Zumiez Inc. reported a net loss of $800,000, or 3 cents per diluted share, compared to net income of $3.2 million, or 11 cents per diluted share, in the second quarter of the prior fiscal year. The results for fiscal 2015 include costs of approximately $0.4 million, or 1 cent per diluted share, for charges associated with the acquisition of Blue Tomato.
Total net sales for the second quarter ended July 30, 2016 (13 weeks) decreased 0.9 percent to $178.3 million, from $179.8 million in the quarter ended August 1, 2015 (13 weeks). Comparable sales for the thirteen weeks ended July 30, 2016 decreased 4.9 percent compared to a comparable sales decrease of 4.5 percent for the thirteen weeks ended August 1, 2015.
Previously, Zumiez said it expected net sales for the second quarter to be in the range of $172 million to $176 million, resulting in net loss per diluted share of approximately 9 cents to 13 cents. This guidance was based on an anticipated comparable sales decrease in the 6 to 8 percent range for the second quarter of fiscal 2016.
Total net sales for the six months (26 weeks) ended July 30, 2016 decreased 1.7 percent to $351.2 million, from $357.4 million reported for the six months (26 weeks) ended August 1, 2015. Comparable sales decreased 6.2 percent for the 26 weeks ended July 30, 2016, compared to a comparable sales decrease of 0.9 percent for the 26 weeks ended August 1, 2015. Net loss for the first six months of fiscal 2016 was $3 million, or 12 cents per diluted share, compared to net income for the first six months of the prior fiscal year of $6 million, or 21 cents per diluted share. Results for the first six months of fiscal 2015 include approximately $1.5 million, or 4 cents per diluted share, for charges associated with the acquisition of Blue Tomato.
As of July 30, 2016, the company had cash and current marketable securities of $52.3 million compared to cash and current marketable securities of $80.8 million at August 1, 2015. The decrease in cash and current marketable securities is a result of stock repurchases and capital expenditures, partially offset by cash generated through operations.
Rick Brooks, chief executive officer of Zumiez Inc., stated, “We continue to navigate through the current retail environment with a balanced approach to executing our strategic growth objectives and protecting near-term profitability in the face of challenging consumer demand. While our monthly comparable sales improved as the quarter progressed led by solid gains in our men’s category, our overall business continues to underperform versus our long-term expectations. Therefore, we continue to manage our expense structure to better align with current trends, which is what allowed us to exceed our bottom line guidance for the quarter. We are confident that we are making the right decisions that will allow us to best serve our customers and expand our global market share while delivering sustained growth and increased shareholder value well into the future.”
Zumiez also acquired 100 percent of the outstanding stock of Fast Times Skateboarding (Fast Times) for $6.9 million, consisting of $5.5 million in cash and $1.4 million in shares of common stock subject to certain pre-closing and post-closing adjustments. Founded in 2008, Fast Times is an Australian specialty retailer of skateboards, hardware, apparel and footwear and currently operates five stores and a website at fasttimes.com.au.
Said Brooks, “Fast Times is an important component of the Zumiez global retail network and joins our existing operations in the United States, Canada, and Europe. Our intent is to help the Fast Times team grow their operations across Australia, leveraging our proven skills in profitably scaling culture and brand. We are all excited about the opportunity and about having a proven local Australian team to lead the way.” Andrew Tebb, one of the co-founders and the general manager of Fast Times, added, “We are very excited to be partnering with Zumiez and believe that we have found the right team to help us grow in the Australian marketplace and beyond.” Fast Times will continue to operate under the Fast Times name and be headquartered in Melbourne, Australia.
August 2016 Sales
Total net sales for the four-week period ended August 27, 2016 increased 2.6 percent to $89.5 million, compared to $87.3 million for the four-week period ended August 29, 2015. The company’s comparable sales decreased 1.1 percent for the four-week period ended August 27, 2016, compared to a comparable sales decrease of 10.7 percent for the four-week period ended August 29, 2015.
Fiscal 2016 Third Quarter Outlook
The company is introducing guidance for the three months ending October 29, 2016. Net sales are projected to be in the range of $209 million to $213 million, resulting in net income per diluted share of approximately 21 cents to 26 cents. This guidance is based upon an anticipated comparable sales range of negative 2 percent to zero percent for the third quarter of fiscal 2016. The company currently intends to open approximately 29 new stores in fiscal 2016, including up to six stores in Canada and seven stores in Europe.
Photo courtesy Zumiez
