Zumiez Inc

Previous wording

Fiscal 2024 is the 52-week period ending February 1, 2025. Fiscal 2023 was the 53-week period ending February 3, 2024. The first three months of fiscal 2024 was the 13-week period ended May 4, 2024. The first three months of fiscal 2023 was the 13-week period ended April 29, 2023.

Current wording

Fiscal 2024 is the 52-week period ending February 1, 2025. Fiscal 2023 was the 53-week period ending February 3, 2024. The first six months of fiscal 2024 was the 26-week period ended August 3, 2024. The first six months of fiscal 2023 was the 26-week period ended July 29, 2023.

Previous wording

We have been, and we expect to continue to be affected by a number of factors that may cause actual results to differ from our historical results or current expectations. These factors include the impact of foreign currency rates; changes in laws, including U.S. tax law changes; fluctuations in variable costs, and changes in general economic conditions in the markets in which we operate. Additionally, we have experienced increased costs during 2023 and 2024. Our ability to raise our selling prices depends on market conditions and there may be periods during which we are unable to fully recover increases in our costs or experience an adverse impact on demand due to pricing actions. We believe higher consumer price inflation has resulted in reduced consumer confidence and consumer spending which negatively impacted our sales during fiscal 2023 and the first three months of fiscal 2024.

Current wording

We have been, and we expect to continue to be affected by a number of factors that may cause actual results to differ from our historical results or current expectations. These factors include the impact of foreign currency rates; changes in laws, including U.S. tax law changes; fluctuations in variable costs, and changes in general economic conditions in the markets in which we operate. Additionally, we have experienced increased costs during 2023 and 2024. Our ability to raise our selling prices depends on market conditions and there may be periods during which we are unable to fully recover increases in our costs or experience an adverse impact on demand due to pricing actions. We believe higher consumer price inflation has resulted in reduced consumer confidence and consumer spending which negatively impacted our sales during fiscal 2023 and the first six months of fiscal 2024.

Previous wording

Net sales were $177.4 million for the three months ended May 4, 2024 compared to $182.9 million for the three months ended April 29, 2023, a decrease of $5.5 million or 3.0%. While overall sales trends have continued in a positive trajectory, we continued to see sales declines in each market we do business. Overall, softer sales were primarily driven by continued inflationary pressures on the consumer, continued challenges in competition for the discretionary dollar and tougher trends in certain categories of our business. By region, North America sales decreased $1.3 million or 0.9% and other international sales (which consists of Europe and Australia sales) decreased $4.2 million or 10.8% for the three months ended May 4, 2024 compared to the three months ended April 29, 2023. Foreign exchange rates were not material for the three months ended May 4, 2024 compared to the three months ended April 29, 2023.

Current wording

Net sales were $210.2 million for the three months ended August 3, 2024 compared to $194.4 million for the three months ended July 29, 2023, an increase of $15.8 million or 8.1%. The increase in sales was driven by a calendar shift including an additional week of back-to-school season during the second quarter worth 5.3% of the sales growth and sales increases in our North America business that were offset by unfavorable results in Europe. While overall sales trends have continued in a positive trajectory and our overall business improved, sales were still affected by continued inflationary pressures on the consumer and continued challenges in competition for the discretionary dollar. By region, North America sales increased $16.7 million or 10.4% and other international sales (which consists of Europe and Australia sales) decreased $0.9 million or 2.6% and for the three months ended August 3, 2024 compared to the three months ended July 29, 2023. Excluding the impact of changes in foreign exchange rates, North America sales increased $16.9 million or 10.6% and other international sales decreased $0.6 million or -1.7% for the three months ended August 3, 2024 compared to the three months ended July 29, 2023.

Previous wording

Net sales included a decrease in transactions and an increase in dollars per transaction. Dollars per transaction increased due to an increase in both average unit retail and units per transaction. By category, net sales were primarily driven by a decrease in hardgoods, followed by accessories, and footwear, partially offset by men's clothing and women's clothing.

Current wording

Comparable sales increased 3.6% for the three months ended August 3, 2024 driven by an increase in dollars per transaction that was offset by a decrease in transactions. Dollars per transaction increased due to an increase in both average unit retail and units per transaction. By category, net sales were primarily driven by an increase in men's clothing, women's clothing, followed by footwear, partially offset by accessories and hardgoods.

Previous wording

Gross profit was $51.9 million for the three months ended May 4, 2024 compared to $49.4 million for the three months ended April 29, 2023, an increase of $2.5 million, or 5.1%. As a percent of net sales, gross profit increased 230 basis points for the three months ended May 4, 2024 to 29.3%. The increase was primarily driven by a 70 basis point increase in product margin (defined as net sales minus cost of goods sold excluding shrinkage, buying, occupancy, distribution and warehousing costs and freight costs for store merchandise transfers), a 70 basis point leverage in web shipping costs, a 20 basis point leverage in distribution center costs, a 20 basis point leverage store occupancy costs and 60 basis point benefit related to a mix shift away from service and related shipping revenue in the prior year results which carried a negative margin during the prior year quarter.

Current wording

Gross profit was $71.8 million for the three months ended August 3, 2024 compared to $61.7 million for the three months ended July 29, 2023, an increase of $10.1 million, or 16.4%. As a percent of net sales, gross profit increased 250 basis points for the three months ended August 3, 2024 to 34.2%. The increase was primarily driven by a 140 basis point leverage in store occupancy cost, a 90 basis point leverage in web shipping costs, and a 20 basis point leverage in distribution center costs while product margin (defined as net sales minus cost of goods sold excluding shrinkage, buying, occupancy, distribution and warehousing costs and freight costs for store merchandise transfers) remained flat.

Previous wording

Selling, general and administrative (“SG&A”) expenses were $72.1 million for the three months ended May 4, 2024 compared to $70.7 million for the three months ended April 29, 2023, an increase of $1.4 million, or 1.9%. SG&A expenses as a percent of net sales increased 190 basis points for the three months ended May 4, 2024 to 40.6%. The increase was primarily driven by 60 basis points increase in annual incentive compensation, 40 basis points due to store wages tied to both deleverage on lower sales as well as rate increase that we could not offset by reduction of hours, 50 basis points due timing of employee training, and 50 basis points in non-store wages.

Current wording

Selling, general and administrative (“SG&A”) expenses were $72.2 million for both the three months ended August 3, 2024 and for the three months ended July 29, 2023. SG&A expenses as a percent of net sales decreased 280 basis points for the three months ended August 3, 2024 to 34.4%. The decrease was primarily driven by 100 basis points decrease in store wages tied to both leverage on higher sales as well as reduction of hours offset by rate increase, 80 basis points due to decrease in corporate costs, 50 basis points due to store costs not tied to wages primarily impacted by leverage on higher sales, 50 basis points due timing of employee training, 20 basis points leverage in non-store wages, partially offset by 30 basis point increase in annual incentive compensation.

Previous wording

Net loss for the three months ended May 4, 2024 was $16.8 million, or $0.86 loss per diluted share, compared with net loss of $18.4 million, or $0.96 loss per diluted share, for the three months ended April 29, 2023. Our effective income tax rate for the three months ended May 4, 2024 was a 14.4% benefit from income taxes compared to a 12.6% benefit from income taxes for the three months ended April 29, 2023.

Current wording

Net loss for the six months ended August 3, 2024, was $17.6 million, or $0.91 loss per diluted share, compared with net loss of $26.9 million, or $1.40 loss per diluted share, for the six months ended July 29, 2023. Our effective income tax rate for the six months ended August 3, 2024, was a 7.4% benefit from income taxes compared to an 11.3% benefit from income taxes for the six months ended July 29, 2023.

Previous wording

During fiscal 2024, we expect to spend approximately $14.0 million to $16.0 million on capital expenditures, a majority of which will relate to leasehold improvements and fixtures for the approximately 10 new stores we remain on track to open in fiscal 2024 and remodels or relocations of existing stores. There can be no assurance that the number of stores that we actually open in fiscal 2024 will not be different from the number of stores we plan to open, or that actual fiscal 2024 capital expenditures will not differ from our expectations.

Current wording

During fiscal 2024, we expect to spend approximately $14.0 million to $16.0 million on capital expenditures, a majority of which will relate to leasehold improvements and fixtures for the approximately 7 new stores we remain on track to open in fiscal 2024 and remodels or relocations of existing stores. There can be no assurance that the number of stores that we actually open in fiscal 2024 will not be different from the number of stores we plan to open, or that actual fiscal 2024 capital expenditures will not differ from our expectations.

Previous wording

Net cash used in operating activities decreased by $5.7 million to $18.6 million used in operating activities for the three months ended May 4, 2024 from $12.9 million used in operating activities for the three months ended April 29, 2023. Net cash used in operating activities was $18.6 million for the three months ended May 4, 2024 related to $21.6 million in unfavorable changes in our operating assets and liabilities and a $16.8 million net loss, excluding $19.8 million of noncash charges included within net loss for the period. Net cash used in operating activities was $12.9 million for the three months ended April 29, 2023 related to $15.9 million in unfavorable changes in our operating assets and liabilities and a $18.4 million net loss, excluding $21.4 million of noncash charges included within net loss for the period. Our operating cash flows generally result primarily from cash received from our customers, offset by cash payments we make for inventory, employee compensation, store occupancy expenses and other operational expenditures. Cash received from our customers generally corresponds to our net sales. Because our customers primarily use credit cards or cash to buy from us, our receivables from customers settle quickly. Historically, changes to our operating cash flows have been driven primarily by changes in operating income, which is impacted by changes to non-cash items such as depreciation, amortization and accretion, deferred taxes, and changes to the components of working capital.

Current wording

Net cash used in operating activities decreased by $8.8 million to $15.4 million used in operating activities for the six months ended August 3, 2024 from $24.3 million used in operating activities for the six months ended July 29, 2023. Net cash used in operating activities was $15.4 million for the six months ended August 3, 2024 related to $44.0 million in unfavorable changes in our operating assets and liabilities and a $17.6 million net loss, excluding $46.2 million of noncash charges included within net loss for the period. Net cash used in operating activities was $24.3 million for the six months ended July 29, 2023 related to $42.5 million in unfavorable changes in our operating assets and liabilities and a $26.9 million net loss, excluding $45.1 million of noncash charges included within net loss for the period. Our operating cash flows generally result primarily from cash received from our customers, offset by cash payments we make for inventory, employee compensation, store occupancy expenses and other operational expenditures. Cash received from our customers generally corresponds to our net sales. Because our customers primarily use credit cards or cash to buy from us, our receivables from customers settle quickly. Historically, changes to our operating cash flows have been driven primarily by changes in operating income, which is impacted by changes to non-cash items such as depreciation, amortization and accretion, deferred taxes, and changes to the components of working capital.

Previous wording

Net cash provided by investing activities was $8.0 million for the three months ended May 4, 2024 related to $2.5 million of capital expenditures primarily for new store openings and existing store remodels or relocations, partially offset by $10.5 million in net sales of marketable securities. Net cash used in investing activities was $1.7 million for the three months ended April 29, 2023, related to $5.4 million of capital expenditures primarily for new store openings and existing store remodels or relocation, partially offset by $3.7 million in net sales of marketable securities.

Current wording

Net cash provided by investing activities was $15.9 million for the six months ended August 3, 2024 related to $6.3 million of capital expenditures primarily for new store openings and existing store remodels or relocations, partially offset by $22.2 million in net sales of marketable securities. Net cash used in investing activities was $1.4 million for the six months ended July 29, 2023, related to $11.9 million of capital expenditures primarily for new store openings and existing store remodels or relocation, partially offset by $10.5 million in net sales of marketable securities.

Previous wording

Net cash provided by financing activities for the three months ended May 4, 2024 was $0.2 million, related $0.4 million in proceeds from the issuance and exercise of stock-based awards, partially offset by $0.1 million in payments for tax withholding obligations upon vesting of restricted stock. Net cash used in financing activities for the three months ended April 29, 2023 was $0.3 million, related $0.5 million in proceeds from the issuance and exercise of stock-based awards, partially offset by $0.2 million in payments for tax withholding obligations upon vesting of restricted stock.

Current wording

Net cash used in financing activities for the six months ended August 3, 2024 was $19.4 million, related$19.6 million used in the repurchase of common stock and $0.1 million in payments for tax withholding obligations upon vesting of restricted stock partially offset by $0.3 million in proceeds from the issuance and exercise of stock-based awards. Net cash provided by financing activities for the six months ended July 29, 2023 was $0.3 million, related $0.5 million in proceeds from the issuance and exercise of stock-based awards, partially offset by $0.2 million in payments for tax withholding obligations upon vesting of restricted stock.

Previous wording

There were no borrowings or open commercial letters of credit outstanding under the secured credit facility at February 3, 2024. We had $3.5 million in issued, but undrawn, standby letters of credit at February 3, 2024. As of May 4, 2024 the open standby letters of credit are backed by restricted cash deposits at the bank.

Current wording

There were no borrowings or open commercial letters of credit outstanding under the secured credit facility at February 3, 2024. We had open commercial letters of credit outstanding of less than $0.5 at August 3, 2024 and no open commercial letters of credit outstanding as of February 3, 2024. We had $2.7 million in issued, but undrawn, standby letters of credit at August 3, 2024 and $3.5 million in issued, but undrawn, standby letters of credit at February 3, 2024. As of August 3, 2024 the open standby letters of credit are backed by restricted cash deposits at the bank.