Zumiez Q4 Comps Down 13%, Will Open 37 New Stores in 2009

josh hunter

• March 18 2009
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Zumiez same-store sales dropped 13.4 percent in Q4. Net sales decreased about one percent to 125 million dollars, and net income declined 49 percent to 6.3 million dollars.

Rick Brooks CEO of Zumiez Inc. (above/left, with Quiksilver CEO Bob McKnight) had this to say about the lack luster perfromance:

“Fiscal 2008, particularly the second half of the year, was incredibly challenging. Since September the deteriorating economic conditions have significantly dampened consumer appetite for discretionary items. As a result, we saw a significant increase in promotional activity across all of retail, especially during the third and fourth quarters.”

A quick look at the chart of Zumiez comps over the past 14 months sheds a little light on just how true Brooks’ statement is. But, like any good CEO, he also threw some optimism into the mix for his investors, reiterating that the company has 79 million dollars in cash, no debt, and lean inventory levels going into 2009.

Zumiez also joins the club of retailers that have decided to stop providing investors with specific guidance “until conditions normalize.”

Despite all this, it plans to open 37 stores in 2009.

Here’s the full release:

Zumiez Inc.’s total net sales decreased 0.9% for the fourth quarter ended Jan. 31, to $125.5 million from $126.6 million a year ago. Comps decreased 13.4% versus a 4.0% increase in FY08. Net income fell 49% to $6.3 million, or 21 cents a share, from $12.4 million or 42 cents, a year ago.

The latest quarter included a non-cash, after-tax charge of 2 cents per diluted share associated with the impairment of store related assets, offset by a lower tax rate worth 2 cents per diluted share.

Total net sales for fiscal 2008 increased 7.1% to $408.7 million from $381.4 million reported in fiscal 2007. The company posted net income of $17.2 million or 58 cents per diluted share versus $25.3 million or 86 cents per diluted share in the prior year. Comparable store sales decreased 6.5% in fiscal 2008 compared to an increase of 9.2% in fiscal 2007.

Rick Brooks, CEO of Zumiez Inc., stated: “Fiscal 2008, particularly the second half of the year, was incredibly challenging. Since September the deteriorating economic conditions have significantly dampened consumer appetite for discretionary items. As a result, we saw a significant increase in promotional activity across all of retail, especially during the third and fourth quarters.”

He continued, “We begin 2009 confident that our strong balance sheet which includes approximately $79 million in cash, cash equivalents and current marketable securities, no debt and lean inventory levels, combined with our competitive advantages will allow us to successfully manage our business through this difficult macro environment. While longer-term we believe we are well positioned to drive increased profitability and greater shareholder value once the economy improves.”

2009 Outlook

Due to the current market conditions and uncertain consumer environment, particularly in the back half of the year, the company is discontinuing the practice of providing specific annual guidance until conditions normalize and visibility improves. The company said its current intention is to open approximately 37 new stores in fiscal 2009 with an opening cadence similar to fiscal 2008.

The company is introducing guidance for the three months ending May 2, 2009 of a net loss of approximately 17 cents to 13 cents per diluted share. This guidance is based on an anticipated comparable store sales decline in the mid to high teen range for the first quarter of fiscal 2009.