Profits at Zumiez Inc. climbed 182 percent in the second quarter ended August 1 as sales grew 9.6 percent. Earnings were well above Wall Street’s targets.

Total net sales for the second quarter ended August 1, 2020 (13 weeks) increased 9.6 percent to $250.4 million from $228.4 million in the quarter ended August 3, 2019 (13 weeks). Wall Street’s consensus estimate was $226.73 million.

Due to store closures, stores were open for 73.4 percent of the second 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 August 1, 2020 increased 37.3 percent compared to the same period a year ago.

Net income for the second quarter of fiscal 2020 was $25.4 million, or $1.01 per diluted share, compared to net income of $9.0 million, or $0.36 per diluted share in the second quarter of the prior fiscal year. Wall Street’s consensus estimate was 25 cents.

Total net sales for the six months (26 weeks) ended August 1, 2020 decreased 12.1 percent to $388.2 million from $441.4 million reported for the six months (26 weeks) ended August 3, 2019. Net income for the first six months of fiscal 2020 was $4.3 million, or $0.17 per diluted share, compared to net income for the first six months of the prior fiscal year of $9.8 million, or $0.39 per diluted share.

At August 1, 2020, the company had cash and current marketable securities of $299.1 million compared to cash and current marketable securities of $188.6 million at August 3, 2019. The increase in cash and current marketable securities was driven by cash generated through operations including deferment of $41.5 million composed of landlord payments, lower inventory levels, extended vendor terms and deferred 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 due to COVID-19 and other planned capital expenditures.

Rick Brooks, chief executive officer of Zumiez Inc., stated, “Our teams did a remarkable job serving our customers and delivering these second-quarter results during the most challenging operating environment in the company’s history. As an organization, we successfully executed a quick and safe reopening of the majority of our stores in the quarter, while continuing to lean heavily on our Omni platforms to fulfill the strong demand for our distinct merchandise offering. Our recent performance amidst the pandemic underscores the strength of our brand and culture and speaks to the ability of our business model to adapt to changes in purchasing behavior while continuing to drive strong earnings growth and cash generation. With close to $300 million in cash and no debt on our balance sheet, we are set up well to navigate whatever headwinds arise over the coming quarters and emerge from this crisis positioned to accelerate market share in each of our geographies.”

Third Quarter-To-Date Sales
The company is providing quarter-to-date sales through Labor Day, September 7, as this time period is more comparable to the prior year given the shift in the Labor Day holiday. Total third quarter-to-date sales for the 37 days ending September 7, 2020, were down approximately 14 percent, compared with the same 37 day time period in the prior year ended September 9, 2019. Total comparable sales for the 37 day period ending September 7, 2020, were down 5.1 percent. By channel, open store comparable sales decreased 10.7 percent and e-commerce sales increased 27.4 percent.

Store Re-Opening Update
The company ended the second quarter with 645 or 89.6 percent of our 720 stores open with the primary closures being in California and Australia due to government mandates. As of Labor Day, September 7, 35 stores, or 4.9 percent of its store base, remained closed. All stores are operating under enhanced measures to ensure the health and safety of employees and customers, including

  • requiring employees to wear masks,
  • providing hand sanitizer in multiple locations throughout the store,
  • implementing enhanced cleaning and sanitation protocols,
  • reconfiguring sales floors to promote physical distancing, and
  • modifying employee and customer interactions to limit contact.

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 third quarter or the year.

Photo courtesy Zumiez