Zumiez Inc. reported earnings rose 51.6 percent in the third quarter ended October 31 as sales grew 2.6 percent. Sales turned positive in September and October after delayed back-to-school spending dragged down August results.

Total net sales for the third quarter ended October 31, 2020 (13 weeks) increased to $271.0 million from $264.0 million in the quarter ended November 2, 2019 (13 weeks). Due to store closures, stores were open for approximately 95 percent of the third quarter of 2020 measured as the total number of store days open in the quarter divided by the total number of store days available. For the stores that were open, comparable sales for the thirteen weeks ended October 31, 2020, increased 8.1 percent compared to the same period a year ago.

Net income for the third quarter of fiscal 2020 was $29.1 million, or $1.16 per share, compared to net income of $19.2 million, or $0.75 per diluted share in the third quarter of the prior fiscal year.

Total net sales for the nine months (39 weeks) ended October 31, 2020 decreased 6.6 percent to $659.1 million from $705.4 million reported for the nine months (39 weeks) ended November 2, 2019. Net income for the first nine months of fiscal 2020 increased 15.3 percent to $33.4 million, or $1.32 per diluted share, compared to net income for the first nine months of the prior fiscal year of $29.0 million, or $1.14 per diluted share.

At October 31, 2020, the company had cash and current marketable securities of $316.2 million compared to cash and current marketable securities of $178.6 million at November 2, 2019. The increase in cash and current marketable securities was driven by cash generated through operations including cash deferment of $53.0 million composed of lower inventory levels, landlord payments, extended vendor terms and payroll tax payments as well as net income improvements related to abatements, credits and expense reductions. This increase was partially offset by $13.4 million of share repurchases through the company’s stock buyback program prior to our stores closing in March due to COVID-19 and other planned capital expenditures.

Rick Brooks, chief executive officer of Zumiez Inc., stated, “We once again successfully navigated volatile market conditions and drove strong earnings growth. Following a challenging start to the third quarter due to the delayed start to back to school, sales were positive in both September and October as we capitalized on late-season demand. Our performance in 2020 is a testament to the resiliency of our people and their commitment to serving our customers, the strong culture and brand loyalty we’ve fostered over many years, and the ability of our business model to adapt to changes in purchasing behavior. While there is still uncertainty around how the remainder of the holiday season will unfold, we believe we are positioned well to meet the customer’s expectations and drive value for the long-term.”

Fiscal Fourth Quarter-to-Date Sales
Total fourth quarter-to-date sales for the 31 days ended December 1, 2020 were down approximately 3.9 percent, compared with the same 31 day time period in the prior year ended December 3, 2019. Comparable sales for the 31 days ended December 1, 2020 were down 1.7 percent. By channel, open store comparable sales decreased 7.8 percent and e-commerce sales increased 16.7 percent. During this timeframe, Zumiez had roughly 3 percent fewer open store days than last year due to governmental orders and potential safety concerns. Zumiez also experienced significant metering of traffic and reduced hours where required by local governments. Zumiez expects that the store closures and various other operating restrictions will fluctuate as we move through the quarter.

Outlook
Due to the fast-moving nature of this situation and the uncertainty of impacts on revenue and costs, the company previously withdrew its full-year fiscal 2020 guidance. The company is not providing an updated outlook at this time for the fourth quarter or the year.

Share Repurchase Authorization
On December 2, 2020, the company’s Board of Directors approved the repurchase of up to an aggregate of $100 million of its Common Stock (the “Repurchase Program”). The repurchases will be made from time-to-time on the open market at prevailing market prices. The Repurchase Program is expected to continue through the fiscal year 2021 ending January 29, 2022, unless the time period is extended or shortened by the Board of Directors. The Repurchase Program supersedes all previously approved and authorized stock repurchase programs.

Photo courtesy Zumiez