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Zumiez Reports Sales Increase In Q2 Has Continued Into Q3 Thus Far

Zumiez 2021 Second Quarter Results see Net Sales Increase 7.3% to $268.7 Million.

Net sales for the second quarter ended July 31, 2021 (13 weeks) increased 7.3% to $268.7 million from $250.4 million in the second quarter ended August 1, 2020 (1weeks). Compared to the second quarter ended August 3, 2019 (13 weeks), second quarter 2021 net sales increased 17.6%. Net income in the second quarter of fiscal 2021 was $24.0 million, compared to net income of $25.4 million in the second quarter of the prior fiscal year. Net income for the second quarter of 2019 was $9.0 million as it was negatively impacted by $2.8 million, related to the conditional settlement of a California class action lawsuit.

Total net sales for the six months (26 weeks) ended July 31, 2021 increased 41.1% to $547.7 million from $388.2 million reported for the six months (26 weeks) ended August 1, 2020. Compared to the first six months (26 weeks) ended August 3, 2019, net sales increased 24.1%. Net income for the first six months of 2021 was $50.4 million, compared to net income for the first six months of fiscal 2020 of $4.3 million, and compared to net income for the first six months of fiscal 2019 of $9.8 million.

At July 31, 2021, the Company had cash and current marketable securities of $412.0 million compared to cash and current marketable securities of $299.1 million at August 1, 2020. 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 second quarter performance reflects the sustained success our business has experienced over the past several years. After driving solid growth as we reopened our stores in the second quarter of last year, our teams once again did a terrific job adapting to the current environment to fulfill robust demand for our distinct merchandise offering. Stronger than expected full priced selling helped offset a portion of expenses that were reintroduced following temporary cost savings last year during the height of the pandemic, resulting in second quarter profitability that meaningfully exceeded our projections. The third quarter has started off well driven by a more normalized back to school shopping season, and while operating conditions remain volatile, we believe the flexibility of our business model provides us with key competitive advantages that we can leverage to maintain our positive momentum heading into the holidays. With our strong balance sheet and differentiated strategies, we are well positioned to add to our global market share and return increased value to our shareholders over the long-term.”

Third Quarter To-Date
Total third quarter-to-date total sales for the 37 days ending September 6, 2021 increased 23.2%, compared with the same 37-day time period in the prior year ended September 7, 2020. Compared to the 37-day period ended September 9, 2019, total net sales increased 6.7%. Total comparable sales for the 37-day period ending September 6, 2021 were up 10.5% from the comparable period in the prior year, and increased 5.4% from the comparable period in 2019.

Outlook
Due to the continued fast-moving nature of this situation and the uncertainty of impacts on revenue and costs, the Company is not providing an outlook at this time for the third quarter or the year

Comments from conference call

Europe
Other international sales, which consists of Europe and Australia, were $30.4 million, up 43.2% from last year and up 21.7% from 2 years ago. Both our European and Canadian operations had impactful COVID-related store closures during the first quarter of this year, and they were open for approximately 40% and 77% of the available operating days, respectively. From a category perspective, all categories were up in total sales from the prior year, with men’s being our most positive, followed by accessories, hardgoods, women’s and footwear..

The good news about our European business was that before the pandemic about 50% of our sales where online . So as you would expect, that channel ramped up, and it was no different in the first quarter. We’re really proud of our European teams and how they’ve really kind of had to fight through this. This is not an easy operating environment by any means. But I think that the online volumes have picked up for some of the closures that we’ve had in Q1.And while they’re not quite where we are hoping they’d be in Q1, they’re not far off. And so I really give them a lot of credit given the unexpected challenges we’ve had with closures. I think longer term, you know, we’re still very bullish on our beliefs around Europe. I think, you know, we’ve talked before to grow Europe to what it is today, has taken a pretty meaningful investment, and we’re starting to really see the payoff here. To execute our strategy, our model, our integrated omni model, you have to build scale in markets to do that. You have to have the physical presence, as well as a digital presence. So that has really been a focus of our European business is exactly doing that on a country-by-country basis.

Skate hard goods
So we’re not worried about it because if you think about the increase that hardgoods has had throughout 2019 and 2020 as a percent of overall sales, these are still phenomenal results for the hardgoods category. And I think we’re traversing here a period of time during closure last year, where this became a very popular buy for people that were sheltering at home and looking for things for their kids to do. So we saw a lot of skateboards during the closure period. We’re experiencing that now. And, you know, we’re still optimistic about how the category will play out for the remainder of the year. You know, this is a part of our business increased 600 basis points as a percent of total sales. So yeah, we — I think we’ve seen just phenomenal results here. I think, you know, obviously, skates has been popular everywhere, but we are one of the largest, if not the largest, distributor of skateboards out there. So we’re a destination to come get that product, and I think our results have shown that.