Zumiez Inc. Announces Fiscal 2014 Fourth Quarter and Full Year Results

LYNNWOOD, WA--(Marketwired - Mar 12, 2015) - Zumiez Inc. (NASDAQ: ZUMZ) a leading multi-channel specialty retailer of action sports related apparel, footwear, hardgoods and accessories, today reported results for the fourth quarter and fiscal year ended January 31, 2015.

Fourth Quarter Results
Total net sales for the fourth quarter ended January 31, 2015 (13 weeks) increased 14.0% to $258.6 million from $226.8 million in the quarter ended February 1, 2014 (13 weeks). Comparable sales for the 13-week period ended January 31, 2015 increased 8.3% compared to a 2.2% decrease for the 13-week period ended February 1, 2014. Net income in the fourth quarter of fiscal 2014 decreased 34.8% to $17.5 million, or $0.60 per diluted share, from net income of $26.9 million, or $0.89 per diluted share, in the fourth quarter of the prior fiscal year. The results for fiscal 2014 include Blue Tomato acquisition charges of $6.9 million, or approximately $0.20 per diluted share, including $6.4 million for the accrual of contingent earn-out payments and $0.5 million for the amortization of intangible assets. The results for fiscal 2013 include a $5.8 million benefit, or approximately $0.16 per diluted share, for the reversal of contingent earn-out accruals associated with the acquisition of Blue Tomato, a $3.3 million benefit, or approximately $0.07 per diluted share, for the correction of an error related to the accounting for rent expenses, and a $0.6 million expense, or approximately $0.02 per diluted share, for the amortization of intangible assets associated with the Blue Tomato acquisition. Also included in the fiscal 2013 fourth quarter results is a benefit to the provision for income taxes of $0.8 million, or approximately $0.03 per diluted share, for the release of a valuation allowance of net operating losses in foreign subsidiaries.

Full Year Results
Total net sales for fiscal 2014 (52 weeks) increased 12.0% to $811.6 million from $724.3 million in fiscal 2013 (52 weeks). Comparable sales for the 52-week period ended January 31, 2015 increased 4.6% compared to a 0.3% decrease for the 52-week period ended February 1, 2014. Net income in fiscal 2014 decreased 6.0% to $43.2 million, or $1.47 per diluted share compared to net income in the prior fiscal year of $45.9 million, or $1.52 per diluted share. Results for the fiscal year 2014 include $6.4 million, or approximately $0.19 per diluted share, for the accrual of contingent earn-out payments associated with the acquisition of Blue Tomato, and $2.3 million, or approximately $0.06 per diluted share, for the amortization of intangible assets. Results for the fiscal year 2013 include a benefit of $2.6 million, or approximately $0.08 per diluted share, for the reversal of contingent earn-out accruals associated with the acquisition of Blue Tomato, a $2.7 million benefit, or approximately $0.06 per diluted share, for the correction of an error related to the accounting for rent expenses, a $2.3 million expense, or approximately $0.06 per diluted share, for the amortization of intangible assets associated with the Blue Tomato acquisition, and $1.3 million, or approximately $0.03 per diluted share, for costs associated with the conditional settlement of a California class action wage and hour lawsuit. Also included in the fiscal 2013 results is a benefit to the provision for income taxes of $0.4 million, or approximately $0.01 per diluted share, for the release of a valuation allowance to net operating losses in foreign subsidiaries.

Cash and Current Marketable Securities
At January 31, 2015, the Company had cash and current marketable securities of $154.6 million, compared to cash and current marketable securities of $117.2 million at February 1, 2014. The increase in cash and current marketable securities is a result of cash generated through operations, partially offset by capital expenditures and stock repurchases.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "Our strong fourth quarter operating performance was an extremely gratifying way to finish fiscal 2014. The investments we've made in developing world class omnichannel capabilities, expanding our international presence and providing our people with the tools necessary to best meet the needs of our customers, helped fuel our results and fortify our leading lifestyle position. We are confident that our strategies will yield consistent earnings growth and deliver solid returns for our shareholders over the long-term."

Fiscal 2015 First Quarter Outlook
The Company is introducing guidance for the three months ending May 2, 2015. Net sales are projected to be in the range of $176 to $178 million resulting in net income per diluted share of approximately $0.08 to $0.10, which includes an estimated $1.1 million, or approximately $0.03 per diluted share, for charges associated with the acquisition of Blue Tomato. This guidance is based on an anticipated comparable sales increase in the range of 3% to 4% for the first quarter of fiscal 2015. The Company currently intends to open approximately 57 new stores in fiscal 2015, including up to 7 stores in Canada and 6 stores in Europe.

A conference call will be held today to discuss fourth quarter and fiscal 2014 year-end results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (617)-213-8052 followed by the conference identification code of 44529050.

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 February 28, 2015 we operated 604 stores, including 550 in the United States, 35 in Canada, and 19 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 November 1, 2014 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
			January 31, 2015				% of Sales			February 1, 2014				% of Sales
Net sales			$	258,569			100.0	%		$	226,838			100.0	%
Cost of goods sold				160,791			62.2	%			138,959			61.3	%
Gross profit				97,778			37.8	%			87,879			38.7	%
Selling, general and administrative expenses				66,500			25.7	%			47,579			20.9	%
Operating profit				31,278			12.1	%			40,300			17.8	%
Interest income, net				162			0.1	%			167			0.1	%
Other expense, net				(626	)		(0.3	%)			(682	)		(0.4	%)
Earnings before income taxes				30,814			11.9	%			39,785			17.5	%
Provision for income taxes				13,301			5.1	%			12,934			5.7	%
Net income			$	17,513			6.8	%		$	26,851			11.8	%
Basic earnings per share			$	0.60						$	0.90
Diluted earnings per share			$	0.60						$	0.89
Weighted average shares used in computation of earnings per share:
	Basic			28,989							29,790
	Diluted			29,295							30,139

ZUMIEZ INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
			Twelve Months Ended
			January 31, 2015				% of Sales			February 1, 2014				% of Sales
			(unaudited)
Net sales			$	811,551			100.0	%		$	724,337			100.0	%
Cost of goods sold				524,468			64.6	%			462,577			63.9	%
Gross profit				287,083			35.4	%			261,760			36.1	%
Selling, general and administrative expenses				215,512			26.6	%			188,918			26.0	%
Operating profit				71,571			8.8	%			72,842			10.1	%
Interest income, net				637			0.1	%			711			0.0	%
Other (expense) income, net				(557	)		(0.1	%)			(1,589	)		(0.2	%)
Earnings before income taxes				71,651			8.8	%			71,964			9.9	%
Provision for income taxes				28,459			3.5	%			26,016			3.6	%
Net income			$	43,192			5.3	%		$	45,948			6.3	%
Basic earnings per share			$	1.50						$	1.54
Diluted earnings per share			$	1.47						$	1.52
Weighted average shares used in computation of earnings per share:
	Basic			28,871							29,810
	Diluted			29,288							30,206

ZUMIEZ INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
			January 31, 2015				February 1, 2014
Assets
Current assets
Cash and cash equivalents			$	20,862			$	19,634
Marketable securities				133,782				97,521
Receivables				12,653				10,294
Inventories				93,850				87,182
Prepaid expenses and other				11,651				10,021
Deferred tax assets				6,965				5,194
	Total current assets			279,763				229,846
Fixed assets, net				135,642				127,343
Goodwill				55,852				64,195
Intangible assets, nets				13,062				17,970
Long-term other assets				9,386				4,049
	Total long-term assets			213,942				213,557
	Total assets		$	493,705			$	443,403
Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable			$	32,094			$	18,343
Accrued payroll and payroll taxes				13,047				10,581
Income taxes payable				4,651				4,696
Deferred rent and tenant allowances				7,083				6,478
Other liabilities				24,572				21,276
	Total current liabilities			81,447				61,374
Long-term deferred rent and tenant allowances				42,553				37,658
Long-term deferred tax liabilities				5,738				4,649
Long-term debt and other liabilities				4,443				4,068
	Total long-term liabilities			52,734				46,375
	Total liabilities			134,181				107,749
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; 29,418 shares issued and outstanding at January 31, 2015 and 29,619 shares issued and outstanding at February 1, 2014				129,094				114,983
Accumulated other comprehensive income				(11,278	)			4,710
Retained earnings				241,708				215,961
	Total shareholders' equity			359,524				335,654
	Total liabilities and shareholders' equity		$	493,705			$	443,403

ZUMIEZ INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
			Fiscal Year Ended
			January 31, 2015				February 1, 2014
			(unaudited)				(unaudited)
Cash flows from operating activities:
Net income			$	43,192			$	45,948
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion				29,167				26,596
Deferred taxes				(610	)			(978	)
Stock-based compensation expense				7,520				4,094
Excess tax benefit from stock-based compensation				(1,355	)			(1,232	)
Lease termination costs				(55	)			405
Other				1,164				1,842
Changes in operating assets and liabilities:
	Receivables			(2,990	)			(739	)
	Inventories			(10,850	)			(9,968	)
	Prepaid expenses and other			(4,702	)			(1,789	)
	Trade accounts payable			14,744				1,714
	Accrued payroll and payroll taxes			2,718				(426	)
	Income taxes payable			(23	)			(1,484	)
	Deferred rent and tenant allowances			5,937				2,367
	Other liabilities			6,080				544
Net cash provided by operating activities				89,937				66,894
Cash flows from investing activities:
Additions to fixed assets				(35,758	)			(35,969	)
Acquisitions, net of cash acquired				-				-
Purchases of marketable securities and other investments				(125,971	)			(124,129	)
Sales and maturities of marketable securities and other investments				87,856				110,479
Net cash used in investing activities				(73,873	)			(49,619	)
Cash flows from financing activities:
Proceeds from revolving credit facilities				6,943				4,182
Payments on long-term debt, revolving credit facilities and other liabilities				(9,009	)			(4,488	)
Repurchase of common stock				(19,557	)			(17,556	)
Proceeds from exercise of stock-based compensation, net of withholding tax payments				6,335				1,397
Excess tax benefit from stock-based compensation				1,355				1,232
Net cash used in financing activities				(13,933	)			(15,233	)
Effect of exchange rate changes on cash and cash equivalents				(903	)			13
Net increase in cash and cash equivalents				1,228				2,055
Cash and cash equivalents, beginning of period				19,634				17,579
Cash and cash equivalents, end of period			$	20,862			$	19,634
Supplemental disclosure on cash flow information:
Cash paid during the period for income taxes, net of refunds			$	28,770			$	28,105
Accrual for purchases of fixed assets				2,372				1,491
Accrual for repurchase of common stock				-				2,112