- ----------- -----------
Total liabilities and shareholders'
equity $ 441,070 $ 493,705 $ 499,572
=========== =========== ===========
ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
--------------------------
October 31, November 1,
2015 2014
------------ ------------
Cash flows from operating activities:
Net income $ 15,636 $ 25,679
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization and accretion 23,158 21,556
Deferred taxes (5,223) (4,735)
Stock-based compensation expense 3,843 3,258
Excess tax benefit from stock-based compensation (714) (558)
Other 1,222 431
Changes in operating assets and liabilities:
Receivables (3,211) (4,259)
Inventories (40,571) (47,703)
Prepaid expenses and other (1,127) (5,990)
Trade accounts payable 15,951 42,971
Accrued payroll and payroll taxes (3,231) (377)
Income taxes payable (964) (1,087)
Deferred rent and tenant allowances 3,924 6,355
Other liabilities (8,217) (1,106)
------------ ------------
Net cash provided by operating activities 476 34,435
------------ ------------
Cash flows from investing activities:
Additions to fixed assets (27,115) (28,972)
Purchases of marketable securities and other
investments (58,641) (74,398)
Sales and maturities of marketable securities
and other investments 144,446 75,652
------------ ------------
Net cash provided by (used in) investing
activities 58,690 (27,718)
------------ ------------
Cash flows from financing activities:
Proceeds from revolving credit facilities 33,504 6,056
Payments on long-term debt and revolving credit
facilities (32,393) (2,874)
Repurchase of common stock (77,697) (19,557)
Proceeds from exercise of stock-based
compensation, net of withholding tax payments 678 3,411
Excess tax benefit from stock-based compensation 714 558
------------ ------------
Net cash used in financing activities (75,194) (12,406)
------------ ------------
Effect of exchange rate changes on cash and cash
equivalents (50) (160)
Net decrease in cash and cash equivalents (16,078) (5,849)
Cash and cash equivalents, beginning of period 20,862 19,634
------------ ------------
Cash and cash equivalents, end of period $ 4,784 $ 13,785
============ ============
Supplemental disclosure on cash flow
information:
Cash paid during the period for income taxes,
net of refunds $ 15,348 $ 20,931
Accrual for purchases of fixed assets 5,487 5,046
Company Contact: Darin White Director of Finance & Investor Relations Zumiez Inc. (425) 551-1500, ext. 1337 Investor Contact: ICR Brendon Frey (203) 682-8200
Source: Zumiez
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