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Zumiez Inc. Announces Fiscal 2017 Fourth Quarter Results

LYNNWOOD, Wash., March 15, 2018 (GLOBE NEWSWIRE) -- Zumiez Inc. (NASDAQ:ZUMZ) today reported results for the fourth quarter and year ended February 3, 2018.

Total net sales for the fourth quarter ended February 3, 2018 (14 weeks) increased 16.9% to $308.2 million from $263.6 million in the quarter ended January 28, 2017 (13 weeks). Comparable sales for the 14-week period ended February 3, 2018 increased 7.5% compared to the same fourteen-week period ended February 4, 2017. Net income for the fourth quarter of fiscal 2017 was $19.9 million, or $0.80 per diluted share, compared to net income of $18.2 million, or $0.74 per diluted share in the fourth quarter of the prior fiscal year. Fourth-quarter fiscal 2017 results include $3.8 million in net sales related to the recognition of deferred revenue due to changes in our STASH loyalty program estimated redemption rate and $3.4 million of charges in our provision for income taxes due to a valuation allowance against certain deferred tax assets in Europe, partially offset by a $0.5 million benefit related to U.S. federal tax legislation. The combined impact of these items reduced net income and earnings per share by $0.5 million and $0.02 respectively.

Total net sales for fiscal 2017 (53 weeks) increased 10.9% to $927.4 million from $836.3 million in fiscal 2016 (52 weeks). Comparable sales for the fifty-three-week period ended February 3, 2018 increased 5.9% compared to the same fifty-three-week period ended February 4, 2017. Net income in fiscal 2017 increased to $26.8 million, or $1.08 per diluted share, compared to net income in the prior fiscal year of $25.9 million, or $1.04 per diluted share. Fiscal 2017 was also impacted by the deferred revenue and tax items referred to above in our fourth quarter results. The combined impact of these items reduced net income and earnings per share by $0.5 million and $0.02 respectively for fiscal 2017. At February 3, 2018, the Company had cash and current marketable securities of $121.9 million, an increase of 54.7% compared to cash and current marketable securities of $78.8 million at January 28, 2017. The increase in cash and current marketable securities was driven by cash generated through operations partially offset by capital expenditures.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "We concluded 2017 with strong fourth quarter comparable sales performance which came on top of a successful holiday selling period in the prior year fourth quarter. The top-line momentum exhibited by our business underscores the benefits of our differentiated merchandising strategies, integrated sales channels, and best in class customer service. While we are pleased with our recent top-line results, we believe the company is positioned to deliver accelerated earnings growth in 2018 through a combination of positive comparable sales, margin enhancement programs, improved expense leverage, and lower taxes. I am optimistic about Zumiez future prospects and I’m confident that our approach to expanding market share will lead to increased value for our shareholders over the long-term.”

February 2018 Sales

Total net sales for the four-week period ended March 3, 2018 increased 23.2% to $63.4 million, compared to $51.5 million for the four-week period ended February 25, 2017. The Company's comparable sales increased 9.2% for the four-week period ended March 3, 2018 compared to a comparable sales decrease of 3.1% for the four-week period ended February 25, 2017.

Fiscal 2018 First Quarter Outlook

The Company is introducing guidance for the three months ending May 5, 2018. Net sales are projected to be in the range of $198 million to $202 million including anticipated comparable sales growth of between 4.0% and 6.0%. Consolidated operating margins are expected to be between negative 2.6% and negative 1.7% resulting in a net loss per share of approximately $0.18 to $0.13. The Company currently intends to open approximately 13 new stores in fiscal 2018, including up to 6 stores in the United States, 5 stores in Europe and 2 stores in Australia.

A conference call will be held today to discuss fourth quarter fiscal 2017 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 7259038.

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 March 3, 2018 we operated 698 stores, including 607 in the United States, 50 in Canada, 34 in Europe and 7 in Australia. We operate under the names Zumiez, Blue Tomato and Fast Times. Additionally, we operate ecommerce web sites at zumiez.com, 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 quarterly report on Form 10-Q for the quarter ended December 4, 2017 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
February 3, % of January 28, % of
2018 Sales 2017 Sales
(Unaudited)
Net sales $ 308,245 100.0% $ 263,635 100.0%
Cost of goods sold 193,583 62.8% 169,613 64.3%
Gross profit 114,662 37.2% 94,022 35.7%
Selling, general and administrative expenses 77,714 25.2% 66,115 25.0%
Operating profit 36,948 12.0% 27,907 10.7%
Interest income, net 211 0.1% 11 0.0%
Other (expense) income, net (53) 0.0% 195 0.1%
Earnings before income taxes 37,106 12.1% 28,113 10.8%
Provision for income taxes 17,170 5.6% 9,929 3.8%
Net income $ 19,936 6.5% $ 18,184 7.0%
Basic earnings per share $ 0.81 $ 0.74
Diluted earnings per share $ 0.80 $ 0.74
Weighted average shares used in computation of earnings per share:
Basic 24,729 24,506
Diluted 24,953 24,691


ZUMIEZ INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)

Fiscal Year Ended
February 3, % of January 28, % of
2018 Sales 2017 Sales
(Unaudited)
Net sales $ 927,401 100.0% $ 836,268 100.0%
Cost of goods sold 617,527 66.6% 561,266 67.1%
Gross profit 309,874 33.4% 275,002 32.9%
Selling, general and administrative expenses 261,114 28.2% 235,259 28.1%
Operating profit 48,760 5.2% 39,743 4.8%
Interest income, net 495 0.0% 32 0.0%
Other (expense) income, net (852) 0.0% 449 0.0%
Earnings before income taxes 48,403 5.2% 40,224 4.8%
Provision for income taxes 21,601 2.3% 14,320 1.7%
Net income $ 26,802 2.9% $ 25,904 3.1%
Basic earnings per share $ 1.09 $ 1.05
Diluted earnings per share $ 1.08 $ 1.04
Weighted average shares used in computation of earnings per share:
Basic 24,679 24,727
Diluted 24,878 24,908


ZUMIEZ INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)

February 3,
2018
January 28,
2017
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 24,041 $ 20,247
Marketable securities 97,864 58,579
Receivables 17,027 12,538
Inventories 125,826 106,924
Prepaid expenses and other current assets 14,405 13,075
Total current assets 279,163 211,363
Fixed assets, net 128,852 129,651
Goodwill 62,912 56,001
Intangible assets, net 16,696 14,610
Deferred tax assets, net 4,174 7,041
Other long-term assets 7,713 8,017
Total long-term assets 220,347 215,320
Total assets $ 499,510 $ 426,683
Liabilities and Shareholders’ Equity
Current liabilities
Trade accounts payable $ 37,861 $ 25,529
Accrued payroll and payroll taxes 20,650 14,914
Income taxes payable 5,796 1,866
Deferred rent and tenant allowances 8,073 8,344
Other liabilities 26,867 22,944
Total current liabilities 99,247 73,597
Long-term deferred rent and tenant allowances 39,275 41,066
Other long-term liabilities 5,073 4,969
Total long-term liabilities 44,348 46,035
Total liabilities 143,595 119,632
Shareholders’ equity
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding
Common stock, no par value, 50,000 shares authorized; 25,249 shares issued and outstanding at February 3, 2018 and 24,945 shares issued and outstanding at January 28, 2017 146,523 140,984
Accumulated other comprehensive income (loss) 35 (16,488)
Retained earnings 209,357 182,555
Total shareholders’ equity 355,915 307,051
Total liabilities and shareholders’ equity $ 499,510 $ 426,683


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

Fiscal Year Ended
February 3,
2018
January 28,
2017
(Unaudited)
Cash flows from operating activities:
Net income $ 26,802 $ 25,904
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 27,288 27,916
Deferred taxes 3,282 (2,555)
Stock-based compensation expense 5,032 4,578
Other 2,344 1,564
Changes in operating assets and liabilities:
Receivables (3,216) 413
Inventories (14,848) (7,984)
Prepaid expenses and other current assets (960) (1,793)
Trade accounts payable 11,584 3,261
Accrued payroll and payroll taxes 5,359 2,313
Income taxes payable 3,575 (3,713)
Deferred rent and tenant allowances (2,494) (2,673)
Other liabilities 1,766 1,227
Net cash provided by operating activities 65,514 48,458
Cash flows from investing activities:
Additions to fixed assets (24,062) (20,400)
Acquisitions, net of cash acquired (5,395)
Purchases of marketable securities and other investments (129,036) (86,826)
Sales and maturities of marketable securities and other investments 89,128 61,106
Net cash used in investing activities (63,970) (51,515)
Cash flows from financing activities:
Proceeds from revolving credit facilities 21,466 23,079
Payments on revolving credit facilities (20,700) (22,429)
Repurchase of common stock (21,607)
Proceeds from issuance and exercise of stock-based awards 698 1,014
Payments for tax withholdings on equity awards (191) (134)
Net cash provided by (used in) financing activities 1,273 (20,077)
Effect of exchange rate changes on cash and cash equivalents 977 218
Net increase (decrease) in cash and cash equivalents 3,794 (22,916)
Cash and cash equivalents, beginning of period 20,247 43,163
Cash and cash equivalents, end of period $ 24,041 $ 20,247
Supplemental disclosure on cash flow information:
Cash paid during the period for income taxes $ 14,851 $ 20,462
Accrual for purchases of fixed assets 1,300 1,191
Accrual for repurchase of common stock

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

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

Source:Zumiez Inc