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Zumiez Comparable store sales fall

22
Aug '08
Zumiez Inc reported results for the second quarter ended August 2, 2008.

Total net sales for the second quarter (13 weeks) ended August 2, 2008 increased by 12.5% to $92.3 million from $82.0 million reported in the second quarter ended August 4, 2007 (13 weeks). The company posted net income for the quarter of $2.7 million or $0.09 per diluted share versus $3.1 million or $0.11 per diluted share in the second quarter of the prior fiscal year. Comparable store sales decreased 1.7% for the second quarter of fiscal 2008 compared to an 11.6% increase in the second quarter of fiscal 2007.

Total net sales for the first six months (26 week period) of fiscal 2008 increased by 13.4% to $171.0 million from $150.8 million reported in the first six months of the prior year.

The company posted net income of $4.1 million or $0.14 per diluted share in the first six months of 2008 versus $4.7 million or $0.16 per diluted share in the prior year. Comparable store sales decreased 1.3% for the first six months of fiscal 2008 compared to an increase of 11.4% for the first six months of fiscal 2007.

Net cash provided by operating activities in the first half of fiscal 2008 was $15.7 million compared to net cash used in operating activities of $6.7 million in the first half of fiscal 2007, driven largely by favorable changes in working capital.

Rick Brooks, President and Chief Executive Officer of Zumiez Inc., stated: "We continue to make positive strides in our ongoing efforts to give our customers a unique specialty retail experience, while controlling costs and effectively managing inventories during this very difficult operating environment.

Due to this focus, we exceeded our earnings projection for the first six months of this year. We have opened 39 stores this year and continue to make the investments necessary to build the Zumiez chain to our goal of 800 stores."

2008 Outlook:
Mr. Brooks continued "That said, the macro environment remains challenging and retailers are becoming increasingly promotional. Therefore, we believe it is prudent to adopt a more conservative outlook for the back half of the year." The company now expects diluted earnings per share of approximately $0.80 to $0.82 for fiscal 2008, compared to its previous expectation for diluted earnings per share of approximately $0.90 to $0.93.

This guidance is based on anticipated square footage growth of approximately 20% and on a mid single digit to low single digit comparable store sales decline for the second half of fiscal 2008. Weighted average diluted shares for the fiscal year are expected to be approximately 29,600,000.

This guidance is based on our current expectations and includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Although the Company believes there to be a reasonable basis for these forward-looking statements, it cangive no assurance that its expectations will prove to be correct.

The company reminds investors of the difficulty of accurately assessing future growth given the unpredictability of fashion trends and consumer preferences, boardsports' popularity and participation rates, general economic conditions, weather, and other business variables and risks.

Zumiez Inc


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