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Zumiez reports steep drop in fourth-quarter profit
Zumiez says clothing sales were weakest during the important holiday-sales season.
Seattle Times business reporter
Calling the second half of 2008 "incredibly challenging," Everett-based retailer Zumiez said its fourth-quarter profit plunged 49 percent as stores slashed prices to compete for shoppers accustomed to deep discounts during the holiday-sales season.
For the three months ending Jan. 31, the specialty seller of action-sports clothes, shoes and equipment made a profit of $6.3 million, or 21 cents a share, down from $12.4 million, or 42 cents a share, a year ago.
As steep as the decline was, Zumiez still managed to beat Wall Street's consensus forecast for a per-share profit of 19 cents.
Fourth-quarter sales dropped to $125.5 million from $126.6 million a year ago, mitigated by the opening of 58 new stores in 2008. Sales at stores open at least a year declined 13.4 percent.
"Since September, the deteriorating economic conditions have significantly dampened consumer appetite for discretionary items," Chief Executive Rick Brooks said in a statement Thursday.
Shoes comprised the company's strongest-selling category, while apparel was the weakest, Chief Financial Officer Trevor Lang told analysts in a conference call.
For the year, Zumiez posted a profit of $17.2 million, or 58 cents a share, on sales of $408.7 million.
The company released its financial results after the close of regular trading. Earlier Thursday, shares of its stock rose 42 cents, or 6.5 percent, to $6.87, then fell to $6.20 in after-hours trading. In the past year, shares have traded between $4.80 and $28.84.
Zumiez said it began 2009 with a strong balance sheet that includes about $79 million in cash and equivalents, no debt and lean inventory levels, putting it in relatively good shape to manage through the recession.
"The difficult macroeconomic trends from the last year have continued, and the near-term outlook for the retail industry remains clouded," Brooks said in the conference call.
The company declined to make a full-year profit prediction, citing economic uncertainty. For the first quarter now under way, Zumiez expects a per-share loss in the range of 13 cents to 17 cents and a same-store sales decline in the mid- to high-teens.
The company said it's taking advantage of reduced mall operating hours to cut costs, expanding its presentations of top-selling shoes and maintaining a broad range of brands and categories to attract shoppers.
"We believe our peers are becoming more and more homogeneous," Brooks said. "By simply staying true to who we are, Zumiez has become even more unique in the mall."
Zumiez operated 343 stores as of Jan. 31 and plans to open an additional 37 stores for the current fiscal year.
Amy Martinez: 206-464-2923 or email@example.com
Copyright © 2009 The Seattle Times Company
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