Zumiez Inc. Announces Record Fiscal 2007 Second Quarter Results

Zumiez Inc. (NASDAQ: ZUMZ) today reported results for the second quarter ended August 4, 2007. Total net sales for the second quarter (13 weeks) ended August 4, 2007 increased by 47.0% to $82.0 million from $55.8 million reported in the second quarter ended July 29, 2006 (13 weeks). The company posted net income for the quarter of $3.1 million or $0.11 per diluted share versus $1.6 million or $0.06 per diluted share in the second quarter of the prior fiscal year. Comparable store sales increased 11.6% for the second quarter of fiscal 2007 compared to a 12.6% increase in the second quarter of fiscal 2006. Total net sales for the first six months (26 week period) of fiscal 2007 increased by 45.6% to $150.8 million from $103.5 million reported in the first six months of the prior year. The company posted net income of $4.7 million or $0.16 per diluted share in the first six months of 2007 versus $2.8 million or $0.10 per diluted share in the prior year. Comparable store sales increased 11.4% for the first six months of fiscal 2007 compared to 15.8% for the first six months of fiscal 2006. Rick Brooks, President and Chief Executive Officer of Zumiez Inc., stated, "We are pleased to have reported another strong quarter, and feel our unique retail model has Zumiez very well positioned as we head into the back half of the year. We opened 12 new stores in the second quarter and 31 stores year-to-date. We remain on track to open 50 new stores in fiscal 2007 and continue to believe that we can eventually operate 800 Zumiez stores in the U.S.” 2007 Outlook The company remains focused on its long-term financial targets of comparable store sales growth in the mid single digit range, net square footage expansion of approximately 20%, and diluted EPS growth in excess of 30%. Given the stronger than planned results in the first half of the year, the company is increasing its guidance for fiscal 2007 to $0.97 to $0.99 per diluted share, up from the previous guidance of $0.94 to $0.96 in diluted earnings per share. Weighted average diluted shares for the fiscal year are expected to be approximately 29,500,000. In putting forth this outlook, the company reminds investors of the complexity of accurately assessing future growth given the difficulty in predicting fashion trends and consumer preferences, boardsports popularity and participation rates, general economic conditions and the impact of other business variables and risks. A conference call will be held today to discuss second quarter results and will be webcast at 5:00 p.m. ET on http://ir.zumiez.com. Participants may also dial (800) 295-4740 followed by the conference identification code of 55107296. About Zumiez Inc. Zumiez is a leading specialty retailer of action sports related apparel, footwear, equipment and accessories. Our stores cater to young men and women between ages 12-24, focusing on skateboarding, surfing, snowboarding, motocross and BMX. As of August 4, 2007 we operate 266 stores, which are primarily located in shopping malls and our web site address is www.zumiez.com. Safe Harbor Statement Certain statements in this press release and oral statements relating thereto made from time to time by representatives of the company may constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements include, without limitation, predictions and guidance relating to the company's future financial performance, brand and product category diversity, ability to adjust product mix, integration of acquired businesses, growing customer demand for our products and new store openings. In some cases, you can identify forward-looking statements by terminology such as, "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. These forward-looking statements are based on management's current expectations but they involve a number of risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in the forward-looking statements as a result of risks and uncertainties, which include, without limitation, those described in the company’s quarterly report on Form 10-Q for the quarter ended May 5, 2007 as filed with the Securities and Exchange Commission and available at www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements speak only as of the date on which they are made and the company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. ZUMIEZ INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (in thousands, except share and per share data) (Unaudited)   Three Months Ended Six Months Ended August 4, 2007   July 29, 2006 August 4, 2007   July 29, 2006 Net sales $ 81,974 $ 55,756 $ 150,765 $ 103,541 Cost of goods sold   53,701   36,981   100,677   69,500 Gross profit 28,273 18,775 50,088 34,041   Selling, general and administrative expenses   23,571   16,780   43,203   30,576 Operating profit 4,702 1,995 6,885 3,465   Interest income, net 327 231 753 583 Other expense   -   (16)   (1)   (16) Earning before income taxes 5,029 2,210 7,637 4,032   Provision for income taxes   1,911   568   2,902   1,281   Net income $ 3,118 $ 1,642 $ 4,735 $ 2,751   Basic net income per share $ 0.11 $ 0.06 $ 0.17 $ 0.10   Diluted net income per share $ 0.11 $ 0.06 $ 0.16 $ 0.10   Weighted average shares outstanding, Basic 28,540,326 27,396,890 28,478,125 27,299,864   Weighted average shares outstanding, Diluted 29,186,270 28,903,588 29,094,234 28,768,373 ZUMIEZ INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)     August 4, February 3, July 29, 2007 2007 2006   (Unaudited) (Audited) (Unaudited) Assets Current assets Cash and cash equivalents $ 6,139 $ 8,161 $ 4,221 Marketable Securities 27,283 43,816 10,366 Receivables 13,384 5,223 6,196 Inventory 61,803 42,157 51,783 Prepaid expenses and other 4,457 3,593 3,610 Deferred tax assets   1,900   1,551   1,485 Total current assets 114,966 104,501 77,661   Leasehold improvements and equipment, net 62,255 49,889 45,447 Goodwill 13,154 12,904 11,635 Deferred tax assets   433   -   - Total long-term assets 75,842 62,793 57,082   Total assets $ 190,808 $ 167,294 $ 134,743   Liabilities and Shareholders’ Equity Current liabilities Trade accounts payable $ 38,405 $ 24,164 $ 30,075 Book Overdraft - 6,083 - Accrued payroll and payroll taxes 3,318 4,784 3,317 Income taxes payable - 6,598 - Current portion of deferred rent and tenant allowances 1,817 1,377 1,180 Other accrued liabilities   6,575   6,566   7,860 Total current liabilities 50,115 49,572 42,432   Long-term deferred rent and tenant allowances, less current portion 15,470 12,069 10,226 Deferred tax liabilities   -   841   807 Total long-term liabilities 15,470 12,910 11,033   Commitments and contingencies — — —   Shareholders’ equity Preferred stock, no par value, 40,000,000 shares authorized; none issued and outstanding — — — Common stock, no par value, 100,000,000 shares authorized; 28,688,861 shares issued and outstanding at August 4, 2007, 27,880,512 shares issued and outstanding at February 3, 2007, and 27,553,420 issued and outstanding at July 29, 2006 60,983 45,311 39,885 Accumulated other comprehensive loss (10) (14) (16) Retained earnings   64,250   59,515   41,409 Total shareholders’ equity 125,223 104,812 81,278   Total liabilities and shareholders’ equity $ 190,808 $ 167,294 $ 134,743