Zumiez Inc. Announces Fiscal 2022 Second Quarter Results

LYNNWOOD, Wash., Sept. 08, 2022 (GLOBE NEWSWIRE) -- 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-Date
Total 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 Outlook
The 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 White
Director of Finance &
Investor Relations
Zumiez Inc.
(425) 551-1500, ext. 1337

Investor Contact:
ICR
Brendon Frey
(203) 682-8200