Zumiez Inc. Announces Fiscal 2023 Third Quarter Results
LYNNWOOD, Wash., Nov. 30, 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 third quarter ended October 28, 2023.
Net sales for the third quarter ended October 28, 2023 (13 weeks) decreased 8.9% to $216.3 million from $237.6 million in the third quarter ended October 29, 2022 (13 weeks). Net loss in the third quarter of fiscal 2023 was $2.2 million, or $0.12 per diluted share, compared to net income of $6.9 million, or $0.36 per diluted share, in the third quarter of the prior fiscal year.
Total net sales for the nine months (39 weeks) ended October 28, 2023 decreased 12.5% to $593.7 million from $678.3 million reported for the nine months (39 weeks) ended October 29, 2022. Net loss for the first nine months of fiscal 2023 was $29.1 million, or $1.51 per diluted share, compared to net income for the first nine months of fiscal 2022 of $9.6 million, or $0.49 per diluted share.
At October 28, 2023, the Company had cash and current marketable securities of $135.8 million compared to cash and current marketable securities of $141.1 million at October 29, 2022. The decrease was primarily driven by capital expenditures partially offset by cash flow from operating activities.
Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “Third quarter results came in just ahead of our guidance for sales and earnings as we saw sequential improvement in the year-over-year sales comparisons from the first two quarters of 2023. Given the challenging macroeconomic backdrop, we are encouraged by the strength of newer brand introductions and fashion trends that we look to capitalize upon in the important holiday season. While 2023 has certainly been difficult, the adjustments we’ve made to our merchandise assortment and our steadfast commitment to providing consumers with superior service and a highly differentiated shopping experience will continue to separate us from the competition and position Zumiez to recapture operating margin as our sales recover.”
Fourth Quarter To-Date
Total fourth quarter-to-date total sales for the 31 days ending November 28, 2023 decreased 4.6%, compared with the same 31-day time period in the prior year ended November 29, 2022. Total comparable sales for the 31-day period ending November 28, 2023 decreased 6.0% from the comparable period in the prior year.
Fiscal 2023 Fourth Quarter Outlook
The Company is introducing guidance for the three months ending February 3, 2024. Net sales are projected to be in the range of $275 to $281 million inclusive of the 53rd week. Consolidated operating margins are expected to between 1.5% and 2.5% resulting in earnings per diluted share of approximately $0.24 to $0.34. The Company currently intends to open 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 (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 November 25, 2023, we operated 771 stores, including 610 in the United States, 49 in Canada, 87 in Europe and 25 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 | ||||||||||||||
| October 28, 2023 | % of Sales | October 29, 2022 | % of Sales | |||||||||||
| Net sales | $ | 216,339 | 100.0 | % | $ | 237,591 | 100.0 | % | ||||||
| Cost of goods sold | 143,135 | 66.2 | % | 155,608 | 65.5 | % | ||||||||
| Gross profit | 73,204 | 33.8 | % | 81,983 | 34.5 | % | ||||||||
| Selling, general and administrative expenses | 73,361 | 33.9 | % | 71,544 | 30.1 | % | ||||||||
| Operating (loss) profit | (157 | ) | -0.1 | % | 10,439 | 4.4 | % | |||||||
| Interest income, net | 948 | 0.4 | % | 428 | 0.1 | % | ||||||||
| Other income, net | (1,037 | ) | -0.4 | % | (1,256 | ) | -0.5 | % | ||||||
| (Loss) earnings before income taxes | (246 | ) | -0.1 | % | 9,611 | 4.0 | % | |||||||
| Provision for (Benefit from) income taxes | 1,985 | 0.9 | % | 2,679 | 1.1 | % | ||||||||
| Net (loss) income | $ | (2,231 | ) | -1.0 | % | $ | 6,932 | 2.9 | % | |||||
| Basic (loss) earnings per share | $ | (0.12 | ) | $ | 0.36 | |||||||||
| Diluted (loss) earnings per share | $ | (0.12 | ) | $ | 0.36 | |||||||||
| Weighted average shares used in computation of (loss) earnings per share: | ||||||||||||||
| Basic | 19,327 | 19,101 | ||||||||||||
| Diluted | 19,327 | 19,248 | ||||||||||||
| Nine Months Ended | ||||||||||||||
| October 28, 2023 | % of Sales | October 29, 2022 | % of Sales | |||||||||||
| Net sales | $ | 593,664 | 100.0 | % | $ | 678,270 | 100.0 | % | ||||||
| Cost of goods sold | 409,425 | 69.0 | % | 448,861 | 66.2 | % | ||||||||
| Gross profit | 184,239 | 31.0 | % | 229,409 | 33.8 | % | ||||||||
| Selling, general and administrative expenses | 216,243 | 36.3 | % | 213,519 | 31.5 | % | ||||||||
| Operating (loss) profit | (32,004 | ) | -5.3 | % | 15,890 | 2.3 | % | |||||||
| Interest income, net | 2,581 | 0.4 | % | 1,279 | 0.2 | % | ||||||||
| Other (expense) income, net | (1,156 | ) | -0.2 | % | (850 | ) | -0.1 | % | ||||||
| (Loss) earnings before income taxes | (30,579 | ) | -5.1 | % | 16,319 | 2.4 | % | |||||||
| Provision for (Benefit from) income taxes | (1,456 | ) | -0.2 | % | 6,717 | 1.0 | % | |||||||
| Net (loss) income | $ | (29,122 | ) | -4.9 | % | $ | 9,602 | 1.4 | % | |||||
| Basic (loss) earnings per share | $ | (1.51 | ) | $ | 0.50 | |||||||||
| Diluted (loss) earnings per share | $ | (1.51 | ) | $ | 0.49 | |||||||||
| Weighted average shares used in computation of (loss) earnings per share: | ||||||||||||||
| Basic | 19,278 | 19,239 | ||||||||||||
| Diluted | 19,278 | 19,490 | ||||||||||||
| ZUMIEZ INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) | |||||||||||||||
| October 28, 2023 | January 28, 2023 | October 29, 2022 | |||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||
| Assets | |||||||||||||||
| Current assets | |||||||||||||||
| Cash and cash equivalents | $ | 48,968 | $ | 81,503 | $ | 49,336 | |||||||||
| Marketable securities | 86,857 | 91,986 | 91,776 | ||||||||||||
| Receivables | 23,022 | 20,613 | 19,824 | ||||||||||||
| Inventories | 175,882 | 134,824 | 177,205 | ||||||||||||
| Prepaid expenses and other current assets | 11,315 | 11,252 | 15,166 | ||||||||||||
| Total current assets | 346,044 | 340,178 | 353,307 | ||||||||||||
| Fixed assets, net | 92,925 | 93,746 | 91,590 | ||||||||||||
| Operating lease right-of-use assets | 212,984 | 222,240 | 220,420 | ||||||||||||
| Goodwill | 55,145 | 56,566 | 52,899 | ||||||||||||
| Intangible assets, net | 13,819 | 14,443 | 13,199 | ||||||||||||
| Deferred tax assets, net | 10,788 | 8,205 | 6,794 | ||||||||||||
| Other long-term assets | 11,321 | 12,525 | 11,598 | ||||||||||||
| Total long-term assets | 396,982 | 407,725 | 396,500 | ||||||||||||
| Total assets | $ | 743,026 | $ | 747,903 | $ | 749,807 | |||||||||
| Liabilities and Shareholders’ Equity | |||||||||||||||
| Current liabilities | |||||||||||||||
| Trade accounts payable | $ | 74,337 | $ | 40,379 | $ | 69,076 | |||||||||
| Accrued payroll and payroll taxes | 18,756 | 16,321 | 20,557 | ||||||||||||
| Operating lease liabilities | 69,084 | 65,460 | 65,236 | ||||||||||||
| Other liabilities | 19,602 | 23,649 | 20,677 | ||||||||||||
| Total current liabilities | 181,779 | 145,809 | 175,546 | ||||||||||||
| Long-term operating lease liabilities | 176,233 | 188,835 | 188,818 | ||||||||||||
| Other long-term liabilities | 5,550 | 5,931 | 4,773 | ||||||||||||
| Total long-term liabilities | 181,783 | 194,766 | 193,591 | ||||||||||||
| Total liabilities | 363,562 | 340,575 | 369,137 | ||||||||||||
| Shareholders’ equity | |||||||||||||||
| Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding | — | — | — | ||||||||||||
| Common stock, no par value, 50,000 shares authorized; 19,836 shares issued and outstanding at October 28, 2023, 19,489 shares issued and outstanding at January 28, 2023, and 19,490 shares issued and outstanding at October 29, 2022 | 194,230 | 188,418 | 186,684 | ||||||||||||
| Accumulated other comprehensive loss | (24,347 | ) | (19,793 | ) | (33,285 | ) | |||||||||
| Retained earnings | 209,581 | 238,703 | 227,271 | ||||||||||||
| Total shareholders’ equity | 379,464 | 407,328 | 380,670 | ||||||||||||
| Total liabilities and shareholders’ equity | $ | 743,026 | $ | 747,903 | $ | 749,807 | |||||||||
| ZUMIEZ INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) | |||||||||
| Nine Months Ended | |||||||||
| October 28, 2023 | October 29, 2022 | ||||||||
| Cash flows from operating activities: | |||||||||
| Net (loss) income | $ | (29,122 | ) | $ | 9,602 | ||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | |||||||||
| Depreciation, amortization and accretion | 16,209 | 15,802 | |||||||
| Noncash lease expense | 51,607 | 50,074 | |||||||
| Deferred taxes | (3,014 | ) | 3,441 | ||||||
| Stock-based compensation expense | 5,108 | 5,249 | |||||||
| Impairment of long-lived assets | 925 | 372 | |||||||
| Other | 943 | 1,331 | |||||||
| Changes in operating assets and liabilities: | |||||||||
| Receivables | (1,767 | ) | (2,317 | ) | |||||
| Inventories | (43,186 | ) | (52,020 | ) | |||||
| Prepaid expenses and other assets | (273 | ) | (5,365 | ) | |||||
| Trade accounts payable | 34,270 | 14,570 | |||||||
| Accrued payroll and payroll taxes | 2,684 | (10,191 | ) | ||||||
| Income taxes payable | 252 | (1,790 | ) | ||||||
| Operating lease liabilities | (52,656 | ) | (56,796 | ) | |||||
| Other liabilities | (4,902 | ) | (8,374 | ) | |||||
| Net cash used in operating activities | (22,922 | ) | (36,412 | ) | |||||
| Cash flows from investing activities: | |||||||||
| Additions to fixed assets | (16,210 | ) | (17,720 | ) | |||||
| Purchases of marketable securities and other investments | (28,679 | ) | (1,914 | ) | |||||
| Sales and maturities of marketable securities and other investments | 34,506 | 80,051 | |||||||
| Net cash (used in) provided by investing activities | (10,383 | ) | 60,417 | ||||||
| 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 | 890 | 1,110 | |||||||
| Payments for tax withholdings on equity awards | (185 | ) | (499 | ) | |||||
| Common stock repurchased | — | (87,860 | ) | ||||||
| Net cash provided by (used in) financing activities | 705 | (87,249 | ) | ||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (1,643 | ) | (4,978 | ) | |||||
| Net decrease in cash, cash equivalents, and restricted cash | (34,243 | ) | (68,222 | ) | |||||
| Cash, cash equivalents, and restricted cash, beginning of period | 88,453 | 124,052 | |||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 54,210 | $ | 55,830 | |||||
| Supplemental disclosure on cash flow information: | |||||||||
| Cash paid during the period for income taxes | $ | 1,686 | $ | 5,166 | |||||
| Accrual for purchases of fixed assets | 2,780 | 1,802 | |||||||
Company Contact:
Darin White
Director of Finance &
Investor Relations
Zumiez Inc.
(425) 551-1500, ext. 1337
Investor Contact:
ICR
Brendon Frey
(203) 682-8200
