Zumiez Inc. Announces Fiscal 2016 Fourth Quarter and Full Year Results

LYNNWOOD, WA--(Marketwired - Mar 9, 2017) -  Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the fourth quarter and fiscal year ended January 28, 2017.

Total net sales for the fourth quarter ended January 28, 2017 (13 weeks) increased 8.7% to $263.6 million from $242.4 million in the quarter ended January 30, 2016 (13 weeks). Comparable sales for the 13-week period ended January 28, 2017 increased 5.1% compared to a 9.5% decrease for the 13-week period ended January 30, 2016. Net income in the fourth quarter of fiscal 2016 increased 38.3% to $18.2 million, or $0.74 per diluted share, from net income of $13.1 million, or $0.50 per diluted share, in the fourth quarter of fiscal 2015. The results for fiscal 2015 include charges of $1.2 million, or approximately $0.03 per diluted share for exit costs associated with the shutdown of the Company's fulfillment facility in Edwardsville, Kansas.

Total net sales for fiscal 2016 (52 weeks) increased 4.0% to $836.3 million from $804.2 million in fiscal 2015 (52 weeks). Comparable sales for the 52-week period ended January 28, 2017 decreased 0.2% compared to a 5.3% decrease for the 52-week period ended January 30, 2016. Net income in fiscal 2016 decreased 10.0% to $25.9 million, or $1.04 per diluted share compared to net income in the prior fiscal year of $28.8 million, or $1.04 per diluted share. Results for the fiscal year 2015 include approximately $1.5 million, or $0.04 per diluted share, for charges associated with the acquisition of Blue Tomato, and $1.2 million, or approximately $0.03 per diluted share for exit costs associated with the shutdown of the Company's fulfillment facility in Edwardsville, Kansas. 

Cash and Current Marketable Securities
At January 28, 2017, the Company had cash and current marketable securities of $78.8 million, compared to cash and current marketable securities of $75.6 million at January 30, 2016. The increase in cash and current marketable securities was driven by cash generated through operations of $48.5 million partially offset by stock repurchases of $21.6 million and capital expenditures of $20.4 million.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "Our fourth quarter earnings performance exceeded expectations driven by efficiencies realized as we continued to execute on our omni-channel and localization efforts combined with a more favorable tax rate. The investments we've made in our merchandise offering, sales teams and omnichannel capabilities generated solid top-line momentum during the holiday season and continue to further distinguish Zumiez, Blue Tomato and Fast Times from the competition. We are pleased with our finish to the year especially in light of the headwinds facing the retail industry. Looking ahead, our primary focus remains on executing the strategic multi-year growth objectives that we believe will deliver increased profitability and greater shareholder value over the long-term. We believe that it is this focus that will allow us to successfully navigate through the current environment, including the impact that certain events are having on our monthly sales cadence in early 2017."

February 2017 Sales
Total net sales for the four-week period ended February 25, 2017 decreased 0.8% to $51.5 million, compared to $51.9 million for the four-week period ended February 27, 2016. The Company's comparable sales decreased 3.1% for the four-week period ended February 25, 2017 compared with a comparable sales decrease of 8.6% for the four-week period ended February 27, 2016. 

Fiscal 2017 First Quarter Outlook
The Company is introducing guidance for the three months ending April 29, 2017. Net sales are projected to be in the range of $178 million to $182 million resulting in a net loss per share of approximately -$0.17 to -$0.21. This guidance is based upon anticipated comparable sales growth of between 0% and positive 2% for the first quarter of fiscal 2017 compared to the prior year. The Company currently intends to open approximately 18 new stores in fiscal 2017, including up to 3 stores in Canada, 4 stores in Europe and 2 stores in Australia.

A conference call will be held today to discuss fourth quarter and fiscal 2016 year-end 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 80527207.

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 February 25, 2017 we operated 684 stores, including 602 in the United States, 48 in Canada, and 29 in Europe and 5 in Australia. We operate under the names Zumiez, Blue Tomato and Fast Times. Additionally, we operate ecommerce web sites at www.zumiez.com, www.blue-tomato.com and www.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 quarterly report on Form 10-Q for the quarter ended October 29, 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.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
			Three Months Ended
			January 28, 2017			% of Sales			January 30, 2016				% of Sales
Net sales			$	263,635		100.0	%		$	242,434			100.0	%
Cost of goods sold				169,613		64.3	%			158,177			65.2	%
Gross profit				94,022		35.7	%			84,257			34.8	%
Selling, general and administrative expenses				66,115		25.0	%			62,754			25.9	%
Operating profit				27,907		10.7	%			21,503			8.9	%
Interest income, net				11		0.0	%			90			0.0	%
Other income (expense), net				195		0.1	%			(606	)		(0.2	%)
Earnings before income taxes				28,113		10.8	%			20,987			8.7	%
Provision for income taxes				9,929		3.8	%			7,838			3.2	%
Net income			$	18,184		7.0	%		$	13,149			5.5	%
Basic earnings per share			$	0.74					$	0.50
Diluted earnings per share			$	0.74					$	0.50
Weighted average shares used in computation of earnings per share:
	Basic			24,506						26,071
	Diluted			24,691						26,200

ZUMIEZ INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
			Twelve Months Ended
			January 28, 2017			% of Sales			January 30, 2016				% of Sales
			(unaudited)
Net sales			$	836,268		100.0	%		$	804,183			100.0	%
Cost of goods sold				561,266		67.1	%			535,559			66.6	%
Gross profit				275,002		32.9	%			268,624			33.4	%
Selling, general and administrative expenses				235,259		28.1	%			222,459			27.7	%
Operating profit				39,743		4.8	%			46,165			5.7	%
Interest income, net				32		0.0	%			529			0.1	%
Other income (expense), net				449		0.0	%			(833	)		(0.1	%)
Earnings before income taxes				40,224		4.8	%			45,861			5.7	%
Provision for income taxes				14,320		1.7	%			17,076			2.1	%
Net income			$	25,904		3.1	%		$	28,785			3.6	%
Basic earnings per share			$	1.05					$	1.05
Diluted earnings per share			$	1.04					$	1.04
Weighted average shares used in computation of earnings per share:
	Basic			24,727						27,497
	Diluted			24,908						27,673

ZUMIEZ INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
			January 28,				January 30,
			2017				2016
Assets
Current assets
Cash and cash equivalents			$	20,247			$	43,163
Marketable securities				58,579				32,391
Receivables				12,538				12,840
Inventories				106,924				98,299
Prepaid expenses and other current assets				13,075				12,204
	Total current assets			211,363				198,897
Fixed assets, net				129,651				137,233
Goodwill				56,001				54,245
Intangible assets, net				14,610				11,766
Deferred tax assets, net				7,041				4,634
Other long-term assets				8,017				7,920
	Total long-term assets			215,320				215,798
	Total assets		$	426,683			$	414,695
Liabilities and Shareholders' Equity
Current liabilities
Trade accounts payable			$	25,529			$	21,919
Accrued payroll and payroll taxes				14,914				12,466
Income taxes payable				1,866				4,066
Deferred rent and tenant allowances				8,344				8,116
Other liabilities				22,944				22,575
	Total current liabilities			73,597				69,142
Long-term deferred rent and tenant allowances				41,066				43,779
Other long-term liabilities				4,969				4,817
	Total long-term liabilities			46,035				48,596
	Total liabilities			119,632				117,738
Shareholders' equity
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding				-				-
Common stock, no par value, 50,000 shares authorized; 24,945 shares issued and outstanding at January 28, 2017 and 25,708 shares issued and outstanding at January 30, 2016				140,984				135,013
Accumulated other comprehensiv loss				(16,488	)			(15,247	)
Retained earnings				182,555				177,191
	Total shareholders' equity			307,051				296,957
	Total liabilities and shareholders' equity		$	426,683			$	414,695

ZUMIEZ INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
			Fiscal Year Ended
			January 28, 2017				January 30, 2016
			(unaudited)				(unaudited)
Cash flows from operating activities:
Net income			$	25,904			$	28,785
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion				27,916				30,410
Deferred taxes				(2,555	)			(2,698	)
Stock-based compensation expense				4,578				4,996
Excess tax benefit from stock-based compensation				(3	)			(714	)
Other				1,564				4,009
Changes in operating assets and liabilities:
	Receivables			413				(1,184	)
	Inventories			(7,984	)			(5,953	)
	Prepaid expenses and other current assets			(1,793	)			(133	)
	Trade accounts payable			3,261				(9,103	)
	Accrued payroll and payroll taxes			2,313				(483	)
	Income taxes payable			(3,713	)			1
	Deferred rent and tenant allowances			(2,673	)			2,613
	Other liabilities			1,227				(1,939	)
Net cash provided by operating activities				48,455				48,607		`
Cash flows from investing activities:
Additions to fixed assets				(20,400	)			(34,834	)
Acquisitions, net of cash acquired				(5,395	)			-
Purchases of marketable securities and other investments				(86,826	)			(59,286	)
Sales and maturities of marketable securities and other investments				61,106				158,850
Net cash (used in) provided by investing activities				(51,515	)			64,730
Cash flows from financing activities:
Proceeds from revolving credit facilities				23,079				43,173
Payments on revolving credit facilities				(22,429	)			(43,255	)
Repurchase of common stock				(21,607	)			(92,235	)
Proceeds from exercise of stock-based compensation, net of withholding tax				880				845
Excess tax benefit from stock-based compensation				3				714
Net cash used in financing activities				(20,074	)			(90,758	)
Effect of exchange rate changes on cash and cash equivalents				218				(278	)
Net (decrease) increase in cash and cash equivalents				(22,916	)			22,301
Cash and cash equivalents, beginning of period				43,163				20,862
Cash and cash equivalents, end of period			$	20,247			$	43,163
Supplemental disclosure on cash flow information:
Cash paid during the period for income taxes			$	20,462			$	19,630
Accrual for purchases of fixed assets				1,191				1,166
Accrual for repurchase of common stock				-				1,067