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Zumiez Release Fiscal Q4’23 & Full Year Financial Results
- Net sales for the fourth quarter ended February 3, 2024 (14 weeks) increased 0.6% to $281.8 million from $280.1 million in the fourth quarter ended January 28, 2023 (13 weeks).
- Net loss in the fourth quarter of fiscal 2023 was $33.5 million, or $1.73 per share, compared to net income of $11.4 million, or $0.59 per diluted share, in the fourth quarter of the prior fiscal year.
Fiscal 2023 fourth quarter results reflect a goodwill impairment charge of $41.1 million, or $2.13 per share after-tax, related to Zumiez Inc’s decision to slow store growth and focus on profitability in Europe and the corresponding impact on the future cash flow projections of its Blue Tomato business.
- Total net sales for the twelve months (53 weeks) ended February 3, 2024 decreased 8.6% to $875.5 million from $958.4 million reported for the twelve months (52 weeks) ended January 28, 2023.
- Net loss for fiscal 2023 inclusive of the $41.1 million goodwill impairment charge was $62.6 million, or $3.25 per share, compared to net income for fiscal 2022 of $21.0 million, or $1.08 per diluted share.
At February 3, 2024, the Company had cash and current marketable securities of $171.6 million compared to cash and current marketable securities of $173.5 million at January 28, 2023. The slight decrease was primarily driven by capital expenditures, offset by cash flow from operating activities.
Rick Brooks, Chief Executive Officer of Zumiez Inc., stated, “We concluded a difficult year with stronger than anticipated fourth quarter results as our consolidated monthly sales trend accelerated in January. Within our recent performance, there were multiple areas that showed a marked improvement, led by our North American men’s business which grew year-over-year in the fourth quarter. While we are encouraged by our stronger than anticipated fourth quarter and sustained quarterly improvements as we moved through the year, the global operating environment remains challenging and therefore we are further adjusting our strategies to balance the interests of our shareholders and customers.
For 2024, this includes slowing store growth in Europe and focusing on increasing the productivity of our current footprint in the region. We are also continuing to close underperforming stores in the U.S., reducing labor costs to align with lower revenue levels, and looking to drive even greater efficiencies throughout the organization. At the same time, we’ll invest to ensure we are winning with the consumer by launching new, highly sought-after brands, maintaining our best-in-class service levels, and strengthening our customer connections. We have successfully navigated down cycles before and I am confident in our teams’ ability to return the Company to growth and enhanced profitability both in the near-term and the years ahead.”
Fiscal First Quarter-to-Date Sales
Total first quarter-to-date sales for the four weeks ended March 2, 2024 decreased 3.1%, from the four weeks ended February 25, 2023. Comparable sales for the four weeks ended March 2, 2024 decreased 6.2% from the four weeks ended March 4, 2023. From a regional perspective, comparable sales for North America decreased 2.6% and other international comparable sales decreased 17.8%.
Fiscal 2023 First Quarter Outlook
The Company is introducing guidance for the three months ending May 4, 2024. Net sales are projected to be in the range of $167 to $172 million. Earnings per share are expected to be between a loss of $1.09 and a loss of $1.19.
The Company currently intends to open approximately 10 new stores in fiscal 2024, including up to 3 stores in North America, 3 stores in Europe and 4 stores in Australia.
More specific information on Blue Tomato from their conference call
They recorded a full impairment of Blue Tomato goodwill amounting to $41.1 million for the fiscal year ended February 3, 2024. Though sales at Blue Tomato continued a trend of year-over-year growth, the trend has been more closely tied to store growth than comparable sales trends needed to keep up with the cost of doing business. As such, they have experienced increasing operating losses with the current fiscal year having the largest loss at Blue Tomato since acquisition.
The macroeconomic climate conditions continue to indicate economic instability. Factors include consumer trends, higher costs of doing business, lingering COVID-19 impacts, war in Ukraine, energy challenges and inflation/interest rate pressures. These pressures and the continued lack of scalability in the business have led the Board and Company management to prioritize positive cash flow and operating profit in the annual budget cycle and the resulting 5 and 10-year plans that reduced expected store count by 50% to align with lower levels of capital and attempt to focus on profitability rather than growth. This change in store growth directly impacts the future revenue expectations of the business and related present value valuation technique used in their annual impairment test. Furthermore, they have reduced growth rates going forward to more closely align with historical trends as well as factor in the impact of less maturing stores.
Look back over Zumiez’ fiscal 2023 below:
