Zumiez’s CEO Rick Brooks said in a statement the company had "concluded a difficult year with stronger than anticipated fourth quarter results, despite its losses in both Q4 (14 weeks ended 3 February 2024 and FY23 (53 weeks ended 3 February 2024).
However, Brooks also admitted that the “global operating environment remains challenging” and said the retailer would be adjusting its strategies as a result.
The company said it will slow its planned European store growth and close underperforming stores in the US.
Key results for Zumiez in Q4
- Net sales increased 0.6% to a total of $281.8m, compared to $280.1m in Q4 in previous year
- Comparable sales in North America decreased by 3.4% to $212.4m, while international sales, which consist of Europe and Australia, were $69.4m, up 15.2% from last year
- Net loss of $33.5m, down from income of $11.4m in previous Q4.
Brooks said Zumiez was “encouraged” by the “stronger than anticipated” Q4 results. He added: “We concluded a difficult year with stronger than anticipated fourth quarter results as our consolidated monthly sales trend accelerated in January.”
Comparable sales deceased 3.9% in Q4. Speaking on a call with investors, Zumiez’s chief financial officer (CFO) Chris Work attributed this to “continued inflationary pressure” on consumers.
On the call with investors, CEO Brooks shared that, despite losses elsewhere, Zumiez’s menswear business was doing surprisingly well. He said: “Our men's business turned positive in November and growth accelerated in both December and January.” CFO Work added that menswear was the only category to see positive comparable sales in the quarter.
The company’s North American business saw net sales decrease 3.4%, down to $212.4m, although net sales increased 15.2% in Europe and Australia.
Key results for Zumiez in FY 2023
- Net sales totalled $875.5m, down 8.6% from $958.4m in previous FY
- Net loss of $62.6m, inclusive of a $41.1m goodwill impairment charge, compared to a net income of $21m in prior FY.
- Zumiez said it has $171.6m in cash and marketable securities, down from $173.5m in January 2023.
Zumiez’s results include a goodwill impairment charge of $41.1m related to the company’s decision to slow store growth and focus on profitability in Europe and the corresponding impact on the future cash flow projections of its ‘Blue Tomato’ business.
On the call with investors, Brooks said 2023 was a “disappointing year overall” and added: “We’re not satisfied with our results. With two years of meaningful negative comparable sales trends, the business has deleveraged significantly, and we experienced the first annual net loss in our history this last year.”
What's next for Zumiez?
Zumiez said it plans to improve profitability with strategic closures of underperforming stores and a focus on improving productivity, particularly in its European market. As consumers shift towards private label brands, particularly in its menswear category, Zumiez hopes to attract a broader customer base.
On the call with investors, Brooks said Zumiez expects the “macro climate to remain a headwind” in the near term, but added that the company was optimistic.
CEO Brooks added: “We have successfully navigated down cycles before and I am confident in our teams’ ability to return the company to growth and enhanced profitability both in the near-term and the years ahead.”
In 2021 Zumiez said its second-quarter net income was negatively impacted by $2.8m related to the conditional settlement of a California class action lawsuit.
