Zumiez Inc. Annual Report 2010

FY2010 Annual Report · Zumiez Inc.

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Notice of 2011 Annual Meeting
And Proxy Statement
2010 Annual Report on Form 10-K

6300 Merrill Creek Parkway Suite B
Everett, Washington 98203

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held On May 25, 2011

Dear Shareholder:

You are cordially invited to attend the annual meeting of shareholders of Zumiez Inc., a Washington
corporation. Zumiez is also referred to as “we,” “our,” “us” and the “Company.” The meeting will be held on
Wednesday, May 25, 2011 at 1:00 p.m. (Pacific Time) at our headquarters located at 6300 Merrill Creek
Parkway, Suite B, Everett, Washington 98203 for the following purposes:

1.
2.
3.

To elect two directors to hold office until our 2014 annual meeting of shareholders;
To hold an advisory, non-binding, vote on executive compensation;
To hold an advisory, non-binding, vote to determine shareholder preferences on whether future
advisory votes on executive compensation should occur every one, two or three years;
To consider and act upon a proposal to ratify the selection of Moss Adams LLP as our independent
registered public accounting firm for the fiscal year ending January 28, 2012 (“fiscal 2011”); and
To conduct any other business properly brought before the meeting.

These items of business are more fully described in the Proxy Statement accompanying this Notice.

Our board of directors recommends a vote “For” Items 1, 2 and 4 and a vote for the every “3 Years” option

of Item 3. The record date for the annual meeting is March 17, 2011. Only shareholders of record at the close of
business on that date may vote at the meeting or any adjournment or postponement thereof.

Under the Securities and Exchange Commission (“SEC”) rules that allow companies to furnish proxy
materials to shareholders over the Internet, Zumiez has elected to deliver our proxy materials to the majority of
our shareholders over the Internet. The delivery process will allow us to provide shareholders with the
information they need, while at the same time conserving natural resources and lowering the cost of delivery. On
or about April 4, 2011, we mailed to our shareholders a Notice of Internet Availability of Proxy Materials (the
“Notice”) containing instructions on how to access our fiscal year ending January 29, 2011 (“fiscal 2010”) Proxy
Statement and 2010 Annual Report to Shareholders. The Notice also provides instructions on how to vote online
or by telephone and includes instructions on how to receive a paper copy of the proxy materials by mail.

YOUR VOTE IS IMPORTANT!

Whether or not you attend the annual meeting, it is important that your shares be represented and voted at
the meeting. Therefore, we urge you to promptly vote online, by telephone, or if you received a paper copy of the
voting card, submit your proxy by signing, dating and returning the accompanying proxy card in the enclosed
prepaid return envelope. If you decide to attend the annual meeting and you are a shareholder of record, you will
be able to vote in person even if you have previously submitted your proxy.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 25, 2011: The Notice of Annual Meeting
of Shareholders, Proxy Statement and the Annual Report to Shareholders are available on the internet at
http://ir.zumiez.com./phoenix.zhtml?c=188692&p=irol-reports.

By Order of the Board of Directors
Trevor S. Lang
Chief Financial Officer, Chief Administrative Officer
and Secretary

Everett, Washington
April 4, 2011

6300 Merrill Creek Parkway Suite B
Everett, Washington 98203

PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 25, 2011

QUESTIONS AND ANSWERS

Why am I receiving these proxy materials?

We are making available to you this proxy statement and the accompanying proxy card because the board of

directors of Zumiez Inc. (“Zumiez,” “we,” “us” and the “Company”) is soliciting your proxy to vote at its 2011
annual meeting of shareholders. You are invited to attend the annual meeting to vote on the proposals described
in this proxy statement. Should you choose to attend, you must be ready to present proof of your ownership of
Zumiez stock as of the record date, March 17, 2011, to attend the meeting. However, you do not need to attend
the meeting to vote your shares. Instead, you may simply complete, sign and return the accompanying proxy
card. For more information on voting, see information below under the section heading “How do I vote?”

We intend to mail or otherwise make available this proxy statement and the accompanying proxy card on or

about April 4, 2011 to all shareholders of record entitled to vote at the annual meeting.

Who can vote at the annual meeting?

Only shareholders of record at the close of business on March 17, 2011, the record date for the annual

meeting, will be entitled to vote at the annual meeting. At the close of business on the record date, there were
30,989,623 shares of common stock outstanding and entitled to vote.

Shareholder of Record: Shares Registered in Your Name

If, at the close of business on the record date, your shares were registered directly in your name with our

transfer agent, American Stock Transfer & Trust Company, then you are a shareholder of record. As a
shareholder of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend
the meeting, we urge you vote your proxy to ensure your vote is counted.

Beneficial Owner: Shares Registered in the Name of a Broker, Bank or Other Agent

If, at the close of business on the record date, your shares were not held in your name, but rather in an
account at a brokerage firm, bank or other agent, then you are the beneficial owner of shares held in “street
name” and these proxy materials are being forwarded to you by your broker, bank or other agent. The broker,
bank or other agent holding your account is considered to be the shareholder of record for purposes of voting at
the annual meeting. As a beneficial owner, you have the right to direct your broker, bank or other agent on how
to vote the shares in your account. You are also invited to attend the annual meeting. Should you choose to
attend, you must be ready to present proof of your ownership of Zumiez stock as of the record date, March 17,
2011, in order to attend the meeting. However, since you are not the shareholder of record, you may not vote
your shares in person at the meeting unless you request and obtain a valid legal proxy issued in your name from
your broker, bank or other agent. For more information about a legal proxy, see the information, below, under the
section heading “Beneficial Owner: Shares Registered in the Name of Broker, Bank or Other Agent.”

What am I voting on?

You are being asked to vote on the following matters:

• Election of two directors (Proposal 1);

• An advisory, non-binding, vote on executive compensation (Proposal 2);

• An advisory, non-binding, vote to determine shareholder preferences on whether future advisory votes

on executive compensation should occur every one, two or three years (Proposal 3); and

• To consider and act upon a proposal to ratify the selection of Moss Adams LLP as our independent

registered public accounting firm for the fiscal year ending January 28, 2012 (“fiscal 2011”)
(Proposal 4).

When you vote your proxy, you appoint Trevor S. Lang and Richard M. Brooks as your representatives at

the meeting. When we refer to the “named proxies,” we are referring to Mr. Lang and Mr. Brooks. This way,
your shares will be voted even if you cannot attend the meeting.

How do I vote?

For Proposals 1, 2 and 4, you may vote “For,” “Against” or “Abstain” from voting (for the election of
directors, you may do this for any director nominee that you specify). For Proposal 3, you may vote for every “1
Year,” every “2 Years,” every “3 Years” or “Abstain” from voting. The procedures for voting are as follows:

Shareholder of Record: Shares Registered in Your Name

If you are a shareholder of record, you may vote in person at the annual meeting, via the internet, by

telephone or by proxy card. Whether or not you plan to attend the meeting, we urge you to vote by proxy to
ensure your vote is counted. You may still attend the meeting and vote in person if you have already voted by
proxy.

• To vote in person, come to the annual meeting and we will give you a ballot when you arrive. Please be

prepared to present proof of your ownership of Zumiez stock as of March 17, 2011.

• To vote via the internet—You may vote online at www.proxyvote.com. Voting on the internet has the
same effect as voting by mail or by telephone. If you vote via the internet, do not return your proxy
card and do not vote by telephone. Internet voting will be available until 11:59 p.m. PST May 24, 2011.

• To vote by telephone—Shareholders may vote by telephone by calling 1-800-690-6903 and following
the automated voicemail instructions. Voting by telephone has the same effect as voting by mail or via
the internet. If you vote by telephone, do not return your proxy card and do not vote via the internet.
Telephone voting will be available until 11:59 p.m. PST, May 24, 2011.

• To vote using the proxy card, simply complete, sign and date the proxy card and return it promptly in
the envelope provided. If you return your signed proxy card to us before the annual meeting, we will
vote your shares as you direct.

Beneficial Owner: Shares Registered in the Name of Broker, Bank or Other Agent

If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you
should have received a proxy or voting instruction form with these proxy materials from that organization rather
than from us. You can vote by using the proxy or voting information form provided by your broker, bank or other
agent or, if made available, vote by telephone or via the internet. To vote in person at the annual meeting, you
must obtain a legal proxy from your broker, bank or other agent. Under a legal proxy, the bank, broker, or other
agent confers all of its rights as a record holder (which may in turn have been passed on to it by the ultimate
record holder) to grant proxies or to vote at the meeting. Follow the instructions from your broker, bank or other

agent included with these proxy materials, or contact your broker, bank or other agent to request a legal proxy.
Please allow sufficient time to receive a legal proxy through the mail after your broker, bank or other agent
receives your request.

How many votes do I have?

On each matter to be voted upon, you have one vote for each share of common stock you own as of the

close of business on March 17, 2011, the record date for the annual meeting.

What if I return a proxy card but do not make specific choices?

If you return a signed and dated proxy card without marking any voting selections, your shares will be voted

in the following manner:

•

“For” the election of all nominees for director (Proposal 1);

“For” the approval of the compensation of the Company’s named executive officers as disclosed in
these materials (Proposal 2);

For a frequency of every “3 Years” for future advisory votes on executive compensation (Proposal 3);
and

“For” the ratification of the selection of Moss Adams LLP as our independent registered public
accounting firm for fiscal 2011 (Proposal 4).

If any other matter is properly presented at the meeting, one of the named proxies on your proxy card as

your proxy will vote your shares using his discretion.

Who is paying for this proxy solicitation?

We will pay for the entire cost of soliciting proxies. In addition to mailed proxy materials, our directors and

employees may also solicit proxies in person, by telephone or by other means of communication. Directors and
employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage
firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners. We have retained
Advantage Proxy to act as a proxy solicitor in conjunction with the annual meeting. We have agreed to pay
Advantage Proxy approximately $5,500 for proxy solicitation services.

What does it mean if I receive more than one proxy card?

If you receive more than one proxy card, your shares are registered in more than one name or are registered
in different accounts. Please complete, sign and return each proxy card to ensure that all of your shares are voted.
Alternatively, if you vote by telephone or via the internet, you will need to vote once for each proxy card and
voting instruction card you receive.

Can I change my vote after voting my proxy?

Yes. You can revoke your proxy at any time before the applicable vote at the meeting. If you are the record

holder of your shares, you may revoke your proxy in any one of three ways:

• You may submit another properly completed proxy with a later date.

• You may send a written notice that you are revoking your proxy to our Secretary, Trevor Lang, at 6300

Merrill Creek Parkway, Suite B, Everett, Washington 98203.

• You may attend the annual meeting and vote in person (if you hold your shares beneficially through a
broker, bank or other agent you must bring a legal proxy from the record holder in order to vote at the
meeting).

If your shares are held by your broker, bank or other agent, you should follow the instructions provided by

them.

What is the quorum requirement?

A quorum of shareholders is necessary to hold a valid meeting. A quorum will be present if at least a
majority of the outstanding shares as of the close of business on the record date are represented by shareholders
present at the meeting or by proxy.

Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on
your behalf by your broker, bank or other agent) or if you vote in person at the meeting. Generally, abstentions
and broker non-votes (discussed below in “How are votes counted?”) will be counted towards the quorum
requirement. If there is no quorum, a majority of the votes present at the meeting may adjourn the meeting to
another date. Your vote is extremely important, so please vote.

How are votes counted?

Votes will be counted by the inspector of election appointed for the meeting, who will separately count

“For,” “Against” and “Abstain” and broker non-votes (described below, if applicable) for Proposals 1, 2 and 4
and “1 Year,” “2 Years,” “3 Years” and “Abstain” and broker non-votes for Proposal 3. Abstentions and broker
non-votes will not be counted as votes cast for any proposal.

If your shares are held by your broker, bank or other agent as your nominee (that is, in “street name”), you

will need to obtain a voting instruction form from the institution that holds your shares and follow the
instructions included on that form regarding how to instruct your broker, bank or other agent to vote your shares.
If you do not give instructions to your broker, bank or other agent, they can vote your shares with respect to
discretionary items, but not with respect to non-discretionary items. Under the rules of the New York Stock
Exchange, the election of directors (Proposal 1), the advisory vote on executive compensation (Proposal 2) and
the advisory vote on the frequency of future advisory votes on executive compensation (Proposal 3) are
considered non-discretionary items while the ratification of the selection of Moss Adams LLP as our auditor
(Proposal 4) is considered a discretionary item. Accordingly, if your broker holds your shares in its name, the
broker is not permitted to vote your shares on Proposals 1, 2 or 3 but is permitted to vote your shares on Proposal
4 even if it does not receive voting instructions from you because Proposal 4 is considered discretionary. When a
broker votes a client’s shares on some but not all of the proposals at the annual meeting, the missing votes are
referred to as broker non-votes. Broker non-votes will be included in determining the presence of a quorum at the
annual meeting but are not considered present or a vote cast for purposes of voting on the non-discretionary
items. Please vote your proxy so your vote can be counted.

How many votes are needed to approve each proposal?

Under Washington corporation law, our Articles of Incorporation and our bylaws, if a quorum exists, the
approval of any corporate action taken at a shareholder meeting is based on votes cast. “Votes cast” means votes
actually cast “For” or “Against” Proposals 1, 2 and 4 and votes actually cast for every “1 Year,” “2 Years” or “3
Years” for Proposal 3, whether by proxy or in person. Abstentions and broker non-votes (discussed previously)
are not considered “votes cast.” Each outstanding share entitled to vote with respect to the subject matter of an
issue submitted to a meeting of the shareholders shall be entitled to one vote per share.

Proposal 1. As described in more detail below under “Election of Directors,” we have adopted majority
voting procedures for the election of directors in uncontested elections. As this is an uncontested election, the
director nominees will be elected if the votes cast “For” a nominee’s election exceed the votes cast “Against” the
director nominee. There is no cumulative voting for the election of directors.

If a director nominee does not receive the requisite votes to be elected, that director’s term will end on the
date on which an individual is selected by the board of directors to fill the position held by such director or ninety
(90) days after the date the election results are determined, or the date the director nominee resigns, whichever
occurs first.

Proposal 2. For the approval, on an advisory basis, of the compensation of the Company’s named executive
officers as disclosed in these materials, if the number of “For” votes exceeds the number of “Against” votes, then
Proposal 2 will be approved.

Proposal 3. For the frequency of the advisory votes on executive compensation, the alternative receiving the

greatest number of votes—every “1 Year,” every “2 Years” or every “3 Years”—will be the frequency that
shareholders prefer.

Proposal 4. For the ratification of the selection of our independent registered public accounting firm for
fiscal 2011, if the number of “For” votes exceeds the number of “Against” votes, then Proposal 4 will be ratified.

For the Proposals 2 and 3 regarding an advisory vote on executive compensation and the proposal regarding

an advisory vote on the frequency of advisory votes on executive compensation, please refer to the text of these
proposals for more information on the advisory nature of these proposals. If you abstain from voting on any of
the proposals, or if a broker or bank indicates it does not have discretionary authority to vote on any particular
proposal, the shares will be counted for the purpose of determining if a quorum is present, but will not be
included in the vote totals as a vote cast with respect to the proposal in question. Furthermore, any abstention or
broker non-vote (a broker non-vote is explained previously in “How are votes counted”) will have no effect on
the proposals to be considered at the meeting since these actions do not represent votes cast by shareholders.

How can I find out the results of the voting at the annual meeting?

Preliminary voting results will be announced at the annual meeting. Final voting results will be published on

Form 8-K with the SEC within four business days after the annual meeting.

Director Qualifications

The board of directors believes that it is necessary for each of the Company’s directors to possess many
qualities and skills and the composition of our board of directors has been designed to allow for expertise in
differing skill sets. The governance and nominating committee is responsible for assisting the board in matters of
board organization and composition and in establishing criteria for board membership. A detailed discussion of
these criteria and how they are utilized is set forth below under “Membership Criteria for Board Members.” Also,
the procedures for nominating directors is set forth below under “Director Nomination Procedures.”

Information as of the date of this proxy statement about each nominee for election this year and each other

current director is included below under “Election of Directors.” The information presented includes information
each director has given us about his or her age, all positions he or she holds, his or her principal occupation and
business experience for the past five years and the names of other publicly-held companies of which he or she
currently serves as a director or has served as a director during the past five years. In addition to the information
presented below regarding each nominee’s and current director’s specific experience, qualifications, attributes
and skills that led our board to the conclusion that he or she should serve as a director, we also believe that all of
our director nominees and current directors have a reputation for integrity, honesty and adherence to high ethical
standards.

Information about the number of shares of common stock beneficially owned by each director appears under

the heading “Security Ownership of Certain Beneficial Owners and Management.” There are no family
relationships among any of the directors and executive officers of the Company.

Board Leadership

We separate the roles of Chief Executive Officer (“CEO”) and Chairman of the Board (“Chairman”) in
recognition of the differences between the two roles. Our CEO, Richard M. Brooks, is responsible for setting the
strategic direction for the Company and the day to day leadership and performance of the Company, while our
Chairman, Thomas D. Campion, provides guidance to the CEO and sets the agenda for board meetings and
presides over meetings of the full board of directors. Because Mr. Campion is an employee of the Company and
is therefore not “independent,” our board has appointed the chairman of our governance and nominating
committee, Matthew L. Hyde, as the Company’s lead independent director. The lead independent director has
responsibility to:

•

call, lead and preside over meetings of the independent directors, which meet in private executive
sessions at each board meeting;

call special meetings of the board of directors on an as-needed basis;

set the agenda for executive sessions of meetings of the independent directors;

facilitate discussions among the independent directors on key risks and issues and concerns outside of
board meetings;

brief the Chairman and CEO on issues that arise in executive session meetings;

serve as a non-exclusive conduit to the Chairman and CEO of views, concerns and issues of the
independent directors; and

collaborate with the Chairman and CEO on setting the agenda for board meetings.

Membership Criteria for Board Members

The governance and nominating committee of the board is responsible for establishing criteria for board
membership. This criteria includes, but is not limited to, personal and professional ethics, training, commitment
to fulfill the duties of the board of directors, commitment to understanding the Company’s business, commitment

to engage in activities in the best interest of the Company, independence, industry knowledge and contacts,
financial and accounting expertise, leadership qualities, public company board of director and committee
experience and other relevant experience and qualifications. These criteria are referenced in the Company’s
Corporate Governance Guidelines and in Exhibit A to the governance and nominating committee’s charter, both
available at http://ir.zumiez.com under the “Governance” section. The board also has the ability to review and
add other criteria, from time to time, that it deems relevant. Specific weights are not assigned to particular criteria
and no particular criterion is necessarily applicable to all prospective nominees.

The criteria referenced above are used as guidelines to help evaluate the experience, qualifications, skills

and diversity of current and potential board members. With respect to diversity, we broadly construe it to mean
diversity of race, gender, age, geographic orientation and ethnicity, as well as diversity of opinions, perspectives,
and professional and personal experiences. Nominees are not discriminated against on the basis of race, religion,
national origin, sexual orientation, disability or any other basis proscribed by law. The board believes that the
backgrounds and qualifications of the directors, considered as a group, should provide a significant composite
mix of experience, knowledge and abilities that will allow the board to fulfill its responsibilities.

Risk Oversight

The board takes an active role, as a whole and also at the committee level, in helping the Company evaluate

and plan for the material risks it faces, including operational, financial, legal and regulatory and strategic and
reputational risks. As part of its charter, the audit committee discusses with management the Company’s major
financial risk exposures and the steps management has taken to monitor and control such exposures, including
the Company’s risk assessment and risk management policies. The compensation committee is responsible for
overseeing the management of risks relating to the Company’s executive compensation plans and arrangements.
The governance and nominating committee manages risks associated with corporate governance, including risks
associated with the independence of the board and reviews risks associated with potential conflicts of interest
affecting directors and executive officers of the Company. While each committee is responsible for evaluating
certain risks and overseeing the management of such risks, the entire board is regularly informed through
committee reports about such risks. Furthermore, at least annually, the board conducts an independent session
where they outline the risks that they believe exist for the Company and the broader retail industry and compares
these with the risks outlined by management. Subsequent to this evaluation, management prioritizes the
identified risks along with strategies to manage them or address how the Company intends to mitigate these risks.
Additionally, the board exercises its risk oversight function in approving the annual budget and quarterly
re-forecasts and in reviewing the Company’s long-range strategic and financial plans with management. The
board’s role in risk oversight has not had any effect on the board’s leadership structure.

Director Compensation

The goal of our director compensation is to help attract, retain and reward our non-employee directors and
align their interests with those of the shareholders. The board follows the compensation philosophies discussed,
below, in the Compensation Discussion & Analysis. Our goal for total director compensation (cash and equity) is
to be at the 50th percentile of comparable companies based on our compensation consultant’s competitive survey
results.

The Company pays its non-employee directors an annual fee for their services as members of the board of

directors. Each non-employee director receives an annual cash retainer of $30,000. The audit committee
members receive cash compensation of $10,000 with the chairperson receiving $20,000 per year. The
compensation committee members receive cash compensation of $7,500 with the chairperson receiving $15,000
per year. The governance and nominating committee member receives cash compensation of $5,000 with the
chairperson receiving $10,000 per year. Directors appointed in an interim period receive pro-rata retainer fees
based on the number of meetings they attend between annual shareholder meetings. The committee chairperson
and the respective committee members are paid rates commensurate with the duties and responsibilities inherent
within the position held.

Additionally, the Company issues restricted stock awards to its non-employee directors. The board believes

such awards provide alignment with the interests of our shareholders. Directors appointed in an interim period
receive pro-rata restricted stock awards based on the number of meetings they attend between annual shareholder
meetings.

The Company reimburses all directors for reasonable expenses incurred to attend meetings of the board of

directors. Non-employee directors may elect to have a portion, or all, of their annual retainer be used for the
reimbursement of travel expenses in excess of those that the Company considers to be reasonable.

The following table discloses the cash and stock awards earned by each of the Company’s non-employee

directors during the fiscal year ending January 29, 2011 (“fiscal 2010”).

Name

James M. Weber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Matthew L. Hyde . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
William M. Barnum Jr.
Gerald F. Ryles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sarah (Sally) G. McCoy (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fees Earned
or Paid in
Cash ($)

55,000
50,000
47,500
55,000
35,625

Stock
Awards
(1) ($)

64,004
64,004
64,004
64,004
52,229

Total ($)

119,004
114,004
111,504
119,004
87,854

(1) This column represents the aggregate grant-date fair value of restricted stock awards calculated in

On May 26, 2010, the day of the annual shareholder meeting, the Company awarded 3,732 shares of
restricted stock to the directors with a grant-date fair value of $64,004, except for Ms. McCoy. Upon her
appointment to the board of directors, Ms. McCoy was awarded 1,872 shares of restricted stock with a grant
date of November 15, 2010 and a grant-date fair value of $52,229. The stock awards for all directors will
vest on May 26, 2011.

(2) Ms. McCoy was appointed to the board of directors on October 22, 2010.

PROPOSAL 1

ELECTION OF DIRECTORS

The Company currently has seven director positions. The directors are divided into three classes so that
approximately one-third of the directors are elected each year for three-year terms. Directors are elected to hold
office until their successors are elected and qualified, or until resignation or removal in the manner provided in
our bylaws. Two directors are nominees for election this year and each has consented to serve a three-year term
ending in 2014. The remaining directors will continue to serve the terms set out below.

The nominees for director in an uncontested election, such as this one, will be elected if the votes cast in
favor of a nominee’s election exceed the votes cast opposing such nominee’s election. Abstentions and broker
non-votes are not considered “votes cast.” Likewise, a share otherwise present at the meeting as to which a
shareholder gives no authority or direction to vote is also not considered a “vote cast.”

In a contested election, the directors shall be elected by a plurality of the votes cast. A “contested election”
means an election of directors of the Corporation in which the number of nominees for any election of directors
nominated by (i) the board of directors, or (ii) any shareholder pursuant to Article 1, Section 10 of the
Company’s bylaws, or (iii) a combination of nominees by the board of directors and any shareholder pursuant to
Article I, Section 10 of the Company’s bylaws, exceed the number of directors to be elected.

A nominee for director in an uncontested election who does not receive the requisite votes for election, but
who was a director at the time of the election, shall continue to serve as a director for a term that shall terminate
on the date that is the earlier of: (i) ninety (90) days from the date on which the voting results of the election are
certified, (ii) the date on which an individual is selected by the board of directors to fill the office held by such
director, which selection shall be deemed to constitute the filling of a vacancy by the board of directors, or
(iii) the date the director resigns. Except in the foregoing sentence, a director who failed to receive a majority
vote for election will not participate in the filling of his or her office. If none of the directors receive a majority
vote in an uncontested election, then the incumbent directors (a) will nominate a slate of directors and hold a
special meeting for the purpose of electing those nominees as soon as practicable, and (b) may in the interim fill
one or more offices with the same director(s) who will continue in office until their successors are elected. If, for
any reason, the directors shall not have been elected at any annual meeting, they may be elected at a special
meeting of shareholders called for that purpose in the manner provided by the Company’s bylaws.

We invite and recommend all of our directors and the nominees for director to attend our annual meeting of

shareholders.

Nominees for Election to Terms Expiring in 2014

Thomas D. Campion, 62, is one of our co-founders and has served on our board of directors since our
inception in 1978. Mr. Campion has held various senior management positions during this time, including
serving as our Chairman since June 2000. From November 1970 until August 1978, he held various management
positions with JC Penney Company. Mr. Campion holds a B.A. in Political Science from Seattle University.
Mr. Campion serves as the Board Chair of the Alaska Wilderness League, a Washington, D.C. based
environmental group, and is on the board of Conservation Northwest, a Bellingham, Washington based
environmental group. He is also the trustee of the Campion Foundation, a nonprofit organization focused on
ensuring that biologically important ecosystems in Northwestern North American are preserved. The Foundation
also works on homelessness issues in the Pacific Northwest.

Director Qualifications: Mr. Campion’s knowledge as a retailer and as the co-founder of the Company
provide the board with invaluable insight into the Company’s business and its unique culture. Mr. Campion
provides generational leadership, sales, marketing, merchandising and brand building experience and expertise.
Mr. Campion’s particular knowledge and experience with Zumiez and its competition helps the Company

formulate short and long-term strategies that have contributed to Zumiez differentiating itself in the specialty
niche of action sports retailing. As the Company’s largest shareholder, Mr. Campion’s interests are aligned with
other Zumiez shareholders’ interests to increase the long-term value of the Company.

Sarah (Sally) G. McCoy, 50, was appointed to our board of directors in October 2010 and is the President

and CEO of CBK Holdings LLC, a company that controls Armacel Armor, an advanced composite materials
company that makes ballistic protections, and CamelBak, a company that originated hands free-hydration and is
the leader in hydration products. From September 2006 to September 2010, Ms. McCoy was the CEO and
President of CamelBak. Prior to joining CamelBak, Ms. McCoy co-founded Silver Steep Partners in 2004, a
leading investment banking firm catering to companies in the outdoor and active lifestyle industry. Before Silver
Steep, McCoy served as president of Sierra Designs and Ultimate Direction and as vice president at The North
Face. Ms. McCoy is a graduate of Dartmouth College. She also serves as the Board President of the Conservation
Alliance.

Director Qualifications: Ms. McCoy’s background in sales, merchandising, sourcing, marketing and
executive management of outdoor and action sports consumer brands provides strategic insight and direction for
Zumiez as we plan our branded and private label growth strategies. Additionally, her experience in investment
banking and valuation experience in our industry is valuable as we formulate our growth strategies.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH NOMINEE
PREVIOUSLY NAMED

Continuing Directors Whose Terms Expire in 2012

Richard M. Brooks, 51, has served as our CEO since June 2000. From August 1993 through June 2000, he

served as a Vice President and our Chief Financial Officer. From November 1989 until February 1992,
Mr. Brooks was with Interchecks, Inc., a subsidiary of Bowater PLC, as a finance officer. Mr. Brooks was with
Deloitte, Haskins & Sells, currently known as Deloitte LLP, from July 1982 to March 1989. Mr. Brooks holds a
B.A. in Business from the University of Puget Sound. Mr. Brooks has served on the University of Puget Sound
Board of Trustees from May 2002 to the present, where he currently serves as the Chairman of the Board of
Trustees as well as serving on its Executive Committee, Development and Alumni Relations Committee and
Compensation Committee.

Director Qualifications: Mr. Brooks’ day to day leadership as our CEO provides him with detailed

knowledge of our business and operations. Mr. Brooks provides generational leadership, sales, marketing,
merchandising and brand building experience and expertise. Mr. Brooks has demonstrated a record of innovation,
achievement and leadership. This experience provides the board with a unique perspective into the operations
and vision of Zumiez. Mr. Brooks’ particular knowledge and experience with Zumiez and its competition helps
the Company formulate short and long-term strategies that have helped Zumiez differentiate itself in the specialty
niche of the action sports retail business. As the Company’s second largest shareholder, Mr. Brooks’ interest is
aligned with other Zumiez shareholders’ interests to increase the long-term value of the Company.

Matthew L. Hyde, 48, was appointed to our board in December 2005 and is the Executive Vice President of

Recreational Equipment Inc. (REI), which he joined in 1986. He currently oversees Marketing, Retail,
Ecommerce & Direct Sales, Public Affairs and Customer Experience functions at REI. Mr. Hyde previously led
REI’s online division, championing its award-winning multi-channel strategy. He currently serves on the board
of the YMCA of the USA, and holds a Bachelor’s of Science degree from Oregon State University in Corvallis.

Director Qualifications: Mr. Hyde’s background in a retail company, including his online retail and brand
marketing experience, is of critical importance to the board. Mr. Hyde also provides critical merchandising and
brand building expertise because of his long tenure in specialty retail. Mr. Hyde’s successful expertise in building
a retail brick and mortar, direct and multi-channel strategy provides insight and experience as the Company plans
its growth in these channels of distribution.

James M. Weber, 51, was appointed to our board in April 2006 and is the President and CEO of Brooks
Sports, a leading running shoe and apparel company, where he has been since 2001. Mr. Weber’s experience also
includes positions as Managing Director of U.S. Bancorp Piper Jaffray Seattle Investment Banking practice,
Chairman and CEO of Sims Sports, President of O’Brien International, Vice President of The Coleman Company
and various roles with the Pillsbury Company. Mr. Weber earned an M.B.A., with distinction, from the Tuck
School at Dartmouth College and is a graduate of the University of Minnesota. Presently, Mr. Weber is a director
at the Seattle Sports Commission and at Bensussen, Deutsche and Associates.

Director Qualifications: Mr. Weber’s role as the chief executive officer of a sports related company and his

international business experience, extensive brand building, marketing and chief executive officer experience
provide our board with a very useful perspective as the Company plans its growth strategies.

Continuing Directors Whose Terms Expire in 2013

William M. Barnum, Jr., 57, has served on our board of directors since November 2002. Since 1984,

Mr. Barnum has been with Brentwood Private Equity where he co-founded the firm’s private equity effort, and is
currently its General Partner. Prior to joining Brentwood Private Equity, Mr. Barnum worked at Morgan
Stanley & Co. in the investment banking division. He is a graduate of Stanford University, and a graduate of
Stanford Law School and Stanford Graduate School of Business. Presently, Mr. Barnum is a director of Filson
Holdings, Inc., Quiksilver Corporation, The Teaching Company Holdings, Inc., Ariat International, Inc.,
ThreeSixty Asia Ltd and Zoe’s Kitchen Inc.

Director Qualifications: Mr. Barnum’s background in private equity and his public company board
experience is invaluable to our board’s discussions of financial and capital market matters. As the Company
formulates and executes its growth strategies, Mr. Barnum provides valuable insights and experiences regarding
mergers and acquisitions and international expansion. Additionally, Mr. Barnum has been engaged in the retail
and action sports industry for many years and his experience provides valuable guidance to the Company.

Gerald F. Ryles, 74, has served on our board of directors since August 2005. Until it was acquired in
September 2003, Mr. Ryles was Chairman of the Board and a major shareholder of Microserv Technology
Services, a privately held information technology services company. From January 1994 through January 2001,
Mr. Ryles was also the Chief Executive Officer. He also has over 40 years of management experience in several
different industries as well as management consulting experience with McKinsey & Company. He is a graduate
of the University of Washington, and earned an M.B.A. from Harvard University. He also serves on the board of
directors of Giant Campus an educational software company, and the State of Washington’s Board of
Accountancy, where he was the Chairman until December 31, 2010.

Director Qualifications: Mr. Ryles’ extensive prior business experiences as a chief executive officer and his

financial expertise are critical to our board and the audit committee in particular. Mr. Ryles’ consulting
background and chief executive experience provides the Company with perspective regarding a number of
different successful business strategies that help the Company formulate its operating and growth plans.

CORPORATE GOVERNANCE

Independence of the Board of Directors and its Committees

As required under The NASDAQ Stock Market listing standards, a majority of the members of a listed

company’s board of directors must qualify as “independent,” as affirmatively determined by the board of
directors. Our board of directors consults with our counsel to ensure that the board’s determinations are
consistent with all relevant securities and other laws and regulations regarding the definition of “independent,”
including those set forth in applicable NASDAQ listing standards, as in effect from time to time.

Consistent with these considerations, after review of all relevant transactions or relationships between each

director or any of his or her family members and the Company, our senior management and our independent
auditors, our board of directors has affirmatively determined that all of our directors are independent directors
within the meaning of the applicable NASDAQ listing standards, except for our Chairman, Mr. Campion, and
CEO, Mr. Brooks.

As required under applicable NASDAQ listing standards, our independent directors meet in regularly
scheduled executive sessions at which only independent directors are present. All of the committees of our board
of directors are comprised of directors determined by the board to be independent within the meaning of the
applicable NASDAQ listing standards.

Certain Relationships and Related Transactions

The Company made charitable contributions to the Zumiez Foundation in fiscal 2010 and the fiscal year

ending January 30, 2010 (“fiscal 2009”) of approximately of $0.6 million and $0.3 million. Our Chairman,
Thomas D. Campion, is a trustee of the Zumiez Foundation.

Policy and Procedures with Respect to Related Person Transactions

The Company recognizes that Related Person Transactions (defined as transactions, arrangements or
relationships in which the Company was, is or will be a participant and the amount involved exceeds $10,000,
and in which any Related Person (defined below) had, has or will have a direct or indirect interest) may raise
questions among shareholders as to whether those transactions are consistent with the best interests of the
Company and its shareholders. It is the Company’s policy to enter into or ratify Related Person Transactions only
when the board of directors, acting through the audit committee of the board of directors, determines that the
Related Person Transaction in question is in, or is not inconsistent with, the best interests of the Company and its
shareholders, including but not limited to situations where the Company may obtain products or services of a
nature, quantity or quality, or on other terms, that are not readily available from alternative sources or when the
Company provides products or services to Related Persons on an arm’s length basis on terms comparable to those
provided to unrelated third parties or on terms comparable to those provided to employees generally. A summary
of the Company’s policies and procedures with respect to review and approval of Related Person Transactions
are set forth below.

“Related Persons” are defined as follows:

any person who is, or at any time since the beginning of the Company’s last fiscal year was, a director
or executive officer of the Company or a nominee to become a director of the Company;

any person who is known to be the beneficial owner of more than 5% of any class of the Company’s
voting securities;

any immediate family member of any of the foregoing persons, which means any child, stepchild,
parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,

brother-in-law, or sister-in-law of the director, executive officer, nominee or more than 5% beneficial
owner, and any person (other than a tenant or employee) sharing the household of such director,
executive officer, nominee or more than 5% beneficial owner; and

any firm, corporation or other entity in which any of the foregoing persons is employed or is a general
partner or principal or in a similar position or in which such person has a 5% or greater beneficial
ownership interest.

Directors and executive officers are required to submit to the audit committee a list of immediate family

members and a description of any current or proposed Related Person Transactions on an annual basis and
provide updates during the year.

In its review of any Related Person Transactions, the audit committee shall consider all of the relevant facts
and circumstances available to the audit committee, including (if applicable) but not limited to: the benefits to the
Company; the impact on a director’s independence in the event the Related Person is a director, an immediate
family member of a director or an entity in which a director is a partner, shareholder or executive officer; the
availability of other sources for comparable products or services; the terms of the transaction; and the terms
available to unrelated third parties or to employees generally. No member of the audit committee shall participate
in any review, consideration or approval of any Related Person Transaction with respect to which such member
or any of his or her immediate family members is the Related Person. The audit committee shall approve or ratify
only those Related Person Transactions that are in, or are not inconsistent with, the best interests of the Company
and its shareholders as the audit committee determines in good faith. The audit committee shall convey the
decision to the CEO or the Chief Financial Officer and Chief Administrative Officer, who shall convey the
decision to the appropriate persons within the Company.

Information Regarding the Board of Directors and its Committees

Our board has established an audit committee, compensation committee and governance and nominating

committee. The board has adopted a written charter for each committee. The charters of these three committees
are posted on the Company’s website and can be accessed free of charge at http://ir.zumiez.com and are available
in print to any shareholder who requests them. The composition of our board committees complies with the
applicable rules of the SEC and The NASDAQ Stock Market. The board has determined that Gerald F. Ryles is
an audit committee financial expert as defined in the rules of the SEC.

Chairperson

Member

Lead Independent
Director

Audit Committee
Financial Expert

Audit Committee

Governance & Nominating
Committee

Compensation Committee

James M. Weber . . . . . . . . .

Matthew L. Hyde

. . . . . .

Sarah (Sally) G. McCoy . . .

Gerald F. Ryles

. . . . . . . .

William M. Barnum . . . . . .

Audit Committee

As more fully described in its charter, our audit committee has responsibility for, among other things:

•

the sole authority to appoint, determine the funding for and oversee the independent registered public
accounting firm;

assisting our board in monitoring the integrity of our financial statements and other SEC filings;

•

discussing with our management and our independent registered public accounting firm significant
financial reporting issues and judgments and any major issues as to the adequacy of our internal
controls;

reviewing our annual and quarterly financial statements prior to their filing with the SEC and prior to
the release of our results of operations;

reviewing the independence, performance and qualifications of our independent registered public
accounting firm and presenting its conclusions to our board and approving, subject to permitted
exceptions, any non-audit services proposed to be performed by the independent registered public
accounting firm;

oversight of the performance of the Company’s internal audit function; and

reviewing its charter at least annually for appropriate revisions.

The audit committee has the power to investigate any matter brought to its attention within the scope of its

duties and to retain counsel for this purpose where appropriate.

Governance and Nominating Committee

As more fully described in its charter, our governance and nominating committee has the responsibility for,

among other things:

•

recommending persons to be selected by the board as nominees for election as directors and as chief
executive officer;

assessing our directors’ and our board’s performance;

• making recommendations to the board regarding membership and the appointment of chairpersons of

the board’s committees;

recommending director compensation and benefits policies;

reviewing its charter at least annually for appropriate revisions; and

recommending to the board other actions related to corporate governance principles and policies.

•

Compensation Committee

As more fully described in its charter, our compensation committee has responsibility for, among other

things:

•

establishing the Company’s philosophy, policies and strategy relative to executive compensation,
including the mix of base salary, short-term and long-term incentive and equity based compensation
within the context of the stated policies and philosophy including management development and
succession planning practices and strategies;

reviewing corporate goals and objectives relevant to compensation of our CEO and other senior
executives including review and approval of performance measures and targets for all executive
officers participating in the annual executive incentive bonus plan and certify achievement of
performance goals after the annual measurement period to permit bonus payouts under the plan;

determining and approving our CEO’s compensation and making recommendations to the board with
respect to compensation of other executive employees, including any special discretionary
compensation and benefits;

administering our incentive compensation plans and equity based plans and making recommendations
to the board with respect to those plans;

• making recommendations to our board with respect to the compensation of directors;

•

the sole authority to appoint, determine the funding for and oversee the independent compensation
consultant; and

reviewing its charter at least annually for appropriate revisions.

Succession Planning

Our CEO and board of directors review at least annually the succession plan of our CEO and each of our

named executive officers (“NEO” or “NEOs”). The board of directors conducts an annual review of, and
provides approval for, our management development and succession planning practices and strategies.

Our CEO provides an annual report to the board of directors assessing senior management and their

potential successors. As part of this process, contingency plans are presented in the event of our CEO’s
termination of employment for any reason (including death or disability). The report to the board of directors also
contains the CEO’s recommendation as to his successor. The full board of directors has the primary
responsibility to develop succession plans for the CEO position.

Meetings of the Board of Directors and Board and Committee Member Attendance

In fiscal 2010, our full board of directors met six times, the audit committee met four times, the

compensation committee met four times and the governance and nominating committee met three times. The
board of directors and the committees acted by unanimous written consent when required during the last fiscal
year. Each board member attended 75% or more of the aggregate number of meetings of the board, and of the
committees on which he or she served, that were held during the period for which he or she was a director or
committee member, respectively. All board members were in attendance at our May 26, 2010 annual shareholder
meeting.

Shareholder Communications with the Board of Directors

The Company has a process by which shareholders may communicate directly with directors, including
non-employee directors, by mailing such communication to the board of directors in care of the Company’s
Secretary, at the Company’s headquarters in Everett, Washington. The mailing envelope must contain a clear
notation indicating that the enclosed letter is a “Shareholder-Board Communication” or “Shareholder-Director
Communication.” All such letters must identify the author as a shareholder and clearly state whether the intended
recipients are all members of the board or just certain specified individual directors. The Secretary will make
copies of all such letters and circulate them to the appropriate director or directors. All such communications will
be forwarded to the intended director(s) without editing or screening. If these foregoing procedures are modified,
then updated procedures will be posted on the Company’s corporate website.

Code of Conduct and Ethics

Our board has adopted a code of conduct and ethics applicable to our directors, executive officers, including
our chief financial officer and other of our senior financial officers, and employees in accordance with applicable
rules and regulations of the SEC and The NASDAQ Stock Market. The code of conduct is available at http://
ir.zumiez.com under the “Governance” section.

Corporate Governance Guidelines

Our board has adopted corporate governance guidelines that provide an overview of the governance

structure maintained at the Company and policies related thereto. The guidelines are available at http://
ir.zumiez.com under the “Governance” section.

Executive Compensation Recovery Policy

The Company maintains an executive compensation recovery policy. Pursuant to this policy, the Company

may recover incentive income that was based on the achievement of quantitative performance targets if the
executive officer engaged in fraud or intentional misconduct that resulted in an increase in his or her incentive
income. Incentive income includes all incentive income and compensation that the compensation committee
considers to be appropriate based upon the circumstance.

The compensation committee has the sole discretion to administer this policy and take actions under it,
including soliciting recommendations from the audit committee and the full board of directors and retaining
outside advisors to assist in making its determinations. The actions taken by the compensation committee are
independent of any action imposed by law enforcement agencies, regulators or other authorities.

Director Nomination Procedures

The nominations to the board of directors were completed by the governance and nominating committee.
The governance and nominating committee has established board membership criteria (discussed above, under
the section entitled “Membership Criteria for Board Members”) and the procedures for selecting new directors.

The nominations to the board of directors in fiscal 2011 and through the date of this proxy statement were

completed using procedures in accordance with the charter of the governance and nominating committee
including the director qualifications, criteria and skills as outlined in such charter. These procedures include:

•

Initial review of potential director candidates by the committee as submitted by the independent
directors of the board based on our established criteria for board membership including (without
limitation) experience, skill set, diversity and the ability to act effectively on behalf of the shareholders
and such other criteria as the committee may deem relevant from time to time.

• Each director candidate was put forth for consideration as a director candidate independently by our
independent directors based on their knowledge of the candidates. None of our independent directors
had a relationship with any candidates that would impair his or her independence. Each candidate’s
biography was reviewed by each member of the committee with the intention that each candidate
would bring a unique perspective to benefit our shareholders and management.

•

Interviews of director candidates were conducted by members of the committee and senior
management. These interviews confirmed the committee’s initial conclusion that candidates met the
qualifications, criteria and skills to serve as a director of the Company.

• Reference checks were conducted if further checks were required based on the level of knowledge

about the candidate by members of the committee.

• Background checks were conducted, including criminal, credit and bankruptcy, SEC violations and/or

sanctions, work history and education.

•

Independence questionnaires were completed by candidates and then reviewed by the Company, the
committee and the Company’s outside legal counsel to ensure candidates meet the requirements to be
an independent director for the board, audit committee, compensation committee and the governance
and nominating committee. The review also ensures the candidates positions do not conflict in any
material way with Company business.

• Conclusion to nominate a candidate is based on all of the procedures reviewed previously and the
information attached. It is ensured through these procedures that the candidate appears to be well
qualified to serve on the Company’s board of directors and its committees and appears to meet The
NASDAQ Stock Market and SEC requirements to be able to serve as an independent director and as a
member of the audit committee and any other committee the board may assign to such director.

No fees were paid to any third party search firms in connection with any director nominations.

Sarah (Sally) G. McCoy was appointed to our board of directors on October 22, 2010 and she is included as

a nominee for election in this proxy statement for a term expiring in 2014. Ms. McCoy was originally
recommended to the Company to join the board by a non-management board member.

The governance and nominating committee of the board will consider qualified nominees recommended by

shareholders who may submit recommendations to the governance and nominating committee in care of our
Chairman of the Board and Secretary at the following address:

Board of Directors and Chairman of the Board
c/o Corporate Secretary
Zumiez Inc.
6300 Merrill Creek Parkway, Suite B
Everett, Washington 98203

Nominees for director who are recommended by our shareholders will be evaluated in the same manner as

any other nominee for director. Shareholder recommendations for director should include the following
information:

•

the name, age, residence, personal address and business address of the shareholder who intends to
make the nomination and of the person(s) to be nominated;

the principal occupation or employment, the name, type of business and address of the organization in
which such employment is carried on of each proposed nominee and of the shareholder who intends to
make the nomination;

a representation that the shareholder is a holder of record of stock of the Company, including the
number of shares held and the period of holding;

a description of all arrangements or understandings between the shareholder and the recommended
nominee;

such other information regarding the recommended nominee as would be required to be included in a
proxy statement filed pursuant to Regulation 14A promulgated by the SEC pursuant to the Securities
Exchange Act of 1934, as amended; and

the consent of the recommended nominee to serve as a director of the Company if so elected.

The governance and nominating committee may require that the proposed nominee furnish the committee

with other information as it may reasonably request to assist it in determining the eligibility of the proposed
nominee to serve as a director.

To submit a recommendation for director for an upcoming annual shareholder meeting, it is necessary that a

proposing shareholder notify the Company and provide the information set forth previously, no later than 120
days prior to the corresponding date on which the Company’s annual proxy statement is mailed in connection
with the most recent annual meeting.

General Director Nomination Right of All Shareholders

Any shareholder of the Company may nominate one or more persons for election as a director of the

Company at an annual meeting of shareholders if the shareholder complies with the notice, information and
consent provisions contained in Article I, Section 10 of the Company’s bylaws. Specifically, these provisions
require that written notice of a shareholder’s intent to make a nomination for the election of directors be received
by the Secretary of the Company not fewer than 120 days and not more than 150 days prior to the anniversary
date of the prior year’s annual meeting of shareholders.

The Secretary will send a copy of the Company’s bylaws to any interested shareholder who requests them.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table provides information regarding the beneficial ownership of our common stock as of

March 17, 2011 by: (i) each of our directors; (ii) each of our NEOs; (iii) all of our executive officers and
directors as a group; and (iv) each person, or group of affiliated persons, known by us to beneficially own more
than 5% percent of our common stock. The table is based upon information supplied by our officers, directors
and principal shareholders and a review of Schedule 13G reports filed with the SEC. Unless otherwise indicated
in the footnotes to the table and subject to community property laws where applicable, we believe that each of the
shareholders named in the table has sole voting and investment power with respect to the shares indicated as
beneficially owned.

Applicable percentages are based on shares outstanding on March 17, 2011, adjusted as required by rules

promulgated by the SEC. These rules generally attribute beneficial ownership of securities to persons who
possess sole or shared voting power or investment power with respect to those securities. In addition, the rules
include shares of common stock issuable pursuant to the exercise of stock options that are either immediately
exercisable or exercisable on or before May 16, 2011, which is 60 days after March 17, 2011. These shares are
deemed to be outstanding and beneficially owned by the person holding those options for the purpose of
computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of
computing the percentage ownership of any other person. Except as noted below, the address for each person that
holds 5% or more of our common stock is c/o Zumiez Inc., 6300 Merrill Creek Parkway, Suite B, Everett,
Washington 98203.

Name of Beneficial Owner

Thomas D. Campion (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Richard M. Brooks (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lynn K. Kilbourne (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trevor S. Lang (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ford W. Wright (5)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
William M. Barnum Jr. (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gerald F. Ryles (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
James M. Weber (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Matthew L. Hyde (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sarah (Sally) G. McCoy (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
All Executive Officers and Directors as a group (10 persons)
T. Rowe Price Associates, Inc. (11) . . . . . . . . . . . . . . . . . . . . . . . . . .
Waddell & Reed Financial Services, Inc. (12) . . . . . . . . . . . . . . . . . .

* Less than one percent.

Number of Common
Shares Beneficially Owned

Percentage of Shares
Beneficially Owned

5,338,454
3,713,024
196,260
143,774
184,052
87,106
36,369
27,988
27,988
1,872
9,756,887
3,387,200
3,180,336

17.2%
12.0%
*
*
*
*
*
*
*
*
31.1%
11.0%
10.4%

(1)

Includes shares of common stock held by grantor retained annuity trusts for which Thomas D. Campion is
trustee. Mr. Campion is our Chairman of the Board.

(2) Mr. Brooks is our CEO and a Director.

(3) Consists of 53,639 shares of stock held by Ms. Kilbourne of which 44,340 shares are restricted and 142,621

vested stock options. Ms. Kilbourne is our President and General Merchandising Manager.

(4) Consists of 43,954 shares of stock held by Mr. Lang of which 27,843 shares are restricted; 98,153 vested

stock options, and 1,667 stock options exercisable within 60 days of March 17, 2011. Mr. Lang is our Chief
Financial Officer and Chief Administrative Officer.

(5) Consists of 72,764 shares of stock held by Mr. Wright of which 18,396 shares are restricted and 111,288

vested stock options. Mr. Wright is our Executive Vice President of Stores.

(6) Consists of 63,106 shares of stock held by Mr. Barnum of which 3,732 shares are restricted and 24,000

vested stock options. Mr. Barnum is one of our directors.

(7) Consists of 12,369 shares of stock held by Mr. Ryles of which 3,732 shares are restricted and 24,000 vested

stock options. Mr. Ryles is one of our directors.

(8) Consists of 13,988 shares of stock held by Mr. Weber of which 3,732 shares are restricted and 14,000 vested

stock options. Mr. Weber is one of our directors.

(9) Consists of 13,988 shares of stock held by Mr. Hyde of which 3,732 shares are restricted and 14,000 vested

stock options. Mr. Hyde is one of our directors.

(10) Consists of 1,872 shares of stock held by Ms. McCoy of which 1,872 shares are restricted. Ms. McCoy is

one of our directors.

(11) This information is based solely on a Schedule 13G/A filed February 14, 2011 by T. Rowe Price Associates,
Inc. (“Price Associates”). These securities are owned by various individual and institutional investors which
Price Associates servers as an investment adviser with power to direct investments and/or sole power to vote
the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, Price
Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities. The business address of T. Rowe Price
Associates, Inc. is 100 E. Pratt Street, Baltimore, Maryland 21202.

(12) This information is based solely on a Schedule 13G/A filed February 8, 2011 by Waddell & Reed Financial,

Inc. The securities reported on herein are beneficially owned by one or more open-ended investment
companies or other managed accounts which are advised or sub-advised by Ivy Investment Management
Company (“IICO”), an investment advisory subsidiary of Waddell & Reed Financial, Inc. (“WDR”) or
Waddell & Reed Investment Management Company (“WRIMCO”), an investment advisory subsidiary of
Waddell & Reed, Inc. (“WRI”). WRI is a broker-dealer and underwriting subsidiary of Waddell & Reed
Financial Services, Inc., a parent holding company (“WRFSI”). In turn, WRFSI is a subsidiary of WDR, a
publicly traded company. The investment advisory contracts grant IICO and WRIMCO all investment and/
or voting power over securities owned by such advisory clients. The investment sub-advisory contracts grant
IICO and WRIMCO investment power over securities owned by such sub-advisory clients and, in most
cases, voting power. Any investment restriction of a sub-advisory contract does not restrict investment
discretion or power in a material manner. Therefore, IICO and/or WRIMCO may be deemed the beneficial
owner of the securities covered by this statement under Rule 13d-3 of the Securities Exchange Act of 1934
(the “1934 Act”). IICO, WRIMCO, WRI, WRFSI and WDR are of the view that they are not acting as a
“group” for purposes of Section 13(d) under the 1934 Act. Indirect “beneficial ownership” is attributed to
the respective parent companies solely because of the parent companies’ control relationship to WRIMCO
and IICO. The business address of Waddell & Reed Financial, Inc. is 6300 Lamar Avenue, Overland Park,
KS 66202.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more

than 10% of a registered class of our equity securities, to file with the SEC initial reports of ownership and
reports of changes in ownership of our common stock and other equity securities. Officers, directors and greater
than 10% shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they
file.

To our knowledge, based solely on a review of the copies of such reports furnished to us and written
representations that no other reports were required, during fiscal 2010, all applicable Section 16(a) filing
requirements were met, and that all such filings were timely except as follows. Late Form 4 reports were filed for
Lynn K. Kilbourne, Trevor S. Lang and Ford K. Wright on April 13, 2010 for the reporting of an annual grant of
restricted stock and stock options and for Ford K. Wright on December 30, 2010 for the reporting of a sale of
common stock. In addition, late Form 4 reports were filed for non-employee directors William M. Barnum, Jr.,
Matthew J. Hyde, Gerald F. Ryles and James Weber on February 23, 2011 for the reporting of an annual grant of
restricted stock.

EXECUTIVE OFFICERS

As of the end of fiscal 2010 the names, ages and positions of the current non-director executive officers of

the Company are listed below, along with their respective business experience during the past five years. No
family relationships exist among any of the directors or executive officers of the Company.

Trevor S. Lang, 40, has served as our Chief Financial Officer, Chief Administrative Officer and Secretary
since April 2010. Prior to April 2010 and since June 2007, Mr. Lang served as our Chief Financial Officer and
Secretary. He had served as Vice President of Finance for Carter’s, Inc. since January 2003. At Carter’s,
Mr. Lang was responsible for the management of the corporate accounting and finance functions. From
September 1999 until joining Carter’s in 2003, Mr. Lang served in a progressive series of Vice President roles in
the finance area at Blockbuster Inc., culminating in his role as Vice President Operations Finance where he was
responsible for accounting and reporting for over 5,000 company-owned and franchised stores. From 1994 until
1999, Mr. Lang worked in the audit division of Arthur Andersen reaching the level of audit manager. Mr. Lang is
a 1993 graduate of Texas A&M University with a BBA, Accounting. He is also a Certified Public Accountant.

Lynn K. Kilbourne, 48, has served as our President and General Merchandising Manager (“GMM”) since
September 2008. Prior to September 2008 and since September 2004, Ms. Kilbourne served as our Executive
Vice President and GMM. From July 1991 until May 2001, she was with Banana Republic, a subsidiary of
Gap, Inc., in various senior management positions. After leaving Banana Republic, Ms. Kilbourne served as an
independent consultant in the retail industry until she joined Zumiez in September 2004. Ms. Kilbourne holds a
B.A. in Economics and Political Science from Yale University and an M.B.A. from the Harvard University
Graduate School of Business Administration.

Ford K. Wright, 43, has served as our Executive Vice President of Stores since March 2007. From May of

2000 through February 2007 he served as the Director of Store Systems. From June 1994 through April 2000
Mr. Wright has served in Store, District and Regional Management positions. Prior to June of 1994 Mr. Wright
was employed with Nordstrom. Mr. Wright has over 20 years experience in the retail and wholesale clothing
industry.

EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS

The Company’s basis for competitive advantage is its culture—conceived, developed and maintained as a
unique and powerful basis for engendering commitment, accountability, competitiveness and creativity among all
staff. The objective of the Company’s compensation discussion and analysis is to describe how, for the NEOs,
the Company links its culture to compensation philosophy and then to compensation strategy; and, to explain
how the Company executed its compensation strategy during the last year. While the discussion and analysis
focuses on the NEOs in the compensation tables in this proxy statement, the Company links culture,
compensation philosophy and compensation strategy throughout the organization from the seasonal sales person
to each of the NEOs.

Value Creation Model

The following summary illustrates how the compensation philosophy and strategies are integrated with and

derived from the Zumiez culture. This integrated approach supports long-term growth in shareholder value.

Zumiez Culture

Compensation
Philosophy

Compensation
Elements

Performance Measures

Shared values

•Empowered managers
– through clear
measurements &
accountability
•Teaching and learning
– through
comprehensive training
developed to empower
our managers to make
good retail decisions
•Competition – creating
opportunities to
compete and
recognizing their
contributions
•Fairness and honesty –
through all our
relationships

Externally
competitive

Reward
performance

Fair and
consistent

Drive long-term
shareholder
thinking

Effective blend
of guaranteed
and at-risk
components

For at-risk
components,
effective blend
between short-
term and long-
term

Base Salary

Bonus

Short-Term
Cash Based
Incentives

Stock Option
Grants

Restricted Stock
Grants

Comparable
store sales

Product margin

Diluted earnings
per share

Capital
preservation

Common stock
price

The Zumiez Culture

While every organization has a culture, even if it is a culture by default, the Company believes that the
Zumiez culture is unique. The Company believes it is well defined, understood widely and thoroughly among all
staff, reinforced and exemplified by leaders held accountable for doing so and integrated into the daily practices
and processes throughout the business. The Company believes the Zumiez culture is a competitive advantage and
is built on a set of shared values that have been in place since the inception of the business. These shared values
include:

• Empowered managers—The Zumiez culture pushes decision making down to the appropriate level in
the organization within the context of appropriate guidelines, controls and procedures. This gives our
managers throughout the organization the ability to impact their results creating increased
accountability, clear measurements and a sense of ownership throughout the organization.

• Teaching and learning—Our culture strives to integrate quality teaching and learning experiences

throughout the organization. We do this through a comprehensive training program, which primarily

focuses on sales and customer service training. Our training programs have been developed internally
and are almost exclusively taught internally by Zumiez employees to Zumiez employees. The training
programs have been developed to empower our managers to make good retail decisions.

• Competition—We believe that Zumiez employees enjoy competing. Our entire system is built around
creating opportunities for people to compete and to be recognized for their contributions. This is
reflected in everything we do including empowering managers, building competition into almost all of
our training and in how we recognize the successes of our employees throughout the organization.

• Fairness and honesty—Along with our employees, we strive to be fair and honest in all of our
relationships. This includes how we work with each other, our suppliers, our landlords and our
customers.

Culture and Compensation Philosophy

The Zumiez culture guides how we manage our business and it permeates through our compensation

philosophy. We believe our culture itself has value to our employees. Our culture allows our employees
throughout the organization to make appropriate decisions to impact their results as well as the Company’s
financial results. We believe the competitive people we hire and the training we provide helps us generate strong
operating results and we believe that our employees value working in this kind of environment.

The compensation committee believes the purpose of the compensation program for our NEOs is to help

attract, retain, align, motivate and reward executives capable of understanding, committing to, maintaining and
enhancing the culture; and, with culture as a centerpiece of our competitive advantage, establishing and
accomplishing business strategies and goals that we believe makes the Company an attractive investment for
shareholders. To do so, the compensation committee believes the compensation program should offer
compensation opportunities that:

•

are externally competitive with compensation paid by companies in the market for executive talent;

reward performance by linking compensation to quantitative and qualitative goals that the
compensation committee believes is in the best long-term interest of shareholders;

drive long-term shareholder thinking by delivering a substantial portion of the NEOs compensation or
wealth in the form of equity that is directly linked to our stock price;

are an effective blend of guaranteed and at-risk components, where the proportion of guaranteed pay is
less than average and the proportion of at-risk pay is greater than average when compared to the
competitive survey data;

for at-risk components of pay, are an effective balance between short-term and long-term mechanisms;
and

provide nominal executive perquisites.

In structuring a competitive opportunity for each executive officer, the compensation committee evaluates
and takes into account the total stock accumulated and owned by the executive as a result of equity-based award
plans. The compensation committee believes that at-risk components should result in compensation for the
executive only if justified by performance. For Zumiez executives, “performance” means, first of all, doing the
right things—building the culture and achieving the financial results that clearly drive the creation of shareholder
value. The compensation program must align the interests and motivations of executives with those of
shareholders. Secondly, performance means doing things right—acting as strong, respected and acknowledged
leaders of staff; and, as role models of leadership behavior in the community at-large. We believe that exemplary
executive behavior helps to support sustainable long-term creation of shareholder value.

The compensation committee intends to continually explore, consider and introduce enhanced or new

compensation approaches and elements for NEOs as appropriate.

Compensation Goals and Strategy for NEOs

Simplicity and Transparency. The compensation committee seeks simplicity and transparency in the
compensation program for our NEOs. Therefore, the program focuses on easily understood components of
clearly determinable value—base salary, bonuses, Short-Term Cash Based Incentives and long-term equity
awards. We refer to the combination of these as “total direct compensation.” The compensation committee does
not use supplemental executive benefits and perquisites that are not also provided to all Company employees.

Attractive Compensation Opportunities. The compensation committee believes in and commits to planning

for internal succession; however, the Company must be positioned to attract and retain high-caliber executive
talent in the external marketplace. It believes it must be positioned to bring in seasoned, proven individuals from
within the industry and beyond who can perform the full scope of their roles from time of hire. Establishing and
maintaining the ability to attract and retain talent is a top priority for compensation of NEOs. To address this
priority responsibly on behalf of shareholders, the compensation committee works each year to:

• Establish a conservative salary range for each position to guide salary hiring offers and salary increase

decisions.

• Establish a competitive total annual cash compensation opportunity for each position through annual

cash incentives where payout is contingent on performance.

•

Provide opportunities to earn stock incentives in proportions so that the long-term opportunity for each
NEO to earn total direct compensation (salary plus annual cash incentives plus stock incentives) is
above average should shareholders realize above average returns.

Pay-at-Risk. The compensation committee is committed to pay-at-risk. “Pay-at-risk” means compensation

that is earned only upon clear evidence that the interests of shareholders have been served. By design, the
proportion of each NEOs total direct compensation that is at risk is greater than what is typically observed in the
marketplace. Conservative base salaries are combined with above-average cash and stock incentives to create a
total package that is competitive. We believe the pay-at risk philosophy is evidenced by the fact that no NEO has
been paid the maximum total incentive compensation during the last three years, including fiscal 2010 when our
growth in earnings and balance of cash, cash equivalents and marketable securities are the highest in our history
of being a public company.

Pay-for-Performance. The compensation committee believes pay-at-risk enables pay-for-performance. It
allows major portions of total direct compensation to be paid only when short-term and long-term interests of
shareholders have been met.

For short-term (annual) pay-for-performance for the NEOs as a group, the compensation committee has the

following goals:

• Drive alignment around three Company-wide measures of performance: (1) comparable store sales

results, (2) product margin and (3) diluted earnings per share. The compensation committee believes
these are the best measures because they have the largest impact on Zumiez ability to grow profitability
and provide clarity to individual executives. We calculate these performance measures as follows:

• Comparable store sales—We report “comparable store sales” based on net sales beginning on the
first anniversary of the first day of operation of a new store. Our comparable store sales also
include our ecommerce sales. Changes in our comparable store sales between two periods are
based on net sales of stores which were in operation during both of the two periods being
compared and, if a store is included in the calculation of comparable store sales for only a portion
of one of the two periods being compared, then that store is included in the calculation for only the
comparable portion of the other period. Any change in square footage of an existing comparable
store, including remodels, does not eliminate that store from inclusion in the calculation of
comparable store sales.

•

Product margin—Product margin is calculated as net sales less cost of goods sold, divided by our
net sales. For purposes of this calculation, our net sales consist of revenue recognized upon
purchase by our customers, net of actual sales returns, excluding shipping revenue. For purposes
of this calculation, our cost of goods sold consist of the cost of goods purchased from our private
label vendors, including importing and inbound freight costs, and the cost of goods purchased
from third party manufacturers, sold to our customers.

• Diluted earnings per share—Diluted earnings per share is calculated in accordance with GAAP.

•

Provide for the risk of zero annual Short-Term Cash Based Incentives payout should performance
expectations not be met.

• Average awards upon achievement of performance measures that, in the judgment of the board of

directors, are in the best long-term interests of the shareholders, would be expected in light of industry,
company size, company maturity, prevailing business conditions and any need to draw upon short-term
earnings to fulfill strategic goals (such as growth, market share, or innovation).

•

Provide for pay-at-risk, i.e., performance expectations that are challenging, but achievable.

Proactively communicate to all NEOs performance expectations in order to establish clear incentive for
achievement.

Provide for upside compensation potential for earnings growth that is beyond Company expectations.

Set forth prudent limits, or caps, on upside potential to ensure no possibility of payouts that might be
judged by shareholders as unjustifiable or excessive.

• Allow for flexibility to attract and retain executives.

For long-term pay-for-performance (long-term equity incentive), the compensation committee’s goal is to
link the ultimate compensation amounts realized by NEOs directly and exclusively to the Company’s long-term
common stock price change. To do so, the compensation committee makes use of stock-based awards for all
NEOs (except as noted, below, under the section heading “The Compensation Decision-making Process”).

The compensation committee has used, and intends to make use of, both gain-based stock awards (stock
options) and full-value stock awards (restricted stock). The compensation committee determines on an annual
basis for each NEO the total value of an award, based on a competitive range, that best reflects in the
compensation committee’s judgment both the individual’s long-term track record of success and potential for
long-term value-added future contributions.

Gain-based awards have widespread use and have upside potential that can be highly motivational however,

the compensation committee; (i) is aware that gain-based awards have no downside potential similar to that of
holding outright shares of stock; (ii) recognizes that the exclusive and substantial use of gain-based awards have
historically been noted by the investment community as a potential contributor to misguided or unacceptable
decisions on the part of executives in certain other companies; and (iii) knows that historic accounting
advantages for the use of gain-based awards no longer exist. In addition, the compensation committee is aware of
the executive compensation trend among publicly-held companies to utilize less gain-based awards in favor of
full-value awards such as restricted stock. Therefore, the compensation committee continues to review and has
deployed full-value restricted stock awards to help offset and balance the disadvantages of gain-based awards for
achieving pay-for-performance and other compensation goals while retaining the advantages of gain-based
awards. The mix of gain-based awards and full-value awards is evaluated annually by the compensation
committee and adjusted based on input from the compensation consultant and the CEO; all in the context of the
marketplace, our compensation philosophy and what the compensation committee believes is in the best interest
of the shareholders and the NEOs. The compensation committee also allows some deference to the NEOs in the
allocation between stock options and restricted stock, so long as the total compensation charge to the Company is
equal to what was approved by the compensation committee.

Executive Officer Continuity. Undesirable, unanticipated or untimely departure of an executive officer is a
risk to the Company that the compensation committee works to avoid. The risk stems from the potentially high
costs of recruiting, relocation, operational disruption, reduced morale, turnover ripple effects among staff,
negative external perceptions, reduced external confidence and lost intellectual capital.

The compensation committee encourages executive officer continuity by granting stock awards to an NEO
where the ultimate realization of value not only depends on stock price, but also on the NEO remaining with the
Company for many years. Accordingly, if a NEO was to depart from the Company then he or she could forfeit
potentially substantial amounts of unrealized compensation.

Shareholder Mentality. We believe it is in the best interests of shareholders for Zumiez leaders to feel, think

and act like shareholders, and to have a “shareholder mentality” as they go about envisioning, planning for and
executing operations. The compensation committee seeks to cultivate NEOs with a shareholder mentality by
having NEOs receive, accumulate and maintain significant ownership positions in Zumiez through annual equity
grants.

Within this concept, through equity awards granted over time, each NEO of the Company has the ability to

establish and maintain a valuable ownership in the Company.

Summary of the Elements of NEO Compensation

The compensation committee utilizes five primary elements for compensating NEOs:

• Base Salary

• Bonus

• Non-Equity Incentive Plan Compensation (“Short-Term Cash Based Incentives”)

•

Stock Option Grants

• Restricted Stock Grants

Total Pay Philosophy—Our “Total Pay” compensation philosophy is designed to recognize and reward the

contributions of all employees, including executives, in achieving our strategic goals and business objectives,
while aligning our compensation program with shareholder interests. We regularly assess our total pay package,
and we adjust it as appropriate to remain competitive and to enable us to attract and retain our NEOs. We believe
our total pay practices motivate our executives to build long-term shareholder value.

Base Salary is a pre-set fixed cash amount that is delivered regularly in equal portions through the year.
Each NEOs annual base salary rate is reviewed from time to time and at least annually by the compensation
committee. Outside of the CEO, the review is based on recommendations of the CEO.

Bonuses may be awarded from time to time in order to attract and retain key NEOs. These bonuses, when

awarded, are generally in addition to NEOs participating in Short-Term Cash Based Incentives and are
considered in the executive’s total direct compensation.

Short-Term Cash Based Incentives are based on pre-set opportunities for cash awards to be paid after the

end of the year based on performance for the year. Actual payouts may be between zero and twice the target
amount, where the target amount is that established for each NEO by the compensation committee if target goals
are achieved.

Stock Option Grants are opportunities granted from time to time (usually annually or at the time of hiring)

to an NEO to purchase Company common stock at some future time at a pre-established fixed price set at the
time of grant. This price is the actual market price of the stock at the time of grant. The right to exercise options

in a particular grant is accumulated over a number of years, and is subject to vesting based upon continued
employment with the Company.

Restricted Stock Grants are awards of common voting shares of stock that are granted from time to time
(usually annually or at the time of hiring) to each NEO. The right to earn the stock is contingent upon continued
employment over a period of time.

The compensation committee views the elements of total direct compensation for NEOs as an integrated
orchestrated package to achieve all of the compensation goals described in the immediately preceding section of
this discussion.

FY 2010—A Review of This Past Year

Zumiez achieved strong financial results in fiscal 2010. Our results were outstanding compared to
competitors in the mall and considering the backdrop of muted economic activity and a difficult consumer
environment. The charts below show net sales and diluted earnings per share on a GAAP basis for fiscal 2009
and 2010 and the percentage growth in fiscal 2010.

Net Sales
(in millions)

+17%

$479

$500

$480

$460

$440

$420

$400

$380

$360

$408

2009

Diluted EPS

+163%

$0.79

$0.30

$0.90
$0.80
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$-

2010

2009

2010

Coming into fiscal 2010, we expected our financial results would improve relative to our performance
during the previous two years when comparable store sales and diluted earnings per share declined. Even though
our results were expected to improve in fiscal 2010, the compensation committee did not grant any salary
increases to the NEOs, with the exception of Mr. Lang as discussed below. The compensation committee did not
give any base salary increases to the other NEOs because it believed the compensation levels were competitive,
in line with historical practice and the Company’s fiscal 2009 performance did not warrant increases. The
compensation committee believed the compensation structure outlined in previous years was still relevant and
appropriate, so the Short-term Cash Based Incentives and long-term equity incentives components of
compensation were designed to follow the same methodology and is discussed in further detail below.

We believe the strong fiscal 2010 results are due to focusing on long-term winning solutions and the unique

business model and compensation structure that have been formed over many years. We continued to make key
infrastructure and people investments during the “great recession” and in fiscal 2010 that resonated with our
customers. We believe that by making these key investments over many years and looking at financial results
over a longer time horizon will provide a better long-term return for our investors; and since owned stock or
stock based awards are the material component of our NEOs compensation and wealth creation, we believe our
compensation structure aligns management’s and shareholders’ interests.

Due to our executive compensation programs emphasis on pay for performance, compensation awarded to

the NEOs for fiscal 2010 reflected Zumiez’ strong results. As shown below, for the named executive officers as a
group, excluding the Chairman and the CEO, performance-based pay for fiscal 2010 comprised an average of
approximately 70% of the total compensation as shown in the Summary Compensation Table. We have excluded
our Chairman and CEO due to the difference in the compensation structure for the Chairman and CEO, who
beneficially own 17% and 12% of the Company as of March 17, 2011, respectively, and have not received equity
awards in the past five years as discussed further on page 36.

Compensa(cid:2)on Elements as a Percentage
of Total Compensa(cid:2)on

Performance-based pay
70%

Op(cid:2)on Awards

Stock Awards

Non-Equity Incen(cid:2)ve
Plan Compensa(cid:2)on

All Other Compensa(cid:2)on

Salary

19%

13%

38%

29%

Fiscal 2011—A Look At the Upcoming Year

Although the United States economy has improved in 2010, we recognize the difficult economic situation

many consumers face and we are still planning the business in a conservative manner. In addition, it has been
well publicized that production costs will be increasing in fiscal 2011, especially in the second half of the year.
The compensation committee evaluated compensation for fiscal 2011 with an eye toward balancing retention of
key executive officers with our pay for performance principles and anticipated costs to the Company. With this in
mind, the compensation committee kept the same elements of compensation for fiscal 2011 as the elements in
place for fiscal 2010. As such, fiscal 2011 target total direct compensation consists of base salary, bonus, annual
Short-Term Cash Based Incentives and long-term equity incentive compensation in the form of stock options
awards and restricted stock awards. The compensation committee believes this combination of elements of
compensation is the appropriate mix to motivate future performance, drive Company results and retain executive
officers. The compensation committee will continue to evaluate both quantitative and qualitative performance
results relative to internal goals and standards as well as industry averages when evaluating and determining total
direct compensation rewards and opportunities for its NEOs.

Based on the evaluation of compensation for fiscal 2011, the Company amended the salary of

Richard M. Brooks, the Company’s CEO. The compensation committee increased Mr. Brooks’ base salary from
$262,500 per year to $613,200 per year. The decision to increase Mr. Brooks’ salary was made by the
compensation committee in light of Mr. Brooks’ contributions to the Company over the last 18 years, the strong
financial performance of the Company in fiscal 2010 and in order to bring Mr. Brooks’ salary closer to the 40th
percentile peer group target, which is in line with the Company’s overall compensation philosophy.

Base Salary

In March 2010, the compensation committee met and reviewed the evaluations of the NEOs and the overall

performance of the Company against three objective measures; (1) comparable store sales performance,
(2) product margin and (3) diluted earnings per share. Based upon the performance of the Company in fiscal
2009 and the uncertain operating environment in fiscal 2010, the compensation committee decided to maintain
the base salaries for fiscal 2010 at the fiscal 2009 level, with the exception of Mr. Lang as discussed below:

Executive Officer

Thomas D. Campion, Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Richard M. Brooks, Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lynn K. Kilbourne, President and General Merchandising Manager . . . . . . . . . . . . . . . . . .
Trevor S. Lang, Chief Financial Officer, Chief Administrative Officer and Secretary . . . .
Ford W. Wright, Executive Vice President of Stores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010 Base
Salary

$262,500
$262,500
$350,000
$292,500
$225,000

Increase
Over Prior
Year

0.0%
0.0%
0.0%
11.4%
0.0%

The compensation committee sets executive base salaries at levels it believes are competitive based on each
individual executive’s role and responsibilities. The compensation committee reviews base salaries for executive
officers on an annual basis, at the time of hire and promotion and for other changes in responsibilities. Base
salary changes also impact target annual incentive bonus amounts, and actual annual incentive bonus payouts,
because they are based on a percentage of base salary. When reviewing each executive’s base salary, the
compensation committee considers the level of responsibility and complexity of the executive’s job, whether
individual performance in the prior year was particularly strong or weak and the salaries paid by survey analysis
for the same or similar positions. Consistent with the philosophy discussed previously, our executive base
salaries generally are set at less than the median for comparable positions based on survey analysis.

As the compensation committee, with the input of the CEO, evaluated Mr. Lang’s performance during his

tenure, along with his expanded responsibilities, and compared it to other companies, it decided his title and
compensation should be adjusted to reflect the broader role he carries out at Zumiez. As such, Mr. Lang was
given the additional title of Chief Administrative Officer and granted an 11.4% raise for fiscal 2010.

Bonus

While we continue to open new stores and invest for the future, and have been for many years, the
compensation committee recognizes uncertain economic environment that has negatively impacted virtually
every industry including consumer discretionary spending businesses and the Company. We believe that our
current strong capital position, as evidenced by our cash and net working capital, reflect the strength of the
Company now and its prospects for successfully navigating this economic cycle.

The economic challenges that caused the “great recession” of 2008 and 2009 and its lingering effect in the

current economy have placed an important emphasis on maintaining strong working capital balances that provide
for adequate liquidity while balancing the need to allocate capital to drive increased returns on that capital.
Additionally, due to the uncertainty that exists around the fragile state of the economy, there was a wide range of
possible financial performance outcomes for the Company in fiscal 2010. This variability makes setting targets
for Short-Term Cash Based Incentives difficult. The compensation committee also recognizes that in this
environment preserving the Company’s strong financial position and retaining key management is critical to its
long-term success. For these reasons, the compensation committee established a discretionary bonus pool for
fiscal 2010 of up to 20% of each NEOs base salary in order to reward each NEO for preserving the Company’s
strong capital position while still maintaining the Company’s historical approach to setting targets for our Short-
Term Cash Based Incentives. The amount of the bonus was set below the historical minimum for the Short-Term
Cash Based Incentives, but meaningfully enough to reward the NEOs for achieving the goals set forth below. In

evaluating capital preservation, the compensation committee considers the NEOs performance in collectively
managing the following:

• Cash and marketable securities position at year-end versus plan and prior year.

• Working capital versus plan and prior year.

• Capital spending versus plan and prior year.

• Operating income and diluted earnings per share performance for the year versus plan and the prior

year.

• The current year’s performance relative to driving long-term value creation.

As was the case this year, with respect to discretionary bonuses, in the event that the Company achieves any

one of its Short-Term Cash Based Incentive thresholds (described under the heading “Short-Term Cash Based
Incentives,” below) for any performance metric, the compensation committee, at its discretion, may choose to
grant a lesser bonus or none at all. Since the Company met fiscal 2010 performance thresholds (as defined below)
and earned Short-Term Cash Based Incentives there was no bonus paid to the NEOs.

Short-Term Cash Based Incentives

In March 2010, the compensation committee approved the terms of the fiscal 2010 Short-Term Cash Based
Incentives. Our NEOs Short-Term Cash Based Incentives are targeted at approximately 0.2% of sales and 0.4%
at maximum payout. The Short-Term Cash Based Incentives is appropriate to provide for increased payouts due
to the significant shareholder returns commonly generated by above-target comparable store sales, product
margin and diluted earnings per share performance. The compensation committee and the independent directors
have the discretion under the plan to reduce the awards paid under the plan, but do not have discretion to increase
payouts that are based on achievement of the objective performance goals or make a payout based on the
objective performance goals if the threshold targets are not achieved. All of our executives are subject to our
Executive Compensation Recovery Policy, which further mitigates excessive risk taking. No payouts are made
until audited financial results are received, reviewed and approved by the audit committee at our March meeting
after our fiscal year has ended.

For each of the three performance measures: comparable store sales, diluted earnings per share and product

margin, the compensation committee established performance thresholds for the NEOs. The first threshold
relates to a minimum acceptable level of financial performance. Each succeeding threshold is designed to reward
the NEOs based upon the improved financial performance of the business. The first threshold is the target
threshold. The thresholds above the target threshold each pay out a higher percentage of base salary culminating
in the top threshold, which is designed as a stretch challenge. The compensation committee believes these goals
are not easily achieved; in the last five years, none of the NEOs have achieved all three of the stretch challenge
measurement goals. The following table shows the performance thresholds for each measure for fiscal 2010:

Comparable Store Sales Growth . . . . .
Diluted Earnings Per Share . . . . . . . . .
Diluted Earnings Per Share Growth . .
Product Margin Improvement . . . . . . .

3.5%
0.39
30.0%

Performance Threshold

7.0%
0.48
60.0%

10.0%
0.57
90.0%

13.0%
0.67
123.3%

Last year plus

0.2%

0.4%

0.5%

0.6%

The following table represents the percentage of the respective NEOs base salary that will be earned upon

achievement of the performance thresholds (“Threshold Percentage”):

Chairman
& CEO

President
& GMM

CFO &
CAO

EVP of
Stores

1st Threshold (target) . . . . . . . . . . . . . . . . . . . . . .
2nd Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3rd Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4th Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

50%
75%
88%
100%

75%
113%
131%
150%

70%
105%
123%
140%

55%
83%
96%
110%

The threshold percentages in the table above are multiplied by the percentages in the following table for

each performance threshold achieved (“Objective Measure Weighting Percentage”). The compensation
committee weights each threshold for each of the NEOs based upon that individual’s ability to impact the
measure. For example, our Executive Vice President of Stores is more heavily weighted on the comparable store
sales objective measure, while our President and General Merchandising Manager is more heavily weighted on
product margin.

Objective Measure

Comparable
Store Sales

Diluted
Earnings Per
Share Growth

Product
Margin

Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chief Executive Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
President and General Merchandising Manager . . . . . . . . . . . .
Chief Financial Officer, Chief Administrative Officer and

Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Vice President of Stores . . . . . . . . . . . . . . . . . . . . . .

30%
30%
30%

30%
40%

40%
40%
40%

50%
40%

30%
30%
30%

20%
20%

Therefore, for each performance threshold achieved, the calculation of the Short-Term Cash Based Incentive

earned is as follows:

Base Salary ($) x Threshold Percentage x Objective Measure Weighting Percentage

The level four diluted earnings per share and product margin improvement (stretch challenge) performance

thresholds of $0.67 and a 0.6% increase was achieved for fiscal 2010. In addition, the level three performance
threshold for comparable store sales growth of 10.0% was achieved for fiscal 2010. Short-Term Cash Based
Incentive awards for meeting these achievements were paid to the NEOs for fiscal 2010 in March 2011. The
Short-Term Cash Based Incentives target and compensation paid to the NEOs for fiscal 2010 are as follows:

Executive Officer

Short-Term
Cash Based
Incentive
Compensation
Target

Short-Term
Cash Based
Incentive
Compensation
Paid

Thomas D. Campion, Chairman of the Board . . . . . . . . . . . . . . . . . . . . .
Richard M. Brooks, Chief Executive Officer
. . . . . . . . . . . . . . . . . . . . .
Lynn K. Kilbourne, President and General Merchandising Manager . . .
Trevor S. Lang, Chief Financial Officer, Chief Administrative Officer

$131,250
$131,250
$262,500

and Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ford W. Wright, Executive Vice President of Stores . . . . . . . . . . . . . . .

$204,750
$123,750

$252,656
$252,656
$505,313

$394,144
$235,125

Long-Term Equity Incentives

The compensation committee uses long-term equity incentives as a significant component of total

compensation consistent with the culture and compensation philosophy. The compensation committee continues
to believe in the importance of equity compensation for all executive officers and issues equity incentives
broadly through the management population.

Additionally, because we do not have a pension or a supplemental executive retirement plan, we believe our
executives should plan for their retirement substantially through potential wealth accumulation from equity gains.

Long-term equity incentive awards are determined through a combination of the Company’s performance,

execution of our total compensation strategy of rewarding executives and providing a foundation for wealth
building. Our stock option awards generally have a ten-year term and typically vest 25% per year. Our restricted
stock awards generally vest 33% per year.

The compensation committee met in March 2010 and considered the performance of the Company, its
overall compensation strategy and the level of equity grants to align the NEOs with shareholders. Based on the
compensation committee’s deliberations, the following equity incentive awards were granted:

Executive Officer

Restricted
Stock Grants

Stock Option
Grants

Thomas D. Campion, Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Richard M. Brooks, Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lynn K. Kilbourne, President and General Merchandising Manager . . . . . . . . . . . . . . .
Trevor S. Lang, Chief Financial Officer, Chief Administrative Officer and

Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ford W. Wright, Executive Vice President of Stores . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—
7,000

6,800
5,950

—
—
16,600

15,950
14,350

The compensation committee believes the levels of grants are appropriate, consistent with its compensation

strategy and provide a meaningful alignment of the NEOs with the Company’s shareholders.

Equity Grant Timing Practices. All stock options granted at Zumiez have an exercise price equal to the
closing market price of our stock on the grant date. Regular annual grants for employees are approved at the
March compensation committee and board meetings, and the grant date for such annual grants is the second
business day after the public release of fiscal year-end earnings. The grants are approved as formulas based on a
specified dollar amount and approved dilution percentages; the number of shares and exercise price for each
option grant are determined based on the closing market price of our stock on the grant date, and the number of
shares for each restricted stock grant is determined by dividing the dollar amount by the closing market price of
our stock on the grant date. The board gives the CEO the ability to grant a small number of equity awards for the
current fiscal year at the March board meeting for new hires and promotions.

Executive Compensation and Change in Net Wealth of Zumiez Stock Compare to Diluted EPS and Share
Performance

The following summary charts illustrate, over the previous five fiscal years, the relationship of the
percentage change in executive compensation earned and change in net wealth of Zumiez stock value (“NEO
Compensation and Wealth”) to stock performance and diluted earnings per share performance, measured by the
percentage change in stock price as of the end of the fiscal year and the percentage change in annual diluted
earnings per share. For a discussion of how NEO Compensation and Wealth is calculated, please refer to the
footnotes of these charts. Additionally, refer to our Summary Compensation Table for a summary of executive
compensation calculated in accordance with SEC rules and regulations.

Chairman and Chief Executive Officer (1)(2)

d
n
a
n
o
i
t
a
s
n
e
p
m
o
C
O
E
N
n

e
g
n
a
h
C
%

h
t
l
a
e
W

60%

40%

20%

-20%

-40%

-60%

Other NEOs (2)(3)

d
n
a
n
o
i
t
a
s
n
e
p
m
o
C
O
E
N
n

e
g
n
a
h
C
%

h
t
l

a
e
W

70%

60%

50%

40%

30%

20%

10%

-10%

-20%

-30%

2006

2007

2008

2009

2010

200%

150%

100%

50%

-50%

-100%

S
P
E
d
e
t
u

l
i

D
d
n
a

e
c
i
r
P
k
c
o
t
S
n

e
g
n
a
h
C
%

Chairman and CEO

Stock Price

Diluted EPS

200%

150%

100%

50%

-50%

-100%

S
P
E
d
e
t
u

l
i

D
d
n
a

e
c
i
r
P
k
c
o
t
S
n

e
g
n
a
h
C
%

President & GMM, CFO &
CAO, and EVP of Stores

Stock Price

Diluted EPS

2006

2007

2008

2009

2010

(1) We have shown the comparison of our Chairman of the Board and Chief Executive Officer value to

performance separately from the other NEOs due to the difference in the compensation structure for the
Chairman and CEO (who beneficially own 17% and 12% of the Company as of March 17, 2011,
respectively, and have not received equity awards in the past five years).

(2) NEO Compensation and Wealth is calculated based on (1) the cash compensation earned during the fiscal
year (Salary, Bonus and Non-Equity Incentive Plan Compensation from the Summary Compensation
Table), (2) all other compensation received during the fiscal year (All Other Compensation from the
Summary Compensation Table), (3) the change in the ending value of owned stock, stock awards granted
and in-the-money stock option awards and (4) realized gains on sales of stock.

(3) The NEO Compensation and Wealth in this chart for Mr. Lang (CFO & CAO) begins in June 2007 when he
joined the Company and the NEO Compensation and Wealth for Mr. Wright (EVP of Stores) begins in
March 2007, when he was named an executive officer of the Company.

Who is Involved in Compensation Decisions for NEOs

The role of the compensation committee—The compensation committee oversees and governs the
compensation of the NEOs. The compensation committee is currently composed of three independent outside
directors. Its top priority is aligning the interests of the NEOs with those of shareholders and motivating them in
the most effective manner possible to create maximum long-term shareholder value. The compensation
committee’s responsibilities are to:

• Establish and articulate the philosophy, rationale and strategy for compensating all NEOs.

• Approve and oversee group and individual compensation plans designed to fulfill Company philosophy

and strategy.

• Develop, recommend and justify to the board all compensation decisions and actions for the CEO.

• Review and approve all compensation decisions and actions for other NEOs.

• Review and approve any up-front performance measures, goals, standards, weightings and formulas

that may be used to determine future conditional awards for NEOs.

• Ensure the ongoing success of our compensation program for NEOs by seeking, pursuing, evaluating

and implementing improvements.

• Review total compensation in relation to survey analysis.

• Evaluate the enterprise risk associated with all forms of compensation.

• Appoint, determine the funding for, and oversee the independent compensation consultant.

The role of NEOs—The NEOs, and in particular the CEO, provide and explain information requested by the
compensation committee and are present at compensation committee meetings as requested by the compensation
committee. The NEOs are not present during deliberations or determination of their respective compensation. On
behalf of the compensation committee, the CEO has the following specific responsibilities:

• Develop, recommend and justify, to the compensation committee, compensation decisions and actions

for NEOs other than the CEO.

• Develop, recommend and justify, to the compensation committee, any up-front performance measures,
goals, standards, weightings and formulas that may be used to determine future conditional awards for
the compensation program for NEOs.

• Report, to the compensation committee, experiences with the compensation program for NEOs and

present any perceived opportunities for improvement.

• Communicate appropriate information about the compensation committee’s actions and decisions to

the other NEOs.

The role of external advisors—At the compensation committee’s discretion, it may engage and consult with

external advisors as it determines necessary to assist in the execution of its duties. External advisors have the
following responsibilities:

•

Provide research, analysis and expert opinions, on an as-requested basis, to assist the compensation
committee in education, deliberations and decision-making.

• Maintain independence from the management of the Company.

•

Interact with members of management only with the approval of the chair of the compensation
committee.

All external advisors are engaged directly by the compensation committee and independently of the

management of the Company.

The compensation committee periodically engages a compensation consultant, Ascend Consulting, to work

with the compensation committee on its compensation deliberations. During fiscal 2010, the compensation

committee asked the consultant to review the alignment of the Company’s culture with its compensation
philosophy, provide an assessment of compensation levels and advise the compensation committee on
compensation strategies based on a market analysis taking into account recruiting goals, and retaining and
motivating talent to build shareholder value. The compensation committee and the Company believe the
compensation consultant is independent of the Company and management.

The role of outside counsel—The compensation committee consults with outside legal counsel to advise on
its deliberations. Outside legal counsel attends compensation committee meetings as deemed appropriate by the
compensation committee and is also available between compensation committee meetings to advise the
compensation committee.

The Compensation Decision-making Process

The compensation committee gathers together information to help it assess compensation for the NEOs,

including:

• Tally sheets—The Company uses tally sheets for each of the NEOs to summarize the significant

components of compensation. At Zumiez, the components of compensation primarily include salary,
Short-Term Cash Based Incentives, bonuses, equity incentives, 401K discretionary match and clothing
discounts. The tally sheets are compared to targeted total compensation. The tally sheets are used to
help prepare the tables that follow this compensation discussion and analysis.

•

Surveys—At the compensation committees direction, the compensation consultant performed an
analysis of compensation data from six surveys including: Apparel Industry Compensation Survey
(ICR Ltd.), U.S. Long-term Incentive and Equity Survey (Mercer Human Resources Consulting Inc.),
U.S. Retail Compensation and Benefits Survey (Mercer Human Resources Consulting Inc.), Northwest
Executive Compensation Survey (Milliman), National Executive & Senior Management Compensation
Survey (Compdata Surveys), Report on Top Management Compensation (Watson Wyatt Worldwide).
The consultant analyzed the survey data by considering companies of similar size nature and scope and
taking into account our industry growth rate and geographic location. The consultant examined the data
for aberrations, weighted observations and applied statistical methods and modeling techniques to
determine the competitive market for salary, bonus and equity incentives awards. Apart from providing
information related to job content, organization structure, and pertinent financial information,
management did not participate in any part of the survey analysis.

Fiscal 2010 results—The compensation committee has access to the Company’s fiscal 2010 operating
plans and budgets as approved by the board of directors in March 2010. Management updates the
compensation committee and the board on actual performance compared to budgets and summarizes
for the compensation committee how the Company and the NEOs performed against the performance
targets.

Fiscal 2011 operating and financial plans—The compensation committee also receives the Company’s
operating plan and budgets for fiscal 2011 as approved by the Company’s board of directors. The
compensation committee uses this information to help establish performance targets for the upcoming
fiscal year.

• Audited results—The compensation committee reviews the final audited results to confirm that

performance targets were achieved. No incentive awards are made until audited results are received by
the board.

• Wealth creation schedules—The compensation committee requests that management prepare wealth

creation schedules for each NEO showing accumulated equity (both vested and unvested), the amount
of vested equity awards exercised and the related pre-tax proceeds.

•

Performance of teen specialty retailers—The compensation committee requests that management
prepare a schedule for a group of teen retailers comparing same-store sales results for the last four
fiscal years and the percentage change in diluted earnings per share comparing the most recent

year-end results to the previous year. The teen retailers include: Abercrombie & Fitch, Aeropostale,
American Eagle, Hot Topic and Pacific Sunwear. The group was selected because they are generally
considered to be leading lifestyle retailers in the teen market. All of the information for these retailers
was summarized from publicly available date. The compensation committee compares the Company’s
relative performance as an additional data point understanding that all of these companies are larger
and may have significantly different business models with significantly different growth profiles.

• Evaluations—The compensation committee receives a self-evaluation and confidential upward
evaluations of the CEO and summary evaluations of the remaining NEOs. The compensation
committee chair solicits the full membership of the board for feedback on the CEO’s performance and
prepares the CEO’s annual evaluation for review by the full compensation committee.

There is discretion inherent in the compensation committee’s role of establishing compensation for the

NEOs. The compensation committee has attempted to minimize discretion by focusing on the three objective
financial measures it considers to be the long-term drivers of the Company’s business: comparable store sales,
product margin and diluted earnings per share. These three measures have historically been used exclusively to
determine the Short-Term Cash Based Incentives and are also key considerations in determining changes to base
salary adjustments and long-term equity-based incentive awards. Some discretion is used by the compensation
committee in evaluating the qualitative performance of the NEOs in determining base salary adjustments and
payment of discretionary bonuses. Some discretion is also used in the granting of long-term equity incentive
awards to help NEOs build wealth through ownership of Zumiez stock. However, in all of these uses of
discretion the compensation committee is also governed by the overall compensation philosophy. The
compensation committee also takes into consideration survey analysis, changes in year over year compensation
and total compensation.

The compensation committee thoroughly and systematically reviews and discusses all information
submitted. It asks management to clarify and supplement as appropriate. The committee then works with its
consultant to determine fair and competitive compensation awards and opportunities for each of the NEOs.

The compensation committee currently structures the NEO compensation program to:

•

Provide conservative salary opportunities (40th percentile against survey analysis for executive
compensation talent).

• Establish average (50th percentile) total cash compensation opportunities (base salary, bonus and

Short-Term Cash Based Incentives) against the survey analysis.

•

Provide long-term equity-based awards at the 50th percentile when compared to survey analysis for
comparable roles. In the case of our Chairman and our CEO who beneficially own 17% and 12% of the
Company, respectively, the compensation committee has concluded that each executive owns a
sufficient amount of equity to align them with the long-term interests of shareholders. Because of this,
neither our Chairman nor our CEO has received equity grants for the last five years.

The compensation committee evaluates this approach to total direct compensation on an annual basis to best

maintain alignment of the interests of NEO’s with the long-term economic interests of shareholders, given the
maturity, complexity and size of the business. Included is a thorough review of the approach to the Chairman and
CEO, where the committee reserves the right to provide additional equity-based awards to the incumbents if it
determines doing so is in the best interests of shareholders and/or is needed to best reflect competitive practices.

During its deliberations, the compensation committee also considers:

• Long-term wealth accumulation—the accumulated wealth from previous equity incentives granted to

each NEO.

•

Internal pay equity—the relationship between the compensation of our CEO and the other NEOs, as
well as staff at-large.

In making its final decisions, the committee works to ensure that all outcomes are thoroughly justifiable and

defensible as well as fair and effective from all critical perspectives: those of the full board, shareholders,
objective external experts and the NEOs themselves.

Enterprise Risk and Compensation

The compensation committee considers all facets of the NEOs compensation structure and believes it
appropriately balances the drive for financial results and risks to the Company. The compensation committee
aligns executive compensation with shareholder interests by placing a majority of total compensation “at risk,”
and increasing the amount of pay that is “at risk” as the executives achieve higher levels of performance. There
are no individuals subordinate to the NEOs that can earn a higher annual or long-term incentive than the NEOs.
“At risk” means the executive will not realize value unless performance goals are attained. The short-term
incentives are tied to easily measureable financial metrics that the compensation committee believes are
consistent, transparent and drive shareholder value; that is, comparable store sales, product margin and diluted
earnings per share. The majority of the long-term based compensation vests over several years and is not tied to
specific financial metrics. By combining annual cash incentives tied to short-term financial performance along
with the majority of the NEOs long-term wealth creation tied to stock performance, the compensation committee
believes an appropriate balance exists between rewarding performance without excessive risk taking. In addition
the compensation committee believes the short-term incentives in place that are tied to financial performance do
not provide excessive risk to the Company as they are capped at no more than 150% of base pay for our President
and GMM, 140% for our CFO, 110% for our Executive Vice President of Stores and 100% for our Chairman and
CEO. The compensation committee believes that the overall executive compensation policy contains less than a
‘reasonable likelihood’ of material risk.

Employment Agreements

No employees of the Company have employment agreements and all employees are “at will.”

Tax Implications

Section 162(m) of the Internal Revenue Code limits the Company’s ability to deduct certain compensation

over $1.0 million paid to the executive officers unless such compensation is based on performance objectives
meeting certain criteria or is otherwise excluded from the limitation. The compensation committee believes that
it is generally in the Company’s best interests to comply with Section 162(m) and expects that most of the
compensation paid to the named executives will either be under the $1.0 million limit, eligible for exclusion
(such as stock options) under the $1.0 million limit, or based on qualified performance objectives. However,
notwithstanding this general policy, the compensation committee also believes that there may be circumstances
in which the Company’s interests are best served by maintaining flexibility in the way compensation is provided,
whether or not compensation is fully deductible under Section 162(m). Accordingly, it is possible that some
compensation paid to executive officers may not be deductible to the extent that the aggregate of non-exempt
compensation exceeds the $1.0 million level.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Weber and Barnum and Ms. McCoy currently serve as members of the compensation committee.

Ms. McCoy was appointed to the compensation committee on October 22, 2010. No member of the
compensation committee was at any time during fiscal 2010 or at any other time an officer or employee of
Zumiez, and no member had any relationship with Zumiez requiring disclosure as a related-person in the section
“Certain Relationships and Related Transactions.” No executive officer of Zumiez has served on the board of
directors or compensation committee of any other entity that has or has had one or more executive officers who
served as a member of our board of directors or compensation committee during fiscal 2010.

REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

The compensation committee of the Company has reviewed and discussed the Compensation Discussion

and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and
discussion, the compensation committee recommended to the board of directors that the Compensation
Discussion and Analysis be included in this Proxy Statement.

THE COMPENSATION COMMITTEE

James M. Weber, Chairman
William M. Barnum
Sarah (Sally) G. McCoy

The compensation committee report does not constitute soliciting material, and shall not be deemed to be filed or
incorporated by reference into any other filing under the Securities Act of 1933, or the Securities Exchange Act
of 1934, except to the extent that the Company specifically incorporates the compensation committee report by
reference therein.

PROPOSAL 2

ADVISORY VOTE ON EXECUTIVE COMPENSATION

We are providing the Company’s shareholders with the opportunity to vote to approve, on an advisory,

non-binding basis, the compensation of our named executive officers as disclosed pursuant to Item 402 of
Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative
discussion contained in this proxy statement.

As described in the section entitled, “Compensation Discussion and Analysis,” our executive compensation

programs are designed to attract, retain, align, motivate and reward executives capable of understanding,
committing to, maintaining and enhancing the Zumiez culture; and, with culture as a centerpiece of our
competitive advantage, establishing and accomplishing business strategies and goals that we believe makes the
Company an attractive investment for shareholders. As a result, our compensation programs are designed to be
externally competitive, reward performance, be fair and consistent, drive long-term shareholder thinking, be an
effective blend of guaranteed and at-risk components and for at-risk components, be an effective blend between
short-term and long-term.

We are presenting this proposal, which gives our shareholders, the opportunity to endorse or not endorse our

executive compensation programs through an advisory vote on the following resolution:

“Resolved, that the shareholders approve, on an advisory basis, the compensation of our named executive
officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and
Analysis, compensation tables and narrative disclosure, contained in this proxy statement.”

This vote is advisory, and therefore not binding on the Company, the compensation committee or our board
of directors. Our board of directors and our compensation committee value the opinions of our shareholders and
to the extent there is any significant vote against the named executive officer compensation as disclosed in this
proxy statement, we will consider our shareholders’ concerns and the compensation committee will evaluate
whether any actions are necessary to address those concerns. In addition, the non-binding advisory votes
described in this Proposal 2 and below in Proposal 3 will not be construed as (1) overruling any decision by the
Company, the board of directors, or the compensation committee relating to the compensation of the named
executive officers, or (2) creating or changing any fiduciary duties or other duties on the part of the board of
directors, or any committee of the board of directors, or the Company.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL, ON AN ADVISORY BASIS, OF
THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS AS DISCLOSED PURSUANT TO
ITEM 402 OF REGULATION S-K, INCLUDING THE COMPENSATION DISCUSSION AND ANALYSIS,
COMPENSATION TABLES AND NARRATIVE DISCUSSION CONTAINED IN THIS PROXY STATEMENT

ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION

PROPOSAL 3

In addition to providing an advisory vote on executive compensation, we are providing the Company’s
shareholders with the opportunity to indicate their preference on how frequently we should seek an advisory vote
on the compensation of our named executive officers. Shareholders have the option to vote for every “1 Year,”
every “2 Years,” every “3 Years” or abstain.

After careful consideration, the board of directors believes that a frequency of every three years for the
advisory vote on executive compensation is the optimal interval. The board of directors believes that holding an
advisory vote every three years complements the goal to create a compensation program that enhances long-term
shareholder value. As discussed in the section entitled, “Compensation Discussion and Analysis,” a significant
component of our compensation program is long-term equity incentives. A vote every three years will provide
shareholders with the ability to evaluate our compensation program over a period of time similar to the periods
associated with our long-term equity incentive compensation. Additionally, a three-year period of time will allow
for our compensation committee and board of directors sufficient time to analyze the results of the advisory vote
in comparison to the Company’s performance and implement necessary changes. The compensation committee
also believes this time horizon will allow the board of directors to engage with shareholders to better understand
and respond to vote results. Management actively dialogues with investors and an advisory vote on executive
compensation every three years will enhance shareholder communication by providing another avenue to obtain
information on investor sentiment about our executive compensation philosophy, policies and procedures. The
board of directors believes the Company manages its business and investments to yield sustainable long-term
results that are above competitors and that the there is a correlation between earnings, stock price and total
compensation as expressed in the graphs on page 33. The direct link between incentive payments and
achievement of business goals and shareholder value has helped drive the Company’s strong results over the last
decade and as most recently evidenced by the largest growth in earnings in our history as a public company.

This vote is advisory, and therefore not binding on the Company, the compensation committee or our board
of directors. Our board of directors and our compensation committee value the opinions of our shareholders and
will take into account the outcome of the vote when considering the frequency of future advisory votes on
executive compensation. While the board of directors is in favor of a shareholder advisory vote on the
compensation of our named executive officers every three years, you may choose to vote in favor of any of three
alternatives, i.e. having a shareholder advisory vote on executive compensation ever “1 Year,” every “2 Years”
or every “3 Years” (or you may abstain from voting on this matter). You are not being asked to vote for or
against the board’s recommendation of having a shareholder advisory vote every three years.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR A FREQUENCY OF 3 YEARS AS THE
SHAREHOLDERS’ PREFERENCE FOR THE FREQUENCY FOR ADVISORY VOTES ON THE APPROVAL OF THE
COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS

Summary Compensation Table

The following table shows all compensation for fiscal 2010, 2009 and 2008 awarded to, earned by, or paid
to our CEO, our Chief Financial Officer and Chief Administrative Officer and our other three most highly paid
executive officers. These executive officers are referred to as “NEOs.”

Name and Principal Position

Thomas D. Campion . . . . . . . . . . . . . . .

Chairman of the Board

Richard M. Brooks . . . . . . . . . . . . . . . .

Chief Executive Officer

Lynn K. Kilbourne . . . . . . . . . . . . . . . . .

President and General
Merchandising Manager

Trevor S. Lang . . . . . . . . . . . . . . . . . . . .

Chief Financial Officer, Chief
Administrative Officer and Secretary

Ford W. Wright . . . . . . . . . . . . . . . . . . .

Executive Vice
President of Stores

Year

2010
2009
2008

Salary
($)

262,500
262,500
262,500

350,000
350,000
315,369

292,500
262,500
262,500

225,000
225,000
225,000

Stock
Awards
($) (1)

Option
Awards
($) (2)

Non-Equity
Incentive Plan
Compensation
($) (3)

All Other
Compensation
($) (4)

—
—
—

134,610
113,520
500,004

204,512
233,200
308,800

130,764
106,640

196,504
233,200
— 308,800

114,419
79,120

176,792
233,200
— 308,800

252,656
105,000
—

505,313
210,000
—

394,144
110,250
—

235,125
74,250
—

6,363
2,512
5,009

9,100
4,808
5,726

613
861
3,524

8,092
4,503
2,411

9,864
6,250
7,798

Total
($)

521,519
370,012
267,509

524,256
372,308
268,226

1,195,048
907,581
1,127,697

1,022,004
717,093
573,711

761,200
617,820
541,598

(1) This column represents the aggregate grant-date fair value of restricted stock awards calculated in accordance with FASB
ASC Topic 718, excluding the impact of estimated forfeitures related to service based vesting conditions. Amounts for
2008 have been recomputed under the same methodology in accordance with SEC rules. For assumptions used in
determining these values, please see Note Two (listed under Stock Compensation) in the Notes to Consolidated Financial
Statements in our fiscal 2010, 2009 and 2008 and Forms 10-K. Information regarding the restricted stock awards granted
to the NEOs during fiscal 2010 is set forth in the Grants of Plan-Based Awards Table on a grant-by-grant basis.

(2) This column represents the aggregate grant-date fair value of stock option awards calculated in accordance with FASB
ASC Topic 718, excluding the impact of estimated forfeitures related to service based vesting conditions. Amounts for
2008 have been recomputed under the same methodology in accordance with SEC rules. For assumptions used in
determining these values, please see Note Two (listed under Stock Compensation) in the Notes to Consolidated Financial
Statements in our fiscal 2010, 2009 and 2008 Form 10-K. Information regarding the stock option awards granted to our
NEOs during 2010 is set forth in the Grants of Plan-Based Awards Table on a grant-by-grant basis.

(3) The amounts set forth in this column were earned during fiscal 2010 and 2009 and paid in early fiscal 2011 and 2010

respectively, to each of the NEOs under our executive Short-Term Cash Based Incentives. No Short-Term Cash Based
Incentives were earned by our NEOs for fiscal 2008. For additional information on the determination of the amounts
related to Non-Equity Incentive Plan Compensation, see the previous discussion in the Compensation Discussion and
Analysis entitled, “Short-Term Cash Based Incentives.”

(4) All Other Compensation includes the amount of Company 401K employer match contributions and merchandise

discounts, which are widely available to all qualified employees.

Grants of Plan-Based Awards

The following table provides information about equity and non-equity awards granted to the NEOs in fiscal
2010. In the columns described as Estimated Future Payouts Under Non-Equity Incentive Plan Awards, this table
quantifies potential awards under the executive Short-Term Cash Based Incentives plan discussed previously.

Estimated Future Payouts Under
Non-Equity Incentive Plan Awards (1)

Grant Date

Threshold
($)

Target
($)

Maximum
($)

131,250

262,500

All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)
(2)

All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)
(3)

Exercise or
Base Price
of Option
Awards ($)
(4)

Grant Date
Fair Value
of Stock and
Option
Awards ($)
(5)

Name

Thomas D. Campion . . . .
Chairman of the Board

Richard M. Brooks . . . . . .
Chief Executive Officer

Lynn K. Kilbourne . . . . . .
President and General
Merchandising Manager

3/15/2010
6/3/2010

Trevor S. Lang . . . . . . . . .
Chief Financial Officer,
Chief Administrative
Officer and Secretary

3/15/2010
6/3/2010

131,250

262,500

525,000

204,750

409,500

7,000

6,800

5,950

16,600

19.23

15,950

19.23

14,350

19.23

134,610
204,512

130,764
196,504

114,419
176,792

Ford W. Wright

. . . . . . . .

123,750

247,500

Executive Vice
President of Stores

3/15/2010
6/3/2010

(1) These columns show what the potential payout for each NEO was under the executive Short-Term Cash Based

Incentives for fiscal 2010 if the threshold, target or maximum goals were satisfied for all performance measures. Please
refer to the discussion in the Compensation Discussion and Analysis entitled, “Short-Term Cash Based Incentives” for
amounts earned by the NEOs in fiscal 2010.

(2) This column shows the number of shares of restricted stock granted in fiscal 2010 to the NEOs. The restricted stock vest
over a three-year period in equal annual installments beginning on the first anniversary date of the grant. Please refer to
the discussion in the Compensation Discussion and Analysis entitled, “Long-Term Equity Incentives.”

(3) This column shows the number of stock options granted in fiscal 2010 to the NEOs. These stock options vest over a four-
year period in equal annual installments beginning on the first anniversary date of the grant. Please refer to the discussion
in the Compensation Discussion and Analysis entitled, “Long-Term Equity Incentives.”

(4) This column shows the exercise price for the stock options granted, which was the closing price of the Company’s stock

on the grant date indicated.

(5) This column represents the aggregate grant-date fair value of restricted stock and stock option awards calculated in

accordance with FASB ASC Topic 718, excluding the impact of estimated forfeitures related to service based vesting
conditions. For assumptions used in determining these values, please see Note Two (listed under Stock Compensation) in
the Notes to Consolidated Financial Statements in our fiscal 2010 Form 10-K. These amounts reflect the Company’s
accounting expense for these stock option and restricted stock awards to be recognized over the vesting period of the
grants, and do not correspond to the actual value that will be recognized by the NEO.

Outstanding Equity Awards at Fiscal Year-End

The following table provides information on the holdings of stock option awards and restricted stock awards

for the NEOs at January 29, 2011. This table includes unexercised and unvested stock options and restricted
stock awards. The vesting schedule for each grant of stock options and restricted stock awards is shown in the
footnotes to this table. The market value of the restricted stock awards is based on the closing market price of our
stock on January 29, 2011, which was $22.31.

Option Awards

Stock Awards

Name

Thomas D. Campion . . . . . . . . . . . .

Chairman of the Board

Richard M. Brooks . . . . . . . . . . . . .

Chief Executive Officer

Lynn K. Kilbourne . . . . . . . . . . . . .

President and General
Merchandising Manager

Trevor S. Lang . . . . . . . . . . . . . . . .
Chief Financial Officer, Chief
Administrative Officer and
Secretary

Ford W. Wright . . . . . . . . . . . . . . . .

Executive Vice President of
Stores

Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)

Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)

Options
Exercise
Price
($)

Option
Expiration
Date

—

8,971
38,667
24,000
20,000
13,750
—
—
—
—

35,832
20,000
13,750
—
—
—
—

20,000
18,900
20,000
13,750
—
—
—

—

— (1)
1,333 (2)
16,000 (3)
20,000 (4)
41,250 (5)
16,600 (6)
—
—
—

—

3.87
27.31
35.85
14.00
6.88
19.23
—
—
—

14,168 (10) 38.19
14.00
20,000 (4)
41,250 (5)
6.88
19.23
15,950 (6)
—
—
—
—
—
—

20,000 (12) 27.31
35.85
12,600 (3)
14.00
20,000 (4)
41,250 (5)
6.88
19.23
14,350 (6)
—
—
—
—

—

9/9/2014
3/9/2016
3/13/2017
3/12/2018
3/16/2019
3/15/2020
—
—
—

6/28/2017
3/12/2018
3/16/2019
3/15/2020
—
—
—

3/9/2016
3/13/2017
3/12/2018
3/16/2019
3/15/2020
—
—

Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)

—

Market
Value of
Shares or
Units of
Stock that
Have Not
Vested
($)

—

—
—
—
—
—
—

—
—
—
—
—
—
16,340 (7) 364,545
11,000 (8) 245,410
7,000 (9) 156,170

—
—
—
—

—
—
—
—
4,250 (11) 94,818
10,333 (8) 230,529
6,800 (9) 151,708

—
—
—
—
—

—
—
—
—
—
7,666 (8) 171,028
5,950 (9) 132,745

(1) Options subject to this grant vest twenty percent on July 31, 2005 and 1/48th of the remaining options vest

each month thereafter. The grant date was September 9, 2004 and fully vested on July 31, 2009.

(2) Options subject to this grant vest twenty percent on the one-year anniversary of the grant date and 1/48th of

the remaining options vest each month thereafter. The grant date was March 9, 2006.

(3) Options subject to this grant vest over a five-year period in equal annual installments beginning on the

one-year anniversary of the grant date. The grant date was March 13, 2007.

(4) Options subject to this grant vest over a four-year period in equal annual installments beginning on the

one-year anniversary of the grant date. The grant date was March 12, 2008.

(5) Options subject to this grant vest over a four-year period in equal annual installments beginning on the

one-year anniversary of the grant date. The grant date was March 16, 2009.

(6) Options subject to this grant vest over a four-year period in equal annual installments beginning on

March 15, 2011. The grant date was June 3, 2010.

(7) This restricted stock grant vest over a four-year period in equal annual installments beginning on the grant

date anniversary. The grant date was September 2, 2008.

(8) This restricted stock grant vest over a three-year period, with thirty three percent vesting annually upon the
one- and two-year anniversary of the grant date and thirty four percent on the third-year anniversary of the
grant date. The grant date was March 16, 2009.

(9) This restricted stock grant vest over a three-year period, with thirty three percent vesting annually upon the
one- and two-year anniversary of the grant date and thirty four percent on the third-year anniversary of the
grant date. The grant date was March 15, 2010.

(10) Options subject to this grant vest twenty percent on the one-year anniversary of the grant date and 1/48th of

the remaining options vest each month thereafter. The grant date was June 28, 2007.

(11) This restricted stock grant vest twenty percent on the one-year anniversary of the grant date and 1/48th of the

remaining restricted stock grant vest each month thereafter. The grant date was June 28, 2007.

(12) Options subject to this grant vest over an eight-year period in equal annual installments beginning on the

grant date anniversary. The grant date was March 9, 2006.

Option Exercises and Stock Vested

The following table provides information for the NEOs on stock option exercises and on the vesting of other

stock awards during fiscal 2010, including the number of shares acquired upon exercise or vesting and the value
released before payment of any applicable withholding taxes and broker commissions.

Name

Thomas D. Campion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chairman of the Board

Richard M. Brooks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chief Executive Officer

Option Awards

Stock Awards

Number of
Shares
Acquired on
Exercise
(#)

Valued
Realized on
Exercise (1)
($)

Number of
Shares
Acquired
on Vesting
(#)

Value
Realized on
Vesting (2)
($)

—

Lynn K. Kilbourne . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100,000

1,968,493

13,670

246,238

President and General Merchandising Manager

Trevor S. Lang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chief Financial Officer, Chief Administrative Officer and
Secretary

Ford W. Wright . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Executive Vice President of Stores

—

8,167

164,867

—

3,834

75,913

(1) The dollar amount realized upon exercise was calculated by determining the difference between the market
price of the underlying shares of common stock at exercise and the exercise price of the stock options.

(2) The dollar amount realized upon vesting was calculated by applying the market price of the restricted stock

shares on the vesting dates.

Pension Benefits

The Company does not maintain a defined benefit pension plan or supplemental pension plan.

Nonqualified Deferred Compensation

The Company does not maintain a nonqualified deferred compensation plan.

Potential Payments Upon Termination or Change in Control

Certain of the NEOs have unvested stock options and awards of restricted stock under the Company’s 2005

Equity Incentive Plan, the vesting of which may accelerate in the event of a Change in Control (as defined
below). The information below is a summary of certain provisions of these agreements and does not attempt to
describe all aspects of the agreements. The rights of the parties are governed by the actual agreements and are in
no way modified by the abbreviated summaries set forth in this proxy statement.

Acceleration of Stock Award Vesting

The Company’s 2005 Equity Incentive Plan provides that in the event of a Change in Control (as defined
below), if the surviving corporation does not assume or continue outstanding stock awards or substitute similar
stock awards for those outstanding under the 2005 Equity Incentive Plan, then all such outstanding stock awards
will be accelerated and become fully vested and exercisable immediately prior to the consummation of the
Change in Control transaction.

For purposes of the 2005 Equity Incentive Plan, “Change in Control” means:

(i)

the consummation of a merger or consolidation of the Company with or into another entity or any other
corporate reorganization, if more than 50% of the combined voting power of the continuing or
surviving entity’s securities outstanding immediately after such merger, consolidation or other
reorganization is owned by persons who were not shareholders of the Company immediately prior to
such merger, consolidation or other reorganization; or

(ii)

the sale, transfer or other disposition of all or substantially all of the Company’s assets.

A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the

Company’s incorporation or to create a holding company that will be owned in substantially the same
proportions by the persons who held the Company’s securities immediately before such transaction.

The following table shows the potential payments the NEOs could have received under these arrangements

in connection with a Change in Control on January 29, 2011.

Executive Officer

Stock Option Vesting
in Connection with a
Change in Control (1)

Restricted Stock
Vesting in Connection
with a Change in
Control (2)

Thomas D. Campion, Chairman of the Board . . . . . . . . . . . . . . . . . . . .
Richard M. Brooks, Chief Executive Officer . . . . . . . . . . . . . . . . . . . . .
Lynn K. Kilbourne, President and General Merchandising Manager . . .
Trevor S. Lang, Chief Financial Officer, Chief Administrative Officer

and Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ford W. Wright, Executive Vice President of Stores . . . . . . . . . . . . . . .

$ —
$ —
$853,816

$851,814
$846,886

$ —
$ —
$766,125

$477,055
$303,773

(1) Represents the amount calculated by multiplying the number of in-the-money options with respect to which
the vesting would accelerate as a result of a Change in Control under the circumstances noted by the
difference between the exercise price and the closing price of a share of common stock on the last trading
day of the 2010 fiscal year. The number of shares subject to unvested stock options and exercise prices
thereof are shown previously in the Outstanding Equity Awards at Fiscal Year-End table.

(2) Represents the amount of unvested restricted stocks awarded with respect to which the vesting would

accelerate as a result of a Change in Control noted by the number of restricted stock shares unvested at the
closing price of a share of common stock on the last trading day of the 2010 fiscal year.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information concerning the Company’s equity compensation plans at

January 29, 2011:

Plan Category

Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights

Weighted-
average
exercise
price of
outstanding
options,
warrants
and rights

Number of
securities
remaining
available for
future issuance
under equity
compensation
plans

Equity compensation plans approved by security holders (1) . . . . . .
Equity compensation plans not approved by security holders (2) . . .
Employee stock purchase plans approved by security holders (3) . . .

1,118,465
—
—

$14.86
—
—

5,924,131

—
866,012

(1) Equity compensation plans approved by shareholders include the 1993 Stock Option Plan, the 2004 Stock

Option Plan and the 2005 Equity Incentive Plan.

(2) The Company does not have any equity compensation plans that were not approved by the Company’s

shareholders.

(3) Employee stock purchase plans approved by shareholders include the 2005 Employee Stock Purchase Plan.

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

The 2010 audit committee operates under a written charter adopted by the Company’s board of directors.

The charter of the audit committee is available at http://ir.zumiez.com.

We have reviewed and discussed with management our consolidated financial statements as of and for the

fiscal year ended January 29, 2011.

We have discussed with the independent public accountants the matters required to be discussed by

Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU Section 380),
as adopted by the Public Company Accounting Oversight Board in Rule 3200T.

We have received and reviewed the written disclosures and the letter from the independent public

accountants required by applicable requirements of the Public Company Accounting Oversight Board regarding
the independent accountant’s communications with the Audit Committee concerning independence, and have
discussed with the independent accountants their independence.

Based on the reviews and discussions referred to previously, we recommended to our board of directors that

the financial statements referred to previously be included in our Annual Report on Form 10-K.

THE AUDIT COMMITTEE

Gerald F. Ryles, Chairman
William M. Barnum
Matthew L. Hyde
James M. Weber
Sarah (Sally) G. McCoy

The audit committee report does not constitute soliciting material, and shall not be deemed to be filed or
incorporated by reference into any other filing under the Securities Act of 1933, or the Securities Exchange Act
of 1934, except to the extent that the Company specifically incorporates the audit committee report by reference
therein.

Fees Paid to Independent Registered Public Accounting Firm for Fiscal Years 2010 and 2009

The aggregate fees billed by Moss Adams LLP for professional services rendered for the fiscal years ended

January 29, 2011 (fiscal 2010) and January 30, 2010 (fiscal 2009), respectively, are as follows:

Audit fees (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit-related fees (2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax fees (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

406,000
15,000
82,000

448,000
15,000
49,000

Total fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

503,000

512,000

2010

2009

(1) Audit fees include services and costs in connection with the audit of the consolidated financial statements of

the Company along with the reviews of the interim financial information of the Company and its
Forms 10-K and 10-Q.

(2) Audit-related fees include services and costs in connection with the audit of the Company’s 401K plan.

(3) Tax fees include preparation of the fiscal 2009 and 2008 federal income tax returns, preparation of state

income and franchise tax returns and services related to a cost segregation analysis.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent
Registered Public Accounting Firm

The audit committee pre-approves all auditing services, internal control-related services and permitted

non-audit services (including the fees and terms thereof) to be performed for the Company by its independent
auditor, subject to the “de minimis exception” (discussed below) for non-audit services that are approved by the
audit committee prior to the completion of the audit. The audit committee may form and delegate authority to
subcommittees consisting of one or more members when appropriate, including the authority to grant
pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant
pre-approvals shall be presented to the full audit committee at its next scheduled meeting. The audit committee
will evaluate whether any permitted non-audit services are compatible with maintaining the auditor’s
independence.

As discussed previously, all services of the auditor must be pre-approved by the audit committee except for

certain services other than audit, review or attest services that meet the “de minimis exception” under 17 CFR
Section 210.2-01, namely:

•

the aggregate amount of fees paid for all such services is not more than 5% of the total fees paid by the
Company to its auditor during the fiscal year in which the services are provided;

such services were not recognized by the Company at the time of the engagement to be non-audit
services; and

such services are promptly brought to the attention of the audit committee and approved prior to the
completion of the audit.

During fiscal 2010 and 2009, there were no services that were performed pursuant to the “de minimis

exception.”

RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PROPOSAL 4

Upon the recommendation of the audit committee, the board of directors has reappointed Moss Adams LLP

to audit our consolidated financial statements for the fiscal year ending January 28, 2012 (“fiscal 2011”). Moss
Adams LLP has served as our independent registered public accounting firm since fiscal 2006. A representative
from Moss Adams LLP will be at the meeting to answer any questions that may arise.

If the shareholders do not ratify the selection of Moss Adams LLP as our independent registered public

accounting firm for fiscal 2011, our board of directors will evaluate what would be in the best interests of our
Company and our shareholders and consider whether to select a new independent registered public accounting
firm for the current fiscal year or whether to wait until the completion of the audit for the current fiscal year
before changing our independent registered public accounting firm.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF ITS SELECTION OF MOSS ADAMS
LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2011

HOUSEHOLDING OF PROXY MATERIALS

The SEC has adopted rules that permit companies and intermediaries (e.g., brokers, banks and other agents)

to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more
shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders.
This process, which is commonly referred to as “householding,” potentially means extra convenience for
shareholders and cost savings for companies.

A number of brokers, banks or other agents with account holders who are shareholders of Zumiez will be

“householding” our proxy materials. A single proxy statement will be delivered to multiple shareholders sharing
an address unless contrary instructions have been received from the affected shareholders. Once you have
received notice from your broker, bank or other agent that it will be “householding” communications to your
address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any
time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement
and annual report, please notify your broker, bank or other agent, and direct a written request for the separate
proxy statement and annual report to Secretary, Zumiez Inc., 6300 Merrill Creek Parkway, Suite B, Everett,
Washington 98203. Shareholders whose shares are held by their broker, bank or other agent as nominee and who
currently receive multiple copies of the proxy statement at their address that would like to request
“householding” of their communications should contact their broker, bank or other agent.

PROPOSALS OF SHAREHOLDERS

We expect to hold our next annual meeting on or about May 23, 2012. If you wish to submit a proposal for

inclusion in the proxy materials for that meeting, you must send the proposal to our Secretary at the address
below. The proposal must be received at our executive offices no later than December 8, 2011, to be considered
for inclusion. Among other requirements set forth in the SEC’s proxy rules and our bylaws, you must have
continuously held at least $2,000 in market value or 1% of our outstanding stock for at least one year by the date
of submitting the proposal, and you must continue to own such stock through the date of the meeting.

If you intend to nominate candidates for election as directors or present a proposal at the meeting without
including it in our proxy materials, you must provide notice of such proposal to us no later than January 25, 2012,
and not before December 26, 2011. Our bylaws outline procedures for giving the required notice. If you would
like a copy of the procedures contained in our bylaws, please contact:

Secretary
Zumiez Inc.
6300 Merrill Creek Parkway, Suite B
Everett, Washington 98203

OTHER MATTERS

Our board of directors knows of no other matters that will be presented for consideration at the annual
meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in
the accompanying proxy to vote on such matters in accordance with their best judgment.

By Order of the Board of Directors

Trevor S. Lang
Chief Financial Officer, Chief Administrative
Officer and Secretary

Everett, Washington
April 4, 2011

A copy of our Annual Report on Form 10-K for the fiscal year ended January 29, 2011, filed with the

SEC is available without charge upon written request to: Secretary, Zumiez Inc., 6300 Merrill Creek
Parkway, Suite B, Everett, Washington 98203.

[THIS PAGE INTENTIONALLY LEFT BLANK]

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended: January 29, 2011
OR

Commission File Number: 000-51300

ZUMIEZ INC.

(Exact name of Registrant as specified in its charter)

Washington
(State or other jurisdiction of
incorporation or organization)

6300 Merrill Creek Parkway, Suite B,
Everett, Washington
(Address of principal executive offices)

91-1040022
(IRS Employer
Identification No.)

98203
(Zip Code)

(425) 551-1500
(Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Act: Common Stock
Name of each exchange on which registered: The NASDAQ Global Select Market
Securities registered under Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act. Yes ‘ No È

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

Act. Yes ‘ No È

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the last ninety days. Yes È No ‘

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such
files). Yes ‘ No ‘

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is

not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10–K. ‘

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act.
Large accelerated filer ‘
Non-accelerated filer ‘

È
Accelerated filer
Smaller reporting company ‘

Indicate by check mark if the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No È
As of the last business day of the second fiscal quarter, July 30, 2010, the aggregate market value of the Registrant’s voting

and non-voting stock held by non-affiliates of the Registrant was $386,823,680 using the closing sales price on that day of $18.30.

At March 15, 2011, there were 30,989,173 shares outstanding of common stock.

The information required by Part III of this report is incorporated by reference from the Registrant’s definitive proxy
statement, relating to the Annual Meeting of Shareholders scheduled to be held May 25, 2011, which definitive proxy statement
will be filed not later than 120 days after the end of the fiscal year to which this report relates.

DOCUMENTS INCORPORATED BY REFERENCE

ZUMIEZ INC.
FORM 10-K
TABLE OF CONTENTS

PART I

Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Removed and Reserved) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4.

PART II

Item 5. Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer

Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
Selected Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8. Consolidated Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . .
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III

Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 13. Certain Relationships and Related Transactions and Director Independence . . . . . . . . . . . . . .
Item 14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART IV

Item 15. Exhibits and Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exhibit 21.1
Exhibit 23.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1

1
10
22
22
23
23

24
26
28
40
40
41
41
41

42
42

42
42
42

42
44

ZUMIEZ INC.
FORM 10-K
PART I.

This Form 10-K contains forward-looking statements. These statements relate to our expectations for future

events and future financial performance. Generally, the words “anticipates,” “expects,” “intends,” “may,”
“should,” “plans,” “believes,” “predicts,” “potential,” “continue” and similar expressions identify forward-
looking statements. Forward-looking statements involve risks and uncertainties, and future events and
circumstances could differ significantly from those anticipated in the forward-looking statements. These
statements are only predictions. Actual events or results may differ materially. Factors which could affect our
financial results are described in Item 1A below and in Item 7 of Part II of this Form 10-K. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot
guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other
person assume responsibility for the accuracy and completeness of the forward-looking statements. We undertake
no duty to update any of the forward-looking statements after the date of this report to conform such statements
to actual results or to changes in our expectations.

We use a fiscal calendar widely used by the retail industry that results in a fiscal year consisting of a 52-

or 53-week period ending on the Saturday closest to January 31. Each fiscal year consists of four 13-week
quarters, with an extra week added to the fourth quarter every five or six years. Fiscal 2010 was the 52-week
period ending January 29, 2011. Fiscal 2009 was the 52-week period ended January 30, 2010. Fiscal 2008 was
the 52-week period ended January 31, 2009.

“Zumiez,” the “Company,” “we,” “us,” “its,” “our” and similar references refer to Zumiez Inc. and its

wholly-owned subsidiaries.

ITEM 1.

BUSINESS

Zumiez Inc., a Washington corporation, is a leading specialty retailer of action sports related apparel,
footwear, equipment and accessories operating under the Zumiez brand name. At January 29, 2011, we operated
400 stores primarily located in shopping malls, giving us a presence in 37 states. Our stores cater to young men
and women between the ages of 12 and 24 who seek popular brands representing a lifestyle centered on activities
that include skateboarding, surfing, snowboarding, bicycle motocross (or “BMX”) and motocross. We support
the action sports lifestyle and promote our brand through a multi-faceted marketing approach that is designed to
integrate our brand image with our customers’ activities and interests. This approach, combined with our
differentiated merchandising strategy, store design, comprehensive training programs and passionate employees,
allows us to provide an experience for our customers that we believe is consistent with their attitudes, fashion
tastes and identities and is otherwise unavailable in most malls. In addition, we operate a website that sells
merchandise online and provides content and a community for our target customers. The Company was formed
in August 1978.

Our stores bring the look and feel of an independent specialty shop to the mall by emphasizing the action

sports lifestyle through a distinctive store environment and high-energy sales personnel. We seek to staff our
stores with store associates who are knowledgeable users of our products, which we believe provides our
customers with enhanced customer service and supplements our ability to identify and react quickly to emerging
trends and fashions. We design our stores to appeal to teenagers and young adults and to serve as a destination
for our customers. Most of our stores, which average approximately 2,900 square feet, feature couches and action
sports oriented video game stations that are intended to encourage our customers to shop for longer periods of
time and to interact with each other and our store associates. To increase customer traffic, we generally locate our
stores near busy areas of the mall such as food courts, movie theaters, music or game stores and other popular
teen retailers. We believe that our distinctive store concept and compelling store economics will provide
continued opportunities for growth in both new and existing markets.

We believe that our customers desire merchandise and fashion that is rooted in the action sports lifestyle and

reflects their individuality. We strive to keep our merchandising mix fresh by continuously introducing new
brands and styles and categories of product. Our focus on a diverse collection of brands allows us to quickly
adjust to changing fashion trends. We believe that our strategic mix of both apparel and hardgoods, including
skateboards, snowboards, bindings, components and other equipment, allows us to strengthen the potential of the
brands we sell and helps to affirm our credibility with our customers. In addition, we supplement our stores with
a select offering of private label apparel and products as a value proposition that we believe complements our
overall merchandise selection.

Over our 32-year history, we have developed a corporate culture based on a passion for the action sports
lifestyle. Our management philosophy emphasizes an integrated combination of results measurement, training
and incentive programs, all designed to drive sales productivity at the individual store associate level. We
empower our store managers to make store-level business decisions and consistently reward their success. We
seek to enhance the productivity of our employees and encourage their advancement by offering comprehensive
in-store, regional and national training programs, which we refer to collectively as “Zumiez University.” We
have:

•

increased our store count from 174 as of the end of fiscal 2005 to 400 as of the end of fiscal 2010, a
compounded annual growth rate of 18.1%;

experienced average net sales per square foot of $435 for our last five fiscal years ending with fiscal
2010, from a peak of net sales per square foot of $499 in fiscal 2006;

increased net sales from $205.6 million in fiscal 2005 to $478.8 million in fiscal 2010, representing a
compound annual growth rate of 18.4%;

been profitable in every fiscal year of our 32 year history.

Competitive Strengths

We believe that the following competitive strengths differentiate us from our competitors and are critical to

our continuing success.

Attractive Lifestyle Retailing Concept. We target a large population of 12 to 24 year olds, many of whom we

believe are attracted to the action sports lifestyle and desire to promote their personal independence and style
through the apparel, shoes and accessories they wear and the equipment they use. We believe that action sports is
a permanent aspect of youth culture, reaching not only consumers that actually participate in action sports, but
also those who seek brands and styles that fit a desired action sports image. We believe we have developed a
brand image that our customers view as consistent with their attitudes, fashion tastes and identity that should
allow us to benefit in our market.

Differentiated Merchandising Strategy. We have created a highly differentiated retailing concept by offering

an extensive selection of current and relevant action sports brands encompassing apparel, footwear, equipment
and accessories. The breadth of merchandise offered at our stores exceeds that offered by many other action
sports specialty stores and includes some brands and products that are available within many malls only at our
stores. The action sports lifestyle includes activities that are popular at different times throughout the year,
providing us the opportunity to shift our merchandise selection seasonally. Many of our customers desire to
update their wardrobes and equipment as fashion trends evolve or the action sports season dictates. We believe
that our ability to quickly recognize changing brand and style preferences and transition our merchandise
offerings allows us to continually provide a compelling offering to our customers.

Deep-rooted Culture. Our culture and brand image enable us to successfully attract and retain high quality

employees who are passionate and knowledgeable about the products we sell. We place great emphasis on
customer service and satisfaction, and we have made this a defining feature of our corporate culture. To preserve

our culture, we strive to promote store managers from within and they are given extensive responsibility for most
aspects of store level management. We provide these managers with the knowledge and tools to succeed through
our comprehensive training programs and the flexibility to manage their stores to meet localized customer
demand. Our store leadership at the district manager level and above have all been promoted from within the
Zumiez system and their leadership provides unique value and insight to our store managers and sales associates.

Distinctive Store Experience. We strive to provide a convenient shopping environment that is appealing and

clearly communicates our distinct brand image. Our stores are designed to reflect an “organized chaos” that we
believe is consistent with many teenagers’ and young adults’ lifestyles. We seek to attract knowledgeable store
associates who identify with the action sports lifestyle and are able to offer superior customer service, advice and
product expertise. To further enhance our customers’ experience, most of our stores feature areas with couches
and action sports oriented video game stations that are intended to encourage our customers to shop for longer
periods of time, to interact with each other and our store associates in a familiar and comfortable setting and to
visit our stores more frequently. We believe that our distinctive store environment enhances our image as a
leading source for apparel and equipment for the action sports lifestyle.

Disciplined Operating Philosophy. We have an experienced senior management team. Our management
team has built a strong operating foundation based on sound retail principles that underlie our unique culture. Our
philosophy emphasizes an integrated combination of results measurement, training and incentive programs, all
designed to drive sales productivity to the individual store associate level. Our comprehensive training programs
are designed to provide our home office staff, managers and store associates with enhanced product knowledge,
selling skills and operational expertise. We believe that our merchandising team’s immersion in the action sports
lifestyle, supplemented with feedback from our customers, store associates, store leadership and managers,
allows us to consistently identify and react to emerging fashion trends. We believe that this, combined with our
inventory planning and allocation processes and systems, helps us better manage markdown and fashion risk.

High-Impact, Integrated Marketing Approach. We seek to build relationships with our customers through a

multi-faceted marketing approach that is designed to integrate our brand image with the action sports lifestyle.
Our marketing efforts focus on reaching our customers in their environment and feature extensive grassroots
marketing events, such as the Zumiez Couch Tour, which is a series of interactive sports, music and lifestyle
events held at various locations throughout the United States. Our marketing efforts also incorporate local
sporting and music event promotions, advertising in magazines popular with our target market, interactive
contest sponsorships that actively involve our customers with our brands and products and various social network
channels such as Facebook and Twitter. Events and activities such as these provide opportunities for our
customers to develop a strong identity with our culture and brand. We believe that our immersion in the action
sports lifestyle allows us to build credibility with our customers and gather valuable feedback on evolving
customer preferences.

Growth Strategy

We intend to expand our presence as a leading action sports lifestyle retailer by:

Opening New Store Locations. We believe that the action sports lifestyle has appeal that provides store
expansion opportunities throughout the country and internationally. Since January 28, 2006 through January 29,
2011, we have opened or acquired 233 new stores consisting of 62 stores in fiscal 2006, 50 stores in fiscal 2007,
58 stores in fiscal 2008, 36 stores in fiscal 2009 and 27 stores in fiscal 2010. We have successfully opened stores
in diverse markets throughout the United States, which we believe demonstrates the portability and growth
potential of our concept. To take advantage of what we believe to be a compelling economic store model, we
plan to open approximately 44 stores in fiscal 2011, including stores in our existing markets, in new markets
domestically and the planned opening of our first international stores in Canada. The number of anticipated store
openings may increase or decrease due to market conditions.

Continuing to Generate Sales Growth through Improved Store Level Productivity and Continued

Ecommerce Sales Growth. We seek to maximize our comparable store sales, including sales from our ecommerce
site, and net sales per square foot by maintaining consistent store-level execution and offering our customers a
broad and relevant selection of action sports brands and products. We seek to continue to grow our ecommerce
sales with a continued focus on enhancing and integrating the unique Zumiez brand experience through this
channel. In fiscal years 2010, 2009 and 2008, ecommerce sales represented 4.7%, 2.5% and 1.7% of our total net
sales.

Enhancing our Brand Awareness through Continued Marketing and Promotion. We believe that a key
component of our success is the brand exposure that we receive from our marketing events, promotions and
activities that embody the action sports lifestyle. These are designed to assist us in increasing brand awareness in
our existing markets and expanding into new markets by strengthening our connection with our target customer
base. We believe that our marketing efforts have also been successful in generating and promoting interest in our
product offerings. In addition, we use our ecommerce presence, designed to convey our passion for the action
sports lifestyle, to increase our brand awareness. We plan to continue to expand our integrated marketing efforts
by promoting more events and activities in our existing and new markets. We also benefit from branded vendors’
marketing.

Merchandising and Purchasing

Our goal is to be viewed by our customers, both young men and young women, as the definitive source of

merchandise for the action sports lifestyle. We believe that the breadth of merchandise offered at our stores,
which includes apparel, footwear, equipment and accessories, exceeds that offered by many other action sports
specialty stores at a single location, and makes our stores a single-stop purchase destination for our target
customers. Our apparel offerings include tops, bottoms, outerwear and accessories such as caps, bags and
backpacks, belts, jewelry and sunglasses. Our footwear offerings primarily consist of action sports related
athletic shoes and sandals. Our equipment offerings, or hardgoods, include skateboards, snowboards and
ancillary gear such as boots and bindings. We also offer a selection of other items, such as miscellaneous
novelties and DVDs.

We seek to identify action sports oriented fashion trends as they develop and to respond in a timely manner

with a relevant in-store product assortment. We strive to keep our merchandising mix fresh by continuously
introducing new brands or styles in response to the evolving desires of our customers. We also take advantage of
the change in action sports seasons during the year to maintain an updated product selection. Our merchandise
mix may vary by region, reflecting the specific action sports preferences and seasons in different parts of the
country.

We believe that offering an extensive selection of current and relevant brands used and sometimes
developed by professional action sports athletes is integral to our overall success. No single brand, including
private label, accounted for more than 6.5%, 7.1% and 6.9% of our net sales in fiscal 2010, 2009 and 2008. We
believe that our strategic mix of both apparel and hardgoods, including skateboards, snowboards, bindings,
components and other equipment, allows us to strengthen the potential of the brands we sell and affirms our
credibility with our customers.

We believe that our ability to maintain an image consistent with the action sports lifestyle is important to
our key vendors. Given our scale and market position, we believe that many of our key vendors view us as an
important retail partner. This position helps ensure our ability to procure a relevant product assortment and
quickly respond to the changing fashion interests of our customers. Additionally, we believe we are presented
with a greater variety of products and styles by some of our vendors, as well as certain specially designed items
that are only distributed to our stores. We supplement our merchandise assortment with a select offering of
private label products across many of our apparel product categories. Our private label products complement the

branded products we sell, and some of our private label brands allow us to cater to the more value-oriented
customer. For fiscal 2010, 2009 and 2008 our private label merchandise represented 18.0%, 15.7% and 15.0% of
our net sales.

Our purchasing approach focuses on quality, speed and cost in order to provide timely delivery of

merchandise to our stores. We have developed a disciplined approach to buying and a dynamic inventory
planning and allocation process to support our merchandise strategy. We utilize a broad vendor base that allows
us to shift our merchandise purchases as required to react quickly to changing market conditions. We manage the
purchasing and allocation process by reviewing branded merchandise lines from new and existing vendors,
identifying emerging fashion trends and selecting branded merchandise styles in quantities, colors and sizes to
meet inventory levels established by management. We also coordinate inventory levels in connection with
individual store sales strength, our promotions and seasonality. Our management information systems provide us
with current inventory levels at each store and for our Company as a whole, as well as current selling history
within each store by merchandise classification and by style. We purchase most of our branded merchandise
from domestic vendors.

Our merchandising staff remains in tune with the action sports culture by participating in action sports,

attending relevant events and concerts, watching action sports related programming and reading action sports
publications. In order to identify evolving trends and fashion preferences, our staff spends considerable time
analyzing sales data by category and brand down to the stock keeping unit, or “SKU” (an identification used for
inventory tracking purposes) level, gathering feedback from our stores and customers, shopping in key markets
and soliciting input from our vendors. As part of our feedback collection process, our merchandise team receives
merchandise requests from both customers and store associates and meets with our store managers two to three
times per year to discuss current customer trends.

We source our private label merchandise from foreign manufacturers around the world. We have cultivated

our private brand sources with a view towards high quality merchandise, production reliability and consistency of
fit. We believe that our knowledge of fabric and production costs combined with a flexible sourcing base enables
us to source high-quality private label goods at favorable costs.

Distribution and Fulfillment

Timely and efficient distribution of merchandise to our stores is an important component of our overall
business strategy. During fiscal 2010, we relocated our distribution center from Everett, Washington to Corona,
California to reduce distribution costs, expand capacity and increase speed of merchandise delivery to our
customers. At our Corona, California facility, merchandise is inspected, allocated to stores, ticketed when
necessary and boxed for distribution to our stores. A significant percentage of our merchandise is currently
pre-ticketed by our vendors, which allows us to ship merchandise more quickly, reduces labor costs and enhances
our inventory management. We continue to work with our vendors to increase the percentage of pre-ticketed
merchandise as well as other value added services. Each store is typically shipped merchandise five times a
week, providing our stores with a steady flow of new merchandise. We currently use United Parcel Service to
ship the majority of our merchandise to our stores. We believe our current distribution infrastructure is sufficient
to accommodate our expected store growth and expanded product offerings over the next several years.

Stores

Store Locations. At January 29, 2011, we operated 400 stores in 37 states. All of our stores are leased and

substantially all are located in shopping malls of different types.

The following store list shows the number of stores we operated in each state at January 29, 2011:

State

Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Arizona . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Colorado . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Connecticut
Delaware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hawaii
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Iowa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Illinois . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maryland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Massachusetts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michigan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minnesota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Missouri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Montana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Jersey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Hampshire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nevada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New York . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oklahoma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pennsylvania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rhode Island . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Dakota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wisconsin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wyoming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
Stores

Percent of
Total Stores

3
13
75
18
8
2
16
1
2
6
16
7
3
1
8
7
2
11
2
4
16
3
8
5
30
2
3
12
16
1
2
41
12
5
24
13
2

0.7%
3.3%
18.7%
4.5%
2.0%
0.5%
4.0%
0.2%
0.5%
1.5%
4.0%
1.8%
0.7%
0.2%
2.0%
1.8%
0.5%
2.8%
0.5%
1.0%
4.0%
0.7%
2.0%
1.3%
7.5%
0.5%
0.7%
3.0%
4.0%
0.2%
0.5%
10.3%
3.0%
1.3%
6.0%
3.3%
0.5%

Total Number of Stores . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

400

100.0%

Approximately 63% of our stores have been opened or remodeled within the previous five fiscal years. The

following table shows the number of stores (excluding temporary stores that we operate from time to time for
special events) opened and closed in each of our last five fiscal years including 20 stores acquired in the fiscal
2006 Fast Forward acquisition:

Fiscal Year

Stores
Opened

Stores
Acquired

Stores
Closed

Total Number of
Stores End of Year

2010
2009
2008
2007
2006

27
36
58
50
42

—
—
—
—
20

4
2
—
—
1

400
377
343
285
235

Store Design and Environment. We design our stores to create a distinctive and engaging shopping

environment that we believe resonates with our customers and it reflects an “organized chaos” that is consistent
with many teenagers’ and young adults’ lifestyles. Our stores feature an industrial look with concrete floors and
open ceilings, dense merchandise displays, action sports focused posters and signage and popular music, all of
which are consistent with the look and feel of an independent action sports specialty shop. Most of our stores
have couches and action sports oriented video game stations that are intended to encourage our customers to shop
for longer periods of time, to interact with each other and our store associates and to visit our stores more
frequently. Our stores are constructed and finished to allow us to efficiently shift merchandise displays
throughout the year as the action sports season dictates. We believe that our store atmosphere enhances our
image as a leading provider of action sports lifestyle merchandise.

At January 29, 2011, our stores averaged approximately 2,900 square feet. All references in this Annual

Report on Form 10-K to square footage of our stores refers to gross square footage, including retail selling,
storage and back-office space. In fiscal 2011, we plan on opening new stores with square footage similar to this
average. New stores’ size is determined by our expected sales volume; for instance, if we project higher sales, we
generally try to build larger stores and, conversely, if we believe stores will be lower volume stores we generally
try to build smaller stores.

Expansion Opportunities and Site Selection. In selecting a location for a new store, we target high-traffic

mall space with suitable demographics and favorable lease terms. We seek locations near busy areas of the mall
such as food courts, movie theaters, music or game stores and other popular teen retailers. We generally locate
our stores in malls in which other teen-oriented retailers have performed well. We also focus on evaluating the
market and mall-specific competitive environment for potential new store locations. We seek to diversify our
store locations regionally and by caliber of mall. We have currently identified a number of potential sites for new
stores in malls with appropriate market characteristics.

We have successfully and consistently implemented our store concept across a variety of mall classifications

and geographic locations. Our 36 new stores opened in fiscal 2009 generated average net sales of approximately
$0.9 million per store in fiscal 2010 during their first full year of operation. In fiscal 2010, we opened 27 stores
with an average net capital investment of approximately $0.2 million per store by negotiating favorable terms
with our construction contractors and obtaining tenant improvement allowances from landlords. In addition to
capital investments, we make working capital investments between $0.1 million and $0.2 million per store
consisting primarily of merchandise inventory. However, our capital investment to open new stores and net sales
generated by new stores vary significantly and depend on a number of factors, including manager and sales
associate competency and tenure, the geographic location, type of mall, sales volume of the mall and square
footage of those stores. Accordingly, net sales and other operating results for stores that we open or have opened
subsequent to the end of fiscal 2010, as well as our net capital investment to open those stores, may differ
substantially from net sales and other operating results and our net capital investment for the stores we opened in
prior years.

Store Management, Operations and Training. We believe that our success is dependent in part on our ability

to attract, train, retain and motivate qualified employees at all levels of our organization. We have developed a
corporate culture that we believe empowers the individual store managers to make store-level business decisions
and consistently rewards their success. We are committed to improving the skills and careers of our workforce
and providing advancement opportunities for employees, as evidenced by a significant number of our store
managers that began their careers with us as store associates.

Our store operations are currently organized into divisions, regions and districts. Each division is managed

by a divisional manager, responsible for approximately one third of our stores. Each region is managed by a
regional manager, responsible for approximately 50 stores. We employ one district manager per district,
responsible for the sales and operations of approximately 10 stores. Each of our stores is typically staffed with
one store manager, one or more assistant managers and two or more store associates, depending on the season
and sales volume of the store. The number of store associates we employ generally increases during peak selling
seasons, particularly the back-to-school and the winter holiday seasons, and will increase to the extent that we
open new stores.

We believe we provide our managers with the knowledge and tools to succeed through our comprehensive
training programs and the flexibility to manage their stores to meet customer demands. While general guidelines
for our merchandise assortments, store layouts and in-store visuals are provided by our home office, we give our
store managers and district managers substantial discretion to tailor their stores to the individual market and
empower them to make store-level business decisions. We design group training programs for our managers,
such as our “Zumiez Managers Retreat,” and “Rocktober,” to improve both operational expertise and supervisory
skills. Our comprehensive training programs are offered at the store, regional and national levels. Our programs
allow managers from all geographic locations to interact with each other and exchange ideas to better operate
stores. Our store, district, and regional managers are compensated in part based on the sales volume of the store
or stores they manage.

Our store associates generally have an interest in the action sports lifestyle and are knowledgeable about our

products. Through our training, evaluation and incentive programs, we seek to enhance the productivity of our
store associates. Our store associates receive extensive training from their managers to improve their product
expertise and selling skills. We evaluate our store associates weekly on measures such as sales per hour, units per
transaction and dollars per transaction to ensure consistent productivity, to reward top performers and to identify
potential training opportunities. We provide sales incentives for store associates such as sales-based commissions
in addition to hourly wages and our annual “Zumiez 100K” event, which recognizes outstanding sales
performance in a resort setting that combines recreation and education. These and other incentive programs are
designed to promote a competitive, yet fun, corporate culture that is consistent with the action sports lifestyle we
seek to promote.

Marketing and Advertising

We seek to reach our target customer audience through a multi-faceted marketing approach that is designed

to integrate our brand image with the action sports lifestyle. Our marketing efforts focus on reaching our
customers in their environment, and feature extensive grassroots marketing events, which give our customers an
opportunity to experience and participate in the action sports lifestyle. Our grassroots marketing events are built
around the demographics of our customer base and offer an opportunity for our customers to develop a strong
identity with our brand and culture. For example, the Zumiez Couch Tour is a series of entertainment events that
includes skateboarding demonstrations from top professionals, autograph sessions, competitions and live music,
and has featured some of today’s most popular personalities in action sports and music. The Zumiez Couch Tour
provides a high-impact platform where customers can interact with some of their favorite action sports athletes
and vendors can showcase new products. In fiscal 2010, our Zumiez Couch Tour completed a twelve-city tour
across the United States.

Our marketing efforts also incorporate local sporting and music event promotions, advertising in magazines

popular with our target market, interactive contest sponsorships that actively involve our customers with our
brands and products and various social network channels such as Facebook and Twitter. We believe that our
immersion in the action sports lifestyle allows us to build credibility with our target audience and gather valuable
feedback on evolving customer preferences.

Management Information Systems

Our management information systems provide integration of store, merchandising, distribution, financial
and human resources functions. The systems include applications related to point-of-sale, inventory management,
supply chain, planning, sourcing, merchandising and financial reporting. We continue to invest in technology to
align our systems with our business requirements and to support our continuing growth.

Competition

The teenage and young adult retail apparel, hardgoods and accessories industry is highly competitive. We

compete with other retailers for vendors, teenage and young adult customers, suitable store locations and
qualified store associates and management personnel. In the softgoods markets, which includes apparel,
accessories and footwear, we currently compete with other teenage-focused retailers such as Abercrombie &
Fitch, Aeropostale, American Apparel, American Eagle Outfitters, Boathouse, CCS, Forever 21, Hollister, Hot
Topic, Old Navy, Pacific Sunwear of California, The Buckle, The Wet Seal, Tillys, Urban Outfitters and West
49. In addition, in the softgoods markets we compete with independent specialty shops, department stores and
direct marketers that sell similar lines of merchandise and target customers through catalogs and ecommerce. In
the hardgoods markets, which includes skateboards, snowboards, bindings, components and other equipment, we
compete directly or indirectly with the following categories of companies: other specialty retailers that compete
with us across a significant portion of our merchandising categories, such as local snowboard and skate shops;
large-format sporting goods stores and chains, such as Big 5 Sporting Goods Corporation, Dick’s Sporting
Goods, Sport Chalet and The Sports Authority and ecommerce retailers.

Competition in our sector is based on, among other things, merchandise offerings, store location, price and

the ability to identify with the customer. We believe that we compete favorably with many of our competitors
based on our differentiated merchandising strategy, compelling store environment and deep-rooted culture.
However, some of our competitors are larger than we are and have substantially greater financial, marketing and
other resources than we do. See “Item 1A Risk Factors.” We may be unable to compete favorably in the highly
competitive retail industry, and if we lose customers to our competitors, our sales could decrease.

Seasonality

Historically, our operations have been seasonal, with the largest portion of net sales and net income

occurring in the third and fourth fiscal quarters, reflecting increased demand during the back-to-school and
winter holiday selling seasons. During fiscal 2010, approximately 61% of our net sales occurred in the third and
fourth quarters, similar to previous years. As a result of this seasonality, any factors negatively affecting us
during the last half of the year, including unfavorable economic conditions, adverse weather or our ability to
acquire seasonal merchandise inventory, could have a material adverse effect on our financial condition and
results of operations for the entire year. Our quarterly results of operations may also fluctuate based upon such
factors as the timing of certain holiday seasons, the popularity of seasonal merchandise offered, the timing and
amount of markdowns, store remodels and closings, competitive influences and the number and timing of new
store openings.

Trademarks

The “Zumiez” trademark and certain other trademarks, have been registered, or are the subject of pending

trademark applications, with the United States Patent and Trademark Office and with the registries of certain
foreign countries. We regard our trademarks as valuable and intend to maintain such marks and any related
registrations and vigorously protect our trademarks. We also own numerous domain names, which have been
registered with Corporation for Assigned Names and Numbers.

Employees

At January 29, 2011, we employed approximately 1,380 full-time and approximately 3,460 part-time
employees, of which approximately 440 were employed at our home office, distribution center and ecommerce
fulfillment center and approximately 4,400 at our store locations. However, the number of part-time employees
fluctuates depending on our seasonal needs and, in fiscal 2010, varied from between approximately 3,000 and
5,400 part-time employees. None of our employees are represented by a labor union and we believe generally
that our relationship with our employees is good.

Available Information

Our principal website address is www.zumiez.com. We make available, free of charge, our proxy statement,

annual report to shareholders, annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is
electronically filed with or furnished to the SEC at http://ir.zumiez.com. Information available on our website is
not incorporated by reference in and is not deemed a part of this Form 10-K.

Item 1A. RISK FACTORS

Investing in our securities involves a high degree of risk. The following risk factors, issues and uncertainties

should be considered in evaluating our future prospects. In particular, keep these risk factors in mind when you
read “forward-looking” statements elsewhere in this report. Forward-looking statements relate to our
expectations for future events and time periods. Generally, the words “anticipate,” “believe,” “expect,”
“intend” and similar expressions identify forward-looking statements. Forward-looking statements involve risks
and uncertainties, and future events and circumstances could differ significantly from those anticipated in the
forward-looking statements. Any of the following risks could harm our business, operating results or financial
condition and could result in a complete loss of your investment. Additional risks and uncertainties that are not
yet identified or that we currently think are immaterial may also harm our business and financial condition in the
future.

Significant fluctuations and volatility in the price of cotton, foreign labor costs and other raw materials used
in the production of our merchandise may have a material adverse effect on our business, results of
operations and financial conditions.

Increases in the cost of cotton, foreign labor costs or other raw materials used in the production of our
merchandise can result in higher costs in the price we pay for this merchandise. The costs for cotton are affected
by weather, consumer demand, speculation on the commodities market and other factors that are generally
unpredictable and beyond our control. Our gross profit and earnings per share could be adversely affected to the
extent that the selling prices of our products do not increase proportionately with the increases in the costs of
cotton or other materials. Increasing labor costs and oil-related product costs, such as manufacturing and
transportation costs, could also adversely impact gross profit. Additionally, significant changes in the relationship
between carrier capacity and shipper demand could increase transportation costs, which could also adversely
impact gross profit.

We are aware of increasing cotton, oil and other input costs that affect our cost of goods sold. We are

working with our vendors and private label manufacturers to manage these cost increases. Our current
expectation is that increases in product cost will be higher in the second half of 2011 versus the first half. While
we believe we have strategies in place to mitigate the increase in cost, there can be no assurance our efforts will
be successful and our gross profit margins may decline.

Most of our merchandise is produced by foreign manufacturers; therefore, the availability and costs of these
products may be negatively affected by risks associated with international trade and other international
conditions.

Most of our merchandise is produced by manufacturers around the world. Some of these facilities are
located in regions that may be affected by natural disasters, political instability or other conditions that could
cause a disruption in trade. Trade restrictions such as increased tariffs or quotas, or both, could also affect the
importation of merchandise generally and increase the cost and reduce the supply of merchandise available to us.
Any reduction in merchandise available to us or any increase in its cost due to tariffs, quotas or local issues that
disrupt trade could have a material adverse effect on our results of operations. Although the prices charged by
vendors for the merchandise we purchase are primarily denominated in United States dollars, a continued decline
in the relative value of the United States dollar to foreign currencies could lead to increased merchandise costs,
which could negatively affect our competitive position and our results of operation.

Our ability to attract customers to our stores depends heavily on the success of the shopping malls in which
our stores are located; any decrease in customer traffic in those malls could cause our sales to be less than
expected.

In order to generate customer traffic we depend heavily on locating our stores in prominent locations within

successful shopping malls. Sales at these stores are derived, in part, from the volume of traffic in those malls.
Our stores benefit from the ability of a mall’s other tenants to generate consumer traffic in the vicinity of our
stores and the continuing popularity of malls as shopping destinations. Our sales volume and mall traffic
generally may be adversely affected by, among other things, economic downturns in a particular area,
competition from ecommerce retailers, non-mall retailers and other malls, increases in gasoline prices and the
closing or decline in popularity of other stores in the malls in which we are located. An uncertain economic
outlook could curtail new shopping mall development, decrease shopping mall traffic, reduce the number of
hours that shopping mall operators keep their shopping malls open or force them to cease operations entirely. A
reduction in mall traffic as a result of these or any other factors could have a material adverse effect on our
business, results of operations and financial condition.

Our growth strategy depends on our ability to open and operate new stores each year, which could strain our
resources and cause the performance of our existing stores to suffer.

Our growth largely depends on our ability to open and operate new stores successfully. However, our ability

to open new stores is subject to a variety of risks and uncertainties, and we may be unable to open new stores as
planned, and any failure to successfully open and operate new stores would have a material adverse effect on our
results of operations. We intend to continue to open new stores in future years while remodeling a portion of our
existing store base annually. In addition, our proposed expansion will place increased demands on our
operational, managerial and administrative resources. These increased demands could cause us to operate our
business less effectively, which in turn could cause deterioration in the financial performance of our individual
stores and our overall business. To the extent our new store openings are in markets where we already have
stores, we may experience reduced net sales in existing stores in those markets. In addition, successful execution
of our growth strategy may require that we obtain additional financing, and we cannot assure you that we will be
able to obtain that financing on acceptable terms or at all.

If we fail to effectively execute our expansion strategy, we may not be able to successfully open new store
locations in a timely manner, if at all, which could have an adverse affect on our net sales and results of
operations.

Our ability to open and operate new stores successfully depends on many factors, including, among others,

our ability to:

•

identify suitable store locations, the availability of which is outside of our control;

negotiate acceptable lease terms, including desired tenant improvement allowances;

source sufficient levels of inventory at acceptable costs to meet the needs of new stores;

hire, train and retain qualified store personnel;

successfully integrate new stores into our existing operations; and

identify and satisfy the merchandise preferences of new geographic areas.

In addition, many of our planned new stores are to be opened in regions of the United States or international

locations in which we currently have few, or no, stores. The expansion into these markets may present
competitive, merchandising and distribution challenges that are different from those currently encountered in our
existing markets. Any of these challenges could adversely affect our business and results of operations.

The expansion of our store base to Canada may present increased risks due to our limited familiarity with that
market.

In fiscal 2011, we plan to open store locations in Canada. The Canadian market may have different
competitive conditions, consumer tastes and discretionary spending patterns than our existing markets. As a
result, new stores in that market may be less successful than our stores in the United States. Additionally,
consumers in the Canadian market may not be familiar with our brand, and we may need to build brand
awareness in that market. Furthermore, we have limited experience with the legal and regulatory environments
and market practices outside of the United States and cannot guarantee that we will be able penetrate or
successfully operate in the Canadian market. We may also incur additional costs in complying with applicable
Canadian laws and regulations as they pertain to both our products and our operations.

Our business is dependent upon our being able to anticipate, identify and respond to changing fashion trends,
customer preferences and other fashion-related factors; failure to do so could have a material adverse effect
on us.

Customer tastes and fashion trends in the action sports lifestyle market are volatile and tend to change
rapidly. Our success depends on our ability to effectively anticipate, identify and respond to changing fashion
tastes and consumer preferences, and to translate market trends into appropriate, saleable product offerings in a
timely manner. If we are unable to successfully anticipate, identify or respond to changing styles or trends and
misjudge the market for our products or any new product lines, our sales may be lower than predicted and we
may be faced with a substantial amount of unsold inventory or missed opportunities. In response to such a
situation, we may be forced to rely on markdowns or promotional sales to dispose of excess or slow-moving
inventory, which could have a material adverse effect on our results of operations.

The current uncertainty surrounding the United States economy coupled with cyclical economic trends in
action sports retailing could have a material adverse effect on our results of operations.

The action sports retail industry historically has been subject to substantial cyclicality. As economic

conditions in the United States change, the trends in discretionary consumer spending become unpredictable and
discretionary consumer spending could be reduced due to uncertainties about the future. When discretionary

consumer spending is reduced, purchases of action sports apparel and related products may decline. The current
uncertainty in the United States economy and increased government debt spending may have a material adverse
impact on our results of operations and financial position.

Because of this cycle, we believe the “value” message has become more important to consumers. As a
retailer that sells approximately 82% branded merchandise, this trend may negatively affect our business, as we
generally will have to charge more than vertically integrated private label retailers.

Our sales and inventory levels fluctuate on a seasonal basis, leaving our operating results particularly
susceptible to changes in back-to-school and winter holiday shopping patterns.

Our sales and profitability are typically disproportionately higher in the third and fourth fiscal quarters of

each fiscal year due to increased sales during the back-to-school and winter holiday shopping seasons. Sales
during these periods cannot be used as an accurate indicator of annual results. Our sales in the first and second
fiscal quarters are typically lower than in our third and fourth fiscal quarters due, in part, to the traditional retail
slowdown immediately following the winter holiday season. As a result of this seasonality, any factors
negatively affecting us during the last half of the year, including unfavorable economic conditions, adverse
weather or our ability to acquire seasonal merchandise inventory, could have a material adverse effect on our
financial condition and results of operations for the entire year. In addition, in order to prepare for the
back-to-school and winter holiday shopping seasons, we must order and keep in stock significantly more
merchandise than we carry during other times of the year. Any unanticipated decrease in demand for our
products during these peak shopping seasons could require us to sell excess inventory at a substantial markdown,
which could have a material adverse effect on our business, results of operations and financial condition.

Our quarterly results of operations are volatile and may decline.

Our quarterly results of operations have fluctuated significantly in the past and can be expected to continue
to fluctuate significantly in the future. As discussed above, our sales and operating results are typically lower in
the first and second quarters of our fiscal year due, in part, to the traditional retail slowdown immediately
following the winter holiday season. Our quarterly results of operations are affected by a variety of other factors,
including:

•

the timing of new store openings and the relative proportion of our new stores to mature stores;

• whether we are able to successfully integrate any new stores that we acquire and the presence or absence

of any unanticipated liabilities in connection therewith;

fashion trends and changes in consumer preferences;

calendar shifts of holiday or seasonal periods;

changes in our merchandise mix;

timing of promotional events;

general economic conditions and, in particular, the retail sales environment;

actions by competitors or mall anchor tenants;

•

• weather conditions;

•

the level of pre-opening expenses associated with our new stores; and

inventory shrinkage beyond our historical average rates.

Failure to successfully integrate any businesses or stores that we acquire could have an adverse impact on our
results of operations and financial performance.

We may from time to time acquire other retail stores, individually or in groups, or businesses. We may

experience difficulties in assimilating any stores or businesses we may acquire and any such acquisitions may
also result in the diversion of our capital and our management’s attention from other business issues and
opportunities. We may not be able to successfully integrate any stores or businesses that we may acquire,
including their facilities, personnel, financial systems, distribution, operations and general operating procedures.
If we fail to successfully integrate acquisitions or if such acquisitions fail to provide the benefits that we expect
to receive, we could experience increased costs and other operating inefficiencies, which could have an adverse
effect on our results of operations and financial performance.

Our business is susceptible to weather conditions that are out of our control including the potential risks of
unpredictable weather patterns, including any weather patterns associated with naturally occurring global
climate change, and the resultant unseasonable weather could have a negative impact on our results of
operations.

Our business is susceptible to unseasonable weather conditions. For example, extended periods of

unseasonably warm temperatures (including any weather patterns associated with global warming and cooling)
during the winter season or cool weather during the summer season could render a portion of our inventory
incompatible with those unseasonable conditions. These prolonged unseasonable weather conditions, particularly
in regions of the United States where we have a concentration of stores, could have a material adverse effect on
our business and results of operations.

We may be unable to compete favorably in the highly competitive retail industry, and if we lose customers to
our competitors, our sales could decrease.

The teenage and young adult retail apparel, hardgoods and accessories industry is highly competitive. We
compete with other retailers for vendors, teenage and young adult customers, suitable store locations, qualified
store associates and management personnel. In the softgoods market, which includes apparel, accessories and
footwear, we currently compete with other teenage-focused retailers. In addition, in the softgoods market we
compete with independent specialty shops, department stores and direct marketers that sell similar lines of
merchandise and target customers through catalogs and ecommerce. In the hardgoods market, which includes
skateboards, snowboards, bindings, components and other equipment, we compete directly or indirectly with
other specialty retailers that compete with us across a significant portion of our merchandising categories, such as
local snowboard and skate shops, large-format sporting goods stores and chains and ecommerce retailers.

Some of our competitors are larger than we are and have substantially greater financial, marketing,

including advanced ecommerce marketing capabilities, and other resources than we do. Direct competition with
these and other retailers may increase significantly in the future, which could require us, among other things, to
lower our prices and could result in the loss of our customers. Current and increased competition could have a
material adverse effect on our business, results of operations and financial condition.

If we fail to maintain good relationships with vendors or if a vendor is otherwise unable or unwilling to supply
us with adequate quantities of their products at acceptable prices, our business and financial performance
could suffer.

Our business is dependent on continued good relations with our vendors. In particular, we believe that we

generally are able to obtain attractive pricing and other terms from vendors because we are perceived as a
desirable customer, and deterioration in our relationship with our vendors would likely have a material adverse
effect on our business. We do not have any contractual relationships with our vendors, other than normal course
of business purchase orders and, accordingly, there can be no assurance that our vendors will provide us with an

adequate supply or quality of products or acceptable pricing. Our vendors could discontinue selling to us or raise
the prices they charge at any time. There can be no assurance that we will be able to acquire desired merchandise
in sufficient quantities on terms acceptable to us in the future. In addition, certain of our vendors sell their
products directly to the retail market and therefore compete with us directly and other vendors may decide to do
so in the future. There can be no assurance that such vendors will not decide to discontinue supplying their
products to us, supply us only less popular or lower quality items, raise the prices they charge us or focus on
selling their products directly. In addition, a number of our vendors are smaller, less capitalized companies and
are more likely to be impacted by unfavorable general economic and market conditions than larger and better
capitalized companies. These smaller vendors may not have sufficient liquidity during economic downturns to
properly fund their businesses and their ability to supply their products to us could be negatively impacted. Any
inability to acquire suitable merchandise at acceptable prices, or the loss of one or more key vendors, would have
a material adverse effect on our business, results of operations and financial condition.

If we lose key management or are unable to attract and retain the talent required for our business, our
financial performance could suffer.

Our performance depends largely on the efforts and abilities of our senior management, including our
Co-Founder and Chairman, Thomas D. Campion, our Chief Executive Officer, Richard M. Brooks, our President
and General Merchandising Manager, Lynn K. Kilbourne, our Chief Financial Officer and Chief Administrative
Officer, Trevor S. Lang and our Executive Vice President of Stores, Ford K. Wright. None of our employees
have employment agreements with us and we do not plan to obtain key person life insurance covering any of our
employees. If we lose the services of one or more of our key executives, we may not be able to successfully
manage our business or achieve our growth objectives. As our business grows, we will need to attract and retain
additional qualified management personnel in a timely manner and we may not be able to do so.

Our failure to meet our staffing needs could adversely affect our ability to implement our growth strategy and
could have a material impact on our results of operations.

Our success depends in part upon our ability to attract, motivate and retain a sufficient number of qualified

employees, including divisional managers, regional managers, district managers, store managers and store
associates, who understand and appreciate our corporate culture based on a passion for the action sports lifestyle
and are able to adequately represent this culture to our customers. Qualified individuals of the requisite caliber,
skills and number needed to fill these positions may be in short supply in some areas, and the employee turnover
rate in the retail industry is high. Competition for qualified employees could require us to pay higher wages to
attract a sufficient number of suitable employees. If we are unable to hire and retain store managers and store
associates capable of consistently providing a high level of customer service, as demonstrated by their
enthusiasm for our culture and knowledge of our merchandise, our ability to open new stores may be impaired
and the performance of our existing and new stores could be materially adversely affected. We are also
dependent upon temporary personnel to adequately staff our stores, distribution center and ecommerce
fulfillment center particularly during busy periods such as the back-to-school and winter holiday seasons. There
can be no assurance that we will receive adequate assistance from our temporary personnel, or that there will be
sufficient sources of temporary personnel. Although none of our employees is currently covered by collective
bargaining agreements, we cannot guarantee that our employees will not elect to be represented by labor unions
in the future, which could increase our labor costs and could subject us to the risk of work stoppages and strikes.
Any such failure to meet our staffing needs, any material increases in employee turnover rates, any increases in
labor costs or any work stoppages, interruptions or strikes could have a material adverse effect on our business or
results of operations.

Our operations, including our sole distribution center, are concentrated in the western United States, which
makes us susceptible to adverse conditions in this region.

Our home office and ecommerce fulfillment center are located in Washington, our sole distribution center is

located in California and a substantial number of our stores are located in the western half of the United States.

We also have a substantial number of stores in the New York/New Jersey region and Texas. As a result, our
business may be more susceptible to regional factors than the operations of more geographically diversified
competitors. These factors include, among others, economic and weather conditions, demographic and
population changes and fashion tastes. In addition, we rely on a single distribution center to receive, store and
distribute the vast majority of our merchandise to all of our stores. As a result, a natural disaster or other
catastrophic event, such as an earthquake affecting the West Coast, could significantly disrupt our operations and
have a material adverse effect on our business, results of operations and financial condition.

We have relocated our sole distribution center previously located in Everett, Washington to Corona,
California to receive, store and distribute the vast majority of our merchandise to all of our retail stores. As a
result, events may occur subsequent to the relocation that could significantly disrupt our operations and have a
material adverse effect on our business, results of operations and financial condition.

We are required to make substantial rental payments under our operating leases and any failure to make these
lease payments when due would likely have a material adverse effect on our business and growth plans.

We do not own any of our retail stores or our combined home office and ecommerce fulfillment center, but

instead we lease these facilities under operating leases. Payments under these operating leases account for a
significant portion of our operating expenses and has historically been our third largest expense behind cost of
sales and our employee related costs. For example, total rental expense, including additional rental payments (or
“percentage rent”) based on sales of some of the stores, common area maintenance charges and real estate taxes,
under operating leases was $61.8 million, $58.0 million and $52.9 million for the fiscal 2010, 2009 and 2008. At
January 29, 2011, we were a party to operating leases requiring future minimum lease payments aggregating
$227.8 million through fiscal 2015 and $120.0 million thereafter. In addition, substantially all of our store leases
provide for additional rental payments based on sales of the respective stores, as well as common area
maintenance charges, and require that we pay real estate taxes. These amounts generally escalate each year. We
expect that any new stores we open will also be leased by us under operating leases, which will further increase
our operating lease expenses.

Our substantial operating lease obligations could have significant negative consequences, including:

•

increasing our vulnerability to general adverse economic and industry conditions;

limiting our ability to obtain additional financing;

requiring that a substantial portion of our available cash be applied to pay our rental obligations, thus
reducing cash available for other purposes; and

limiting our flexibility in planning for or reacting to changes in our business or in the industry in which
we compete, and placing us at a disadvantage with respect to some of our competitors.

We depend on cash flow from operations to pay our lease expenses and to fulfill our other cash needs. If our

business does not generate sufficient cash flow from operating activities, and sufficient funds are not otherwise
available to us from borrowings under bank loans or from other sources, we may not be able to service our
operating lease expenses, grow our business, respond to competitive challenges or to fund our other liquidity and
capital needs, which would have a material adverse effect on our business.

The terms of our revolving credit facility impose operating and financial restrictions on us that may impair
our ability to respond to changing business and economic conditions. This impairment could have a
significant adverse impact on our business.

provides for the issuance of a standby letter of credit in an amount not to exceed $5.0 million outstanding at any
time and with a term not to exceed 365 days. The commercial line of credit provides for the issuance of a
commercial letter of credit in an amount not to exceed $10.0 million and with terms not to exceed 120 days. The
amount of borrowings available at any time under our secured revolving credit facility is reduced by the amount
of standby and commercial letters of credit outstanding at that time. There were no outstanding borrowings under
the secured revolving credit facility at January 29, 2011 or January 30, 2010. We had open commercial letters of
credit outstanding under our secured revolving credit facility of $0.5 million and $0.6 million at January 29, 2011
and January 30, 2010. The secured revolving credit facility bears interest at the Daily One Month LIBOR rate
plus 1.00%. The credit agreement contains a number of restrictions and covenants that generally limit our ability
to, among other things, (1) incur additional debt, (2) undergo a change in ownership and (3) enter into certain
transactions. The credit agreement also contains financial covenants that require us to meet certain specified
financial tests and ratios, including, a maximum net loss not to exceed $10.0 million after taxes on a trailing four-
quarter basis provided, that, there shall be added to net income all charges for impairment of goodwill and store
assets not to exceed $5.0 million in aggregate, and a minimum quick ratio of 1.25. The quick ratio is defined as
our cash and near cash equivalents plus certain defined receivables divided by the outstanding borrowings. All of
our personal property, including, among other things, our inventory, equipment and fixtures, has been pledged to
secure our obligations under the credit agreement. We must also provide financial information and statements to
our lender. We were in compliance with all such covenants at January 29, 2011.

A breach of any of these restrictive covenants or our inability to comply with the required financial tests and

ratios could result in a default under the credit agreement. If a default occurs, the lender may elect to declare all
borrowings outstanding, together with accrued interest and other fees, to be immediately due and payable. If we
are unable to repay outstanding borrowings when due, whether at their maturity or if declared due and payable by
the lender following a default, the lender has the right to proceed against the collateral granted to it to secure the
indebtedness. As a result, any breach of these covenants or failure to comply with these tests and ratios could
have a material adverse effect on us. There can be no assurance that we will not breach the covenants or fail to
comply with the tests and ratios in our credit agreement or any other debt agreements we may enter into in the
future and, if a breach occurs, there can be no assurance that we will be able to obtain necessary waivers or
amendments from the lenders.

The restrictions contained in our credit agreement could: (1) limit our ability to plan for or react to market

conditions or meet capital needs or otherwise restrict our activities or business plans; and (2) adversely affect our
ability to finance our operations, strategic acquisitions, investments or other capital needs or to engage in other
business activities that would be in our interest.

Our business could suffer if our ability to acquire financing is reduced or eliminated.

In the current economic environment, we cannot be assured that our borrowing relationship with our lender
will continue or that our lender will remain able to support its commitments to us in the future. If our lender fails
to do so, then we may not be able to secure alternative financing on commercially reasonable terms, or at all.

Our business could suffer as a result of small parcel delivery services such as United Parcel Service or
Federal Express being unable to distribute our merchandise.

We rely upon small parcel delivery services for our product shipments, including shipments to, from and

between our stores. Accordingly, we are subject to risks, including employee strikes and inclement weather,
which may affect their ability to meet our shipping needs. Among other things, any circumstances that require us
to use other delivery services for all or a portion of our shipments could result in increased costs and delayed
deliveries and could harm our business materially. In addition, although we have contracts with small parcel
delivery services, we and the service providers have the right to terminate these contracts upon 30-90 days
written notice. Although the contracts with these small parcel delivery services provide certain discounts from

the shipment rates in effect at the time of shipment, the contracts do not limit their ability to raise the shipment
rates at any time. Accordingly, we are subject to the risk that small parcel delivery services may increase the
rates they charge, that they may terminate their contracts with us, that they may decrease the rate discounts
provided to us when an existing contract is renewed or that we may be unable to agree on the terms of a new
contract with them, any of which could materially adversely affect our operating results.

Our business could suffer if a manufacturer fails to use acceptable labor practices.

We do not control our vendors or the manufacturers that produce the products we buy from them, nor do we
control the labor practices of our vendors and these manufacturers. The violation of labor or other laws by any of
our vendors or these manufacturers, or the divergence of the labor practices followed by any of our vendors or
these manufacturers from those generally accepted as ethical in the United States, could interrupt, or otherwise
disrupt, the shipment of finished products to us or damage our reputation. Any of these, in turn, could have a
material adverse effect on our financial condition and results of operations. In that regard, most of the products
sold in our stores are manufactured overseas, primarily in Asia and Central America, which may increase the risk
that the labor practices followed by the manufacturers of these products may differ from those considered
acceptable in the United States.

Additionally, our products are subject to regulation of and regulatory standards set by various governmental
authorities with respect to quality and safety. Regulations and standards in this area are currently in place. These
regulations and standards may change from time to time. Our inability to comply on a timely basis with
regulatory requirements could result in significant fines or penalties, which could adversely affect our reputation
and sales. Issues with the quality and safety of merchandise we sell in our stores, regardless of our culpability, or
customer concerns about such issues, could result in damage to our reputation, lost sales, uninsured product
liability claims or losses, merchandise recalls and increased costs.

Our failure to adequately anticipate a correct mix of private label merchandise may have a material adverse
effect on our business.

Sales from private label merchandise accounted for 18% of our net sales in fiscal 2010 and generally carries

higher gross margins than our other merchandise. We may take steps to increase the percentage of net sales of
private label merchandise in the future, although there can be no assurance that we will be able to achieve
increases in private label merchandise sales as a percentage of net sales. Our failure to anticipate, identify and
react in a timely manner to fashion trends with our private label merchandise, would likely have a material
adverse effect on our comparable store sales, financial condition and results of operations.

If our information systems hardware or software fails to function effectively or does not scale to keep pace
with our planned growth, our operations could be disrupted and our financial results could be harmed.

Over the past several years, we have made improvements to our infrastructure and existing hardware and
software systems, as well as implemented new systems. If these or any other information systems and software
do not work effectively, this could adversely impact the promptness and accuracy of our transaction processing,
financial accounting and reporting and our ability to manage our business and properly forecast operating results
and cash requirements. To manage the anticipated growth of our operations and personnel, we may need to
continue to improve our operational and financial systems, transaction processing, procedures and controls, and
in doing so could incur substantial additional expenses that could impact our financial results.

Our inability or failure to protect our intellectual property or our infringement of other’s intellectual property
could have a negative impact on our operating results.

We believe that our trademarks and domain names are valuable assets that are critical to our success. The
unauthorized use or other misappropriation of our trademarks or domain names could diminish the value of the

Zumiez brand, our store concept, our private label brands or our goodwill and cause a decline in our net sales.
Although we have secured or are in the process of securing protection for our trademarks and domain names in a
number of countries outside of the United States, there are certain countries where we do not currently have or
where we do not currently intend to apply for protection for certain trademarks or at all. Also, the efforts we have
taken to protect our trademarks may not be sufficient or effective. Therefore, we may not be able to prevent other
persons from using our trademarks or domain names outside of the United States, which also could adversely
affect our business. We are also subject to the risk that we may infringe on the intellectual property rights of third
parties. Any infringement or other intellectual property claim made against us, whether or not it has merit, could
be time-consuming, result in costly litigation, cause product delays or require us to pay royalties or license fees.
As a result, any such claim could have a material adverse effect on our operating results.

The effects of war or acts of terrorism could adversely affect our business.

Substantially all of our stores are located in shopping malls. Any threat of terrorist attacks or actual terrorist

events, particularly in public areas, could lead to lower customer traffic in shopping malls. In addition, local
authorities or mall management could close shopping malls in response to security concerns. Mall closures, as
well as lower customer traffic due to security concerns, would likely result in decreased sales. Additionally, the
armed conflicts in the Middle East, or the threat, escalation or commencement of war or other armed conflict
elsewhere, could significantly diminish consumer spending, and result in decreased sales for us. Decreased sales
would have a material adverse effect on our business, financial condition and results of operations.

The outcome of litigation could have a material adverse effect on our business, and may result in substantial
costs and could divert management’s attention.

We are involved, from time to time, in litigation incidental to our business including complaints filed by
investors. This litigation could result in substantial costs, and could divert management’s attention and resources,
which could harm our business. Risks associated with legal liability are often difficult to assess or quantify, and
their existence and magnitude can remain unknown for significant periods of time. While we maintain director
and officer insurance for litigation surrounding investor lawsuits, the amount of insurance coverage may not be
sufficient to cover a claim and the continued availability of this insurance cannot be assured. We also maintain
other forms of insurance that have historically been adequate to address lawsuits; however, there can be no
assurance that the actual outcome of pending or future litigation will not have a material adverse effect on our
results of operations or financial condition.

Our operations expose us to the risk of litigation, which could lead to significant potential liability and costs
that could harm our business, financial condition or results of operations.

We employ a substantial number of full-time and part-time employees, a majority of whom are employed at
our store locations. As a result, we are subject to a large number of federal and state laws and regulations relating
to employment. This creates a risk of potential claims that we have violated laws related to discrimination and
harassment, health and safety, wage and hour laws, criminal activity, personal injury and other claims. We are
also subject to other types of claims in the ordinary course of our business. Some or all of these claims may give
rise to litigation, which could be time-consuming for our management team, costly and harmful to our business.

In addition, we are exposed to the risk of class action litigation. The costs of defense and the risk of loss in
connection with class action suits are greater than in single-party litigation claims. Due to the costs of defending
against such litigation, the size of judgments that may be awarded against us, and the loss of significant
management time devoted to such litigation, we cannot assure you that such litigation will not disrupt our
business or impact our financial results.

Our failure to comply with federal, state or local laws, or changes in these laws, could have an adverse impact
on our results of operations and financial performance.

Our business is subject to a wide array of laws and regulations. Changes in the regulations, the imposition of

additional regulations, or the enactment of any new legislation including those related to health care, taxes,
environmental issues and trade, could adversely affect our results of operations or financial condition.

Recent federal health care legislation could increase our expenses.

We are self-insured with respect to our health care coverage and do not purchase third party insurance for

the health insurance benefits provided to employees with the exception of pre-defined stop loss, which helps
limit the cost of large claims. In March 2010, the Patient Protection and Affordable Care Act (the “Act”) and the
Health Care Education Reconciliation Act of 2010 (the “Reconciliation Act”) were signed into law. The Act, as
modified by the Reconciliation Act, includes a large number of health care provisions to take effect over four
years, including expanded dependent coverage, incentives for businesses to provide health care benefits, a
prohibition on the denial of coverage and denial of claims on pre-existing conditions, a prohibition on limits on
essential benefits and other expansions of health care benefits and coverage. The costs of these provisions are
expected to be funded by a variety of taxes and fees. Some of the taxes and fees, as well as certain health care
changes required by these acts, are expected to result, directly or indirectly, in increased health care costs for
us. For example, the prohibition on limits on essential benefits (whereas we currently cap health-related benefits)
could result in increased costs to us. At this time, we cannot quantify the impact, if any, that the legislation may
have on us due to the changing regulatory environment around this legislation and due to the government’s
requirement to issue future unknown regulatory rules. There is no assurance that we will be able to absorb and/or
pass through the costs of such legislation in a manner that will not adversely impact our results of operations.

Our ecommerce operations subject us to numerous risks that could have an adverse effect on our results of
operations.

Although ecommerce sales constitute a small, but increasing portion of our overall sales, our ecommerce

operations subject us to certain risks that could have an adverse effect on our operational results, including:

•

diversion of traffic and sales from our stores;

liability for online content; and

risks related to the computer systems that operate our website and related support systems, including
computer viruses, electronic break-ins and similar disruptions.

In addition, risks beyond our control, such as governmental regulation of ecommerce, entry of our vendors

in the ecommerce business in competition with us, online security breaches and general economic conditions
specific to ecommerce could have an adverse effect on our results of operations.

We have incurred and will continue to incur significant expenses as a result of being a public company, which
will negatively impact our financial performance.

We completed our initial public offering in May 2005 and we have incurred and could continue to incur
significant legal, accounting, insurance and other expenses as a result of being a public company. Rules and
regulations implemented by Congress, the SEC and the NASDAQ Global Select Market have required changes in
corporate governance practices of public companies. Compliance with these laws could cause us to incur
significant costs and expenses, including legal and accounting costs, and could make some compliance activities
more time-consuming and negatively impact our financial performance. Additionally, these rules and regulations
may make it more expensive for us to obtain director and officer liability insurance. As a result, it may be more
difficult for us to attract and retain qualified persons to serve on our board of directors or as officers.

Failure to maintain adequate financial and management processes and controls could lead to errors in our
financial reporting and could harm our ability to manage our expenses.

Reporting obligations as a public company and our anticipated growth are likely to place a considerable
strain on our financial and management systems, processes and controls, as well as on our personnel. In addition,
we are required to document and test our internal controls over financial reporting pursuant to Section 404 of the
Sarbanes-Oxley Act of 2002 so that our management can certify as to the effectiveness of our internal controls
and our independent registered public accounting firm can render an opinion on the effectiveness of our internal
control over financial reporting on an annual basis. This process requires us to document our internal controls
over financial reporting and to potentially make significant changes thereto, if applicable. As a result, we have
incurred and expect to continue to incur substantial expenses to test our financial controls and systems, and we
have been and in the future may be required to improve our financial and managerial controls, reporting systems
and procedures, to incur substantial expenses to make such improvements and to hire additional personnel. If our
management is ever unable to certify the effectiveness of our internal controls or if our independent registered
public accounting firm cannot render an opinion on the effectiveness of our internal control over financial
reporting, or if material weaknesses in our internal controls are ever identified, we could be subject to regulatory
scrutiny and a loss of public confidence, which could have a material adverse effect on our business and our
stock price. In addition, if we do not maintain adequate financial and management personnel, processes and
controls, we may not be able to accurately report our financial performance on a timely basis, which could cause
a decline in our stock price and adversely affect our ability to raise capital.

Changes to accounting rules or regulations could significantly affect our financial results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”). New accounting rules or regulations and changes to existing accounting
rules or regulations have occurred and may occur in the future. Future changes to accounting rules or regulations,
such as changes to lease accounting guidance or a requirement to convert to international financial reporting
standards, could negatively affect our results of operations and financial condition through increased cost of
compliance.

The security of our databases that contain personal information of our retail customers could be breached,
which could subject us to adverse publicity, litigation and expenses. In addition, if we are unable to comply
with security standards created by the credit card industry, our operations could be adversely affected.

Database privacy, network security and identity theft are matters of growing public concern. In an attempt to

prevent unauthorized access to our network and databases containing confidential, third-party information, we
have installed privacy protection systems, devices and activity monitoring on our network. Nevertheless, if
unauthorized parties gain access to our networks or databases, they may be able to steal, publish, delete or
modify our private and sensitive third-party information. In such circumstances, we could be held liable to our
customers or other parties or be subject to regulatory or other actions for breaching privacy rules. This could
result in costly investigations and litigation, civil or criminal penalties and adverse publicity that could adversely
affect our financial condition, results of operations and reputation. Further, if we are unable to comply with the
security standards established by banks and the credit card industry, we may be subject to fines, restrictions and
expulsion from card acceptance programs, which could adversely affect our retail operations.

We may fail to meet analyst expectations, which could cause the price of our stock to decline.

Our common stock is traded publicly and various securities analysts follow our financial results and issue

reports on us. These reports include information about our historical financial results as well as the analysts’
estimates of our future performance. The analysts’ estimates are based upon their own independent opinions and
can be different from our estimates or expectations. If our operating results are below the estimates or
expectations of public market analysts and investors, our stock price could decline. In December 2007, a

securities class action litigation and associated derivative lawsuits was brought against us and such actions are
frequently brought against other companies following a decline in the market price of their securities. These
lawsuits were dismissed with prejudice in March 2009. If our stock price is volatile, we may become involved in
this type of litigation in the future. Any litigation could result in substantial costs and a diversion of
management’s attention and resources that are needed to successfully run our business.

The value of our investments may fluctuate.

We have our excess cash primarily invested in state and local municipal securities, U.S. Treasury securities,
U.S. Agency securities and variable-rate demand notes. These investments have historically been considered very
safe investments with minimal default rates. At January 29, 2011, we had $114.6 million of investments in state
and local government securities and variable-rate demand notes, excluding our auction rate security. These
securities are not guaranteed by the United States government and are subject to additional credit risk based upon
each local municipality’s tax revenues and financial stability. As a result, we may experience a reduction in value
or loss of liquidity of our investments, which may have a negative adverse effect on our results of operations,
liquidity and financial condition.

The uncertainties in the credit markets have prevented us and other investors from liquidating holdings of
auction rate securities in recent auctions for these securities because the amount of securities submitted for sale
has exceeded the amount of purchase orders. At January 29, 2011, we had $0.9 million, net of $0.1 million
temporary impairment, invested in an auction rate security that is included in long-term investments on the
consolidated balance sheet. We may incur impairment charges on this investment in the future.

In addition, we made a $2.0 million equity investment in a manufacturer and expect the value of this

investment to increase. However, we do not have control over this investment and it may encounter unanticipated
operating issues or negative financial performance that could adversely impact the value of our investment.

A decline in the market price of our stock and our performance may trigger an impairment of the goodwill
recorded on the consolidated balance sheets.

Goodwill and other intangible assets with indefinite lives is required to be tested for impairment at least

annually or more frequently if management believes indicators of impairment exist. Any reduction in the
carrying value of our goodwill as a result of our impairment analysis could result in a non-cash goodwill
impairment charge to our statement of operations. A goodwill impairment charge could have a significant impact
on earnings and potentially result in a violation of our financial covenants, thereby limiting our ability to secure
short-term financing.

Changes to estimates related to our fixed assets, or operating results that are lower than our current estimates
at certain store locations, may cause us to incur non-cash impairment charges.

We make certain estimates and projections in connection with impairment analyses for our store locations
and other property and equipment. These calculations require us to make a number of estimates and projections
of future results. If these estimates or projections change or prove incorrect, we may be required to record
impairment charges on certain store locations and other property and equipment. If these impairment charges are
significant, our operating results would be adversely affected and our bank covenants may be violated.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

Item 2.

PROPERTIES

All of our stores, primarily located in shopping malls and encompassing approximately 1,174,000 total

square feet at January 29, 2011, are occupied under operating leases.

We lease an 87,350 square foot combined home office and ecommerce fulfillment center in Everett,

Washington. This lease expires in 2017.

In fiscal 2010, we acquired a 168,450 square foot building in Corona, California that serves as our

warehouse and distribution facility. Additionally, in fiscal 2010, we acquired approximately 253,500 square feet
of land in Lynnwood, Washington, which we plan to use as the location of our new home office starting in 2012.

Item 3.

LEGAL PROCEEDINGS

We are involved from time to time in litigation incidental to our business. We believe that the outcome of

current litigation is not expected to have a material adverse effect on our results of operations or financial
condition.

See Note 9 to the Notes to Consolidated Financial Statements found in Part IV Item 15 of this Form 10-K

(listed under “Litigation” under Commitments and Contingencies).

Item 4.

(REMOVED AND RESERVED)

PART II

Item 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock has traded on the NASDAQ Global Select Market under the symbol “ZUMZ.” At
January 29, 2011, there were 30,834,713 shares of common stock outstanding. The following table sets forth the
high and low sales prices for our common stock on the NASDAQ Global Select Market for fiscal 2010 and fiscal
2009.

Fiscal 2010

High

Low

. . . . . . . . . . . . . .
First Fiscal Quarter (January 31, 2010—May 1, 2010)
Second Fiscal Quarter (May 2, 2010—July 31, 2010) . . . . . . . . . . . . . . .
Third Fiscal Quarter (August 1, 2010—October 30, 2010) . . . . . . . . . . .
Fourth Fiscal Quarter (October 31, 2010—January 29, 2011) . . . . . . . . .

$22.53
$19.79
$26.45
$33.13

$12.54
$14.98
$14.44
$22.24

Fiscal 2009

First Fiscal Quarter (February 1, 2009—May 2, 2009)
. . . . . . . . . . . . . .
Second Fiscal Quarter (May 3, 2009—August 1, 2009) . . . . . . . . . . . . . .
Third Fiscal Quarter (August 2, 2009—October 31, 2009) . . . . . . . . . . .
Fourth Fiscal Quarter (November 1, 2009—January 30, 2010) . . . . . . . .

High

Low

$13.07
$12.86
$17.43
$15.74

$ 5.70
$ 7.27
$ 9.25
$10.68

Performance Measurement Comparison

The following graph shows a comparison for total cumulative returns for Zumiez Inc., The NASDAQ
Composite Index and the NASDAQ Retail Trade Index during the period commencing on January 28, 2006 and
ending on January 29, 2011. The comparison assumes $100 was invested on January 28, 2006 in each Zumiez,
the NASDAQ Composite Index and the NASDAQ Retail Trade Index, and assumes the reinvestment of all
dividends, if any. The comparison in the following graph and table is required by the SEC and is not intended to
be a forecast or to be indicative of future Company common stock performance.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Zumiez Inc., the NASDAQ Composite Index
and the NASDAQ Retail Trade Index

$180

$160

$140

$120

$100

$80

$60

$40

$20

1/28/06

2/3/07

2/2/08

1/31/09

1/30/10

1/29/11

Zumiez Inc.

NASDAQ Composite

NASDAQ Retail Trade

*$100 invested on 1/28/06 in stock or 1/31/06 in index, including reinvestment of dividends.
Indexes calculated on month-end basis.

Zumiez Inc.
NASDAQ Composite
NASDAQ Retail Trade

1/28/06

2/3/07

2/2/08

1/31/09

1/30/10

1/29/11

100.00
100.00
100.00

136.16
109.00
103.41

81.02
107.45
111.20

28.91
66.46
75.42

51.47
97.13
127.28

90.20
123.13
168.13

Holders of the Corporation’s Capital Stock

We had 356 shareholders of record as of March 7, 2011.

Dividends

No cash dividends have been declared on our common stock to date nor have any decisions been made to

pay a dividend in the foreseeable future. Payment of dividends is evaluated on a periodic basis and if a dividend
were paid, it would be subject to covenants of our lending facility, which may have the effect of restricting our
ability to pay dividends.

Recent Sales of Unregistered Securities

None

Issuer Purchases of Equity Securities

The following table presents information with respect to purchases of common stock of the Company made
during the thirteen weeks ended January 29, 2011.

Period

October 31, 2010—November 27, 2010
November 28, 2010—January 1, 2011
January 2, 2011—January 29, 2011

Total

Total Number of
Shares
Purchased (1)

Average Price
Paid per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs

Maximum Number of
Shares that May Yet
Be Purchased Under
the Plans or
Programs

—
134
77

211

$ —
$29.32
$22.31

—
—
—

—

—
—
—

—

(1) During the thirteen weeks ended January 29, 2011, 211 shares were either forfeited or purchased by us in

order to satisfy employee tax withholding obligations upon the vesting of restricted stock. These shares were
not acquired pursuant to any publicly announced purchase plan or program.

Item 6.

SELECTED FINANCIAL INFORMATION

The following selected consolidated financial information has been derived from our audited Consolidated
Financial Statements. The data should be read in conjunction with our Consolidated Financial Statements and the
notes thereto, and Management’s Discussion and Analysis of Financial Condition and Results of Operations
included elsewhere herein.

Fiscal Year Ended

January 29,
2011

January 30,
2010

January 31,
2009

February 2,
2008

February 3,
2007 (1)

(in thousands, except per share data)

Statement of Operations Data:
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . .

$478,849
308,452

$407,603
272,865

$408,669
274,134

$381,416
244,429

$298,177
189,959

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . .

170,397
133,030

134,738
122,003

134,535
109,927

136,987
98,042

108,218
75,774

Operating profit
. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . .
Interest income, net
Other (expense) income, net . . . . . . . . . . . . . . . . . .

Earnings before income taxes . . . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . . . . . . . . .

37,367
1,496
(8)

38,855
14,652

12,735
1,176
96

14,007
4,876

24,608
2,059
36

26,703
9,499

38,945
1,722
3

40,670
15,344

32,444
1,178
(16)

33,606
12,750

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 24,203

Earnings per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.81

0.79

9,131

$ 17,204

$ 25,326

$ 20,856

0.31

0.30

0.59

0.58

0.89

0.86

0.76

0.73

Weighted average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29,971
30,794

29,499
30,133

29,127
29,694

28,609
29,322

27,543
28,703

(1) The fiscal year ended February 3, 2007 consisted of 53 weeks.

January 29,
2011

January 30,
2010

January 31,
2009

February 2,
2008

February 3,
2007

(in thousands)

Balance Sheet Data:
Cash, cash equivalents and current marketable

securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Working capital (1)
. . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term liabilities . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . .

$128,801
155,400
301,631
29,435
226,735

$108,051
133,927
260,265
27,802
192,676

$ 78,582
112,092
233,349
24,177
177,951

$ 76,532
92,161
216,095
18,097
154,602

$ 51,977
54,929
167,294
12,910
104,812

(1) Working capital is defined as current assets minus current liabilities. The fiscal year ended January 30, 2010
has been restated to account for the reclassification of certain assets from current assets to long-term assets.
Reclassification of these assets from current assets to long-term assets is immaterial for prior periods.

Other Financial Data:
Gross margin (2) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures (in thousands) . . . . . . . . . . . .
Depreciation, amortization and accretion (in

Fiscal Year Ended

January 29,
2011

January 30,
2010

January 31,
2009

February 2,
2008

February 3,
2007 (1)

35.6%

33.1%

32.9%

35.9%

36.3%

$29,361

$16,548

$28,349

$30,722

$22,160

thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$17,923

$22,092

$19,470

$14,762

$10,499

(1) The fiscal year ended February 3, 2007 consisted of 53 weeks.

(2) Gross margin represents gross profit divided by net sales.

Store Data:
Number of stores open at end of period . . . . . . . . .
Comparable store sales increase (decrease) (2) . . .
Net sales per store (3) (in thousands) . . . . . . . . . . .
Total square footage at end of period (4) (in

Fiscal Year Ended

January 29,
2011

January 30,
2010

January 31,
2009

February 2,
2008

February 3,
2007 (1)

400
11.9%

377
(10.0%)

343
(6.5%)

285
9.2%

235
14.5%

$1,162

$1,081

$1,240

$1,405

$1,389

thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,174

1,107

1,005

829

667

Average square footage per store at end of period

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net sales per square foot (6) . . . . . . . . . . . . . . . . . .

2,935
$ 396

2,937
$ 367

2,930
$ 424

2,909
$ 488

2,840
$ 499

(1) The fiscal year ended February 3, 2007 consisted of 53 weeks.

(2) Comparable store sales percentage changes are calculated by comparing comparable store sales for the

applicable fiscal year to comparable store sales for the prior fiscal year. Comparable store sales are based on
net sales, and stores are considered comparable beginning on the first anniversary of their first day of
operation. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—
General” for more information about how we compute comparable store sales. Comparable store sales
include our ecommerce sales.

(3) Net sales per store represents net sales for the period divided by the average number of stores open during

the period. For purposes of this calculation, the average number of stores open during the period is equal to
the sum of the number of stores open as of the end of each month during the period divided by the number
of months in the period. Net sales per store excludes ecommerce sales.

(4) Total square footage at end of period includes retail selling, storage and back office space.

(5) Average square footage per store at the end of a period is calculated based on the total store square footage

at end of period, including retail selling, storage and back office space, of all stores open at the end of the
period.

(6) Net sales per square foot represents net sales, excluding ecommerce sales, for the period divided by the

average square footage of stores open during the period. For purposes of this calculation, the average square
footage of stores open during the period is equal to the sum of the total square footage of the stores open as
of the end of each month during the period divided by the number of months in the period.

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in

conjunction with our consolidated financial statements and related notes included elsewhere in this document.
This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in these forward-looking statements as a result of certain factors,
including those discussed in “Item 1A Risk Factors.” See the cautionary note regarding forward-looking
statements set forth at the beginning of Part I of the Annual Report on Form 10-K.

Overview

We are a mall based specialty retailer of action sports related apparel, footwear, equipment and accessories

operating under the Zumiez brand name. At January 29, 2011, we operated 400 stores primarily located in
shopping malls, giving us a presence in 37 states. Our stores cater to young men and women between the ages of
12 and 24 who seek popular brands representing a lifestyle centered on activities that include skateboarding,
surfing, snowboarding, BMX and motocross. We support the action sports lifestyle and promote our brand
through a multi-faceted marketing approach that is designed to integrate our brand image with our customers’
activities and interests. This approach, combined with our differentiated merchandising strategy, store design,
comprehensive training programs and passionate employees, allows us to provide an experience for our
customers that we believe is consistent with their attitudes, fashion tastes and identities and is otherwise
unavailable in most malls. Accordingly, our success is largely dependent upon our ability to anticipate, identify
and respond to the fashion tastes of our customers and to provide merchandise that satisfies customer demands.

Fiscal 2010—A Review of This Past Year

Zumiez’ financial results in fiscal 2010 meaningfully exceeded our own projections and these results were

significant, particularly when viewing against the teen retail landscape in what remained a tenuous consumer
environment. In addition, while accomplishing these results, we made strategic investments that we believe will
reap long-term benefits focused on enhancing the customer experience across multiple sales channels, and on our
people and infrastructure aimed at improving decision making and product speed to market. The table below
show net sales, operating profit and margin and diluted earnings per share growth for fiscal 2010 compared to
fiscal 2009:

Fiscal Year Ended

January 29, 2011

January 30, 2010 % Change

Net sales (in thousands) . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit (in thousands) . . . . . . . . . . . . . . . . . .
Operating margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . .

$478,849
$ 37,367

7.8%
0.79

$407,603
$ 12,735

3.1%
0.30

17%
193%

163%

Our sales results were primarily driven by an increase in transactions, which is a testament to our

differentiated product offering and the unique customer experience our store associates provide. The strong sales
results we realized in fiscal 2010 translated to a significant increase in operating income, operating margin and
diluted earnings per share compared to fiscal 2009 due to our unique business model and focus on managing our
cost structure.

Fiscal 2011—A Look At the Upcoming Year

While the momentum we have seen throughout fiscal 2010 would suggest that discretionary spending is

increasing, unemployment, debt and housing remain concerns and the economy is still in recovery. In addition,
other challenges have surfaced as we look out into fiscal 2011, most notably increases in production costs that
may have an impact on our ability to maintain product margins. Considering these factors, our current outlook is
cautiously optimistic, and we are planning the business conservatively for fiscal 2011.

For the year, we expect total sales to increase driven by an increase in comparable store sales, the opening of

approximately 44 new stores, including our first stores in Canada, and increased sales from our ecommerce
channel. If we achieve our sales projections, we expect earnings will increase in fiscal 2011. We will make
further investments in people and infrastructure in fiscal 2011, building on the progress we have made through
fiscal 2010, primarily focused on the development of our multi-channel sales strategies, expansion into Canada
and continued progress on our product assortment planning and supply chain solutions and a capital investment
related to building a new home office, planned to opening in the spring of 2011. We expect our cash, short-term
investments and working capital to increase, and do not anticipate any borrowings on our credit facility.
Inventory levels per square foot are expected to grow due to increased production costs and to support sales
growth.

General

Net sales constitute gross sales net of actual and estimated returns and deductions for promotions. Net sales

include our in-store sales and our ecommerce sales, which includes ecommerce shipping revenue. Ecommerce
sales were 4.7%, 2.5% and 1.7% of total net sales for fiscal 2010, 2009 and 2008. Sales of gift cards are deferred
and recognized when gift cards are redeemed. The amount of the gift card liability is determined taking into
account our estimate of the portion of gift cards that will not be redeemed or recovered (“gift card breakage”).
Gift card breakage is recognized as revenue after 24 months, at which time the likelihood of redemption is
considered remote based on our historical redemption data.

We report “comparable store sales” based on net sales beginning on the first anniversary of the first day of

operation of a new store. Our comparable store sales also include our ecommerce sales. Changes in our
comparable store sales between two periods are based on net sales of stores which were in operation during both
of the two periods being compared and, if a store is included in the calculation of comparable store sales for only
a portion of one of the two periods being compared, then that store is included in the calculation for only the
comparable portion of the other period. Any change in square footage of an existing comparable store, including
remodels, does not eliminate that store from inclusion in the calculation of comparable store sales. There may be
variations in the way in which some of our competitors and other apparel retailers calculate comparable or same
store sales. As a result, data herein regarding our comparable store sales may not be comparable to similar data
made available by our competitors or other retailers.

Cost of goods sold consists of branded merchandise costs and our private label merchandise costs including
design, sourcing, importing and inbound freight costs. Our cost of goods sold also includes shrinkage and buying,
occupancy, distribution and warehousing costs. This may not be comparable to the way in which our competitors
or other retailers compute their cost of goods sold. We receive cash consideration from vendors, which have been
reported as a reduction cost of goods sold if the inventory has sold, as a reduction of the carrying value of the
inventory if the inventory is still on hand, or a reduction of selling, general and administrative expense if the
amounts are reimbursements of specific, incremental and identifiable costs of selling the vendors’ products.

Selling, general and administrative expenses consist primarily of store personnel wages and benefits,
administrative staff and infrastructure expenses, outbound freight, store supplies, depreciation on fixed assets at
our home office and stores, facility expenses and training, advertising and marketing costs. Credit card fees,
insurance, public company expenses, legal expenses and other miscellaneous operating costs are also included in
selling, general and administrative expenses. This may not be comparable to the way in which our competitors or
other retailers compute their selling, general and administrative expenses.

Key Performance Indicators

Our management evaluates the following items, which we consider key performance indicators, in assessing

our performance:

Comparable store sales. As previously described in detail under the caption “General,” comparable store
sales provide a measure of sales growth for stores open at least one year over the comparable prior year period.

We consider comparable store sales to be an important indicator of our current performance. Comparable

store sales results are important to achieve leveraging of our costs, including store payroll, store supplies and
rent. Comparable store sales also have a direct impact on our total net sales, cash and working capital.

Gross profit. Gross profit measures whether we are optimizing the price and inventory levels of our
merchandise. Gross profit is the difference between net sales and cost of goods sold. Any inability to obtain
acceptable levels of initial markups or any significant increase in our use of markdowns could have an adverse
effect on our gross profit and results of operations.

Operating profit. We view operating profit as a key indicator of our success. The key drivers of operating

profit are comparable store sales, gross profit, our ability to control selling, general and administrative expenses
and our level of capital expenditures affecting depreciation expense.

Store productivity. We review our stores’ operating profit as a measure of their profitability.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with GAAP. In connection with the
preparation of our consolidated financial statements, we are required to make assumptions and estimates about
future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and
the related disclosures. We base our assumptions, estimates and judgments on historical experience, current
trends and other factors that management believes to be relevant at the time our consolidated financial statements
are prepared. On a regular basis, we review the accounting policies, assumptions, estimates and judgments to
ensure that our consolidated financial statements are presented fairly and in accordance with GAAP. However,
because future events and their effects cannot be determined with certainty, actual results could differ from our
assumptions and estimates, and such differences could be material.

Our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, of

the Notes to Consolidated Financial Statements, included in Part IV Item 15, “Exhibits and Consolidated
Financial Statements,” of this Annual Report on Form 10-K. We believe that the following accounting estimates
are the most critical to aid in fully understanding and evaluating our reported financial results, and they require
our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect
of matters that are inherently uncertain.

Description

Judgments and Uncertainties

Effect If Actual Results Differ
From Assumptions

Our write-down reserve contains
uncertainties because the calculation
requires management to make assumptions
based on the current rate of sales, the age
of inventory, the profitability of the
inventory and other factors.

Our inventory loss reserve contains
uncertainties because the calculation
requires management to make assumptions
and to apply judgment regarding a number
of factors, including historical percentages
that can be affected by changes in
merchandise mix and changes in actual
shrinkage trends.

We have not made any material changes in
the accounting methodology used to
calculate our write-down and inventory loss
reserves in the past three fiscal years. We
do not believe there is a reasonable
likelihood that there will be a material
change in the future estimates or
assumptions we use to calculate our
inventory reserves. However, if actual
results are not consistent with our estimates
and assumptions, we may be exposed to
losses or gains that could be material.

A 10% decrease in ultimate sales price at
January 29, 2011 would have affected net
income by $0.1 million in fiscal 2010.

A 10% difference in actual physical
inventory shrinkage reserved at January 29,
2011 would have affected net income by
$0.3 million in fiscal 2010.

Our impairment loss calculations contain
uncertainties because they require
management to make assumptions and to
apply judgment to estimate future cash
flows and asset fair values, including
forecasting future sales, gross profit and
operating expenses and selecting the
discount rate that reflects the risk inherent
in future cash flows.

Our fixed assets accounting methodology
contains uncertainties because it requires
management to make estimates with
respect to the useful lives of our fixed
assets that we believe are reasonable.

We do not believe there is a reasonable
likelihood that there will be a material
change in the estimates or assumptions we
use to calculate long-lived asset impairment
losses. However, if actual results are not
consistent with our estimates and
assumptions, our operating results could be
adversely affected.

Although management believes that the
current useful lives estimates assigned to
our fixed assets are reasonable, factors
could cause us to change our estimates, thus
affecting the future calculation of
depreciation.

Valuation of Merchandise Inventories

We value our inventory at the lower of cost or
fair market value through the establishment of
write-down and inventory loss reserves.

Our write-down reserve represents the excess
of the carrying value over the amount we
expect to realize from the ultimate sales or
other disposal of the inventory. Write-downs
establish a new cost basis for our inventory.
Subsequent changes in facts or circumstances
do not result in the restoration of previously
recorded write-downs or an increase in that
newly established cost basis.

Our inventory loss reserve represents
anticipated physical inventory losses
(“shrinkage reserve”) that have occurred since
the last physical inventory dates. Each quarter,
we reserve for anticipated physical inventory
losses on an aggregate basis.

Fixed Assets

We review the carrying value of our fixed
assets for impairment whenever events or
changes in circumstances indicate that the
carrying value of such asset may not be
recoverable.

Recoverability of assets to be held and used is
determined by a comparison of the carrying
amount of an asset to future undiscounted net
cash flows expected to be generated by the
asset. If such assets are considered impaired,
the impairment recognized is measured by
comparing projected individual store
discounted cash flow to the asset carrying
values. Declines in projected store cash flow
could result in the impairment of assets.

The actual economic lives of our fixed assets
may be different from our estimated useful
lives, thereby resulting in a different carrying
value. These evaluations could result in a
change in the depreciable lives of these assets
and therefore our depreciation expense in
future periods.

Description

Judgments and Uncertainties

Effect If Actual Results Differ
From Assumptions

Revenue Recognition

Revenue is recognized upon purchase at our
retail store locations. For orders placed through
our website, revenue is recognized upon
estimated delivery to the customer. Revenue is
recorded net of estimated and actual sales
returns and deductions for promotions.

Revenue is not recorded on the sale of gift
cards. A current liability is recorded upon sale,
and revenue is recognized when the gift card is
redeemed for merchandise. The amount of the
gift card liability is determined taking into
account our estimate of the portion of gift
cards that will not be redeemed or recovered
(“gift card breakage”). Gift card breakage is
recognized as revenue after 24 months, at
which time the likelihood of redemption is
considered remote based on our historical
redemption data.

Stock-Based Compensation

We maintain the Zumiez Inc. 2005 Equity
Incentive Plan under which non-qualified stock
options and restricted stock have been granted
to employees and non-employee directors.

In determining the fair value of our stock
options, we use the Black-Scholes option
pricing model, which requires management to
apply judgment and make assumptions to
determine the fair value of our awards.

We determine the fair value of our restricted
stock awards based on the closing market price
of our stock on the grant date.

Accounting for Income Taxes

As part of the process of preparing the
financial statements, income taxes are
estimated for each of the jurisdictions in which
we operate. This process involves estimating
actual current tax exposure together with
assessing temporary differences resulting from
differing treatment of items for tax and
accounting purposes. These differences result
in deferred tax assets and liabilities, which are
included on the consolidated balance sheets.

We have not made any material changes in
the accounting methodology used to
measure sales returns or recognize revenue
for our gift card program in the past three
fiscal years. We do not believe there is a
reasonable likelihood that there will be a
material change in the future estimates or
assumptions we use to recognize revenue.
However, if actual results are not consistent
with our estimates or assumptions, we may
be exposed to losses or gains that could be
material.

A 10% change in our sales return reserve at
January 29, 2011 would have affected net
income by less than $0.1 million in fiscal
2010.

A 10% change in our unredeemed gift card
breakage life at January 29, 2011 would
have affected net income by $0.2 million in
fiscal 2010.

We do not believe there is a reasonable
likelihood there will be a material change in
the future estimates or assumptions we use
to determine stock-based compensation
expense. However, if actual results are not
consistent with our estimates or
assumptions, we may be exposed to
changes in stock-based compensation
expense that could be material.

A 10% change in our stock-based
compensation expense in fiscal 2010 would
have affected net income by $0.3 million in
fiscal 2010.

Although management believes that the
income tax related judgments and estimates
are reasonable, actual results could differ
and we may be exposed to losses or gains
that could be material.

Upon income tax audit, any unfavorable tax
settlement generally would require use of
our cash and may result in an increase in
our effective income tax rate in the period
of resolution. A favorable tax settlement
may be recognized as a reduction in our
effective income tax rate in the period of
resolution.

Our revenue recognition accounting
methodology contains uncertainties because
it requires management to make
assumptions regarding future sales returns
and the amount and timing of gift cards
projected to be redeemed by gift card
recipients. Our estimate of the amount and
timing of sales returns and gift cards to be
redeemed is based primarily on historical
transaction experience.

The calculation of stock-based
compensation requires management to
make assumptions and to apply judgment to
determine the fair value of our awards.
These assumptions and judgments include
estimating the inputs to the Black-Scholes
option pricing model, future employee
turnover rates and future employee stock
option exercise behaviors. Changes in these
assumptions can materially affect the fair
value estimate.

Significant judgment is required in
evaluating our tax positions and
determining our provision for income taxes.
During the ordinary course of business,
there are many transactions and calculations
for which the ultimate tax determination is
uncertain. For example, our effective tax
rates could be adversely affected by
earnings being lower than anticipated in
jurisdictions where we have lower statutory
rates and higher than anticipated in
jurisdictions where we have higher statutory
rates, by changes in the valuation of our
deferred tax assets and liabilities or by
changes in the relevant tax, accounting and
other laws, regulations, principles and
interpretations.

Description

Judgments and Uncertainties

Effect If Actual Results Differ
From Assumptions

Significant judgment is required in
evaluating our claims and contingencies,
including determining the probability that a
liability has been incurred and whether such
liability is reasonably estimable. The
estimated accruals for claims and
contingencies are made based on the best
information available, which can be highly
subjective.

Although management believes that the
contingencies related judgments and
estimates are reasonable, our accrual for
claims and contingencies could fluctuate as
additional information becomes known,
thereby creating variability in our results of
operations from period to period.
Additionally, actual results could differ and
we may be exposed to losses or gains that
could be material.

Forecasts of future cash flow are based on
our best estimate of future net sales and
operating expenses. These types of analyses
contain uncertainties because they require
management to make assumptions and to
apply judgment to estimate economic
factors and the profitability of future
business operations.

We do not believe there is a reasonable
likelihood that there will be a material
change in the future estimates or
assumptions we use to test for impairment
losses on goodwill. However, if actual
results are not consistent with our estimates
or assumptions, we may be exposed to an
impairment charge that could be material.

A 10% decrease in the fair value of the
Company at January 29, 2011 would have
no impact on the carrying value of
goodwill.

Accounting for Contingencies

We are subject to various claims and
contingencies related to lawsuits, insurance,
regulatory and other matters arising out of the
normal course of business. We accrue a liability
if the likelihood of an adverse outcome is
probable and the amount is estimable. If the
likelihood of an adverse outcome is only
reasonably possible (as opposed to probable), or
if an estimate is not determinable, we provide
disclosure of a material claim or contingency in
the Notes to the Consolidated Financial
Statements.

Goodwill

We evaluate goodwill for impairment annually
and when an event occurs or circumstances
change to suggest that the carrying value may
not be recoverable. We complete our
impairment evaluation by performing internal
valuation analyses, considering other publicly
available market information, and where
appropriate, by use of an independent valuation
firm.

We test goodwill for impairment by first
comparing the carrying value of net assets to
the fair value of the related operations. If the
fair value is determined to be less than carrying
value, a second step is performed to compute
the amount of impairment. We estimate fair
value using discounted cash flows.

Results of Operations

The following table presents, for the periods indicated, selected items in the consolidated statements of

operations as a percent of net sales:

Fiscal Year Ended

January 29,
2011

January 30,
2010

January 31,
2009

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . .

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . .

Operating profit
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and other income, net . . . . . . . . . . . . . . . . . .

Earnings before income taxes . . . . . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . . . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100.0%
64.4%

35.6%
27.8%

7.8%
0.3%

8.1%
3.0%

5.1%

100.0%
66.9%

33.1%
30.0%

3.1%
0.3%

3.4%
1.2%

2.2%

100.0%
67.1%

32.9%
26.9%

6.0%
0.5%

6.5%
2.3%

4.2%

Fiscal 2010 Results Compared With Fiscal 2009

Net Income

Net income for fiscal 2010 was $24.2 million, or $0.79 per diluted share, compared with net income of $9.1

million, or $0.30 per diluted share, for fiscal 2009. Our effective income tax rate for fiscal 2010 was 37.7%
compared to 34.8% for fiscal 2009.

Net Sales

Net sales were $478.8 million for fiscal 2010 compared to $407.6 million for fiscal 2009, an increase of
$71.2 million or 17.5%. The increase reflected a comparable store sales increase of 11.9% for fiscal 2010 as well
as the net addition of 23 stores (27 new stores offset by four store closures) in fiscal 2010.

Geographically, our best performing region for comparable store sales was the South, increasing 12%. Our
stores west of Texas, which accounted for 50% of our comparable store sales, increased by 9%, our stores in the
Northeast and Midwest increased by 8% combined and the remaining increase in comparable store sales is due to
increases in our ecommerce sales. The increase in comparable stores sales was primarily driven by an increase in
comparable store transactions, partially offset by a decline in dollars per transaction. Comparable store sales
increases in men’s apparel, accessories, footwear, boy’s apparel and junior’s apparel were partially offset by
comparable store sales decreases in hardgoods. For information as to how we define comparable stores, see
“General” above.

Gross Profit

Gross profit was $170.4 million for fiscal 2010 compared to $134.7 million for fiscal 2009, an increase of
$35.7 million, or 26.5%. As a percentage of net sales, gross profit increased 250 basis points for fiscal 2010 to
35.6% from 33.1% for fiscal 2009. The increase was primarily due to product margin improvement of 140 basis
points and a 140 basis points decrease in store occupancy costs, partially offset by a 40 basis points increase due
to distribution costs primarily associated with the exit costs and other charges of $2.4 million related to the
relocation of our distribution center.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were $133.0 million for fiscal 2010 compared to

$122.0 million for fiscal 2009, an increase of $11.0 million, or 9.0%. SG&A expenses as a percent of sales
decreased by 220 basis points for fiscal 2010 to 27.8% compared to 30.0% for fiscal 2009. The primary
contributors to this decrease were 110 basis points due to store operating expense efficiencies gained by growing
expenses at a slower rate than sales growth, the effect of the change in accounting estimate for the depreciable
lives of our leasehold improvements of 90 basis points (as further explained in Note 2 in our Notes to
Consolidated Financial Statements), 60 basis points due to impairment charges of $2.5 million on 21 stores in
fiscal 2009 and a 30 basis points impact of a litigation settlement charge of $1.3 million incurred fiscal 2009,
partially offset by a 70 basis points impact of a litigation settlement charge of $2.1 million incurred in fiscal
2010.

Exit or Disposal Activities

On March 2, 2010, we acquired a 168,450 square foot building in Corona, California for $11.8 million and
we have relocated our distribution facility from Everett, Washington to this facility. We believe that we will be
more effective distributing our products through a distribution center located in Corona, California due to the
majority of our vendors being located in Southern California. Cumulatively, during fiscal 2010, we have
recorded $0.9 million of employee benefit costs (severance and performance bonuses), $0.6 million of lease
termination costs, $0.3 million of loss on disposal of long-lived assets and $0.8 million of other costs to exit the

facility, partially offset by the $0.2 million benefit related to deferred rent liability. These amounts are included
in cost of goods sold in our consolidated statements of operations. We do not expect to incur material additional
costs related to the relocation.

Fiscal 2009 Results Compared With Fiscal 2008

Net Income

Net income in fiscal 2009 was $9.1 million, or $0.30 per diluted share, compared with $17.2 million, or

$0.58 per diluted share, in fiscal 2008, a decrease of 46.9%. The decrease in net income was driven by the
deleveraging effect of increased selling, general and administrative expenses (SG&A) on a decrease in net sales,
partially offset by an improvement in gross profit as a percent of sales. Our effective income tax rate in fiscal
2009 was 34.8% compared to 35.6% in fiscal 2008.

Net Sales

Net sales in fiscal 2009 decreased 0.3% to $407.6 million. The decrease reflected a comparable store sales

decline of 10.0% in the 52-week period ended January 30, 2010, mostly offset by the net addition of 34 new
stores in fiscal 2009 and a full year of sales from the 58 stores opened in fiscal 2008.

Geographically our stores west of Texas, which account for 54% of our comparable store sales, declined by

12.4%, while our comparable store sales in the Northeast, Midwest and South decreased 9.0% combined. The
decline in comparable store sales was driven by a decrease in comparable store transactions and all merchandise
categories experienced comparable store sales declines except footwear. For information as to how we define
comparable stores, see “General” above.

Gross Profit

Gross profit was $134.7 million in fiscal 2009 compared to $134.5 million in fiscal 2008, an increase of
$0.2 million or 0.2%. As a percent of net sales, gross profit increased 0.2 percentage points in fiscal 2009 to
33.1% from 32.9% in fiscal 2008. The increase was primarily due to product margin improvement of 140 basis
points and 20 basis points from supply chain efficiencies, largely offset by a store occupancy increase of 140
basis points. Store occupancy is largely a fixed cost for which we have a minimal ability to lower. Store
occupancy costs increased as a percent to sales primarily due to a 10.0% same store sales decline.

Selling, General and Administrative Expenses

SG&A was $122.0 million in fiscal 2009 compared to $109.9 million in fiscal 2008, an increase of $12.1
million or 11.0%. SG&A as a percent of sales increased by 310 basis points in fiscal 2009 to 30.0% compared to
26.9% in fiscal 2008. The primary contributors to this increase were a 180 basis points increase for expenses
associated with the opening of 36 new stores, 40 basis points related to impairment charges on 21 stores, and
legal settlement costs contributing 30 basis points. New stores generally open with lower revenues than stores
that have been open greater than one year, but a majority of new store operating costs are not meaningfully lower
than stores greater than one year old. As a result, these stores contribute to higher SG&A as a percent to sales.

Seasonality and Quarterly Results

As is the case with many retailers of apparel and related merchandise, our business is subject to seasonal

influences. As a result, we have historically experienced, and expect to continue to experience, seasonal and
quarterly fluctuations in our net sales and operating results. Our net sales and operating results are typically lower
in the first and second quarters of our fiscal year, while the back-to-school and winter holiday periods in our third
and fourth fiscal quarters historically have accounted for the largest percentage of our annual net sales. Quarterly

results of operations may also fluctuate significantly as a result of a variety of factors, including the timing of
store openings and the relative proportion of our new stores to mature stores, fashion trends and changes in
consumer preferences, calendar shifts of holiday or seasonal periods, changes in merchandise mix, timing of
promotional events, general economic conditions, competition and weather conditions.

The following table sets forth selected unaudited quarterly consolidated statements of operations data for the
last two recent fiscal years. The unaudited quarterly information has been prepared on a basis consistent with the
audited consolidated financial statements included elsewhere herein and includes all adjustments that we
consider necessary for a fair presentation of the information shown. This information should be read in
conjunction with our audited consolidated financial statements and the notes thereto. The operating results for
any fiscal quarter are not indicative of the operating results for a full fiscal year or for any future period and there
can be no assurance that any trend reflected in such results will continue in the future.

Fiscal Year Ended January 29, 2011

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings (loss) per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings (loss) per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of stores open at the end of the period . . . . . . . . . . . . . . . . .
Comparable store sales increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings (loss) per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings (loss) per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of stores open at the end of the period . . . . . . . . . . . . . . . . .
Comparable store sales decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(in thousands, except stores and per share data)
$156,192
$135,859
$97,702
$89,096
$ 60,881
$25,752
$ 53,048
$30,716
$ 24,014
$ (3,254) $ (2,368) $ 18,975
$ 15,005
$ (1,900) $ (1,214) $ 12,312
0.50
$
0.41
$ (0.06) $ (0.04) $
0.49
0.40
$
$ (0.06) $ (0.04) $
400
400
13.0%
14.4%

381
9.1%

393
9.3%

Fiscal Year Ended January 30, 2010

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

$85,170
$24,644

(in thousands, except stores and per share data)
$132,433
$76,808
$ 48,095
$21,900
$ 13,042
$ (3,438) $ (5,226) $
8,801
$
$ (1,658) $ (3,085) $
0.30
$
$ (0.06) $ (0.10) $
0.29
$
$ (0.06) $ (0.10) $
377
(1.7%)

$113,192
$ 40,099
8,357
5,073
0.17
0.17
378
(8.0%)

369
(18.8%)

358
(15.3%)

Liquidity and Capital Resources

Our primary uses of cash are for operational expenditures, capital investments, inventory purchases, store

remodeling, store fixtures and ongoing infrastructure improvements such as technology enhancements and
distribution capabilities. Historically, our main sources of liquidity have been cash flows from operations.

The significant components of our working capital are inventory and liquid assets such as cash, cash
equivalents, current marketable securities and receivables, reduced by accounts payable and accrued expenses.
Our working capital position benefits from the fact that we generally collect cash from sales to customers the
same day or within several days of the related sale, while we typically have longer payment terms with our
vendors.

At January 29, 2011 and January 30, 2010, we held one $1.0 million par value auction rate security valued
at $0.9 million, net of a $0.1 million temporary impairment charge. The $1.0 million security failed to sell at its

scheduled auction in March 2009 and March 2010. In March 2010, the interest rate for the security reset to a
prescribed tax-free rate of 0.68% from 1.16%. We previously held another $1.0 million auction rate security that
was redeemed at par in May 2009. We currently do not intend to hold the security beyond the next auction date
and will try to sell this security when the auction date comes up in March 2011. However, the uncertainties in the
credit markets have prevented us and other investors from liquidating holdings of auction rate securities in
auctions for these securities because the amount of securities submitted for sale has exceeded the amount of
purchase orders. If the March 2011 auction fails, we plan to hold the security until the next auction date and the
security coupon rate will reset to a prescribed “failure” rate. An unsuccessful auction could result in our holding
the security beyond the next scheduled auction reset date; therefore, limiting the short-term liquidity of the
investment. The security has been classified as available-for-sale marketable securities and included in long-term
investments on the consolidated balance sheets at January 29, 2011 and January 30, 2010.

At January 29, 2011 and January 30, 2010, cash, cash equivalents and current marketable securities were

$128.8 million and $108.1 million. Working capital, the excess of current assets over current liabilities, was
$155.4 million at the end of fiscal 2010, up 16% from $133.9 million at the end of fiscal 2009. The increase in
cash, cash equivalents and current marketable securities and working capital in fiscal 2010 were due primarily to
the increased cash flow from operations driven primarily by an increase in net income, partially offset by the
costs of opening 27 stores in fiscal 2010 and the purchase of our distribution center in Corona, California.

The following table summarizes our cash flows from operating, investing and financing activities for each

of the past three fiscal years (in thousands):

Fiscal Year Ended

January 29,
2011

January 30,
2010

January 31,
2009

Total cash provided by (used in)

Operating activities . . . . . . . . . . . . . . . . . . . . . .
Investing activities . . . . . . . . . . . . . . . . . . . . . .
Financing activities . . . . . . . . . . . . . . . . . . . . . .

$ 48,692
(44,011)
5,108

$ 45,116
(78,065)
1,460

$ 38,337
(11,943)
(5,282)

Increase (decrease) in cash and cash equivalents . . .

$ 9,789

$(31,489)

$ 21,112

Operating Activities

Net cash provided by operating activities increased by $3.6 million from $45.1 million in fiscal 2009 to

$48.7 million in fiscal 2010. Our operating cash flows result primarily from cash received from our customers,
offset by cash payments we make for inventory, employee compensation, store occupancy expenses and other
operational expenditures. Cash received from our customers generally corresponds to our net sales. Because our
customers primarily use credit cards or cash to buy from us, our receivables from customers settle quickly.
Changes to our operating cash flows have historically been driven primarily by changes in operating income and
changes to the components of working capital, as well as changes to non-cash items such as deferred taxes,
depreciation, amortization and accretion and excess tax benefit from stock-based compensation. Net cash
provided by operating activities increased by $6.8 million from $38.3 million in fiscal 2008 to $45.1 million in
fiscal 2009. The increase was primarily due to changes in working capital, partially offset by a decrease in net
income in fiscal 2009 compared to 2008.

Investing Activities

Net cash used in investing activities was $44.0 million in fiscal 2010 primarily related to capital

expenditures of $29.4 million for new store openings, existing store renovations and the purchase of our new
distribution center in Corona, California and by net purchases of marketable securities of $14.7 million. Net cash
used in investing activities was $78.1 million in fiscal 2009 primarily related to capital expenditures for new

store openings and existing store renovations of $16.6 million and by net purchases of marketable securities of
$61.5 million. Net cash used in investing activities was $11.9 million in fiscal 2008 primarily related to capital
expenditures for new store openings and existing store renovations of $28.3 million partially offset by net sales
of marketable securities of $16.4 million.

Financing Activities

Net cash provided by financing activities in fiscal 2010 was $5.1 million related to proceeds from stock
option exercise and the associated tax benefits. Net cash provided by financing activities in fiscal 2009 was $1.5
million related to proceeds from stock option exercise and the associated tax benefits. Net cash used in financing
activities in fiscal 2008 was $5.3 million primarily related to short-term use of bank funds partially offset by
proceeds from stock option exercise and associated tax benefits.

Sources of Liquidity

Our most significant sources of liquidity continue to be funds generated by operating activities, available

cash, cash equivalents and current marketable securities. We expect these sources of liquidity and available
borrowings under our revolving credit facility will be sufficient to meet our foreseeable cash requirements for
operations and planned capital expenditures for at least the next twelve months. Beyond this time frame, if cash
flows from operations and borrowings under our revolving credit facility are not sufficient to meet our capital
requirements, then we will be required to obtain additional equity or debt financing in the future. However, there
can be no assurance that equity or debt financing will be available to us when we need it or, if available, that the
terms will be satisfactory to us and not dilutive to our then-current shareholders.

We renewed and amended our secured credit agreement with Wells Fargo HSBC Trade Bank, N.A., on
June 10, 2009, and the prior facility agreement was terminated. The credit agreement provides us with a secured
revolving credit facility until September 1, 2011 of up to $25.0 million. The secured revolving credit facility
provides for the issuance of a standby letter of credit in an amount not to exceed $5.0 million outstanding at any
time and with a term not to exceed 365 days. The commercial line of credit provides for the issuance of a
commercial letter of credit in an amount not to exceed $10.0 million and with terms not to exceed 120 days. The
amount of borrowings available at any time under our secured revolving credit facility is reduced by the amount
of standby and commercial letters of credit outstanding at that time. There were no outstanding borrowings under
the secured revolving credit facility at January 29, 2011 or January 30, 2010. We had open commercial letters of
credit outstanding under our secured revolving credit facility of $0.5 million and $0.6 million at January 29, 2011
and January 30, 2010. The secured revolving credit facility bears interest at the Daily One Month LIBOR rate
plus 1.00%. The credit agreement contains a number of restrictions and covenants that generally limit our ability
to, among other things, (1) incur additional debt, (2) undergo a change in ownership and (3) enter into certain
transactions. The credit agreement also contains financial covenants that require us to meet certain specified
financial tests and ratios, including, a maximum net loss not to exceed $10.0 million after taxes on a trailing four-
quarter basis provided, that, there shall be added to net income all charges for impairment of goodwill and store
assets not to exceed $5.0 million in aggregate, and a minimum quick ratio of 1.25. The quick ratio is defined as
our cash and near cash equivalents plus certain defined receivables divided by the outstanding borrowings. All of
our personal property, including, among other things, our inventory, equipment and fixtures, has been pledged to
secure our obligations under the credit agreement. We must also provide financial information and statements to
our lender. We were in compliance with all such covenants at January 29, 2011.

Capital Expenditures

Our capital requirements include construction and fixture costs related to the opening of new stores and
remodeling expenditures for existing stores. Future capital requirements will depend on many factors, including
the pace of new store openings, the availability of suitable locations for new stores and the nature of
arrangements negotiated with landlords. In that regard, our net investment to open a new store has varied
significantly in the past due to a number of factors, including the geographic location and size of the new store,
and is likely to vary significantly in the future.

During fiscal 2010, we spent $29.4 million on capital expenditures, related to investment in 27 new stores

and 3 remodeled stores at a cost of $10.0 million, the acquisition and build-out costs of our new distribution
center in Corona, California of $12.9 million, the acquisition costs of $3.2 million for land in Lynnwood,
Washington, which we plan to use as the location of our new home office and $3.3 million in information
technology projects and other improvements.

During fiscal 2009, we spent $16.6 million on capital expenditures, related to investment in 36 new stores
and 7 remodeled stores at a cost of $14.8 million and $1.8 million in information technology projects and other
improvements.

During fiscal 2008, we spent $28.3 million on capital expenditures, related to investment in 58 new stores
and 8 remodeled stores at a cost of $27.1 million and $1.2 million in information technology projects and other
improvements.

In upcoming fiscal 2011, we expect to spend approximately $32 million to $34 million on capital
expenditures, a majority of which will relate to leasehold improvements and fixtures for the 44 new stores we
plan to open in fiscal 2011 and construction of our new home office building in Lynnwood, Washington. There
can be no assurance that the number of stores that we actually open in fiscal 2011 will not be different from the
number of stores we plan to open, or that actual fiscal 2011 capital expenditures will not differ from this expected
amount.

Contractual Obligations and Commercial Commitments

There were no material changes outside the ordinary course of business in our contractual obligations during
the fiscal year ended January 29, 2011. The following table summarizes the total amount of future payments due
under our contractual obligations at January 29, 2011 (in thousands):

Total

Fiscal
2011

Fiscal 2012 and
Fiscal 2013

Fiscal 2014 and
Fiscal 2015

Operating Lease Obligations
Purchase Obligations . . . . .

$347,801
76,474

$ 46,721
76,474

$93,763

—

$87,304

—

Thereafter

$120,013

—

Total

. . . . . . . . . . . . . . . . . .

$424,275

$123,195

$93,763

$87,304

$120,013

We occupy our retail stores and combined home office and ecommerce fulfillment center under operating

leases generally with terms of five to ten years. At January 29, 2011, we were committed to property owners for
operating lease obligations for $347.8 million. A majority of our leases provide for ongoing co-tenancy
requirements or early cancellation clauses that would further lower rental rates, or permit lease terminations, or
both, in the event that co-tenants cease to operate for specific periods or if certain sales levels are not met in
specific periods. Most of the store leases require payment of a specified minimum rent and a contingent rent
based on a percentage of the store’s net sales in excess of a specified threshold. Amounts in the above table do
not include percentage rent, common area maintenance charges or real estate taxes unless these costs are fixed
and determinable.

At January 29, 2011, we had outstanding purchase orders to acquire merchandise from vendors for $76.5

million, including $0.5 million of letters of credit outstanding. We have an option to cancel these commitments
with no notice prior to shipment, except for private label purchase orders in which we are obligated to repay
certain contractual amounts upon cancellation.

Off-Balance Sheet Obligations

We did not have any off-balance sheet arrangements at January 29, 2011.

Impact of Inflation

We do not believe that inflation has had a material impact on our net sales or operating results for the past

three fiscal years. There can be no assurance that our business will not be affected by inflation in the future.

Quantitative and Qualitative Disclosures About Market Risk

See discussion in Item 7A—”Quantitative and Qualitative Disclosures About Market Risk.”

Recent Accounting Pronouncements

See Item 15 of Part IV, “Exhibits and Consolidated Financial Statements—Note 2 Summary of Significant

Accounting Policies—Recent Accounting Pronouncements.”

Risk Factors, Issues and Uncertainties

Please refer to the information set forth under Item 1A, “Risk Factors,” above for a discussion of risk

factors, issues and uncertainties that our business faces.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are susceptible to market value fluctuations with regard to our short-term investments. However, due to

the relatively short maturity period of those investments and our intention and ability to hold those investments
until maturity, the risk of material market value fluctuations is not expected to be significant.

During different times of the year, due to the seasonality of our business, we may borrow under our
revolving credit facility. To the extent we borrow under our revolving credit facility, which bears interest at the
Daily One Month LIBOR rate plus 1.00%, we are exposed to market risk related to changes in interest rates. At
January 29, 2011, we had no borrowings outstanding under our secured revolving credit facility. At January 29,
2011, we had $0.5 million of open commercial letters of credit outstanding under our secured revolving credit
facility. We are not a party to any derivative financial instruments. Fluctuations in interest rates did not have a
material effect on the results of operations in fiscal 2010.

Interest Rate Risk

Our earnings are affected by changes in market interest rates as a result of our short-term and long-term

investments, which are primarily invested in state and local municipal securities, U.S. Treasury securities, U.S.
Agency securities and variable-rate demand notes, which have long-term nominal maturity dates but feature
variable interest rates that reset at short-term intervals. If our current portfolio average yield rate decreased by
10% in fiscal 2010, our net income would have decreased by $0.1 million. Our current expectation is that our
investment yields will remain low in 2011 due to historically low interest rates. This amount is determined by
considering the impact of the hypothetical yield rates on our cash, cash equivalents, short-term and long-term
investment balances. This analysis does not consider the effects of the reduced level of overall investments that
could happen in such an environment. Further, in the event of a change of such magnitude, management would
likely take actions to further mitigate its exposure to the change. However, due to the uncertainty of the specific
actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in our
investments structure.

Item 8.

CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information with respect to this item is set forth in “Index to the Consolidated Financial Statements,” under

“Part IV, Item 15” of this report.

Item 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

Item 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. We carried out an evaluation, under the supervision and

with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial
Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (as
defined in Securities Exchange Act Rule 13a-15(e)). Based on this evaluation, our CEO and CFO concluded that,
as of January 29, 2011 our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting. There has been no change in our internal control

over financial reporting (as defined in Securities Exchange Act Rule 13a-15(f)) during the quarter ended
January 29, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting. The effectiveness of Zumiez Inc. internal control over financial reporting as of January 29,
2011 has been audited by Moss Adams LLP, the Company’s independent registered public accounting firm, as
stated in their report, which appears herein.

Management’s Report on Internal Control Over Financial Reporting is included in this Form 10-K under

Part IV, Item 15, “Exhibits and Consolidated Financial Statements.”

Item 9B. OTHER INFORMATION

None.

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information regarding our directors and nominees for directorship is presented under the headings “Election

of Directors,” in our definitive proxy statement for use in connection with our 2011 Annual Meeting of
Shareholders (the “Proxy Statement”) that will be filed within 120 days after our fiscal year ended January 29,
2011 and is incorporated herein by this reference thereto. Information concerning our executive officers is set
forth under the heading “Executive Officers” in our Proxy Statement, and is incorporated herein by reference
thereto. Information regarding compliance with Section 16(a) of the Exchange Act, our code of conduct and
ethics and certain information related to the Company’s Audit Committee and Governance Committee is set forth
under the heading “Corporate Governance” in our Proxy Statement, and is incorporated herein by reference
thereto.

Item 11.

EXECUTIVE COMPENSATION

Information regarding the compensation of our directors and executive officers and certain information
related to the Company’s Compensation Committee is set forth under the headings “Executive Compensation,”
“Director Compensation,” “Compensation Discussion and Analysis,” “Report of the Compensation Committee of
the Board of Directors” and “Compensation Committee Interlocks and Insider Participation” in our Proxy
Statement, and is incorporated herein by this reference thereto.

Item 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, AND MANAGEMENT
AND RELATED SHAREHOLDER MATTERS

Information with respect to security ownership of certain beneficial owners and management is set forth

under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity
Compensation Plan Information” in our Proxy Statement, and is incorporated herein by this reference thereto.

Item 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE

Information regarding certain relationships and related transactions and director independence is presented
under the heading “Corporate Governance” in our Proxy Statement, and is incorporated herein by this reference
thereto.

Item 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information concerning principal accounting fees and services is presented under the heading “Fees Paid to
Independent Registered Public Accounting Firm for Fiscal Years 2010 and 2009” in our Proxy Statement, and is
incorporated herein by this reference thereto.

PART IV

Item 15.

EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENTS

(a)(1) Consolidated Financial Statements:

1. Management’s Annual Report on Internal Control Over Financial Reporting.

2. Report of Independent Registered Public Accounting Firm on Internal Control over Financial

Reporting.

Index to Consolidated Financial Statements.

4. Consolidated Financial Statements.

(2) Consolidated Financial Statement Schedules:

All financial statement schedules are omitted because the required information is presented either in the
consolidated financial statements or notes thereto, or is not applicable, required or material.

(3) Exhibits included or incorporated herein:

See Exhibit Index.

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Zumiez Inc. (the “Company”) is responsible for establishing and maintaining adequate

internal control over financial reporting, as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934.
The Company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles.

This process includes policies and procedures that: (i) pertain to the maintenance of records that, in

reasonable detail, accurately and fairly reflect the transactions of the Company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the Company are being made only
in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
Company’s assets that could have a material effect on the financial statements. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements, and can provide
only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, because
of changes in conditions, the effectiveness of internal control may vary over time.

The Company’s management, with the participation of the Chief Executive Officer and Chief Financial

Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of January 29,
2011. Management’s assessment was based on criteria described in the Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on that
assessment, the Company’s management concluded that the Company’s internal control over financial reporting
was effective as of January 29, 2011.

The effectiveness of Zumiez Inc. internal control over financial reporting as of January 29, 2011 has been
audited by Moss Adams LLP, the Company’s independent registered public accounting firm, as stated in their
report, which appears herein.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant

has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

ZUMIEZ INC.
/S/ RICHARD M. BROOKS

Signature
By: Richard M. Brooks Chief Executive Officer

and Director (Principal Executive Officer)

/s/ TREVOR S. LANG

Signature
By: Trevor S. Lang, Chief Financial Officer,

Chief Administrative Officer and Secretary
(Principal Financial Officer and Principal
Accounting Officer)

3/15/11

Date

3/15/11

Date

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the

following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/S/ THOMAS D. CAMPION

Signature
Thomas D. Campion, Chairman

/S/ MATTHEW L. HYDE

Signature
Matthew L. Hyde, Director

/S/ GERALD F. RYLES

Signature
Gerald F. Ryles, Director

3/15/11

Date

3/15/11

Date

3/15/11

Date

/S/ WILLIAM M. BARNUM, JR.

Signature
William M. Barnum, Jr., Director

/S/ JAMES M. WEBER

Signature
James M. Weber, Director

/S/ SARAH G. MCCOY

Signature
Sarah G. McCoy, Director

3/15/11

Date

3/15/11

Date

3/15/11

Date

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Zumiez Inc.

We have audited Zumiez Inc.’s (the “Company”) internal control over financial reporting as of January 29, 2011,
based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. The Company’s management is responsible for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control
over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over
Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

In our opinion, Zumiez Inc. maintained, in all material respects, effective internal control over financial reporting
as of January 29, 2011, based on criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of Zumiez Inc. as of January 29, 2011 and January 30, 2010, and
the consolidated statements of operations, changes in shareholders’ equity, and cash flows for the three fiscal
years in the period ended January 29, 2011, and our report dated March 15, 2011 expressed an unqualified
opinion on those consolidated financial statements.

/s/ Moss Adams LLP

Seattle, Washington
March 15, 2011

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

47
48
49
50
51
52

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Zumiez Inc.

We have audited the accompanying consolidated balance sheets of Zumiez Inc. (the “Company”) as of
January 29, 2011 and January 30, 2010, and the related consolidated statements of operations, changes in
shareholders’ equity and cash flows for each of the three fiscal years in the period ended January 29, 2011. These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the auditing standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall consolidated financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
consolidated financial position of Zumiez Inc. as of January 29, 2011 and January 30, 2010 and the consolidated
results of its operations and its cash flows for each of the three fiscal years in the period ended January 29, 2011,
in conformity with generally accepted accounting principles in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), Zumiez Inc.’s internal control over financial reporting as of January 29, 2011 based on criteria
established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission and our report dated March 15, 2011 expressed an unqualified opinion thereon.

/s/ Moss Adams LLP

Seattle, Washington
March 15, 2011

ZUMIEZ INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)

January 29,
2011

January 30,
2010

Assets

Current assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 11,357
117,444
6,129
56,303
7,210
2,418

1,568
106,483
5,600
50,916
6,102
3,045

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

200,861

173,714

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assets, net
Goodwill and other intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

78,248
13,154
5,703
2,766
899

Total long-term assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100,770

66,008
13,186
5,537
872
948

86,551

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$301,631

$260,265

Liabilities and Shareholders’ Equity

Current liabilities
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued payroll and payroll taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred rent and tenant allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term deferred rent and tenant allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 16,371
7,580
4,108
3,719
13,683

$ 16,817
6,593
4,006
3,248
9,123

45,461
27,629
1,806

29,435

74,896

39,787
26,375
1,427

27,802

67,589

Commitments and contingencies (Note 9)

Shareholders’ equity
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding . . .
Common stock, no par value, 50,000 shares authorized; 30,835 shares issued and
outstanding at January 29, 2011 and 30,251 shares issued and outstanding at
January 30, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

91,373
(17)
135,379

81,399
101
111,176

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

226,735

192,676

Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$301,631

$260,265

See accompanying notes to consolidated financial statements

ZUMIEZ INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

January 29,
2011

Fiscal Year Ended
January 30,
2010

January 31,
2009

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$478,849
308,452

$407,603
272,865

$408,669
274,134

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

170,397

134,738

134,535

Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . .

133,030

122,003

109,927

Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

37,367

12,735

24,608

Interest income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (expense) income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,496
(8)

1,176
96

2,059
36

Earnings before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

38,855

14,007

26,703

Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14,652

4,876

9,499

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 24,203

Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.81

0.79

Weighted average shares used in computation of earnings per share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29,971

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30,794

9,131

$ 17,204

0.31

0.30

0.59

0.58

29,499

30,133

29,127

29,694

See accompanying notes to consolidated financial statements

ZUMIEZ INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands)

Balance at February 2, 2008 . . . . . . . . . . . . . . . . . .

29,003

$69,297

$ 464

$ 84,841

$154,602

Common Stock

Accumulated
Other
Comprehensive

Retained

Amount

Income (Loss)

Earnings

Total

—

17,204

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in unrealized loss on available-for-sale

investments, net of tax of $213 . . . . . . . . . . . . . . .

—

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . .

Issuance and exercise of stock-based compensation,
including tax benefit of $1,173 . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . .

530
—

2,102
4,390

Balance at January 31, 2009 . . . . . . . . . . . . . . . . . .

29,533

75,789

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in unrealized loss on available-for-sale

investments, net of tax of $7 . . . . . . . . . . . . . . . . .

—

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . .

Issuance and exercise of stock-based compensation,
including tax benefit of $707 . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . .

718
—

1,461
4,149

Balance at January 30, 2010 . . . . . . . . . . . . . . . . . .

30,251

81,399

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in unrealized loss on available-for-sale

investments, net of tax of $76 . . . . . . . . . . . . . . . .

—

(347)

—
—

117

—

(16)

—
—

101

—

(118)

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . .

Issuance and exercise of stock-based compensation,
including tax benefit of $3,248 . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . .

584
—

5,108
4,866

—
—

—

—
—

(347)

16,857

2,102
4,390

102,045

177,951

9,131

—

—
—

(16)

9,115

1,461
4,149

111,176

192,676

24,203

—

—
—

(118)

24,085

5,108
4,866

Balance at January 29, 2011 . . . . . . . . . . . . . . . . . .

30,835

91,373

(17)

135,379

226,735

See accompanying notes to consolidated financial statements

ZUMIEZ INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

January 29,
2011

Fiscal Year Ended
January 30,
2010

January 31,
2009

Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, amortization and accretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefit from stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities:

Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued payroll and payroll taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred rent and tenant allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 24,203

9,131

$ 17,204

17,923
537
4,866
283
(3,248)
105
70

(92)
(5,387)
(1,137)
(446)
987
3,350
1,838
4,840

22,092
(4,886)
4,149
141
(707)
2,538
(36)

(319)
1,058
(656)
908
1,854
4,475
3,917
1,457

19,470
(1,221)
4,390
271
(1,173)
812
(36)

220
(3,253)
(1,174)
(3,763)
(358)
1,364
6,814
(1,230)

Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

48,692

45,116

38,337

Cash flows from investing activities:
Additions to fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of marketable securities and other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales and maturities of marketable securities and other investments . . . . . . . . . . . . . . . . . . . . . .

(29,361)
(179,611)
164,961

(16,548)
(128,963)
67,446

Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(44,011)

(78,065)

Cash flows from financing activities:
Change in book overdraft
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from exercise of stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefit from stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
1,860
3,248

5,108

9,789
1,568

—
753
707

1,460

(31,489)
33,057

(28,349)
(82,607)
99,013

(11,943)

(7,384)
929
1,173

(5,282)

21,112
11,945

Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 11,357

Supplemental disclosure on cash flow information:
Cash paid during the period for interest
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid during the period for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash investing activity—refundable use tax in fixed assets . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash investing activity—asset retirement obligations in fixed assets . . . . . . . . . . . . . . . . . .

54
10,789
359
129

1,568

$ 33,057

10
5,288
(1,506)
1,095

10
9,422
—
—

See accompanying notes to consolidated financial statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Basis of Presentation

Nature of Business—Zumiez Inc. (the “Company,” “we,” “us,” “its” and “our”) is a leading specialty
retailer of action sports related apparel, footwear, equipment and accessories operating under the Zumiez brand
name. At January 29, 2011, we operated 400 stores primarily located in shopping malls, giving us a presence in
37 states. Our stores cater to young men and women between the ages of 12 and 24 who seek popular brands
representing a lifestyle centered on activities that include skateboarding, surfing, snowboarding, bicycle
motocross (or “BMX”) and motocross. We support the action sports lifestyle and promote our brand through a
multi-faceted marketing approach that is designed to integrate our brand image with our customers’ activities and
interests. In addition, we operate a website that sells merchandise online and provides content and a community
for our target customers. The Company was formed in August 1978, its home office and ecommerce fulfillment
center are located in Everett, Washington and its distribution center is located in Corona, California. The
Company operates within one reportable segment. We account for our business operation as one reportable
segment based on the similar nature of products sold, production, merchandising and distribution processes
involved, target customers and economic characteristics.

Fiscal Year—We use a fiscal calendar widely used by the retail industry that results in a fiscal year
consisting of a 52- or 53-week period ending on the Saturday closest to January 31. Each fiscal year consists of
four 13-week quarters, with an extra week added to the fourth quarter every five or six years. Fiscal 2010 was the
52-week period ending January 29, 2011. Fiscal 2009 was the 52-week period ended January 30, 2010. Fiscal
2008 was the 52-week period ended January 31, 2009.

Basis of Presentation—The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of America (“GAAP”). The
consolidated financial statements include the accounts of Zumiez Inc. and its wholly-owned subsidiaries. All
significant intercompany transactions and balances are eliminated in consolidation.

Reclassification of Previously Issued Financial Statements—Certain prior period amounts have been

reclassified to conform to the current period presentation. These reclassifications do not have a material impact
on our consolidated financial statements. We have reclassified $21.4 million on the consolidated balance sheet at
January 30, 2010 from cash equivalents to short-term marketable securities related to variable-rate demand notes
and municipal bonds, which have an embedded put option that allows the bondholder to sell the security at par
plus accrued interest. While these reclassified securities are considered highly liquid, we believe they are more
appropriately classified as short-term marketable securities. This reclassification increased net cash used in
investing activities by $21.4 million on the consolidated statements of cash flows for the fiscal year ended
January 30, 2010. We have also reclassified $0.9 million on the consolidated balance sheets at January 30, 2010
related to long-term assets from receivables and prepaid expenses and other to long-term other assets. There was
no impact on the consolidated statements of cash flows from this reclassification.

2. Summary of Significant Accounting Policies

Use of Estimates—The preparation of financial statements in conformity with GAAP requires estimates

and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the consolidated financial statements as well as the reported amounts of revenues and
expenses during the reporting period. These estimates can also affect supplemental information disclosed by us,
including information about contingencies, risk and financial condition. Actual results could differ from these
estimates and assumptions.

Fair Value of Financial Instruments—We disclose the estimated fair value of certain assets and liabilities
as financial instruments. Financial instruments are generally defined as cash, evidence of ownership interest in an

entity or a contractual obligation that both conveys to one entity a right to receive cash or other financial
instruments from another entity and imposes on the other entity the obligation to deliver cash or other financial
instruments to the first entity. Our financial instruments, other than those presented in “Note 10. Fair Value
Measurements,” include cash and cash equivalents, receivables, payables and other liabilities. The carrying
amounts of cash and cash equivalents, receivables, payables and other liabilities approximate fair value because
of the short-term nature of these instruments.

Cash and Cash Equivalents—We consider all highly liquid investments with original maturity of three

months or less when purchased to be cash equivalents.

Concentration of Risk—We maintain our cash and cash equivalents in accounts with major financial

institutions, in the form of demand deposits, money market accounts and state and local municipal securities.
Deposits in these financial institutions may exceed the amount of federal deposit insurance provided on such
deposits. We have not experienced any losses on our deposits of cash and cash equivalents.

Marketable Securities—At January 29, 2011 and January 30, 2010, marketable securities, classified as

available-for-sale, were $118.3 million and $107.4 million, and consisted primarily of state and local municipal
securities, U.S. Treasury securities, U.S. Agency securities and variable-rate demand notes with original
maturities over 90 days. Variable-rate demand notes are considered highly liquid. Although the variable-rate
demand notes have long-term nominal maturity dates, the interest rates generally reset weekly. Despite the long-
term nature of the underlying securities of the variable-rate demand notes, we have the ability to quickly liquidate
these securities, which have an embedded put option that allows the bondholder to sell the security at par plus
accrued interest.

Generally accepted accounting principles require recording an investment impairment charge at the point we
believe an investment has experienced a decline in value that is other-than-temporary. In determining whether an
other-than-temporary impairment has occurred, we review information about the underlying investment that is
publicly available such as analyst reports, applicable industry data and other pertinent information and assess our
intent to hold the security and whether it is more likely than not we will be required to sell any investment before
recovery of its amortized cost basis. The investment would be written down to its current market value at the
time the impairment is deemed to have occurred. Future adverse changes in market conditions, continued poor
operating results of underlying investments or other factors could result in further losses that may not be reflected
in an investment’s current carrying value, possibly requiring an additional impairment charge in the future.

Inventories— Merchandise inventories are valued at the lower of cost or market. The cost of merchandise
inventories are based upon an average cost methodology. Merchandise inventories may include items that have
been written down to our best estimate of their net realizable value. Our decisions to write-down our merchandise
inventories are based on their current rate of sale, the age of the inventory, the profitability of the inventory and
other factors. Actual final sales prices to customers may be higher or lower than our estimated sales prices and
could result in a fluctuation in gross profit. Historically, any additional write-downs have not been significant.
We have reserved for inventory at January 29, 2011 and January 30, 2010 in the amounts of $3.2 million and
$2.8 million. The inventory reserve includes inventory whose estimated market value is below cost and an
estimate for inventory shrinkage. We estimate an inventory shrinkage reserve for anticipated losses for the
period. Shrinkage refers to a reduction in inventory due to shoplifting, employee theft and other matters. The
inventory related to these reserves is not marked up in subsequent periods.

Fixed Assets—Fixed assets primarily consist of land, buildings, leasehold improvements, fixtures,

computer equipment, software and store equipment. Fixed assets are stated at cost less accumulated depreciation
utilizing the straight-line method over the assets’ estimated useful lives. The useful lives of our major classes of
fixed assets are as follows:

Leasehold improvements
Fixtures
Computer equipment, software, store equipment & other
Buildings and improvements

Lesser of 10 years or the term of the lease
3 to 7 years
3 to 5 years
15 to 39 years

The cost and related accumulated depreciation of assets sold or otherwise disposed of is removed from the

accounts and the related gain or loss is reported in the consolidated statements of operations.

In accordance with our fixed asset policy, we review the estimated useful lives of our fixed assets on an

ongoing basis. This review indicated that the actual lives of leasehold improvements were longer than the
estimated useful lives used for depreciation purposes in our consolidated financial statements. As a result,
effective January 31, 2010, we changed our estimate of the useful lives of our leasehold improvements to the
lesser of 10 years or the term of the lease to better reflect the estimated periods during which these assets will
remain in service. The useful lives of leasehold improvements were previously estimated to be the lesser of 7
years or the term of the lease. For the fiscal year ended January 29, 2011, the effect of this change in estimate
was to reduce depreciation expense by $4.2 million, increase net income by $2.7 million and increase basic and
diluted earnings per share by $0.09.

Asset Retirement Obligations— An asset retirement obligation (ARO) represents a legal obligation
associated with the retirement of a tangible long-lived asset that is incurred upon the acquisition, construction,
development or normal operation of that long-lived asset. Our AROs are primarily associated with leasehold
improvements that, at the end of a lease, we are contractually obligated to remove in order to comply with certain
lease agreements. The ARO is recorded in other liabilities and long-term other liabilities on the consolidated
balance sheets and will be subsequently adjusted for changes in fair value. The associated estimated asset
retirement costs are capitalized as part of the carrying amount of the long-lived asset and depreciated over its
useful life.

Valuation of Long-Lived Assets—We review the carrying value of long-lived assets for impairment
annually, or as indicators of impairment are present. Measurement of the impairment loss is based on the fair
value of the asset or group of assets. Generally, fair value will be determined using accepted valuation
techniques, such as the present value of expected future cash flows. During the fiscal year ended January 29,
2011, two stores were determined to be impaired, resulting in a non-cash impairment charge of $0.1 million.
During the fiscal year ended January 30, 2010, 21 stores were determined to be impaired, resulting in a non-cash
impairment charge of $2.5 million. These non-cash impairment charges are included in selling, general and
administrative expenses.

Goodwill and Other Intangible Assets—We evaluate the recoverability of goodwill annually based on a
two-step impairment test. The first step compares the fair value of the reporting unit with its carrying amount,
including goodwill. If the carrying amount exceeds fair value, then the second step of the impairment test is
performed to measure the amount of any impairment loss. Additional impairment assessments may be performed
on an interim basis if we encounter events or changes in circumstances that would indicate that, more likely than
not, the carrying amount of goodwill has been impaired.

Equity Method Investments—We hold a 14.3% interest in a manufacturer of apparel and hard goods,
which we acquired for $2.0 million on May 11, 2010. We have elected to apply fair value accounting for this
investment, which would otherwise be accounted for under the equity method of accounting. We have elected
fair value accounting, as we believe the terms of the contract are more properly reflected through the fair value

method. The investment balance is reported in long-term investments on the consolidated balance sheets, with
the corresponding changes in the fair value recorded in other income (expense), net on the consolidated
statements of operations.

The investment agreement allows for a put option, where Zumiez has an option to sell its interest back to the

investee for the greater of the initial purchase price of $2.0 million or the fair value of the investment. This put
option is allowed any time following the fifth anniversary of the initial investment, but prior to the seventh
anniversary of the initial investment. Additionally, the investment agreement allows for a call option, where the
investee has an option to repurchase the interest from Zumiez for the fair value of the investment. This call
option is allowed any time on or after the seventh anniversary of the initial investment. We have elected to apply
fair value accounting for the put and call options. The put option has a nominal value and the call option has no
fair value, given that the investment would be repurchased at its fair value if the call option were exercised.

Deferred Rent, Rent Expense and Tenant Allowances—We occupy our retail stores and combined home

office and ecommerce fulfillment center under operating leases generally with terms of five to ten years. A
majority of our leases provide for ongoing co-tenancy requirements or early cancellation clauses that would
further lower rental rates, or permit lease terminations, or both, in the event that co-tenants cease to operate for
specific periods or if certain sales levels are not met in specific periods. Most of the store leases require payment
of a specified minimum rent and a contingent rent based on a percentage of the store’s net sales in excess of a
specified threshold. Most of the lease agreements have defined escalating rent provisions, which are straight-
lined over the term of the related lease, including any lease renewals deemed to be probable. We recognize rent
expense over the term of the lease, plus the construction period prior to occupancy of the retail location. For
certain locations, we receive tenant allowances and report these amounts as a liability, which is amortized to rent
expense over the term of the lease.

Claims and Contingencies—We are subject to various claims and contingencies related to lawsuits,
insurance, regulatory and other matters arising out of the normal course of business. We accrue a liability if the
likelihood of an adverse outcome is probable and the amount is estimable. If the likelihood of an adverse
outcome is only reasonably possible (as opposed to probable), or if an estimate is not determinable, we provide
disclosure of a material claim or contingency in the Notes to the Consolidated Financial Statements.

Revenue Recognition—Sales are recognized upon purchase at our retail store locations. For orders placed

through our website, revenue is recognized upon estimated delivery to the customer. Taxes collected from our
customers are recorded on a net basis. We record the sale of gift cards as a current liability and recognize revenue
when a customer redeems a gift card. The amount of the gift card liability is determined taking into account our
estimate of the portion of gift cards that will not be redeemed or recovered (“gift card breakage”). Gift card
breakage is recognized as revenue after 24 months, at which time the likelihood of redemption is considered
remote based on our historical redemption data. We report shipping revenues within net sales. Revenue is
recorded net of estimated and actual sales returns and deductions for promotions. We accrue for estimated sales
returns by customers based on historical sales return results. The allowance for sales returns at January 29, 2011
and January 30, 2010 was $0.7 million and $0.3 million. The Company offers a return policy of 30 days.

We present our net sales by category as a percentage of net sales in the following table. “Accessories and
Other” includes all other merchandise (e.g., hardgoods, accessories, footwear, etc.). The percentage of net sales
for the fiscal years ended January 29, 2011, January 30, 2010 and January 31, 2009 was as follows:

Fiscal Year Ended

January 29, 2011

January 30, 2010

January 31, 2009

Men’s Apparel . . . . . . . . . . . . . . . . . . .
Junior’s Apparel
. . . . . . . . . . . . . . . . .
Accessories and Other . . . . . . . . . . . . .

32.5%
10.1%
57.4%

Total

. . . . . . . . . . . . . . . . . . . . . .

100.0%

31.2%
11.2%
57.6%

100.0%

30.6%
14.2%
55.2%

100.0%

Cost of Goods Sold—Cost of goods sold consists of branded merchandise costs and our private label
merchandise costs including design, sourcing, importing and inbound freight costs. Our cost of goods sold also
includes shrinkage and buying, occupancy, distribution and warehousing costs. This may not be comparable to
the way in which our competitors or other retailers compute their cost of goods sold. We receive cash
consideration from vendors, which have been recorded as a reduction of cost of goods sold if the inventory has
sold, as a reduction of the carrying value of the inventory if the inventory is still on hand, or a reduction of
selling, general and administrative expense if the amounts are reimbursements of specific, incremental and
identifiable costs of selling the vendors’ products.

With respect to the freight component of our ecommerce sales, we arrange and pay the freight for our
customers and bill them for this service, unless our customers have their product shipped to one of our stores or
we have free shipping promotions to our customers, in which case we do not bill our customers. Such amounts
billed are included in net sales and the related freight cost is charged to cost of goods sold. For fiscal years ended
January 29, 2011, January 30, 2010 and January 31, 2009, we incurred shipping costs related to ecommerce sales
of $2.6 million, $1.2 million and $0.8 million.

Selling, General and Administrative Expense—Selling, general and administrative expenses consist
primarily of store personnel wages and benefits, administrative staff and infrastructure expenses, outbound
freight, store supplies, depreciation on fixed assets at the home office and stores, facility expenses and training,
advertising and marketing costs. Credit card fees, insurance, public company expenses, legal expenses and other
miscellaneous operating costs are also included in selling, general and administrative expenses. This may not be
comparable to the way in which our competitors or other retailers compute their selling, general and
administrative expenses.

Advertising—We expense advertising costs as incurred. Advertising expenses are net of sponsorships and
vendor reimbursements. Advertising expense was $1.3 million, $0.8 million and $0.8 million for the fiscal years
ended January 29, 2011, January 30, 2010, and January 31, 2009.

Stock-Based Compensation—We account for stock-based compensation by which the estimated fair value

of stock-based awards granted is recognized as compensation expense over the vesting period, net of estimated
forfeitures. Stock-based compensation expense is recognized using an accelerated method for stock options and a
straight-line basis for restricted stock. We estimate forfeitures of stock-based awards based on historical
experience and expected future activity.

The fair value of restricted stock awards is measured based on the closing fair market value of the

Company’s common stock on the date of grant. The fair value of stock option grants are estimated on the date of
grant using the Black-Scholes option pricing method based on the following subjective assumptions:

Volatility—This is a measure of the amount by which a stock price has fluctuated or is expected to fluctuate.
We use actual daily historical changes in the market value of our stock since becoming a public company in
May 2005. An increase in the expected volatility will increase compensation expense.

Risk-free interest rate—This is the U.S. Treasury rate as of the grant date having a term equal to the
expected term of the option. An increase in the risk-free interest rate will increase compensation expense.

Expected term—The expected term was calculated using the simplified method outlined by SEC Staff
Accounting Bulletin No. 107, Share-Based Payment (SAB 107). Under this method, the expected term is
equal to the sum of the weighted average vesting term plus the original contractual term divided by two. We
have elected this method as we have concluded that we do not have sufficient historical exercise data to
provide a reasonable basis upon which to estimate expected term due to the limited period of time our equity
shares have been publicly traded.

Dividend yield—We do not have plans to pay dividends in the foreseeable future. An increase in the
dividend yield will decrease compensation expense.

The following weighted-average assumptions were used for stock option grants issued during the fiscal

years ended January 29, 2011, January 30, 2010 and January 31, 2009:

Fiscal Year Ended

January 29, 2011

January 30, 2010

January 31, 2009

Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volatility rate . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expected life (in years):

Expected lives—four years . . . . . . . . . . . . .
Expected lives—five years . . . . . . . . . . . . .
Expected lives—eight years . . . . . . . . . . . .
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . .

0.0%
67.5%

6.50
6.50
—
2.4%

0.0%
66.8%

6.25
6.50
—
1.7%

0.0%
55.4%

6.25
6.50
7.25
2.8%

Income Taxes—Deferred income tax balances reflect the effects of temporary differences between the
carrying amounts of assets and liabilities and their respective tax bases. Valuation allowances may be established
when necessary to reduce deferred tax assets to the amount expected to be realized. We did not have a valuation
allowance recorded at January 29, 2011, January 30, 2010 and January 31, 2009.

We recognize tax benefits from an uncertain position only if it is “more likely than not” that the position is

sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount of tax
benefit that is greater than fifty percent likely of being realized upon ultimate settlement with a taxing authority
having full knowledge of all relevant information. Interest and penalties related to uncertain tax positions may be
classified in the financial statements as either income taxes or interest and another expense classification. The
Company has elected to classify interest and penalties related to uncertain tax positions as income tax expense.
We did not have unrealized tax benefits related to uncertain tax positions recorded at January 29,
2011, January 30, 2010 and January 31, 2009.

Earnings per Share—Basic earnings per share is based on the weighted average number of common shares

outstanding during the period. The dilutive effect of stock options and restricted stock is applicable only in
periods of net income. Diluted earnings per share is based on the weighted average number of common shares
and common share equivalent outstanding during the period. Common share equivalents included in the
computation represent shares issuable upon assumed exercise of outstanding stock options, employee stock
purchase plan funds held to acquire stock and non-vested restricted stock. Potentially anti-dilutive securities not
included in the calculation of diluted earnings per share are options to purchase common stock where the option
exercise price is greater than the average market price of the Company’s common stock during the period
reported.

Recent Accounting Pronouncements—In June 2009, the Financial Accounting Standards Board (“FASB”)

issued guidance on the consolidation of variable interest entities. The guidance requires a revised approach to
identifying a controlling financial interest in a variable interest entity and requires additional disclosures about an
entity’s involvement in variable interest entities. The guidance is effective for interim and annual reporting
periods beginning after November 15, 2009. We adopted the new requirements in the three months ended May 1,
2010. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In January 2010, the FASB issued guidance that requires reporting entities to make new disclosures about fair
value measurements including significant transfers into and out of Level 1 and Level 2 fair value measurements and
information on purchases, sales, issuances and settlements on a gross basis in the reconciliation of Level 3 fair value
measurements. In addition, the guidance clarifies certain existing disclosure requirements. This guidance is effective
for interim and annual reporting periods beginning after December 15, 2009, except for the additional Level 3
reconciliation disclosures, which are effective for interim and annual reporting periods beginning after
December 15, 2010. We adopted the new requirements in the three months ended May 1, 2010. The adoption of this
guidance did not have a material impact on our consolidated financial statements.

In February 2010, the FASB issued amended guidance on subsequent events. Under this amended guidance,

SEC filers are no longer required to disclose the date through which subsequent events have been evaluated in
originally issued and revised financial statements. This guidance was effective immediately and we adopted these
new requirements in the three months ended May 1, 2010.

In July 2010, the FASB issued guidance that requires reporting entities to make new disclosures about the
allowance for credit losses and the credit quality of its financing receivables. For disclosures required as of the
end of a reporting period, the guidance is effective for interim and annual reporting periods ending on or after
December 15, 2010. For disclosures required about activity that occurs during a reporting period, the guidance is
effective for interim and annual reporting periods beginning on or after December 15, 2010. We adopted the new
requirements in the three months ended January 29, 2011. The adoption of this guidance did not have a material
impact on our consolidated financial statements.

3. Cash, Cash Equivalents and Marketable Securities

The following tables summarize the estimated fair market value of our cash, cash equivalents and

marketable securities and the gross unrealized holding gains and losses at January 29, 2011 and January 30, 2010
(in thousands):

January 29, 2011

Gross
Unrealized
Holding
Gains

Gross
Unrealized
Holding
Losses

Amortized
Cost

Cash and cash equivalents:

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market funds . . . . . . . . . . . . . . . . . . . .
State and local government securities . . . . . . .

7,160
928
3,269

Total cash and cash equivalents . . . . . . . . . . . . . . .

11,357

Marketable securities:

Treasury and agency securities . . . . . . . . . . . .
State and local government securities . . . . . . .
Variable-rate demand notes . . . . . . . . . . . . . . .

6,043
103,110
9,205

$—
—
—

—

26
125
—

Estimated
Fair Value

7,160
928
3,269

11,357

$ —
—
—

—

—
(195)
—

6,069
103,040
9,205

Total marketable securities . . . . . . . . . . . . . . . . . . .

$118,358

$151

$(195)

$118,314

Less: Long-term marketable securities (1) . . . . . . .

Total current marketable securities . . . . . . . . . . . . .

(870)

$117,444

January 30, 2010

Gross
Unrealized
Holding
Gains

Gross
Unrealized
Holding
Losses

Amortized
Cost

Cash and cash equivalents:

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market funds . . . . . . . . . . . . . . . . . . . .

Total cash and cash equivalents . . . . . . . . . . . . . . .

Marketable securities:

Treasury and agency securities . . . . . . . . . . . .
State and local government securities . . . . . . .
Variable-rate demand notes . . . . . . . . . . . . . . .

1,081
487

1,568

15,268
70,538
21,382

$—
—

—

48
255
—

Estimated
Fair Value

1,081
487

1,568

$ —
—

—

—
(136)
—

15,316
70,657
21,382

Total marketable securities . . . . . . . . . . . . . . . . . . .

$107,188

$303

$(136)

$107,355

Less: Long-term marketable securities (1) . . . . . . .

Total current marketable securities . . . . . . . . . . . . .

(872)

$106,483

(1) At January 29, 2011 and January 30, 2010, we held one $1.0 million par value auction rate security valued

at $0.9 million net of a $0.1 million temporary impairment charge, classified as available-for-sale
marketable securities and included in long-term investments on the consolidated balance sheets.

All of our available-for-sale securities, excluding our auction rate security, have an effective maturity date

of two years or less and may be liquidated, at our discretion, prior to maturity. For the fiscal years ended
January 29, 2011, January 30, 2010 and January 31, 2009, realized gains and losses on sales of available-for-sale
marketable securities were not material. We use the specific identification method to determine any realized
gains or losses from the sale of our marketable securities classified as available-for-sale.

The following tables summarize the gross unrealized holding losses and fair value for investments in an

unrealized loss position at January 29, 2011 and January 30, 2010, and the length of time that individual
securities have been in a continuous loss position (in thousands):

January 29, 2011

Less Than Twelve Months

12 Months or Greater

Total

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Marketable securities:

Treasury and agency securities . . .
State and local government

securities . . . . . . . . . . . . . . . . . .
Variable-rate demand notes . . . . . .

$ —

$—

$ —

42,761
—

(62)
—

1,907
—

(133)
—

44,668
—

(195)
—

Total marketable securities . . . . . . . . . .

$42,761

$ (62)

$1,907

$(133)

$44,668

$(195)

January 30, 2010

Less Than Twelve Months

12 Months or Greater

Total

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Marketable securities:

Treasury and agency securities . . .
State and local government

securities . . . . . . . . . . . . . . . . . .
Variable-rate demand notes . . . . . .

$ —

$—

$ —

8,389
—

(8)

—

872
—

(128)
—

9,261
—

(136)
—

Total marketable securities . . . . . . . . . .

$ 8,389

$ (8)

$ 872

$(128)

$ 9,261

$(136)

We did not record a realized loss for other-than-temporary impairments during the fiscal years ended
January 29, 2011, January 30, 2010 and January 31, 2009. At January 29, 2011 and January 30, 2010, we had
$0.9 million invested, net of temporary impairment charge of $0.1 million, in an auction rate security that is
classified as available-for-sale marketable securities in long-term investments on the consolidated balance sheets.
Auction rate securities are generally long-term debt instruments that provide liquidity through a Dutch auction
process that resets the applicable interest rate at pre-determined calendar intervals. This mechanism generally
allows existing investors to rollover their holdings and continue to own their respective securities or liquidate
their holdings by selling their securities at par value. Prior to February 3, 2008, we invested in these securities for
short periods of time as part of our cash management program. However, the uncertainties in the credit markets
that began in early 2008 have prevented us and other investors from liquidating holdings of auction rate
securities in recent auctions for these securities because the amount of securities submitted for sale has exceeded
the amount of purchase orders. Should the auction continue to fail, we do not intend to sell the security and it is
not more likely than not that we will be required to sell the investment before the liquidity in the market
improves. Additionally, the investment is fully collateralized by the U. S. government. Although we are uncertain
as to when the liquidity issues relating to this investment will improve, we consider the issue temporary. As a
result of the temporary decline in fair value for our auction rate security, we have recorded an unrealized loss of
$0.1 million, which is included in accumulated other comprehensive (loss) income on the consolidated balance
sheets at January 29, 2011 and January 30, 2010. We continue to monitor the market for auction rate securities
and consider its impact, if any, on the fair market value of the investment. It is possible that further declines in
fair value may occur, and those declines, if any, would be recognized in accordance with GAAP, and if it is later
determined that the fair value of this security is other-than-temporarily impaired, we will record a loss in the
consolidated statements of operations. Due to our belief that the market for this investment may take in excess of
twelve months to fully recover, we have classified it as a noncurrent asset in long-term investments on the
consolidated balance sheets at January 29, 2011 and January 30, 2010.

4. Receivables

At January 29, 2011 and January 30, 2010, receivables on the consolidated balance sheets consisted of the

following (in thousands):

Credit cards receivable . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Refundable use tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tenant allowances receivable . . . . . . . . . . . . . . . . . . . . . .
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

January 29, 2011

January 30, 2010

$2,468
1,220
1,053
704
684

$6,129

$2,161
894
1,506
575
464

$5,600

We do not extend credit to our customers except through independent third-party credit cards, which are
generally collected in several business days. The refundable use tax amounts in the table of $1.1 million and $1.5
million at January 29, 2011 and January 30, 2010 represents an overpayment of use tax on construction costs to
build and remodel stores that is expected to be collected or credited from state jurisdictions.

5. Fixed Assets

At January 29, 2011 and January 30, 2010, fixed assets on the consolidated balance sheets consist of the

following (in thousands):

Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . .
Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer equipment, software, store equipment and

other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land, building and building improvements . . . . . . . . . . .

Fixed assets, at cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . .

January 29, 2011

January 30, 2010

$ 93,011
49,738

$ 88,892
46,219

15,586
14,890

173,225
(94,977)

11,807
—

146,918
(80,910)

Fixed assets, net of accumulated depreciation . . . . . . . . .

$ 78,248

$ 66,008

In March 2010, we acquired a 168,450 square foot building in Corona, California for $11.8 million and
relocated our distribution center from Everett, Washington to this facility in the fiscal year ended January 29,
2011. Refer to “Note 16. Exit or Disposal Activities” for discussion of our exit activity related to this relocation.

Depreciation expense on fixed assets was $16.4 million, $20.3 million, and $18.8 million for fiscal years

ended January 29, 2011, January 30, 2010 and January 31, 2009.

6. Goodwill and Other Intangible Assets

We recorded $13.2 million of goodwill as the excess of the purchase price of $15.5 million over the fair
value of the net amounts assigned to assets acquired and liabilities assumed in connection with the acquisition of
Action Concepts Fast Forward, Ltd. in 2006. We will continue to assess, in accordance with our goodwill policy
as stated in Note 2, whether goodwill is impaired. There was no impairment of goodwill for the fiscal years
ended January 29, 2011, January 30, 2010 and January 31, 2009.

In 2008, we acquired the assets of an Island Snow store from Kodama Incorporated located in Honolulu,
Hawaii. In connection with the purchase, the Company entered into a noncompetition agreement for which the
Company paid $0.1 million and recorded an intangible asset. Under this agreement, Kodama Incorporated agreed
not to compete with Zumiez for a period of two years. We amortized the non-compete agreement over the term
of the agreement and at January 29, 2011, this intangible asset has been fully amortized.

7. Other Liabilities

At January 29, 2011 and January 30, 2010, other liabilities on the consolidated balance sheets consisted of

the following (in thousands):

Accrued sales tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unredeemed gift cards . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued legal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .

January 29, 2011

January 30, 2010

$ 3,906
3,260
3,092
2,211
1,214

$13,683

$1,497
2,930
2,695
1,512
489

$9,123

8. Revolving Credit Facility

On June 10, 2009, we renewed and amended our secured credit agreement with Wells Fargo HSBC Trade
Bank, N.A., and the prior facility agreement was terminated. The credit agreement provides us with a secured
revolving credit facility until September 1, 2011 of up to $25.0 million. The secured revolving credit facility
provides for the issuance of a standby letter of credit in an amount not to exceed $5.0 million outstanding at any
time and with a term not to exceed 365 days. The commercial line of credit provides for the issuance of a
commercial letter of credit in an amount not to exceed $10.0 million and with terms not to exceed 120 days. The
amount of borrowings available at any time under our secured revolving credit facility is reduced by the amount
of standby and commercial letters of credit outstanding at that time. There were no outstanding borrowings under
the secured revolving credit facility at January 29, 2011 or January 30, 2010. We had open commercial letters of
credit outstanding under our secured revolving credit facility of $0.5 million at January 29, 2011 and $0.6 million
at January 30, 2010. The secured revolving credit facility bears interest at the Daily One Month LIBOR rate plus
1.00%. The credit agreement contains a number of restrictions and covenants that generally limit our ability to,
among other things, (1) incur additional debt, (2) undergo a change in ownership and (3) enter into certain
transactions. The credit agreement also contains financial covenants that require us to meet certain specified
financial tests and ratios, including, a maximum net loss not to exceed $10.0 million after taxes on a trailing four-
quarter basis provided, that, there shall be added to net income all charges for impairment of goodwill and store
assets not to exceed $5.0 million in aggregate, and a minimum quick ratio of 1.25. The quick ratio is defined as
our cash and near cash equivalents plus certain defined receivables divided by the outstanding borrowings. All of
our personal property, including, among other things, our inventory, equipment and fixtures, has been pledged to
secure our obligations under the credit agreement. We must also provide financial information and statements to
our lender. We were in compliance with all such covenants at January 29, 2011.

9. Commitments and Contingencies

Leases—We are committed under operating leases for all of our retail store locations and our combined
home office and ecommerce fulfillment center generally with terms of five to ten years. Total rent expense, base
rent expense and contingent and other rent expense for the fiscal years ended January 29, 2011, January 30, 2010
and January 31, 2009 is as follows (in thousands). Included in other rent expense are payments of real estate
taxes, insurance and common area maintenance costs.

Fiscal Year Ended

January 29, 2011

January 30, 2010

January 31, 2009

Base rent expense . . . . . . . . . . . . . . . .
Contingent and other rent expense . . .

Total rent expense . . . . . . . . . . . .

$37,140
24,660

$61,800

$35,208
22,774

$57,982

$31,772
21,101

$52,873

At January 29, 2011, we were committed to property owners for operating lease obligations for $347.8
million. A majority of our leases provide for ongoing co-tenancy requirements or early cancellation clauses that
would further lower rental rates, or permit lease terminations, or both, in the event that co-tenants cease to
operate for specific periods or if certain sales levels are not met in specific periods. Most of the store leases
require payment of a specified minimum rent and a contingent rent based on a percentage of the store’s net sales
in excess of a specified threshold. Amounts in the table below do not include percentage rent, common area
maintenance charges or real estate taxes unless these costs are fixed and determinable. Future minimum
commitments on all leases at January 29, 2011 are as follows (in thousands):

Fiscal 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Operating Lease
Obligations

$ 46,721
47,013
46,750
44,975
42,329
120,013

$347,801

Purchase Commitments—At January 29, 2011 and January 30, 2010, we had outstanding purchase orders
to acquire merchandise from vendors of $76.5 million and $47.6 million, including $0.5 million and $0.6 million
of letters of credit outstanding. We have an option to cancel these commitments with no notice prior to shipment,
except for private label purchase orders in which we are obligated to repay certain contractual amounts upon
cancellation.

Litigation—We are involved from time to time in claims, proceedings and litigation arising in the ordinary
course of business. We have made accruals with respect to these matters, where appropriate, which are reflected
in our consolidated financial statements. For some matters, the amount of liability is not probable or the amount
cannot be reasonable estimated and therefore accruals have not been made. We may enter into discussions
regarding settlement of these matters, and may enter into settlement agreements, if we believe settlement is in the
best interest of the Company’s shareholders.

On March 5, 2008, a former employee commenced an action against the Company in California state court

(Evan Johnson v. Zumiez, Inc., et al., Case No. RG08374968, Alameda County Superior Court, filed March 5,
2008) alleging that we failed to pay all overtime wages owing to him and other employees in California, failed to
provide meal breaks as required by California law, failed to provide employees with proper itemized wage
statements (pay stubs) as required by California law, and failed to pay terminated employees waiting time
penalties under California Labor Code section 203. The court granted preliminary approval of the settlement on
March 16, 2010, and issued an order granting final approval on July 23, 2010. No class members objected to the
settlement and only four class members opted out of the settlement. The total amount of the negotiated settlement
is $1.4 million. This entire amount was paid out in settlement awards to the class members, attorneys’ fees and
costs, claims administration fees and other payments required by the settlement, with no reversion of unclaimed
funds to the Company. This accrued charge was recorded in selling, general and administrative expenses on the
consolidated statement of operations for the fiscal year ended January 30, 2010, and was paid out on August 10,
2010.

A putative class action, Chandra Berg et al. v. Zumiez Inc., was filed against the Company in the Los
Angeles Superior Court under case number BC408410 on February 25, 2009. The Complaint alleged causes of
action for failure to pay overtime wages to present and former store managers in California, failure to provide
meal periods and rest breaks to store managers, failure to reimburse retail employees for clothing required by the
Company’s dress code, failure to reimburse retail employees for business expenses, failure to provide store

managers with accurate itemized wage statements, failure to pay terminated store managers all wages due at the
time of termination, unfair business practices and declaratory relief. Plaintiff filed a First Amended Complaint on
April 2, 2010 which added an additional plaintiff/class representative and a new cause of action for penalties for
alleged Labor Code violations under the Private Attorneys General Act. We filed an answer to the First Amended
Complaint and conducted discovery. On February 8, 2010, we attended a mediation wherein no settlement was
reached. Plaintiffs filed their motion for class certification, and we filed our opposition to class certification.
Plaintiffs’ reply papers were filed on August 2, 2010. On September 1, 2010, the Company announced that it had
reached an agreement to settle. The settlement agreement is $2.1 million, which includes settlement awards to
class members, incentive payments to the two plaintiffs, attorneys’ fees and costs and claims administration
costs. The court granted preliminary approval of the settlement on November 3, 2010, and granted final approval
of the settlement on February 23, 2011. The claims administrator will now distribute the settlement funds
pursuant to the Court’s order and the settlement agreement. The accrued charge of $2.1 million was recorded in
selling, general and administrative expenses on the consolidated statements of operations for the fiscal year
ended January 29, 2011 and was paid out on March 10, 2011.

Insurance Reserves—We are responsible for medical and dental insurance claims up to a specified
aggregate amount. We maintain a reserve for estimated medical and dental insurance claims based on historical
claims experience and other estimated assumptions. The insurance reserve at January 29, 2011 and January 30,
2010 was $0.4 million and $0.3 million.

10. Fair Value Measurements

We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into
three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and
significant to the fair value measurement:

• Level 1—Quoted prices in active markets for identical assets or liabilities;

• Level 2—Quoted prices for similar assets or liabilities in active markets or inputs that are observable;

and

• Level 3—Inputs that are unobservable.

We follow the guidelines for assessing fair value measurements consistent with GAAP that requires an

assessment of whether certain factors exist to indicate that the market for an instrument is not active at the
measurement date. If, after evaluating those factors, the evidence indicates the market is not active, a company
must determine whether recent quoted transaction prices are associated with distressed transactions.

The following tables summarize assets measured at fair value on a recurring basis at January 29, 2011 and

January 30, 2010 (in thousands):

January 29, 2011

Level 1

Level 2

Level 3

Cash equivalents:

Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local government securities . . . . . . . . . . . . . .

$928
—

$ —
3,269

$ —
—

Marketable securities:

Treasury and agency securities . . . . . . . . . . . . . . . . . . .
State and local government securities . . . . . . . . . . . . . .
Variable-rate demand notes . . . . . . . . . . . . . . . . . . . . . .

Long-term investments:

State and local government securities . . . . . . . . . . . . . .
Equity method investment . . . . . . . . . . . . . . . . . . . . . . .

—
—
—

—
—

6,069
102,170
9,205

—
—
—

—
—

870
1,896

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$928

$120,713

$2,766

January 30, 2010

Level 1

Level 2

Level 3

Cash equivalents:

Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$487

$ —

$—

Marketable securities:

Treasury and agency securities . . . . . . . . . . . . . . . . . . . .
State and local government securities . . . . . . . . . . . . . .
Variable-rate demand notes . . . . . . . . . . . . . . . . . . . . . .

Long-term investments:

State and local government securities . . . . . . . . . . . . . .

—
—
—

—

15,316
69,785
21,382

—

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$487

$106,483

—
—
—

872

$872

Our policy is to recognize transfers into and transfers out of hierarchy levels as of the actual date of the

event or change in circumstances that caused the transfer.

The Level 2 marketable securities primarily include state and local municipal securities, U.S. Treasury
securities, U.S. Agency securities and variable-rate demand notes. Fair values are based on quoted market prices
for similar assets or liabilities or determined using inputs that use readily observable market data that are actively
quoted and can be validated through external sources, including third-party pricing services, brokers and market
transactions.

The Level 3 state and local government securities at January 29, 2011 and January 30, 2010 represents a

$1.0 million par value auction rate security, net of temporary impairment charge of $0.1 million. Our valuation
method for the auction rate security is based on numerous assumptions including assessments of the underlying
security, expected cash flows, credit ratings, liquidity and other relevant factors. The equity method investment is
valued using comparative market multiples adjusted by an estimated discount factor. The assumptions,
assessments and the interpretations of relevant market data are subject to uncertainties and are difficult to predict
and require significant judgment. The use of different assumptions, applying different judgment to inherently
subjective matters and changes in future market conditions could result in significantly different estimates of fair
value.

The following tables present the changes in the Level 3 fair value category for the fiscal years ended

January 29, 2011 and January 30, 2010 (in thousands):

State and Local
Government
Securities

Equity
Investment

Balance at January 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,767

$ —

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gain included in accumulated other comprehensive
income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at January 30, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized loss included in accumulated other comprehensive

income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized loss included in other income (expense), net . . . . . .

(1,000)

105

872

—

(2)

—

2,000

—
(104)

Balance at January 29, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

870

$1,896

The following table represents the fair value hierarchy for assets measured at fair value on a nonrecurring

basis at January 29, 2011 and January 30, 2010 (in thousands):

Long-Lived Assets Held and Used

Fair Value (as of
period end)

Using Significant
Unobservable
Inputs (Level 3
Measurements)

January 29, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . .
January 30, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . .

$117
$ 30

Net Loss (for
the fiscal year
ended)

$ 105
$2,538

During the fiscal year ended January 29, 2011, in accordance with the accounting for impairments of long-

lived assets classified as held and used, two stores with a net fixed asset carrying amount of $0.2 million were
written down to their fair value of $0.1 million, resulting in a net impairment charge of $0.1 million. During the
fiscal year ended January 30, 2010, 21 stores with a net fixed asset carrying amount of $2.6 million were written
down to their fair value of less than $0.1 million, resulting in a net impairment charge of $2.5 million. These
non-cash impairment charges are included in selling, general and administrative expenses. The fair value was
determined using a discounted cash flow model at a store level. Store impairment expense was recorded net of
the remaining tenant allowance. The estimation of future cash flows from operating activities requires significant
judgments of factors that include future sales, gross profit and operating expenses. If our actual sales, gross profit
or operating expenses differ from our estimates, the carrying value of certain store assets may prove
unrecoverable and we may incur additional impairment charges in the future.

11. Equity Awards

General Description of Equity Awards Plans—During fiscal 2004, the Company adopted the 2004 Stock

Option Plan (the “2004 Plan”) to provide for the granting of incentive stock options and nonqualified stock
options to executive officers and key employees of the Company as determined by the 2004 Plan Committee of
the Company’s board of directors. The terms of the 2004 Plan are generally the same as the 1993 Plan. The
Company has authorized 7,365,586 split adjusted shares of common stock for issuance under the 2004 Plan. The
Company does not plan on making any new stock option grants under the 2004 Plan.

The Company adopted the 2005 Equity Incentive Plan (the “2005 Plan”) on January 24, 2005 and the
Company’s shareholders approved it on April 27, 2005. Unless sooner terminated by the Board, the 2005 Plan
will terminate on the day before the tenth anniversary of the date that the 2005 Plan was approved by the
Company’s shareholders. The 2005 Incentive Plan provides for the grant of incentive stock options, nonqualified
stock options, stock bonuses, restricted stock awards, restricted stock units and stock appreciation rights, which
may be granted to the Company’s employees (including officers), directors and consultants.

The aggregate number of shares of common stock that may be issued pursuant to awards granted under the

2005 Plan will not exceed 5,850,000 plus (1) the number of shares that are subject to awards under the 2005 Plan,
the 1993 Plan or the 2004 Plan that have been forfeited or repurchased by us or that have otherwise expired or
terminated, (2) at our option, the number of shares that were reserved for issuance under the 2004 Plan but that
were not subject to a grant under such plan at the completion of the Company’s initial public offering in
May 2005, and (3) an annual increase on the first business day of each fiscal year such that the total number of
shares available for issuance under the 2005 Plan shall equal 15% of the total number of shares of common stock
outstanding on such business day; provided, that with respect to such annual increase, the board may designate a
lesser number of additional shares or no additional shares during such fiscal year. In no event, however, will the
aggregate number of shares available for award under the 2005 Plan exceed 8,775,000 split adjusted shares. As a
result of this limitation on the aggregate number of shares available for award under the 2005 Plan, and the
6,614,594 split adjusted shares of the Company’s common stock that were reserved for issuance under our 2004
Plan but that were not subject to grants under that plan at the completion of the initial public offering, up to
2,925,000 split adjusted shares, may currently be added to the shares of common stock that may be issued
pursuant to awards granted under the 2005 Plan pursuant to clause (2) of the first sentence of this paragraph;
however, the Company does not currently intend to add any of those shares to the 2005 Plan.

Stock Options—On July 21, 2009, we completed an offer to exchange certain employee stock options
issued under the 2005 Equity Incentive Plan (“Exchange Offer”). Certain previously granted stock options were
exchanged for new, lower-priced stock options granted on a one and one half-for-one basis (1.5:1). An aggregate
of 460,700 previously granted stock options were exchanged for an aggregate of 307,138 new stock options
granted pursuant to the Exchange Offer with an exercise price of $8.64 per share. The new stock option grants
will vest annually over a four-year period beginning on the first anniversary of the date granted. The Exchange
Offer resulted in a nominal increase in stock-based compensation expense.

The following table summarizes our stock option activity for the fiscal years ended January 29,
2011, January 30, 2010 and January 31, 2009 (in thousands except weighted-average exercise price and
weighted-average remaining contractual life):

Grant Date
Weighted-
Average Exercise
Price

Weighted-Average
Remaining
Contractual Life
(in Years)

Intrinsic
Value (1)

Stock Options

Outstanding at February 2, 2008 . . . . . . . . . . . . . . . .

1,958

Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

160
(211)
(114)

Outstanding at January 31, 2009 . . . . . . . . . . . . . . . .

1,793

528
(258)
(568)

Outstanding at January 30, 2010 . . . . . . . . . . . . . . . .

1,495

Granted (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

58
(392)
(43)

Outstanding at January 29, 2011 . . . . . . . . . . . . . . . .

1,118

Exercisable at January 29, 2011 . . . . . . . . . . . . . . . .

466

Vested or expected to vest at January 29,

$16.29

$14.25
$ 2.46
$28.20

$17.13

$ 8.03
$ 1.64
$29.50

$11.88

$19.13
$ 3.70
$18.68

$14.86

$19.43

6.06

5.43

$11,512

$ 3,800

2011 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,051

$15.04

6.01

$10,735

(1)

(2)
(3)
(4)

Intrinsic value for stock options is defined as the difference between the market price of the Company’s
common stock on the last business day of the fiscal year and the weighted average exercise price of
in-the-money options outstanding at the end of the fiscal year. The market value per share was $22.31 at
January 29, 2011.
Includes 307,138 stock options issued pursuant to the Exchange Offer.
Includes 460,700 stock options exchanged in the Exchange Offer.
Includes outstanding vested options as well as outstanding, non-vested options after a forfeiture rate is
applied.

The following table summarizes additional information related to stock option activity for the fiscal years

ended January 29, 2011, January 30, 2010 and January 31, 2009:

Fiscal Year Ended

January 29, 2011

January 30, 2010

January 31, 2009

Weighted-average fair value per share
of stock options granted . . . . . . . . .

Aggregate intrinsic value of stock

$12.24

options exercised (in thousands) . . .

$7,909

Vest-date fair value of stock options

vested (in thousands) . . . . . . . . . . . .

$2,094

$ 4.44

$2,489

$1,400

$ 7.89

$3,410

$3,046

The following table summarizes information concerning outstanding and exercisable options at January 29,

2011:

Options Outstanding

Number of
Options
(in thousands)

Weighted
Average
Remaining
Contractual Life

Options
Exercisable

Number of
Options
(in thousands)

33
164
202
250
192
120
157

1,118

0.6
3.6
8.1
5.7
7.7
5.2
6.3

33
81
42
34
62
99
115

466

Exercise Price

1.78
3.87
6.88
8.64
14.00-19.23
27.31-33.59
35.85-38.19

Total

Restricted Stock—The following table summarizes our restricted stock activity for the fiscal years ended

January 29, 2011, January 30, 2010 and January 31, 2009 (in thousands except weighted-average fair value):

Grant Date
Weighted-
Average Fair
Value

Restricted Stock

Intrinsic Value (1)

Outstanding at February 2, 2008 . . . . . . .

Granted . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding at January 31, 2009 . . . . . . .

Granted . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding at January 30, 2010 . . . . . . .

Granted . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding at January 29, 2011 . . . . . . .

333
(5)
(59)

285

450
(81)
(32)

622

196
(195)
(31)

592

$37.19

$14.52
$37.54
$14.05

$15.49

$ 7.17
$16.17
$ 9.80

$ 9.67

$19.19
$10.11
$11.99

$12.55

$13,213

(1)

Intrinsic value for restricted stock is defined as the market value of the outstanding
restricted stock on the last business day of the fiscal year. The market value per share
was $22.31 at January 29, 2011.

The following table summarizes additional information related to restricted stock activity for the fiscal years

ended January 29, 2011, January 30, 2010 and January 31, 2009:

Vest-date fair value of restricted stock
vested (in thousands) . . . . . . . . . . . .

$3,734

$674

$73

Fiscal Year Ended

January 29, 2011

January 30, 2010

January 31, 2009

Stock-Based Compensation—We recorded $4.9 million, $4.1 million and $4.4 million of total stock-based

compensation expense for the fiscal years ended January 29, 2011, January 30, 2010 and January 31, 2009.

At January 29, 2011, there was $6.7 million of total unrecognized compensation cost related to unvested

stock options and restricted stock grants. This cost has a weighted-average recognition period of 1.1 years.

12. Employee Benefit Plans

The Zumiez Investment Plan (Z.I.P.) is a qualified plan under Section 401(k) of the Internal Revenue Code.

Employees that have been with the Company for a year, work an average of thirty hours a week and are
twenty-one or older are eligible to participate in the Z.I.P. Our 401(k) matching and profit-sharing contributions
are discretionary and are determined annually by management. We committed $0.4 million, $0.2 million and
$0.3 million to the plan for the fiscal years ended January 29, 2011, January 30, 2010 and January 31, 2009.

We offer an Employee Stock Purchase Plan (the “ESPP”) for eligible employees to purchase the Company’s

common stock at a 15% discount of the lesser of fair market value of the stock on the first business day or the
last business day of the offering period. The ESPP provides for six month offering periods commencing on
October 1 and April 1 of each year. Employees can contribute up to 15% of their pay but may not exceed
$25,000 of aggregate stock value in a calendar year. The maximum number of shares an employee may purchase
during an offering period is 2,000 shares. Employees are eligible to participate in the ESPP if they work at least
20 hours a week and at least five months in a calendar year.

13. Income Taxes

The components of deferred income taxes at January 29, 2011 and January 30, 2010 are (in thousands):

January 29, 2011

January 30, 2010

Deferred tax assets:

Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefits, including stock based compensation . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred tax liabilities:

Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill and other intangibles . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 12,172
6,001
1,783
897
333

21,186

(10,986)
(1,714)
(365)

(13,065)

Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8,121

$ 11,496
5,547
1,158
1,945
167

20,313

(9,973)
(1,422)
(336)

(11,731)

$ 8,582

The components of the provision for income taxes for the fiscal years ended January 29, 2011, January 30,

2010 and January 31, 2009 are (in thousands):

Fiscal Year Ended

January 29, 2011

January 30, 2010

January 31, 2009

Current:

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current

. . . . . . . . . . . . . . . . . . . .

$11,813
2,324

14,137

Deferred:

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total deferred . . . . . . . . . . . . . . . . . . .

662
(147)

515

$ 7,760
2,002

9,762

(3,872)
(1,014)

(4,886)

$ 9,164
1,556

10,720

(1,147)
(74)

(1,221)

Provision for income taxes . . . . . . . . .

$14,652

$ 4,876

$ 9,499

The reconciliation of the income tax provision at the U.S. federal statutory rate to our effective income tax

rate is as follows for the fiscal years ended January 29, 2011, January 30, 2010 and January 31, 2009:

Fiscal Year Ended

January 29, 2011

January 30, 2010

January 31, 2009

Expected U.S. federal income taxes at
statutory rates . . . . . . . . . . . . . . . . .

State and local income taxes, net of

federal effect . . . . . . . . . . . . . . . . . .
Tax exempt interest . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . .

35.0%

3.4
(1.2)
0.5

Effective tax rate . . . . . . . . . . . . .

37.7%

35.0%

4.6
(2.9)
(1.9)

34.8%

35.0%

3.6
(1.9)
(1.1)

35.6%

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The
Company’s U.S. federal income tax returns are no longer subject to examination for years before fiscal 2007.

14. Comprehensive Income

Comprehensive income represents all changes in equity during a period except those resulting from
investments by and distributions to shareholders. Comprehensive income for the fiscal years ended January 29,
2011, January 30, 2010 and January 31, 2009 is as follows (in thousands):

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net change in unrealized losses on available-for-sale

Fiscal Year Ended

January 29, 2011

January 30, 2010

January 31, 2009

$24,203

$9,131

$17,204

investments, net of tax of $76, $7 and $213 . . . . . . . . . . . . .

(118)

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . .

$24,085

(16)

$9,115

(347)

$16,857

15. Earnings per Share, Basic and Diluted

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except

per share amounts):

Fiscal Year Ended

January 29, 2011

January 30, 2010

January 31, 2009

$24,203

$ 9,131

$17,204

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average common shares for basic earnings per

share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dilutive effect of stock options and restricted stock . . . . . . . . .

29,971
823

Weighted average common shares for diluted earnings per

share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$30,794

Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.81

0.79

29,499
634

$30,133

0.31

0.30

29,127
567

$29,694

0.59

0.58

Total anti-dilutive common stock options not included in the calculation of diluted earnings per share were

0.3 million, 0.4 million and 0.8 million for the fiscal years ended January 29, 2011, January 30, 2010 and
January 31, 2009.

16. Exit or Disposal Activities

On March 2, 2010, we acquired a 168,450 square foot building in Corona, California for $11.8 million and
we have relocated our distribution facility from Everett, Washington to this facility. We believe that we will be
more effective distributing our products through a distribution center located in Corona, California due to the
majority of our vendors being located in Southern California. In July 2010, we entered into an amendment of the
lease for our combined home office, ecommerce fulfillment center and the exited distribution facility in Everett,
Washington, which terminated our lease commitments for a portion of the leased space in exchange for
additional charges to be paid over the life of the remaining lease period. The lease termination costs recorded
reflect the present value of these future charges.

In conjunction with the closure of the Everett, Washington distribution facility, during the fiscal year ended

January 29, 2011, we have recorded $0.9 million of employee benefit costs (severance and performance
bonuses), $0.6 million of lease termination costs and $0.8 million of other costs to exit the facility. Additionally,
we incurred a $0.3 million charge on disposal of long-lived assets and we recognized a $0.2 million benefit
related to deferred rent liability. These amounts are included in cost of goods sold on the consolidated statements
of operations. We do not expect to incur material additional costs related to the relocation.

Exit or disposal provisions recorded during the fiscal year ended January 29, 2011 as a result of this

relocation are as follows (in thousands):

January 30, 2010 Additions

Payments Adjustments (1)

January 29, 2011 (2)

Employee benefit costs . . . . . . . . . . . .
Lease termination costs . . . . . . . . . . . .
Other exit costs . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . .

$—
—
—

$—

$ 882
1,051
806

$ (876)
(305)
(806)

$2,739

$(1,987)

$
9
(453)
—

$(444)

$ 15
293
—

$308

(1) The lease termination cost adjustment primarily represents the difference between the calculated lease

termination cost as a result of the amended lease and our initial estimate of lease termination costs recorded
on the cease use date.

(2) The exit or disposal provisions are included in accrued payroll and payroll taxes, other liabilities and long-

term other liabilities on the consolidated balance sheets.

17. Related Party Transactions

We committed charitable contributions to Zumiez Foundation of $0.6 million, $0.3 million and $0.4 million

for fiscal years ended January 29, 2011, January 30, 2010 and January 31, 2009. We have accrued charitable
contributions payable to Zumiez Foundation at January 29, 2011 and January 30, 2010 of $0.6 million and $0.2
million. Zumiez Foundation is a charitable based nonprofit organization focused on meeting the various needs of
the under-privileged in communities where we have retail stores. The Company’s Chairman of the Board is also
the President of Zumiez Foundation.

3.1

3.2

4.1

10.1

10.2

10.4

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

10.15

10.16

10.17

EXHIBIT INDEX

Articles of Incorporation. [Incorporated by reference to Exhibit 3.1 to the Company’s Registration
Statement on Form S-1 (file No. 333-122865)]

Bylaws. [Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed
on August 25, 2008]

Form of Common Stock Certificate of Zumiez Inc. [Incorporated by reference to Exhibit 4.1 to the
Company’s Registration Statement on Form S-1 (file No. 333-122865)]

Business Loan Agreement dated May 29, 2003 between Bank of America, N.A. and Zumiez Inc., as
modified by Loan Modification Agreement dated September 30, 2004. [Incorporated by reference to
Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (file No. 333-122865)]

Lease Agreement between Merrill Creek Holdings, LLC and Zumiez Inc. dated August 2, 2004.
[Incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1 (file
No. 333-122865)]

Carrier Agreement between United Parcel Service Inc. and Zumiez Inc. dated July 4, 2005.
[Incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the
period ended July 30, 2005 as filed on September 13, 2005]

Zumiez Inc. 2004 Stock Option Plan. [Incorporated by reference to Exhibit 10.6 to the Company’s
Registration Statement on Form S-1 (file No. 333-122865)]

Zumiez Inc. 2005 Equity Incentive Plan. [Incorporated by reference to Exhibit 10.7 to the Company’s
Registration Statement on Form S-1 (file No. 333-122865)]

Zumiez Inc. 2005 Employee Stock Purchase Plan. [Incorporated by reference to Exhibit 10.8 to the
Company’s Registration Statement on Form S-1 (file No. 333-122865)]

Form of Indemnity Agreement between Zumiez Inc. and each of its officers and directors.
[Incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-1 (file
No. 333-122865)]

Limited Liability Company Agreement of Zumiez Holdings LLC. [Incorporated by reference to
Exhibit 10.10 to the Company’s Registration Statement on Form S-1 (file No. 333-122865)]

Modification dated May 11, 2005 to Business Loan Agreement dated May 29, 2003 between Bank of
America, N.A. and Zumiez Inc., as modified by Loan Modification Agreement dated September 30,
2004. [Incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q
for the period ended July 30, 2005 as filed on September 13, 2005]

Equity Purchase Agreement with Gerald R. Anderson, Brandon C. Batton, AC Fast Forward LLC and
AC Fast Forward Mgt., LLC dated May 16, 2006. [Incorporated by reference to Exhibit 10.12 to the
Company’s Quarterly Report on Form 10-Q for the period ended July 29, 2006 as filed on
September 12, 2006]

Lease Agreement between Merrill Creek Holdings, LLC and Zumiez Inc. dated October 2, 2006.
[Incorporated by reference to Exhibit 10.13 to the Company’s Form 8-K filed on October 4, 2006]

Zumiez Inc. 2005 Equity Incentive Plan, as amended and restated effective May 27, 2009.
[Incorporated by reference from Exhibit 10.15 to the Form 8-K filed by the Company on June 1, 2009]

Credit Agreement, including Revolving Line of Credit Note, with Wells Fargo HSBC Trade Bank,
N.A. dated June 10, 2009. [Incorporated by reference from Exhibit 10.16 to the Form 8-K filed by the
Company on June 11, 2009]

Purchase and Sale Agreement and Joint Escrow Instructions with Railroad Street Land Holdings, LLC
dated February 18, 2010. [incorporated by reference from Exhibit 10.17 to the Form 8-K filed by the
Company on February 22, 2010]

21.1

23.1

31.1

31.2

32.1

Subsidiaries of the Company.

Consent of Moss Adams LLP, Independent Registered Public Accounting Firm.

Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of
1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of the Principal Financial Officer (Principal Accounting Officer) pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.

Certifications of the Principal Executive Officer and Principal Financial Officer (Principal Accounting
Officer) pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

Copies of Exhibits may be obtained upon request directed to the attention of our Chief Financial Officer and
Chief Administrative Officer, 6300 Merrill Creek Parkway, Suite B, Everett, WA 98203, and are available at the
SEC’s website found at www.sec.gov.