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8-K - FORM 8-K - Zumiez Incf8k_060420.htm

EXHIBIT 99.1

Zumiez Inc. Announces Fiscal 2020 First Quarter Results

Company Ended First Quarter with $217 Million in Cash and Marketable Securities and No Debt 
Company Provides COVID-19 Business Update

LYNNWOOD, Wash., June 04, 2020 (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 first quarter ended May 2, 2020.

Total net sales for the first quarter ended May 2, 2020 (13 weeks) decreased 35.3% to $137.8 million from $212.9 million in the first quarter ended May 4, 2019 (13 weeks).  Net loss in the first quarter of fiscal 2020 was $21.1 million, or $(0.84) per diluted share, compared to net income of $0.8 million, or $0.03 per diluted share, in the first quarter of the prior fiscal year. Included in this amount is $1.5 million or $0.5 cents associated with the impairment of our right of use assets and fixed assets.

At May 2, 2020, cash and current marketable securities increased $49.2 million or 29.3% to $217.2 million, compared to cash and current marketable securities of $168.0 million at May 4, 2019. The increase in cash and current marketable securities was driven by cash generated through operations throughout 2019 partially offset by capital expenditures and $13.4 million of share repurchases through the company's stock buyback program prior to our stores closing due to COVID-19. We ended the quarter with no debt. 

“We came into fiscal 2020 in a strong financial position and the new year was off to a good start with first quarter sales and earnings tracking ahead of expectations through early-March,” commented Rick Brooks, Chief Executive Officer of Zumiez Inc. “Following the outbreak of COVID-19 we closed all of our stores in accordance with state and local guidelines to protect the health and safety of our customers, employees and the communities in which we operate.  We immediately shifted our focus to increasing financial flexibility and directing resources towards continuing to engage and service our customers through our digital platforms. We took many difficult actions, but remained committed to our full time employees across the organization who have helped us create the strong culture and brand that has driven our success.  We have made this investment throughout the closures and we believe we are already seeing a return on our investment in our ability to connect with our communities during closure and open stores quickly and safely as government guidelines allow. With a history of managing the capital of the organization and quickly adapting to changing environments, we are confident in Zumiez’s ability to weather this crisis and emerge well positioned to further expand our market share and resume our long track record of creating value for our shareholders.”

Actions Taken In Response to COVID-19
As part of the COVID-19 response, the Company has taken the following actions to preserve financial liquidity and financial flexibility:

  • Suspended hiring, laid off virtually all part-time staff, eliminated substantially all planned fiscal 2020 bonuses and delayed majority of merit raises,
  • Lowered operating costs, including travel, marketing and other non-essential items,
  • Reduced capital spend by delaying or cancelling select projects,
  • Reduced planned inventory receipts by cancelling or delaying orders,
  • Suspended rent payments while negotiating rent relief with landlords and delayed or canceled planned new store openings,
  • Extended payment terms for both merchandise and non-merchandise vendor invoices, and
  • Paused share repurchases.

Store Re-Opening Update
Late in the first quarter the Company began reopening some stores with most at reduced hours in accordance with governmental regulations.  The company ended the first quarter with 65 or 9% of our 719 stores open. We ended the period ending May 30, 2020 with 493 open stores consisting of 432 Zumiez stores in North America, 49 Blue Tomato stores in Europe and 12 Fast Times stores in Australia, representing 69% of our total stores. All stores are operating under enhanced measures to ensure the health and safety of employees and customers, including

  • requiring our employees to wear masks,
  • providing hand sanitizer in multiple locations throughout the store,
  • implementing enhanced cleaning and sanitation protocols,
  • reconfiguring sales floors to promote physical distancing, and
  • modifying employee and customer interactions to limit contact.

May 2020 Sales
The Company's total net sales decreased 8.6% for the four-week period ended May 30, 2020 compared to an increase of 2.6% for the four-week period ended June 1, 2019 primarily based on closures continuing into May with some areas not expected to open until June, offset by better than expected results in stores open and our e-commerce demand.  Comparable store sales for locations opened in May as well as our e-commerce traffic increased 79.6%.  By channel, our open store comparable sales were 38.5% and our e-commerce sales were 181.6% in May. 

Outlook
Due to the fast-moving nature of this situation and the uncertainty of impacts on revenue and costs, the Company previously withdrew its full year fiscal 2020 guidance. The Company is not providing an updated outlook at this time for the second quarter or the year.

A conference call will be held today to discuss first quarter fiscal 2020 results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (570) 990-9934 followed by the conference identification code of 7543829.

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 May 30, 2020, we operated 719 stores, including 606 in the United States, 52 in Canada, 49 in Europe and 12 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 February 2, 2019 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 INCOME (LOSS)
(In thousands, except per share amounts)
(Unaudited)

 Three Months Ended
 May 2, 2020 % of Sales  May 4, 2019 % of Sales
Net sales$137,772  100.0% $212,928 100.0%
Cost of goods sold 114,036  82.8%  146,464 68.8%
Gross profit 23,736  17.2%  66,464 31.2%
Selling, general and administrative expenses 51,584  37.4%  65,496 30.7%
Operating (loss) profit (27,848) (20.2%)  968 0.5%
Interest income, net 1,074  0.8%  852 0.4%
Other income, net 106  0.0%  153 0.0%
(Loss) earnings before income taxes (26,668) (19.4%)  1,973 0.9%
Provision for income taxes (5,567) (4.1%)  1,180 0.5%
Net (loss) income$(21,101) (15.3%) $793 0.4%
Basic (loss) earnings per share$(0.84)   $0.03  
Diluted (loss) earnings per share$(0.84)   $0.03  
Weighted average shares used in computation of (loss) earnings per share:       
Basic 25,040     25,090  
Diluted 25,040     25,351  
          

ZUMIEZ INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

 May 2, 2020 February 1, 2020 May 4, 2019
 (Unaudited)   (Unaudited)
Assets           
Current assets           
Cash and cash equivalents$63,731  $52,428  $60,616 
Marketable securities 153,494   198,768   107,364 
Receivables 16,837   16,841   15,083 
Inventories 136,354   135,095   135,959 
Prepaid expenses and other current assets 5,179   9,456   9,616 
Total current assets 375,595   412,588   328,638 
Fixed assets, net 109,573   113,051   116,830 
Operating lease right-of-use assets 285,416   301,784   301,980 
Goodwill 56,706   57,099   57,682 
Intangible assets, net 14,366   14,564   14,852 
Deferred tax assets, net 11,206   6,303   6,312 
Other long-term assets 8,571   8,869   8,442 
Total long-term assets 485,838   501,670   506,098 
Total assets$861,433  $914,258  $834,736 
      
Liabilities and Shareholders’ Equity     
Current liabilities     
Trade accounts payable$49,497  $47,787  $54,454 
Accrued payroll and payroll taxes 13,173   23,653   15,302 
Income taxes payable 4,430   4,686   65 
Operating lease liabilities 70,584   61,800   54,469 
Other liabilities 19,197   21,784   19,675 
Total current liabilities 156,881   159,710   143,965 
Long-term operating lease liabilities 269,608   284,717   293,375 
Other long-term liabilities 3,790   3,745   3,436 
Total long-term liabilities 273,398   288,462   296,811 
Total liabilities 430,279   448,172   440,776 
      
Shareholders’ equity     
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding        
Common stock, no par value, 50,000 shares authorized; 25,431 shares issued and outstanding at May 2, 2020, 25,828 shares issued and outstanding at February 1, 2020 and 25,741 shares issued and outstanding at May 4, 2019 163,349   161,458   155,104 
Accumulated other comprehensive loss (14,896)  (12,591)  (12,275)
Retained earnings 282,701   317,219   251,131 
Total shareholders’ equity 431,154   466,086   393,960 
Total liabilities and shareholders’ equity$861,433  $914,258  $834,736 
            

ZUMIEZ INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 Three Months Ended
 May 2, 2020 May 4, 2019
Cash flows from operating activities:   
Net (loss) income$(21,101) $793 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation, amortization and accretion 6,096   6,263 
Noncash lease expense 14,996   13,371 
Deferred taxes (4,856)  1,249 
Stock-based compensation expense 1,556   1,693 
Impairment of long-lived assets 1,514   123 
Other (173)  101 
Changes in operating assets and liabilities:   
Receivables 1,918   4,708 
Inventories (2,031)  (7,540)
Prepaid expenses and other assets 4,354   (167)
Trade accounts payable 1,074   19,568 
Accrued payroll and payroll taxes (10,423)  (5,636)
Income taxes payable (1,078)  (7,104)
Operating lease liabilities (6,948)  (13,770)
Other liabilities (2,440)  (3,790)
Net cash (used in) provided by operating activities (17,542)  9,862 
Cash flows from investing activities:   
Additions to fixed assets (2,504)  (3,331)
Purchases of marketable securities and other investments (9,106)  (33,385)
Sales and maturities of marketable securities and other investments 54,344   39,001 
Net cash provided by investing activities 42,734   2,285 
Cash flows from financing activities:   
Proceeds from issuance and exercise of stock-based awards 428   583 
Payments for tax withholdings on equity awards (93)  (238)
Common stock repurchased (13,417)   
Net cash (used in) provided by financing activities (13,082)  345 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash (853)  (466)
Net increase in cash, cash equivalents, and restricted cash 11,257   12,026 
Cash, cash equivalents, and restricted cash, beginning of period 58,991   54,271 
Cash, cash equivalents, and restricted cash, end of period$70,248  $66,297 
Supplemental disclosure on cash flow information:   
Cash paid during the period for income taxes$343  $7,038 
Accrual for purchases of fixed assets 1,976   1,583 

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

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