Zumiez Inc. said comps store sales in February were down 9 percent and that it now expects them to decline in the mid-single-digit range in the first quarter. The company forecasts comp store sales will increase for the full fiscal year, which began Feb. 3.
Were off to a slow start in February, with comps down 9 percent and believe some of the factors weighing on the recent monthly comps are temporary, said CEO Richard Brooks, alluding to later tax refunds and colder weather than a year earlier.
ZUMZ, which operates 472 action sports stores globally, reported total net sales for the fourth quarter ended Feb. 2 increased 22.1 percent to $224.4 million from $183.9 million in the quarter ended Jan. 28.
Comparable store sales decreased 1.0 percent during the fourth quarter despite the benefit of a 14th week compared to the prior fiscal year. Lower comps were partially offset by an increase in dollars per transaction, which benefited from higher average unit retail prices and an increase in units per transaction year-over-year. Comparable North American e-commerce sales, which ZUMZ includes in its comps number, increased 22 percent and reached 8.3 percent of North American revenue. Only mens and juniors apparel comped positively during the quarter.
Gross profit for the fourth quarter was $85.7 million, or 38.2 percent of net sales, in the fourth quarter, down 70 basis points from a year earlier as web fulfillment and shipping cost increase as a percent of total sales due to the acquisition of European online retailer Blue Tomato. Excluding the impact of Blue Tomato, product margins improved slightly in the quarter. Brooks said that while Blue Tomato continues to comp positively, it has short-term challenges in the face of a difficult European economy, that have enabled ZUMZ to reduce its estimate of earn-out payments to the sellers.
SG&A expenses for the quarter were $49.6 million or 22.1 percent of net sales, compared to $40.2 million or 21.9 percent of net sales in the prior year quarter. Net income in the period increased 22.1 percent to $22.9 million, or 74 cents per diluted share from the prior fiscal year.
The company initiated guidance for the first quarter ending May 4, 2013 by projecting net sales of $141-$144 million and net income per diluted share of approximately 4 to 7 cents, including an estimated $1.6 million, or approximately 4 cents per diluted share, for charges associated with the acquisition of Blue Tomato. The guidance is based on an anticipated comparable store sales decrease in the mid-single-digit range. Brooks said he anticipates slower growth in footwear, which accounted for 23 percent of 2012 sales, as a four-year positive footwear cycle tapers off.
