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Zumiez reports lackluster Quarter Three

 

 

Industry Updates

Zumiez Quarter Three earnings lag despite back-to-school hit

Surfersvillage Global Surf News, 10 December, 2013 - Comparable store sales for the period increased 1.5 percent on top of a comparable store sales increase of 3.7 percent for the 13 weeks ended Oct. 27, 2012. Net income in the third quarter of fiscal 2013 was $11.9 million, or 39 cents per diluted share, compared to net income of $12.7 million, or 40 cents per diluted share, in the third quarter of the prior fiscal year.

"The quarter began with a solid Back-to-School season, and while softer traffic trends returned, we were able to maintain a positive comparable store sales result for the quarter,” said CEO Rick Brooks.

“We believe the investments in our people, merchandise assortment planning and omni-channel capabilities are helping to further distinguish our concept and enabling us to gain market share. We are committed to selling the most compelling mix of brands and products coveted by our customer in a unique, personalized and efficient manner across all channels, and we believe our business is well positioned for the upcoming holiday season and more importantly the long-term."

The results for fiscal 2013 include costs of $1.7 million for charges associated with the acquisition of Blue Tomato and $1.3 million for the conditional settlement of a previously disclosed California class action wage and hour lawsuit, or 7 cents per diluted share in total.

The results for fiscal 2012 included $4.0 million of Blue Tomato acquisition related costs and operations and $500,000 of exit costs associated with the relocation of corporate offices to Lynnwood, WA, or 11 cents per diluted share in total.

Zumiez also disclosed that its comparable store sales increased 1.7 percent for the four-week period ended Nov. 30, 2013 compared to a comparable store sales decrease of 4.2 percent for the four-week period ended Nov. 24, 2012. Total net sales for month were up 16.3 percent to $62.4 million, compared to $53.6 million in the four-weeks ended Nov. 24, 2012.

Results for nine months
Total net sales for the nine months (39 weeks) ended Nov. 2, 2013 increased 11.8 percent to $497.5 million from $445.0 million for the nine months (39 weeks) ended Oct. 27, 2012. Comparable store sales increased 0.7 percent for the 39 weeks ended Nov. 2, 2013 on top of a comparable store sales increase of 8.0 percent for the 39 weeks ended Oct. 27, 2012.

The company reported net income of $19.1 million or 63 cents per diluted share in the first nine months of fiscal 2013 compared to $19.3 million, or 61 cents per diluted share for the comparable period in 2012. Results for the nine months ended Nov. 2, 2013 include approximately $6.3 million, or 16 cents per diluted share, for charges associated with the acquisition of Blue Tomato and the conditional settlement of a California class action wage and hour lawsuit.

Results for the first nine months of fiscal 2012 included approximately $8.9 million, or 22 cents diluted share, of Blue Tomato acquisition related costs and operations and costs associated with the relocation the company's ecommerce fulfillment center to Edwardsville, Kansas and corporate offices to Lynnwood, Washington from Everett, Washington.

At Nov. 2, 2013, the company had cash and current marketable securities of $94.2 million compared to cash and current marketable securities of $98.3 million at Oct. 27, 2012. The decrease in cash and current marketable securities is a result of capital expenditures and stock repurchases, offset by cash generated through operations.
 
New fourth quarter guidance
The company is introducing guidance for the three months ending Feb. 1, 2014. Net sales are projected to be in the range of $230-237 million resulting in net income per diluted share of approximately60 to 66 cents, which includes an estimated $1.7 million, or approximately 5 cents 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 1 to 2 percent. The company is planning to open 59 new stores in fiscal 2013, including 9 in Canada and 6 in Europe.

New share repurchase program
Zumiez also announced that its board of directors approved the repurchase of up to $30 million of its Common Stock effective as of Dec. 4. The repurchases will be made from time to time on the open market at prevailing market prices and are expected to continue through the fiscal year 2014, which will end Jan. 31, 2015, unless the time period is extended or shortened by the Board of Directors. The new repurchase program supersedes the previously approved repurchase program approved on Dec. 17, 2012, which as of Dec. 4, 2013 had $12.5 million of stock repurchase authorization.

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