Zumiez, Inc. reported earnings and sales were down year-over-year in the third quarter ended October 29 but came in better than company guidance.
Net sales decreased 17.9 percent to $237.6 million from $289.5 million in the third quarter ended October 30, 2021 (13 weeks). Net sales were projected to be in the range of $220 to $228 million.
Net income in the third quarter of fiscal 2022 was $6.9 million, or $0.36 per diluted share, compared to net income of $30.7 million, or $1.25 per diluted share, in the third quarter of the prior fiscal year. Earnings per share were expected to be in the range of $0.03 to $0.18.
Total net sales for the nine months (39 weeks) ended October 29, 2022 decreased 19.0 percent to $678.3 million from $837.2 million reported for the nine months (39 weeks) ended October 30, 2021. Net income for the first nine months of 2022 was $9.6 million, or $0.49 per diluted share, compared to net income for the first nine months of fiscal 2021 of $81.1 million, or $3.20 per diluted share.
At October 29, 2022, the company had cash and current marketable securities of $141.1 million compared to cash and current marketable securities of $338.1 million at October 30, 2021. The decrease was driven by share repurchases of $183.1 million and capital expenditures of $24.7 million over this time period, partially offset by cash generated through operations.
Rick Brooks, CEO, said, “We are managing through a challenging operating environment and our recent performance reflects the emergence of multiple headwinds since the year-ago period led by a pullback in consumer discretionary spending, inflation-driven cost and expense pressures, an increasingly promotional marketplace, a war in Eastern Europe and the anniversary of some strong trends that drove our business during the pandemic. At the same time, our growth in Europe and Australia is being offset on a reported basis due to unfavorable movements in foreign currency. While we are disappointed with the change in our results year-over-year, I am encouraged with how our teams are managing the business in light of the current challenges. Like we have done during similar economic times, we are prudently balancing the protection of near-term profitability while investing in our people and the key projects that will continue to deliver our distinct merchandise and world-class customer service that has been the foundation of Zumiez’s long-term success.”
Fourth Quarter To-Date
Total fourth quarter-to-date total sales for the 31 days ending November 29, 2022 decreased 23.9 percent, compared with the same 31-day time period in the prior year ended November 30, 2021. Total comparable sales for the 31-day period ending November 29, 2022 decreased 24.8 percent from the comparable period in the prior year.
Fiscal 2022 Fourth Quarter Outlook
The company is introducing guidance for the three months ending January 28, 2023. Net sales are projected to be in the range of $258 to $265 million. Consolidated operating margins are expected to be between 3.4 percent and 4.7 percent resulting in earnings per diluted share of approximately $0.36 to $0.51. In the year-ago fourth quarter, earnings were $1.70 on sales of $346.7 million.
The company currently intends to open approximately 33 new stores in fiscal 2022, including up to 16 stores in North America, 13 stores in Europe and 4 stores in Australia.
Photo courtesy Zumiez
