GlobeNewswire Inc | Sep 10, 2020 04:05PM EDT

September 10, 2020

Second Quarter 2020 Sales Increased 9.6% to $250.4 MillionSecond Quarter 2020 Diluted Earnings Per Share Increased 184.4% to $1.01Cash and Current Marketable Securities Increased 58.6% to $299.1 Million

LYNNWOOD, Wash., Sept. 10, 2020 (GLOBE NEWSWIRE) -- Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the second quarter ended August 1, 2020.

Total net sales for the second quarter ended August 1, 2020 (13 weeks) increased 9.6% to $250.4 million from $228.4 million in the quarter ended August 3, 2019 (13 weeks). Due to store closures, stores were open for 73.4% of the second quarter of 2020 measured as the total number of store days open in the quarter divided by the total number of store days available. For the stores that were open, comparable sales for the thirteen weeks ended August 1, 2020 increased 37.3% compared to the same period a year ago. Net income for the second quarter of fiscal 2020 was $25.4 million, or $1.01 per diluted share, compared to net income of $9.0 million, or $0.36 per diluted share in the second quarter of the prior fiscal year.

Total net sales for the six months (26 weeks) ended August 1, 2020 decreased 12.1% to $388.2 million from $441.4 million reported for the six months (26 weeks) ended August 3, 2019. Net income for the first six months of fiscal 2020 was $4.3 million, or $0.17 per diluted share, compared to net income for the first six months of the prior fiscal year of $9.8 million, or $0.39 per diluted share.

At August 1, 2020, the Company had cash and current marketable securities of $299.1 million compared to cash and current marketable securities of $188.6 million at August 3, 2019. The increase in cash and current marketable securities was driven by cash generated through operations including deferment of $41.5 million composed of landlord payments, lower inventory levels, extended vendor terms and deferred payroll tax payments as well as net income improvements related to abatements, credits and expense reductions. This increase was partially offset by $13.4 million of share repurchases through the Companys stock buyback program prior to our stores closing due to COVID-19 and other planned capital expenditures.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, Our teams did a remarkable job serving our customers and delivering these second quarter results during the most challenging operating environment in the Companys history. As an organization, we successfully executed a quick and safe reopening of the majority of our stores in the quarter, while continuing to lean heavily on our omni platforms to fulfill strong demand for our distinct merchandise offering. Our recent performance amidst the pandemic underscores the strength of our brand and culture and speaks to the ability of our business model to adapt to changes in purchasing behavior while continuing to drive strong earnings growth and cash generation. With close to $300 million in cash and no debt on our balance sheet, we are set up well to navigate whatever headwinds arise over the coming quarters and emerge from this crisis positioned to accelerate market share in each of our geographies.

Third Quarter-To-Date salesThe Company is providing quarter-to-date sales through Labor Day, Monday September 7th, as this time period is more comparable to the prior year given the shift in the Labor Day holiday. Total third quarter-to-date sales for the 37 days ending September 7, 2020 were down approximately 14%, compared with the same 37 day time period in the prior year ended September 9, 2019. Total comparable sales for the 37 day period ending September 7, 2020 were down 5.1%. By channel, open store comparable sales decreased 10.7% and e-commerce sales increased 27.4%.

Store Re-Opening UpdateThe Company ended the second quarter with 645 or 89.6% of our 720 stores open with the primary closures being in California and Australia due to government mandates. As of Labor Day September 7, 2020, 35 stores or 4.9% of the store base remained closed. 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.

OutlookDue 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 third quarter or the year.

Conference Call Information A conference call will be held today to discuss second quarter fiscal 2020 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 8269508.

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 August 29, 2020, we operated 720 stores, including 607 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 Companys annual report on Form 10-K for the fiscal year ended February 1, 2020 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.

Company Contact:Darin WhiteDirector of Finance & Investor RelationsZumiez Inc.(425) 551-1500, ext. 1337

Investor Contact:ICRBrendon Frey (203) 682-8200



ZUMIEZINC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share amounts) (Unaudited)

Three MonthsEnded August 1, % of August % of 2020 Sales 3, 2019 SalesNet sales $ 250,392 100.0 % $ 228,425 100.0 % Cost of goods sold 159,542 63.7 % 151,229 66.2 % Gross profit 90,850 36.3 % 77,196 33.8 % Selling, general and 57,738 23.1 % 65,523 28.7 % administrative expensesOperating profit 33,112 13.2 % 11,673 5.1 % Interest income, net 794 0.3 % 798 0.4 % Other income, net 392 0.2 % 559 0.2 % Earnings before income taxes 34,298 13.7 % 13,030 5.7 % Provision for income taxes 8,906 3.6 % 4,005 1.7 % Net income $ 25,392 10.1 % $ 9,025 4.0 % Basic earnings per share $ 1.02 $ 0.36 Diluted earnings per share $ 1.01 $ 0.36 Weighted average shares usedin computation of earnings per share:Basic 24,837 25,199 Diluted 25,128 25,402 Six Months Ended August 1, % of August % of 2020 Sales 3, 2019 SalesNet sales $ 388,164 100.0 % 441,353 100.0 % Cost of goods sold 273,578 70.5 % 297,693 67.5 % Gross profit 114,586 29.5 % 143,660 32.5 % Selling, general and 109,322 28.1 % 131,019 29.6 % administrative expensesOperating profit 5,264 1.4 % 12,641 2.9 % Interest income, net 1,868 0.5 % 1,650 0.4 % Other income, net 498 0.1 % 711 0.1 % Earnings before income taxes 7,630 2.0 % 15,002 3.4 % Provision for income taxes 3,339 0.9 % 5,184 1.2 % Net income $ 4,291 1.1 % 9,818 2.2 % Basic earnings per share $ 0.17 0.39 Diluted earnings per share $ 0.17 0.39 Weighted average shares usedin computation of earnings per share:Basic 24,938 25,144 Diluted 25,277 25,395

ZUMIEZ INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)

August 1, February 1, August 3, 2020 2020 2019 (Unaudited) (Unaudited)Assets Current assets Cash and cash equivalents $ 133,905 $ 52,428 $ 63,846 Marketable securities 165,227 198,768 124,803 Receivables 24,811 16,841 21,615 Inventories 126,701 135,095 151,079 Prepaid expenses and other current 10,560 9,456 11,789 assetsTotal current assets 461,204 412,588 373,132 Fixed assets, net 106,151 113,051 116,219 Operating lease right-of-use assets 277,322 301,784 306,056 Goodwill 60,225 57,099 57,306 Intangible assets, net 15,577 14,564 14,672 Deferred tax assets, net 7,080 6,303 6,502 Other long-term assets 9,337 8,869 8,374 Total long-term assets 475,692 501,670 509,129 Total assets $ 936,896 $ 914,258 $ 882,261 Liabilities and Shareholders? Equity Current liabilities Trade accounts payable $ 75,318 $ 47,787 $ 82,859 Accrued payroll and payroll taxes 17,816 23,653 15,582 Income taxes payable 5,534 4,686 2,895 Operating lease liabilities 74,558 61,800 58,646 Other liabilities 30,374 21,784 21,150 Total current liabilities 203,600 159,710 181,132 Long-term operating lease liabilities 259,412 284,717 293,450 Other long-term liabilities 3,858 3,745 3,472 Total long-term liabilities 263,270 288,462 296,922 Total liabilities 466,870 448,172 478,054 Shareholders? equity Preferred stock, no par value, 20,000shares authorized; none issued and ? ? ? outstandingCommon stock, no par value,50,000shares authorized; 25,450 sharesissued and outstanding at August 1,2020, 25,828 shares issued and 165,056 161,458 156,625 outstanding at February 1, 2020 and25,770 shares issued and outstanding atAugust 3, 2019Accumulated other comprehensive loss (3,123 ) (12,591 ) (12,574 )Retained earnings 308,093 317,219 260,156 Total shareholders? equity 470,026 466,086 404,207 Total liabilities and shareholders? $ 936,896 $ 914,258 $ 882,261 equity

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

Six Months Ended August 1, August 3, 2020 2019Cash flows from operating activities: Net income $ 4,291 $ 9,818 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation, amortization and accretion 12,005 12,514 Noncash lease expense 30,167 28,318 Deferred taxes (1,144 ) 935 Stock-based compensation expense 3,146 3,214 Impairment of long-lived assets 2,128 123 Other (428 ) (288 )Changes in operating assets and liabilities: Receivables (5,871 ) (770 )Inventories 9,926 (22,727 )Prepaid expenses and other assets (937 ) (2,115 )Trade accounts payable 27,323 47,275 Accrued payroll and payroll taxes (6,134 ) (5,345 )Income taxes payable (317 ) (3,857 )Operating lease liabilities (20,868 ) (29,842 )Other liabilities 8,718 (2,090 )Net cash provided by operating activities 62,005 35,163 Cash flows from investing activities: Additions to fixed assets (5,024 ) (8,292 )Purchases of marketable securities and other (35,720 ) (93,288 )investmentsSales and maturities of marketable securities and other 71,387 82,123 investmentsNet cash provided by (used in) investing activities 30,643 (19,457 )Cash flows from financing activities: Proceeds from issuance and exercise of stock-based 545 583 awardsPayments for tax withholdings on equity awards (93 ) (238 )Common stock repurchased (13,417 ) ? Net cash (used in) provided by financing activities (12,965 ) 345 Effect of exchange rate changes on cash, cash 2,146 (504 )equivalents, and restricted cashNet increase in cash, cash equivalents, and restricted 81,829 15,547 cashCash, cash equivalents, and restricted cash, beginning 58,991 54,271 of periodCash, cash equivalents, and restricted cash, end of $ 140,820 $ 69,818 periodSupplemental disclosure on cash flow information: Cash paid during the period for income taxes $ 4,630 $ 8,056 Accrual for purchases of fixed assets 381 2,052