Zumiez Inc.
Annual Report 2015

Notice of 2016 Annual Meeting
And Proxy Statement
2015 Annual Report on Form 10-K

4001 204th Street SW
Lynnwood, Washington 98036

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held On June 1, 2016

Dear Shareholder:

You are cordially invited to attend the 2016 annual meeting of shareholders of Zumiez Inc., a Washington
corporation. Zumiez Inc. and its wholly-owned subsidiaries is also referred to as “Zumiez,” “we,” “our,” “us,”
“its” and the “Company.” The meeting will be held on Wednesday, June 1, 2016 at 1:00 p.m. (Pacific Time) at
our headquarters located at 4001 204th Street SW, Lynnwood, Washington 98036 for the following purposes:

1.
2.

3.

To elect three directors to hold office until our 2019 annual meeting of shareholders;
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, 2017 (“fiscal 2016”); 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 and 2. The record date for the annual meeting is

March 23, 2016. 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, we have 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 22, 2016, 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 30, 2016 (“fiscal 2015”) Proxy Statement
and 2015 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 JUNE 1, 2016: 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
Chris K. Visser
Executive Vice President, General Counsel and
Secretary

Lynnwood, Washington
April 22, 2016

4001 204th Street SW
Lynnwood, Washington 98036

PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD June 1, 2016

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,” “its” and the “Company”) is soliciting your proxy to vote at our
2016 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 23, 2016, to attend the meeting. However, you do not
need to attend the meeting to vote your shares. 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 22, 2016 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 23, 2016, 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
25,592,245 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 23, 2016, 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 “How do I
vote? – Beneficial Owner: Shares Registered in the Name of Broker, Bank or Other Agent.”

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What am I voting on?

You are being asked to vote on the following matters:

•

•

Election of three directors (Proposal 1); 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, 2017 (“fiscal 2016”) (Proposal 2).

When you vote your proxy, you appoint Chris K. Visser and Richard M. Brooks as your representatives at
the meeting. When we refer to the “named proxies,” we are referring to Mr. Visser and Mr. Brooks. This way,
your shares will be voted even if you cannot attend the meeting.

How do I vote?

For Proposals 1 and 2, 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). 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 23, 2016.

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. Eastern time,
May 31, 2016.

To vote by telephone—You 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. Eastern time, May 31, 2016.

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.

3

How many votes do I have?

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

the close of business on March 23, 2016, 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); and

“For” the ratification of the selection of Moss Adams LLP as our independent registered public
accounting firm for fiscal 2016 (Proposal 2).

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 $4,500 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 and/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, Chris K. Visser, at
4001 204th Street SW, Lynnwood, Washington 98036.

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.

4

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 and 2.
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) is considered a non-discretionary item while the ratification of
the selection of Moss Adams LLP as our independent registered public accounting firm (Proposal 2) 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 Proposal 1 but is permitted to vote your shares on Proposal 2 even if it does not
receive voting instructions from you because Proposal 2 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 and 2, 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.

Proposal 2. For the ratification of the selection of our independent registered public accounting firm for
fiscal 2016, if the number of “For” votes exceeds the number of “Against” votes, then Proposal 2 will be ratified.

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.

5

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 Securities and Exchange Commission (“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 are 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, information is also
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 Sarah G. McCoy, 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.

6

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, regulatory, 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. Our desired 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 $38,100 and the lead independent
director receives an additional $23,500. The audit committee members receive cash compensation of $12,700
with the chairperson receiving $25,400 per year. The compensation committee members receive cash

7

compensation of $9,500 with the chairperson receiving $19,000 per year. The governance and nominating
committee member receives cash compensation of $6,400 with the chairperson receiving $12,800 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 30, 2016 (“fiscal 2015”).

Name (2)

Fees Earned
or Paid in
Cash
($)

Stock
Awards (1)
($)

Matthew L. Hyde . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ernest R. Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sarah (Sally) G. McCoy . . . . . . . . . . . . . . . . . . . . . . . .
Travis D. Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
James M. Weber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kalen F. Holmes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

54,000
63,500
80,700
69,800
54,000
60,400

85,300
85,300
85,300
85,300
85,300
85,300

Total
($)

139,300
148,800
166,000
155,100
139,300
145,700

(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. For assumptions used in determining these values, please see Note 2 (listed under
Stock Compensation) in the Notes to Consolidated Financial Statements in our fiscal 2015 Form 10-K.

On May 28, 2015, the day of the annual shareholder meeting, the Company awarded 2,816 shares of
restricted stock to each of the then current directors with a grant-date fair value of $85,300. The stock
awards will vest on May 28, 2016.

(2) Scott A. Bailey was appointed to the board of directors on February 29, 2016. Mr. Bailey earned no cash or

stock awards during the fiscal year ended January 30, 2016.

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PROPOSAL 1

ELECTION OF DIRECTORS

The Company currently has nine 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. The Company believes that a
classified board promotes continuity of experience and an orderly succession of directors, which, in turn,
increases the stability of the Company and encourages a long-term corporate perspective. 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. Three directors are nominees for election this year and each has consented to serve a three-year
term ending in 2019. The remaining directors will continue to serve the terms set out below.

On February 29, 2016, Scott A. Bailey was appointed to our Board of Directors and will also serve on the

Audit Committee.

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 Company 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 for Terms Expiring in 2019

Kalen F. Holmes, 49, was appointed to our board in December 2014. Ms. Holmes served as an Executive
Vice President of Partner Resources (Human Resources) at Starbucks Corporation from November 2009 until her
retirement in February 2013. Prior to her employment with Starbucks, Ms. Holmes held a variety of leadership
roles with HR responsibility for Microsoft Corporation from September 2003 through November 2009. Prior to
joining Microsoft, Ms. Holmes served in a variety of industries, including high-tech, energy, pharmaceuticals and
global consumer sales. She also serves as the Chairperson of the Board of Directors for the YWCA King and
Snohomish counties and on the Board of Trustees for the Pacific Northwest Ballet. Ms. Holmes holds a Bachelor
of Arts in Psychology from the University of Texas and a Master of Arts and a Ph.D. in Industrial/Organization
Psychology from the University of Houston.

9

Director Qualifications: Ms. Holmes’ extensive expertise in human resources and people development adds

important and relevant experience to the Company’s board of directors. Her background in a variety of
industries, including retail, provides insight and experience in successfully developing and executing long term
strategy related to operations and human resources. In addition, she has experience with large international
organizations as they grew in scale to become large multinational corporations and this experience will be
beneficial to the Company as it grows in size and scale.

Travis D. Smith, 43, was appointed to our board of directors in August 2012 and was the CEO and President
of Jo-Ann Fabric and Craft stores until August 2014. Mr. Smith began his career with Jo-Ann in 2006 serving as
the Executive Vice President, Merchandising and Marketing. In February 2009, Mr. Smith was named Chief
Operating Officer and added the duties of President in February 2010, then Chief Executive Officer in August
2011. Prior to his employment with Jo-Ann, Mr. Smith held merchandising and marketing positions of increasing
responsibility with Fred Meyer Stores, a division of the Kroger Company, ultimately serving as Senior Vice
President, General Merchandise. Mr. Smith has also served on the Board of Directors of Pendleton Woolen Mills
since February of 2016. Mr. Smith is a graduate of the University of Notre Dame with a Bachelor’s Degree in
Business Marketing and Communications.

Director Qualifications: Mr. Smith’s background in retailing and in particular merchandising, marketing
and leadership roles adds important and relevant experience to the Company’s board of directors. Mr. Smith also
brings experience in brand building, retail brick and mortar and direct to customer operations.

Scott A. Bailey, 52, was appointed to our board in February 2016. From 2002 to 2015 Mr. Bailey was the

CEO and co-founder of One Distribution Company, a leading skate-inspired apparel and footwear company
whose brands included KR3W Denim and SUPRA Footwear. KR3W is a lifestyle brand born out of the
skateboard culture on the streets of Southern California in 2003 and is known for its denim apparel and SUPRA
was launched in 2006 as a premium footwear brand known for its premium high top sneakers. Prior to One
Distribution, Mr. Bailey was the co-founder of Split Inc., a youth culture men’s and women’s apparel brand
founded in the early 1990s.

Director Qualifications: Mr. Bailey brings a unique brand and vendor perspective to the Company’s board
of directors. He has had over a 25 year career as a co-founder and CEO of influential brands in the apparel and
footwear space and his experience in growing and building brands both domestically and internationally will be
beneficial to the board of directors in an ever changing consumer environment. Also, his understanding of the
youth lifestyle customer is also very valuable to the Company.

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

Continuing Directors Whose Terms Expire in 2017

Thomas D. Campion, 67, 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 on the Board of the Alaska Wilderness League, a Washington, D.C. based environmental
group. He is the trustee of the Campion Foundation, a nonprofit organization focused on ensuring that
biologically important ecosystems in Northwestern North America are preserved. The Foundation also works on
homelessness issues in the Pacific Northwest. He is also a trustee of the Campion Advocacy Fund, a 501(c)(4)
organization that was founded to support and strengthen efforts to end homelessness in the U.S. and protect
wilderness in western North America through direct advocacy and political engagement.

Director Qualifications: Mr. Campion’s knowledge as a retailer and as the co-founder of the Company
provides the board with invaluable insight into the Company’s business and its unique culture. Mr. Campion

10

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 lifestyle retailing. As one of the Company’s largest shareholders, Mr. Campion’s interests are aligned
with other Zumiez shareholders’ interests to increase the long-term value of the Company.

Sarah (Sally) G. McCoy, 55, was appointed to our board of directors in October 2010 and was the CEO and

President of CamelBak Products, a company that originated hands free-hydration and is the leader in hydration
products until January of 2016. Ms. McCoy has been the CEO and President of CamelBak since September of
2006. 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.

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.

Ernest R. Johnson, 65, was appointed to our board of directors in July 2011 and has served as the Chairman
of Cutter & Buck Inc. and President and Chief Executive Officer for New Wave USA Inc. since November 2009.
From February 2006 to November 2009, he served as Chief Executive Officer of Cutter & Buck. Mr. Johnson
was also a Senior Vice President and Chief Financial Officer for Cutter & Buck from November 2002 to
February 2006. Prior to joining Cutter & Buck, he worked 29 years in several commercial banks holding various
senior accounting and financial positions. Mr. Johnson holds a B.A. in Business Administration—Accounting
from Washington State University.

Director Qualifications: Mr. Johnson’s background as a CEO for an apparel company and as a CFO for an
apparel company and commercial banks provides relevant leadership and financial expertise to the Company’s
board of directors. Mr. Johnson also has experience in international business and in mergers and acquisitions.

Continuing Directors Whose Terms Expire in 2018

Richard M. Brooks, 56, 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 and he currently chairs its Board of Trustees as well as its
Compensation and Executive Committees.

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 lifestyle retailing. As one of the Company’s largest shareholders, Mr. Brooks’ interest is aligned with
other Zumiez shareholders’ interests to increase the long-term value of the Company.

Matthew L. Hyde, 53, was appointed to our board in December 2005 and is the Chief Executive Officer and

President at West Marine, Inc. where he joined in June 2012. He also serves on the Board of Directors at West

11

Marine, Inc. Previously he served as an Executive Vice President of Recreational Equipment Inc. (REI), where
he had been since 1986, responsible for Marketing, Direct Sales, Real Estate and Retail operations. 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.

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, 56, was appointed to our board in April 2006 and is the Chairman and CEO of Brooks
Sports Inc., 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.

Director Qualifications: Mr. Weber’s role as the CEO of a sports related company and his international
business experience, extensive brand building, marketing and CEO experience provide our board with a very
useful perspective as the Company plans its growth strategies.

12

CORPORATE GOVERNANCE

Independence of the Board of Directors and its Committees

As required under Nasdaq listing rules, 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 rules, 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 rules, except for our Chairman, Mr. Campion, and CEO,
Mr. Brooks.

As required under applicable Nasdaq listing rules, 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 rules.

Director Tenure; No Term Limits

The Board currently believes it is not necessary to institute term limits for Directors. Directors who serve on
the Board for an extended period of time are able to provide valuable insight into the operations and future of the
Company based on their experience with, and understanding of, the Company and its history, policies and
objectives. The Board believes that, as an alternative to term limits, it can ensure that the Board continues to
evolve and adopt new viewpoints through its evaluation and nomination process and procedures.

Other Company Board and Committee Service

The Company values the experience directors bring from other boards on which they serve, but recognizes

that those boards may also present demands on a director’s time and availability and may present conflicts or
legal issues. Directors are required to advise the Chair of the Governance and Nominating Committee and the
CEO before accepting membership on other boards of directors, membership on the audit committee of the other
boards in particular, or other significant commitments involving affiliation with other businesses or governmental
units.

Accordingly, no director may serve on over five public company boards (including the Company’s Board)

and no member of the Audit Committee may serve on over three public company audit committees (including the
Company’s Audit Committee). In addition, directors who serve as CEOs or in equivalent positions generally
should not serve on over two public company boards (including the Company’s Board) besides their employer’s
board.

Certain Relationships and Related Transactions

The Company committed to make charitable contributions to the Zumiez Foundation of $0.6 million in

fiscal 2015 and $0.7 million in fiscal year ending January 31, 2015 (“fiscal 2014”). Our Chairman, Thomas D.
Campion, is a trustee of the Zumiez Foundation.

13

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 written 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, General
Counsel or the Chief Financial Officer, who shall convey the decision to the appropriate persons within the Company.

Policy on Insider Trading

In general, employees of the Company are subject to a separate insider trading policy that prohibits them
from buying, selling or transferring the Company’s securities except during a pre-determined window period,
which commences one full business day after the public announcement of the Company’s same store sales
following the Company’s quarterly or annual earnings and ending on the day two weeks thereafter.

14

Employees are prohibited from buying, selling or transferring the Company’s securities, even within the
window period, if they are aware of any material non- public information. Material information is information
that might affect the Company’s stock price or otherwise be of significance to an investor who is determining
whether to purchase, sell or hold the Company’s securities

Policy on Derivative Securities and Hedging Activities

The Company maintains a policy related to derivative securities and hedging activities as these securities
and activities may put the personal interests and objectives in conflict with the best interests of the Company and
its shareholders. Absent the prior written consent of the CFO or the General Counsel, individuals who are subject
to this policy (including immediate family members), may not purchase, sell and trade-in options, warrants, puts
and calls, or similar instruments or engage in derivative securities involving or relating to the Company’s
securities. In addition, without the prior written consent of the CFO or the General Counsel, hedging or
monetization transactions such as zero-cost collars and forward sale contracts that allow a person to lock in a
portion of the value of his or her shares, often in exchange for all or part of the potential for upside appreciation
in the shares, are prohibited.

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 Nasdaq. The board has determined that Ernest R. Johnson is an audit committee
financial expert as defined in the rules of the SEC.

Audit Committee

Governance & Nominating
Committee

Compensation Committee

Matthew L. Hyde . . . . . . . . . .

Ernest R. Johnson

. . . . . . . .

Sarah (Sally) G. McCoy

. . .

Travis D. Smith . . . . . . . . . . .

James M. Weber

. . . . . . . . . .

Kalen F. Holmes . . . . . . . . . .

Scott A. Bailey . . . . . . . . . . . .

Chairperson

Member

Lead Independent
Director

Audit Committee
Financial Expert

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;

15

•

•

•

•

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 non-equity 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.

16

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 2015, our board of directors met five times, the audit committee met five times, the governance and

nominating committee met four times, and the compensation 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. The Company has a formal policy pursuant to which members of the board of directors are expected to
attend annual shareholder meetings absent unusual circumstances that make attendance impracticable.

Shareholder Communications with the Board of Directors; Shareholder Engagement

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 Lynnwood, 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.

The Company maintains an active dialogue with shareholders to ensure a diversity of perspectives are
thoughtfully considered. The Board believes that the responsibility lies with management for communications
and relationships on behalf of the Company with institutional investors, the media, and customers. Therefore, the
Board may participate occasionally in such interaction, but will generally do so only at the request of or with the
prior knowledge of management. It has been the Company’s practice for the Lead Independent Director to
periodically accompany management to meetings with the Company’s institutional investors.

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 Nasdaq. 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.

17

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.

Nominations to the board of directors are 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 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 Nasdaq
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.

18

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 Secretary
Zumiez Inc.
4001 204th Street SW
Lynnwood, Washington 98036

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.

Scott A. Bailey was appointed to our board of directors on February 29, 2016. Mr. Bailey was originally
recommended to join the board of directors jointly by our CEO and by one of our current directors. No fees were
paid to any third party search firms in connection with any director nominations.

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 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.

19

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table provides information regarding the beneficial ownership of our common stock as of
March 23, 2016 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 23, 2016, 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 22, 2016, which is 60 days after March 23, 2016. 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., 4001 204th Street SW, Lynnwood, Washington 98036.

Name of Beneficial Owner

Thomas D. Campion (1) . . . . . . . . . . . . . . . . . . .
Richard M. Brooks (2) . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .
Christopher C. Work (3)
Troy R. Brown (4) . . . . . . . . . . . . . . . . . . . . . . .
Chris K. Visser (5) . . . . . . . . . . . . . . . . . . . . . . .
James M. Weber (6) . . . . . . . . . . . . . . . . . . . . . .
Matthew L. Hyde (7) . . . . . . . . . . . . . . . . . . . . .
Sarah (Sally) G. McCoy (8) . . . . . . . . . . . . . . . .
Ernest R. Johnson (9) . . . . . . . . . . . . . . . . . . . . .
Travis D. Smith (10)
. . . . . . . . . . . . . . . . . . . . .
Kalen Holmes (11) . . . . . . . . . . . . . . . . . . . . . . .
Scott A. Bailey (12) . . . . . . . . . . . . . . . . . . . . . .
All Executive Officers and Directors as a group
(12 persons) . . . . . . . . . . . . . . . . . . . . . . . . . .
FMR LLC (13) . . . . . . . . . . . . . . . . . . . . . . . . . .
Wasatch Advisors, Inc (14) . . . . . . . . . . . . . . . .
T. Rowe Price Associates, Inc. (15) . . . . . . . . . .
Black Rock, Inc. (16) . . . . . . . . . . . . . . . . . . . . .
The Vanguard Group (17) . . . . . . . . . . . . . . . . .

Number of
Common Shares
Beneficially Owned

Percentage of
Shares
Beneficially
Owned

3,783,314
3,713,024
43,578
76,284
23,469
40,759
40,759
14,643
14,693
10,650
4,630
5,174

7,770,977
3,490,192
3,267,782
1,940,750
1,906,519
1,508,682

14.8%
14.5%
0.2%
0.3%
0.1%
0.2%
0.2%
0.1%
0.1%
0.0%
0.0%
0.0%

30.4%
13.6%
12.8%
7.6%
7.4%
5.9%

*
(1)

Less than one percent.
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. Includes a total of 408,437 shares held by the Campion
Foundation and the Campion Advocacy Fund; while Mr. Campion does not have a pecuniary interest in
these shares he does maintain voting and investment power over these shares.

(2) Mr. Brooks is our CEO and a Director.
(3) Consists of 28,267 shares of stock held by Mr. Work of which 7,722 shares are restricted and 15,311 vested

stock options. Mr. Work is our Chief Financial Officer.

(4) Consists of 24,019 shares of stock held by Mr. Brown of which 19,970 shares are restricted and 52,265
vested stock options. Mr. Brown is our Executive Vice President of Ecommerce and Omni-channel.

20

(5) Consists of 13,775 shares of stock held by Mr. Visser of which 8,550 shares are restricted and 9,694 vested

stock options. Mr. Visser is our Executive Vice President, General Counsel and Secretary.

(6) Consists of 26,759 shares of stock held by Mr. Weber of which 2,816 shares are restricted and 14,000 vested

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

(7) Consists of 26,759 shares of stock held by Mr. Hyde of which 2,816 shares are restricted and 14,000 vested

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

(8) Consists of 14,643 shares of stock held by Ms. McCoy of which 2,816 shares are restricted. Ms. McCoy is

one of our directors.

(9) Consists of 14,693 shares of stock held by Mr. Johnson of which 2,816 shares are restricted. Mr. Johnson is

one of our directors.

(10) Consists of 10,650 shares of stock held by Mr. Smith of which 2,816 shares are restricted. Mr. Smith is one

of our directors.

(11) Consists of 4,630 shares of stock held by Ms. Holmes of which 2,816 shares are restricted. Ms. Holmes is

one of our directors.

(12) Consists of 5,174 shares of stock held by Mr. Bailey of which 2,064 shares are restricted. Mr. Bailey is one

of our directors.

(13) This information is based solely on a Schedule 13G filed February 12, 2016 by FMR LLC. The business

address of FMR LLC is 245 Summer Street, Boston, MA 02210. Members of the Johnson family, including
Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares
of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other
Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting
common shares will be voted in accordance with the majority vote of Series B voting common shares.
Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting
agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to
form a controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole
power to vote or direct the voting of the shares owned directly by the various investment companies registered
under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management and Research
Company (“FMR Co”), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity
Funds’ Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares
under written guidelines established by the Fidelity Funds’ Boards of Trustees.

(14) This information is based solely on a Schedule 13G filed February 16, 2016 by Wasatch Advisors, Inc. The

business address of Wasatch Advisors, Inc. is 505 Wakara Way, Salt Lake City, UT 84108.

(15) This information is based solely on a Schedule 13G/A filed February 9, 2016 by T. Rowe Price Associates,
Inc. (“Price Associates”). The business address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street,
Baltimore, Maryland 21202.

(16) This information is based solely on a Schedule 13G filed January 27, 2016 by BlackRock, Inc. The business

address of BlackRock, Inc. is 55 East 52nd Street New York, NY 10055.

(17) This information is based solely on a Schedule 13G filed February 11, 2016 by The Vanguard Group, Inc.

The business address of The Vanguard Group, Inc. is 100 Vanguard Blvd. Malvern, PA 19355.

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 2015, all applicable Section 16(a) filing
requirements were met and that all such filings were timely, except for late Form 4 reports filed on behalf of
Mr. Weber, Mr. Hyde, Ms. McCoy, Mr. Johnson, Mr. Smith and Ms. Holmes for their annual grants of restricted
shares in connection with their Board service.

21

EXECUTIVE OFFICERS

As of the end of fiscal 2015 the names, ages and positions of the current non-director executive officers of

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

Troy R. Brown, 53, has served as our Executive Vice President of Ecommerce and Omni-channel since
August 2012. From October 2008 through July 2012, he served as the Senior Vice President of Ecommerce.
From February 2007 through August 2008, Mr. Brown was with Tommy Bahama as the Director of Ecommerce.
From March 2005 until September 2006, he was with Expedia, where he served as General Manager (“GM”) of
Vacation Packages. From August 1994 until March 2005, Mr. Brown was with Eddie Bauer in various
management positions including Vice President of Ecommerce. Prior to August 1994, he was employed by
Nautica Inc, and ZCMI, where he held various management positions. Mr. Brown has more than 30 years
experience in the retail, wholesale and Ecommerce industries.

Chris K. Visser, 45, serves as our Executive Vice President, General Counsel and Secretary. Mr. Visser

oversees all legal affairs, real estate, human resources and corporate services operations of the Company.
Mr. Visser was appointed General Counsel and Secretary in October 2012 and Executive Vice President in May
2014. From 2001 until October 2012, Mr. Visser was with K&L Gates LLP where he has been a partner in the
corporate, securities, and mergers and acquisitions practice group. Mr. Visser also worked as a process engineer
with Vista Chemical Company prior to earning his law degree. Mr. Visser holds a Bachelor of Science degree in
Chemical Engineering from the University of Washington. Mr. Visser also obtained an M.B.A, with a
Concentration in Finance, from the University of Houston and a J.D. from the University of Houston Law Center
where he graduated with academic honors and served as an editor on the Houston Law Review.

Christopher C. Work, 37, has served as Chief Financial Officer since August 2012. Mr. Work has been
employed with the Company since October 2007, where he last served as Vice President, Controller. From
September 2002 to October 2007, Mr. Work was an employee of Ernst & Young LLP, obtaining the level of
Manager. Mr. Work received a Master of Professional Accounting from the University of Washington and a B.A.
in Accountancy from Western Washington University. Mr. Work is a Certified Public Accountant in the State of
Washington.

22

EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS

Our basis for competitive advantage is our culture—conceived, developed and maintained as a unique and

powerful basis for engendering commitment, accountability, competitiveness and creativity among all of our
employees. The objective of this compensation discussion and analysis is to describe how, for our named
executive officers (“NEOs”), we link our culture to compensation philosophy and then to compensation strategy;
and, to explain how we executed our compensation strategy during the last fiscal year. While the discussion and
analysis focuses on the NEOs in the compensation tables in this proxy statement, we link culture, compensation
philosophy and compensation strategy throughout the organization from the seasonal sales employee 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. We believe 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
(cid:129)Teaching and learning 
– through 
comprehensive training 
developed to empower 
our managers to make 
good retail decisions
(cid:129)Competition – creating 
opportunities to 
compete and 
recognizing their 
contributions
(cid:129)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

Short-Term 
Cash Based 
Inventives

Bonus

Stock Option 
Grants

Restricted Stock 
Grants

Comparable 
sales

Product margin

Diluted earnings 
per share

Operating 
Related Margins

Common stock 
price

The Zumiez Culture

While every organization has a culture, even if it is a culture by default, we believe that the Zumiez culture
is unique. We believe it is well defined, understood widely and thoroughly among all employees, reinforced and
exemplified by leaders held accountable for doing so and integrated into the daily practices and processes
throughout the business. We believe 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

23

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 vendors, 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 our 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 us 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 against the
competitive market; and

for at-risk components of pay, are an effective balance between short-term and long-term interests of
our shareholders.

The compensation committee believes that at-risk components should result in compensation for the
executive in proportion to and to the extent justified by performance. For Zumiez executives, “performance”
means, first of all, doing the right things—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; 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.

24

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 generally not also made available to our 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 the 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 equity incentives in proportions so that the long-term opportunity for
each NEO to earn total direct compensation (salary plus annual cash incentives plus equity 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, we believe
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 equity 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 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 four general measures of performance: (1) comparable sales results,
(2) product margin, (3) diluted earnings per share and (4) operating related margins. 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. Different performance measures may
be utilized for different executives based in part on the executive’s ability to impact the performance
measure. We calculate these performance measures as follows:

•

Comparable sales— We report “comparable sales” based on net sales beginning on the first
anniversary of the first day of operation of a new store or ecommerce business. We operate a sales
strategy that integrates our stores with our ecommerce platform. There is significant interaction
between our store sales and our ecommerce sales channels and we believe that they are utilized in
tandem to serve our customers. Therefore, our comparable sales also include our ecommerce
sales. Changes in our comparable sales between two periods are based on net sales of store or
ecommerce businesses which were in operation during both of the two periods being compared
and, if a store or ecommerce business is included in the calculation of comparable sales for only a
portion of one of the two periods being compared, then that store or ecommerce business is
included in the calculation for only the comparable portion of the other period. Any store or

25

ecommerce business that we acquire will be included in the calculation of comparable sales after
the first anniversary of the acquisition date. Comparable sales can be based on a geographic area
and we currently utilize comparable sales growth based on our North America operations.

•

•

•

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 gross sales (net of actual and
estimated returns and deductions for promotions), excluding shipping revenue. For purposes of
this calculation, our cost of goods sold consist of branded merchandise costs and our private label
merchandise costs including design, sourcing, importing and inbound freight costs.

Diluted earnings per share—Diluted earnings per share is calculated in accordance with GAAP.
Diluted earnings per share can also be utilized on a consolidated basis or based upon a geographic
area. We currently utilize diluted earnings per share on both a consolidated basis and on a North
America basis.

Operating related margins—In general, operating margin represents operating profit divided by
net sales. Operating margin may also be based on a particular business unit or geographic area in
which we operate.

•

•

•

•

•

•

Provide for the risk of zero annual short-term cash based incentives payout should minimum
performance expectations not be met.

Grant of awards that upon achievement of target performance measures, are in the best long-term
interests of the shareholders.

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

Communicate proactively to all NEOs performance expectations in order to establish clear incentive
for achievement.

Provide for upside compensation potential results that are 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.

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 performance. 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 a different downside potential
than that of holding outright shares of stock; (ii) recognizes that the exclusive and substantial use of gain-based
awards has been historically 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

26

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 CEO in the allocation between stock options and restricted stock, so long as the total compensation charge to
Zumiez 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
Zumiez for many years. Accordingly, if a NEO were to depart from Zumiez then he or she could forfeit
substantial amounts of unrealized compensation.

Shareholder Mentality. We believe it is in the best interests of shareholders for our 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. We do not believe it is necessary to establish share ownership or share holding requirements because
historically the NEOs on aggregate have held a substantial amount of equity and, from a cultural point of view,
NEOs are empowered to make decisions on their equity holdings taking into account their personal values,
temperament, risk tolerance and personal finances.

Within this concept, through equity awards granted over time, each of our NEOs has the ability to establish

and maintain a valuable ownership in Zumiez.

Summary of the Elements of NEO Compensation

The compensation committee utilizes five primary elements for compensating NEOs:

•

•

•

•

•

Base Salary

Non-Equity Incentive Plan Compensation (“short-term cash based incentives”)

Bonus

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.

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.

27

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 those earned from participating in short-term cash based incentives and are
considered in the executive’s total direct compensation. The intention is to pay such bonuses rarely and in modest
amounts if and only if other elements of the executive pay system do not respond to outstanding achievements
clearly pursued and delivered in the interests of shareholders.

Stock Option Grants are opportunities granted from time to time (usually annually or at the time of hiring)
to an NEO to purchase our 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 us.

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

package to achieve all of the compensation goals described in the immediately preceding section of this
discussion.

Fiscal 2015 – A Review of This Past Year

The charts below show net sales and diluted earnings per share (“diluted EPS”) on a GAAP basis for fiscal

2014 and 2015 and the percentage change in fiscal 2015.

Net Sales
(in millions)

-0.9%

$811.6

$804.2

$900.0

$800.0

$700.0

$600.0

Diluted EPS -29.3%

$1.47

$1.04

$2.00

$1.50

$1.00

$0.50

$1.00

Fiscal 2014

Fiscal 2015

Fiscal 2014

Fiscal 2015

In fiscal 2015 teen retail in general faced a challenging sales environment with many mall based teen
retailers experiencing declining sales. Following a 2014 annual comparable sales increase of 4.6% and a fourth
quarter 2014 comparable sales increase of 8.3%, Zumiez sales remained positive in the first quarter of 2015 at
3%. By the second quarter of 2015, sales had begun to slow and remained soft through the remainder of the year
with the absence of a strong fashion trend or key item to drive traffic resulting in a negative 5.3% comparable
sales decrease for the year. Operating margins and earnings declined from the prior year due primarily to
deleveraging of fixed costs on negative comparable sales results and to a lesser extent a decline in product
margins as a result of efforts to keep inventory healthy. Throughout the year, we continued to make investments
in our North America store footprint focused on expanding in the United States and Canada by adding 51 new
stores during fiscal 2015. We also added 6 new stores to our Blue Tomato operations in Europe which showed
strong sales growth in 2015.

Considering the prior year performance and the plans in motion for fiscal 2015, the compensation

committee granted salary increases to our NEOs, to keep pay in line with the stated compensation philosophy and

28

market data. The compensation committee believes the compensation structure outlined in previous years is 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 our long-term success is 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 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 and pay at risk,

compensation awarded to the NEOs for fiscal 2015 reflected Zumiez’ results. As shown below, for the named
executive officers as a group, excluding the Chairman and the CEO, pay at risk and performance-based pay for
fiscal 2015 comprised an average of approximately 45% and 18%, respectively, of the total compensation as
shown in the Summary Compensation Table. Due to fiscal 2015 results, no short term cash based incentives were
awarded. We have excluded our Chairman and CEO due to the difference in the compensation structure for the
Chairman and CEO, who beneficially own 14.8% and 14.5% of the Company as of March 23, 2016, respectively,
and have not received equity awards since before our initial public offering as discussed further under the section
heading, “The Compensation Decision-making Process.”

Compensation Elements as a Percentage of
Total Compensation

At-risk pay
45%

18%
0%
27%

1%

54%

Performance-
based pay
18%

Stock Option Grants

Short Term Cash Based Incentive

Restricted Stock Grants

All Other Compensation

Base Salary

Fiscal 2016 – A Look at the Upcoming Year

Entering 2016 we remain cautious with our expectations. Our focus will be on continued execution of our core

strategies as well as strategic investments centered on long-term quality growth. These investments will be largely
focused on continued store growth, both domestically and international, the roll-out of our new Customer
Engagement Suite and continued investments in our people through acquisition, retention, and statutory wage
increases around the country. As we are closer to our targeted number of stores in North America, we expect that
store growth in fiscal 2016 will be less than in fiscal 2015 with an estimated 34 stores opening during the fiscal year

29

compared with 57 stores in fiscal 2015. This includes 7 additional stores in Europe, an increase from the 6 stores
added in 2015. In 2016 we will invest in the roll-out of our Customer Engagement Suite focused on integrating our
on-line and in-store point of sale (POS) systems, order management system (OMS), and transportation management
system (TMS) improving our efficiency and further enhancing our omni-channel capabilities.

The compensation committee evaluated compensation for fiscal 2016 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 2016 as the
elements in place for fiscal 2015. As such, fiscal 2015 target total direct compensation consists of base salary,
annual short-term cash based incentives, bonus 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.

Base Salary

In March 2015, the compensation committee met and reviewed the evaluations of the NEOs and the overall

performance of the Company against three objective measures; (1) comparable sales performance, (2) product
margin and (3) diluted earnings per share. Based upon our performance in fiscal 2014 and the contributions of the
NEOs towards achieving these results, the following base salaries for fiscal 2015 were awarded:

Executive Officer

Fiscal 2015
Base Salary
(1)

Increase Over
Prior Fiscal
Year

Thomas D. Campion, Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . $335,000
Richard M. Brooks, Chief Executive Officer and Director . . . . . . . . . . . . . . . . . $690,100
Christopher C. Work, Chief Financial Officer
. . . . . . . . . . . . . . . . . . . . . . . . . . $265,000
Troy R. Brown, Executive Vice President of Ecommerce and Omni-channel . . $400,000
Chris K. Visser, Executive Vice President, General Counsel and Secretary . . . . $273,000

3.0%
3.0%
6.0%
10.0%
3.8%

(1) Reflects annualized base salary as of the fiscal year end. Refer to the Summary Compensation Table for

actual base salary paid in fiscal 2015.

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 at the time of hire and thereafter on an annual basis. The compensation committee may also review base
salary at the time of promotion or other significant changes in responsibilities. Base salary changes also impact
target annual short-term cash based incentive amounts, and actual annual short-term cash based incentive
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 for the same or
similar positions based on analysis of the competitive market. Consistent with the philosophy discussed
previously, our executive base salaries generally are set at less than the median (at the 40th percentile) for
comparable positions based on analysis of the competitive market.

Short-Term Cash Based Incentives

In March 2015, the compensation committee approved the terms of the fiscal 2015 short-term cash based

incentives. Our NEOs short-term cash based incentives are targeted at approximately 0.2% of consolidated
budgeted sales and 0.3% of consolidated budgeted sales 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 sales, product margin and diluted earnings per share performance. The

30

compensation committee has the discretion under the plan to reduce the awards paid under the plan, but does 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 first 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 following performance measures, comparable sales-North America, product margin-North

America, diluted earnings per share-North America and diluted earnings per share-Consolidated, 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 second 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; and, in the ten years since becoming a public company, no NEO has achieved all of the stretch
challenge measurement goals. For fiscal 2015, the compensation committee used different performance measures
for different NEOs. These are noted and presented by group (Consolidated and North America) in the following
tables which show the performance thresholds for each performance measure used for fiscal 2015:

Objective Measure

Performance Threshold - Consolidated

1

2

Target

3

4

5

Comparable Sales Growth - North America . . . . . . . .
Product Margin Improvement - North America . . . . . Last year plus

3.0%

4.5%

5.5%

6.0%

6.5%

Last year plus

Last year plus

Last year plus

Last year plus

Diluted Earnings Per Share - Consolidated . . . . . . . . . $
Diluted Earnings Per Share Growth . . . . . . . . . . . . . .

0.3%
1.88
27.9%

$

0.4%
1.95
32.7%

$

0.6%

2.02
37.4%

$

0.7%
2.06
40.1%

$

0.8%
2.10
42.9%

Objective Measure

1

Performance Threshold - North America
3

4

2

5

Comparable Sales Growth - North America . . . . . . . .
Product Margin Improvement - North America . . . . . Last year plus

3.0%

4.5%

5.5%

6.0%

6.5%

Last year plus

Last year plus

Last year plus

Last year plus

Diluted Earnings Per Share - North America . . . . . . . $
Diluted Earnings Per Share Growth . . . . . . . . . . . . . .

0.3%
1.89
8.6%

$

0.4%
1.95
12.1%

$

0.6%

2.00
14.9%

$

0.7%
2.02
16.1%

$

0.8%
2.06
18.4%

Target

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

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

Executive Officer

Performance Threshold - Consolidated

1

2

3

4

5

Thomas D. Campion, Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . .
Richard M. Brooks, Chief Executive Officer and Director
Christopher C. Work, Chief Financial Officer . . . . . . . . . . . . . . . . . . . . . . .

33%
65% 98% 114% 130%
50% 100% 150% 175% 200%
60% 90% 105% 120%
30%

Executive Officer

Performance Threshold - North America

1

2

3

4

5

Troy R. Brown, Executive Vice President of Ecommerce and Omni-

channel

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35%

70% 105% 123% 140%

Chris K. Visser, Executive Vice President, General Counsel and

Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28%

55% 83% 96% 110%

31

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.

Executive Officer

Objective Measure

Comparable
Sales - North
America

Diluted
Earnings Per
Share Growth -
Consolidated

Diluted
Earnings Per
Share Growth -
North America

Product
Margin - North
America

Thomas D. Campion, Chairman of the Board . . . . . . . . . .
Richard M. Brooks, Chief Executive Officer and

Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . .
Christopher C. Work, Chief Financial Officer
Troy R. Brown, Executive Vice President of Ecommerce
and Omni-channel . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chris K. Visser, Executive Vice President, General

30%

30%
30%

30%

Counsel and Secretary . . . . . . . . . . . . . . . . . . . . . . . . . .

30%

40%

40%
50%

n/a

n/a

n/a

n/a
n/a

40%

50%

30%

30%
20%

30%

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

During fiscal 2015, we did not achieve any of the level one metrics. Accordingly, no short-term cash based

incentive awards were paid to the NEOs for fiscal 2015. The short-term cash based incentives target and
compensation paid to the NEOs for fiscal 2015 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 and Director . . . . . . . . . . . . . . .
Christopher C. Work, Chief Financial Officer
. . . . . . . . . . . . . . . . . . . . . . . .
Troy R. Brown, Executive Vice President of Ecommerce and

$217,750
$690,100
$159,000

Omni-channel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$280,000

Chris K. Visser, Executive Vice President, General Counsel and

Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$150,150

$—
$—
$—

$—

$—

Bonus

While we continue to open new stores and invest for the future, and have been for many years, the
compensation committee recognizes the uncertain economic environment that has the potential to negatively
impact virtually every industry including consumer discretionary spending businesses such as ours. The
compensation committee recognizes that in some circumstances it may be advisable to establish and pay
discretionary bonuses in order to reward NEOs for managing the business during difficult economic conditions.
For example, in a situation where at the beginning of a fiscal year there was believed to be a wide range of
possible financial outcomes, this variability may make it difficult to set targets for short-term cash based
incentives. Accordingly, at the end of the fiscal year the compensation committee retains the discretion to award
a bonus if the NEOs were able to achieve meaningful results during the fiscal year by managing the business,
such as in the following ways:

•

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

• Working capital versus plan and prior year.

32

•

•

•

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.

We may also award discretionary cash bonuses from time to time in order to attract and retain key NEOs.

The intention is to pay such bonuses rarely and in modest amounts if and only if other elements of the
executive pay system do not respond to outstanding achievements clearly pursued and delivered in the interests
of our shareholders. The compensation committee also recognizes that such bonuses would be discretionary and
would not qualify for deductibility under Section 162(m) of the Internal Revenue Code. For additional
information on the applicability of Section 162(m), see the discussion under the section heading “Tax and
Accounting Implications.”

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 2015 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 and Director
. . . . . . . . . . . . . . .
Christopher C. Work, Chief Financial Officer . . . . . . . . . . . . . . . . . . . . . . . . .
Troy R. Brown, Executive Vice President of Ecommerce and

Omni-channel

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chris K. Visser, Executive Vice President, General Counsel and Secretary . .

—
—
2,365

7,000
2,567

—
—
3,011

8,915
3,269

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 generally 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.

33

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 four 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 our 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 compared to compensation opportunities and practices in the competitive
market for executive talent.

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 our management.

•

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.

34

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

with the compensation committee on its compensation deliberations. During fiscal 2015, the compensation
committee asked the consultant to 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 Zumiez and our management.

Our Executive Vice President, General Counsel and Secretary supports the compensation committee in its

work.

The Compensation Decision-making Process

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

including:

•

•

•

•

•

•

Tally sheets—We use tally sheets for each of the NEOs to summarize the significant components of
compensation, including base salary, short-term cash based incentives, bonuses, and equity incentives.
The tally sheets are compared to targeted total compensation.

Competitive Compensation Analysis—At the compensation committee’s direction, the compensation
consultant developed and delivered analysis of competitive compensation for each NEO position.
Analysis was performed using publicly-available information on executive pay levels compiled from
the most recently available proxy statements of publicly-held companies. The focus was on selected
samples of retail companies that best reflect the competitive market for executive talent: those of
similar size, business profile and executive compensation practices. Supplemental analyses for the
retail sector as a whole and across business sectors in both the Pacific Northwest and nationwide were
also conducted. These, along with application of generally accepted methods of statistical analysis,
helped ensure the accuracy, validity, reliability and defensibility of results. On the basis of this rigorous
approach, the compensation consultant provided expert opinions and conclusions to the compensation
committee about targets for base salary, short-term cash based incentives and long-term equity
incentives for our NEO roles. The committee used this information to ensure that our stated philosophy
and strategy for aligning executive compensation opportunities with the competitive market has been
and continues to be fulfilled.

Fiscal 2015 results—The compensation committee has access to fiscal 2015 operating plans and
budgets as approved by the board of directors in March 2015. 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 2016 operating and financial plans—The compensation committee also receives the operating
plan and budgets for fiscal 2016 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.

Performance of teen and young adult specialty retailers—The compensation committee requests that
management prepare a schedule for a group of teen and young adult retailers comparing comparable-
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 and young adult retailers
include: Abercrombie & Fitch, Aeropostale, American Eagle, Tilly’s and Pacific Sunwear. The group
was selected because they are generally considered to be leading lifestyle retailers in the teen and
young adult market. All of the information for these retailers was summarized from publicly available
data. The compensation committee compares our 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.

35

•

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.

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 (40th percentile) base salary opportunities against the Company’s competitive
market for executive compensation talent.

Establish average (50th percentile) total cash compensation opportunities (base salary, bonus and Short-
Term Cash Based Incentives) against the competitive market.

Provide long-term equity-based awards at the 50th percentile when compared to competitive practices
for comparable roles. In the case of our Chairman and our CEO who beneficially own 14.8% and
14.5% 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 since before the Company’s
initial public offering.

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.

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 sales, product
margin and diluted earnings per share. These three measures have historically been used to determine the short-
term cash based incentives and are also key considerations in determining changes to base salary and long-term
equity 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; and, is guided by explicit competitive targets and ranges of
reasonableness.

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.

Advisory Vote on Executive Compensation. The shareholders of the Company are provided the opportunity
to provide an advisory vote on the Company’s executive compensation every three years. At the last such vote in

36

May of 2014 the shareholders of the Company approved the Company’s executive compensation in an advisory
vote with 99.7% of the votes being cast in favor of the Company’s executive compensation. The compensation
committee viewed this vote as strong support for its executive compensation decisions and policies and,
accordingly, it did not consider making changes to its executive compensation decisions and policies in response
to the 2014 advisory shareholder vote.

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. “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 sales-North America, product margin-North America, diluted earnings
per share-Consolidated and diluted earnings per share-North America. 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 200% of base pay for our CEO, 140% for our Executive Vice President of Ecommerce and
Omni-channel, 130% for our Chairman of the Board, 120% for our Chief Financial Officer and 110% for our
Executive Vice President, General Counsel and Secretary. The compensation committee believes that the overall
executive compensation policy contains less than a ‘reasonable likelihood’ of material risk.

Employment Agreements

None of our U.S. employees have an employment agreement and all U.S. employees are “at will.”

Tax and Accounting Implications

Accounting Treatment. We recognize a charge to earnings for accounting purposes for equity awards over

their vesting period. We expect that the compensation committee will continue to review and consider the
accounting impact of equity awards in addition to considering the impact for dilution and overhand when
deciding on amounts and terms of equity grants.

Deductibility of Executive Compensation. 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. At our
2014 Annual Meeting of Shareholders, the Company’s shareholders approved the material terms of the
performance criteria that is utilized in our short-term cash based incentive awards and other awards that may be
made in the future pursuant to the terms of the 2014 Equity Incentive Plan and therefore, the short-term cash
based incentive awards (discussed earlier in the Compensation Discussion and Analysis) are eligible for
exclusion under the Section 162(m) $1.0 million limit for fiscal 2015 and beyond.

37

Taxation of Parachute Payments and Deferred Compensation. We do not provide and have no obligation to
provide any executive officer, including any NEO, with a “gross-up” or other reimbursement payment for any tax
liability that he or she might owe as a result of the application of Section 280G, 4999, or 409A of the Code.
Sections 280G and 4999 of the Code provide that executive officers and directors who hold significant equity
interests and certain other service providers may be subject to an excise tax if they receive payments or benefits
in connection with a change in control that exceed certain limits prescribed by the Code, and that the employer
may forfeit a deduction on the amounts subject to this additional tax. Section 409A of the Code also may impose
significant taxes on a service provider in the event that he or she receives deferred compensation that does not
comply with the requirements of Code Section 409A. We have structured our compensation arrangements with
the intention of complying with or otherwise being exempt from the requirements of Code Section 409A. Our
2014 Equity Incentive Plan provides that it shall be interpreted and administered to the extent necessary to
comply with or effectuate an exemption from the requirements of Code Section 409A.

Advisory Vote on Executive Compensation

We provided the Company’s shareholders with the opportunity to vote to approve, on an advisory, non-

binding basis, the compensation of our named executive officers at our 2014 Annual Meeting of Shareholders.
As noted above under the section heading “The Compensation Decision-making Process,” the result of the prior
advisory shareholder vote at our 2014 Annual Meeting of Shareholders was 99.7% of votes cast approved the
compensation of our named executive officers.

Additionally, at our 2011 Annual Meeting of Shareholders, we provided 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, with the option for every “1 Year,” every “2 Years,” or every
“3 Years.” The result of this advisory vote was 58.9% of votes cast were in favor of an advisory vote on
executive compensation every three years. Based on the board of directors’ recommendation for a frequency of
three years and the voting results with respect to the frequency of future advisory votes on executive
compensation, the board of directors determined that it will include in the annual shareholder meeting proxy
materials a shareholder vote on executive compensation every three years until the next required vote on
frequency of advisory votes on executive compensation, which will occur at the 2017 Annual Meeting of
Shareholders. As an advisory vote on executive compensation occurred at the 2014 Annual Meeting of
Shareholders, the next advisory vote on executive compensation will occur at the 2017 Annual Meeting of
Shareholders.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Weber, Hyde, Smith, and Ms. Holmes currently serve as members of the compensation committee.
No member of the compensation committee was at any time during fiscal 2015 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 2015.

38

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

Travis D. Smith, Chairperson
Kalen F. Holmes
Matthew L. Hyde
James M. Weber

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.

39

Summary Compensation Table

The following table shows all compensation for fiscal 2015, 2014, and 2013 awarded to, earned by, or paid

to our CEO, our CFO and our other executive officers. These executive officers are referred to as “NEOs.”

Stock
Awards
($) (1)

Option
Awards
($) (2)

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

All Other
Compensation
($) (4)

Name and Principal Position

Year

Thomas D. Campion . . . . . . . . . . . . . 2015
2014
2013

Chairman of the Board

Richard M. Brooks . . . . . . . . . . . . . . 2015
2014
2013

Chief Executive Officer
and Director

Christopher C. Work . . . . . . . . . . . . . 2015
2014
2013

Chief Financial Officer

Salary
($)

334,658
324,911
315,446

689,327
669,250
649,769

264,423
249,158
227,404

—
—
—

—
—
—

—

—
— 105,714
61,581
—

—
—
— 335,000
— 195,150

91,218
62,476
54,359

60,792
62,490
54,403

Troy R. Brown . . . . . . . . . . . . . . . . . . 2015
2014
2013

Executive Vice President of
Ecommerce and Omni-channel

398,597 269,990 179,994
362,851 199,995 199,998
338,270 145,511 145,606

Chris K. Visser . . . . . . . . . . . . . . . . . 2015
2014
2013

Executive Vice President, General
Counsel and Secretary

272,616
262,709
255,154

99,009
62,476
54,359

66,001
62,490
54,403

—
68,750
22,810

—
235,366
27,576

—
108,488
25,544

Total
($)

340,847
438,207
383,706

698,138
1,016,018
855,742

421,549
449,550
364,940

856,889
1,004,516
663,904

442,185
499,322
391,338

6,189
7,582
6,679

8,811
11,768
10,823

5,116
6,676
5,964

8,308
6,306
6,941

4,559
3,159
1,878

(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. For assumptions used in determining these values, please see Note 2 (listed under
Stock Compensation) in the Notes to Consolidated Financial Statements in our fiscal 2015, 2014 and 2013
Form 10-K. Information regarding the restricted stock awards granted to the NEOs during fiscal 2015 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. For assumptions used in determining these values, please see Note 2 (listed under Stock
Compensation) in the Notes to Consolidated Financial Statements in our fiscal 2015, 2014 and 2013 Form
10-K. Information regarding the stock option awards granted to our NEOs during 2013 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 2015, 2014 and 2013 and paid in early fiscal
2016, 2015 and 2014 respectively, to each of the NEOs under our executive Short-Term Cash Based
Incentives. 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.” Information regarding the threshold, target and maximum estimated future
payouts under non-equity incentive plan awards is set forth in the Grants of Plan-Based Awards Table.

(4) For fiscal 2015, All Other Compensation includes the amount of Company 401K employer match

contributions, merchandise discounts, and any insurance reimbursements that are not generally available to
all salaried employees. For fiscal 2015, Company 401K employer match contributions were as follows:
Mr. Campion ($5,549); Mr. Brooks ($5,640); Mr. Work ($4,320); Mr. Brown ($5,640) and Mr. Visser
($4,320). For fiscal 2015, the value of merchandise discounts were as follows: Mr. Campion ($640);
Mr. Brooks ($3,171); Mr. Work ($796); Mr. Brown ($2,668) and Mr. Visser ($239). Merchandise discounts
are generally available to all qualified employees. In fiscal 2013, Mr. Visser also received a COBRA health
plan reimbursement of $1,493

40

Grants of Plan-Based Awards

The following table provides information about equity and non-equity awards granted to the NEOs in fiscal
2015. 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.

Name

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

Grant
Date

Threshold
($)

Target
($)

Maximum
($)

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

108,875

217,750

435,500

Chairman of the Board

Richard M. Brooks . . . . . . . . . . .
Chief Executive Officer and
Director

345,050

690,100

1,380,200

Christopher C. Work . . . . . . . . .

79,500

159,000

318,000

Chief Financial
Officer

3/16/2015
3/16/2015

Troy R. Brown . . . . . . . . . . . . . .

140,000

280,000

560,000

Executive Vice
President of Ecommerce
and Omni-channel

3/16/2015
3/16/2015

Chris K. Visser . . . . . . . . . . . . . .
Executive Vice President,
General Counsel and
Secretary

3/16/2015
3/16/2015

75,075

150,150

300,300

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

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

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

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

2,365

7,000

2,567

3,011

20.19

8,915

20.19

3,269

20.19

91,218
60,792

269,990
179,994

99,009
66,001

(1) These columns show what the potential payout for each NEO was under the executive short-term cash based

incentives for fiscal 2015 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” and the Summary Compensation Table for amounts earned by the NEOs in fiscal 2015. No short-
term cash based incentive awards were paid to the NEOs for fiscal 2015.

(2) This column shows the number of shares of restricted stock granted in fiscal 2015 to the NEOs. The restricted

stock awards 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.” Information on the aggregate grant-date fair value of restricted stock awards is set forth in
the Summary Compensation Table.

(3) This column shows the number of stock options granted in fiscal 2015 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.”
Information on the aggregate grant-date fair value of stock option awards is set forth in the Summary
Compensation Table.

(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 2 (listed under Stock
Compensation) in the Notes to Consolidated Financial Statements in our fiscal 2015 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.

41

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 30, 2016. 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 30, 2016, which was $18.11.

Name

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

Chairman of the Board

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

Chief Executive Officer and Director

Christopher C. Work . . . . . . . . . . . . . . . . . . . . . . .

Chief Financial Officer

Troy R. Brown . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Executive Vice President of Ecommerce
and Omni-channel

Chris K. Visser . . . . . . . . . . . . . . . . . . . . . . . . . . .

Executive Vice President,
General Counsel and Secretary

Option Awards

Stock Awards

Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)

Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)

Options
Exercise
Price
($)

Option
Expiration
Date

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

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

—

—

9,801
1,806
1,024
—
—
—
—
—

4,970
4,614
4,832
3,277
—
—
—
—

6,864
1,806
1,024
—
—
—
—
—

—

—

3,265(1)
1,804(2)
3,071(3)
3,011(4)
—
—
—
—

—

—

28.30
24.81
25.49
38.57
—
—
—
—

— (9)

25.31
1,538(10) 34.57
24.81
4,830(2)
25.49
9,829(3)
38.57
8,915(4)
—
—
—
—
—
—

2,288(11) 27.00
24.81
1,804(2)
25.49
3,071(3)
38.57
3,269(4)
—
—
—
—
—
—
—
—

—

—

—

—

9/15/2022
3/18/2023
3/17/2024
3/16/2025

—
—
—
—

3/14/2021
3/12/2022
3/18/2023
3/17/2024
3/16/2015

—
—

10/15/2022
3/18/2023
3/17/2024
3/16/2025

—
—
—
—

—
—
—
—
456(5)
729(6)
1,634(7)
2,365(8)

—
—
—
—
—
1,955(6)
5,230(7)
7,000(8)

—
—
—
—
693(12)
729(6)
1,634(7)
2,567(8)

—

—

—
—
—
—
8,258
13,202
29,592
42,830

—
—
—
—
—
35,405
94,715
126,770

—
—
—
—
12,550
13,202
29,592
46,488

(1) 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 September 15, 2012.

(2) 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 18, 2013.

(3) 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 17, 2014.

(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 16, 2015.

42

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

date anniversary. The grant date was March 16, 2012.

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

date anniversary. The grant date was March 18, 2013.

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

date anniversary. The grant date was March 17, 2014.

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

date anniversary. The grant date was March 16, 2015.

(9) 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 14, 2011.

(10) 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, 2012.

(11) 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 October 15, 2012.

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

date anniversary. The grant date was October 15, 2012.

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 2015, 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

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)
($)

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

Chairman of the Board

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

Chief Executive Officer and Director

—

—

—

—

—

—

—

—

Christopher C. Work . . . . . . . . . . . . . . . . . . . .

1,665

11,921

2,632

100,475

Chief Financial Officer

Troy R. Brown . . . . . . . . . . . . . . . . . . . . . . . .
Executive Vice President of Ecommerce
and Omni-channel

Chris K. Visser . . . . . . . . . . . . . . . . . . . . . . . .
Executive Vice President, General Counsel
and Secretary

23,700

557,466

5,823

225,820

—

—

2,243

71,784

(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.

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

Pension Benefits

43

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 and 2014 Equity Incentive Plan, the vesting of which may accelerate in the event of a
Change in Control (as defined below). The Company does not have employment agreements with any of its
employees, including its executive officers. Also, the Company does not maintain a severance or separation plan
for its executive officers. Accordingly, except as described below, there are no agreements, arrangements or
plans that entitle the Company’s executive officers to enhanced benefits upon termination of their employment.
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.

Double-Trigger Acceleration of Stock Award Vesting

The Company’s 2014 Equity Incentive Plan has a double-trigger acceleration which provides that in the
event of a Change in Control we do not accelerate vesting of awards that are assumed or replaced by the resulting
entity after a change in control unless an employee employment is also terminated by the Company without
cause or by the employee with good reason within one year of the change in control.

For purposes of the 2005 Equity Incentive Plan and 2014 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.

44

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

in connection with a Change in Control on January 30, 2016.

Change in Control

Change in Control
with Double Trigger Acceleration

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

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

Stock Option Vesting
in Connection with a
Change in Control (3)

Restricted Stock
Vesting in Connection
with a Change in
Control (4)

Executive Officer

Thomas D. Campion, Chairman

of the Board . . . . . . . . . . . . . . .

$—

$ —

Richard M. Brooks, Chief
Executive Officer and
Director . . . . . . . . . . . . . . . . . .

Christopher C. Work, Chief

Financial Officer . . . . . . . . . . .

Troy R. Brown, Executive Vice
President of Ecommerce and
Omni-channel

. . . . . . . . . . . . .

Chris K. Visser, Executive Vice
President, General Counsel
and Secretary . . . . . . . . . . . . . .

$—

$—

$—

$—

$ —

$ 51,052

$130,120

$ 55,344

$—

$—

$—

$—

$—

$ —

$ —

$ 93,882

$256,890

$101,833

(1) Represents the amount calculated by multiplying the number of in-the-money unvested 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 fiscal 2015. 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 fiscal 2015.

(3) Represents the amount calculated by multiplying the number of in-the-money unvested options with respect
to which the vesting would accelerate as a result of Change in Control under the circumstances of a double
trigger acceleration as defined in the 2014 Equity Incentive Plan noted by the difference between the
exercise price and the closing price of a share of common stock on the last trading day of fiscal 2015. 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.

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

accelerate as a result of a Change in Control under the circumstances of a double trigger acceleration as
defined in the 2014 Equity Incentive Plan 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 fiscal 2015.

45

EQUITY COMPENSATION PLAN INFORMATION

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

January 30, 2016:

Plan Category

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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

143,361

$27.86

3,339,289

—

—

—

—

—

346,844

(1) Equity compensation plans approved by shareholders include the 2005 Equity Incentive Plan and the 2014

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 2014 Employee Stock Purchase Plan.

46

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

The fiscal 2015 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 30, 2016.

We have reviewed and discussed with management and the independent auditor management’s assessment

of the effectiveness of the Company’s internal control over financial reporting and the independent auditor’s
opinion about the effectiveness of the Company’s internal control over financial reporting.

We have discussed with the independent auditor the matters required to be discussed by Public Company
Accounting Oversight Board (PCAOB) Auditing Standard No. 16 (Communication with Audit Committees).

We have received and reviewed the written disclosures and the letter from our independent auditor required

by applicable requirements of the PCAOB regarding the independent auditor’s communications with the audit
committee concerning independence, and have discussed with the independent auditor 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

Ernest R. Johnson, Chairman
Sarah (Sally) G. McCoy
Travis D. Smith
Scott A. Bailey

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.

47

Fees Paid to Independent Registered Public Accounting Firm for Fiscal 2015 and 2014

The aggregate fees billed by Moss Adams LLP for professional services rendered for fiscal 2015 and fiscal

2014, are as follows:

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

$441,000
16,000
—

$448,000
18,000
—

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

$457,000

$466,000

Fiscal 2015

Fiscal 2014

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

statements of the Company and reviews of the interim condensed consolidated financial statements included
in the Company’s quarterly reports.

(2) Audit-related fees include services and costs in connection with the audit of the Company’s 401K plan.
(3) Tax fees include services and costs in connection with federal, state and foreign tax compliance and tax

advice.

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 2015 and 2014, there were no services that were performed pursuant to the “de minimis

exception.”

48

RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PROPOSAL 2

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, 2017 (“fiscal 2016”). Moss
Adams LLP has served as our independent registered public accounting firm since 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 2016, 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 2016

49

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., 4001 204th Street SW, Lynnwood, Washington
98036. 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 31, 2017. 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 22, 2016, to be considered
for inclusion. Among other requirements set forth in the SEC’s proxy rules, 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 31, 2017,
and not before January 1, 2017. 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.
4001 204th Street SW
Lynnwood, Washington 98036

50

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
Chris K. Visser
Executive Vice President, General Counsel and
Secretary

Lynnwood, Washington
April 22, 2016

A copy of our Annual Report on Form 10-K for the fiscal year ended January 30, 2016 filed with the

SEC is available without charge upon written request to: Secretary, Zumiez Inc., 4001 204th Street SW,
Lynnwood, Washington 98036.

51

[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 30, 2016

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)

4001 204th Street SW
Lynnwood, Washington
(Address of principal executive offices)

91-1040022
(IRS Employer
Identification No.)

98036
(Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act: Common Stock

Name of each exchange on which registered: The Nasdaq Global Select Market

Securities registered pursuant to 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 90 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 È 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 È
Non-accelerated filer ‘

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
The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant as of the last business day of the

second fiscal quarter, August 1, 2015, was $523,197,781. At March 7, 2016, there were 25,488,900 shares outstanding of common stock.

DOCUMENTS INCORPORATED BY REFERENCE

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 June 1, 2016, which definitive proxy statement will be filed not later than
120 days after the end of the fiscal year to which this report relates.

ZUMIEZ INC.
FORM 10-K
TABLE OF CONTENTS

PART I

Item 1.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Item 3.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART II

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

of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8.
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 . . . . . . . . . . . . . . . . .
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 14.

PART IV

3
10
21
21
21
21

22
25
26
40
40
41
41
43

43
43

43
43
43

Item 15. Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

44
73

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 2016 will be the 52 week period
ending January 28, 2017. Fiscal 2015 was the 52 week period ending January 30, 2016. Fiscal 2014 was the
52-week period ending January 31, 2015. Fiscal 2013 was the 52-week period ending February 1, 2014. Fiscal
2012 was the 53-week period ending February 2, 2013. Fiscal 2011 was the 52-week period ending January 28,
2012.

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

wholly-owned subsidiaries.

Item 1.

BUSINESS

Zumiez Inc., including its wholly-owned subsidiaries, is a leading specialty retailer of apparel, footwear,

accessories and hardgoods for young men and women who want to express their individuality through the
fashion, music, art and culture of action sports, streetwear, and other unique lifestyles. Zumiez Inc. was formed
in August 1978 and is a Washington State corporation.

At January 30, 2016, we operated 658 stores; 592 in the United States (“U.S.”), 42 in Canada and 24 in
Europe. We operate under the names Zumiez and Blue Tomato. Additionally, we operate ecommerce websites at
www.zumiez.com and www.blue-tomato.com.

We completed the acquisition of Snowboard Dachstein Tauern GmbH and Blue Tomato Graz Handel
GmbH (collectively, “Blue Tomato”) during fiscal 2012. Blue Tomato is one of the leading European specialty
retailers of apparel, footwear, accessories and hardgoods.

We employ a sales strategy that integrates our stores with our ecommerce platform. There is significant
interaction between our store sales and our ecommerce sales channels and we believe that they are utilized in
tandem to serve our customers. Our selling platforms bring the look and feel of an independent specialty shop
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 selling platforms to appeal to teenagers and young adults and to serve as a destination
for our customers. We believe that our distinctive selling platforms concepts and compelling economics will
provide continued opportunities for growth in both new and existing markets.

3

We believe that our customers desire authentic merchandise and fashion that is rooted in the fashion, music,
art and culture of action sports, streetwear, and other unique lifestyles to express their individuality. We strive to
keep our merchandising mix fresh by continuously introducing new brands, 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 apparel, footwear, accessories 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 merchandise mix with a select offering of
private label apparel and products as a value proposition that we believe complements our overall merchandise
selection.

Over our 37-year history, we have developed a corporate culture based on a passion for action sports,
streetwear and other unique lifestyles. We have increased our store count from 400 as of the end of fiscal 2010 to
658 as of the end of fiscal 2015, representing a compound annual growth rate of 10.5%; increased net sales from
$478.8 million in fiscal 2010 to $804.2 million in fiscal 2015, representing a compound annual growth rate of
10.9%; and been profitable in every fiscal year of our 37-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 young men and women, many of
whom we believe are attracted to action sports, streetwear, and other unique lifestyles and desire to express their
personal independence and style through the apparel, footwear and accessories they wear and the equipment they
use. 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 and differentiates us in our market.

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

an extensive selection of current and relevant lifestyle brands encompassing apparel, footwear, accessories and
hardgoods. The breadth of merchandise offered through our sales channels exceeds that offered by many of our
competitors and includes some brands and products that are available only at our stores within many malls or
shopping areas. Many of our customers desire to update their wardrobes and equipment as fashion trends evolve
or the season dictates, providing us the opportunity to shift our merchandise selection seasonally. 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. We believe 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 from within and we provide our employees with the knowledge and
tools to succeed through our comprehensive training programs and the empowerment to manage their stores to
meet localized customer demand.

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

and clearly communicates our distinct brand image. We seek to integrate our store and digital shopping
experiences to serve our customers whenever, wherever, and however they choose to engage with us. We seek to
attract knowledgeable sale associates who identify with our brand and are able to offer superior customer service,
advice and product expertise. We believe that our distinctive shopping experience enhances our image as a
leading source for apparel and equipment for action sports, streetwear, and other unique lifestyles.

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

4

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 employees with enhanced product knowledge, selling skills and operational
expertise. We believe that our merchandising teams’ immersion in the lifestyles we represent, supplemented with
feedback from our customers, store associates and omni-channel leadership, 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 images with the lifestyles we represent.
Our marketing efforts focus on reaching our customers in their environment and feature extensive grassroots
marketing events. 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. Events and activities such as these provide
opportunities for our customers to develop a strong identity with our culture and brands. We believe that our
immersion in the lifestyles we represent 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 specialty retailer of action sports, streetwear, and other

unique lifestyles by:

Opening New Store Locations. We believe our brand has appeal that provides store expansion opportunities

throughout the U.S., Canada and Europe. During the last three fiscal years, we have opened 172 new stores
consisting of 57 stores in fiscal 2015, 56 stores in fiscal 2014 and 59 stores in fiscal 2013. We have successfully
opened stores in diverse markets throughout the U.S. and internationally, which we believe demonstrates the
portability and growth potential of our concepts. To take advantage of what we believe to be a compelling
economic store model, we plan to open approximately 34 new stores in fiscal 2016, including stores in our
existing markets and in new markets domestically and internationally. The number of anticipated store openings
may increase or decrease due to market conditions and other factors.

Continuing to Generate Sales Growth through Existing Channels. We seek to maximize our comparable
sales by continuing to integrate our store and on-line shopping experiences and offering our customers a broad
and relevant selection of brands and products.

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 unique lifestyles of our customers. 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 to further 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 as the definitive source of merchandise for their unique lifestyles
across all channels in which we operate. We believe that the breadth of merchandise that we offer our customers,
which includes apparel, footwear, accessories and hardgoods, exceeds that offered by many other specialty stores
at a single location, and makes us a single-stop purchase destination for our target customers.

5

We seek to identify fashion trends as they develop and to respond in a timely manner with a relevant
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. Our merchandise mix may vary by region, country,
and season, reflecting the preferences and seasons in each market.

We believe that offering an extensive selection of current and relevant brands in sports, fashion, music, and
art is integral to our overall success. No single brand that we carry accounted for more than 9.8%, 8.7% and 7.6%
of our net sales in fiscal 2015, 2014 and 2013. We believe that our strategic mix of apparel, footwear, accessories
and hardgoods 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 unique lifestyles of our customers 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 we exclusively distribute. We supplement our merchandise assortment with a select offering
of private label products across many of our 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 2015, 2014 and 2013, our private label merchandise represented 21.0%, 19.9% and 17.7% of
our net sales.

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 consumer demands and 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 stores’ sales strength, our promotions and seasonality.

Our merchandising staff remains in tune with the fashion, music, art and culture of action sports, streetwear,

and other unique lifestyles by participating in action sports, attending relevant events and concerts, watching
related programming and reading relevant publications and social network channels. In order to identify evolving
trends and fashion preferences, our staff spends considerable time analyzing sales data, gathering feedback from
our stores and customers, shopping in key markets and soliciting input from our vendors.

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

cultivated our private label 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.

6

Stores

Store Locations. At January 30, 2016, we operated 658 stores in the following locations:

United States and Puerto Rico - 592 Stores

Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois

Indiana
Iowa

4
3
13 Kansas

3 Kentucky
89 Louisiana
19 Maine

9 Maryland
4 Massachusetts

32 Michigan
12 Minnesota
6 Mississippi
6 Missouri
19 Montana

10 Nebraska
4 New Hampshire
3 New Jersey
4 New Mexico
6 New York
3 Nevada
11 North Carolina
11 North Dakota
13 Ohio
11 Oklahoma
1 Oregon
7 Pennsylvania
5 Puerto Rico

2 Rhode Island
6 South Carolina

20 South Dakota
5 Tennessee
33 Texas
9 Utah
12 Vermont
3 Virginia
11 Washington

6 West Virginia

13 Wisconsin
21 Wyoming
3

2
4
2
8
52
14
1
14
25
2
14
2

Canada - 42 Stores

Alberta
British Columbia
Manitoba

6 New Brunswick
9 Nova Scotia
2 Ontario

1
2
20

Saskatoon

2

Europe - 24 Stores

Austria
Germany

12
12

The following table shows the number of stores (excluding temporary stores that we operate from time to

time for special or seasonal events) opened, acquired and closed in each of our last three fiscal years:

Fiscal Year

2015
2014
2013

Stores
Opened

57
56
59

Stores
Closed

Total Number of
Stores End of Year

2
4
6

658
603
551

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

environment that we believe resonates with our customers. Our stores feature an industrial look, dense
merchandise displays, lifestyle focused posters and signage and popular music, all of which are consistent with
the look and feel of an independent specialty shop. Our stores are designed 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 season dictates. At January 30, 2016, our stores averaged approximately 2,941 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 2016, we plan on opening new stores
with square footage similar to this average.

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

locations with suitable demographics and favorable lease terms. For mall locations, we seek locations near busy
areas of the mall such as food courts, movie theaters, game stores and other popular teen and young adult

7

retailers. We generally locate our stores in malls in which other teen and young adult-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.

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.

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 offices, we give our
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 to improve both operational
expertise and supervisory skills.

Our store associates generally have an interest in the fashion, music, art and culture of 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. These programs are designed to promote a competitive,
yet fun, culture that is consistent with the unique lifestyles 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 lifestyles we represent. 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 lifestyles we offer. 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 brands and culture.

We have a customer loyalty program, the Zumiez STASH, which allows members to earn points for
purchases or performance of certain activities. The points can be redeemed for a broad range of rewards,
including product and experiential rewards. 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, the Zumiez STASH, catalogs and various social
network channels. We believe that our immersion in action sports, streetwear, and other unique lifestyles allows
us to build credibility with our target audience and gather valuable feedback on evolving customer preferences.

Distribution and Fulfillment

Timely and efficient distribution of merchandise to our stores is an important component of our overall

business strategy. Domestically, our distribution center is located in Corona, California. At this facility,
merchandise is inspected, allocated to stores and distributed to our stores and customers. Each store is typically
shipped merchandise five times a week, providing our stores with a steady flow of new merchandise.

During fiscal 2015, we closed our ecommerce fulfillment center located in Edwardsville, Kansas moving to
fully localized fulfillment strategy in which we use our domestic store network to provide fulfillment services for
the vast majority of customer purchases.

Internationally, we operate a combined distribution and ecommerce fulfillment center located in Graz,
Austria that supports our Blue Tomato ecommerce and store operations in Europe and we operate a distribution
center located in Delta, British Columbia, Canada to distribute merchandise to our Canadian stores.

8

Management Information Systems

Our management information systems provide integration of store, on-line, 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 these systems with our business requirements and to support our continuing growth.

Competition

The teenage and young adult retail apparel, hardgoods, footwear and accessories industry is highly

competitive. We compete with other retailers for vendors, customers, suitable store locations and qualified store
associates and management personnel. In the softgoods market, which includes apparel, footwear and
accessories, we currently compete with other teenage and young adult focused retailers. 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 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 our ability to compete favorably with many of our
competitors is due to our differentiated merchandising strategy, compelling store environment and deep-rooted
culture.

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 2015, approximately 56% of our net sales occurred in the third and
fourth quarters combined, 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, competitive influences and the number and timing of new store openings, remodels
and closings.

Trademarks

The “Zumiez” and “Blue Tomato” trademarks and certain other trademarks, have been registered, or are the

subject of pending trademark applications, with the U.S. 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 the Corporation for Assigned Names and Numbers.

Employees

At January 30, 2016, we employed approximately 2,300 full-time and approximately 4,700 part-time
employees globally. However, the number of part-time employees fluctuates depending on our seasonal needs
and generally increases during peak selling seasons, particularly the back-to-school and the winter holiday
seasons. None of our employees are represented by a labor union and we believe that our relationship with our
employees is positive.

9

Financial Information about Segments

See Note 17, “Segment Reporting,” in the Notes to Consolidated Financial Statements found in Part IV
Item 15 of this Form 10-K, for information regarding our segments, product categories and certain geographical
information.

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 Securities and Exchange Commission (“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. The SEC maintains a website that contains electronic filings by Zumiez and other
issuers at www.sec.gov. In addition, the public may read and copy any materials Zumiez files with the SEC at the
SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

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 “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. 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.

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

In order to generate customer traffic we depend heavily on locating many of 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, fluctuations in exchange rates in border or
tourism-oriented locations 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 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 our 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

10

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.

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 could 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 may not be able to obtain that
financing on acceptable terms or at all.

In addition, we plan to open new stores in regions of the U.S. or international locations in which we
currently have few, or no, stores. The expansion into these markets may present competitive, merchandising,
hiring 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.

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 or businesses, such as our acquisition of Blue
Tomato, one of the leading European specialty retailers of apparel, footwear, accessories, and hardgoods. We
may experience difficulties in integrating any stores or businesses we may acquire, including their facilities,
personnel, financial systems, distribution, operations and general operating procedures, and any such acquisitions
may also result in the diversion of our capital and our management’s attention from other business issues and
opportunities. If we experience difficulties in integrating acquisitions or if such acquisitions do not 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 overall financial performance.

Our plans for international expansion include risks that could have a negative impact on our results of
operations.

In fiscal 2011, we opened our first store locations in Canada and we plan to continue to open new stores in

Canada. During fiscal 2012, we acquired Blue Tomato, which operates primarily in the European market, and we
plan to open new stores in Europe in the future. We may continue to expand internationally, either organically, or
through additional acquisitions. International markets may have different competitive conditions, consumer tastes
and discretionary spending patterns than our existing U.S. market. As a result, operations in international markets
may be less successful than our operations in the U.S. Additionally, consumers in international markets may not
be familiar with us or the brands we sell, and we may need to build brand awareness in the markets. Furthermore,
we have limited experience with the legal and regulatory environments and market practices outside of the U.S.
and cannot guarantee that we will be able to penetrate or successfully operate in international markets. We also
expect to incur additional costs in complying with applicable foreign laws and regulations as they pertain to both
our products and our operations.

11

Additionally, the results of operations of our international subsidiaries are exposed to foreign exchange rate

fluctuations. Upon translation, operating results may differ materially from expectations. As we expand our
international operations, our exposure to exchange rate fluctuations will increase.

The current uncertainty surrounding the U.S. and global economies, including the European economy,
coupled with cyclical economic trends in retailing could have a material adverse effect on our results of
operations.

Our retail market historically has been subject to substantial cyclicality. As the U.S. and global economic

conditions 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 apparel and related products may decline. The current uncertainty in the U.S.
and global economies and increased government debt 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 80% 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. Accordingly, our quarterly
results of operations are volatile and may fluctuate significantly.

Our quarterly results of operations have fluctuated significantly in the past and can be expected to continue to

fluctuate significantly in the future. 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. 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 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 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.

12

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, other raw materials, foreign labor costs and transportation costs 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 results of operations 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.

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 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. Our business could be adversely affected by disruptions in the supply chain, such as
strikes, work stoppages, or port closures. Although the prices charged by vendors for the merchandise we
purchase are primarily denominated in U.S. dollars, a decline in the relative value of the U.S. dollar to foreign
currencies could lead to increased merchandise costs, which could negatively affect our competitive position and
our results of operations.

The regulatory requirements regarding conflict minerals could have a negative impact on our results of
operations.

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC promulgated final

rules regarding disclosure of the use of certain minerals (tantalum, tin, gold and tungsten) known as conflict
minerals, which are mined from the Democratic Republic of the Congo and adjoining countries, as well as
procedures regarding a manufacturer’s efforts to prevent the sourcing of such minerals and metals produced from
those minerals. We conducted the required due diligence activities for the 2014 calendar year and filed our
second Form SD report with the SEC in May 2015. Additional requirements under the rule could affect sourcing
at competitive prices and availability in sufficient quantities of certain of the minerals used in the manufacture of
our products, which could have a material adverse effect on our ability to purchase these products in the future.
The costs of compliance, including those related to supply chain research, the limited number of suppliers and
possible changes in the sourcing of these minerals, could have a material adverse effect on our results of
operations or cash flow.

Our business is susceptible to weather conditions that are out of our control, including the potential risks of
unpredictable weather patterns and 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 during the winter season or cool weather during the summer season (including
any weather patterns associated with global warming and cooling) could render a portion of our inventory
incompatible with those unseasonable conditions. These prolonged unseasonable weather conditions could have a
material adverse effect on our business and results of operations.

13

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, footwear, accessories and hardgoods 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. 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. Additionally, some of our competitors may offer more options for free and/or
expedited shipping for ecommerce sales. 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 terms from vendors because we are perceived as a desirable
customer, and deterioration in our relationship with our vendors could have a material adverse effect on our
business. 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, raise the prices they charge at any
time or allow their merchandise to be discounted by other retailers. 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, could have a material adverse effect on our business, results of operations and financial
condition.

Our ecommerce operations subject us to numerous risks that could have an adverse effect on our results of
operations.

Our ecommerce operations subject us to certain risks that could have an adverse effect on our operational

results, including:

•

•

•

rapid technological change;

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.

14

If we lose key executives 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 key executives. 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 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 who understand and appreciate our culture and our brand 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 and our distribution and fulfillment operations 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 are 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 business could suffer with the closure or disruption of our home office or our distribution centers.

Domestically, we rely on a single distribution center located in Corona, California to receive, store and

distribute the vast majority of our merchandise to our domestic stores. Internationally, we operate a combined
distribution and ecommerce fulfillment center located in Graz, Austria that supports our Blue Tomato
ecommerce and store operations in Europe and we operate a distribution center located in Delta, British
Columbia, Canada to distribute our merchandise to our Canadian stores. Additionally, we are headquartered in
Lynnwood, Washington. As a result, a natural disaster or other catastrophic event that affects one of the regions
where we operate these centers 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 could have a material adverse effect on our business and growth plans.

Payments under operating leases account for a significant portion of our operating expenses and has
historically been our third largest expense behind cost of sales and employee related costs. Total rent expense,
including contingent rent based on sales of some of our stores, was $71.1 million, $64.6 million and
$53.4 million for fiscal 2015, 2014 and 2013. Total rent expense amounts do not include real estate taxes,
insurance, common area maintenance charges and other executory costs, which were $38.6 million, $35.6 million
and $32.0 million for fiscal 2015, 2014 and 2013.

At January 30, 2016, we were committed to property owners for minimum lease payments of
$425.4 million. In addition to minimum lease payments, substantially all of our store leases provide for
contingent rent payments based on sales of the respective stores, as well as real estate taxes, insurance, common

15

area maintenance charges and other executory costs. 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 and obligations.

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 fund our other liquidity and
capital needs, which could have a material adverse effect on our business.

The terms of our primary credit facility impose certain restrictions on us that may impair our ability to
respond to changing business and economic conditions. These restrictions could have a significant adverse
impact on our business. Additionally, our business could suffer if our ability to acquire financing is reduced
or eliminated.

Subsequent to January 30, 2016, we entered into an asset-based revolving credit agreement with Wells
Fargo Bank, N.A., which provides for a senior secured revolving credit facility (“ABL Facility”) of up to $100
million. The ABL Facility replaces the above mentioned secured credit agreement. The ABL Facility contains
various representations, warranties and restrictive covenants that, among other things and subject to specified
circumstances and exceptions, restrict our ability to incur indebtedness (including guarantees), grant liens, make
investments, pay dividends or distributions with respect to capital stock, make prepayments on other
indebtedness, engage in mergers, dispose of certain assets or change the nature of their business. In addition,
excess availability equal to at least 10% of the loan cap must be maintained under the ABL Facility. The ABL
Facility does not otherwise contain financial maintenance covenants. These restrictions 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.

The ABL Facility includes customary events of default including non-payment of principal, interest or fees,
violation of covenants, inaccuracy of representations or warranties, cross-default to other material indebtedness,
bankruptcy and insolvency events, invalidity or impairment of guarantees or security interests, material
judgments and change of control.

Additionally, we cannot be assured that our borrowing relationship with our lenders will continue or that our
lenders will remain able to support their commitments to us in the future. If our lenders fail to do so, then we may
not be able to secure alternative financing on commercially reasonable terms, or at all.

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

16

these manufacturers from those generally accepted as ethical in the U.S., 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 we sell 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
U.S.

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, 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 account for approximately 20% of our net sales and generally carry
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, could have a material adverse
effect on our comparable 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.

We are continuing to make investments to improve our information systems infrastructure. If our

information systems, including 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. Additionally, we rely on third-party service
providers for certain information systems functions. If a service provider fails to provide the data quality,
communications capacity or services we require, the failure could interrupt our services and could have a
material adverse effect on our business, financial condition and results of operations. 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.

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 networks. 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 and we may be
exposed to reputation damage and loss of customers’ trust and business. 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.

17

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 or Blue Tomato brands, our store concepts, 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 U.S., 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 U.S., 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, or other types of mall violence, could adversely affect our business.

Most of our stores are located in shopping malls. Any threat of terrorist attacks or actual terrorist events, or

other types of mall violence, such as shootings in malls, 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, could
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 could 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. 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. Additionally, while we maintain director and officer liability 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.

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, state and foreign 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

18

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, local or foreign 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,
privacy, environmental issues and trade, could adversely affect our results of operations or financial condition.

Our business could be adversely affected by increased labor costs, including costs related to an increase in the
minimum wage and new health care laws.

Labor is a primary component in the cost of operating our business. Increased labor costs, whether due to

competition, unionization, increased minimum wage, state unemployment rates, employee benefits costs or
otherwise, may adversely impact our operating expenses. A considerable amount of our store team members are
paid at rates related to the federal or state minimum wage and any changes to the minimum wage rate may
increase our operating expenses. Furthermore, inconsistent increases in state and or city minimum wage
requirements limits our ability to increase prices across all markets and channels. Additionally, we are self-
insured with respect to our health care coverage in the U.S. and do not purchase third party insurance for the
health insurance benefits provided to employees with the exception of pre-defined stop loss coverage, which
helps limit the cost of large claims. In March 2010, The Patient Protection and Affordable Care Act was enacted
requiring employers such as us to provide health insurance for all qualifying employees or pay penalties for not
providing coverage. These costs were incurred in fiscal 2015, however, there is no assurance that we will be able
to absorb and/or pass through the costs of future heath care legislation in a manner that will not adversely impact
our results or operations.

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, both domestically and

internationally, 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 consolidated financial statements are prepared in accordance with generally accepted accounting
principles in the United States of America (“U.S. GAAP”). New accounting rules or regulations and changes to

19

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.

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 were 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 reduction of total outstanding shares through the execution of the share repurchase program of common
stock may increase the risk that a group of shareholders could form a group to become a controlling
shareholder.

We do not have a controlling shareholder, nor are we aware of any shareholders that have formed a “group”

(defined as when two or more persons agree to act together for the purposes of acquiring, holding, voting or
otherwise disposing of the equity securities of an issuer). The reduction of total outstanding shares through the
execution of the share repurchase program of common stock may increase the risk that a group of shareholders
could form a group to become a controlling shareholder.

A controlling shareholder would have significant influence over, and may have the ability to control,
matters requiring approval by the Company’s shareholders, including the election of directors and approval of
mergers, consolidations, sales of assets, recapitalizations and amendments to the Company’s articles of
incorporation. Furthermore, a controlling shareholder may take actions with which other shareholders do not
agree, including actions that delay, defer or prevent a change of control of the company and that could cause the
price that investors are willing to pay for the company’s stock to decline.

The value of our investments may fluctuate.

We have our excess cash primarily invested in state and local municipal securities and variable-rate demand
notes. These investments have historically been considered very safe investments with minimal default rates. At
January 30, 2016, we had $33.2 million of investments in state and local government securities and variable-rate
demand notes. These securities are not guaranteed by the U.S. 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.

A decline in the market price of our stock and/or our performance may trigger an impairment of the goodwill
and other indefinite-lived intangible assets recorded on the consolidated balance sheets.

Goodwill and other indefinite-lived intangible assets are 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 or other indefinite-lived intangible assets as a result of our impairment analysis
could result in a non-cash impairment charge, which could have a significant impact on our results of operations.

20

Reduced operating results and cash flows may cause us to incur impairment charges.

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. The review could result in a
non-cash impairment charge related to underperforming stores, which could impact our results of operations.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

Item 2.

PROPERTIES

All of our stores are occupied under operating leases and encompassed approximately 1.9 million total

square feet at January 30, 2016.

We own approximately 356,000 square feet of land in Lynnwood, Washington, and completed construction

of a 63,071 square foot home office in fiscal 2012. Additionally, we lease 14,208 square feet of office space in
Schladming, Austria for our European home office. This lease is set to expire in 2017.

We own a 168,450 square foot building in Corona, California that serves as our domestic warehouse and

distribution center.

We lease a 85,390 square feet combined distribution and ecommerce fulfillment center in Graz, Austria that

supports our Blue Tomato ecommerce and store operations in Europe. This lease is set to expire in 2019. We
lease 17,168 square feet of a distribution facility in Delta, British Columbia, Canada that supports our store
operations in Canada. This lease is set to expire in 2018.

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 10, “Commitments and Contingencies,” in the Notes to Consolidated Financial Statements found

in Part IV Item 15 of this Form 10-K, for additional information related to legal proceedings.

Item 4.

MINE SAFETY DISCLOSURES

Not applicable.

21

PART II

Item 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is traded on the Nasdaq Global Select Market under the symbol “ZUMZ.” At

January 30, 2016, there were 25,708,017 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.

Fiscal 2015

High

Low

. . . . . . . . . . . . . .
First Fiscal Quarter (February 1, 2015—May 2, 2015)
Second Fiscal Quarter (May 3, 2015—August 1, 2015) . . . . . . . . . . . . . .
Third Fiscal Quarter (August 2, 2015—October 31, 2015) . . . . . . . . . . .
Fourth Fiscal Quarter (November 1, 2015—January 30, 2016) . . . . . . . .

$40.64
$32.29
$26.32
$18.49

$30.89
$23.51
$13.75
$11.53

Fiscal 2014

First Fiscal Quarter (February 2, 2014—May 3, 2014)
. . . . . . . . . . . . . .
Second Fiscal Quarter (May 4, 2014—August 2, 2014) . . . . . . . . . . . . . .
Third Fiscal Quarter (August 3, 2014—November 1, 2014) . . . . . . . . . .
Fourth Fiscal Quarter (November 2, 2013—January 31, 2015) . . . . . . . .

High

Low

$26.50
$30.75
$34.64
$41.81

$20.68
$24.25
$27.21
$32.68

22

Performance Measurement Comparison

The following graph shows a comparison for total cumulative returns for Zumiez, the Nasdaq Composite

Index and the Nasdaq Retail Trade Index during the period commencing on January 29, 2011 and ending on
January 30, 2016. The comparison assumes $100 was invested on January 29, 2011 in each of 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

$250

$200

$150

$100

$50

$0

1/29/11

1/28/12

2/2/13

2/1/14

1/31/15

1/30/16

Zumiez Inc.

Nasdaq Composite

Nasdaq Retail Trade

*$100 invested on 1/29/11 in stock or 1/31/11 in index, including reinvestment of dividends.
Indexes calculated on month-end basis.

Zumiez
NASDAQ Composite
NASDAQ Retail Trade

1/29/11

1/28/12

2/2/13

2/1/14

1/31/15

1/30/16

100.00
100.00
100.00

126.98
105.66
109.43

94.62
119.44
134.51

96.46
159.71
169.09

167.14
181.15
189.62

81.17
180.76
223.63

Holders of the Company’s Capital Stock

We had 530 shareholders of record as of February 26, 2016.

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.

23

Recent Sales of Unregistered Securities

None

Issuer Purchases of Equity Securities

The following table presents information with respect to purchases of our common stock made during the

thirteen weeks ended January 30, 2016 (in thousands, except average price paid per share):

Period

Total Number of
Shares
Purchased

Average Price
Paid per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (1)

Dollar Value of
Shares that May Yet
be Repurchased
Under the Plans or
Programs (1)

November 1, 2015—November 28, 2015 . . . .
November 29, 2015—January 2, 2016 . . . . . .
January 3, 2016—January 30, 2016 . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
546
443

989

$ —
15.26
16.42

—
546
443

989

$ —

61,674
54,395

(1) The share repurchase program is conducted under authorizations made from time to time by our Board of

Directors. In December 2014, our Board of Directors authorized us to repurchase $30.0 million shares of our
common stock. This superseded and replaced any previously authorized share repurchase program. In June
2015, our Board of Directors superseded and replaced this program with a $50.0 million share repurchase
program that was completed in August 2015. In December 2015, our Board of Directors authorized us to
repurchase up to $70.0 million of our common stock. This program is expected to continue through
January 28, 2017, unless the time period is extended or shortened by the Board of Directors.

24

Item 6.

SELECTED FINANCIAL DATA

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 2015 (1) Fiscal 2014 (2) Fiscal 2013 (3) Fiscal 2012 (4) Fiscal 2011

Statement of Operations Data (in thousands,

except per share data):

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $804,183
535,559
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . .

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . .

268,624
222,459

$811,551
524,468

287,083
215,512

$724,337
462,577

261,760
188,918

$669,393
428,109

$555,874
354,198

241,284
172,742

201,676
141,444

Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income, net . . . . . . . . . . . . . . . . . . . . . . . .
Other (expense) income, net . . . . . . . . . . . . . . . . .

Earnings before income taxes . . . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . . . . . . . .

46,165
529
(833)

45,861
17,076

71,571
637
(557)

71,651
28,459

72,842
711
(1,589)

71,964
26,016

68,542
1,410
327

70,279
28,115

60,232
1,836
(379)

61,689
24,338

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28,785

$ 43,192

$ 45,948

$ 42,164

$ 37,351

Earnings per share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

1.05

1.04

$

$

1.50

1.47

$

$

1.54

1.52

$

$

1.37

1.35

$

$

1.22

1.20

Weighted average shares outstanding:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27,497
27,673

28,871
29,288

29,810
30,206

30,742
31,273

30,527
31,119

Balance Sheet Data (in thousands):
Cash, cash equivalents and current marketable

securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75,554
129,755
414,695
48,596
296,957

Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term liabilities . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . .

$154,644
191,351
493,705
52,734
359,524

$117,155
168,472
443,403
46,375
335,654

$103,172
146,115
409,098
48,478
303,421

$172,798
197,927
362,157
34,304
272,277

Other Financial Data (in thousands, except
gross margin and operating margin):

Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating margin . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . $ 34,834
Depreciation, amortization and accretion . . . . . . . $ 30,410

33.4%
5.7%

35.4%
8.8%

36.1%
10.1%

36.0%
10.2%

36.3%
10.8%

$ 35,758
$ 29,167

$ 35,969
$ 26,596

$ 41,070
$ 22,957

$ 25,508
$ 19,744

Company Data:
Number of stores open at end of period . . . . . . . .
Comparable sales increase (decrease) (5) . . . . . . .
Net sales per store (6) (in thousands) . . . . . . . . . . $
Total store square footage (7) (in thousands) . . . .
Average square footage per store (8)
. . . . . . . . . .
Net sales per square foot (9) . . . . . . . . . . . . . . . . . $

658
(5.3%)

603
4.6%

551
(0.3%)

498
5.0%

444
8.7%

1,256
1,935
2,941
427

$

$

1,390
1,770
2,936
473

$

$

1,366
1,624
2,947
462

$

$

1,403
1,480
2,961
475

$

$

1,303
1,308
2,945
443

25

(1)

(2)

(3)

Included in the results for fiscal 2015 is $1.2 million for the exit costs associated with the closure of our
Kansas fulfillment center, $0.6 million for the expense associated with the incentive payments to be paid in
conjunction with our acquisition of Blue Tomato and an expense of $0.9 million of amortization of
intangible assets.

Included in the results for fiscal 2014 is $6.4 million for the expense associated with the future incentive
payments to be paid in conjunction with our acquisition of Blue Tomato and an expense of $2.3 million of
amortization of intangible assets.

Included in the results for fiscal 2013 are the following charges: a) a benefit of $2.7 million representing the
correction of an error related to our calculation to account for rent expense on a straight-line basis, b) a
benefit of $2.6 million for the reversal of the previously recorded expense associated with the future
incentive payments to be paid in conjunction with our acquisition of Blue Tomato, c) an expense of $2.3
million for the amortization of intangible assets, d) an expense of $1.3 million for a litigation settlement and
e) a benefit of $0.4 million for the release of a valuation allowance to net operating losses in foreign
subsidiaries.

(4) Fiscal 2012 consisted of 53 weeks. All other fiscal years presented consisted of 52 weeks. In fiscal 2012, we

acquired Blue Tomato for cash consideration of 59.5 million Euros ($74.8 million). Additionally, included
in the results for fiscal 2012 are the following charges: a) an expense of $2.3 million associated with the
future incentive payments to be paid in conjunction with our acquisition of Blue Tomato, b) an expense of
$2.2 million related to a step-up in inventory to estimated fair value in conjunction with our acquisition of
Blue Tomato, c) an expense of $2.1 million associated with the relocation of our ecommerce fulfillment
center and home office, d) an expense of $1.9 million in transaction costs incurred in conjunction with our
acquisition of Blue Tomato and e) an expense of $1.3 million for the amortization of intangible assets.

(5) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—General”

for more information about how we compute comparable sales.

(6) Net sales per store represents net sales, including ecommerce 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
fiscal year divided by the number of months in the fiscal year.

(7) Total store square footage includes retail selling, storage and back office space at the end of the fiscal year.

(8) Average square footage per store is calculated based on the total store square footage at the end of the fiscal

year, including retail selling, storage and back office space, of all stores open at the end of the fiscal year.

(9) Net sales per square foot represents net sales, including 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 fiscal year divided by the number of months in the fiscal year.

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.

Fiscal 2015—A Review of This Past Year

In fiscal 2015 teen retail in general faced a challenging sales environment with many mall based teen
retailers experiencing declining sales. Following a 2014 annual comparable sales increase of 4.6% and a fourth

26

quarter 2014 comparable sales increase of 8.3%, Zumiez sales remained positive in the first quarter of 2015 at
3%. By the second quarter of 2015, sales had begun to slow and remained soft through the remainder of the year
with the absence of a strong fashion trend or key item to drive traffic resulting in a negative 5.3% comparable
sales decrease for the year. Operating margins and earnings declined from the prior year due primarily to
deleveraging of fixed costs on negative comparable sales results and to a lesser extent a decline in product
margins as a result of efforts to keep inventory healthy. Throughout the year, we continued to make investments
in our North America store footprint focused on expanding in the United States and Canada by adding 51 new
stores during fiscal 2015. We also added 6 new stores to our Blue Tomato operations in Europe which showed
strong sales growth in 2015.

As a leading lifestyle retailer we continue to differentiate ourselves through our distinctive brand offering
and diverse product selection, as well as the unique customer experience our sales associates provide. We also
believe that investments made in our omni-channel platform focused on creating a seamless shopping experience
for our customer between the physical and digital channels is critical for our long-term financial performance. At
the end of fiscal 2015 we took another major step toward creating a seamless shopping experience by closing our
Kansas fulfillment operations and transitioning to a fully localize fulfillment model with stores shipping all but a
small fraction of on-line orders. In store fulfillment is a key part of our omni-channel strategy that we believe
will drive long term market share by leveraging the strengths of our store sales team, providing better and faster
service to customers, improving product margins, and providing additional selling opportunities.

The following table shows net sales, operating profit, operating margin, and diluted earnings per share for
fiscal 2015 compared to fiscal 2014. The fiscal 2015 results include $1.5 million of charges associated with the
acquisition of Blue Tomato made up of $0.6 million for incentive payments related to the transaction and
$0.9 million for the amortization of intangible assets and $1.2 million associated with exit charges related to our
Kansas fulfillment center. The fiscal 2014 results include $8.7 million of charges associated with the acquisition
of Blue Tomato made up of $6.4 million for incentive payments related to the transaction and $2.3 million for the
amortization of intangible assets.

Net sales (in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit (in thousands)
. . . . . . . . . . . . . . . . . . . . . . . . . .
Operating margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$804,183
$ 46,165

$811,551
$ 71,571

5.7%
1.04

$

8.8%
1.47

$

-1%
-35%

-29%

Fiscal 2015

Fiscal 2014 % Change

The decrease in net sales was primarily driven by a 5.3% comparable sales decrease partially offset by the
net addition of 55 stores (57 new stores offset by 2 store closures). The decrease in comparable sales was driven
by a decrease in transactions partially offset by an increase in dollars per transaction. Dollars per transaction
increased primarily due to an increase in average unit retail, and to a lesser extent an increase in units per
transaction. Operating margin was down in fiscal 2015 compared to fiscal 2014 primarily as a result of
deleveraging operating costs partially offset by a decline in unique charges as discussed above.

Fiscal 2016—A Look At the Upcoming Year

Entering 2016 we remain cautious with our expectations. Our focus will be on continued execution of our
core strategies as well as strategic investments centered on long-term quality growth. These investments will be
largely focused on continued store growth, both domestically and international, the roll-out of our new Customer
Engagement Suite and continued investments in our people through acquisition, retention, and statutory wage
increases around the country. As we are closer to our targeted number of stores in North America, we expect that
store growth in fiscal 2016 will be less than in fiscal 2015 with an estimated 34 stores opening during the fiscal
year compared with 57 stores in fiscal 2015. This includes 7 additional stores in Europe, an increase from the
6 stores added in 2015. In 2016 we will invest in the roll-out of our Customer Engagement Suite focused on

27

integrating our on-line and in-store point of sale (POS) systems, order management system (OMS), and
transportation management system (TMS) improving our efficiency and further enhancing our omni-channel
capabilities.

In fiscal 2016, excluding 2015 costs associated with the acquisition of Blue Tomato and one-time costs

associated with the closing of our Kansas Facility, we expect our cost structure will grow at a higher rate than
2015. We anticipate inventory levels per square foot to be flat or grow slightly. Excluding any possible share
buy-backs, we expect cash, short-term investments and working capital to increase, and do not anticipate any
new borrowings during the year. Long-term we aim to grow sales annually and grow operating profit at a faster
rate than sales by focusing on the changing consumer environment while managing our cost structure.

General

Net sales constitute gross sales (net of actual and estimated returns and deductions for promotions) and
shipping revenue. Net sales include our store sales and our ecommerce sales. We record the sale of gift cards as a
current liability and recognize revenue when a customer redeems a gift card. Additionally, the portion of gift
cards that will not be redeemed (“gift card breakage”) is recognized in net sales after 24 months, at which time
the likelihood of redemption is considered remote based on our historical redemption data.

We report “comparable sales” based on net sales beginning on the first anniversary of the first day of
operation of a new store or ecommerce business. We operate a sales strategy that integrates our stores with our
ecommerce platform. There is significant interaction between our store sales and our ecommerce sales channels
and we believe that they are utilized in tandem to serve our customers. Therefore, our comparable sales also
include our ecommerce sales. Changes in our comparable sales between two periods are based on net sales of
store or ecommerce businesses which were in operation during both of the two periods being compared and, if a
store or ecommerce business is included in the calculation of comparable sales for only a portion of one of the
two periods being compared, then that store or ecommerce business 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 and relocations, does not eliminate that store from inclusion in the calculation of comparable sales. Any
store or ecommerce business that we acquire will be included in the calculation of comparable sales after the first
anniversary of the acquisition date. Current year foreign exchange rates are applied to both current year and prior
year comparable sales to achieve a consistent basis for comparison. There may be variations in the way in which
some of our competitors and other apparel retailers calculate comparable sales. As a result, data herein regarding
our comparable 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, buying,
occupancy, ecommerce fulfillment, distribution and warehousing costs (including associated depreciation) and
freight costs for store merchandise transfers. This may not be comparable to the way in which our competitors or
other retailers compute their cost of goods sold. Cash consideration received from vendors is reported as a
reduction of cost of goods sold if the inventory has sold, 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, amounts billed to our customers are included

in net sales and the related freight cost is charged to cost of goods sold.

Selling, general and administrative expenses consist primarily of store personnel wages and benefits,
administrative staff and infrastructure expenses, freight costs for merchandise shipments from the distribution
centers to the stores, store supplies, depreciation on fixed assets at our home office and stores, facility expenses,
training expenses and advertising and marketing costs. Credit card fees, insurance, public company expenses,
legal expenses, amortization of intangibles, and other miscellaneous operating costs are also included in selling,

28

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 sales. As previously described in detail under the caption “General,” comparable sales provide
a measure of sales growth for stores and ecommerce businesses open at least one year over the comparable prior
year period.

We consider comparable sales to be an important indicator of our current performance. Comparable sales
results are important to achieve leveraging of our costs, including store payroll and store occupancy. Comparable
sales also have a direct impact on our total net sales, operating profit, 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. Operating profit is the
difference between gross profit and selling, general and administrative expenses. The key drivers of operating
profit are comparable sales, gross profit, our ability to control selling, general and administrative expenses and
our level of capital expenditures affecting depreciation expense.

Results of Operations

The following table presents selected items on the consolidated statements of income as a percent of net

sales:

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gross profit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . .

Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and other (expenses) income, net . . . . . . . . . .

Earnings before income taxes . . . . . . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . . . . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal 2015

Fiscal 2014

Fiscal 2013

100.0%
66.6%

33.4%
27.7%

5.7%
0.0%

5.7%
2.1%

3.6%

100.0%
64.6%

35.4%
26.6%

8.8%
0.0%

8.8%
3.5%

5.3%

100.0%
63.9%

36.1%
26.0%

10.1%
-0.2%

9.9%
3.6%

6.3%

Fiscal 2015 Results Compared With Fiscal 2014

Net Sales

Net sales were $804.2 million for fiscal 2015 compared to $811.6 million for fiscal 2014, a decrease of
$7.4 million or 0.9%. The decrease reflected a $42.1 million decrease due to comparable sales for fiscal 2015 and
a decrease of $19.6 million due to the impact of changes in foreign exchange rates, partially offset by the net
addition of 55 stores (made up of 51 new stores in North America and 6 new stores in Europe offset by 2 store
closures in North America). By region, North America sales decreased $19.0 million or 2.5% and European sales
increased $11.6 million or 18.0% during fiscal 2015 compared to fiscal 2014.

29

The 5.3% decrease in comparable sales was primarily driven by a decrease in comparable transactions
partially offset by an increase in dollars per transaction. Dollars per transaction increased due to an increase in
average unit retail and to a lesser extent an increase in units per transaction. Comparable sales decreases in
accessories, men’s apparel, footwear, and junior’s apparel were partially offset by a comparable sales increase in
hardgoods. For information as to how we define comparable sales, see “General” above.

Gross Profit

Gross profit was $268.6 million for fiscal 2015 compared to $287.1 million for fiscal 2014, a decrease of

$18.5 million, or 6.4%. As a percentage of net sales, gross profit decreased 200 basis points in fiscal 2015 to
33.4%. The decrease was primarily driven by a 140 basis point impact due to deleveraging of our store
occupancy costs, 30 basis points impact of the increase in ecommerce related costs including $1.2 million in exit
costs associated with the closure of our Kansas fulfillment center and 20 basis point decrease in product margin.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were $222.5 million for fiscal 2015 compared to
$215.5 million for fiscal 2014, an increase of $7.0 million, or 3.2%. SG&A expenses as a percent of net sales
increased by 110 basis points in fiscal 2015 to 27.7%. The increase was primarily driven by a 170 basis points
due to deleveraging of store costs partially offset by 70 basis point decrease from the fiscal 2014 expense
associated with the future incentive payments to be paid in conjunction with our acquisition of Blue Tomato. See
Note 3, “Business Combination,” in the Notes to Consolidated Financial Statements found in Part IV Item 15 of
the Form 10-K, for additional information related to our incentive payments.

Net Income

Net income for fiscal 2015 was $28.8 million, or $1.04 per diluted share, compared with net income of
$43.2 million, or $1.47 per diluted share, for fiscal 2014. Our effective income tax rate for fiscal 2015 was 37.2%
compared to 39.7% for fiscal 2014. The decrease in the effective tax rate for fiscal 2015 compared to fiscal 2014
was primarily due to the tax impact of foreign operations and the incentive payments in fiscal 2014.

Fiscal 2014 Results Compared With Fiscal 2013

Net Sales

Net sales were $811.6 million for fiscal 2014 compared to $724.3 million for fiscal 2013, an increase of

$87.2 million or 12.0%. The increase reflected the net addition of 52 stores (made up of 50 new stores in North
America and six new stores in Europe offset by four store closures in North America) and a $33.2 million
increase due to comparable sales for fiscal 2014. By region, North America sales increased $71.5 million or
10.6% and European sales increased $15.7 million or 32.4% during fiscal 2014 compared to fiscal 2013.

The 4.6% increase in comparable sales was primarily driven by an increase in comparable transactions and

dollars per transaction. Dollars per transaction increased due to an increase in units per transaction and an
increase in average unit retail. Comparable sales increases in hardgoods, accessories, junior’s apparel, and men’s
apparel were partially offset by a comparable sales decrease in footwear. For information as to how we define
comparable sales, see “General” above.

Gross Profit

Gross profit was $287.1 million for fiscal 2014 compared to $261.8 million for fiscal 2013, an increase of

$25.3 million, or 9.7%. As a percentage of net sales, gross profit decreased 70 basis points in fiscal 2014 to
35.4%. The decrease was primarily driven by a 40 basis points benefit from the correction of an error in our

30

calculation to account for rent expense recorded in fiscal 2013, 30 basis point decrease in product margin,
10 basis point impact due to deleveraging of our store occupancy costs, and 10 basis points impact of the increase
in ecommerce related costs due to growth in ecommerce sales as a percentage of total sales. These decreases
were partially offset by 20 basis points impact due to distribution center efficiencies.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were $215.5 million for fiscal 2014 compared to

$188.9 million for fiscal 2013, an increase of $26.6 million, or 14.0%. SG&A expenses as a percent of net sales
increased by 60 basis points in fiscal 2014 to 26.6%. The increase was primarily driven by a 110 basis points
impact from the expense associated with the future incentive payments to be paid in conjunction with our
acquisition of Blue Tomato and 10 basis point impact due to an increase in incentive compensation. These
increases were partially offset by a 40 basis point impact due to corporate costs savings, and 20 basis points
impact due to a litigation settlement charge incurred in fiscal 2013. See Note 3, “Business Combination,” in the
Notes to Consolidated Financial Statements found in Part IV Item 15 of the Form 10-K, for additional
information related to our future incentive payments.

Net Income

Net income for fiscal 2014 was $43.2 million, or $1.47 per diluted share, compared with net income of
$45.9 million, or $1.52 per diluted share, for fiscal 2013. Our effective income tax rate for fiscal 2014 was 39.7%
compared to 36.1% for fiscal 2013. The increase in the effective tax rate for fiscal 2014 compared to fiscal 2013
was primarily due to the tax impact on the future incentive payments in fiscal 2013 and 2014 and the release of
valuation allowance related to net operating losses and other deferred tax assets of foreign subsidiaries in fiscal
2013.

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.

31

The following table sets forth selected unaudited quarterly consolidated statements of income data. 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.

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of stores open at the end of the period . . . . . . . . . . . . . . .
Comparable sales increase (decrease) . . . . . . . . . . . . . . . . . . . . . . .

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of stores open at the end of the period . . . . . . . . . . . . . . .
Comparable sales increase (decrease) . . . . . . . . . . . . . . . . . . . . . . .

Liquidity and Capital Resources

Fiscal 2015

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

(in thousands, except stores and per share data)

$177,610
$ 56,535
4,126
$
2,770
$
0.10
$
0.09
$
616
3.0%

$179,819
$ 57,773
5,312
$
3,213
$
0.11
$
0.11
$
640
-4.5%

$204,320
$ 70,059
$ 15,224
9,653
$
0.36
$
0.36
$
653
-7.3%

$242,434
$ 84,257
$ 21,503
$ 13,149
0.50
$
0.50
$
658
-9.5%

Fiscal 2014

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

(in thousands, except stores and per share data)

$162,932
$ 50,533
3,713
$
2,496
$
0.09
$
0.09
$
558
1.8%

$176,709
$ 60,912
$ 11,605
7,456
$
0.26
$
0.26
$
582
3.4%

$213,341
$ 77,860
$ 24,975
$ 15,727
0.54
$
0.54
$
602
3.7%

$258,569
$ 97,778
$ 31,278
$ 17,513
0.60
$
0.60
$
603
8.3%

Our primary uses of cash are for operational expenditures, inventory purchases and capital investments,
including new stores, store remodels, store relocations, store fixtures and ongoing infrastructure improvements.
Additionally, we may use cash for the repurchase of our common stock. Refer to Note 12, “Stockholders’
Equity” of the Notes to Consolidated Financial Statements for further discussion of the repurchase plan.
Historically, our main source of liquidity has been cash flows from operations.

The significant components of our working capital are inventories 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 30, 2016 and January 31, 2015, cash, cash equivalents and current marketable securities were

$75.6 million and $154.6 million. Working capital, the excess of current assets over current liabilities, was
$129.8 million at the end of fiscal 2015, a decrease of 32.2% from $191.4 million at the end of fiscal 2014. The
decrease in cash, cash equivalents and current marketable securities in fiscal 2015 were due primarily to the

32

$92.2 million repurchase of common stock and $34.8 million of capital expenditures primarily related to the
opening of 57 new stores in fiscal 2015 and 19 remodels and relocations, partially offset by cash provided by
operating activities of $48.6 million.

The following table summarizes our cash flows from operating, investing and financing activities (in

thousands):

Fiscal 2015

Fiscal 2014

Fiscal 2013

Total cash provided by (used in)

Operating activities . . . . . . . . . . . . . . . . . . .
Investing activities . . . . . . . . . . . . . . . . . . . .
Financing activities . . . . . . . . . . . . . . . . . . .

$ 48,607
64,730
(90,758)

$ 89,937
(73,873)
(13,933)

$ 66,894
(49,619)
(15,233)

Effect of exchange rate changes on cash and

cash equivalents . . . . . . . . . . . . . . . . . . . . . . . .

(278)

(903)

13

Increase in cash and cash equivalents . . . . . . . . . . . . .

$ 22,301

$ 1,228

$ 2,055

Operating Activities

Net cash provided by operating activities decreased by $41.3 million in fiscal 2015 to $48.6 million from

$89.9 million in fiscal 2014. Net cash provided by operating activities increased by $23.0 million in fiscal 2014
to $89.9 million from $66.9 million in fiscal 2013. 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, which is impacted by changes to non-cash items such as depreciation, amortization and
accretion, deferred taxes and excess tax benefit from stock-based compensation, and changes to the components
of working capital.

Investing Activities

Net cash provided by investing activities was $64.7 million in fiscal 2015 related to $99.6 million in net
sales of marketable securities partially offset by $34.8 million of capital expenditures primarily for new store
openings and existing store remodels or relocations. Net cash used in investing activities was $73.9 million in
fiscal 2014 related to $35.8 million of capital expenditures primarily for new store openings and existing store
remodels or relocations and $38.1 million in net purchases of marketable securities. Net cash used in investing
activities was $49.6 million in fiscal 2013 related to $36.0 million of capital expenditures primarily for new store
openings and existing store remodels or relocations and $13.6 million in net purchases of marketable securities
and other investments.

Financing Activities

Net cash used in financing activities in fiscal 2015 was $90.8 million, related to $92.2 million cash paid for
repurchase of common stock, partially offset by proceeds from stock-based compensation exercises and related
tax benefits of $1.6 million. Net cash used in financing activities in fiscal 2014 was $13.9 million, related to
$19.6 million cash paid for repurchase of common stock and $2.1 million of net payments on revolving credit
facilities, and other liabilities, partially offset by proceeds from stock-based compensation exercises and related
tax benefits of $7.7 million. Net cash used in financing activities in fiscal 2013 was $15.2 million, primarily
related to $17.6 million cash paid for repurchase of common stock, partially offset by proceeds from stock-based
compensation exercises and related tax benefits of $2.6 million.

33

Sources of Liquidity

Our most significant sources of liquidity continue to be funds generated by operating activities and 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 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.

As of January 30, 2016, we maintained a secured credit agreement with Wells Fargo Bank, N.A., which

provides us with a secured revolving credit facility until September 1, 2016 of up to $25.0 million, which,
pursuant to an accordion feature, may be increased to $35.0 million at our discretion. 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 borrowings
outstanding under the secured revolving credit facility at January 30, 2016 and January 31, 2015. We had no
open commercial letters of credit outstanding under our secured revolving credit facility as of January 30, 2016
and $0.3 million as of January 31, 2015. The secured revolving credit facility bears interest at the Daily Three
Month LIBOR rate plus 1.00%.

Additionally, we have revolving lines of credit of up to 9.0 million Euros, the proceeds of which are used to
fund certain international operations. There were no borrowings or open commercial letters of credit outstanding
under these revolving lines of credit at January 30, 2016 and January 31, 2015.

Subsequent to January 30, 2016, we entered into an asset-based revolving credit agreement, which provides
for a senior secured revolving credit facility of up to $100 million. Refer to Note 18, “Subsequent Event,” of the
Notes to Consolidated Financial Statements for further discussion.

Capital Expenditures

Our capital requirements include construction and fixture costs related to the opening of new stores and
remodel and relocation 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 2015, we spent $34.8 million on capital expenditures, which consisted of $30.9 million of

costs related to investment in 57 new stores and 19 remodeled or relocated stores, $1.9 million associated with
improvements to our websites and the customer engagement suite and $2.0 million in other improvements.

During fiscal 2014, we spent $35.8 million on capital expenditures, which consisted of $31.5 million of

costs related to investment in 56 new stores and 19 remodeled or relocated stores, $1.7 million associated with
improvements to our websites and $2.6 million in other improvements.

During fiscal 2013, we spent $36.0 million on capital expenditures, which consisted of $30.2 million of

costs related to investment in 59 new stores and 13 remodeled or relocated stores, $3.1 million associated with
improvements to our websites and $2.7 million in other improvements.

34

In fiscal 2016, we expect to spend approximately $27 million to $29 million on capital expenditures, a

majority of which will relate to leasehold improvements and fixtures for the approximately 34 new stores we
plan to open in fiscal 2016 and remodels or relocations of existing stores. There can be no assurance that the
number of stores that we actually open in fiscal 2016 will not be different from the number of stores we plan to
open, or that actual fiscal 2016 capital expenditures will not differ from this expected amount.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with U.S. 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 we believe 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 U.S. 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,”

in the Notes to Consolidated Financial Statements found in Part IV Item 15 of this 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.

35

Description

Judgments and Uncertainties

Effect If Actual Results Differ
From Assumptions

Valuation of Merchandise Inventories

We value our inventory at the lower of average
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.

Valuation of Long-Lived Assets

We review the carrying value of our long-lived
assets for impairment whenever events or
changes in circumstances indicate that the
carrying value of such asset or asset group 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 the projected discounted cash flow
of the asset to the asset carrying value.

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.

Our write-down reserve contains
uncertainties because the calculation
requires management to make
assumptions based on the current rate of
sales, the age and profitability of
inventory and other factors.

Our shrinkage 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.

Events that may result in an impairment
include the decision to close a store or
facility or a significant decrease in the
operating performance of a long-lived
asset group. Our impairment 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. In addition to
historical results, current trends and
initiatives, and long-term macro economic
and industry factors are qualitatively
considered. Additionally management
seeks input from store operations related
to local economic conditions.

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 have not made any material changes
in the accounting methodology used to
calculate our write-down and shrinkage
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 the sales price of our
inventory at January 30, 2016 would
have decreased net income by $0.1
million in fiscal 2015.

A 10% increase in actual physical
inventory shrinkage rate at January 30,
2016 would have decreased net income
by $0.2 million in fiscal 2015.

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 fixed asset
impairment losses. However, if actual
results are not consistent with our
estimates and assumptions, our operating
results could be adversely affected.
Declines in projected cash flow of the
assets could result in impairment.

Although management believes that the
current useful life estimates assigned to
our fixed assets are reasonable, factors
could cause us to change our estimates,
thus affecting the future calculation of
depreciation.

36

Description

Judgments and Uncertainties

Effect If Actual Results Differ
From Assumptions

Revenue Recognition

Revenue is recognized upon purchase at our
retail store locations. For our ecommerce sales,
revenue is recognized upon delivery to the
customer. Revenue is recorded net of sales
returns and deductions for promotions.

Revenue is not recorded on the sale of gift
cards. We record the sale of gift cards as a
current liability and recognize revenue when a
customer redeems a gift card. Additionally, the
portion of gift cards that will not be redeemed
(“gift card breakage”) is recognized in net sales
after 24 months, at which time the likelihood
of redemption is considered remote based on
our historical redemption data.

Our revenue recognition accounting
methodology contains uncertainties
because it requires management to make
assumptions regarding delivery to our
customers, 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.

Stock-Based Compensation

We grant restricted stock awards, restricted
stock units and non-qualified stock options to
employees and non-employee directors.

We determine the fair value of our restricted
stock awards and restricted stock units based
on the closing market price of our stock on the
grant date. In determining the fair value of our
stock options, we use the Black-Scholes option
pricing model. The estimated fair value of
stock-based awards is recognized as
compensation expense over the vesting period,
net of estimated forfeitures.

The calculation of stock-based
compensation expense requires
management to make assumptions and to
apply judgment to estimate the number of
stock awards that will ultimately vest and
to determine the fair value of our stock
option awards. These assumptions and
judgments include estimating future
employee turnover rates and the inputs to
the Black-Scholes option pricing model,
including expected term. Changes in these
assumptions can materially affect our
stock-based compensation expense.

We have not made any material changes
in the accounting methodology used to
measure future 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% increase in our sales return
reserve at January 30, 2016 would have
decreased net income by $0.1 million in
fiscal 2015.

A 10% increase in our unredeemed gift
card breakage life at January 30, 2016
would have decreased net income by
$0.5 million in fiscal 2015.

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.

37

Description

Judgments and Uncertainties

Effect If Actual Results Differ
From Assumptions

Accounting for Income Taxes

As part of the process of preparing the
consolidated 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.
Valuation allowances may be established when
necessary to reduce deferred tax assets to the
amount expected to be realized.

We regularly evaluate the likelihood of
realizing the benefit for income tax positions
we have taken in various federal, state and
foreign filings by considering all relevant facts,
circumstances and information available to us.
If we believe it is more likely than not that our
position will be sustained, we recognize a
benefit at the largest amount that we believe is
cumulatively greater than 50% likely to be
realized.

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.

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.

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.

Unrecognized tax benefits require
significant management judgment
regarding applicable statutes and their
related interpretation and our particular
facts and circumstances.

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
contingency 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.

38

Description

Judgments and Uncertainties

Effect If Actual Results Differ
From Assumptions

Goodwill and Other Indefinite-lived
Intangible Assets

We test goodwill and other indefinite-lived
intangible assets for impairment on an annual
basis, or as indicators of impairment are
present.

We have an option to first assess qualitative
factors for our goodwill impairment analysis to
determine whether it is necessary to perform
the quantitative test based on whether it is
more likely than not that the fair value of a
reporting unit is less than its carrying amount.
If we choose not to perform the qualitative test,
or we determine that it is more likely than not
that the fair value of the reporting unit is less
than the carrying amount, we perform a
quantitative two-step impairment test.

We test our indefinite-lived assets by
estimating the fair value of the asset and
comparing that to the carrying value, an
impairment loss is recorded for the amount that
carrying value exceeds the estimated fair value.
The fair value of the trade names and
trademarks is determined using the relief from
royalty method, which requires management to
make assumptions and to apply judgment,
including forecasting future sales, expenses,
discount rates and royalty rates.

Our goodwill and other indefinite-lived
intangible assets impairment loss
calculations contain uncertainties because
they require management to make
assumptions in the qualitative assessment
of relevant events and circumstances and
estimating the fair value of our reporting
units and indefinite-lived intangible assets,
including estimating future cash flows and
other inputs. These calculations contain
uncertainties because they require
management to make assumptions and to
apply judgment to estimate economic
factors and the profitability of future
business operations and if necessary, the
fair value of a reporting units’ assets and
liabilities. Further, our ability to realize the
future cash flows used in our fair value
calculations is affected by factors such as
changes in economic conditions, changes
in our operating performance and changes
in our business strategies.

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 on goodwill. Based on the
results of our annual impairment test for
goodwill and other indefinite-lived
intangible assets, no impairment was
recorded. We believe based on our
assessment discussed above our
goodwill and other indefinite-lived
intangible assets are not at risk of
impairment. However, if actual results
are not consistent with our estimates or
assumptions or there are significant
changes in any of these estimates,
projections and assumptions could have
a material effect of the fair value of these
assets in future measurement periods and
result in an impairment which could
materially affect our results of
operations.

Contractual Obligations and Commercial Commitments

There were no material changes outside the ordinary course of business in our contractual obligations during

fiscal 2015. The following table summarizes the total amount of future payments due under our contractual
obligations at January 30, 2016 (in thousands):

Total

Fiscal 2016

Fiscal 2017 and
Fiscal 2018

Fiscal 2019 and
Fiscal 2020

Thereafter

Operating lease obligations (1) . . $425,383 $ 65,551
. . . . . . . 159,651 159,651
Purchase obligations (2)

$119,069

$97,128

$143,635

—

—

—

Total (3) . . . . . . . . . . . . . . . . . . . . $585,034 $225,202

$119,069

$97,128

$143,635

(1) Amounts do not include contingent rent and real estate taxes, insurance, common area maintenance charges
and other executory costs obligations. See Note 10, “Commitments and Contingencies,” in the Notes to
Consolidated Financial Statements found in Part IV Item 15 of the Form 10-K, for additional information
related to our operating leases.

(2) We have an option to cancel these commitments with no notice prior to shipment, except for certain private

label purchase orders in which we are obligated to repay contractual amounts upon cancellation.

(3) The table above excludes unrecognized tax benefits of $0.7 million, as we are unable to reasonably estimate

the timing of future cash payments, if any, for these liabilities.

Off-Balance Sheet Arrangements

At January 30, 2016, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of

Regulation S-K.

39

Impact of Inflation/Deflation

We do not believe that inflation has had a material impact on our net sales or operating results for the past

three fiscal years. However, substantial increases in costs, including the price of raw materials, labor, energy and
other inputs used in the production of our merchandise, could have a significant impact on our business and the
industry in the future. Additionally, while deflation could positively impact our merchandise costs, it could have
an adverse effect on our average unit retail price, resulting in lower sales and operating results.

Recent Accounting Pronouncements

See Note 2, “Significant Accounting Policies,” in the Notes to Consolidated Financial Statements found in

Part IV Item 15 of this Form 10-K.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our earnings are affected by changes in market interest rates as a result of our short-term and long-term

marketable securities, which are primarily invested in state and local municipal 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 2015, our net income would
have decreased by $0.1 million. This amount is determined by considering the impact of the hypothetical yield
rates on our cash, cash equivalents, short-term and long-term marketable securities balances and assumes no
changes in our investment structure.

During different times of the year, due to the seasonality of our business, we may borrow under our
revolving credit lines. To the extent we borrow under this revolving credit lines, we are exposed to the market
risk related to changes in interest rates. At January 30, 2016, we had no borrowings outstanding under our
revolving lines of credit.

Foreign Exchange Rate Risk

Our international subsidiaries operate with functional currencies other than the U.S. dollar. Therefore, we
must translate revenues, expenses, assets and liabilities from functional currencies into U.S. dollars at exchange
rates in effect during, or at the end of, the reporting period. As a result, the fluctuation in the value of the U.S.
dollar against other currencies affects the reported amounts of revenues, expenses, assets and liabilities.
Assuming a 10% change in foreign exchange rates, fiscal 2015 net sales could have decreased or increased by
approximately $11.5 million. As we expand our international operations, our exposure to exchange rate
fluctuations will continue to increase. To date, we have not used derivatives to manage foreign currency
exchange risk.

We import merchandise from foreign countries. As a result, any significant or sudden change in the
financial, banking or currency policies and practices of these countries could have a material adverse impact on
our financial position, results of operations and cash flows.

Item 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information with respect to this item is set forth in “Index to the Consolidated Financial Statements,” found

in Part IV Item 15 of this Form 10-K.

40

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 30, 2016, 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 30, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting.

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 30,
2016. Management’s assessment was based on criteria described in the Internal Control—Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this
assessment, management concluded that the Company’s internal control over financial reporting was effective as
of January 30, 2016.

The effectiveness of the Company’s internal control over financial reporting as of January 30, 2016 has been

audited by Moss Adams LLP, the Company’s independent registered public accounting firm, as stated in
their report, which is included below.

41

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 30, 2016,
based on criteria established in Internal Control—Integrated Framework (2013) 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 30, 2016, based on criteria established in Internal Control—Integrated Framework (2013) 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 30, 2016 and January 31, 2015, and
the consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows
for each of the three years in the period ended January 30, 2016, and our report dated March 14, 2016, expressed
an unqualified opinion on those consolidated financial statements.

/s/ Moss Adams LLP

Seattle, Washington
March 14, 2016

42

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 2016 Annual Meeting of
Shareholders (the “Proxy Statement”) that will be filed within 120 days after our fiscal year ended January 30,
2016 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, Compensation 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 2015 and 2014” in our Proxy Statement, and is
incorporated herein by this reference thereto.

43

PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1) 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.

44

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

46
47
48
49
50
51
52

45

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 30, 2016 and January 31, 2015, and the related consolidated statements of income, comprehensive
income, changes in shareholders’ equity and cash flows for each of the three years in the period ended
January 30, 2016. 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 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 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 30, 2016 and January 31, 2015, and the consolidated
results of its operations and its cash flows for each of the three years in the period ended January 30, 2016, 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 30, 2016, based on criteria
established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated March 14, 2016 expressed an unqualified
opinion thereon.

/s/ Moss Adams LLP

Seattle, Washington
March 14, 2016

46

ZUMIEZ INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)

January 30,
2016

January 31,
2015

Assets

Current assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assets, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 43,163
32,391
12,840
98,299
12,204

198,897
137,233
54,245
11,766
4,634
7,920

$ 20,862
133,782
12,653
93,850
11,651

272,798
135,642
55,852
13,062
7,734
8,617

Total long-term assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

215,798
$414,695

220,907
$493,705

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 21,919
12,466
4,066
8,116
22,575

$ 32,094
13,047
4,651
7,083
24,572

69,142
43,779
—
4,817

48,596

81,447
42,553
5,738
4,443

52,734

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

117,738

134,181

Commitments and contingencies (Note 10)
Shareholders’ equity
Preferred stock, no par value, 20,000 shares authorized; none issued and outstanding . . .
Common stock, no par value, 50,000 shares authorized; 25,708 shares issued and
outstanding at January 30, 2016 and 29,418 shares issued and outstanding at
January 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

—

135,013
(15,247)
177,191

129,094
(11,278)
241,708

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

296,957

359,524

Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$414,695

$493,705

See accompanying notes to consolidated financial statements

47

ZUMIEZ INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)

January 30,
2016

Fiscal Year Ended
January 31,
2015

February 1,
2014

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$804,183
535,559

$811,551
524,468

$724,337
462,577

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . .

268,624
222,459

287,083
215,512

261,760
188,918

Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expense, net

Earnings before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

46,165
529
(833)

45,861
17,076

71,571
637
(557)

71,651
28,459

72,842
711
(1,589)

71,964
26,016

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 28,785

$ 43,192

$ 45,948

Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

1.05

1.04

$

$

1.50

1.47

$

$

1.54

1.52

Weighted average shares used in computation of earnings per share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27,497
27,673

28,871
29,288

29,810
30,206

See accompanying notes to consolidated financial statements

48

ZUMIEZ INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)

January 30,
2016

Fiscal Year Ended
January 31,
2015

February 1,
2014

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss, net of tax and reclassification adjustments:

Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net change in unrealized gain/loss on available-for-sale

$28,785

$ 43,192

$45,948

(3,931)

(15,995)

(1,231)

investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(38)

7

(69)

Other comprehensive loss, net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3,969)

(15,988)

(1,300)

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$24,816

$ 27,204

$44,648

See accompanying notes to consolidated financial statements

49

ZUMIEZ INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands)

Common Stock

Shares

Amount

Accumulated
Other
Comprehensive
Income (Loss)

Retained
Earnings

Total

Balance at February 2, 2013 . . . . . . . . . . . . . . . . . .

30,114

$108,360

$ 6,010

$189,051

$303,421

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss, net . . . . . . . . . . . . . . . . . .
Issuance and exercise of stock-based awards,

including net tax benefit of $1,232 . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . .

—
—

344
—
(839)

—
—

2,529
4,094
—

—
(1,300)

45,948
—

45,948
(1,300)

—
—
—

—
—
(19,038)

2,529
4,094
(19,038)

Balance at February 1, 2014 . . . . . . . . . . . . . . . . . .

29,619

$114,983

$ 4,710

$215,961

$335,654

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss, net . . . . . . . . . . . . . . . . . .
Issuance and exercise of stock-based awards,

including net tax benefit of $1,355 . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . .

—
—

557
—
(758)

—
—

6,591
7,520
—

—
(15,988)

43,192
—

43,192
(15,988)

—
—
—

—
—
(17,445)

6,591
7,520
(17,445)

Balance at January 31, 2015 . . . . . . . . . . . . . . . . . .

29,418

$129,094

$(11,278)

$241,708

$359,524

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss, net . . . . . . . . . . . . . . . . . .
Issuance and exercise of stock-based awards,

—
—

including net tax benefit of $714 . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . .

255
—
(3,965)

—
—

923
4,996
—

—
(3,969)

28,785
—

28,785
(3,969)

—
—
—

—
—
(93,302)

923
4,996
(93,302)

Balance at January 30, 2016 . . . . . . . . . . . . . . . . . .

25,708

$135,013

$(15,247)

$177,191

$296,957

See accompanying notes to consolidated financial statements

50

ZUMIEZ INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

January 30,
2016

Fiscal Year Ended
January 31,
2015

February 1,
2014

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefit from stock-based compensation . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28,785

$ 43,192

$ 45,948

30,410
(2,698)
4,996
(714)
4,009

(1,184)
(5,953)
(133)
(9,103)
(483)
1
2,613
(1,939)

29,167
(610)
7,520
(1,355)
1,109

(2,990)
(10,850)
(4,702)
14,744
2,718
(23)
5,937
6,080

26,596
(978)
4,094
(1,232)
2,247

(739)
(9,968)
(1,789)
1,714
(426)
(1,484)
2,367
544

Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . .

48,607

89,937

66,894

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 . . . . . .

(34,834)
(59,286)
158,850

(35,758)
(125,971)
87,856

(35,969)
(124,129)
110,479

Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . .

64,730

(73,873)

(49,619)

Cash flows from financing activities:
Proceeds from long-term debt and revolving credit facilities . . . . . . . . . . . .
Payments on long-term debt and revolving credit facilities . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from exercise of stock-based awards, net of withholding tax . . . . .
Excess tax benefit from stock-based compensation . . . . . . . . . . . . . . . . . . . .

43,173
(43,255)
(92,235)
845
714

6,943
(9,009)
(19,557)
6,335
1,355

4,182
(4,488)
(17,556)
1,397
1,232

Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(90,758)

(13,933)

(15,233)

Effect of exchange rate changes on cash and cash equivalents . . . . . . . .
Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . .

(278)
22,301
20,862

(903)
1,228
19,634

13
2,055
17,579

Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . . . . . . .

$ 43,163

$ 20,862

$ 19,634

Supplemental disclosure on cash flow information:
Cash paid during the period for income taxes . . . . . . . . . . . . . . . . . . . . . . . .
Accrual for purchases of fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrual for repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 19,630
1,166
1,067

$ 28,770
2,372
—

$ 28,105
1,491
2,112

See accompanying notes to consolidated financial statements

51

ZUMIEZ INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Basis of Presentation

Nature of Business—Zumiez Inc., including its wholly-owned subsidiaries, (“Zumiez”, the “Company,”
“we,” “us,” “its” and “our”) is a leading specialty retailer of apparel, footwear, accessories and hardgoods for
young men and women who want to express their individuality through the fashion, music, art and culture of
action sports, streetwear, and other unique lifestyles. At January 30, 2016, we operated 658 stores; 592 in the
United States (“U.S.”), 42 in Canada and 24 in Europe. We operate under the names Zumiez and Blue Tomato.
Additionally, we operate ecommerce websites at www.zumiez.com and www.blue-tomato.com.

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. The fiscal years
ended January 30, 2016, January 31, 2015 and February 1, 2014 were 52-week periods.

Basis of Presentation—The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the United States of America (“U.S. 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.

Correction of an Error—Included in cost of goods sold for the fiscal year ended February 1, 2014 was a
$2.7 million benefit representing the correction of an error in prior periods related to our calculation to account
for rent expense on a straight-line basis. The correction was not material to any previously reported financial
period or to the fiscal year ended February 1, 2014.

Reclassification—Certain balances in the consolidated financial statements as of January 31, 2015 and
February 1, 2014 have been revised to conform to the current year’s presentation with no impact to net income,
total assets, or total stockholders’ equity. This revision is not material to prior periods.

2. Summary of Significant Accounting Policies

Use of Estimates—The preparation of financial statements in conformity with U.S. 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 our 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 11, “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. 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.

Cash and Cash Equivalents—We consider all highly liquid investments with original maturity of three

months or less when purchased to be cash equivalents.

52

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—Our marketable securities primarily consist of state and local municipal securities
and variable-rate demand notes. 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.

Investments are considered to be impaired when a decline in fair value is determined to be other-than-
temporary. If the cost of an investment exceeds its fair value, we evaluate information about the underlying
investment that is publicly available such as analyst reports, applicable industry data and other pertinent
information and assess our intent and ability to hold the security. For fixed-income securities, we also evaluate
whether we have plans to sell the security or it is more likely than not we will be required to sell the security
before recovery. The investment would be written down to its fair value at the time the impairment is deemed to
have occurred and a new cost basis is established. 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 fair market value. 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. We have reserved for inventory at January 30, 2016 and January 31, 2015 in the
amounts of $4.7 million and $3.7 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 leasehold improvements, fixtures, land, buildings,

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 building and land 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 recorded in selling, general and administrative expenses on the
consolidated statements of income.

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 balance at January 30, 2016 and January 31, 2015 is $2.6 million and $2.3 million
and is recorded in other liabilities and other long-term liabilities on the consolidated balance sheets and will be

53

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 or asset groups for
impairment when events or changes in circumstances indicate that the carrying values may not be recoverable.
Recoverability of assets to be held and used is determined by a comparison of the carrying amount of an asset or
asset group 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 discounted cash flow of the
asset to the asset carrying values. The estimation of future cash flows from operating activities requires
significant judgments of factors that include forecasting future sales, gross profit and operating expenses. In
addition to historical results, current trends and initiatives, and long-term macro economic and industry factors
are qualitatively considered. Additionally management seeks input from store operations related to local
economic conditions. Impairment charges are included in selling, general and administrative expenses on the
consolidated statements of income.

Goodwill—Goodwill represents the excess of purchase price over the fair value of acquired tangible and

identifiable intangible net assets. We test goodwill for impairment on an annual basis or more frequently if
indicators of impairment are present. We perform our annual impairment measurement test on the first day of the
fourth quarter. Events that may trigger an early impairment review include significant changes in the current
business climate, future expectations of economic conditions, declines in our operating results of our reporting
units, or an expectation that the carrying amount may not be recoverable.

We have an option to test goodwill for impairment by first performing a qualitative assessment to determine

whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount. If it is
more likely than not that the fair value of the reporting unit is less than the carrying amount or if we choose not
to perform the qualitative assessment, we perform a quantitative two-step impairment test. The first step
compares the fair value of the reporting unit with its carrying amount of net assets, including goodwill. If the
carrying amount exceeds fair value, then the second step of the impairment test is performed to measure the
amount of impairment loss, if any. The second step includes estimating the fair value of the reporting unit by
taking all of the tangible and intangible assets of the reporting unit as if the reporting unit had been acquired in a
business combination. Then, the implied fair value of the reporting unit’s goodwill is compared to the carrying
amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of
the goodwill, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying
amount.

We generally determine the fair value of each of our reporting units based on a blended analysis of the
present value of future discounted cash flows and market valuation approach using a multiple of an average
annual earnings. Key assumptions used in this calculation include revenue growth, operating expenses, long-term
rate of growth and the probability of the reporting unit, working capital impacts and a discount rate that we
believe a buyer would assume when determining a purchase price for the reporting unit. Estimates of revenue
growth and operating expenses are based on internal projections considering a reporting unit’s past performance
and forecasted growth, local market economics and the local business environment impacting the reporting unit’s
performance. These estimates are highly subjective judgments and can be significantly impacted by changes in
the business or economic conditions.

Intangible Assets—Our intangible assets consist of trade names and trademarks with indefinite lives and
certain definite-lived intangible assets. We test our indefinite-lived intangible assets for impairment on an annual
basis, or more frequently if indicators of impairment are present. We test our indefinite-lived assets by estimating
the fair value of the asset and comparing that to the carrying value, an impairment loss is recorded for the amount
that carrying value exceeds the estimated fair value. The fair value of the trade names and trademarks is
determined using the relief from royalty method. This method assumes that the trade name and trademarks have
value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from

54

them. The assumptions used in this method requires management judgment and estimates in forecasting future
sales, expenses, discount rates, and royalty rates.

Definite-lived intangible assets, which consist of developed technology and customer relationships, are
amortized using the straight-line method over their estimated useful lives. Additionally, we test the definite-lived
intangible assets when facts and circumstances indicate that the carrying values may not be recoverable. We first
assess the recoverability of our definite-lived intangible assets by comparing the undiscounted cash flows of the
definite-lived asset less its carrying value. If the undiscounted cash flows are less than the carrying value, we
then determine the estimated fair value of our definite-lived asset by taking the estimated future operating cash
flows derived from the operation to which the asset relates over its remaining useful life, using a discounted cash
flow analysis and comparing it to the carrying value. Any impairment would be measured as the difference
between the carrying amount and the estimated fair value. Changes in any of these estimates, projections and
assumptions could have a material effect of the fair value of these assets in future measurement periods and result
in an impairment which could materially affect our results of operations.

Deferred Rent, Rent Expense and Tenant Allowances—We lease our stores and certain corporate and

other operating facilities under operating leases. 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, as well as real estate taxes,
insurance, common area maintenance charges and other executory costs. Most of the lease agreements have
defined escalating rent provisions, which are straight-lined over the term of the related lease. 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 as a
reduction 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.

Revenue Recognition—Sales are recognized upon purchase at our retail store locations. For our

ecommerce sales, revenue is recognized upon 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. Additionally, the portion of gift cards that will not be redeemed (“gift card
breakage”) is recognized in net sales after 24 months, at which time the likelihood of redemption is considered
remote based on our historical redemption patterns. For the fiscal years ended January 30, 2016, January 31,
2015 and February 1, 2014, we recorded net sales related to gift card breakage income of $0.9 million, $0.9
million and $0.8 million. Revenue is recorded net of 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 30, 2016 and January 31, 2015 was $2.0 million.

We have a customer loyalty program, the Zumiez STASH, which allows members to earn points for
purchases or performance of certain activities. The points can be redeemed for a broad range of rewards,
including product and experiential rewards. Points earned for purchases are recorded as a reduction of net sales
based on the fair value of the points at the time the points are earned and the revenue is recognized upon
redemption of points for rewards. Points earned for the performance of activities are recorded as marketing
expense based on the estimated cost of the points.

55

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, buying, occupancy, ecommerce fulfillment, distribution and warehousing costs (including
associated depreciation) and freight costs for store merchandise transfers. Cash consideration received from
vendors is reported as a reduction of cost of goods sold if the inventory has sold, 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.

Shipping Revenue and Costs—We include shipping revenue related to ecommerce sales in net sales and

the related freight cost is charged to cost of goods sold.

Selling, General and Administrative Expense—Selling, general and administrative expenses consist
primarily of store personnel wages and benefits, administrative staff and infrastructure expenses, freight costs for
merchandise shipments from the distribution centers to the stores, store supplies, depreciation on fixed assets at
the home office and stores, facility expenses, training expenses and advertising and marketing costs. Credit card
fees, insurance, public company expenses, legal expenses, amortization of intangibles assets and other
miscellaneous operating costs are also included in selling, general and administrative expenses.

Advertising—We expense advertising costs as incurred, except for catalog costs, which are expensed once

the catalog is mailed. Advertising expenses are net of sponsorships and vendor reimbursements. Advertising
expense was $9.5 million, $9.4 million and $8.7 million for the fiscal years ended January 30, 2016, January 31,
2015 and February 1, 2014.

Stock-Based Compensation—We account for stock-based compensation by recording the estimated fair

value of stock-based awards granted as compensation expense over the vesting period, net of estimated
forfeitures. Stock-based compensation expense is attributed to earnings straight-line method. We estimate
forfeitures of stock-based awards based on historical experience and expected future activity.

The fair value of restricted stock awards and units is measured based on the closing price of our common stock
on the date of grant. The fair value of stock option grants is estimated on the date of grant using the Black-
Scholes option pricing model based on the following 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 equal to the expected term of the
option.

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.

Expected term—The expected term was calculated using the simplified method. 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.

56

The following weighted-average assumptions were used to estimate the fair value of stock options granted:

Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volatility rate . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average expected life (in years) . . . . .
Weighted-average risk-free interest rate . . . . . . .
Weighted-average fair value per share of stock

Fiscal Year Ended

January 30, 2016

January 31, 2015

February 1, 2014

0.0%
53.4%
6.25
1.8%

0.0%
63.7%
6.25
1.9%

0.0%
66.4%
6.25
1.1%

options granted . . . . . . . . . . . . . . . . . . . . . . . .

$20.19

$15.26

$15.07

Common Stock Share Repurchases—We may repurchase shares of our common stock under

authorizations made from time to time by our Board of Directors. Under applicable Washington State law, shares
repurchased are retired and not displayed separately as treasury stock on the consolidated financial statements.
Instead, the value of repurchased shares is deducted from retained earnings.

Income Taxes—We use the asset and liability method of accounting for income taxes. Using this method,
deferred tax assets and liabilities are recorded based on the differences between the financial reporting and tax
basis of assets and liabilities. The deferred tax assets and liabilities are calculated using the enacted tax rates and
laws that are expected to be in effect when the differences are expected to reverse. We routinely evaluate the
likelihood of realizing the benefit of our deferred tax assets and may record a valuation allowance if, based on all
available evidence, it is determined that it is more likely than not that all or some portion of the deferred tax
benefit will not to be realized.

We regularly evaluate the likelihood of realizing the benefit for income tax positions that we have taken in

various federal, state and foreign filings by considering all relevant facts, circumstances and information
available. If we believe it is more likely than not that our position will be sustained, we recognize a benefit at the
largest amount that we believe is cumulatively greater than 50% likely to be realized. Interest and penalties
related to income tax matters are classified as a component of income tax expense. Unrecognized tax benefits are
recorded in other long-term liabilities on the consolidated balance sheets.

Our tax provision for interim periods is determined using an estimate of our annual effective rate, adjusted

for discrete items, if any, that are taken into account in the relevant period. As the fiscal year progresses, we
periodically refine our estimate based on actual events and earnings by jurisdiction. This ongoing estimation
process can result in changes to our expected effective tax rate for the full fiscal year. When this occurs, we
adjust the income tax provision during the quarter in which the change in estimate occurs so that our year-to-date
provision equals our expected annual rate.

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 equivalents 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 our common stock during the period reported.

Foreign Currency Translation—Assets and liabilities denominated in foreign currencies were translated
into U.S. dollars, the reporting currency, at the exchange rate prevailing at the balance sheet date. Revenue and
expenses denominated in foreign currencies were translated into U.S. dollars at the monthly average exchange
rate for the period and the translation adjustments are reported as an element of accumulated other
comprehensive income on the consolidated balance sheets.

57

Segment Reporting—We identify our operating segments according to how our business activities are

managed and evaluated. Our operating segments have been aggregated and are reported as one reportable
segment based on the similar nature of products sold, production, merchandising and distribution processes
involved, target customers and economic characteristics.

Recent Accounting Standards—In February 2016, the Financial Accounting Standards Board (“FASB”)
issued a comprehensive standard related to lease accounting to increase transparency and comparability among
organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information
about leasing arrangements. Most significantly, the new guidance requires lessees to recognize operating leases
with a term of more than 12 months as lease assets and lease liabilities. The adoption will require a modified
retrospective approach at the beginning of the earliest period presented. The new standard is effective for the
fiscal year beginning after December 15, 2018, with early adoption permitted. We are evaluating the impact of
this standard on our consolidated financial statements.

In January 2016, the FASB issued a new standard related primarily to accounting for equity investments,
financial liabilities where the fair value option has been elected, and the presentation and disclosure requirements
for financial instruments. There will no longer be an available-for-sale classification and therefore, no changes in
fair value will be reported in other comprehensive income for equity securities with readily determinable fair
values. The new standard will be effective for the fiscal year beginning after December 15, 2017 and early
adoption is permitted. We are currently evaluating the impact of this standard on our consolidated financial
statements.

In November 2015, the FASB issued guidance simplifying the presentation of deferred tax liabilities and

assets requiring that deferred tax liabilities and assets be classified as noncurrent in a classified statement of
financial position. The new standard is effective for the fiscal year beginning after December 15, 2016, with early
adoption permitted. We have early adopted this guidance retrospectively as of January 30, 2016. Adoption of this
update resulted in the reclassification of $7.0 million net current deferred tax assets to be presented as noncurrent
on our consolidated balance sheet as of January 31, 2015.

In July 2015, the FASB issued guidance simplifying the measurement of inventory. This standard requires
entities that use inventory methods other than the last-in, first-out (LIFO) or retail inventory method to measure
inventory at the lower of cost or net realizable value, which is defined as the estimated selling prices in the
normal course of business, less reasonably predictable costs of completion, disposal, and transportation. We are
required to adopt this guidance for the fiscal year beginning after December 31, 2016. We are currently
evaluating the impact of this standard on our consolidated financial statements.

In May 2015, the FASB issued guidance about a customer’s accounting for fees paid in a cloud computing

arrangement. If a cloud computing arrangement includes a software license, then the customer should account for
the software license element of the arrangement consistent with the acquisition of other software licenses. If a
cloud computing arrangement does not include a software license, the customer should account for the
arrangement as a service contract. The guidance is effective for the fiscal year beginning after December 15,
2015 and may be applied on either a prospective or retrospective basis. We do not expect the adoption of this
standard to have a material impact on our consolidated financial statements.

In August 2014, the FASB issued new guidance which provides details on when and how to disclose going
concern uncertainties. The new standard requires management to perform interim and annual assessments of an
entity’s ability to continue as a going concern within one year and to provide certain footnote disclosures if
conditions or events raise substantial doubt about an entity’s ability to continue as a going concern. The new
standard is effective for the fiscal year beginning after December 15, 2016, with early adoption permitted. We do
not expect the adoption of this standard to have a material impact on our consolidated financial statements.

In May 2014, the FASB issued a comprehensive new revenue recognition standard. The new standard

allows for a full retrospective approach to transition or a modified retrospective approach. This guidance was

58

effective for fiscal years and interim periods within those years beginning after December 15, 2016. In August
2015, the FASB issued updated guidance deferring the effective date for the fiscal year beginning after
December 15, 2017 and will permit early adoption of the standard, but not before the original effective date of
December 15, 2016. We are currently evaluating the method of adoption we plan to use and the effect the
standard is expected to have on our financial position, results of operations and cash flows.

In April 2014, the FASB issued guidance that changes the criteria for reporting discontinued operations, as
well as requiring new disclosures about discontinued operations and disposals of components of an entity that do
not qualify for discontinued operations reporting. We adopted this guidance beginning in the fiscal quarter
ending May 2, 2015 and the adoption did not have a material impact on our consolidated financial statements.

3. Business Combination

Blue Tomato—On July 4, 2012, we acquired 100% of the outstanding stock of Blue Tomato for cash
consideration of 59.5 million Euros ($74.8 million, using the exchange rate as of July 4, 2012). Blue Tomato is
one of the leading European specialty retailers of apparel, footwear, accessories and hardgoods and the
acquisition allowed us to enter into the European marketplace.

In addition, there was the possibility of future incentive payments to the sellers and certain employees of

Blue Tomato in an aggregate amount of up to 22.1 million Euros ($24.1 million, using the exchange rate on the
date of payment) to the extent that certain financial metrics were met related to (i) the obtainment of certain
EBITDA performance of Blue Tomato for the twelve months ended April 30, 2015 and (ii) the opening and
performance of certain defined incremental stores in the European market by April 30, 2015.

We determined that Blue Tomato achieved the metrics related to the opening and performance of certain
defined incremental stores by April 30, 2015 and we paid 6.0 million Euros ($6.6 million, using the exchange
rate on the date of payment) of which 3.0 million Euros ($3.3 million, using the exchange rate on the date of
payment) was paid in cash and 3.0 million Euros ($3.3 million, using the exchange rate on the date of payment)
was paid in 0.1 million shares of our common stock. The incentive payment was paid during the fiscal year ended
January 30, 2016. For the fiscal year ended January 30, 2016, we recorded an expense of $0.6 million. For the
fiscal year ended January 31, 2015, we recorded an expense for the incentive payments of $6.4 million. For the
fiscal year ended February 1, 2014, we estimated that we would not be obligated for future incentive payments
and reversed $5.8 million of previously recorded expense associated with the future incentive payments.

4. Goodwill and Intangible Assets

The following tables summarize the changes in the carrying amount of goodwill (in thousands):

Balance as of February 1, 2014 . . . . . . . . . . . . . . . . . . . . . . . .
Effects of foreign currency translation . . . . . . . . . . . . . . . . . . .

Balance as of January 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . .
Effects of foreign currency translation . . . . . . . . . . . . . . . . . . .

$64,195
(8,343)

55,852
(1,607)

Balance as of January 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . .

$54,245

There was no impairment of goodwill for the fiscal years ended January 30, 2016, January 31, 2015 and

February 1, 2014.

59

The following table summarizes the gross carrying amount, accumulated amortization and the net carrying

amount of intangible assets (in thousands):

January 30, 2016

Gross Carrying
Amount

Accumulated
Amortization

Intangible
Assets, Net

Intangible assets not subject to amortization:

Trade names and trademarks . . . . . . . . . . .

$11,766

$ —

$11,766

Intangible assets subject to amortization:

Developed technology . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . . .

3,267
2,422

3,267
2,422

—
—

Total intangible assets . . . . . . . . . . . . . . . . . . . .

$17,455

$5,689

$11,766

January 31, 2015

Gross Carrying
Amount

Accumulated
Amortization

Intangible
Assets, Net

Intangible assets not subject to amortization:

Trade names and trademarks . . . . . . . . . . .

$12,226

$ —

$12,226

Intangible assets subject to amortization:

Developed technology . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . . .

3,396
2,516

2,925
2,151

471
365

Total intangible assets . . . . . . . . . . . . . . . . . . . .

$18,138

$5,076

$13,062

There was no impairment of intangible assets for the fiscal years ended January 30, 2016, January 31, 2015

and February 1, 2014.

Amortization expense of intangible assets for the fiscal years ended January 30, 2016, January 31, 2015 and

February 1, 2014 was $0.9 million, $2.3 million and $2.3 million. Amortization expense of intangible assets is
recorded in selling, general and administrative expense on the consolidated statements of income.

5. Cash, Cash Equivalents and Marketable Securities

The following tables summarize the estimated fair value of our cash, cash equivalents and marketable

securities and the gross unrealized holding gains and losses (in thousands):

January 30, 2016

Gross
Unrealized
Holding
Gains

Gross
Unrealized
Holding
Losses

Amortized
Cost

Cash and cash equivalents:

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local government securities . . . . . . . . . . . . . . . . . . .

$33,608
9,555
—

Total cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43,163

Marketable securities:

State and local government securities . . . . . . . . . . . . . . . . . . .
Variable-rate demand notes . . . . . . . . . . . . . . . . . . . . . . . . . . .

32,754
644

$—
—
—

—

—

Total marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$33,398

$

Less: Long-term marketable securities (1) . . . . . . . . . . . . . . . . . . . .

Total current marketable securities . . . . . . . . . . . . . . . . . . . . . . . . .

60

Estimated
Fair Value

$33,608
9,555
—

43,163

$ —
—
—

—

8

8

(187)
—

32,575
644

$(187)

$33,219

(828)

$32,391

January 31, 2015

Gross
Unrealized
Holding
Gains

Gross
Unrealized
Holding
Losses

Amortized
Cost

Cash and cash equivalents:

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local government securities . . . . . . . . . . . . . . . . . . .

$ 10,251
7,061
3,550

Total cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . .

20,862

$—
—
—

—

$ —
—
—

—

Estimated
Fair Value

$ 10,251
7,061
3,550

20,862

Marketable securities:

State and local government securities . . . . . . . . . . . . . . . . . . .
Variable-rate demand notes . . . . . . . . . . . . . . . . . . . . . . . . . . .

102,888
31,830

73
—

(186)
—

102,775
31,830

Total marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$134,718

$ 73

$(186)

$134,605

Less: Long-term marketable securities (1) . . . . . . . . . . . . . . . . . . .

Total current marketable securities . . . . . . . . . . . . . . . . . . . . . . . . .

(823)

$133,782

(1) At January 30, 2016 and January 31, 2015, we held one auction rate security, classified as available-for-sale

marketable securities and included in long-term other assets 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.

The following tables summarize the gross unrealized holding losses and fair value for investments in an
unrealized loss position, and the length of time that individual securities have been in a continuous loss position
(in thousands):

January 30, 2016

Less Than Twelve Months

12 Months or Greater

Total

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Marketable securities:

State and local government

securities . . . . . . . . . . . . . . . . . . . .

$16,884

Total marketable securities . . . . . . . . . . .

$16,884

$(15)

$(15)

$853

$853

$(172)

$17,737

$(172)

$17,737

$(187)

$(187)

January 31, 2015

Less Than Twelve Months

12 Months or Greater

Total

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Marketable securities:

State and local government

securities . . . . . . . . . . . . . . . . . . . .

$27,701

Total marketable securities . . . . . . . . . . .

$27,701

$(9)

$(9)

$823

$823

$(177)

$28,524

$(177)

$28,524

$(186)

$(186)

We did not record a realized loss for other-than-temporary impairments during the fiscal years ended

January 30, 2016, January 31, 2015 and February 1, 2014.

61

6. Receivables

Receivables consisted of the following (in thousands):

Credit cards receivable . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tenant allowances receivable . . . . . . . . . . . . . . . . . . . . . .
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 7,606
1,201
4,033

$12,840

$ 7,781
1,555
3,317

$12,653

January 30, 2016

January 31, 2015

7. Fixed Assets

Fixed assets consisted of the following (in thousands):

January 30, 2016

January 31, 2015

Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . .
Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings, land and building and land improvements . . .
Computer equipment, software, store equipment and

other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fixed assets, at cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Accumulated depreciation . . . . . . . . . . . . . . . . . . . .

$ 164,930
83,467
28,198

30,257

306,852
(169,619)

$ 151,703
75,683
28,087

33,803

289,276
(153,634)

Fixed assets, net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 137,233

$ 135,642

Depreciation expense on fixed assets is recognized on our consolidated income statement as follows (in

thousands):

Cost of goods sold . . . . . . . . . . . . . . . .
Selling, general and administrative

expenses . . . . . . . . . . . . . . . . . . . . .

Depreciation expense . . . . . . . . .

Fiscal Year Ended

January 30, 2016

January 31, 2015

February 1, 2014

$ 1,238

$ 1,230

$ 1,086

26,113

$27,351

23,513

$24,743

21,281

$22,367

Impairment of Long-Lived Assets—We review the carrying value of our long-lived assets or asset groups

(defined as a store, corporate facility or distribution center) for impairment whenever events or changes in
circumstances indicate that the carrying value of such asset or asset group may not be recoverable. We evaluate
the performance of the asset or asset groups to determine if the carrying amount of the long-lived assets exceeds
the discounted cash flows expected to result from the use and eventual disposal of the assets. We use estimated
sales, gross margin, occupancy costs, including operating costs as well as other considerations, such as legal and
business climate. In addition to historical results, current trends, and long-term macro economic and industry
factors, we have considered qualitative factors such as local economic conditions. We recorded $3.1 million,
$0.2 million and $0.3 million of impairment of long-lived assets in selling, general and administrative expenses
on the consolidated statements of income for the years ended January 30, 2016, January 31, 2015 and February 1,
2014.

62

8. Other Liabilities

Other liabilities consisted of the following (in thousands):

January 30, 2016

January 31, 2015

Unredeemed gift cards . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued indirect taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for sales returns . . . . . . . . . . . . . . . . . . . . . . .
Accrual for repurchase of common stock . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Future incentive payments . . . . . . . . . . . . . . . . . . . . . . . .

Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 5,328
5,136
4,485
3,726
1,978
1,067
855
—

$22,575

$ 4,980
4,691
4,993
3,632
1,986
—
1,194
3,096

$24,572

9. Revolving Credit Facilities and Debt

As of January 30, 2016, we maintained a secured credit agreement with Wells Fargo Bank, N.A., which

provided us with a secured revolving credit facility until September 1, 2016 of up to $25.0 million, which,
pursuant to an accordion feature, may be increased to $35.0 million at our discretion. 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. The secured revolving credit
facility bears interest at the Daily Three 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
income after taxes of not less than one dollar on a trailing four-quarter basis provided, that, there shall be added
to net income all charges for impairment of goodwill and other intangibles and up to an aggregate of $5.0 million
of store asset impairment, 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 borrowings outstanding. Our accounts
receivable, general intangibles, inventory and equipment have 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 30, 2016. There were no borrowings outstanding under the
secured revolving credit facility at January 30, 2016 and January 31, 2015. We had no open commercial letters of
credit outstanding under our secured revolving credit facility at January 30, 2016 and $0.3 million at January 31,
2015.

Additionally, we have revolving lines of credit of up to 9.0 million Euros, the proceeds of which are used to
fund certain international operations. The revolving lines of credit bears interest at 1.50%-1.65%. There were no
borrowings or open commercial letters of credit outstanding under these revolving lines of credit at January 30,
2016 and January 31, 2015.

10. Commitments and Contingencies

Operating Leases—Total rent expense is as follows (in thousands):

Minimum rent expense (1) . . . . . . . . .
Contingent rent expense . . . . . . . . . . .

Total rent expense (2) . . . . . . . . .

Fiscal Year Ended

January 30, 2016

January 31, 2015

February 1, 2014

$62,336
2,219

$64,555

$51,131
2,312

$53,443

$68,904
2,196

$71,100

63

(1)

Included in minimum rent expense for the fiscal year ended February 1, 2014 is a benefit of $2.7 million
representing the correction of an error related to our calculation to account for rent expense on a straight-
line basis.

(2) Total rent expense does not include real estate taxes, insurance, common area maintenance charges and

other executory costs, which were $38.6 million, $35.6 million and $32.0 million for the fiscal years ended
January 30, 2016, January 31, 2015 and February 1, 2014.

Future minimum lease payments at January 30, 2016 are as follows (in thousands):

Fiscal 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 65,551
62,088
56,981
50,490
46,638
143,635

Total (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$425,383

(1) Amounts in the table do not include contingent rent and real estate taxes, insurance, common area

maintenance charges and other executory costs obligations.

Purchase Commitments—At January 30, 2016 and January 31, 2015, we had outstanding purchase orders

to acquire merchandise from vendors of $159.7 million and $192.9 million. We have an option to cancel these
commitments with no notice prior to shipment, except for certain private label purchase orders in which we are
obligated to repay 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 reasonably 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 our shareholders.

Insurance Reserves—We use a combination of third-party insurance and self-insurance for a number of

risk management activities including workers’ compensation, general liability and employee-related health care
benefits. We maintain reserves for our self-insured losses, which are estimated based on actuarial based analysis
of historical claims experience. The self-insurance reserve at January 30, 2016 and January 31, 2015 was $2.1
million and $1.8 million.

11. 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.

64

The following tables summarize assets measured at fair value on a recurring basis (in thousands):

January 30, 2016

Level 1

Level 2

Level 3

Cash equivalents:

Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local government securities . . . . . . . . . . . . . .

$ 9,555
—

$ —
—

Marketable securities:

State and local government securities . . . . . . . . . . . . . .
Variable-rate demand notes . . . . . . . . . . . . . . . . . . . . . .

—
—

31,747
644

Long-term other assets:

Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local government securities . . . . . . . . . . . . . .
Equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,510
—
—

—
—
—

$—
—

—
—

—
828
118

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$11,065

$32,391

$946

January 31, 2015

Level 1

Level 2

Level 3

Cash equivalents:

Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local government securities . . . . . . . . . . . . . .

$7,061
—

$ —
3,550

Marketable securities:

State and local government securities . . . . . . . . . . . . . .
Variable-rate demand notes . . . . . . . . . . . . . . . . . . . . . .

Long-term other assets:

State and local government securities . . . . . . . . . . . . . .
Equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—

—
—

$—
—

—
—

101,952
31,830

—
—

823
123

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$7,061

$137,332

$946

The Level 2 marketable securities primarily include state and local municipal 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. We review the pricing
techniques and methodologies of the independent pricing service for Level 2 investments and believe that its
policies adequately consider market activity, either based on specific transactions for the security valued or based
on modeling of securities with similar credit quality, duration, yield and structure that were recently traded. We
monitor security-specific valuation trends and we make inquiries with the pricing service about material changes
or the absence of expected changes to understand the underlying factors and inputs and to validate the
reasonableness of the pricing.

Assets measured at fair value on a nonrecurring basis include items such as long-lived assets resulting from

impairment, if deemed necessary. There were no material assets measured at fair value on a nonrecurring basis
for the fiscal years ended January 30, 2016 and January 31, 2015.

12. Stockholders’ Equity

Share Repurchase— In November 2012, our Board of Directors authorized us to repurchase $22.0 million
of our common stock. This repurchase program was completed in December 2012. In December 2012, our Board
of Directors authorized a stock repurchase program that provided for the repurchase of up to an additional
$20.0 million of outstanding common stock and $7.5 million of outstanding common stock was repurchased

65

under that program. In December 2013, the Board of Directors authorized a stock repurchase program that
provides for the repurchase of up to $30.0 million of outstanding common stock. This stock repurchase program
replaced the existing stock repurchase program that was authorized in December 2012, which had $12.5 million
remaining of the authorized amount to repurchase shares under that program. In December 2014, our Board of
Directors superseded and replaced this program with a $30.0 million share repurchase program. In June 2015, our
Board of Directors superseded and replaced this program with a $50.0 million share repurchase program that was
completed in August 2015. In December 2015, our Board of Directors authorized us to repurchase up to $70.0
million of our common stock. This program is expected to continue through January 28, 2017, unless the time
period is extended or shortened by the Board of Directors.

The following table summarizes common stock repurchase activity during the fiscal year ended January 30,

2016 (in thousands except average price per repurchased shares):

Number of shares repurchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average price per share of repurchased shares (with commission) . . . . .
Total cost of shares repurchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,965
$ 23.53
$93,302

At January 30, 2016, there remains $54.4 million available to repurchase shares under the current share

repurchase program.

Accumulated Other Comprehensive Income (Loss)—The component of accumulated other

comprehensive income (loss) and the adjustments to other comprehensive income (loss) for amounts reclassified
from accumulated other comprehensive income (loss) into net income is as follows (in thousands):

Foreign currency
translation
adjustments

Net unrealized
gains (losses) on
available-for-sale
investments

Accumulated other
comprehensive
income (loss)

Balance at February 2, 2013 . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss, net (1) . . . . . . . . . . . . . . . . . . . . .
Balance at February 1, 2014 . . . . . . . . . . . . . . . . . . . . . . . . .

Other comprehensive income (loss), net (1) . . . . . . . . . . . . .
Balance at January 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . .

Other comprehensive loss, net (1) . . . . . . . . . . . . . . . . . . . . .
Balance at January 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . .

$ 6,021
(1,231)
$ 4,790

(15,995)
$(11,205)

(3,931)
$(15,136)

$ (11)
(69)
$ (80)

7
$ (73)

(38)
$(111)

$ 6,010
(1,300)
$ 4,710

(15,988)
$(11,278)

(3,969)
$(15,247)

(1) Other comprehensive income (loss) before reclassifications is net of taxes of less than $0.1 million for the

fiscal year ended January 30, 2016, January 31, 2015 and February 1, 2014 for both net unrealized gains
(losses) on available-for-sale investments and accumulated other comprehensive income (loss). Foreign
currency translation adjustments are not adjusted for income taxes as they relate to permanent investments
in our international subsidiaries.

13. Equity Awards

General—We maintain several equity incentive plans under which we may grant incentive stock options,
nonqualified stock options, stock bonuses, restricted stock awards, restricted stock units and stock appreciation
rights to employees (including officers), non-employee directors and consultants.

66

Stock-Based Compensation—Total stock-based compensation expense is recognized on our consolidated

income statements as follows (in thousands):

Fiscal Year Ended

January 30, 2016

January 31, 2015

February 1, 2014

Cost of goods sold . . . . . . . . . . . . . . . .
Selling, general and administrative

$1,041

expenses (1) . . . . . . . . . . . . . . . . . . .

3,955

$1,048

6,472

$ 990

3,104

Total stock-based compensation

expense . . . . . . . . . . . . . . . . . .

$4,996

$7,520

$4,094

(1)

Included in stock-based compensation expense recognized in selling, general and administrative expenses is
$0.3 million and $3.1 million of expense associated with the incentive payments paid in shares of our
common stock for the fiscal year ended January 30, 2016 and January 31, 2015 and a $0.9 million benefit
associated with the reversal of the incentive payments payable in shares of our common stock associated
with the Blue Tomato acquisition for the fiscal year ended February 1, 2014.

At January 30, 2016, there was $5.7 million of total unrecognized compensation cost related to unvested

stock options and restricted stock. This cost has a weighted-average recognition period of 1.6 years.

Restricted Equity Awards—The following table summarizes restricted stock awards and restricted stock

units, collectively defined as “restricted equity awards”, activity (in thousands, except grant date weighted-
average fair value):

Restricted Equity
Awards

Grant Date
Weighted-
Average Fair
Value

Intrinsic
Value

Outstanding at February 2, 2013 . . . . . . . . . . . .

Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding at February 1, 2014 . . . . . . . . . . . .

Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding at January 31, 2015 . . . . . . . . . . . .

Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding at January 30, 2016 . . . . . . . . . . . .

382

198
(193)
(26)

361

176
(154)
(40)

343

130
(142)
(45)

286

$23.97

$25.45
$19.54
$27.27

$26.91

$25.76
$26.31
$27.14

$26.56

$36.10
$27.06
$28.64

$30.32

$5,176

67

The following table summarizes additional information related to restricted equity awards activity (in

thousands):

Vest-date fair value of restricted stock
vested . . . . . . . . . . . . . . . . . . . . . . . .

$5,184

$3,916

$4,981

Fiscal Year Ended

January 30, 2016

January 31, 2015

February 1, 2014

Stock Options—The following table summarizes stock option activity (in thousands, except grant date

weighted-average exercise price and weighted-average remaining contractual life):

Grant Date
Weighted-
Average Exercise
Price

Weighted-Average
Remaining
Contractual Life
(in Years)

Stock
Options

Intrinsic
Value

Outstanding at February 2, 2013 . . . . . . . . . . . . . . . . . . . . .

820

Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

47
(152)
(24)

Outstanding at February 1, 2014 . . . . . . . . . . . . . . . . . . . . .

691

Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

31
(397)
(74)

Outstanding at January 31, 2015 . . . . . . . . . . . . . . . . . . . . .

251

Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24
(53)
(79)

Outstanding at January 30, 2016 . . . . . . . . . . . . . . . . . . . . .

143

Exercisable at January 30, 2016 . . . . . . . . . . . . . . . . . . . . .

Vested or expected to vest at January 30, 2016 . . . . . . . . .

88

98

$17.62

$24.81
$ 6.64
$35.96

$19.86

$25.49
$14.82
$32.63

$24.76

$38.57
$ 9.61
$33.50

$27.86

$25.55

$27.70

5.3

3.5

4.5

$183

$183

$183

The following table summarizes additional information related to stock option activity (in thousands):

Aggregate intrinsic value of stock

options exercised . . . . . . . . . . . . . . .

$926

$6,756

$3,408

Fiscal Year Ended

January 30, 2016

January 31, 2015

February 1, 2014

The following table summarizes outstanding and exercisable options by exercise price at January 30, 2016:

Exercise Price

Under $ 10.00
$ 10.01-$ 20.00
$ 20.01-$ 30.00
$ 30.01-$ 40.00

Total

Options Outstanding

Options
Exercisable

Number of
Options
(in thousands)

Weighted-Average
Remaining
Contractual Life

Number of Options
(in thousands)

1.1
4.6
7.1
0.9

19
1
35
33

88

19
1
65
58

143

68

Employee Stock Purchase Plan—We offer an Employee Stock Purchase Plan (the “ESPP”) for eligible
employees to purchase our 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, subject to maximum contribution thresholds.
The number of shares issued under our ESPP was less than 0.1 million for each of the fiscal years ended
January 30, 2016, January 31, 2015 and February 1, 2014.

14. Income Taxes

The components of earnings before income taxes are (in thousands):

Fiscal Year Ended

January 30, 2016

January 31, 2015

February 1, 2014

United States . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . .

$46,868
(1,007)

$80,449
(8,798)

$71,288
676

Total earnings before income

taxes . . . . . . . . . . . . . . . . . . . . .

$45,861

$71,651

$71,964

The components of the provision for income taxes are (in thousands):

Fiscal Year Ended

January 30, 2016

January 31, 2015

February 1, 2014

Current:

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current

. . . . . . . . . . . . . . . . . . . .

Deferred:

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total deferred . . . . . . . . . . . . . . . . . . .

$16,186
2,591
972

19,749

(585)
(832)
(1,256)

(2,673)

$24,639
3,386
1,044

29,069

1,706
291
(2,607)

(610)

$22,925
3,544
525

26,994

629
74
(1,681)

(978)

Provision for income taxes . . . . . . . . .

$17,076

$28,459

$26,016

The reconciliation of the income tax provision at the U.S. federal statutory rate to our effective income tax

rate is as follows:

Fiscal Year Ended

January 30, 2016

January 31, 2015

February 1, 2014

Expected U.S. federal income taxes at
statutory rates . . . . . . . . . . . . . . . . .

State and local income taxes, net of

federal effect . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . .

Effective tax rate . . . . . . . . . . . . .

35.0%

3.3
(1.1)

37.2%

35.0%

3.4
1.3

39.7%

35.0%

3.3
(2.2)

36.1%

69

The components of deferred income taxes are (in thousands):

January 30,
2016

January 31,
2015

Deferred tax assets:

Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefits, including stock based compensation . . . . . . . . . . . .
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 19,512
4,384
3,124
2,125
1,181
1,516

$ 18,832
3,053
3,595
1,971
1,351
1,508

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

31,842

30,310

Deferred tax liabilities:

Property and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill and other intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(19,606)
(6,901)
(701)

(27,208)

(21,197)
(6,424)
(693)

(28,314)

Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 4,634

$ 1,996

Reported as:

Long-term deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 4,634
—

$ 7,734
(5,738)

Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 4,634

$ 1,996

At January 30, 2016 and January 31, 2015, we had $16.0 million and $12.1 million of foreign net operating
loss carryovers that could be utilized to reduce future years’ tax liabilities. The tax- effected foreign net operating
loss carryovers were $4.4 million and $3.0 million at January 30, 2016 and January 31, 2015. The net operating
loss carryovers have an indefinite carryfoward period and currently will not expire.

We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Our

U.S. federal income tax returns are no longer subject to examination for years before fiscal 2012, with few
exceptions, we are no longer subject to U.S. state examinations for years before fiscal 2011 and we are no longer
subject to examination for all foreign income tax returns before fiscal 2010.

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):

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average common shares for basic earnings per

share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dilutive effect of stock options and restricted stock . . . . . . . . .

27,497
176

Weighted average common shares for diluted earnings per

share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27,673

Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

1.05

1.04

70

Fiscal Year Ended

January 30, 2016

January 31, 2015

February 1, 2014

$28,785

$43,192

$45,948

28,871
417

29,288

$

$

1.50

1.47

29,810
396

30,206

$

$

1.54

1.52

Total anti-dilutive common stock options not included in the calculation of diluted earnings per share were

0.1 million, 0.1 million and 0.2 million for the fiscal years ended January 30, 2016, January 31, 2015 and
February 1, 2014.

16. Related Party Transactions

The Zumiez Foundation is a charitable based nonprofit organization focused on meeting various needs of

the under-privileged. Our Chairman of the Board is also the President of the Zumiez Foundation. We committed
charitable contributions to the Zumiez Foundation of $0.6 million, $0.7 million and $0.7 million for the fiscal
years ended January 30, 2016, January 31, 2015 and February 1, 2014. We have accrued charitable contributions
payable to the Zumiez Foundation of $0.5 million and $0.6 million at January 30, 2016 and January 31, 2015.

17. Segment Reporting

The following table is a summary of product categories as a percentage of merchandise sales:

Fiscal Year Ended

January 30, 2016

January 31, 2015

February 1, 2014

Men’s Apparel . . . . . . . . . . . . . . . . . . .
Accessories . . . . . . . . . . . . . . . . . . . . .
Footwear . . . . . . . . . . . . . . . . . . . . . . .
Hardgoods . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
Junior’s Apparel

34%
20%
19%
14%
13%

Total

. . . . . . . . . . . . . . . . . . . . . .

100%

34%
20%
19%
14%
13%

100%

34%
19%
22%
13%
12%

100%

The following tables present summarized geographical information (in thousands):

Fiscal Year Ended

January 30, 2016

January 31, 2015

February 1, 2014

Net sales (1):
United States . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . .

Total net sales . . . . . . . . . . . . . . .

$689,582
114,601

$804,183

$708,279
103,272

$811,551

$644,362
79,975

$724,337

January 30, 2016

January 31, 2015

Long-lived assets:

United States . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total long-lived assets . . . . . . . . . . .

$124,436
25,352

$149,788

$122,003
23,025

$145,028

(1) Net sales are allocated based on the location in which the sale was originated for the fiscal year ended

January 30, 2016 and fulfilled for the fiscal years ended January 31, 2015 and February 1, 2014. Store sales
are allocated based on the location of the store and ecommerce sales are allocated to the U.S. for sales on
www.zumiez.com and to foreign for sales on www.blue-tomato.com.

18. Subsequent Event

On February 5, 2016, the Company entered into an asset-based revolving credit agreement with Wells Fargo

Bank, National Association as administrative agent, collateral agent, letter of credit issuer and lenders, which
provides for a senior secured revolving credit facility of up to $100 million (“ABL Facility”), subject to a

71

borrowing base, with a letter of credit sub-limit of $10 million. The ABL Facility is available for working capital
and other general corporate purposes. The ABL Facility replaces our $25.0 million (which, pursuant to an
accordion feature, could have been increased to $35.0 million at our discretion) secured revolving credit facility
with Wells Fargo, which was entered into on July 9, 2014 and was scheduled to expire on September 1, 2016.
The ABL Facility will mature on February 5, 2021.

The ABL Facility is secured by a first-priority security interest in substantially all of the personal property

(but not the real property) of the borrowers and guarantors. Amounts borrowed under the ABL Facility bear
interest, at the Company’s option, at either an adjusted LIBOR rate plus a margin of 1.25% to 1.75% per annum,
or an alternate base rate plus a margin of 0.25% to 0.75% per annum. The Company is also required to pay a fee
of 0.25% per annum on undrawn commitments under the ABL Facility. Customary agency fees and letter of
credit fees are also payable in respect of the ABL Facility.

72

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/ CHRISTOPHER C. WORK

Signature
By: Christopher C. Work, Chief Financial
Officer (Principal Financial Officer and
Principal Accounting Officer)

March 14, 2016

Date

March 14, 2016
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

March 14, 2016

/S/ JAMES M. WEBER

March 14, 2016

Signature
Thomas D. Campion, Chairman

Date

Signature
James M. Weber, Director

Date

/S/ MATTHEW L. HYDE

March 14, 2016

/S/ SARAH G. MCCOY

March 14, 2016

Signature
Matthew L. Hyde, Director

Date

Signature
Sarah G. McCoy, Director

Date

/S/ ERNEST R. JOHNSON

March 14, 2016

/S/ TRAVIS D. SMITH

March 14, 2016

Signature
Ernest R. Johnson, Director

Date

Signature
Travis D. Smith, Director

Date

/S/ KALEN F. HOLMES

March 14, 2016

/S/ SCOTT A. BAILEY

March 14, 2016

Signature
Kalen F. Holmes, Director

Date

Signature
Scott A. Bailey, Director

Date

73

2.1

3.1

3.2

4.1

10.15

10.20

10.21

10.22

10.23

10.24

10.25

10.27

21.1

23.1

31.1

31.2

32.1

EXHIBIT INDEX

Share Purchase Agreement, dated June 18, 2012, by and between Gerfried Schuller, Alexander Zezula
and Eff zwanzig Beteiligungsverwaltung GmbH [Incorporated by reference to Exhibit 2.1 to the
Form 8-K filed by the Company on July 10, 2012]

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, as amended and restated May 21, 2014 and Amendment No.1, dated as of May 21, 2015, to
Bylaws of Zumiez Inc. (as previously Amended and Restated as of May 21, 2014 [Incorporated by
reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 23, 2014 and
Exhibit to the Company’s Form 8-K filed on May 21, 2015]

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)]

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]

Zumiez Inc. 2014 Equity Incentive Plan. [Incorporated by reference to Exhibit 10.20 to the Company’s
Current Report on Form 8-K filed on May 23, 2014]

Form of Restricted Stock Award Agreement and Terms and Conditions. [Incorporated by reference to
Exhibit 10.21 to the Company’s Current Report on Form 8-K filed on May 23, 2014]

Form of Stock Option Award Agreement and Terms and Conditions. [Incorporated by reference to
Exhibit 10.22 to the Company’s Current Report on Form 8-K filed on May 23, 2014]

Zumiez Inc. 2014 Employee Stock Purchase Plan. [Incorporated by reference to Exhibit 10.23 to the
Company’s Current Report on Form 8-K filed on May 23, 2014]

Form of Indemnification Agreement. [Incorporated by reference to Exhibit 10.24 to the Company’s
Current Report on Form 8-K filed on May 23, 2014]

Credit Agreement, including Revolving Line of Credit Note, with Wells Fargo Bank, N.A. dated
July 9, 2014. [Incorporated by reference from Exhibit 10.25 to the Form 8-K filed by the Company on
July 7, 2014]

Credit Agreement dated as of February 5, 2016 among Zumiez Services Inc., as the lead borrower, for
the borrowers and guarantors named therein and Wells Fargo Bank, National Association, as agent and
L/C issuer and other lender parties thereto. [Incorporated by reference to Exhibit 10.27 to the
Company’s Form 8-K filed on February 5, 2016]

Subsidiaries of the Company.

Consent of Moss Adams LLP, Independent Registered Public Accounting Firm.

Certification of the 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.

74

101

The following materials from Zumiez Inc.’s Annual Report on Form 10-K for the annual period ended
January 30, 2016, formatted in XBRL (eXtensible Business Reporting Language):
(i) Consolidated Balance Sheets at January 30, 2016 and January 31, 2015; (ii) Consolidated Statements
of Income for the fiscal years ended January 30, 2016, January 31, 2015 and February 1, 2014;
(iii) Consolidated Statements of Comprehensive Income for the fiscal years ended January 30, 2016,
January 31, 2015 and February 1, 2014; (iv) Consolidated Statements of Changes in Shareholders’
Equity for the fiscal years ended January 30, 2016, January 31, 2015 and February 1, 2014; (v)
Consolidated Statements of Cash Flows for the fiscal years ended January 30, 2016, January 31, 2015
and February 1, 2014; and (vi) Notes to Consolidated Financial Statements.

Copies of Exhibits may be obtained upon request directed to the attention of our Executive Vice President,
General Counsel and Secretary, 4001 204th Street SW, Lynnwood, Washington 98036, and are available at the
SEC’s website found at www.sec.gov.

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