Zumiez Inc. Announces Record Fiscal 2012 Fourth Quarter and Full Year Results

LYNNWOOD, WA--(Marketwire - Mar 14, 2013) - Zumiez Inc. (NASDAQ: ZUMZ) a leading multi-channel specialty retailer of action sports related apparel, footwear, hardgoods and accessories, today reported record results for the fourth quarter and fiscal year ended February 2, 2013.

Fourth Quarter Results

Total net sales for the fourth quarter ended February 2, 2013 (14 weeks) increased 22.1% to $224.4 million from $183.9 million in the quarter ended January 28, 2012 (13 weeks). Comparable store sales for the 14-week period ended February 2, 2013 decreased 1.0% compared to the same 14-week period ended February 4, 2012. Net income in the fourth quarter of fiscal 2012 increased 22.1% to $22.9 million, or $0.74 per diluted share from net income of $18.7 million, or $0.60 per diluted share in the fourth quarter of the prior fiscal year. The results for fiscal 2012 include $0.9 million, or approximately $0.02 per diluted share, of intangible amortization and inventory step-up costs associated with the acquisition of Blue Tomato, and a net benefit of $0.4 million, or approximately $0.01 per diluted share, of contingent earn-out associated with the Blue Tomato transaction.

Full Year Results

Total net sales for fiscal 2012 (53 weeks) increased 20.4% to $669.4 million from $555.9 million in fiscal 2011 (52 weeks). Comparable store sales for the 53-week period ended February 2, 2013 increased 5.0% compared to the same 53-week period ended February 4, 2012. Net income in fiscal 2012 increased 12.9% to $42.2 million, or $1.35 per diluted share compared to net income in the prior fiscal year of $37.4 million, or $1.20 per diluted share. Results for fiscal 2012 include approximately $7.3 million, or $0.19 per diluted share, of Blue Tomato acquisition related costs and operations, and approximately $2.1 million, or $0.04 per diluted share, of costs associated with the relocation the Company's ecommerce fulfillment center to Edwardsville, Kansas and corporate offices to Lynnwood, Washington from Everett, Washington.

Share Repurchase Program

During the fourth quarter 2012, the Company repurchased approximately 1.3 million shares of its common stock, at an average cost per share of $20.43, for a total of $25.8 million. As of February 2, 2012, the $22 million repurchase program announced in November 2012 had been completed and the Company had $16 million authorized repurchase funds remaining under its $20 million stock repurchase program announced in December 2012. 

Cash and Current Marketable Securities

At February 2, 2013, the Company had cash and current marketable securities of $103.2 million, compared to cash and current marketable securities of $172.8 million at January 28, 2012. The decrease in cash and current marketable securities is a result of the acquisition of Blue Tomato, which was funded by the Company's cash and current marketable securities balance, as well as capital expenditures and stock repurchases, offset by cash generated through operations.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "We are pleased with the quality of our fourth quarter results. Our ability to deliver better than expected sales and earnings underscores the strength of our business model which is rooted in a diverse branded merchandising strategy, highly differentiated shopping experience, and unique culture. It's these principles that have allowed us to consistently drive Zumiez forward. With the consumers use of technology evolving and reshaping the retail landscape we are confident that the investments we continue to make in our people, systems and processes will allow us to build on our position as the global leader in action sports retail for many years to come."

Fiscal 2013 First Quarter Outlook

The Company is introducing guidance for the three months ending May 4, 2013. Net sales are projected to be in the range of $141 to $144 million resulting in net income per diluted share of approximately $0.04 to $0.07, which includes an estimated $1.6 million, or approximately $0.04 per diluted share, for charges associated with the acquisition of Blue Tomato. This guidance is based on an anticipated comparable store sales decrease in the mid single digit range for the first quarter of fiscal 2013. 

The Company currently intends to open approximately 60 new stores in fiscal 2013, including up to 10 stores in Canada and 6 stores in Europe.

A conference call will be held today to discuss fourth quarter and fiscal 2012 year-end results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (617)-213-8841 followed by the conference identification code of 85861294. 

About Zumiez Inc.

Zumiez is a leading multi-channel specialty retailer of action sports related apparel, footwear, equipment and accessories, focusing on skateboarding, snowboarding, surfing, motocross and BMX for young men and women. As of March 2, 2013 we operated 501 stores, 472 in the United States, 21 in Canada, and 8 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 October 27, 2012 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.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
			Three Months Ended
			February 2, 2013				% of Sales			January 28, 2012				% of Sales
Net sales			$	224,405			100.0	%		$	183,859			100.0	%
Cost of goods sold				138,722			61.8	%			112,356			61.1	%
Gross profit				85,683			38.2	%			71,503			38.9	%
Selling, general and administrative expenses				49,582			22.1	%			40,190			21.9	%
Operating profit				36,101			16.1	%			31,313			17.0	%
Interest income, net				258			0.1	%			449			0.2	%
Other expense, net				(116	)		0.0	%			(308	)		(0.1	%)
Earnings before income taxes				36,243			16.2	%			31,454			17.1	%
Provision for income taxes				13,359			6.0	%			12,717			6.9	%
Net income			$	22,884			10.2	%		$	18,737			10.2	%
Basic earnings per share			$	0.75						$	0.61
Diluted earnings per share			$	0.74						$	0.60
Weighted average shares used in computation of earnings per share:
	Basic			30,348							30,646
	Diluted			30,774							31,211

ZUMIEZ INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
			Twelve Months Ended
			February 2, 2013			% of Sales			January 28, 2012				% of Sales
			(unaudited)
Net sales			$	669,393		100.0	%		$	555,874			100.0	%
Cost of goods sold				428,109		64.0	%			354,198			63.7	%
Gross profit				241,284		36.0	%			201,676			36.3	%
Selling, general and administrative expenses				172,742		25.8	%			141,444			25.5	%
Operating profit				68,542		10.2	%			60,232			10.8	%
Interest income, net				1,410		0.2	%			1,836			0.4	%
Other income (expense), net				327		0.1	%			(379	)		(0.1	%)
Earnings before income taxes				70,279		10.5	%			61,689			11.1	%
Provision for income taxes				28,115		4.2	%			24,338			4.4	%
Net income			$	42,164		6.3	%		$	37,351			6.7	%
Basic earnings per share			$	1.37					$	1.22
Diluted earnings per share			$	1.35					$	1.20
Weighted average shares used in computation of earnings per share:
	Basic			30,742						30,527
	Diluted			31,273						31,119

ZUMIEZ INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
			February 2,			January 28,
			2013			2012
Assets			(unaudited)
Current assets
Cash and cash equivalents			$	17,579		$	14,779
Marketable securities				85,593			158,019
Receivables				9,467			6,284
Inventories				77,598			65,037
Prepaid expenses and other				9,192			7,907
Deferred tax assets				3,885			1,477
	Total current assets			203,314			253,503
Fixed assets, net				115,474			89,478
Goodwill				64,576			13,154
Intangible assets, nets				20,480			-
Long-term other assets				5,254			6,022
	Total long-term assets			205,784			108,654
	Total assets		$	409,098		$	362,157
Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable			$	16,052		$	21,743
Accrued payroll and payroll taxes				11,057			9,062
Income taxes payable				6,957			5,835
Deferred rent and tenant allowances				4,901			4,230
Other liabilities				18,232			14,706
	Total current liabilities			57,199			55,576
Long-term deferred rent and tenant allowances				36,928			32,321
Long-term deferred tax liabilities				5,544			-
Long-term debt and other liabilities				6,006			1,983
	Total long-term liabilities			48,478			34,304
	Total liabilities			105,677			89,880
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; 30,114 shares issued and outstanding at February 2, 2013 and 31,170 shares issued and outstanding at January 28, 2012				108,360			99,412
Accumulated other comprehensive income				6,010			135
Retained earnings				189,051			172,730
	Total shareholders' equity			303,421			272,277
	Total liabilities and shareholders' equity		$	409,098		$	362,157

ZUMIEZ INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
			Fiscal Year Ended
			February 3, 2013				January 28, 2012
			(unaudited)
Cash flows from operating activities:
Net income			$	42,164			$	37,351
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion				22,957				19,744
Deferred taxes				(1,630	)			3,441
Stock-based compensation expense				5,996				5,303
Excess tax benefit from stock-based compensation				(2,094	)			(1,826	)
Lease termination costs				1,397				-
Other				389				608
Changes in operating assets and liabilities:
	Receivables			(2,568	)			(671	)
	Inventories			(2,987	)			(8,833	)
	Prepaid expenses and other			(1,125	)			(607	)
	Trade accounts payable			(5,626	)			4,295
	Accrued payroll and payroll taxes			1,207				1,485
	Income taxes payable			1,843				2,868
	Deferred rent and tenant allowances			5,469				5,334
	Other liabilities			833				(427	)
Net cash provided by operating activities				66,225				68,065
Cash flows from investing activities:
Additions to fixed assets				(41,070	)			(25,508	)
Acqusitions, net of cash acquired				(70,711	)			-
Purchases of marketable securities and other investments				(121,003	)			(194,531	)
Sales and maturities of marketable securities and other investments				191,705				151,965
Net cash used in investing activities				(41,079	)			(68,074	)
Cash flows from financing activities:
Payments on long-term debt				(258	)			-
Repurchase of common stock				(25,213	)			-
Proceeds from exercise of stock-based compensation, net of withholding tax payments				858				1,589
Excess tax benefit from stock-based compensation				2,094				1,826
Net cash (used in) provided by financing activities				(22,519	)			3,415
Effect of exchange rate changes on cash and cash equivalents				173				16
Net increase in cash and cash equivalents				2,800				3,422
Cash and cash equivalents, beginning of period				14,779				11,357
Cash and cash equivalents, end of period			$	17,579			$	14,779
Supplemental disclosure on cash flow information:
Cash paid during the period for income taxes			$	27,840			$	18,014
Accrual for purchases of fixed assets				1,942				3,083
Accrual for repurchase of common stock				630				-