Zumiez Inc. Announces Fiscal 2023 Second Quarter Results

LYNNWOOD, Wash., Sept. 07, 2023 (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 29, 2023.

Net sales for the second quarter ended July 29, 2023 (13 weeks) decreased 11.6% to $194.4 million from $220.0 million in the second quarter ended July 30, 2022 (13 weeks). Net loss in the second quarter of fiscal 2023 was $8.5 million, or $0.44 per diluted share, compared to net income of $3.1 million, or $0.16 per diluted share, in the second quarter of the prior fiscal year.

Total net sales for the six months (26 weeks) ended July 29, 2023 decreased 14.4% to $377.3 million from $440.7 million reported for the six months (26 weeks) ended July 30, 2022. Net loss for the first six months of fiscal 2023 was $26.9 million, or $1.40 per diluted share, compared to net income for the first six months of fiscal 2022 of $2.7 million, or $0.14 per diluted share.

At July 29, 2023, the Company had cash and current marketable securities of $140.0 million compared to cash and current marketable securities of $166.2 million at July 30, 2022. The decrease was primarily driven by capital expenditures.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “While our North American business remains under pressure, second quarter sales trends improved month-to-month and our year-over-year top-line performance was meaningfully better compared with the first quarter. With continued headwinds facing consumer discretionary spending combined with a heightened promotional marketplace, we are pleased with the progress we’ve made positioning our business for the second half of 2023. The back-to-school season, which is historically a good indicator for holiday demand, is continuing to show improvement from the last few quarters. Despite the challenges year-to-date, we are confident that the global consumer centric operating model we have built and refined over the past four decades will continue to deliver great long-term value for our shareholders.”

Third Quarter To-Date
Total third quarter-to-date sales for the 37 days ending September 4, 2023 decreased 7.7%, compared with the same 37-day time period in the prior year ended September 5, 2022. Total comparable sales for the 37-day period ending September 4, 2023 were down 8.6% from the comparable period in the prior year.

Fiscal 2023 Third Quarter Outlook
The Company is introducing guidance for the three months ending October 28, 2023. Net sales are projected to be in the range of $211 to $216 million. Consolidated operating margins are expected to between negative 1.5% and negative 2.5% resulting in a loss per diluted share of approximately $0.15 to $0.25.  

The Company currently intends to open approximately 19 new stores in fiscal 2023, including up to 5 stores in North America, 10 stores in Europe and 4 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 26, 2023, we operated 761 stores, including 609 in the United States, 49 in Canada, 81 in Europe and 22 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 28, 2023 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 29, 2023				% of Sales			July 30, 2022				% of Sales
Net sales		$	194,438			100.0	%		$	219,993			100.0	%
Cost of goods sold			132,760			68.3	%			144,929			65.9	%
Gross profit			61,678			31.7	%			75,064			34.1	%
Selling, general and administrative expenses			72,171			37.1	%			70,109			31.8	%
Operating (loss) profit			(10,493	)		-5.4	%			4,955			2.3	%
Interest income, net			775			0.4	%			358			0.1	%
Other income, net			423			0.2	%			233			0.1	%
(Loss) earnings before income taxes			(9,295	)		-4.8	%			5,546			2.5	%
(Benefit from) provision for income taxes			(786	)		-0.4	%			2,479			1.1	%
Net (loss) income		$	(8,509	)		-4.4	%		$	3,067			1.4	%
Basic (loss) earnings per share		$	(0.44	)					$	0.16
Diluted (loss) earnings per share		$	(0.44	)					$	0.16
Weighted average shares used in computation of (loss) earnings per share:
Basic			19,311							19,084
Diluted			19,311							19,262
		Six Months Ended
		July 29, 2023				% of Sales			July 30, 2022				% of Sales
Net sales		$	377,325			100.0	%		$	440,679			100.0	%
Cost of goods sold			266,290			70.6	%			293,242			66.5	%
Gross profit			111,035			29.4	%			147,437			33.5	%
Selling, general and administrative expenses			142,881			37.8	%			141,985			32.3	%
Operating (loss) profit			(31,846	)		-8.4	%			5,452			1.2	%
Interest income, net			1,632			0.4	%			850			0.2	%
Other (expense) income, net			(118	)		0.0	%			405			0.1	%
(Loss) earnings before income taxes			(30,332	)		-8.0	%			6,707			1.5	%
(Benefit from) provision for income taxes			(3,441	)		-0.9	%			4,037			0.9	%
Net (loss) income		$	(26,891	)		-7.1	%		$	2,670			0.6	%
Basic (loss) earnings per share		$	(1.40	)					$	0.14
Diluted (loss) earnings per share		$	(1.40	)					$	0.14
Weighted average shares used in computation of (loss) earnings per share:
Basic			19,254							19,308
Diluted			19,254							19,592

ZUMIEZ INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
		July 29, 2023				January 28, 2023				July 30, 2022
		(Unaudited)								(Unaudited)
Assets
Current assets
Cash and cash equivalents		$	57,854			$	81,503			$	59,144
Marketable securities			82,128				91,986				107,036
Receivables			23,910				20,613				24,201
Inventories			156,654				134,824				151,071
Prepaid expenses and other current assets			14,523				11,252				14,053
Total current assets			335,069				340,178				355,505
Fixed assets, net			94,193				93,746				91,196
Operating lease right-of-use assets			221,538				222,240				228,243
Goodwill			56,889				56,566				54,017
Intangible assets, net			14,409				14,443				13,679
Deferred tax assets, net			12,161				8,205				6,546
Other long-term assets			11,575				12,525				11,425
Total long-term assets			410,765				407,725				405,106
Total assets		$	745,834			$	747,903			$	760,611
Liabilities and Shareholders’ Equity
Current liabilities
Trade accounts payable		$	69,773			$	40,379			$	72,915
Accrued payroll and payroll taxes			14,608				16,321				16,970
Operating lease liabilities			66,087				65,460				67,411
Other liabilities			19,312				23,649				23,951
Total current liabilities			169,780				145,809				181,247
Long-term operating lease liabilities			184,439				188,835				196,073
Other long-term liabilities			6,191				5,931				4,995
Total long-term liabilities			190,630				194,766				201,068
Total liabilities			360,410				340,575				382,315
Shareholders’ equity
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding			—				—				—
Common stock, no par value, 50,000 shares authorized; 19,809 shares issued and outstanding at July 29, 2023, 19,489 shares issued and outstanding at January 28, 2023, and 19,474 shares issued and outstanding at July 30, 2023			192,169				188,418				184,619
Accumulated other comprehensive loss			(18,557	)			(19,793	)			(26,662	)
Retained earnings			211,812				238,703				220,339
Total shareholders’ equity			385,424				407,328				378,296
Total liabilities and shareholders’ equity		$	745,834			$	747,903			$	760,611

ZUMIEZ INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
		Six Months Ended
		July 29, 2023				July 30, 2022
Cash flows from operating activities:
Net (loss) income		$	(26,891	)		$	2,670
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation, amortization and accretion			10,881				10,598
Noncash lease expense			34,380				33,040
Deferred taxes			(4,060	)			3,035
Stock-based compensation expense			3,476				3,513
Impairment of long-lived assets			338				65
Other			84				(115	)
Changes in operating assets and liabilities:
Receivables			(1,113	)			(5,496	)
Inventories			(21,721	)			(24,671	)
Prepaid expenses and other assets			(3,807	)			(3,946	)
Trade accounts payable			30,150				17,084
Accrued payroll and payroll taxes			(1,676	)			(13,958	)
Income taxes payable			(1,044	)			(4,128	)
Operating lease liabilities			(38,783	)			(37,239	)
Other liabilities			(4,480	)			(4,611	)
Net cash used in operating activities			(24,266	)			(24,159	)
Cash flows from investing activities:
Additions to fixed assets			(11,879	)			(10,253	)
Purchases of marketable securities and other investments			(1,850	)			(1,914	)
Sales and maturities of marketable securities and other investments			12,284				67,890
Net cash (used in) provided by investing activities			(1,445	)			55,723
Cash flows from financing activities:
Proceeds from revolving credit facilities			25,682				19,844
Payments on revolving credit facilities			(25,682	)			(19,844	)
Proceeds from issuance and exercise of stock-based awards			460				781
Payments for tax withholdings on equity awards			(185	)			(499	)
Common stock repurchased			—				(87,860	)
Net cash provided by (used in) financing activities			275				(87,578	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash			179				(2,367	)
Net decrease in cash, cash equivalents, and restricted cash			(25,257	)			(58,381	)
Cash, cash equivalents, and restricted cash, beginning of period			88,453				124,052
Cash, cash equivalents, and restricted cash, end of period		$	63,196			$	65,671
Supplemental disclosure on cash flow information:
Cash paid during the period for income taxes		$	1,520			$	5,027
Accrual for purchases of fixed assets			1,784				2,466

Company Contact:
Darin White
Director of Finance &
Investor Relations
Zumiez Inc.
(425) 551-1500, ext. 1337

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