Zumiez Inc. reported fourth-quarter earnings rose 18.2 percent on a 16.9 percent climb in sales.
Total net sales for the fourth quarter ended February 3, 2018 (14 weeks) increased 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 percent 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 80 cents per diluted share, compared to net income of $18.2 million, or 74 cents 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 2 cents respectively.
On February 7, Zumiez said that based on slightly higher than expected sales, the company expected fourth quarter 2017 earnings per share to be toward the high-end of it most guidance range of 88 cents to 90 cents, which excludes any potential impact of recently passed tax reform.
Total net sales for fiscal 2017 (53 weeks) increased 10.9 percent 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 percent 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 2 cents 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 percent 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 percent 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 percent for the four-week period ended March 3, 2018 compared to a comparable sales decrease of 3.1 percent 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 percent and 6.0 percent. Consolidated operating margins are expected to be between negative 2.6 percent and negative 1.7 percent 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.
