Zumiez Posts 27% Q3 Sales Jump

Zumiez Inc. reported total net sales for the third quarter ended October 29, 2005 increased by 27.2% to $57.4 million from $45.1 million in the year-ago quarter. Net income for the quarter was $5.3 million or 37 cents per diluted share, up from net income of $3.5 million or 27 cents per diluted share in the third quarter of the prior year. Comparable store sales increased 9.8% for the third quarter of fiscal 2005 compared to 9.0% in the third quarter of fiscal 2004.

Total net sales for the first nine months (39 week period) of fiscal 2005 increased by 29.4% to $130.2 million from $100.6 million reported in the first nine months of the prior year. The company posted net income of $6.1 million or 45 cents per diluted share in the first nine months of 2005 versus $3.0 million or 23 cents per diluted share in the prior year. Comparable store sales increased 10.8% for the first nine months of fiscal 2005 compared to 8.2% for the first nine months of fiscal 2004.

Rick Brooks, president and CEO of Zumiez Inc., stated, “Our results for the third quarter, which exceeded expectations, were fueled by comparable store sales gains and improved leverage on our sales growth. Our positive momentum continues and we believe that we are well-positioned from a merchandising perspective as we head into the all important holiday selling season. ”

Mr. Brooks continued, “Despite a challenging retail environment, we've successfully executed our expansion plan which generated record results. Our performance underscores the strength of our team, the diversity of our brands and the compelling nature of our concept.”

For fiscal 2005, the company plans to open 35 new stores. In the first nine months of fiscal 2005, Zumiez opened 25 new stores and remains on plan for its store openings for the remainder of the year.

Mr. Brooks concluded, “We believe Zumiez has created an important niche in the marketplace as the destination, lifestyle retailer for the action sports consumer. The engaging, interactive feel of our stores, our broad range of products and unique brand offerings, and our well-informed, enthusiastic staff have reinforced this competitive edge. We remain confident that we have the opportunity to significantly expand our store base and we remain focused on further building our leadership position in the industry. ”

On November 8, 2005, a secondary public offering of shares of the company's common stock by certain of its shareholders was priced at $35.60 per share. The offering consisted of 2,731,250 shares of common stock, including 356,250 shares that were subject to the underwriters' over-allotment option. All of the shares were sold by shareholders of Zumiez and, as a result, Zumiez did not receive any of the proceeds from the offering.

2005 Outlook

The company stated that it now expects diluted earnings per share to range from 84 cents to 85 cents in fiscal 2005 and that weighted average diluted shares for the year are expected to be approximately 13,700,000 shares. This is an increase from previous guidance of diluted earnings per share of $0.80 to $0.82 and fiscal 2004 amount of 56 cents per diluted share. The updated guidance includes estimated expenses incurred in connection with the secondary offering mentioned above. The company also stated that it believes that its projected earnings growth rate of 30% continues to be achievable for fiscal 2006 and beyond.

                              ZUMIEZ INC.
              CONDENSED CONSOLIDATED STATEMENT OF INCOME
            (in thousands, except share and per share data)
                              (Unaudited)


                         Three Months Ended       Nine Months Ended
                       ----------------------- -----------------------
                       October 29, October 30, October 29, October 30,
                           2005        2004        2005        2004
---------------------------------------------- -----------   ---------
Net sales                 $57,412     $45,138    $130,188    $100,582
Cost of goods sold         35,999      28,953      86,153      69,165
                       ----------- ----------- -----------   ---------
Gross margin               21,413      16,185      44,035      31,417

Selling, general and
 administrative
 expenses                  13,198      10,609      34,530      26,248
                       ----------- ----------- -----------   ---------
Operating profit
 (loss)                     8,215       5,576       9,505       5,169

Interest income
 (expense), net               221         (62)        269        (218)
Other income                    1           2           2           5
                       ----------- ----------- -----------   ---------
Earnings (loss) before
 income taxes               8,437       5,516       9,776       4,956

Provision (benefit)
 for income taxes           3,158       2,057       3,689       1,936
                       ----------- ----------- -----------   ---------
Net income (loss)          $5,279      $3,459      $6,087      $3,020
                       =========== =========== ===========     =======

Basic net income
 (loss) per share          $ 0.39      $ 0.31      $ 0.48      $ 0.27
                       =========== =========== ===========     =======

Diluted net income
 (loss) per share          $ 0.37      $ 0.27      $ 0.45      $ 0.23