Mar 12, 2012
Author: MIke P.
Zumiez opened up shop in Canada a little over a year ago and now has 10 stores. Seven locations in Ontario and three locations in British Columbia. Canadian vendors and retailers have been waiting and wondering about how many more stores will open and where. At a recent earnings conference CEP Rick Brooks stated that 10 more location would open in Canada during 2012. He also mentioned that the current Canadian locations have been out performing the US locations that had been opened around the same time.
CEO Rick Brooks pointed out that the Zumiez team navigated the promotional environment at the mall well in 2011 and managed to drive sales gains while also recording record product margins.
First, here are some financial highlights for Q4 and the year.
Net sales: up 17.7% to $183.9 million
Same store sales: up 9.7%
Strong categories: men’s, footwear, accessories, junior’s and boy’s
Weak category: hardgoods
Snow (hardgoods, outerwear, etc.): accounted for 17% of total sales and posted a negative comp. However, executive are pleased they were able to move excess hardgoods inventory and currently have very little carry over inventory.
Ecommerce sales: rose 60.3% and accounted for 9.8% of total sales in the quarter.
Dollars per transaction: up
No. of transactions: down
Gross margin: 38.9% vs. 38.3%
SG&A: up 12% to $40.2 million but declined as a percentage of sales.
Net income: rose 25% to $18.7 million
Net sales: up 16.1% to $555.9 million
Same stores sales: up 8.7%
Ecommerce: up 80.1%
Net income: up 54.3% to $37.4 million
Cash and marketable securities: $172.8 million, up from $128.8 million at the end of last year.
Debt: none, including no borrowings on revolving line of credit.
Inventory: $65 million, up 15.5%. The company said it has been disciplined at growing inventory at a rate slower than sales.
Continued (page 2 of 2)...
Zumiez currently operates 434 stores in the U.S., and opened 45 total new stores in 2011.
It plans to open 40 new stores in the U.S. in 2012, including entering two new states. The company continues to believe the chain can grow to 600 to 700 stores in the U.S. in the future.
Zumiez opened 10 stores in Canada last year and plans to open 10 more in 2012. Rick said the current stores are generating more sales than new stores typically do in the U.S., but stressed it was still too early to truly assess their performance until the stores have been open longer.
Zumiez does expect its Canadian business to be a meaningful contributor in coming years, and eventually expects to open 60 to 70 stores in the country.
Executives talked a lot about Zumiez’s strong online performance in 2011 and how the company continues to invest in this area. In 2011, ecommerce accounted for 7.3% of total sales vs. 4.7% in 2010. The company believes that will grow to 10% of total sales in the next few years.
Zumiez is relocating its ecommerce operation to Kansas to give it room to grow and to make it easier to get orders shipped to all parts of the country faster. Zumiez guarantees online shoppers they will receive orders in three days or less anywhere in the continental U.S.
It is also moving into new corporate headquarters in Washington.
Overall retail trends
Rick said he continues to believe that the recessionary environment over the past several years and the increasing influence of technology is leading to retail consolidation in every retail segment.
Zumiez is responding by constantly working on and investing in increasing connections with its consumers and transforming into a channel-less retail company.
Same store sales: should increase in high single digits
Total sales: $123 million to $125 million
EPS: 6 cents to 8 cents per share
2012 – Full Year
Zumiez is planning single digit comp increases