06 Sep Zumiez Blasts Past Q2 Guidance
Zumiez Inc. reported second-quarter earnings nearly doubled and came in well above guidance.
Total net sales for the second quarter ended August 3, 2019 (13 weeks) increased 4.3 percent to $228.4 million from $219.0 million in the quarter ended August 4, 2018 (13 weeks). Guidance was projected between $220 million to $224 million.
Comparable sales for the thirteen weeks ended August 3, 2019 increased 3.6 percent compared to a comparable sales increase of 6.3 percent for the thirteen weeks ended August 4, 2018. Comparable sales were expected to expand between 0.0 percent and 2.0 percent.
Net income for the second quarter of fiscal 2019 was $9.0 million, or $0.36 per diluted share, compared to net income of $4.4 million, or $0.17 per diluted share in the second quarter of the prior fiscal year. Company guidance was expected between 14 cents and 20 cents.
Total net sales for the six months (26 weeks) ended August 3, 2019 increased 3.8 percent to $441.4 million from $425.3 million reported for the six months (26 weeks) ended August 4, 2018. Comparable sales increased 3.5 percent for the twenty-six weeks ended August 3, 2019 compared to a comparable sales increase of 7.2 percent for the twenty-six weeks ended August 4, 2018. Net income for the first six months of fiscal 2019 was $9.8 million, or $0.39 per diluted share, compared to net income for the first six months of the prior fiscal year of $1.8 million, or $0.07 per diluted share.
At August 3, 2019, the company had cash and current marketable securities of $188.6 million compared to cash and current marketable securities of $132.9 million at August 4, 2018. The increase in cash and current marketable securities was driven by cash generated through operations partially offset by capital expenditures.
Rick Brooks, chief executive officer of Zumiez Inc., stated, “Our relentless attention to serving our customers combined with the power of our operating model once again fueled solid comparable sales growth and a significant improvement in profitability. Despite tougher two-year stacked comparisons, we continued to experience strong full price selling driven by our differentiated merchandise offering, authentic brand positioning and seamless shopping experience in whatever channel the customer wants to experience us. Additionally, we are starting to witness the benefits of our work aimed at executing our distinct approach to retailing in markets outside of North America. Our better than expected second quarter performance, combined with a good start to the third quarter, provides us with great momentum heading into the back half of the year and puts us into a position to deliver another year of record profitability.”
August 2019 Sales
The company’s comparable sales increased 7.1 percent for the four-week period ended August 31, 2019 compared to a comparable sales increase of 9.5 percent for the four-week period ended September 1, 2018.
Outlook
The company is introducing guidance for the three months ending November 2, 2019. Net sales are projected to be in the range of $258 to $263 million including anticipated comparable sales growth of between 3.0 percent and 5.0 percent. Consolidated operating margins are expected to between 7.0 percent and 7.7 percent resulting in net income per diluted share of approximately $0.55 to $0.61.
Based on better than anticipated trends and performance year-to-date, the company is raising its annual guidance. Fiscal 2019 comparable sales are now expected to increase between 2.0 percent and 4.0 percent compared to prior guidance of low single digits. Diluted earnings per share are now projected to range from $2.10 to $2.20, up from previous guidance of $1.84 to $1.94. The company currently intends to open approximately 16 new stores in fiscal 2019, including up to 6 stores in North America, 7 stores in Europe and 3 stores in Australia.
As of August 31, 2019, Zumize operated 711 stores, including 607 in the United States, 51 in Canada, 43 in Europe and 10 in Australia. The company operates under the names Zumiez, Blue Tomato and Fast