Zumiez Inc. today reported results for the second quarter ended August 2, 2008. Total net sales for the second quarter increased by 12.5% to $92.3 million from $82.0 million reported in the second quarter ended August 4, 2007. The company posted net income for the quarter of $2.7 million or 9 cents per diluted share versus $3.1 million or 11 cents per diluted share in the second quarter of the prior fiscal year. Comparable store sales decreased 1.7% for the second quarter of fiscal 2008 compared to an 11.6% increase in the second quarter of fiscal 2007.


Total net sales for the first six months of fiscal 2008 increased by 13.4% to $171.0 million from $150.8 million reported in the first six months of the prior year. The company posted net income of $4.1 million or 14 cents per diluted share in the first six months of 2008 versus $4.7 million or 16 cents per diluted share in the prior year. Comparable store sales decreased 1.3% for the first six months of fiscal 2008 compared to an increase of 11.4% for the first six months of fiscal 2007.


Net cash provided by operating activities in the first half of fiscal 2008 was $15.7 million compared to net cash used in operating activities of $6.7 million in the first half of fiscal 2007, driven largely by favorable changes in working capital.


Rick Brooks, president and CEO of Zumiez Inc., stated: “We continue to make positive strides in our ongoing efforts to give our customers a unique specialty retail experience, while controlling costs and effectively managing inventories during this very difficult operating environment. Due to this focus, we exceeded our earnings projection for the first six months of this year. We have opened 39 stores this year and continue to make the investments necessary to build the Zumiez chain to our goal of 800 stores.”


Mr. Brooks continued “That said, the macro environment remains challenging and retailers are becoming increasingly promotional. Therefore, we believe it is prudent to adopt a more conservative outlook for the back half of the year.” The company now expects diluted earnings per share of approximately 80 cents to 82 cents for fiscal 2008, compared to its previous expectation for diluted earnings per share of approximately 90 cents to 93 cents. This guidance is based on anticipated square footage growth of approximately 20% and on a mid-single-digit to low-single-digit comparable store sales decline for the second half of fiscal 2008. Weighted average diluted shares for the fiscal year are expected to be approximately 29,600,000.

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

Three Months Ended
———————————————
August 2, August 4,
2008 % of Sales 2007 % of Sales
———– ———- ———– ———-
Net sales $ 92,258 100.0% $ 81,974 100.0%
Cost of goods sold 62,155 67.4% 53,783 65.6%
———– ———- ———– ———-
Gross profit 30,103 32.6% 28,191 34.4%

Selling, general and
administrative expenses 26,191 28.4% 23,489 28.7%
———– ———- ———– ———-
Operating profit 3,912 4.2% 4,702 5.7%

Interest income, net 495 0.6% 327 0.4%
———– ———- ———– ———-
Earnings before income
taxes 4,407 4.8% 5,029 6.1%

Provision for income
taxes 1,680 1.8% 1,911 2.3%
———– ———- ———– ———-

Net income $ 2,727 3.0% $ 3,118 3.8%
=========== ========== =========== ==========

Basic net income per
share $ 0.09 $ 0.11
=========== ===========

Diluted net income per
share $ 0.09 $ 0.11
=========== ===========

Weighted average shares used in computation of
earnings per share:
Basic 29,072,536 28,540,326

Diluted 29,378,589 29,186,270