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

Zumiez Inc. Announces Fiscal 2022 Second Quarter Results