Zumiez, Inc. reported sales were down 18 percent in the second quarter ended July 30 and fell by the same amount in August. Second-quarter results were well below company guidance.
Net sales for the second quarter ended July 30, 2022 (13 weeks) decreased 18.1 percent to $220.0 million from $268.7 million in the second quarter ended July 31, 2021 (13 weeks). Compared to the second quarter ended August 3, 2019 (13 weeks), second quarter 2022 net sales decreased 3.7 percent.
Net income in the second quarter of fiscal 2022 was $3.1 million, or $0.16 per diluted share, compared to net income of $24.0 million, or $0.94 per diluted share, in the second quarter of the prior fiscal year. Net income for the second quarter of 2019 was $9.0 million, or $0.36 per diluted share.
Sales of $220.0 were below company guidance in the range of $232 to $239 million. Earnings of 16 cents a share were below guidance in the range of $0.45 to $0.55.
Total net sales for the six months (26 weeks) ended July 30, 2022 decreased 19.5 percent to $440.7 million from $547.7 million reported for the six months (26 weeks) ended July 31, 2021. Compared to the first six months (26 weeks) ended August 3, 2019, net sales decreased 0.2 percent. Net income for the first six months of 2022 was $2.7 million, or $0.14 per diluted share, compared to net income for the first six months of fiscal 2021 of $50.4 million, or $1.96 per diluted share, and compared to net income for the first six months of fiscal 2019 of $9.8 million, or $0.39 per diluted share.
At July 30, 2022, the company had cash and current marketable securities of $166.2 million compared to cash and current marketable securities of $412.0 million at July 31, 2021. The decrease was driven by share repurchases and capital expenditures partially offset by cash generated through operations.
Rick Brooks, CEO, Zumiez, Inc., stated, “As the second quarter progressed, we experienced continued pressure on our U.S. business as macroeconomic headwinds, led by inflation weighed on consumer discretionary spending. Our full-price selling model has fueled long cycles of sustained growth and increased profitability during Zumiez’s 44-year history with outsized gains during periods of high disposable income levels such as last year’s stimulus-driven demand environment. We are disappointed that our recent performance fell short of expectations and we are making adjustments to our merchandise assortments and managing expenses in order to improve near-term results. While comparisons do begin to moderate in the back half of the year, based on recent trends we believe it is prudent to adopt a more cautious view on the remainder of 2022. We are currently planning our business and inventory levels accordingly while also focusing on what is important for the customer. Longer-term, we remain optimistic that our differentiated strategies and strong balance sheet have the company well positioned to add to our global market share and return increased value to our shareholders.
Third Quarter To-Date
Total third quarter-to-date sales for the 37 days ending September 5, 2022 decreased 18.1 percent, compared with the same 37-day time period in the prior year ended September 6, 2021. Compared to the 37-day period ended September 9, 2019, total net sales decreased 12.6 percent. Total comparable sales for the 37-day period ending September 5, 2022 were down 19.7 percent from the comparable period in the prior year and decreased 15.3 percent from the comparable period in 2019.
Fiscal 2022 Third Quarter Outlook
The company is introducing guidance for the three months ending October 29, 2022. Net sales are projected to be in the range of $220 to $228 million. Consolidated operating margins are expected to be between 0.5 percent and 2.5 percent resulting in earnings per diluted share of approximately $0.03 to $0.18. The company currently intends to open approximately 35 new stores in fiscal 2022, including up to 16 stores in North America, 14 stores in Europe and 5 stores in Australia.
