Zumiez 2018 comps, profits up; Feb sales disappoint

today Mar 18, 2019
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Youth-centered apparel and accessories retailer Zumiez Inc. reported a comparable sales of 3.9% in the fourth quarter, as the U.S. company saw double-digit profit growth in both the final quarter and full-year.

Zumiez saw comps, profits surge in both Q4 and fiscal 2018 - Instagram: @zumiez

The Lynnwood, Washington-based Zumiez recorded fourth-quarter net sales of $304.6 million, a decrease from $308.2 million, in the same period last year.

For the three-months ending February 2, 2019, the retailer said net income surged by 48.5% to $29.6 million, or $1.18 per diluted share, compared to net income of $19.9 million, or $0.80 per diluted share in the fourth quarter of the prior fiscal year, capping off an exceptional year of growth for the company.

“For the third consecutive year we delivered strong comparable sales and operating income growth in the key holiday quarter,” said Rick Brooks, Chief Executive Officer of Zumiez Inc. 

“Our ability to consistently improve upon our performance is the result of the hard work we’ve done positioning the company to win with today’s empowered consumer."

That "empowered customer" is one that is seeking outstanding customer service and relevant stock instore and online, said the CEO, which led the company to developing its retail strategy during the year: that the right products were placed in the right channel to increase sales and minimise expense.

"Our localized fulfillment strategy has provided a retail model with a singular cost structure that we can more easily leverage to drive operating margin expansion," he added.

The quarterly success lead to a stellar fiscal year for Zumiez. For the full-year 2018, total net sales for the 52 weeks increased 5.5% to $978.6 million from $927.4 million in fiscal 2017.

Comparable sales increased 5.6% compared for the year ending February 2, while net income increased 68.7% to $45.2 million, or $1.79 per diluted share, compared to net income in the prior fiscal year of $26.8 million, or $1.08 per diluted share.

More recently, comps for the four-week month of February, ended March 2, decreased 3.8% against a 9.2% increase last year. The decrease was due to lower transactions and fall in dollars per transaction, said Zumiez, partly offset by improvement in average unit retail. The company also reported sales decline of 3.1% year over year.

Despite the February sales dip, Zumiez said it is well-positioned to take on 2019, adding profits will be affected by expansion expenditure in the first quarter, including new store openings in key local and global locations.

"We start fiscal 2019 with a strong balance sheet that provides us with financial flexibility to explore multiple opportunities for creating increased shareholder value," said Brooks.

For the first-quarter 2019, Zumiez said net sales are projected to be in the range of $202 million to $206 million including anticipated comparable sales growth of between negative 2.% and flat to prior year.

Consolidated operating margins are expected to be between negative 2% and negative 1.0% resulting in a net loss between $0.13 and $0.07 per share, it said.

Zumiez said it expects to open 14 new stores in 2019, including five stores in North America, seven stores in Europe and two stores in Australia.

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