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Zumiez Q4 Earnings Fall by Nearly Half

Company says economy affected results.

The one-two punch of slower spending and accelerated promotions lowered fourth-quarter profits at Zumiez Inc., which projected a first-quarter loss.

In the 13 weeks ended Jan. 31, net income for the Everett, Wash.-based board-sports lifestyle retailer was cut nearly in half, falling 49.4 percent to $6.3 million, or 21 cents a diluted share, from $12.4 million, or 42 cents a share, in last year’s period.

Sales declined 0.9 percent to $125.5 million from $126.6 million a year ago. Comparable-store sales fell 13.4 percent in the fourth quarter versus a gain of 4 percent in last year’s quarter.

“Since September, the deteriorating economic conditions have significantly dampened consumer appetite for discretionary items,” said CEO Rick Brooks. “As a result, we saw a significant increase in promotional activity across all of retail, especially in the third and fourth quarters.”

The company said it expects a net loss of 13 cents to 17 cents a share in the current quarter on comp declines in the middle to high teens.

For the full year, Zumiez profits slid 32.1 percent to $17.2 million, or 58 cents a share, from $25.3 million, or 86 cents a share, last year. Sales rose 7.1 percent, to $408.7 million from $381.4 million in fiscal 2007, but fell 6.5 percent on a same-store basis.

Brooks noted the 343-unit chain began the year with “approximately $79 million in cash, cash equivalents and current marketable securities, no debt and lean inventory levels.”

Year-end inventory was $52 million, up 6.7 percent from a year ago.

Jennifer Black, retail analyst and president of the firm that bears her name, stated in a research note, “We believe the company will be one of the survivors in these difficult times and is positioned to continue to grow and take market share as the landscape continues to constrict, while maintaining its unique market niche.”

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