Zumiez Inc. Announces Fiscal 2016 First Quarter Results

LYNNWOOD, WA--(Marketwired - Jun 2, 2016) - Zumiez Inc. (NASDAQ: ZUMZ), a leading specialty retailer of apparel, footwear, equipment and accessories for young men and women, today reported results for the first quarter ended April 30, 2016.

Total net sales for the first quarter ended April 30, 2016 (13 weeks) decreased 2.6% to $173.0 million from $177.6 million in the first quarter ended May 2, 2015 (13 weeks). Comparable sales for the thirteen weeks ended April 30, 2016 decreased 7.5% compared to a comparable sales increase of 3.0% in the first quarter of 2015. Net loss in the first quarter of fiscal 2016 was $2.1 million, or ($0.08) per diluted share, compared to net income of $2.8 million, or $0.09 per diluted share, in the first quarter of the prior fiscal year. The results for the first quarter of 2015 include approximately $1.1 million, or $0.03 per diluted share, for charges associated with the acquisition of Blue Tomato.

At April 30, 2016, the Company had cash and current marketable securities of $62.1 million, compared to cash and current marketable securities of $150.9 million at May 2, 2015. The decrease in cash and current marketable securities is primarily a result of stock repurchases and capital expenditures, partially offset by cash generated through operations.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "While our monthly comparable sales trends improved as the quarter progressed, the quarter was more challenging than expected. We did experience pockets of strength within our merchandise assortments, however it wasn't enough to offset the general weakness in consumer demand for our major categories. During this period of instability for the retail industry, we are taking actions aimed at preserving near-term profitability while continuing to make the necessary investments in the business to best position the company for future success. We remain confident that we have the right strategies in place to capitalize on the domestic and international growth opportunities that lie ahead and return greater value to our shareholders over the long-term."

May 2016 Sales
Total net sales for the four-week period ended May 28, 2016 decreased 2.9% to $50.0 million, compared to $51.5 million for the four-week period ended May 30, 2015. The Company's comparable sales decreased 7.6% for the four-week period ended May 28, 2016 compared to a comparable sales decrease of 2.2% for the four-week period ended May 30, 2015. 

Fiscal 2016 Second Quarter Outlook
The Company is introducing guidance for the three months ending July 30, 2016. Net sales are projected to be in the range of $172 to $176 million resulting in net loss per diluted share of approximately -$0.09 to -$0.13. This guidance is based on an anticipated comparable sales decrease in the 6% to 8% range for the second quarter of fiscal 2016. The Company currently intends to open approximately 29 new stores in fiscal 2016, including up to 6 stores in Canada and 7 stores in Europe.

A conference call will be held today to discuss first quarter fiscal 2016 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (574) 990-9934 followed by the conference identification code of 15050707. 

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 May 28, 2016 we operated 668 stores, including 599 in the United States, 44 in Canada, and 25 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 annual report on Form 10-K for the fiscal year ended January 30, 2016 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
		April 30, 2016				% of Sales			May 2, 2015			% of Sales
Net sales		$	172,970			100.0	%		$	177,610		100.0	%
Cost of goods sold			123,012			71.1	%			121,075		68.2	%
Gross profit			49,958			28.9	%			56,535		31.8	%
Selling, general and administrative expenses			53,899			31.2	%			52,409		29.5	%
Operating (loss) profit			(3,941	)		(2.3	%)			4,126		2.3	%
Interest income, net			31			0.0	%			205		0.1	%
Other income, net			499			0.3	%			115		0.1	%
(Loss) earnings before income taxes			(3,411	)		(2.0	%)			4,446		2.5	%
(Benefit) provision for income taxes			(1,274	)		(0.7	%)			1,676		0.9	%
Net (loss) income		$	(2,137	)		(1.3	%)		$	2,770		1.6	%
Basic (loss) earnings per share		$	(0.08	)					$	0.10
Diluted (loss) earnings per share		$	(0.08	)					$	0.09
Weighted average shares used in computation of (loss) earnings per share:
	Basic		25,185							29,141
	Diluted		25,185							29,486

ZUMIEZ INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
			April 30,				January 30,				May 2,
			2016				2016				2015
Assets			(Unaudited)								(Unaudited)
Current assets
Cash and cash equivalents			$	16,890			$	43,163			$	11,806
Marketable securities				45,236				32,391				139,048
Receivables				13,234				12,840				14,401
Inventories				112,971				98,299				104,091
Prepaid expenses and other				12,282				12,204				11,117
	Total current assets			200,613				198,897				280,463
Fixed assets, net				138,156				137,233				140,320
Goodwill				56,157				54,245				55,478
Intangible assets, net				12,313				11,766				12,460
Deferred tax asset				6,362				4,634				2,831
Other long-term assets				8,547				7,920				8,482
	Total long-term assets			221,535				215,798				219,571
	Total assets		$	422,148			$	414,695			$	500,034
Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable			$	44,922			$	21,919			$	39,525
Accrued payroll and payroll taxes				10,074				12,466				9,168
Income taxes payable				28				4,066				732
Deferred rent and tenant allowances				8,229				8,116				7,448
Other liabilities				20,863				22,575				29,276
	Total current liabilities			84,116				69,142				86,149
Long-term deferred rent and tenant allowances				43,932				43,779				44,761
Other long-term liabilities				4,800				4,817				4,698
	Total long-term liabilities			48,732				48,596				49,459
	Total liabilities			132,848				117,738				135,608
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; 25,330 shares issued and outstanding at April 30, 2016, 25,708 shares issued and outstanding at January 30, 2016 and 29,535 shares issued and outstanding at May 2, 2015.				136,028				135,013				131,715
Accumulated other comprehensive loss				(10,260	)			(15,247	)			(11,767	)
Retained earnings				163,532				177,191				244,478
	Total shareholders' equity			289,300				296,957				364,426
	Total liabilities and shareholders' equity		$	422,148			$	414,695			$	500,034

ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
				Three Months Ended
				April 30, 2016				May 2, 2015
Cash flows from operating activities:
Net (loss) income				$	(2,137	)		$	2,770
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation, amortization and accretion					7,222				7,797
Deferred taxes					(1,586	)			(622	)
Stock-based compensation expense					1,035				1,572
Excess tax benefit from stock-based compensation					425				(689	)
Other					(176	)			(76	)
	Changes in operating assets and liabilities:
		Receivables			548				(1,617	)
		Inventories			(13,125	)			(10,187	)
		Prepaid expenses and other			(545	)			605
		Trade accounts payable			22,617				7,726
		Accrued payroll and payroll taxes			(2,523	)			(3,891	)
		Income taxes payable			(5,145	)			(3,355	)
		Deferred rent and tenant allowances			(139	)			2,444
		Other liabilities			(3,341	)			(789	)
Net cash provided by operating activities					3,130				1,688
Cash flows from investing activities:
Additions to fixed assets					(4,485	)			(8,818	)
Purchases of marketable securities and other investments					(26,854	)			(35,037	)
Sales and maturities of marketable securities and other investments					13,761				29,074
Net cash used in investing activities					(17,578	)			(14,781	)
Cash flows from financing activities:
Proceeds from long-term debt and revolving credit facilities					-				4,310
Payments on long-term debt and revolving credit facilities					-				(1,271	)
Repurchase of common stock					(12,248	)			-
Proceeds from exercise of stock-based awards, net of withholding tax					405				367
Excess tax benefit from stock-based compensation					(425	)			689
Net cash (used in) provided by financing activities					(12,268	)			4,095
Effect of exchange rate changes on cash and cash equivalents					443				(58	)
Net decrease in cash and cash equivalents					(26,273	)			(9,056	)
	Cash and cash equivalents, beginning of period				43,163				20,862
	Cash and cash equivalents, end of period			$	16,890			$	11,806
	Supplemental disclosure on cash flow information:
	Cash paid during the period for income taxes			$	5,470			$	5,667
	Accrual for purchases of fixed assets				3,309				4,489
	Accrual for repurchase of common stock				341				-