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Zumiez reporting rise in profits for Quarter Four

 

 

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Quarter Four profits rose 17 percent

Surfersvillage Global Surf News, 18 March, 2014 - Zumiez Inc. reported total net sales for the fourth quarter ended Feb. 1 increased 1.1 percent to $226.8 million from $224.4 million in the quarter ended February 2, 2013 (14 weeks). Comparable store sales for the 13-week period ended February 1, 2014 decreased 2.2 percent compared to a 1.0 percent decrease for the 14-week period ended February 2, 2013.

Net income in the fourth quarter of fiscal 2013 increased 17.3 percent to $26.9 million, or $0.89 per diluted share, from net income of $22.9 million, or $0.74 per diluted share, in the fourth quarter of the prior fiscal year. The results for fiscal 2013 include a $5.8 million benefit, or approximately $0.16 per diluted share, for the reversal of contingent earn-out accruals associated with the acquisition of Blue Tomato, a $3.3 million benefit, or approximately $0.07 per diluted share, for the correction of an error related to the accounting for rent expenses, and a $0.6 million expense, or approximately $0.02 per diluted share, for the amortization of intangible assets associated with the Blue Tomato acquisition. Also included in the fiscal 2013 fourth quarter results is a benefit to the provision for income taxes of $0.8 million, or approximately $0.03 per diluted share, for the release of a valuation allowance of net operating losses in foreign subsidiaries. The results for fiscal 2012 include $0.5 million of Blue Tomato acquisition related costs and operations, or $0.01 per diluted share in total.

Full Year Results

Total net sales for fiscal 2013 (52 weeks) increased 8.2 percent to $724.3 million from $669.4 million in fiscal 2012 (53 weeks). Comparable store sales for the 52-week period ended February 1, 2014 decreased 0.3 percent compared to a 5.0 percent increase for the 53-week period ended February 2, 2013. Net income in fiscal 2013 increased 9.0 percent to $45.9 million, or $1.52 per diluted share compared to net income in the prior fiscal year of $42.2 million, or $1.35 per diluted share.

Results for the fiscal year 2013 include a benefit of $2.6 million, or approximately $0.08 per diluted share, for the reversal of contingent earn-out accruals associated with the acquisition of Blue Tomato, a $2.7 million benefit, or approximately $0.06 per diluted share, for the correction of an error related to the accounting for rent expenses, a $2.3 million expense, or approximately $0.06 per diluted share, for the amortization of intangible assets associated with the Blue Tomato acquisition, and $1.3 million, or approximately $0.03 per diluted share, for costs associated with the conditional settlement of a California class action wage and hour lawsuit.

Also included in the fiscal 2013 results is a benefit to the provision for income taxes of $0.4 million, or approximately $0.01 per diluted share, for the release of a valuation allowance to net operating losses in foreign subsidiaries. Results for the fiscal year 2012 included approximately $7.3 million, or $0.19 per diluted share, of Blue Tomato acquisition related costs and operations and approximately $2.1 million, or $0.04 per diluted share, of costs associated with the relocation the Company's ecommerce fulfillment center to Edwardsville, Kansas and corporate offices to Lynnwood, Washington from Everett, Washington.

Share Repurchase Program

During the fourth quarter 2013 and through March 1, 2014, the Company has repurchased approximately 1.1 million shares of its common stock, at an average cost per share of $22.52, for a total of $24.7 million, which includes 0.7 million shares purchased in the fourth quarter of fiscal 2013 for a total of $15.4 million, and 0.4 million shares purchased in the February period of fiscal 2014 for a total of $9.3 million. As of March 1, 2014, the Company had $5.3 million authorized repurchase funds remaining under its $30 million stock repurchase program announced in December 2013.

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The company is also announcing that, effective March 12, 2014, the Board of Directors of Zumiez Inc. has approved the repurchase of up to an additional $30 million of its Common Stock. The repurchases will be made from time to time on the open market at prevailing market prices and is expected to continue through the fiscal year 2014 that will end on January 31, 2015, unless the time period is extended or shortened by the Board of Directors. The new purchase program is in addition to our existing stock repurchase program that was authorized in December 2013 and will begin once the previously approved repurchase program has been completed.

Cash and Current Marketable Securities 

At February 1, 2014, the Company had cash and current marketable securities of $117.2 million, compared to cash and current marketable securities of $103.2 million at February 2, 2013. The increase in cash and current marketable securities is a result of cash generated through operations, partially offset capital expenditures and stock repurchases.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, "The fourth quarter proved to be more challenging than we expected both domestically and abroad. Weak mall traffic in December and January created a highly promotional retail environment that pressured our sales and deleveraged our cost structure. The steps we have taken to broaden our revenue base, including evolving our digital capabilities, investing in our team and expanding into Europe, have pressured our operating margin in the face of ongoing consumer headwinds, but we believe will fortify our long-term earnings growth. We will continue to pursue growth strategies that leverage our core competencies while further diversifying our business toward high-growth and high-return opportunities."

Fiscal 2014 First Quarter Outlook

The Company is introducing guidance for the three months ending May 3, 2014. Net sales are projected to be in the range of $156 to $160 million resulting in a net loss per diluted share of approximately $0.02 to net income per diluted share of approximately $0.03, which includes $0.6 million, or approximately $0.02 per diluted share, for the amortization of intangible assets associated with Blue Tomato. This guidance is based on an anticipated comparable sales decrease in the low single digit range for the first quarter of fiscal 2014. 

The Company currently intends to open approximately 55 new stores in fiscal 2014, including up to 7 stores in Canada and 5 stores in Europe.

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