GlobeNewswire Inc | Dec 3, 2020 04:10PM EST

December 03, 2020

Third Quarter 2020 Sales Increased 2.6% to $271.0 MillionThird Quarter 2020 Diluted Earnings Per Share Increased 54.7% to $1.16Cash and Current Marketable Securities Increased 77.0% to $316.2 Million

LYNNWOOD, Wash., Dec. 03, 2020 (GLOBE NEWSWIRE) -- Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the third quarter ended October 31, 2020.

Total net sales for the third quarter ended October 31, 2020 (13 weeks) increased 2.6% to $271.0 million from $264.0 million in the quarter ended November 2, 2019 (13 weeks). Due to store closures, stores were open for approximately 95% of the third 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 October 31, 2020 increased 8.1% compared to the same period a year ago. Net income for the third quarter of fiscal 2020 was $29.1 million, or $1.16 per diluted share, compared to net income of $19.2 million, or $0.75 per diluted share in the third quarter of the prior fiscal year.

Total net sales for the nine months (39 weeks) ended October 31, 2020 decreased 6.6% to $659.1 million from $705.4 million reported for the nine months (39 weeks) ended November 2, 2019. Net income for the first nine months of fiscal 2020 increased 15.3% to $33.4 million, or $1.32 per diluted share, compared to net income for the first nine months of the prior fiscal year of $29.0 million, or $1.14 per diluted share.

At October 31, 2020, the Company had cash and current marketable securities of $316.2 million compared to cash and current marketable securities of $178.6 million at November 2, 2019. The increase in cash and current marketable securities was driven by cash generated through operations including cash deferment of $53.0 million composed of lower inventory levels, landlord payments, extended vendor terms and 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 in March due to COVID-19 and other planned capital expenditures.

Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, We once again successfully navigated volatile market conditions and drove strong earnings growth. Following a challenging start to the third quarter due to the delayed start to back to school, sales were positive in both September and October as we capitalized on late season demand. Our performance in 2020 is a testament to the resiliency of our people and their commitment to serving our customers, the strong culture and brand loyalty weve fostered over many years, and the ability of our business model to adapt to changes in purchasing behavior. While there is still uncertainty around how the remainder of the holiday season will unfold, we believe we are positioned well to meet the customers expectations and drive value for the long-term.

Fiscal Fourth Quarter-to-Date Sales Total fourth quarter-to-date sales for the 31 days ended December 1, 2020 were down approximately 3.9%, compared with the same 31 day time period in the prior year ended December 3, 2019. Comparable sales for the 31 days ended December 1, 2020 were down 1.7%. By channel, open store comparable sales decreased 7.8% and e-commerce sales increased 16.7%. During this timeframe we had roughly 3% fewer open store days than last year due to governmental orders and potential safety concerns. We also experienced significant metering of traffic and reduced hours where required by local governments. We expect that the store closures and various other operating restrictions will fluctuate as we move through the quarter.

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 fourth quarter or the year.

Share Repurchase Authorization:

On December2, 2020, the Companys Board of Directors approved the repurchase of up to an aggregate of $100million of its Common Stock (the Repurchase Program). The repurchases will be made from time to time on the open market at prevailing market prices. The Repurchase Program is expected to continue through the fiscal year 2021 ending January 29, 2022, unless the time period is extended or shortened by the Board of Directors. The Repurchase Program supersedes all previously approved and authorized stock repurchase programs.

Conference Call Information A conference call will be held today to discuss third 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 6946677.

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 November 28, 2020, we operated 726 stores, including 608 in the United States, 52 in Canada, 54 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 White Director of Finance & Investor Relations Zumiez Inc. (425) 551-1500, ext. 1337

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



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

Three MonthsEnded October % of November % of 31, 2020 Sales 2, 2019 SalesNet sales $ 270,952 100.0 % $ 264,022 100.0 %Cost of goods sold 165,146 61.0 % 169,446 64.2 %Gross profit 105,806 39.0 % 94,576 35.8 %Selling, general and 67,941 25.0 % 70,266 26.6 %administrative expensesOperating profit 37,865 14.0 % 24,310 9.2 %Interest income, net 769 0.3 % 1,002 0.4 %Other income, net 86 0.0 % 275 0.1 %Earnings before income taxes 38,720 14.3 % 25,587 9.7 %Provision for income taxes 9,581 3.5 % 6,408 2.4 %Net income $ 29,139 10.8 % $ 19,179 7.3 % Basic earnings per share $ 1.17 $ 0.76 Diluted earnings per share $ 1.16 $ 0.75 Weighted average shares usedin computation of earnings per share:Basic 24,864 25,231 Diluted 25,219 25,560 Nine Months Ended October % of November % of 31, 2020 Sales 2, 2019 SalesNet sales $ 659,116 100.0 % 705,376 100.0 %Cost of goods sold 438,724 66.6 % 467,140 66.2 %Gross profit 220,392 33.4 % 238,236 33.8 %Selling, general and 177,263 26.9 % 201,285 28.6 %administrative expensesOperating profit 43,129 6.5 % 36,951 5.2 %Interest income, net 2,637 0.4 % 2,652 0.4 %Other income, net 584 0.1 % 987 0.2 %Earnings before income taxes 46,350 7.0 % 40,590 5.8 %Provision for income taxes 12,920 1.9 % 11,593 1.7 %Net income $ 33,430 5.1 % 28,997 4.1 % Basic earnings per share $ 1.34 1.15 Diluted earnings per share $ 1.32 1.14 Weighted average shares usedin computation of earnings per share:Basic 24,913 25,173 Diluted 25,271 25,480

ZUMIEZ INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)

October 31, February 1, November 2, 2020 2020 2019 (Unaudited) (Unaudited)Assets Current assets Cash and cash equivalents $ 84,939 $ 52,428 $ 31,929 Marketable securities 231,234 198,768 146,718 Receivables 19,301 16,841 16,790 Inventories 160,961 135,095 183,381 Prepaid expenses and other current 9,240 9,456 10,757 assetsTotal current assets 505,675 412,588 389,575 Fixed assets, net 101,820 113,051 115,170 Operating lease right-of-use assets 273,796 301,784 301,736 Goodwill 59,540 57,099 57,580 Intangible assets, net 15,329 14,564 14,772 Deferred tax assets, net 8,192 6,303 7,424 Other long-term assets 9,802 8,869 8,773 Total long-term assets 468,479 501,670 505,455 Total assets $ 974,154 $ 914,258 $ 895,030 Liabilities and Shareholders? Equity Current liabilities Trade accounts payable $ 84,069 $ 47,787 $ 73,418 Accrued payroll and payroll taxes 25,603 23,653 21,929 Income taxes payable 8,402 4,686 3,430 Operating lease liabilities 72,526 61,800 59,742 Other liabilities 25,327 21,784 18,815 Total current liabilities 215,927 159,710 177,334 Long-term operating lease liabilities 255,160 284,717 287,400 Other long-term liabilities 3,881 3,745 3,457 Total long-term liabilities 259,041 288,462 290,857 Total liabilities 474,968 448,172 468,191 Shareholders? equity Preferred stock, no par value, 20,000shares authorized; none issued and ? ? ? outstandingCommon stock, no par value,50,000shares authorized; 25,472 sharesissued andoutstanding at October 31, 2020, 25,828 167,119 161,458 159,251 shares issued and outstanding atFebruary 1, 2020and 25,805 shares issued andoutstanding at November 2, 2019Accumulated other comprehensive loss (5,165 ) (12,591 ) (11,747 )Retained earnings 337,232 317,219 279,335 Total shareholders? equity 499,186 466,086 426,839 Total liabilities and shareholders? $ 974,154 $ 914,258 $ 895,030 equity

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

Nine Months Ended October 31, November 2, 2020 2019Cash flows from operating activities: Net income $ 33,430 $ 28,997 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation, amortization and accretion 17,909 18,776 Noncash lease expense 45,797 42,960 Deferred taxes (2,155 ) 29 Stock-based compensation expense 4,795 4,819 Impairment of long-lived assets 4,443 123 Other (430 ) (562 )Changes in operating assets and liabilities: Receivables (1,030 ) 3,190 Inventories (24,856 ) (54,687 ) Prepaid expenses and other assets 532 (934 ) Trade accounts payable 36,196 38,186 Accrued payroll and payroll taxes 1,711 971 Income taxes payable 2,629 (2,586 ) Operating lease liabilities (40,945 ) (45,512 ) Other liabilities 3,728 (4,316 )Net cash provided by operating activities 81,754 29,454 Cash flows from investing activities: Additions to fixed assets (7,488 ) (13,871 )Purchases of marketable securities and other (135,515 ) (165,912 )investmentsSales and maturities of marketable securities and 104,742 132,974 other investmentsNet cash used in investing activities (38,261 ) (46,809 )Cash flows from financing activities: Proceeds from issuance and exercise of stock-based 959 1,604 awardsPayments for tax withholdings on equity awards (93 ) (238 )Common stock repurchased (13,417 ) ? Net cash (used in) provided by financing activities (12,551 ) 1,366 Effect of exchange rate changes on cash, cash 1,899 (242 )equivalents, and restricted cashNet increase (decrease) in cash, cash equivalents, 32,841 (16,231 )and restricted cashCash, cash equivalents, and restricted cash, 58,991 54,271 beginning of periodCash, cash equivalents, and restricted cash, end of $ 91,832 $ 38,040 periodSupplemental disclosure on cash flow information: Cash paid during the period for income taxes $ 11,933 $ 14,024 Accrual for purchases of fixed assets 346 1,412