Zumiez Inc. Announces Fiscal 2013 First Quarter Results

LYNNWOOD, WA--(Marketwired - May 23, 2013) -  Zumiez Inc. (NASDAQ: ZUMZ) a leading specialty retailer of action sports related apparel, footwear, equipment and accessories, today reported results for the first quarter ended May 4, 2013.

Total net sales for the first quarter ended May 4, 2013 (13 weeks) increased 14.3% to $148.5 million from $129.9 million in the first quarter ended April 28, 2012 (13 weeks). Comparable store sales for the thirteen weeks ended May 4, 2013 decreased (0.7%) compared to a comparable store sales increase of 12.9% for the thirteen weeks ended April 28, 2012. Net income in the first quarter of fiscal 2013 was $2.5 million, or $0.08 per diluted share, compared to net income of $4.5 million, or $0.14 per diluted share, in the first quarter of the prior fiscal year. The results for fiscal 2013 include costs of approximately $1.7 million, or $0.05 per diluted share, for charges associated with the acquisition of Blue Tomato, and the results for fiscal 2012 include approximately $0.4 million, or $0.01 per diluted share, of Blue Tomato acquisition charges.

At May 4, 2013, the Company had cash and current marketable securities of $97.6 million compared to cash and current marketable securities of $171.2 million at April 28, 2012. The decrease in cash and current marketable securities is a result of the acquisition of Blue Tomato, which was funded by the Company's cash and current marketable securities balance, as well as capital expenditures and stock repurchases, offset by cash generated through operations.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "Our business improved throughout the first quarter driven by strong full price selling during the combined March/April period. These results, which were delivered in a more challenging operating environment than a year ago, reflect the success of our continued execution on long-term growth strategies and the strength of our highly differentiated and diverse merchandise offering. We remain confident that our current course can continue to yield increased top and bottom line long-term gains."

Fiscal 2013 Second Quarter Outlook
The Company is introducing guidance for the three months ending August 3, 2013. Net sales are projected to be in the range of $155 to $158 million resulting in net income per diluted share of approximately $0.12 to $0.14, which includes an estimated $1.6 million, or approximately $0.04 per diluted share, for charges associated with the acquisition of Blue Tomato. This guidance is based on anticipated comparable store sales in the range of flat to an increase of 2% for the second quarter of fiscal 2013. 

The Company currently intends to open 58 new stores in fiscal 2013, including 9 stores in Canada and 6 stores in Europe.

A conference call will be held today to discuss first quarter fiscal 2013 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (617)-597-5311 followed by the conference identification code of 51349190. 

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 May 4, 2013 we operated 503 stores, 475 in the United States, 22 in Canada, and 6 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 year ended February 2, 2013 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
			May 4, 2013				% of Sales			April 28, 2012			% of Sales
Net sales			$	148,496			100.0	%		$	129,899		100.0	%
Cost of goods sold				100,524			67.7	%			87,798		67.6	%
Gross profit				47,972			32.3	%			42,101		32.4	%
Selling, general and administrative expenses				43,943			29.6	%			34,839		26.8	%
Operating profit				4,029			2.7	%			7,262		5.6	%
Interest income, net				215			0.1	%			490		0.4	%
Other (expense) income, net				(146	)		0.0	%			17		0.0	%
Earnings before income taxes				4,098			2.8	%			7,769		6.0	%
Provision for income taxes				1,600			1.1	%			3,242		2.5	%
Net income			$	2,498			1.7	%		$	4,527		3.5	%
Basic earnings per share			$	0.08						$	0.15
Diluted earnings per share			$	0.08						$	0.14
Weighted average shares used in computation of earnings per share:
	Basic			29,714							30,779
	Diluted			30,183							31,401

ZUMIEZ INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
			May 4,			February 2,			April 28,
			2013			2013			2012
Assets			(Unaudited)						(Unaudited)
Current assets
Cash and cash equivalents			$	14,661		$	17,579		$	7,962
Marketable securities				82,986			85,593			163,243
Receivables				10,466			9,467			8,700
Income taxes receivable				-			-			3,325
Inventories				90,870			77,598			70,435
Prepaid expenses and other				9,456			9,192			8,295
Deferred tax assets				4,104			3,885			1,837
	Total current assets			212,543			203,314			263,797
Fixed assets, net				117,826			115,474			96,275
Goodwill				62,539			64,576			13,154
Intangible assets, net				19,097			20,480			-
Long-term other assets				4,979			5,254			5,700
	Total long-term assets			204,441			205,784			115,129
	Total assets		$	416,984		$	409,098		$	378,926
Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable			$	36,210		$	16,052		$	36,514
Accrued payroll and payroll taxes				6,745			11,057			7,086
Income taxes payable				971			6,957			-
Deferred rent and tenant allowances				5,252			4,901			4,350
Other liabilities				16,307			18,232			14,452
	Total current liabilities			65,485			57,199			62,402
Long-term deferred rent and tenant allowances				38,863			36,928			34,045
Long-term deferred tax liabilities				5,074			5,544			-
Long-term debt and other liabilities				6,321			6,006			2,060
	Total long-term liabilities			50,258			48,478			36,105
	Total liabilities			115,743			105,677			98,507
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; 30,163 shares issued and outstanding at May 4, 2013, 30,114 shares issued and outstanding at February 2, 2013 and 31,324 shares issued and oustanding at April 28, 2012				110,784			108,360			102,971
Accumulated other comprehensive income				2,588			6,010			191
Retained earnings				187,869			189,051			177,257
	Total shareholders' equity			301,241			303,421			280,419
	Total liabilities and shareholders' equity		$	416,984		$	409,098		$	378,926

ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
			Three Months Ended
			May 4, 2013				April 28, 2012
Cash flows from operating activities:
Net income			$	2,498			$	4,527
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion				6,331				5,275
Deferred taxes				(260	)			(35	)
Stock-based compensation expense				1,513				1,606
Excess tax benefit from stock-based compensation				(529	)			(1,710	)
Other				114				(74	)
Changes in operating assets and liabilities:
	Receivables			(1,068	)			(2,172	)
	Inventories			(13,685	)			(5,355	)
	Prepaid expenses and other			(440	)			(411	)
	Trade accounts payable			19,848				14,297
	Accrued payroll and payroll taxes			(4,272	)			(1,978	)
	Income taxes payable			(5,415	)			(7,443	)
	Deferred rent and tenant allowances			2,324				1,821
	Other liabilities			(2,557	)			(2,549	)
Net cash provided by operating activities				4,402				5,799
Cash flows from investing activities:
Additions to fixed assets				(6,374	)			(8,519	)
Purchases of marketable securities and other investments				(15,137	)			(43,375	)
Sales and maturities of marketable securities and other investments				17,315				37,317
Net cash used in investing activities				(4,196	)			(14,577	)
Cash flows from financing activities:
Payments on long-term debt				(77	)			-
Repurchase of common stock				(3,680	)			-
Proceeds from exercise of stock-based compensation, net of withholding tax payments				382				243
Excess tax benefit from stock-based compensation				529				1,710
Net cash (used in) provided by financing activities				(2,846	)			1,953
Effect of exchange rate changes on cash and cash equivalents				(278	)			8
Net decrease in cash and cash equivalents				(2,918	)			(6,817	)
	Cash and cash equivalents, beginning of period			17,579				14,779
	Cash and cash equivalents, end of period		$	14,661			$	7,962
	Supplemental disclosure on cash flow information:
	Cash paid during the period for income taxes		$	7,266			$	10,705
	Accrual for purchases of fixed assets			3,534				5,840