Zumiez’s Profits Jump 39.6%

Zumiez Inc. reported sales for the fourth quarter ended Jan. 30, increased 5.6% to $132.4 million from $125.5 million a year ago. Net income rose to $8.8 million, or 9 cents a share, from $6.3 million or 21 cents, a year ago.

The latest quarter includes a pre-tax charge of $1.8 million (after-tax per diluted share of 4 cents a share) associated with the impairment of store related assets. Last year’s results reflects a pre-tax charge of $0.8 million (after-tax per diluted share of 2 cents) associated with the impairment of store related assets.

Comparable store sales decreased 1.7% for the fourth quarter of fiscal 2009 compared to a 13.4% decrease in the fourth quarter of fiscal 2008.

Total net sales for fiscal 2009 (52 week period) decreased 0.3% to $407.6 million from $408.7 million reported in fiscal 2008 (52 week period). Comparable store sales decreased 10.0% in fiscal 2009 compared to a decrease of 6.5% in fiscal 2008.

The company posted net income of $9.1 million or 30 cents per diluted share, including a pre-tax non-cash charge of $2.5 million (after tax per diluted share of 5 cets) associated with the impairment of store related assets and pre-tax charge of $1.4 million (after tax diluted share of 3 cents) associated with the proposed settlement agreement of a previously disclosed lawsuit. These results compare to net income of $17.2 million or 58 cents per diluted share in the prior year which included a pre-tax non-cash charge of $0.8 million (after-tax charge per diluted share of 2 cents) associated with the impairment of store related assets.

At January 30, 2010, the company had cash and current marketable securities of $108.1 million compared to cash and current marketable securities of $78.6 million at January 31, 2009.

“The year ended stronger than expected from both a sales and earnings standpoint,” commented Rick Brooks, chief executive officer of Zumiez. “Our unique merchandise assortments and compelling promotional packages resonated with consumers, driving an increase in units sold for the fourth quarter, and at the same time, our efforts to build in higher IMU’s coupled with well managed inventory resulted in a significant improvement in product margins. While we are not pleased with our annual performance, we are encouraged that the steps we took to reverse the negative trends from early in the year led to improved results during the back half of 2009. We ended fiscal 2009 well capitalized, with more than $108 million in cash and current marketable securities, and will continue to invest in our business to build on our recent momentum and expand our position as the leading retail destination for the actions sports lifestyle.”

2010 Outlook

The company is introducing guidance for the three months ending May 1, 2010 of a net loss of approximately 9 cents to 11 cents per diluted share which includes estimated pre-tax charges $1.2 million (after-tax per diluted share of 3 cents) associated with its previously disclosed plan to relocate its distribution center from Everett, Washington to Corona, California. This guidance is based on an anticipated comparable store sales increase in the mid to upper single digit range for the first quarter of fiscal 2010.

The action sports retailer currently intends to open approximately 25 new stores in fiscal 2010 with an opening cadence similar to fiscal 2009.

                         ZUMIEZ INC.
        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
       (in thousands, except share and per share amounts)
                        (Unaudited)

                                            Three Months Ended
                                ——————————————
                                January 30,   % of    January 31,   % of
                                   2010      Sales       2009      Sales
                                ———- ———  ———- ———
Net sales                       $  132,433     100.0% $  125,464     100.0%
Cost of goods sold                  84,338      63.7%     84,855      67.6%
                                ———- ———  ———- ———
Gross profit                        48,095      36.3%     40,609      32.4%

Selling, general and
 administrative expenses            35,053      26.5%     31,923      25.5%
                                ———- ———  ———- ———
Operating profit                    13,042       9.8%      8,686       6.9%

Interest income, net                   351       0.2%        399       0.3%
Other income                            91       0.1%          –       0.0%
                                ———- ———  ———- ———
Earnings before income taxes        13,484      10.1%      9,085       7.2%

Provision for income taxes           4,683       3.5%      2,788       2.2%
                                ———- ———  ———- ———

Net income                      $    8,801       6.6% $    6,297       5.0%
                                ========== =========  ========== =========

Basic net income per share      $     0.30            $     0.22
                                ==========            ==========

Diluted net income per share    $     0.29            $     0.21
                                ==========            ==========