Zumiez Inc. Annual Report 2023

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FY2023 Annual Report · Zumiez Inc.

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

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: February 3, 2024
OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934

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)

th
4001 204 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(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 ☒
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 ☒
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company,
or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging
growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Non-accelerated filer

☐

Accelerated filer

Smaller reporting company

☒

☐

Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Common Stock

Trading
Symbol(s)

ZUMZ

Name of each exchange on which registered

Nasdaq Global Select

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, July 29, 2023, was $320,530,872. At March 7, 2024, there were 19,833,198 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 5, 2024, 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.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.

Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
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.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.

Reserved
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

PART III

Item 10.
Item 11.
Item 12.

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder

Matters

Item 13.
Item 14.

Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services

Item 15.
Signatures

Exhibits and Financial Statement Schedules

PART IV

3
11
20
21
24
24
24

25
26
27
38
38
38
38
39
39

40
40

40
40
40

41
74

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 2023 was the 53 week period ending
February 3, 2024. Fiscal 2022 was the 52 week period ending January 28, 2023. Fiscal 2021 was the 52 week
period ending January 29, 2022. Fiscal 2020 was the 52 week period ending January 30, 2021. Fiscal 2019 was the
52 week period ending February 1, 2020. Fiscal 2018 was the 52 week period ending February 2, 2019.

“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.

We operate under the names Zumiez, Blue Tomato and Fast Times. We operate ecommerce websites at
zumiez.com, zumiez.ca, blue-tomato.com and fasttimes.com.au. At February 3, 2024, we operated 756 stores; 597 in
the United States (“U.S.”), 47 in Canada, 87 in Europe and 25 in Australia.

We acquired Blue Tomato in fiscal 2012. Blue Tomato is one of the leading European specialty retailers of

apparel, footwear, accessories and hardgoods. We acquired Fast Times Skateboarding (“Fast Times”) in fiscal 2016.
Fast Times is an Australian leading specialty retailer of hardgoods, accessories, apparel and footwear.

We employ a sales strategy that integrates our stores with our ecommerce platform to serve our customers.

There is significant interaction between our store sales and our ecommerce sales channels and we believe that they
are utilized in tandem by 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.

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.

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 and differentiates us in our market.

Differentiated Merchandising Strategy. We have created a highly differentiated global 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 from us. 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
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 the knowledge and tools to develop leadership, communication, sales, and
operational expertise. We believe that our merchandising team 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 digital
and physical marketing events, as well as the Zumiez STASH loyalty program. Our marketing efforts incorporate
local sporting and music event promotions, 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. Our STASH loyalty
program allows us to learn more about our customer and serve their needs better. We believe that our ability to
interact with our customer, and 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 global specialty retailer of action sports, streetwear, and other

unique lifestyles by:

Continuing to Generate Sales Growth through Existing Channels. We seek to maximize our comparable sales

through our integrated store and online shopping experiences and offering our customers a broad and relevant
selection of brands and products, including a unique customer experience through each interaction with our brand.
We believe in driving to the optimum store count in each physical geography that we operate in and optimizing
comparable sales within these markets between physical and digital to drive total trade area sales growth.

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 also use our STASH loyalty program to increase brand engagement and enhance brand
creditability. 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
focus on utilizing an integrated marketing approach by promoting events and activities in our existing and new
markets. We also benefit from branded vendors’ marketing.

Opening or Acquiring New Store Locations. We believe our brand has appeal that provides select store
expansion opportunities, particularly within our international markets. During the last three fiscal years, we have
opened 74 new stores consisting of 19 stores in fiscal 2023, 32 stores in fiscal 2022 and 23 stores in fiscal 2021. 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 10 new stores in fiscal 2024, including stores in
our existing markets and in new markets internationally. The number of anticipated store openings may increase or
decrease due to market conditions and other factors. Our goal in opening stores is to not have one more store than
needed to serve all our customers within a trade area.

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.

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 third-party brand that we carry accounted for more than 5.9%, 6.3% and
7.9% of our net sales in fiscal 2023, 2022 and 2021, respectively. 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 2023, 2022 and
2021, our private label merchandise represented 23.0%, 18.4%, and 13.3% of our net sales, respectively.

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 coordinate inventory levels in connection with individual stores’
sales strength, our promotions and seasonality. We utilize a localized fulfillment strategy to fulfill the vast majority
of our ecommerce orders through our stores to enhance customer experience, maximize inventory productivity and
reduce shipping time.

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

and other unique lifestyles by participating in lifestyles we support, 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. With a global footprint, we are
able to identify trends that emerge all over the world.

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.

Stores

Store Locations. At February 3, 2024, we operated 756 stores in the following locations:

United States and Puerto Rico - 597 Stores

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

4 Indiana
3 Iowa
11 Kansas
2 Kentucky
89 Louisiana
20 Maine

7 Maryland
3 Massachusetts

38 Michigan
17 Minnesota
7 Mississippi
6 Missouri
16 Montana

10 Nebraska

4 New Hampshire
3 New Jersey
4 New Mexico
5 New York
3 Nevada
11 North Carolina
10 North Dakota
14 Ohio
12 Oklahoma
4 Oregon
7 Pennsylvania
5 Puerto Rico

Canada - 47 Stores

Alberta
British Columbia
Manitoba

8 New Brunswick

12 Nova Scotia

2 Ontario

1 Saskatchewan
2
20

2
6
2
9
48
14
1
15
20
2
13
2

2 Rhode Island
6 South Carolina

17 South Dakota
5 Tennessee

30 Texas
10 Utah
15 Vermont
4 Virginia
14 Washington

6 West Virginia

12 Wisconsin
22 Wyoming

Europe - 87 Stores

Austria
Germany
Switzerland
Netherlands
Norway
Finland

Australia - 25 Stores

Victoria
Queensland
South Australia
New South Wales

20 Sweden
31 Italy
12 Belgium

2
4
1

5
4
8

9
8
2
6

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 permanently closed in each of our last three fiscal years:

Fiscal Year
2023
2022
2021

Stores
Opened
19
32
23

Stores
Closed (1)
21
13
5

Total Number
of
Stores End of
Year
756
758
739

(1) Store closures above do not include short-term closures due to the impact of the novel coronavirus

(“COVID-19”) pandemic.

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 February 3, 2024, our stores averaged approximately 2,909 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.

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. We generally locate our stores in areas in which
other teen and young adult-oriented retailers have performed well. We focus on evaluating the market specific
competitive environment for potential new store locations. We seek to diversify our store locations regionally and
by caliber of mall or shopping area. 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 retailers.

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 lifestyle we support

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 physical and digital 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. We utilize a
localized fulfillment strategy in which we use our domestic store network to provide fulfillment services for the vast
majority of online customer purchases.

Internationally, we operate distribution centers located in Delta, Canada, Graz, Austria, and Melbourne,
Australia to support our operations in Canada, Europe and Australia, respectively. Each of our international entities
are progressing toward full localized fulfillment and are in various states of implementation.

Management Information Systems

Our management information systems provide integration of store, online, 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, management personnel, online marketing content, social media engagement and ecommerce traffic. 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 market we compete with independent specialty
shops, department stores, vendors that sell their products directly to the retail market, non-mall retailers and
ecommerce retailers. In the hardgoods market, which includes skateboards, snowboards, bindings, components and
other equipment, we compete directly or indirectly with the following categories of companies: other specialty
retailers, such as local snowboard and skate shops, large-format sporting goods stores and chains, vendors who sell
their products directly to the retail market 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 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 2023, approximately 57% of our net sales occurred in the third and fourth quarters
combined. 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”, “Blue Tomato” and “Fast Times” 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

On February 3, 2024, we employed approximately 2,600 full-time and approximately 6,300 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 in North America and Australia are represented by labor unions and we believe that our
relationship with our employees is positive.

We believe in delivering quality employment experiences at all levels within the Company. In that regard,
every year we create thousands of career opportunities in our stores for individuals who are just beginning their
professional careers and who are driven to develop new skills in an environment centered around teaching and
learning. Many of these opportunities are provided to our part-time sales associates, who on average are
approximately 19 years of age, and are often furthering their career through concurrent education and/or additional
employment opportunities.

The Zumiez culture 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, teaching and learning, competition, recognition, and
fairness and honesty. Our culture strives to integrate quality teaching and learning experiences throughout the
organization. We do this through a comprehensive training program, which primarily focuses on sales, management
and customer service training in our stores and is more focused on professional development in our home office. 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 employees to make good
business decisions.

We believe Zumiez is a place where people have a voice, will be heard, and have bias-free opportunities.
Accordingly, our workplace is built upon the foundation of inclusion and equity where its people are diverse in their
backgrounds, communities, and points of view, yet all share the same core cultural values of working hard, giving
back and empowering others. In this regard, we strive for our employees within a trade area to be reflective of the
communities they serve. Pay equity, meaning pay parity between employees performing similar job duties, without
regard for race or gender, is a base line component of this focus on inclusion and equity and something we evaluate
as part of our pay practice procedures.

Financial Information about Segments

See Note 18, “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
SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the SEC.

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.

U.S. and global economic and political uncertainty, 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 and
political conditions change, the trends in discretionary consumer spending become unpredictable and discretionary
consumer spending could be reduced due to uncertainties about the future. Economic and consumer confidence can
also be affected by a variety of factors, including housing prices, unemployment rates and inflation. When
disposable income decreases or discretionary consumer spending is reduced due to a decline in consumer
confidence, purchases of apparel and related products may decline. A deterioration in macroeconomic conditions or
consumer confidence or uncertainty in the U.S. and global economies and political environment could have a
material adverse impact on our results of operations and financial position.

In times when there is a decline in disposable income and consumer confidence, there could be a trend to consumers
seeking more inexpensive or value-oriented merchandise. As a retailer that sells a substantial majority of branded
merchandise, this could disproportionately impact us more than vertically integrated private label retailers or we
may be forced to rely on promotional sales to compete in our market which could have a material adverse effect on
our financial position.

Failure to anticipate, identify and respond to changing fashion trends, customer preferences and other fashion-
related factors 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 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, including adequately anticipating the correct mix and trends of our private label merchandise,
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.

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, management personnel, online marketing content, social media engagement and ecommerce traffic.
Some of our competitors are larger than we are and have substantially greater financial and marketing resources,
including advanced ecommerce market capabilities. 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.

We could incur charges due to impairment of goodwill, intangible assets and other long-term assets.

We have recorded goodwill, which is the premium paid over the fair market value of the acquired tangible and
intangible assets paid in an acquisition, as part of our prior year acquisitions. Goodwill and intangible assets, which
consist of tradenames and trademarks, are tested for impairment annually or more frequently if events or changes in
circumstances indicate that the asset might be impaired. Any event that impacts our results negatively could lead to
impairment of these assets which could have negative impacts on our earnings. Long-term assets, primarily fixed
assets and operating lease right-of-use assets, are also subject to testing for impairment if events or changes in
circumstances indicate that the asset might be impaired. A significant amount of judgment is involved in our
impairment assessment. If actual results fall short of our estimates and assumptions used in estimating revenue
growth, future cash flows and asset fair values, we could incur further impairment charges for goodwill, intangible
assets, or long-term assets, which could have an adverse effect on our results of operations.

Most of our merchandise is produced by foreign manufacturers; therefore, the availability, quality and costs of
our merchandise 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, public health concerns, or emergencies, such as COVID-19 and
other communicable diseases or viruses, 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. This
includes costs to comply with regulatory developments regarding the use of “conflict minerals,” certain minerals
originating from the Democratic Republic of Congo and adjoining countries, which may affect the sourcing and
availability of raw materials used by manufacturers and subject us to increased costs associated with our products,
processes or sources of our inputs. Our business could be adversely affected by disruptions in the supply chain, such
as strikes, work stoppages, or port closures.

A decrease in consumer traffic could cause our sales to be less than expected.

We depend heavily on generating customer traffic to our stores and websites. This includes 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 “anchor” tenants, generally large
department stores and other area attractions, to generate consumer traffic in the vicinity of our stores and the
continuing popularity of malls as shopping destinations. In addition, some malls that were in prominent locations
when we opened our stores may cease to be viewed as prominent. If this trend continues or if the popularity of mall
shopping continues to decline generally among our customers, our sales may decline, which would impact our
results of operations. These risks may include circumstances that are not within our control, such as changes in fair
market rent. Furthermore, we depend on generating increased traffic to our ecommerce business and converting that
traffic into sales. This requires us to achieve expected results from our marketing and social media campaigns,
accuracy of data analytics, reliability of our website, network, and transaction processing and a high-quality online
customer experience. Our sales volume and customer traffic in our stores and on our websites generally could be
adversely affected by, among other things, economic downturns, competition from other 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. Also,
geopolitical events, including the threat of terrorism, or widespread health emergencies, such as COVID-19 and
other communicable diseases, viruses, or pandemics, could cause people to avoid our stores in shopping malls and
alter consumer trends. An uncertain economic outlook or continued bankruptcies of mall-based retailers could
curtail new shopping mall development, decrease shopping mall and ecommerce 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 consumer traffic to our stores or websites could have a material adverse effect on our business, results of
operations and financial condition.

Our North America growth strategy depends on our ability to grow customer engagement in our current markets,
which could strain our resources and cause the performance of our existing business to suffer.

Our North America growth largely depends on our ability to optimize our customer engagement. We intend to
continue to open new stores in future years, while remodeling a portion of our existing store base such that we have
the optimum number of stores in any given trade area. The growth strategy may present competitive, merchandising,
hiring and distribution challenges that are different from those currently encountered. In addition, it 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. 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.

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

We plan to continue to open new stores in the European and Australian markets. We may continue to expand
internationally into other markets, either organically or through additional acquisitions. International markets may
have different competitive conditions, consumer tastes and discretionary spending patterns than our existing North
America market. The expansion strategy may present competitive, merchandising, hiring and distribution challenges
that are different from those currently encountered. In addition, it will place increased demands on our operational,
managerial and administrative resources. As a result, operations in international markets may be less successful than
our operations in the North America. 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 in new international markets and cannot
guarantee that we will be able to penetrate or successfully operate in these new 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. Accordingly, for the reasons noted above, our plans for international expansion include
risks that could have a negative impact on our results of operations.

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

We may, from time to time, acquire businesses, such as our acquisition of Blue Tomato and Fast Times. We may
experience difficulties in integrating any businesses we may acquire, including their stores, websites, 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 sales and inventory levels fluctuate on a seasonal basis. 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 calendar shifts of holiday or
seasonal periods, timing of promotional events, general economic conditions, and numerous other items set forth on
these risk factors.

Pandemics and other health crises, including COVID-19, could affect our business, financial condition and
results of operations in many respects.

The emergence, severity, magnitude and duration of global or regional health crises are uncertain and difficult to
predict. A pandemic, such as COVID-19, could affect certain business operations, demand for our products and
services, in-stock positions, costs of doing business, availability of labor, access to inventory, supply chain
operations, our ability to predict future performance, exposure to litigation, and our financial performance, among
other things. Other factors and uncertainties include, but are not limited to:

•

the severity and duration of pandemics;

evolving macroeconomic factors, including general economic uncertainty, unemployment rates, and
recessionary pressures;

changes in labor markets affecting us and our suppliers;

unknown consequences on our business performance and initiatives stemming from the substantial
investment of time and other resources to the pandemic response;

the pace of post-pandemic recovery;

the long-term impact of the pandemic on our business, including consumer behaviors; and

disruption and volatility within the financial and credit markets.

If our information systems fail to function effectively, or do not scale to keep pace with our planned growth, our
operations could be disrupted and our financial results could be harmed.

If our information systems, including hardware and software, do not work effectively, this could adversely impact
the promptness and accuracy of our transaction processing, financial accounting and reporting and our ability to
manage our business and properly forecast operating results and cash requirements. 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.

If we fail to meet the requirements to adequately maintain the privacy and security of personal data and business
information, we may be subjected to adverse publicity, litigation, and significant expenses.

Information systems are susceptible to an increasing threat of continually evolving cybersecurity risks. If we fail to
maintain or adequately maintain security systems, devices, and activity monitoring to prevent unauthorized access to
our network, systems and databases containing confidential, proprietary and personally identifiable information, we
may be subject to additional risk of adverse publicity, litigation or significant expense. Nevertheless, if unauthorized
parties gain access to our networks, systems, or databases, they may be able to steal, publish, delete or modify
confidential 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. Actual or anticipated attacks may cause us to incur increasing costs, including costs to deploy additional
resources, train employees and engage third parties. Further, the regulatory environment surrounding information
security, cybersecurity and privacy is increasingly demanding. If we are unable to comply with the new and
changing security standards, we may be subject to fines, restrictions, and financial exposure, which could adversely
affect our retail operations.

Significant fluctuations and volatility in the cost of raw materials, global labor, shipping and other costs related
to 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 raw materials, global labor costs, freight costs and other shipping costs in the production and
transportation of our merchandise can result in higher costs for this merchandise. The costs for these products are
affected by weather, consumer demand, government regulation, 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 raw 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.

Fluctuations in foreign currency exchange rates could impact our financial condition and results of operations.

We are exposed to foreign currency exchange rate risk with respect to our sales, profits, assets and liabilities
denominated in currencies other than the U.S. dollar. As a result, the fluctuation in the value of the U.S. dollar
against other currencies could have a material adverse effect on our results of operations, financial condition and
cash flows. Upon translation, operating results may differ materially from expectations. As we continue to expand
our international operations, our exposure to exchange rate fluctuations will increase. Tourism spending may be
affected by changes in currency exchange rates, and as a result, sales at stores with higher tourism traffic may be
adversely impacted by fluctuations in currency exchange rates. Further, 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.

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

Labor is one of the primary components in the cost of operating our business. Increased labor costs, whether due to
competition, unionization, increased minimum wage, state unemployment rates, health care, mandated safety
protocols, or other employee benefits costs may adversely impact our operating profit. 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 limit 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. There is no assurance that future health care legislation will not adversely impact our
results or operations.

Although none of our North America and Australia employees are currently covered by collective bargaining
agreements, we cannot guarantee that they 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 if a manufacturer fails to use acceptable labor and environmental practices.

We do not control our vendors or the manufacturers that produce the products we buy from them, nor do we control
the labor and environmental practices of our vendors and these manufacturers. The violation of labor, safety,
environmental and/or other laws and standards by any of our vendors or these manufacturers, or the divergence of
the labor and environmental practices followed by any of our vendors or 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 reputation, financial
condition and results of operations. In that regard, most of the products we sell are manufactured internationally,
primarily in Asia, Mexico and Central America, which may increase the risk that the labor and environmental
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. 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.

If we fail to develop and 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 developing and maintaining good relationships with a large number of vendors to
provide our customers with an extensive selection of current and relevant brands. In addition to maintaining our
large number of current vendor relationships, each year we are identifying, attracting and launching new vendors to
provide a diverse and unique product assortment. 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.

However, there can be no assurance that our current vendors or new 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, sell through direct channels 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 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 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.

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. Furthermore, 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.

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 brand and are able to adequately represent this culture.
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. Our business depends on the ability to
hire and retain qualified technical and support roles for procurement, distribution, ecommerce and back office
functions. Competition for qualified employees in these areas 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 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. If we are unable to hire qualified temporary personnel, our results of operations could be adversely
impacted.

A decline in cash flows from operations could have a material adverse effect on our business and growth plans.

We depend on cash flow from operations to fund our current operations and our growth strategy, including the
payment of our operating leases, wages, store operation costs and 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 our credit facility or from other sources, we may not be able to pay 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 secured credit agreement impose certain restrictions on us that may impair our ability to
respond to changing business and economic conditions, which could have a significant adverse impact on our
business. Additionally, our business could suffer if our ability to acquire financing is reduced or eliminated.

We maintain a secured credit agreement with Wells Fargo Bank, N.A., which provides us with a senior secured
credit facility (“credit facility”) of up to $25.0 million through December 1, 2024. The credit 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. The credit facility contains
certain financial maintenance covenants that generally require us to have EBITDA on a trailing four quarter basis of
not less than $9 million for the quarter ending October 28, 2023, not less than $2.5 million for the quarter ending
February 3, 2024, not less than $9 million for the quarter ending May 4, 2024, not less than $12 million for the
quarter ending August 3, 2024, and not less than $20 million for the quarter ending November 2, 2024 and a quick
ratio of 1.25:1.0 at the end of each fiscal quarter. 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 credit facility contains certain affirmative covenants, including reporting requirements such as delivery of
financial statements, certificates and notices of certain events, maintaining insurance, and providing additional
guarantees and collateral in certain circumstances. The credit 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 with the closure or disruption of our home office or our distribution centers.

In the U.S., 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. We operate a distribution center located in Delta, British Columbia, Canada to distribute our
merchandise to our Canadian stores. We operate a distribution and ecommerce fulfillment center located in
Melbourne, Australia to distribute our merchandise to our Australian stores. Additionally, we are headquartered in
Lynnwood, Washington. As a result, unforeseen events, including war, terrorism, other political instability or
conflicts, riots, public health issues (including widespread/pandemic illnesses such as coronavirus and other
communicable diseases or viruses), a natural disaster or other catastrophic event that affects one of the regions
where we operate these centers or our home office could significantly disrupt our operations and have a material
adverse effect on our business, results of operations and financial condition.

The effects of war, acts of terrorism, threat 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 or riots, could lead to lower consumer 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 consumer traffic due to security concerns, could result in decreased sales. Additionally,
the threat, escalation or commencement of war or other armed conflict elsewhere, could significantly diminish
consumer spending, and result in decreased sales. Decreased sales could have a material adverse effect on our
business, financial condition and results of operations.

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, Blue Tomato, or Fast Times 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. 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.

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 management
time devoted to such litigation, we cannot provide assurance that such litigation will not disrupt our business or
impact our financial results.

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.

Failure to comply with federal, state, local or foreign laws and regulations, or changes in these laws and
regulations, 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 including those related to employment, trade,
consumer protection, transportation, occupancy laws, health care, wage laws, employee health and safety, taxes,
privacy, health information privacy, identify theft, customs, truth-in-advertising, securities laws, unsolicited
commercial communication and environmental issues. Our policies, procedures and internal controls are designed
to comply with foreign and domestic laws and regulations, such as those required by the Sarbanes-Oxley Act of
2002 and the U.S. Foreign Corrupt Practices Act. Although we have policies and procedures aimed at ensuring legal
and regulatory compliance, our employees or vendors could take actions that violate these laws and regulations. Any

violations of such laws or regulations could have an adverse effect on our reputation, results of operations, financial
condition and cash flows. Furthermore, changes in the regulations, the imposition of additional regulations, or the
enactment of any new legislation, particularly in the North America and International businesses, could adversely
affect our results of operations or financial condition.

Fluctuations in our tax obligations and effective tax rate may result in volatility in our operating results.

We are subject to income taxes in many domestic and foreign jurisdictions. In addition, our products are subject to
import and excise duties and/or sales, consumption or value-added taxes in many jurisdictions. We record tax
expense based on our estimates of future payments, which include reserves for estimates of probable settlements of
domestic and foreign tax audits. At any one time, many tax years are subject to audit by various taxing jurisdictions.
There can be no assurance as to the outcome of these audits which may have an adverse effect to our business. In
addition, our effective tax rate may be materially impacted by changes in tax rates and duties, the mix and level of
earnings or losses by taxing jurisdictions, or by changes to existing accounting rules or regulations. Changes to
foreign or domestic tax laws could have a material impact on our financial condition, results of operations or cash
flows.

We may fail to meet analyst and investor expectations, which could cause the price of our stock to decline.

Our common stock is traded publicly and various securities analysts and investors follow our financial results and
issue reports on us. These reports include information about our historical financial results as well as the analysts'
and investors' estimates of our future performance. The analysts' and investors' 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.

The reduction of total outstanding shares through the execution of a 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 share repurchase program may be conducted from time to time under authorization made by our Board of
Directors. 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 a 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 our shareholders, including the election of directors and approval of mergers, consolidations,
sales of assets, recapitalizations and amendments to our 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.

Increased scrutiny and changing expectations from stakeholders with respect to the Company’s ESG practices
may result in additional costs or risks.

Companies across many industries are facing increasing scrutiny related to their environmental, social and
governance practices. Our employees, customers, various types of investors, and other stakeholders are also
increasingly focused on ESG practices and in recent years have placed increasing importance on the non-financial
impacts. If our ESG practices do not meet stakeholder expectations, which continue to evolve, we may incur
additional costs and our brand may be harmed.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

Item 1C. CYBERSECURITY

Risk Management and Strategy

Overview

At its core, our cybersecurity program is the collection of people, processes and technologies that are designed to
protect our networks, computers and data from attack, damage, or unauthorized access. The cybersecurity program
is also part of a broader cybersecurity framework, which involves how we assess and manage cybersecurity threat
risks and how this integrates into our overall risk management framework. While the foregoing summary is specific
to our North America business operations we believe that the cybersecurity programs of our International business
operations are consistent with the approach and framework outlined below and are appropriate for the scope and
scale of their operations.

The Security and Compliance Team, within our IT department, takes the lead role in helping to ensure that we
maintain comprehensive technologies and programs to ensure our systems are effective and prepared for
cybersecurity risks. The Security and Compliance Team is led by the Security and Compliance Program Manager
and consists of a Lead Security Engineer and a Security Analyst. The Security and Compliance Team works very
closely with our team across the IT department and with several different third parties who provide expertise in
different areas such as threat hunting and penetration testing.

Objectives and Key Principles and Priorities

The objective of the Security and Compliance Team is to build practices within the company to define, implement,
enforce, and measure our security, compliance and disaster recovery readiness. In doing so, it utilizes some of the
following key guiding principles and priorities:

•

Alignment. Working within the organization to clearly define the need for secure computing practices,
gaining buy-in on this need and the development of a mindset across the organization around secure
computing.

Measurement and Visibility. Developing measurement and reporting methods which inform our
stakeholders both in the business as well as external audit and other outside entities as to compliance
with various security frameworks and regulatory obligations.

Protection. Using a commonly accepted industry framework to build and ensure the enforcement of
policies and procedures which secure the data and systems of all our stakeholders.

Response. Ensuring that that if a security incident occurs there is a clear and well understood response
plan which is followed by all response participants.

Resources and Tools. Identifying the resources needed to run the cybersecurity program commensurate
with the size and complexity of our company, including identifying and implementing appropriate tools
and systems to help strengthen our security posture.

On a day-to-day basis and from a project perspective, the Security and Compliance Team undertakes the following
activities:

•

Builds and reviews reports on newly identified security threats.

Monitors various internal security toolsets including EDR (Endpoint Detection and Response), email
security and logging from company firewalls and other security related systems and takes action to
prevent or resolve incidents identified by monitoring.

Ensures that appropriate vendor patches/configurations are applied to the various internal systems that
operate to maintain a secure environment.

Works with various teams with the IT department to ensure that company servers and data are properly
backed up and that compliance requirements and security best practices are following during new
system implementations.

•

Deploys and tunes various security and monitoring platforms.

Manages the North America Annual PCI (Payment Card Industry) review and consults with Zumiez
international entities regarding PCI.

Provides evidence gathering for, and conducts walk throughs with, internal and external audit teams for
internal control over financial reporting related to Section 404 of the Sarbanes-Oxley Act of 2002 (SOX
Controls).

Maintains a system of security policies and procedures within the IT department related to cybersecurity
and compliance requirements, primarily related to PCI compliance and SOX Controls.

Framework for Cybersecurity Controls

We have implemented risk-based controls to protect our networks, computers and data. To this end, we utilize the
Center for Internet Security (CIS) version 8.0 framework, which is comprised of eighteen critical security controls.
The CIS framework is based on the COSO (Committee of Sponsoring Organizations on the Treadway Commission)
and NIST (National Institute of Standards and Technology) frameworks and provides a highly actionable way to
implement those frameworks and maps directly to other compliance requirements relevant to us, including PCI
compliance and SOX controls (briefly discussed above).

Use of Third Parties

We work with a third party that provides us with threat hunting services via an Endpoint Detection and Response
(EDR) platform. This team proactively searches for newly uncovered threats based on up-to-the-minute intelligence
on the cybersecurity threat landscape and their knowledge of the Zumiez environment. Upon discovery of a
potential threat, the threat hunting team provides initial remediation guidance.

We also conduct periodic penetration testing of our systems. This testing is performed by a qualified third-party
testing company and is in alignment with our CIS controls. Penetration testing is meant to provide us with
information on the security of a particular system or application. These findings then can be used by us to inform
remediation work on a go-forward basis.

Cybersecurity Insurance.

We maintain what we believe are appropriate levels of cybersecurity insurance that covers settlements, judgments
and defense costs arising out of a failure of network security, a privacy breach, media liability, business income loss
resulting from a cyber event and for cyber extortion coverage. This cybersecurity insurance coverage also provides
for the following breach response services in connection with incidents involving the theft, loss or unauthorized
disclosure of third-party information and computer system security breaches:

•

Computer expert services (such as a cybersecurity firm to determine the existence and cause of an actual
or suspected electronic data breach or a PCI forensic investigator in connection with investigations
dealing with credit card data);

Legal services;

Notification services to provide notification to impacted individuals;

Call center services;

Breach resolution and mitigation services, including credit monitoring and identity theft monitoring; and

Public Relations and crisis management expenses.

Cybersecurity Incident Response Plan

We have a Cybersecurity Incident Response Plan which is maintained by the Security and Compliance Team. The
Incident Response Plan establishes what people and organizations need to be engaged in the event of a significant

incident. The Incident Response Plan also provides templates for technical resolution, documentation and
communication to internal stakeholders as well as insurers and governmental and other regulatory agencies.

Risk Mitigation

We also manage cybersecurity risk by limiting our threat landscape. For example, as an omni-channel retailer, we
accept credit and debit cards via all sales channels and protecting cardholder data is a critical component of our
security practices. Accordingly, PCI compliance (discussed briefly above) is very important and we engage an
external qualified assessor to audit our compliance and to provide us with a report on compliance that is also shared
with various payment providers. To help reduce our exposure to unauthorized access of cardholder data, we have
utilized a strategy of minimizing or eliminating the storage of, and unencrypted transmission of, cardholder
information across our various systems.

Moreover, our businesses do not involve or represent national infrastructure, the likes of which are common targets
of cyber attackers (e.g., energy, oil & gas, transportation, communications, banking and financial systems, etc.). We
recognize that cyber threats are a permanent part of the risk landscape and that new threats are constantly evolving.
For these and other reasons, cybersecurity is a top risk management priority at Zumiez.

Like many companies, we face a number of cybersecurity risks in the day-to-day operation of our business.
Although to date these risks have not materialized into any instances or series of instances that have had a material
adverse effect on our business or otherwise caused material harm to the company, we have, on occasion, experienced
cybersecurity threats to our data and information systems, including phishing attacks. For more information about
the cybersecurity risks we face, see the risk factor entitled "If we fail to meet the requirements to adequately
maintain the privacy and security of personal data and business information, we may be subject to adverse publicity,
litigation and significant expenses” in Item 1A Risk Factors.

Governance

As discussed above, the Security and Compliance team takes a lead role in helping to ensure that we maintain
comprehensive technologies and programs to ensure our systems are effective and prepared for cybersecurity risks.
This team is supported by our Zumiez North America Cybersecurity Team, which consists of the Security and
Compliance Program Manager, the Director of Infrastructure IT, the Vice President of IT, the Chief Financial Officer
and the Chief Legal Officer. Additional support and guidance are provided by the Zumiez North America IT
Steering Committee, which consists of the Chief Financial Officer, Chief Legal Officer, the Executive Vice President
of North American Consumer Teams, the Vice President of IT, the Director of Infrastructure IT and the Senior
Program Manager of Digital Commerce. Together, the Zumiez North America Cybersecurity Team and the Zumiez
North America IT Steering Committee provide guidance and oversight to the Security and Compliance Team in
alignment with the company’s overall risk management and oversight framework.

Members of management, including our Chief Legal Officer, regularly report on the company’s cybersecurity
matters to our board’s Audit Committee. The Audit Committee has been assigned the responsibility for reviewing
and discussing with management the company’s major operational, legal and regulatory risks, including data
security and privacy and the company’s policies to identify and manage cybersecurity risks.

In order to inform the Audit Committee of the planning and execution of our cybersecurity program, several
different reports are provided from management.

Annual Cybersecurity Plan. This plan is provided for the first quarter Audit Committee meeting and outlines the
cybersecurity related strategic initiatives for the fiscal year. It outlines any new investments and projects and their
alignment with the cybersecurity framework, as well as the expected timelines for the implementation of these
activities.

Quarterly Cybersecurity Memos. At the 2nd, 3rd and 4thquarter Audit Committee meetings, an update memo is
provided to the Audit Committee that details the progress against the Annual Cybersecurity Plan, any updates on
PCI compliance and SOX compliance activities and any emerging threats. The memo also contains a summary of
significant cybersecurity threats over the past quarter both within our ecosystem and outside our ecosystem and any
impact (if any) they may have had upon the company.

Internal Audit Reports. Our internal audit function’s reviews of our information security programs and controls are
included in quarterly reports to the Audit Committee.

The cybersecurity program and related risks are also discussed with the full Board of Directors as part of the review
and discussions around the topic of risk management and the risk oversight framework that generally take place at
the 3rd quarter Board of Directors meeting.

Any potentially significant information security issues that arise during the year are discussed with management and
captured in our disclosure controls and procedures and are discussed with our Audit Committee chair between board
meetings as appropriate.

Item 2. PROPERTIES

All of our stores are occupied under operating leases and encompassed approximately 2.2 million total square

feet at February 3, 2024.

We own approximately 356,000 square feet of land in Lynnwood, Washington on which we own a 63,071
square foot home office. Additionally, we lease 14,208 square feet of office space in Schladming, Austria for our
European home office.

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

distribution center.

We lease 17,168 square feet of a distribution facility in Delta, British Columbia, Canada that supports our
store operations in Canada. We lease 114,571 square feet to serve as a distribution and ecommerce fulfillment center
and office space in Graz, Austria that supports our Blue Tomato ecommerce and store operations in Europe. We
lease a 21,754 square feet building that serves as a distribution and ecommerce fulfillment center and office space in
Melbourne, Australia that supports our Fast Times ecommerce and store operations in Australia.

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 11, “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.

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 February 3,

2024, there were 19,833,198 shares of common stock outstanding.

Holders of the Company’s Capital Stock

We had approximately 12 shareholders of record as of March 7, 2024. The number of shareholders of record is

based upon the actual number of shareholders registered at such date and does not include holders of shares in
“street names” or persons, partnerships, associates, corporations or other entities identified in security position
listings maintained by depositories such as the Depository Trust Company.

Dividends

No cash dividends have been declared on our common stock to date nor have any decisions been made to pay

a dividend at this time. Payment of dividends is evaluated on a periodic basis.

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

There were no issuer purchases of our common stock during the thirteen weeks ended February 3, 2024.

Performance Measurement Comparison

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

Index, the Nasdaq Retail Trade Index, the S&P Midcap 400, and the S&P 400 apparel retail during the period
commencing on February 2, 2019 and ending on February 3, 2024. The comparison assumes $100 was invested on
February 2, 2019 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.

For the year ended February 3, 2024, the Company elected to change the relative benchmark groups from
NASDAQ Composite Index and NASDAQ Retail Trade Index, to S&P Midcap 400 and S&P 400 apparel retail. Our
vendor has discontinued their in-house calculation for NASDAQ as they fell out of the requirements of using
indexes that are publicly accessible to shareholders.

Zumiez
S&P MidCap 400
S&P 400 Apparel Retail

Item 6. [Reserved]

2/2/19

2/1/20

1/30/21 1/29/22

1/28/23

2/3/24

100.00 123.99 171.36 172.04
111.27 131.81 150.33
100.00
103.17
92.58
72.90
100.00

102.43
153.84
86.20

68.30
161.19
85.34

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion and analysis compares the change in the consolidated financial statements for

years ended and February 3, 2024 and January 28, 2023 and should be read together with our consolidated
financial statements, the accompanying notes, and other information included in this Annual Report. In particular,
the risk factors contained in Item 1A may reflect trends, demands, commitments, events, or uncertainties that could
materially impact our results of operations and liquidity and capital resources. For comparisons of years ended
January 28, 2023 and January 29, 2022, see our Management's Discussion and Analysis of Financial Condition and
Results of Operations in Item 2 of our Annual Report on Form 10-K for the year ended January 28,2023, filed with
the SEC on March 20, 2023 and incorporated herein by reference.

This discussion contains forward-looking statements based upon current expectations that involve risks and
uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as
a result of various factors, including those discussed in the section titled” Risk Factors” and in other parts of this
Annual Report on Form 10-K. See also the section titled “Note Regarding Forward-Looking Statements” in this
report.

For Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)
related to the year ended January 29, 2022, refer to this same section in our 2022 annual report on Form 10-K as
filed with the Securities and Exchange Commission on March 20, 2023.

Fiscal 2023—A Review of This Past Year

After achieving record sales in fiscal 2021, we have now experienced two challenging years in a row. Though

we ended the year down 8.6% in net sales, the sales trends improved each quarter throughout the year with sales
down 17.1% in the first quarter, down 11.6% in the second quarter, down 8.9% in the third quarter, and turned
positive in the fourth quarter with growth of 0.6% inclusive of the 53rd week. Overall consolidated sales were down
low single digits for the quarter excluding the 53rd week.While inflation declined throughout the first half 2023 and
moderated for the last half of the year, the multi-year inflationary impact on consumer discretionary income,
particularly with our younger customer base, negatively affected sales. This coupled with higher competition for the
discretionary dollar with consumers appearing to favor experiences vs. apparel and negative trends in the business
around areas like Skate had a material impact on our results. The improvement in year-over-year sales trends
throughout fiscal 2023 reflects positive momentum in emerging brands on the men’s side of the business as the
men’s category had positive sales growth both in the back to school weeks of the third quarter and the entire fourth
quarter. We are also beginning to see some of the more difficult categories over the past two years become less of a
negative impact on total sales growth as we reach lower levels of sales and continue to try new things in these
categories.

In fiscal year 2023, product margin declined 70 basis points from the prior year, while fiscal 2022 had
declined 80 basis points from fiscal 2021. The decline of 150 basis points in product margin over the past two years
was driven largely by the difficult sales environment which necessitated discounting to maintain a healthy inventory
position. In a more normalized sales environment, we believe that we can begin to recover and continue to grow
product margins through existing initiatives in the business over time. In addition to the decline of 70 basis points in
product margin in fiscal 2023, the 8.6% decrease in net sales created deleverage of other significant fixed costs
included in gross margin such as occupancy and merchandising expenses, resulting in a decrease of 180 basis points
in total Gross Margin from the prior year. Selling General and Administrative costs increased 17.7% in fiscal year
2023 inclusive of a one-time goodwill impairment charge of $41.1 million which represented 14.0% of the total
growth for these expenses during the year. Our loss per share in fiscal 2023 of $3.25 includes a one-time goodwill
impairment charge worth $2.14 cents per share was down from earnings per share in fiscal 2022 of $1.08.

As a leading global lifestyle retailer, we continue to differentiate ourselves through our distinctive brand
offering and diverse product selection, as well as the unique customer experience across all our platforms. We
remain committed to serving the customer launching nearly 200 new brands in 2023, continuing to focus on our
localized fulfillment platform that provides substantial improvements in the speed of delivery to our customers and
connecting with our customers in a unique way through our events and digital communications.

The following table shows net sales, operating (loss) profit, operating margin and diluted (loss) earnings per

share for fiscal 2023 compared to fiscal 2022:

Net sales (in thousands) (1)
Operating profit (in thousands)
Operating margin
Diluted earnings per share

Fiscal 2023

Fiscal 2022

% Change

$
$

875,486 $
(64,789 ) $
-7.4 %
(3.25 ) $

958,380
31,100
3.2 %
1.08

-8.6 %
-308.3 %

-400.9 %

(1) The decrease in net sales was primarily driven by continued inflationary pressures on the consumer, continued
challenges in competition for the discretionary dollar, and tougher trends in certain categories of our business.
The decrease in net sales resulted from a decrease in transactions, partially offset by an increase in dollars per
transaction. The increase in dollars per transaction was driven by an increase in average unit retail, partially
offset by a decrease in units per transaction. For the year, all categories were down in comparable sales to the
prior year. The footwear category was our largest declining category followed by women’s, accessories,
hardgoods and men’s.

Fiscal 2024—A Look At the Upcoming Year

In fiscal 2024, our focus will continue to be serving the customer with strategic investments focused on
enhancing the customer experience while growing sales and market share to create operational efficiencies to drive
long-term operating margin expansion. Though the last two years have been challenging, the balance sheet remains
strong with $171.6 million in current cash and marketable securities at the end of fiscal 2023. We were able to
minimize the decrease in current cash and marketable securities through this difficult sales cycle with diligent
expense management and a reduction in inventory of 4.4% from fiscal 2022. We believe we have the balance sheet
to manage through potential difficulties, while also investing strategically in important long-term initiatives and
returning value to our shareholders.

Following a difficult sales and earnings cycle through fiscal 2022 and fiscal 2023, the macro-economic
environment in 2024 is unclear. While inflation is moderating from the peaks in 2022 and early 2023, the impact of
multiple years of compounding growth in the cost of consumer goods continues to put pressure on the discretionary
income of our customer base. Comparing fiscal 2023 quarterly performance to pre-pandemic fiscal 2019 which had
more typical seasonality throughout the year, our sales in fiscal 2023 stabilized, but remained below 2019 levels. As
we move through 2024, our focus will be to grow sales by building on the momentum we are seeing in emerging
brands within the Men’s category during 2023, and continuing to showcase our growing private label offering while
also testing new brands to drive sales growth across all of our categories. We also believe that we can achieve
product margin expansion while also diligently controlling spending to drive back to profitability. As we turn our
attention to same store sales, we plan to pull back on new unit growth, slowing new store openings to 10 throughout
the year with our largest percentage decline in Europe as we focus on the profitability of the region and driving cash
flow. From a total store count perspective, we expect to end 2024 with less stores than we had at the end of 2023 as
we pair back underperforming stores. With our relentless focus on the customer, we believe we can win in our space
as we move through the year despite significant macro challenges to the business.

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 based on our historical redemption rate in proportion
to the pattern of rights exercised by the customer.

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 business
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 increase or decrease less than 25% in square footage of an existing comparable store, including remodels and
relocations within the same mall, or temporary closures less than seven days 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, 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:

Net sales. Net sales constitute gross sales, net of sales returns and deductions for promotions, and shipping
revenue. Net sales includes comparable sales and new store sales for all our store and ecommerce businesses. We
consider net sales to be an important indicator of our current performance. Net sales results are important to achieve
leveraging of our costs, including store payroll and store occupancy. Net sales also have a direct impact on our
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 net sales, gross profit, our ability to control selling, general and administrative expenses and our level of capital
expenditures affecting depreciation expense.

Diluted earnings per share. Diluted earnings per share is based on the weighted average number of common
shares and common share equivalents outstanding during the period. We view diluted earnings per share as a key
indicator of our success in increasing shareholder value.

Results of Operations

The following table presents selected items on the consolidated statements of (loss) 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 income, net
Earnings before income taxes
Provision for income taxes
Net income

Fiscal 2023 Fiscal 2022 Fiscal 2021

100.0 %
67.9 %
32.1 %
39.5 %
-7.4 %
0.3 %
-7.1 %
0.1 %
-7.2 %

100.0 %
66.1 %
33.9 %
30.7 %
3.2 %
0.2 %
3.4 %
1.2 %
2.2 %

100.0 %
61.4 %
38.6 %
25.3 %
13.3 %
0.3 %
13.6 %
3.5 %
10.1 %

Fiscal 2023 Results Compared With Fiscal 2022

Net Sales

Net sales were $875.5 million for fiscal 2023 compared to $958.4 million for fiscal 2022, a decrease of $82.9

million or 8.6%. The decrease in sales was primarily driven by continued inflationary pressures on the consumer,
continued challenges in competition for the discretionary dollar, and tougher trends in certain categories of our
business.

The decrease in net sales included a decrease in transactions, partially offset by an increase in dollars per
transaction. The increase in dollars per transaction was driven by an increase in average unit retail, partially offset by
a decrease in units per transaction. For the year, the footwear category was our largest declining category followed
by women’s, accessories, hardgoods and men’s.

By region, North America sales decreased $104.7 million or -13.1% and other international sales increased
$21.8 million or 14.0% during fiscal 2023 compared to fiscal 2022. Net sales for the year ended February 3, 2024
included a $2.5 million increase due to the change in foreign exchange rates, which consisted of $4.7 million in
Europe, which was offset by decrease of $1.2 million in Canada, and decrease of $1.1 million in Australia.
Excluding the impact of changes in foreign exchange rates, North America sales decreased $103.5 million or -12.9%
and other international sales increased $18.2 million or 11.8% during fiscal 2023 compared to fiscal 2022.

Gross Profit

Gross profit was $280.9 million for fiscal 2023 compared to $324.7 million for fiscal 2022, a decrease of
$43.8 million, or 13.5%. As a percentage of net sales, gross profit decreased 180 basis points in fiscal 2023 to
32.1%, as we saw significant deleverage on lower sales across our fixed costs as well as rate increases in numerous
areas. The decrease was primarily driven by a 130 basis points deleverage in store occupancy costs and, 70 basis
points decrease in product margin. These decreases were partially offset by a 20 basis points of efficiencies in
distribution costs.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were $345.7 million for fiscal 2023 compared to
$293.6 million for fiscal 2022, an increase of $52.1 million, or 17.7%. SG&A expenses as a percent of net sales
increased 880 basis points in fiscal 2023 to 39.5%. The increase was primarily driven by 470 basis points due to
impairment of goodwill worth $41.1 million, 180 basis points due to store wages tied to both deleverage on lower
sales as well as rate increase that we could not offset by management of hours, 110 basis points due to store costs not
tied to wages primarily impacted by deleverage on lower sales, 80 basis points in corporate costs, and 60 basis
points in non-store wages. These increases were partially offset by a 20 basis points decrease in training events.

Net (Loss) Income

Net loss for fiscal 2023 was $62.6 million, or $3.25 per diluted share, compared with net income of $21.0

million, or $1.08 per diluted share, for fiscal 2022. Our effective income tax rate for fiscal 2023 was -1.2%
compared to 35.2% for fiscal 2022. The change in effective income tax rate for fiscal 2023 compared to fiscal 2022
was primarily related to an increase in foreign losses in certain jurisdictions, including Blue Tomato goodwill
impairment, which are subject to a valuation allowance. Due to cumulative and ongoing foreign losses in such
jurisdictions, the realization of such deferred tax assets is uncertain and thus subject to a valuation allowance. The
increase in the valuation allowance in fiscal 2023 resulted in $12.3 million of income tax expense when compared to
fiscal 2022 of $3.0 million.

Liquidity and Capital Resources

Our cash requirements are subject to change as business conditions warrant and opportunities arise. Our
primary uses of cash are for operational expenditures, inventory purchases, common stock repurchases and capital
investments, including new stores, store remodels, store relocations, store fixtures and ongoing infrastructure
improvements. 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 February 3, 2024 and January 28, 2023, cash, cash equivalents and current marketable securities were
$171.6 million and $173.5 million. Working capital, the excess of current assets over current liabilities, was $182.5
million at the end of fiscal 2023, a decrease of 6.1% from $194.4 million at the end of fiscal 2022. The decrease in
cash, cash equivalents and current marketable securities in fiscal 2023 was due primarily to cash provided by
operating activities of $14.8 million, partially offset by capital expenditures of $20.3 million primarily related to the
opening of 19 new stores and 4 remodels and relocations.

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

thousands):

Total cash (used in) provided by

Operating activities
Investing activities
Financing activities

Fiscal 2023 Fiscal 2022 Fiscal 2021

$ 14,755 $

(8,548 )
704

(379 ) $ 134,950
101,643
(191,409 )

54,209
(87,257 )

Effect of exchange rate changes on cash and cash
equivalents
Net (decrease) increase in cash, cash equivalents,
and restricted cash

(1,080 )

(2,172 )

(1,822 )

5,831 $ (35,599 ) $ 43,362

Operating Activities

Net cash provided by operating activities increased by $15.1 million in fiscal 2023 to $14.8 million cash
provided by operating activities from $0.4 million cash used in operating activities in fiscal 2022. Net cash provided
by operating activities decreased by $135.3 million in fiscal 2022 to $0.4 million cash used in operating activities
from $135.0 million cash provided by operating activities in fiscal 2021. 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 and debit 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,
impairment, amortization and accretion, deferred taxes, and changes to the components of working capital.

Investing Activities

Net cash used in investing activities was $8.5 million in fiscal 2023 related to $20.4 million of capital
expenditures primarily for new store openings and existing store remodels or relocations primarily offset by $11.7
million in net sales of marketable securities. Net cash provided by investing activities was $54.2 million in fiscal
2022 related to $79.8 million in net sales of marketable securities and $25.6 million of capital expenditures primarily
for new store openings and existing store remodels or relocations. Net cash provided by investing activities was
$101.6 million in fiscal 2021 related to $117.4 million in net sales of marketable securities and $15.7 million of
capital expenditures primarily for new store openings and existing store remodels or relocations.

Financing Activities

Net cash provided by financing activities in fiscal 2023 was $0.7 million related to proceeds from the issuance
and exercise of stock-based awards. Net cash used in financing activities in fiscal 2022 was $87.3 million related to
$87.9 million used in the repurchase of common stock and $0.5 million in payments for tax withholding obligations
upon vesting of restricted stock partially offset by $1.1 million in proceeds from the issuance and exercise of stock-
based awards. Net cash used in financing activities in fiscal 2021 was $191.4 million related to $193.8 million used
in the repurchase of common stock and $0.6 million in payments on tax withholding obligation upon vesting of
restricted stock partially offset by $3.0 million in proceeds from the issuance and exercise of stock-based awards.

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 2023, we spent $20.4 million on capital expenditures which consisted of $8.1 million of costs

related to investment in 19 new stores and 4 remodeled or relocated stores, $8.0 million associated with
improvements to our websites and $4.3 million in other improvements.

During fiscal 2022, we spent $25.6 million on capital expenditures which consisted of $13.8 million of costs

related to investment in 32 new stores and 2 remodeled or relocated stores, $6.6 million associated with
improvements to our websites and $5.2 million in other improvements.

During fiscal 2021, we spent $15.7 million on capital expenditures which consisted of $11.5 million of costs

related to investment in 23 new stores and 3 remodeled or relocated stores, $1.1 million associated with
improvements to our websites and $3.1 million in other improvements.

In fiscal 2024, we expect to spend approximately $14 million to $16 million on capital expenditures, a
majority of which will relate to leasehold improvements and fixtures for the approximately 10 new stores we plan to
open in fiscal 2024 and remodels or relocations of existing stores. There can be no assurance that the number of
stores that we actually open in fiscal 2024 will not be different from the number of stores we plan to open, or that
actual fiscal 2024 capital expenditures will not differ from this expected amount.

Other Material Cash Requirements

Our material cash requirements include the following contractual and other obligations: (1) purchase

obligations (for additional information, see Note 11 to the Consolidated Financial Statements); (2) supply and
service arrangements entered in the normal course of business; (3) operating lease payments (for additional
information, see Note 10 to the Consolidated Financial Statements); and (4) employee wages, benefits, and
incentives; (5) commitments for capital expenditures; and (6) tax payables. Moreover, we may be subject to
additional material cash requirements that are contingent upon the occurrence of certain events, e.g., legal
contingencies, uncertain tax positions, and other matters.

At February 3, 2024, we did not have any “off-balance sheet arrangements,” as defined in relevant SEC

regulations that are reasonably likely to have a current or future effect on our financial condition, results of
operations, liquidity, capital expenditures or capital resources.

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 February 3, 2024, we maintained a secured credit agreement with Wells Fargo Bank, N.A., which
provided us with a senior secured credit facility (“credit facility”) of up to $25.0 million through December 1, 2024.
The credit facility is available for working capital and other general corporate purposes. The credit facility provides
for the issuance of standby letters of credit in an amount not to exceed $17.5 million outstanding at any time and
with a term not to exceed 365 days beyond the maturity of the credit facility. The commercial line of credit provides
for the issuance of commercial letters of credit in an amount not to exceed $10.0 million and with terms not to
exceed 120 days beyond the maturity of the credit facility. The credit facility will mature on December 1, 2024. The
credit facility is secured by a first-priority security interest in substantially all personal property (but not the real
property) of the borrowers and guarantors. There were no borrowings or open commercial letters of credit
outstanding under the secured credit facility at February 3, 2024 and January 28, 2023. We had $3.5 million and $0.6
million in issued, but undrawn, standby letters of credit at February 3, 2024 and January 28, 2023, respectively.

On November 30, 2023, we entered a third amendment to our credit facility with Wells Fargo Bank, N.A. The

amendment, among other things, (a) amended the credit limit to $25 million through December 1, 2024; (b)
amended the EBITDA covenant to not less than $9 million for the quarter ending October 28, 2023, not less than
$2.5 million for the quarter ending February 3, 2024, not less than $9 million in the quarter ending May 4, 2024, not
less than $12 million for the quarter ending August 3, 2024, and not less than $20 million for the quarter ending
November 2, 2024; (c) amended the borrowing rate to SOFR plus 1.75% per annum; (d) introduced an unused
commitment fee of 0.50% per annum; and (e) disallows distribution of dividends or execution of stock buybacks
through December 1, 2024 without bank approval.

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 involve a significant level of estimation uncertainty and have had or are reasonably
likely to have a material impact on our consolidated financial statements.

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 net realizable 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.

Our write-down reserve contains

We have not made any material

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.

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 we use to calculate our
inventory reserves. However, if actual
results are not consistent with our
estimates, we may be exposed to losses
or gains that could be material. Our
inventory reserves have decreased by
$0.3 million in fiscal 2023.

A 10% decrease in the sales price of
our inventory at February 3, 2024
would have decreased net income by
$0.7 million in fiscal 2023.

A 10% increase in actual physical
inventory shrinkage rate at February 3,
2024 would have decreased net income
by less than $0.1 million in fiscal 2023.

Description

Judgments and Uncertainties

Effect If Actual Results Differ
From Assumptions

Valuation of Long-Lived Assets

We do not believe there is a reasonable
likelihood that there will be a material
change in the estimates or assumptions
we use to calculate long-lived asset
impairment losses. However, if actual
results are not consistent with our
estimates and assumptions, our
operating results could be adversely
affected. Declines in projected cash
flow of the assets could result in
impairment. We recognized impairment
losses of $2.9 million related to long-
lived assets in fiscal 2023.

A 10 basis point decrease in forecasted
sales assumptions would have resulted
in an additional impairment charge of
$0.1 million in fiscal 2023.

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 right-of-use assets
and lease liabilities. Given the
significant operating lease assets and
liabilities recorded, changes in the
estimates made by management or the
underlying assumptions could have a
material impact on our consolidated
financial statements.

Total undiscounted future payments for
lease liabilities were $256.4 million at
February 3, 2024. If the incremental
borrowing rate increased 10 basis
points from the rate in effect at
February 3, 2024, the lease liability
balance would decrease by $0.2
million.

We review the carrying value of our long-
lived assets, including fixed assets and
operating lease right-of-use 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 fair
value of the asset to the asset carrying value.

Right-of-use Assets and Lease Liabilities

We determine if a contract contains a lease at
inception. Our operating leases primarily
consist of retail store locations, distribution
centers and corporate office space. We do
not have any material leases, individually or
in the aggregate, classified as a finance
leasing arrangement.

Operating lease right-of-use assets and
liabilities are recognized at commencement
date based on the present value of lease
payments over the lease term, net of lease
incentives received and initial direct costs
paid. Our retail store leases are generally for
an initial period of 5-10 years, with some of
our international leases structured to include
renewal options at our election. We include
renewal options that we are reasonably
certain to exercise in the measurement of our
lease liabilities and right-of-use assets.

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,
operating expenses, or sub-lease
income. 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,
including the impact of closures of
selected co-tenants who occupy the
mall.

Significant judgment is required in
determining our incremental
borrowing rate and the expected
lease term, both of which impact the
determination of lease classification
and the present value of lease
payments. Generally, our lease
contracts do not provide a readily
determinable implicit rate and,
therefore, we use an estimated
incremental borrowing rate as of the
lease commencement date in
determining the present value of
lease payments. The estimated
incremental borrowing rate reflects
considerations such as market rates
for our outstanding collateralized
debt and interpolations of rates for
leases with terms that differ from
our outstanding debt.

Our lease terms include option
periods to extend or terminate the
lease when it is reasonably certain
that those options will be exercised,
which is generally through an initial
period of 5-10 years.

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 shipment
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 proportion of the patterns used
by the customer based on our historical
redemption patterns.

Our revenue recognition accounting
methodology contains uncertainties
because it requires management to
make assumptions regarding future
sales returns and the amount and
timing of gift cards projected to be
redeemed by gift card recipients.
Our estimate of the amount and
timing of sales returns and gift cards
to be redeemed is based primarily
on historical experience.

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 are established when necessary to
reduce deferred tax assets to the amount
expected to be realized.

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.

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.

The assessment of whether we will
realize the value of our deferred tax
assets requires estimates and
judgments related to amount and
timing of future taxable income.
Actual results may differ from those
estimates.

Additionally, changes in the relevant
tax, accounting and other laws,
regulations, principles and
interpretations may adversely affect
financial results.

We have not made any material
changes in the accounting methodology
used to measure future sales returns or
gift card breakage 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.

Our sales return reserve has decreased
by $0.1 million in fiscal 2023. A 10%
increase in our sales return reserve at
February 3, 2024 would have decreased
net income by $0.3 million in fiscal
2023.

Our gift card breakage reserve has
increased by $1.8 million in fiscal
2023. A 1% increase in the estimated
gift card redemption rate would have
decreased net income by $0.1 million
in fiscal 2023.

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.

At February 3, 2024 and January 28,
2023, we had valuation allowances on
our deferred tax assets of $25 million
and $12.8 million, respectively.
Significant changes in performance or
estimated taxable income may result in
a change in our assessment of the
valuation allowance.

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.

Description

Judgments and Uncertainties

Effect If Actual Results Differ
From Assumptions

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.

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. See Note 11,
“Commitments and Contingencies,” in
the Notes to the consolidated financial
statements found in Part IV Item 15 of
this Form 10-K.

Goodwill and Indefinite-lived Intangible
Assets

We assess goodwill and indefinite-lived
intangible assets for impairment on an annual
basis or more frequently if indicators of
impairment arise. We perform this analysis at
the reporting unit level.

The goodwill and indefinite-lived
intangible assets impairment tests
require management to make
assumptions and judgments.

We have an option to first perform a
qualitative assessment to determine 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 compare the carrying value of
the reporting unit to its estimated fair value,
which is based on the perspective of a
market-participant. If the fair value of the
reporting unit is lower than the carrying
value, an impairment loss is recorded for the
amount in which the carrying value exceeds
the estimated fair value.

Our quantitative goodwill analysis
of fair value is determined using a
combination of the income and
market approaches. Key
assumptions in the income approach
include estimating future cash flows,
long-term growth rates and
weighted average cost of capital.
Our ability to realize the future cash
flows used in our fair value
calculations is affected by factors
such as changes in economic
conditions, operating performance
and our business strategies. Key
assumptions in the market approach
include identifying companies and
transactions with comparable
business factors, such as earnings
growth, profitability, business and
financial risk.

Based on the results of our annual
impairment test for goodwill and
indefinite-lived intangible assets, an
impairment was recorded related to the
goodwill from Blue Tomato acquisition
of $41.1 million. No impairment was
recorded for indefinite-lived intangible
assets.

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
additional impairment, which could
materially affect our results of
operations.

See Note 7 Goodwill and Intangible
Assets for the details of the
impairment.

The fair value of the trade names
and trademarks is determined using
the relief from royalty method,
which requires assumptions
including forecasting future sales,
discount rates and royalty rates.

Recent Accounting Pronouncements

See 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.

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 2023, our net income would have
decreased by $0.3 million. This amount is determined by considering the impact of the hypothetical yield rates on
our cash, cash equivalents, short-term marketable securities 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 facility. To the extent we borrow under this revolving credit facility, we are exposed to the market risk related
to changes in interest rates. At February 3, 2024, we had no borrowings outstanding under the secured revolving
credit facility.

Foreign Exchange Rate Risk

Our international subsidiaries operate with functional currencies other than the U.S. Dollar, including the
Canadian Dollar, Euro, Australian Dollar, Norwegian Krone, Swedish Krona, and Swiss Franc. 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 in fiscal 2023 our net income would have decreased or increased by $0.2 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.

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 February 3, 2024, 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 February 3,
2024 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 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 February 3, 2024.
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 February 3,
2024.

The effectiveness of the Company’s internal control over financial reporting as of February 3, 2024 has been

audited by Moss Adams LLP, the Company’s independent registered public accounting firm, as stated in their report,
appearing herein under the heading “Report of Independent Registered Public Accounting Firm.”

Item 9B. OTHER INFORMATION

Rule 10b5-1 Plan and Non-Rule 10b5-1 Trading Arrangement Adoptions, Terminations, and Modifications

During the company’s fourth quarter ended February 3, 2024, none of its directors or “officers” (as defined in Rule
16a-1(f) under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1
trading arrangement,” as each term is defined in Item 408(a) of SEC Regulation S-K.

Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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 2023 Annual Meeting of Shareholders
(the “Proxy Statement”) that will be filed within 120 days after our fiscal year ended February 3, 2024 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

The Company’s independent registered public accounting firm is Moss Adams LLP, Seattle, WA, PCAOB ID:

659.

Information concerning principal accounting fees and services is presented under the heading “Fees Paid to

Independent Registered Public Accounting Firm for Fiscal 2023 and 2022” in our Proxy Statement, and is
incorporated herein by this reference thereto.

PART IV

Item 15. EXHIBITS AND 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.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated statements of (loss) income
Consolidated statement of comprehensive (loss) income
Consolidated Statements of Changes in Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements

43
47
48
49
50
51
52

Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of
Zumiez Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Zumiez Inc. (the “Company”) as of
February 3, 2024 and January 28, 2023, the related consolidated statements of (loss) income,
comprehensive (loss) income, changes in shareholders’ equity and cash flows for each of the three years
in the period ended February 3, 2024, and the related notes (collectively referred to as the “consolidated
financial statements”). We also have audited the Company’s internal control over financial reporting as of
February 3, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of the Company as of February 3, 2024 and January 28,
2023, and the consolidated results of its operations and its cash flows for each of the three years in the
period ended February 3, 2024, in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of February 3, 2024, based on criteria established in Internal Control -
Integrated Framework (2013) issued by COSO.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, 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 Report on Internal Control
over Financial Reporting included in Item 9A. Our responsibility is to express an opinion on the
Company’s consolidated financial statements and an opinion on the Company’s internal control over
financial reporting based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement, whether due to error or fraud, and whether effective internal
control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures to respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting 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
audits also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

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.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the
consolidated financial statements that were communicated or required to be communicated to the
audit committee and that (i) relates to accounts or disclosures that are material to the consolidated
financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below,
providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they
relate.

Goodwill and Intangible Assets Impairment

As described in Note 7 to the consolidated financial statements, the Company’s consolidated goodwill and
intangible assets balances were $15.4 million and $14.2 million, respectively, as of February 3, 2024. For
the year ended February 3, 2024, the Company recorded a full impairment of the Europe reporting unit
goodwill, as disclosed in Notes 7 and 12, amounting to $41.1 million. As described in Note 2 to the
consolidated financial statements, the Company has an option to first perform a qualitative assessment to
determine whether it is more likely than not that the fair value of a reporting unit is less than it’s carrying
amount. If management chooses not to perform the qualitative test or determines that it is more likely than
not that the fair value of the reporting unit is less than the carrying amount, the Company’s evaluation of
impairment of goodwill and intangible assets requires a comparison of the reporting unit’s and intangible
asset’s fair value to their carrying value. If the fair value of the reporting unit or intangible asset is lower
than the carrying value, then the Company records an impairment in the amount equal to the excess, not
to exceed the carrying value.

The determination of the fair value of the reporting unit and intangible assets requires management to
make significant estimates, complex judgments, and assumptions. These assumptions include forecasts
of future cash flows, long-term growth rates, weighted average cost of capital, valuation ratios derived
from market transactions of similar companies, and royalty rates.

Given the Company’s evaluation of impairment of goodwill and intangible assets requires management to
make significant assumptions, performing audit procedures to evaluate whether management
appropriately determined the fair value of the reporting unit and intangible assets required a high degree
of auditor judgment. In addition, our audit effort included the use of professionals with specialized skill and
knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

The primary procedures we performed to address this critical audit matter included:

•

Testing the effectiveness of internal controls relating to management’s goodwill and intangible
assets impairment tests, including controls over the determination of the fair value of the
Europe reporting unit and related intangible assets.

Testing management’s process for determining the fair value of the Europe reporting unit and
related intangible assets. We evaluated the reasonableness of management’s forecasts of
future cash flows, including store growth, and long-term growth rates by comparing these
forecasts to historical operating results of the Company and performing a retrospective review
of the accuracy of management’s prior forecasts.

Utilizing a valuation specialist to assist in testing management’s income and market approach
models for the Europe reporting unit and relief from royalty method for intangible assets and
certain related significant assumptions.

Evaluating whether the assumptions used were reasonable by considering the past
performance of the reporting unit and third-party market data, and whether such assumptions
were consistent with evidence obtained in other areas of the audit.

Store Assets Impairment

As described in Note 6 to the consolidated financial statements, the Company’s consolidated fixed assets,
net balance was $90.5 million and operating lease right-of-use assets was $196.8 million as of February
3, 2024. For the year ended February 3, 2024, the Company recognized store asset impairment losses of
$2.9 million, as disclosed in Note 12, which consists of impairment charges for fixed assets of $1.6 million
and impairment charges for operating right-of-use assets of $1.3 million. As described in Note 2 to the
consolidated financial statements, the Company evaluates the carrying value of long-lived assets or asset
groups (defined as a store, corporate facility or distribution center) for impairment when events or
changes in circumstances indicate that the carrying values may not be recoverable. Events that result in a
store asset impairment review include plans to close a store or facility or a significant decrease in the
operating performance of a store. When such an indicator occurs, the Company evaluates the store
assets for impairment by comparing the undiscounted future cash flows expected to be generated by the
store to the carrying amount. If the carrying amount exceeds the estimated undiscounted future cash
flows, an analysis is performed to estimate the fair value of the assets. An impairment is recorded if the
fair value of the store’s assets is less than the carrying amount.

The evaluation of store assets for possible indications of impairment and the determination of the fair
value of a store requires management to make significant estimates, complex judgments, and
assumptions. These assumptions include estimated future cash flows, sublease income, and the discount
rate.

Given the Company’s evaluation of impairment of store assets requires management to make significant
assumptions, performing audit procedures to evaluate whether management appropriately identified
events or changes in circumstances indicating that the carrying amounts of store assets may not be
recoverable and determine store fair value required a high degree of auditor judgment. In addition, our
audit effort included the use of professionals with specialized skill and knowledge to assist in performing
these procedures and evaluating the audit evidence obtained.

The primary procedures we performed to address this critical audit matter included:

•

Testing the effectiveness of internal controls relating to management’s identification of
indicators of impairment, the assessment of the projected undiscounted cash flows to be
generated by stores with indicators of impairment, the determination of the fair value of the
stores, and the measurement of any resulting impairment.

Evaluating management’s store asset impairment analysis, including inspecting the
Company’s analysis of historical results by store to determine if contrary evidence existed as
to the completeness of the population of potentially impaired stores.

Testing management’s process for determining the projected undiscounted cash flows to be
generated by the stores. We evaluated the reasonableness of management’s assumptions
used to forecast future cash flows, including forecasted growth rates by comparing these
forecasts to historical operating results of the Company.

Evaluating management’s assumptions used to estimate the fair value of the stores by
performing a sensitivity analysis to evaluate the changes in the fair value of the individual
stores that would result from changes in the underlying assumptions.

Utilizing a valuation specialist to assist in our evaluation of the current market rents and market
participant real estate data, and related assumptions used to estimate store fair value.

/s/ Moss Adams LLP

Seattle, Washington

March 14, 2024

We have served as the Company’s auditor since 2006.

ZUMIEZ INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)

Assets

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

Total current assets

Fixed assets, net
Operating lease right-of-use assets
Goodwill
Intangible assets, net
Deferred tax assets, net
Other long-term assets

Total long-term assets
Total assets

Liabilities and Shareholders’ Equity

Current liabilities
Trade accounts payable
Accrued payroll and payroll taxes
Operating lease liabilities
Other current liabilities

Total current liabilities

Long-term operating lease liabilities
Other long-term liabilities

Total long-term liabilities
Total liabilities

Commitments and contingencies (Note 11)
Shareholders’ equity
Preferred stock, no par value, 20,000 shares authorized; none issued and
outstanding
Common stock, no par value, 50,000 shares authorized; 19,833 shares issued
and outstanding at February 3, 2024 and 19,489 shares issued
and outstanding at January 28, 2023
Accumulated other comprehensive loss
Retained earnings

Total shareholders’ equity
Total liabilities and shareholders’ equity

February 3, 2024

January 28,
2023

88,875 $
82,704
13,780
128,827
12,401
326,587
90,508
196,775
15,374
14,200
8,623
12,159
337,639
664,226 $

38,885 $
18,431
60,885
25,886
144,087

159,877
7,052
166,929
311,016

81,503
91,986
20,613
134,824
11,252
340,178
93,746
222,240
56,566
14,443
8,205
12,525
407,725
747,903

40,379
16,321
65,460
23,649
145,809

188,835
5,931
194,766
340,575

—

196,144
(19,027 )
176,093
353,210
664,226 $

188,418
(19,793 )
238,703
407,328
747,903

See accompanying notes to consolidated financial statements.

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

Net sales
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Operating (loss) profit
Interest income, net
Other expense, net
(Loss) Earnings before income taxes
Provision for income taxes
Net (loss) income

Basic (loss) earnings per share

Diluted (loss) earnings per share

February 3,

2024
875,486
594,596
280,890
345,679
(64,789 )
3,522
(611 )
(61,878 )
732
(62,610 )

(3.25 )

$
$
$

January 29,
2022

Fiscal Year Ended
January 28,
2023
958,380 $ 1,183,867
727,137
633,702
456,730
324,678
298,920
293,578
157,810
31,100
3,592
1,924
(891 )
(557 )
160,511
32,467
41,222
11,433
119,289
21,034 $

1.10 $

1.08 $

4.93

4.85

$
$
$

Weighted average shares used in computation of earnings
per share:
Basic
Diluted

19,290
19,290

19,208
19,428

24,187
24,593

See accompanying notes to consolidated financial statements.

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

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

Foreign currency translation
Net change in unrealized gain (loss) on available-for-sale
debt securities

Other comprehensive income (loss), net
Comprehensive (loss) income

February 3,
2024
(62,610 ) $

January 29,
2022
119,289

21,034 $

Fiscal Year Ended
January 28,
2023

(1,045 ) $

(2,596 )

(11,098 )

1,811
766
(61,844 ) $

(3,734 )
(6,330 )
14,704 $

(3,304 )
(14,402 )
104,887

See accompanying notes to consolidated financial statements.

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

Balance at January 30, 2021
Net income
Other comprehensive loss, net
Issuance and exercise of stock-based awards
Stock-based compensation expense
Repurchase of common stock

Balance at January 29, 2022
Net income
Other comprehensive loss, net
Issuance and exercise of stock-based awards
Stock-based compensation expense
Repurchase of common stock
Balance at January 28, 2023
Net loss
Other comprehensive income, net
Issuance and exercise of stock-based awards
Stock-based compensation expense
Balance at February 3, 2024

Accumulat
ed
Other
Comprehe
nsive
Income
(Loss)

Common Stock

Shares
25,599 $171,628 $

Amount

—
—
197
—

—
—
2,380
6,816

Retained

Earnings

Total

939 $380,029 $552,596
119,289
—
(14,402 )
(14,402 )
2,380
—
6,816
—
(198,36

119,289
—
—
—

(198,36

—

—
—
603
6,991
—

—
(6,330 )
—
—
—

(4,581 )
21,215
—
—
188
—
(1,914 )
19,489
—
—
344
—

1 )
180,824 (13,463 ) 300,957
21,034
—
—
—
(83,288 )
188,418 (19,793 ) 238,703
(62,610 )
—
—
—

1 )
468,318
21,034
(6,330 )
603
6,991
(83,288 )
407,328
(62,610 )
766
704
7,022
19,833 $196,144 $ (19,027 ) $176,093 $353,210

—
—
704
7,022

—
766
—
—

See accompanying notes to consolidated financial statements.

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

February 3,
2024

Fiscal Year Ended
January 28,
2023

January 29,
2022

(62,610 ) $

21,034 $

119,289

Cash flows from operating activities:
Net (loss) income
Adjustments to reconcile net income to net cash
provided (used in) by operating activities:
Depreciation, amortization and accretion
Noncash lease expense
Deferred taxes
Stock-based compensation expense
Impairment of goodwill and long-lived assets
Other
Changes in operating assets and liabilities:

Receivables
Inventories
Prepaid expenses and other assets
Trade accounts payable
Accrued payroll and payroll taxes
Income taxes payable
Operating lease liabilities
Other liabilities

Net cash provided by (used in) operating activities
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
Net cash (used in) provided by investing activities
Cash flows from financing activities:
Proceeds from revolving credit facilities
Payments on revolving credit facilities
Proceeds from issuance and exercise of stock-based awards
Payments for tax withholdings on equity awards
Common stock repurchased
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash, cash equivalents,
and restricted cash
Net increase (decrease) in cash, cash equivalents, and
restricted cash
Cash, cash equivalents, and restricted cash, beginning of
period
Cash, cash equivalents, and restricted cash, end of period

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

22,763
68,164
(1,050 )
7,022
43,904
206

6,859
5,809
(1,817 )
(907 )
2,170
2,090
(78,983 )
1,135
14,755

21,626
67,394
2,485
6,991
2,081
1,176

(1,716 )
(5,279 )
(1,082 )
(15,484 )
(14,895 )
(2,320 )
(76,605 )
(5,785 )
(379 )

22,930
64,466
2,374
6,816
2,229
2,728

2,884
2,587
(2,824 )
(14,060 )
3,649
(5,101 )
(77,657 )
4,640
134,950

(20,350 )
(38,348 )

(25,627 )
(1,914 )

(15,749 )
(160,328 )

50,150
(8,548 )

49,440
(49,440 )
704
—
—
704

81,750
54,209

277,720
101,643

22,688
(22,688 )
1,111
(508 )
(87,860 )
(87,257 )

248
(248 )
3,001
(621 )
(193,789 )
(191,409 )

(1,080 )

(2,172 )

(1,822 )

5,831

(35,599 )

43,362

88,453
94,284 $

124,052
88,453 $

80,690
124,052

2,065 $
—
800

11,309 $
—
1,433

42,767
4,572
984

See accompanying notes to consolidated financial statements.

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 global 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. We operate under the names Zumiez, Blue Tomato and Fast Times.
We operate ecommerce websites at zumiez.com, zumiez.ca, blue-tomato.com and fasttimes.com.au.

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 year ended February 3,
2024 has 53-week period. The fiscal years ended January 28, 2023 and January 29, 2022 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.

On April 1, 2022, we received 3.2 million Euro ($3.6 million) as a taxable subsidy from the German
government related to our European business for costs incurred during fiscal 2020 and fiscal 2021 related to the
COVID-19 pandemic. The subsidy was granted free of future obligations to repay and was accounted for using IAS
20, Accounting for Government Grants and Disclosure of Government Assistance by analogy. The amount was
recorded as a reduction to expense in selling, general and administrative expenses on the consolidated statement of
(loss) income in the first quarter of fiscal 2022.

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 12, “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 present 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.

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 corporate debt securities. Deposits in these
financial institutions may exceed the amount of federal deposit insurance provided on such deposits.

Restricted Cash— Cash and cash equivalents that are restricted as to withdrawal or use under the terms of

certain contractual agreements are recorded as restricted cash in other long-term assets on our consolidated balance
sheets.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the

consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of
cash flows (in thousands):

Cash and cash equivalents
Restricted cash included in other long-term assets

88,875 $
5,409

February 3,
2024

January 29,
2022

January 28,
2023
81,503 $ 117,223
6,829
6,950

Total cash, cash equivalents, and restricted cash shown in the
statement of cash flows

94,284 $

88,453 $ 124,052

Restricted cash included in other long-term assets represents amounts held as insurance collateral and

collateral for bank guarantees on certain store operating leases.

Marketable Securities—Our marketable securities primarily consist of U.S treasury and government agency

securities, corporate debt securities, 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, poor operating results of underlying
investments or other factors could result in losses that may not be reflected in an investment’s current carrying value,
possibly requiring an impairment charge in the future.

Inventories—Merchandise inventories are valued at the lower of cost or net realizable value. The cost of

merchandise inventories is 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. The inventory related to this reserve is not marked up in subsequent periods. Inventory
is at net realizable value which factors in a reserve for inventory whose selling price is below cost and an estimate
for inventory shrinkage. Shrinkage refers to a reduction in inventory due to shoplifting, employee theft and other
matters. We estimate an inventory shrinkage reserve for anticipated losses and a write down for our merchandise
inventories at February 3, 2024 and January 28, 2023 in the amounts of $2.8 million and $2.5 million, respectively.

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
Buildings, land, and building and land improvements
Computer equipment, software, store equipment & other 3 to 5 years

Lesser of 10 years or the term of the lease
3 to 7 years
15 to 39 years

The cost and related accumulated depreciation of assets sold or otherwise disposed of is removed from fixed

assets and the related gain or loss is recorded in selling, general and administrative expenses on the consolidated
statements of (loss) 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 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 February 3, 2024 and January 28, 2023 was $4.8 million and $3.4 million and is recorded in
other liabilities and other long-term liabilities on the consolidated balance sheets and will be subsequently adjusted
for changes in fair value. The associated estimated asset retirement costs are capitalized as part of the carrying
amount of the long-lived asset and depreciated over its useful life.

Valuation of Long-Lived Assets—We review the carrying value of long-lived assets or asset groups
(generally defined as a store, corporate facility or distribution center) 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 the fair value of the assets or asset group to the 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, long-term macro-
economic and industry factors are qualitatively considered. Additionally, management seeks input from store
operations related to local economic conditions. Impairment charges for operating lease right-of-use assets are
included in cost of goods sold and impairment charges for fixed assets are included in selling, general and
administrative expenses on the consolidated statements of (loss) 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 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 compare the carrying value of the reporting unit to its estimated
fair value, which is based on the perspective of a market-participant. If the carrying amount of the reporting unit’s
goodwill exceeds the estimated fair value, 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 combination of the income

approach and the market valuation approaches. Key assumptions in the income approach include estimating future
cash flows, long-term growth rates and weighted average cost of capital. Our ability to realize the future cash flows
used in our fair value calculations is affected by factors such as changes in economic conditions, operating
performance and our business strategies. Key assumptions in the market approaches include identifying companies
and transactions with comparable business factors, such as earnings growth, profitability, business and financial risk.

We recorded a full impairment of Blue Tomato goodwill amounting to $41.1 million. See Note 7 Goodwill and

Intangible Assets for the details of the impairment.

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

Definite-lived intangible assets, which consist of developed technology, customer relationships and non-
compete agreements, 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.

Leases – We determine at inception if a contract is or contains a lease. The lease classification is determined at

the commencement date. The majority of our leases are operating leases for our retail store locations. We do not
have any material leases, individually or in the aggregate, classified as a finance leasing arrangement. Upon
modification of a contract, we reassess if a contract is or contains a lease. For contracts that contain both lease and
non-lease components, such as common area maintenance, we allocate the consideration to the components based on
the relative standalone price. At the commencement date of a lease, we recognize (1) a right-of-use asset
representing our right to use the underlying asset during the lease term and (2) a lease liability for the present value
of the lease payments not yet made.

The lease term includes the options to extend the lease, only to the extent it is reasonably certain that we will
exercise such extension options and not exercise such early termination options, respectively. The majority of our
store operating leases include ongoing co-tenancy requirements or early termination option that reduce lease
payments, permit lease termination, or both, in the event that co-tenants cease to operate for specific periods or if
stated sales levels are not met in specific periods. As the rate implicit in the lease is not readily determinable for our
leases, we discount our lease payments using our incremental borrowing rate. Our incremental borrowing rate is
based on information available at commencement date and represents the rate of interest we would have to pay to
borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic
environment.

The right-of-use asset is measured at the present value of fixed lease payments not yet made with adjustments
for initial direct costs, lease prepayments and lease incentives received. The right-of-use asset is reduced over time
by the recognition of straight-line expense less the accretion of the lease liability under the effective interest method.
The lease liability is measured at the present value of fixed lease payments not yet made. We evaluate the carrying
value of right-of-use assets for indicators of impairment and perform an analysis of the recoverability of the related
asset group. If the carrying value of the asset group is determined to be in excess of the estimated fair value, we
record an impairment loss in our consolidated statements of (loss) income. Additionally, we review the carrying
value of the right-of-use assets for impairment when events or changes in circumstances indicate that the carrying
values may not be recoverable, require reassessment of the leases, and remeasurement if needed.

Our store operating leases may include fixed minimum lease payments, as contractually stated in the lease
agreement or variable lease payments, which are generally based on a percentage of the store’s net sales in excess of
a specified threshold or are dependent on changes in an index. Operating lease expense relating to fixed lease
payments is recognized on a straight-line basis over the lease term and lease expense relating to variable payments is
expensed as incurred. Operating lease expense is recorded in the cost of goods sold expenses on the consolidated
statements of (loss) income.

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—Revenue is recognized upon purchase at our retail store locations. For our

ecommerce sales, revenue is recognized when control passes to the customer upon shipment. Taxes collected from
our customers are recorded on a net basis. We accrue for estimated sales returns by customers based on historical
return experience. The allowance for sales returns at February 3, 2024 and January 28, 2023 was $3.0 million and
$3.1 million, respectively. We record the sale of gift cards as a current liability and recognize revenue when a
customer redeems a gift card. The current liability for gift cards was $4.3 million at February 3, 2024 and $4.9
million at January 28, 2023. Additionally, the portion of gift cards that will not be redeemed (“gift card breakage”) is
recognized in proportion of the patterns used by the customer based on our historical redemption patterns. For the
fiscal years ended February 3, 2024, January 28, 2023 and January 29, 2022, we recorded net sales related to gift
card breakage income of $1.8 million, $1.9 million and $1.7 million, respectively.

Loyalty Program— 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 current liability
and a reduction of net sales based on the relative fair value of the points at the time the points are earned and
estimated redemption rates. Revenue is recognized upon redemption of points for rewards. Points earned for the
performance of activities are recorded as a current liability based on the estimated cost of the points and as
marketing expense when redeemed. The deferred revenue related to our customer loyalty program at February 3,
2024 and January 28, 2023 was $1.0 million and $1.2 million, respectively.

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, 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 $11.5 million, $10.4 million and $13.5 million for the fiscal years ended February 3, 2024, January 28, 2023
and January 29, 2022, respectively.

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 using the 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.

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 presented 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
we expect 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 be
realized.

We regularly evaluate the likelihood of realizing the benefit of 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 of $2.6 million and $2.5
million are recorded in other long-term liabilities on the consolidated balance sheets at February 3, 2024 and January
28, 2023, respectively.

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. Diluted earnings per share is based on the weighted average number of common
shares and common share equivalents outstanding during the period. The dilutive effect of stock options and
restricted stock is applicable only in periods of net income. 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—Our international subsidiaries operate with functional currencies other than

the U.S. Dollar, including the Canadian Dollar, Australian Dollar, Euro, Norwegian Krone, Swedish Krona, and
Swiss Franc. Assets and liabilities denominated in foreign currencies are 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 are 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 loss on the consolidated balance sheets.

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 November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07,
Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure
requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the
Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or
loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an

explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment
performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after
December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the
ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is
also permitted. This ASU will likely result in us including the additional required disclosures when adopted. We are
currently evaluating the provisions of this ASU and expect to adopt them for the year ending December 31, 2024.

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic
740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well
as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods
beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not
yet been issued or made available for issuance. This ASU will result in the required additional disclosures being
included in our consolidated financial statements, once adopted.

3. Revenue

The following table disaggregate net sales by geographic region (in thousands):

United States
Canada
Europe
Australia

Net sales

February 3,
2024
654,153 $
43,477
152,869
24,987
875,486

Fiscal Year Ended
January 28,
2023
753,761 $
48,610
132,216
23,793
958,380

January 30,
2022
978,438
52,244
134,988
18,197
$ 1,183,867

Net sales for the year ended February 3, 2024 included a $2.5 million increase due to the change in foreign
exchange rates, which consisted of $4.7 million in Europe, which was offset by decrease of $1.2 million in Canada,
and decrease of $1.0 million in Australia.

4. 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):

Cash and cash equivalents:

Cash
Money market funds
Corporate debt securities
Total cash and cash equivalents

Marketable securities:

U.S. treasury and government agency securities
Corporate debt securities
Certificates of deposit
State and local government securities
Variable-rate demand notes

Total marketable securities

February 3, 2024

Gross
Unrealized
Holding
Gains

Gross
Unrealized
Holding
Losses

Amortized
Cost

Estimated
Fair Value

38,188 $
11,322
39,374
88,884

17,610
41,218
16,607
6,525
4,630
86,590 $

— $
—
—
—

—
1
—
—
—
1 $

— $
—
(9 )
(9 )

(2,834 )
(948 )
—
(105 )
—
(3,887 ) $

38,188
11,322
39,365
88,875

14,776
40,271
16,607
6,420
4,630
82,704

Cash and cash equivalents:

Cash
Money market funds
Corporate debt securities
Total cash and cash equivalents

Marketable securities:

U.S. treasury and government agency securities
Corporate debt securities
State and local government securities

Total marketable securities

January 28, 2023

Gross
Unrealized
Holding
Gains

Gross
Unrealized
Holding
Losses

Amortized
Cost

Estimated
Fair Value

30,587 $
22,121
28,802
81,510

20,973
60,832
16,490
98,295 $

— $
—
—
—

—
—
—
— $

—
—
(7 )
(7 )

(2,891 )
(2,848 )
(570 )
(6,309 ) $

30,587
22,121
28,795
81,503

18,082
57,984
15,920
91,986

All of our available-for-sale debt securities have an effective maturity date of five 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):

Less Than Twelve Months

February 3, 2024
12 Months or Greater

Total

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

$ 29,093 $
$ 29,093 $

(9 ) $
(9 ) $

— $
— $

— $ 29,093 $
— $ 29,093 $

(9 )
(9 )

— $
-

-
— $

— $ 14,777 $ (2,834 ) $ 14,777 $ (2,834 )
(948 )

(948 ) 37,878

- 37,878

6,420

(105 )
(105 )
— $ 59,075 $ (3,887 ) $ 59,075 $ (3,887 )

6,420

Less Than Twelve Months

January 28, 2023
12 Months or Greater

Total

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

$ 27,099 $
$ 27,099 $

(7 ) $
(7 ) $

— $
— $

— $ 27,099 $
— $ 27,099 $

(7 )
(7 )

Cash and cash equivalents:
Corporate debt securities
Total cash and cash equivalents

Marketable securities:

U.S. treasury and government
agency securities
Corporate debt securities
State and local government
securities

Total marketable securities

Cash and cash equivalents:
Corporate debt securities
Total cash and cash equivalents

Marketable securities:

U.S. treasury and government
agency securities
Corporate debt securities
State and local government securities

Total marketable securities

3,682 $
12,044
2,434
$ 18,160 $

(229 ) $ 14,399 $ (2,662 ) $ 18,081 $ (2,891 )
(2,848 )
(604 ) 45,940
(50 ) 13,487
(570 )
(883 ) $ 73,826 $ (5,426 ) $ 91,986 $ (6,309 )

(2,244 ) 57,984
(520 ) 15,921

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

3, 2024, January 28, 2023 and January 29, 2022.

5. Receivables

Receivables consisted of the following (in thousands):

Credit cards receivable
Vendor receivable
Tax-related receivable
Interest receivable
Other receivables
Tenant allowances receivable

Receivables

February 3, 2024

January 28, 2023

6,530 $
4,302
1,521
409
795
223
13,780 $

7,840
6,345
3,727
327
1,686
688
20,613

6. Fixed Assets

Fixed assets consisted of the following (in thousands):

Leasehold improvements
Fixtures
Buildings, land, and building and land improvements
Computer equipment, software, store equipment and other
Fixed assets, at cost
Less: Accumulated depreciation

Fixed assets, net

February 3, 2024 January 28, 2023
205,850
91,954
28,179
56,707
382,690
(288,944 )
93,746

211,537 $
91,818
29,602
68,152
401,109
(310,601 )
90,508 $

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

1,687 $
20,958
22,645 $

Fiscal Year Ended
February 3, 2024 January 29, 2022
$

1,670 $
19,649
21,319 $

January 30, 2021
1,203
20,226
21,429

Impairment of Fixed Assets—We recorded $1.6 million, $1.7 million and $0.1 million of impairment of

fixed assets in selling, general and administrative expenses on the consolidated statements of (loss) income for the
years ended February 3, 2024, January 28, 2023 and January 29, 2022.

7. Goodwill and Intangible Assets

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

Balance as of January 29, 2022
Impairment
Effects of foreign currency translation
Balance as of January 28, 2023
Impairment
Effects of foreign currency translation
Balance as of February 3, 2024

$
$

57,560
-
(994 )
56,566
(41,135 )
(57 )
15,374

The company performs annual impairment test over goodwill and intangible assets to determine if fair value

exceeds carrying value. The fair value of the reporting unit was determined using a combination of an income-based
approach (discounted cash flows) and a market-based approach (guideline transaction method and guideline public
company method). The discounted cash flow method involved subjective estimates and assumptions such as
projected revenue growth, operating profit, and the discount rate. The guideline transaction method involved actual
transactions that have occurred in the company’s industry or related industries to arrive at an indication of value. The
guideline public company method involved calculations based on operating data from comparable publicly traded
companies.

We recorded a full impairment of Blue Tomato goodwill amounting to $41.1 million for the fiscal year ended
February 3, 2024. Though sales at Blue Tomato continued a trend of year-over-year growth, the trend has been more
closely tied to store growth than comparable sales trends needed to keep up with the cost of doing business. As
such, we have experienced increasing operating losses with the current fiscal year having the largest loss at Blue
Tomato since acquisition. The macroeconomic climate conditions continue to indicate economic instability. Factors
include consumer trends, higher costs of doing business, lingering COVID-19 impacts, war in Ukraine, energy
challenges and inflation/interest rate pressures. These pressures and the continued lack of scalability in the business
lead the Board and Company management to prioritize positive cash flow and operating profit in the annual budget
cycle and the resulting 5 and 10-year plans that reduced expected store count by 50% to align with lower levels of
capital and attempt to focus on profitability rather than growth. This change in store growth directly impacts the
future revenue expectations of the business and related present value valuation technique used in our annual
impairment test. Furthermore, we have reduced growth rates going forward to more closely align with historical
trends as well as factor in the impact of less maturing stores. There was no impairment of goodwill for the fiscal
years ended January 28, 2023 and January 29, 2022.

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

amount of intangible assets (in thousands):

February 3, 2024

January 28, 2023

Gross
Carrying
Amount

Accumulated
Amortization

Intangible
Assets, Net

Gross
Carrying
Amount

Accumulated
Amortization

Intangible
Assets, Net

Intangible assets not subject to amortization:

Trade names and trademarks

14,200 $

— $

14,200 $

14,443 $

— $

14,443

Intangible assets subject to amortization:

Developed technology
Customer relationships
Non-compete agreements

Total intangible assets

3,252
2,410
197
20,059 $

3,252
2,410
197
5,859 $

—
—
—
14,200 $

3,262
2,417
213
20,335 $

3,262
2,417
213
5,892 $

—
—
—
14,443

There was no impairment of intangible assets for the fiscal years ended February 3, 2024, January 28, 2023

and January 29, 2022. All amounts in the tables above are denominated in a foreign currency and subject to foreign
exchange fluctuation.

We recorded no amortization expense for intangible assets for the year ended February 3, 2024 and January

28, 2023. We recorded $0.1 million of amortization expense for intangible assets for the year ended January 29,
2022. Amortization expense of intangible assets is recorded in selling, general and administrative expense on the
consolidated statements of (loss) income.

8. Other Current Liabilities

Other current liabilities consisted of the following (in thousands):

Accrued indirect taxes
Accrued payables
Unredeemed gift cards
Allowance for sales returns
Income taxes payable
Other current liabilities
Deferred revenue
Other current liabilities

February 3, 2024
$

7,366 $
7,098
4,280
2,984
1,675
1,372
1,111
25,886 $

January 28, 2023

5,210
6,499
4,916
3,089
1,037
1,667
1,231
23,649

9. Revolving Credit Facilities and Debt

On October 14, 2021, we amended our credit agreement with Wells Fargo Bank, N.A. (previously entered into

December 7, 2018), which provided us with a senior secured credit facility (“credit facility”) of up to $25.0 million
through December 1, 2023, and up to $35.0 million after December 1, 2023 and through December 1, 2024. The
secured revolving credit facility is available for working capital and other general corporate purposes. The senior
secured credit facility provides for the issuance of standby letters of credit in an amount not to exceed $17.5 million
outstanding at any time and with a term not to exceed 365 days. The commercial line of credit provides for the
issuance of commercial letters 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 credit facility is reduced by the amount of standby
and commercial letters of credit outstanding at that time. The credit facility will mature on December 1, 2024. All
obligations under the credit facility are joint and several with Zumiez Services and guaranteed by certain of our
subsidiaries. The credit 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 credit facility
bear interest at a daily simple SOFR rate plus a margin of 1.35% per annum.

The credit 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. The credit facility contains certain financial maintenance covenants that generally require the Registrant to
have net income after taxes of at least $5.0 million on a trailing four-quarter basis and a quick ratio of 1.25:1.0 at the
end of each fiscal quarter. The credit facility contains certain affirmative covenants, including reporting
requirements such as delivery of financial statements, certificates and notices of certain events, maintaining
insurance, and providing additional guarantees and collateral in certain circumstances. The credit 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.

On November 30, 2023, we entered into a third amendment to our credit facility with Wells Fargo Bank, N.A.

The amendment, among other things, (a) amended the credit limit to $25 million through December 1, 2024; (b)
amended the EBITDA covenant to not less than $9 million for the quarter ending October 28, 2023, not less than
$2.5 million for the quarter ending February 3, 2024, not less than $9 million in the quarter ending May 4, 2024, not
less than $12 million for the quarter ending August 3, 2024, and not less than $20 million for the quarter ending
November 2, 2024; (c) amended the borrowing rate to SOFR plus 1.75% per annum; (d) introduced an unused
commitment fee of 0.50% per annum; and (e) disallows distribution of dividends or execution of stock buybacks
through December 1, 2024 without bank approval.

There were no borrowings outstanding under the credit facility at February 3, 2024 or January 28, 2023. We
had no open commercial letters of credit outstanding under our secured revolving credit facility at February 3, 2024
or January 28, 2023. We had $3.4 million in issued, but undrawn, standby letters of credit at February 3, 2024, and
$0.6 million in issued, but undrawn, standby letters of credit at January 28, 2023.

10. Leases

At February 3, 2024, we had operating leases for our retail stores, certain distribution and fulfillment facilities,

vehicles and equipment. Our remaining lease terms vary from one month to eleven years, with varying renewal and
termination options. At February 3, 2024 and January 28, 2023, the weighted-average of the remaining lease term
was 5.0 years and the weighted-average operating lease discount rate was 3.4% and 2.5%, respectively.

The following table presents components of lease expense (in thousands):

Operating lease expense
Variable lease expense

Total lease expense (1)

Year Ended

February 23,
2024

January 28,
2023

76,434
6,694
83,128

74,316
7,882
82,198

(1) Total lease expense does not include common area maintenance charges and other non-lease components.

Supplemental cash flow information related to leases is as follows (in thousands):

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Right-of-use assets obtained in exchange for new operating lease liabilities

February 3, 2024 January 28, 2023

(78,983 ) $
51,883

(76,605 )
61,371

At February 3, 2024, the maturities of our operating leases liabilities are as follows (in thousands):

Fiscal 2024
Fiscal 2025
Fiscal 2026
Fiscal 2027
Fiscal 2028
Thereafter
Total minimum lease payments
Less: interest
Present value of lease obligations
Less: current portion
Long-term lease obligations (2)

61,503
55,652
36,950
28,699
19,334
37,969
240,107
(19,345 )
220,762
(60,885 )
159,877

(2) Amounts in the table do not include contingent rent, common area maintenance charges and other non-

lease components.

At February 3, 2024, we have excluded from the table above $2.0 million of operating leases that were

contractually executed, but have not yet commenced. These operating leases are expected to commence in fiscal
2024.

11. Commitments and Contingencies

Purchase Commitments—At February 3, 2024 and January 28, 2023, we had outstanding purchase orders to
acquire merchandise from vendors of $180.9 million and $174.3 million, respectively. We have an option to cancel
these commitments with no notice prior to shipment, except for certain private label, packaging supplies and
international 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.

On October 14, 2022, former employee Seana Neihart filed a representative action under California’s Private
Attorneys General Act, California Labor Code section 2698 et seq (“PAGA”), against us. An answer to the
complaint was filed on December 8, 2022. A first amended complaint was filed on February 8, 2023 adding Jessica
King as a plaintiff. The lawsuit alleges a series of wage and hour violations under California’s Labor Code. Zumiez
has answered the complaint. We are in the process of investigating the claims and we intend to vigorously defend
ourselves.

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, which is recorded under Accrued payroll and payroll taxes in the
consolidated balance sheets, was $1.7 million and $2.8 million for fiscal years ended February 3, 2024 and January
28, 2023, respectively.

12. 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.

The following tables summarize assets measured at fair value on a recurring basis (in thousands):

Level 1

February 3, 2024
Level 2

Level 3

Cash equivalents:

Money market funds
Corporate debt securities

Marketable securities:

$ 11,322 $

— $

—

39,365

U.S. treasury and government agency securities
Corporate debt securities
Certificates of deposit
State and local government securities
Variable-rate demand notes

—
—
—
—
—

14,776
40,271
16,607
6,420
4,630

Long-term other assets:
Money market funds

Total

Cash equivalents:

Money market funds
Corporate debt securities

Marketable securities:

5,409

—

$ 16,731 $ 122,069 $

Level 1

January 28, 2023
Level 2

Level 3

$ 22,121 $
$

— $
- $ 28,795 $

U.S. treasury and government agency securities
Corporate debt securities
State and local government securities

—
—
—

18,082
57,984
15,920

Long-term other assets:
Money market funds

Total

6,950

—

$ 29,071 $ 120,781 $

—
—

—
—
—
—
—

—
—

—
—
—

—
—

The Level 2 marketable securities primarily include U.S treasury and government agency securities, corporate

debt securities, state and local municipal securities, variable-rate demand notes, and certificates of deposit. 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 and liabilities recognized or disclosed at fair value on the consolidated financial statements on a
nonrecurring basis include items such as fixed assets, operating lease right-of-use-assets, goodwill, other intangible
assets and other assets. These assets are measured at fair value if determined to be impaired. We recorded
impairment charges for operating lease right-of-use assets of $1.3 million in cost of sales. We recorded impairment
charges for fixed assets and goodwill of $1.6 million and $41.1 million, respectively, in selling, general and
administrative expenses on the consolidated statement of (loss) income for the year ended February 3, 2024. We
recorded impairment charges for operating right-of-use assets of $0.4 million in costs of sales and impairment
charges for fixed assets of $1.7 million in selling, general and administrative expenses on the consolidated statement
of (loss) income for the year ended January 28, 2023.

13. Stockholders’ Equity

Share Repurchase— In December 2021, our Board of Directors approved the repurchase of up to an

aggregate of $150 million of common stock. This repurchase program superseded all previously approved and
authorized stock repurchase programs. The December 2021 stock repurchase program was completed in March
2022.

The following table summarizes common stock repurchase activity (in thousands, except per share amounts):

Number of shares repurchased
Average price per share of repurchased shares (with
commission)
Total cost of shares repurchased

Fiscal Year Ended
February 3, 2024 January 28, 2023 January 29, 2022
4,581

1,914

—

$
$

— $
— $

43.51 $
83,288 $

43.30
198,361

Accumulated Other Comprehensive (Loss) Income —The component of accumulated other comprehensive
(loss) income and the adjustments to other comprehensive income (loss) for amounts reclassified from accumulated
other comprehensive (loss) income into net income is as follows (in thousands):

Balance at January 30, 2021
Other comprehensive loss, net (3)
Balance at January 29, 2022
Other comprehensive loss, net (2)
Balance at January 28, 2023
Other comprehensive (loss) income, net (1)
Balance at February 3, 2024

Foreign
currency
translation

Net unrealized
gains (losses) on
available-for-

adjustments (4)

sale investments

Accumulated other
comprehensive (loss)
income

(1,407 ) $
(11,098 )
(12,505 ) $
(2,596 )
(15,101 ) $
(1,045 )
(16,146 ) $

2,346 $
(3,304 )
(958 ) $
(3,734 )
(4,692 ) $
1,811
(2,881 ) $

939
(14,402 )
(13,463 )
(6,330 )
(19,793 )
766
(19,027 )

(1) Other comprehensive loss before reclassifications was $1.8 million, net of taxes for net unrealized losses

on available-for-sale investments for the fiscal year ended February 3, 2024. There were no unrealized
losses, net of taxes reclassified from accumulated other comprehensive loss for the year ended February 3,
2024.

(2) Other comprehensive loss before reclassifications was $3.8 million, net of taxes for net unrealized losses
on available-for-sale investments for the fiscal year ended January 28, 2023. There were $0.1 million net
unrealized losses, net of taxes reclassified from accumulated other comprehensive loss for the year ended
January 28, 2023.

(3) Other comprehensive loss before reclassification was $4.4 million, net of taxes for net unrealized losses

on available-for-sale securities for the fiscal year ended January 29, 2022. There were $1.1 million net
unrealized losses, net of taxes reclassified from accumulated other comprehensive loss for the year ended
January 29, 2022.
Foreign currency translation adjustments are not adjusted for income taxes as they relate to permanent
investments in our international securities.

(4)

14. 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.

Stock-Based Compensation—Total stock-based compensation expense is recognized on our consolidated

income statements as follows (in thousands):

Fiscal Year Ended

Cost of goods sold
Selling, general and administrative expenses
Total stock-based compensation expense

February 3, 2024
$

1,745 $
5,277
7,022 $

January 28, 2023 January 29, 2022
1,451
5,365
6,816

1,464 $
5,527
6,991 $

At February 3, 2024, there was $8.6 million of total unrecognized compensation cost related to unvested stock

options and restricted stock. This cost has a weighted-average recognition period of 1.1 years.

Restricted Equity Awards —The following table summarizes the activity of restricted stock awards and

restricted stock units, collectively defined as “restricted equity awards” (in thousands, except grant date weighted-
average fair value):

Outstanding at January 30, 2021
Granted
Vested
Forfeited
Outstanding at January 29, 2022
Granted
Vested
Forfeited

Outstanding at January 28, 2023
Granted
Vested
Forfeited

Outstanding at February 3, 2024

Restricted Equity
Awards

Grant Date
Weighted-
Average Fair
Value

Intrinsic
Value

600 $
142 $
(247 ) $
(52 ) $
443 $
178 $
(198 ) $
(26 ) $
397 $
334 $
(202 ) $
(34 ) $
495 $

21.41
45.24
21.95
25.30
28.31
38.81
27.01
33.41

33.34
20.06
29.37
31.18

26.14 $

8,762

The following table summarizes additional information related to restricted equity awards activity (in

thousands):

Vest date fair value of restricted stock vested $

3,795 $

February 3, 2024

Fiscal Year Ended
January 28,
2023

January 29, 2022
11,146

8,076 $

Stock Options—We had 0.4 million stock options outstanding at February 3, 2024, and 0.4 million stock

options outstanding at January 28, 2023 and January 29, 2022 with a grant date weighted average exercise price of
$26.51, $29.30 and $26.37, respectively.

Employee Stock Purchase Plan—We offer an Employee Stock Purchase Plan (“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 February 3,
2024, January 28, 2023 and January 29, 2022.

15. Income Taxes

The components of earnings before income taxes are (in thousands):

United States
Foreign

Total earnings before income taxes

February 3,
2024
(4,269 ) $
(57,609 )

$ (61,878 ) $

January 29,
2022

Fiscal Year Ended
January 28,
2023
40,632 $ 166,999
(8,165 )
(6,488 )
32,467 $ 160,511

The components of the provision for income taxes are (in thousands):

February 3,
2024

Fiscal Year Ended
January 28,
2023

January 29,
2022

Current:

Federal
State and local
Foreign

Total current

Deferred:
Federal
State and local
Foreign

Total deferred

(270 ) $
242
1,810
1,782

5,897 $
1,613
1,508
9,018

(1,485 )
(413 )
848
(1,050 )

1,663
340
412
2,415
11,433 $

31,231
6,521
1,273
39,025

1,328
873
(4 )
2,197
41,222

Provision for income taxes

732 $

The reconciliation of the income tax provision at the U.S. federal statutory rate to our effective income tax rate

is as follows:

U.S. federal statutory tax rate
State and local income taxes, net of federal effect
Change in valuation allowance
Foreign earnings, net
Stock-based compensation
Tax credits
Goodwill impairment
Foreign tax audit
Other

Effective tax rate

February 3,
2024

Fiscal Year Ended
January 28,
2023

January 29,
2022

21.0 %
0.3
(19.9 )
3.0
(0.9 )
1.0
(4.3 )
(1.2 )
(0.2 )
(1.2%)

21.0 %
5.5
9.3
3.3
(2.3 )
(1.3 )
-
-
(0.3 )
35.2 %

21.0 %
3.9
1.4
(0.2 )
(1.1 )
(0.4 )
-
-
1.1
25.7 %

The components of deferred income taxes are (in thousands):

Deferred tax assets:
Lease Liability
Net operating losses
Employee benefits, including stock-based compensation
Deferred losses
Other
Accrued liabilities
Inventory

Total deferred tax assets

Deferred tax liabilities:
Right of Use Asset
Goodwill and other intangibles
Prepaid expenses
Other
Property and equipment

Total deferred tax liabilities
Net valuation allowances

Net deferred tax assets

February 3,
2024

January 28,
2023

55,940 $
25,827
3,201
1,631
1,875
353
—
88,827

(48,049 )
(4,323 )
(1,101 )
(925 )
(846 )
(55,244 )
(24,960 )

65,237
20,347
2,410
2,263
1,282
1,605
884
94,028

(55,441 )
(10,771 )
(1,131 )
(1,031 )
(4,699 )
(73,073 )
(12,750 )
8,205

8,623 $

At February 3, 2024 and January 28, 2023, we had foreign net operating loss carryovers that could be utilized
to reduce future years’ tax liabilities of $111.2 million and $88.1 million, respectively. The tax-effected foreign net
operating loss carryovers were $25.6 million and $20.3 million at February 3, 2024 and January 28, 2023,
respectively. The net operating loss carryovers have an indefinite carryforward period and currently will not expire.

At February 3, 2024 and January 28, 2023, we had state net operating loss carryovers that could be utilized to

reduce future year's tax liabilities of $16.8 million and $0, respectively, which, if unused will expire in years 2028
through 2043. The tax-effected state net operating loss carryovers were $0.3 million and $0 at February 3, 2024 and
January 28, 2023, respectively.

At February 3, 2024 and January 28, 2023, we had tax credit carryovers that could be utilized to reduce future
year's tax liabilities of $0.7 million and $0.3 million, respectively, which if unused will expire in years 2028 through
2043.

At February 3, 2024 and January 28, 2023, we had capital loss and charitable deduction limitation carryovers

that could be utilized to reduce future year's tax liabilities of $0.7 million and $0.4 million, which if unused will
expire in years 2026-2028.

At February 3, 2024 and January 28, 2023, we had valuation allowances on our deferred tax assets of $25.0

million and $12.8 million, respectively, primarily due to the uncertainty of the realization of certain deferred tax
assets related to foreign net operating loss carryovers.

The following table summarizes the activity related to our unrecognized tax benefits (in thousands):

Beginning unrecognized tax benefits
Increase related to prior year tax positions
Increase related to current year tax positions
Decrease related to lapsing of statute of limitations
Ending unrecognized tax benefits

February 3,
2024

Fiscal Year Ended
January 28,
2023

January 29,
2022

2,522 $
17
721
(674 )
2,586 $

1,743 $
818
446
(485 )
2,522 $

1,143
—
796
(196 )
1,743

At February 3, 2024 we had $2.6 million of gross unrecognized tax benefits of which $1.6 million, if
recognized, would affect our effective tax rate. We recognized an expense of $0.01 million, an expense of $0.12
million and an expense of $0.09 million of interest and penalties in income tax expense, prior to the benefit of the
federal tax deduction, for fiscal 2023, 2022 and 2021, respectively. As of February 3, 2024 and January 28, 2023, we
had accrued interest and penalties of $0.3 million and $0.3 million, respectively, within our consolidated balance
sheets.

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 2020, and we are no longer
subject to U.S. state and local examinations for years before fiscal 2019. We are no longer subject to examination for
all foreign income tax returns before fiscal 2018.

16. 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):

February 3, 2024
Net (loss) income
$
Weighted average common shares for basic earnings per share
Dilutive effect of stock options and restricted stock
Weighted average common shares for diluted earnings per
share
Basic (loss) earnings per share

(62,610 ) $
19,290
—

19,290
(3.25 ) $
(3.25 ) $

$
$

Diluted (loss) earnings per share

Fiscal Year Ended
January 28,
2023

January 29,
2022
119,289
24,187
406

24,593

4.93

4.85

21,034 $
19,208
220

19,428
1.10 $
1.08 $

Total anti-dilutive common stock options not included in the calculation of diluted earnings per share was 0.5

million for the fiscal year ended February 3, 2024 and 0.1 million for fiscal years ended January 28, 2023 and
January 29, 2022.

17. 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 $0.1 million, $0.9 million and $1.6 million for the fiscal years
ended February 3, 2024, January 28, 2023, and January 29, 2022, respectively. There were no accruals for charitable
contributions payable to the Zumiez Foundation as of February 3, 2024. Accrued charitable contributions payable to
the Zumiez Foundation amounted to $0.5 million as of January 28, 2023.

18. Segment Reporting

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.

The following table is a summary of product categories as a percentage of merchandise sales:

Men's Apparel
Hardgoods
Accessories
Footwear
Women's Apparel

Total

February 3, 2024
47 %
12 %
17 %
14 %
10 %
100 %

Fiscal Year Ended

January 28, 2023

January 29, 2022

43 %
13 %
18 %
15 %
11 %
100 %

43 %
16 %
17 %
13 %
11 %
100 %

The following tables present summarized geographical information (in thousands):

Net sales (1):
United States
Foreign

Total net sales

Long-lived assets (2):

United States
Foreign

Total long-lived assets

Fiscal Year Ended
February 3, 2024 January 28, 2023

January 29, 2022

654,153 $
221,333
875,486 $

753,761 $
204,619
958,380 $

978,438
205,429
1,183,867

February 3, 2024

January 29, 2022

167,204 $
120,079
287,283 $

186,433
129,553
315,986

(1) Net sales are allocated based on the location in which the sale was originated. Store sales are allocated

based on the location of the store and ecommerce sales are allocated to the U.S. for sales on zumiez.com
and to foreign for sales on zumiez.ca, blue-tomato.com and fasttimes.com.au.
Long-lived assets include fixed assets, net and operating lease right-of-use assets.

(2)

EXHIBIT INDEX

3.1

3.2

4.1

10.15

10.20

10.21

10.22

10.23

10.24

10.28

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 22, 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 dated as of December 7, 2018 by and among Zumiez Inc., Zumiez Services Inc. and
Wells Fargo Bank, National Association. [Incorporated by reference to Exhibit 10.28 to the Form 8-K filed
by the Company on December 7, 2018]

10.29

First Amendment to Credit Agreement dated as of October 14, 2021 by and among Zumiez Inc., Zumiez
Services Inc. And Wells Fargo Bank, National Association. [Incorporated by reference to Exhibit 10.29 to
the Company’s Current Report on Form 8-K filed on October 18, 2021]

10.30

10.31

10.32

10.33

10.34

10.35

10.36

Zumiez Inc. 2023 Equity Incentive Plan [Incorporated by reference to Exhibit 10.30 to the Company's
Current Report on Form 8-K filed by the Company on June 2, 2023]

Form of Restricted Stock Award Agreement and Terms and Conditions [Incorporated by reference to
Exhibit 10.31 to the Company's Current Report on Form 8-K filed on June 2, 2023]

Form of Restricted Stock Unit Award Agreement and Terms and Conditions [Incorporated by reference to
Exhibit 10.32 to the Company's Current Report on Form 8-K filed on June 2, 2023]

Form of Stock Option Award Agreement and Terms and Conditions [Incorporated by reference to Exhibit
10.33 to the Company's Current Report on Form 8-K filed on June 2, 2023]

Zumiez Inc. 2023 Employee Stock Purchase Plan [Incorporated by reference to Exhibit 10.34 to the
Company's Current Report on Form 8-K filed by the Company on June 2, 2023]

Second Amendment to Credit Agreement dated effective as of July 27, 2023 by and among Zumiez Inc.,
Zumiez Services Inc. and Wells Fargo Bank, National Association.

Third Amendment to Credit Agreement dated effective as of November 30, 2023 by and among Zumiez
Inc., Zumiez Services Inc. and Wells Fargo Bank, National Association.

21.1

Subsidiaries of the Company.

23.1

Consent of Moss Adams LLP, Independent Registered Public Accounting Firm.

31.1

31.2

32.1

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.

97.1

Policy for Recovery of Erroneously Awarded Compensation

101

The following materials from Zumiez Inc.’s Annual Report on Form 10-K for the annual period ended
February 3, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language):

(i) Consolidated Balance Sheets at February 3, 2024 and January 28, 2023; (ii) Consolidated statements of
(loss) income for the fiscal years ended February 3, 2024, January 28, 2023 and January 29, 2022; (iii)
Consolidated statement of comprehensive (loss) income for the fiscal years ended February 3, 2024,
January 28, 2023 and January 29, 2022; (iv) Consolidated Statements of Changes in Shareholders’ Equity
for the fiscal years ended February 3, 2024, January 28, 2023 and January 29, 2022; (v) Consolidated
Statements of Cash Flows for the fiscal years ended February 3, 2024, January 28, 2023 and January 29,
2022; and (vi) Notes to Consolidated Financial Statements.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

Copies of Exhibits may be obtained upon request directed to the attention of our Chief Legal Officer and Secretary,
4001 204th Street SW, Lynnwood, Washington 98036, and are available at the SEC’s website found at www.sec.gov.

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)

March 14, 2024
Date

/S/ CHRISTOPHER C. WORK
Signature
By:

Christopher C. Work,
Chief Financial Officer (Principal Financial Officer
and Principal Accounting Officer)

March 14, 2024
Date

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the

following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/S/ THOMAS D. CAMPION
Signature
Thomas D. Campion, Chairman

March 14, 2024
Date

/S/ STEVEN P. LOUDEN
Signature
Steven P. Louden, Director

/S/ JAMES P. MURPHY
Signature
James P. Murphy, Director

March 14, 2024
Date

/S/TRAVIS D. SMITH
Signature
Travis D. Smith, Director

/S/ CARMEN R. BAUZA
Signature
Carmen R. Bauza, Director

March 14, 2024
Date

/S/ SCOTT A. BAILEY
Signature
Scott A. Bailey, Director

/S/ LILIANA GIL VALLETTA
Signature
Liliana Gil Valletta, Director

March 14, 2024
Date

/S/ GUY HARKLESS
Signature
Guy Harkless, Director

March 14, 2024
Date

Exhibit 21.1

ZUMIEZ INC.

SUBSIDIARIES OF THE REGISTRANT
As of January 28, 2023

Place of Incorporation or Formation

Nevada

Washington

British Columbia

Switzerland

Austria

Germany

Netherlands

Puerto Rico

Australia

Finland

Norway

Italy

Sweden

Belgium

Name of Subsidiary

Zumiez Nevada, LLC

ZIC, LLC

ZIC II, LLC

Zumiez International, LLC

Zumiez Services Inc.

Zumiez Distribution LLC

Zumiez Canada Holdings Inc.

Zumiez Europe Holding GmbH

Blue Tomato Schweiz GmbH

Zumiez Austria Holding GmbH

Blue Tomato GmbH

Blue Tomato Deutschland GmbH

Blue Tomato Nederland B.V.

Zumiez Puerto Rico LLC

Zumiez Australia Holding Pty Ltd

Black Phoenix One Pty Ltd

Blue Tomato Finland Oy

Blue Tomato Norway AS

Blue Tomato Italy S.r.l

Blue Tomato Sweden AB

Blue Tomato Belgium B.V.

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Registration Statements on Form S-8(Nos. 333-125110, 333-
196347, and 333-272634) of Zumiez Inc. (the “Company) of our report dated March 14, 2024, relating to the
consolidated financial statements of the Company and the effectiveness of internal control over financial reporting
of the Company, appearing in the Annual Report on Form 10-K of the Company for the year ended February 3,
2024.

Exhibit 23.1

/s/ Moss Adams LLP

Seattle, Washington
March 14, 2024

CERTIFICATION PURSUANT TO

RULE 13a-14(a), AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

Exhibit 31.1

I, Richard M. Brooks, certify that:

I have reviewed this annual report on Form 10-K of Zumiez Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant
and have:

designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;

designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, 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;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of
registrant’s board of directors (or persons performing the equivalent function):

all significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.

/S/ RICHARD M. BROOKS
Richard M. Brooks
Chief Executive Officer and Director
(Principal Executive Officer)

Dated March 14, 2024

CERTIFICATION PURSUANT TO

RULE 13a-14(a), AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

Exhibit 31.2

I, Christopher C. Work, certify that:

I have reviewed this annual report on Form 10-K of Zumiez Inc.;

any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.

/S/ CHRISTOPHER C. WORK
Christopher C. Work
Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)

Dated March 14, 2024

CERTIFICATIONS PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

Exhibit 32.1

In connection with the Annual Report of Zumiez Inc., a Washington corporation (the “Company”), on Form

10-K for the fiscal year ending February 3, 2024 as filed with the Securities and Exchange Commission (the
“Report”), We, Richard M. Brooks, Principal Executive Officer of the Company, and Christopher C. Work, Principal
Financial and Accounting Officer of the Company, certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18
U.S.C. § 1350), that:

(1)

(2)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition
and result of operations of the Company.

/S/ RICHARD M. BROOKS
Richard M. Brooks
Chief Executive Officer and Director
(Principal Executive Officer)
March 14, 2024

/S/ CHRISTOPHER C. WORK
Christopher C. Work
Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
March 14, 2024

ZUMIEZ INC.

POLICY FOR RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION

Zumiez Inc., a Washington corporation (the “Company”) has adopted this Policy for Recovery of
Erroneously Awarded Compensation (the “Policy”), on November 28, 2023, with an effective date as of
October 2, 2023 (the “Effective Date”). Capitalized terms used in this Policy but not otherwise defined
herein are defined in Section 11.

1. Persons Subject to Policy

This Policy shall apply to current and former Officers of the Company. Each Officer shall be required to
sign an Acknowledgement Agreement pursuant to which such Officer will agree to be bound by the terms
of, and comply with, this Policy; however, any Officer’s failure to sign any such Acknowledgment
Agreement shall not negate the application of this Policy to the Officer.

2. Compensation Subject to Policy

This Policy shall apply to Incentive-Based Compensation received on or after the Effective Date. For
purposes of this Policy, the date on which Incentive-Based Compensation is “received” shall be
determined under the Applicable Rules, which generally provide that Incentive-Based Compensation is
“received” in the Company’s fiscal period during which the relevant Financial Reporting Measure is
attained or satisfied, without regard to whether the grant, vesting or payment of the Incentive-Based
Compensation occurs after the end of that period.

3. Recovery of Compensation

In the event that the Company is required to prepare a Restatement, the Company shall recover,
reasonably promptly, the portion of any Incentive-Based Compensation that is Erroneously Awarded
Compensation, unless the Committee has determined that recovery would be Impracticable. Recovery
shall be required in accordance with the preceding sentence regardless of whether the applicable Officer
engaged in misconduct or otherwise caused or contributed to the requirement for the Restatement and
regardless of whether or when restated financial statements are filed by the Company. For clarity, the
recovery of Erroneously Awarded Compensation under this Policy will not give rise to any person’s right
to voluntarily terminate employment for “good reason,” or due to a “constructive termination” (or any
similar term of like effect) under any plan, program or policy of, or agreement with, the Company or any
of its affiliates.

4. Manner of Recovery; Limitation on Duplicative Recovery

The Committee shall, in its sole discretion, determine the manner of recovery of any Erroneously
Awarded Compensation, which may include, without limitation, reduction or cancellation by the
Company or an affiliate of the Company of Incentive-Based Compensation or Erroneously Awarded
Compensation, reimbursement or repayment by any person subject to this Policy of the Erroneously
Awarded Compensation, and, to the extent permitted by law, an offset of the Erroneously Awarded
Compensation against other compensation payable by the Company or an affiliate of the Company to
such person. Notwithstanding the foregoing, unless otherwise prohibited by the Applicable Rules, to the
extent this

Policy provides for recovery of Erroneously Awarded Compensation already recovered by the Company
pursuant to Section 304 of the Sarbanes-Oxley Act of 2022 or Other Recovery Arrangements, the amount
of Erroneously Awarded Compensation already recovered by the Company from the recipient of such
Erroneously Awarded Compensation will be credited to the amount of Erroneously Awarded
Compensation required to be recovered pursuant to this Policy from such person.

5. Administration

This Policy shall be administered, interpreted and construed by the Committee, which is authorized to
make all determinations necessary, appropriate or advisable for such purpose. The Board of Directors of
the Company (the “Board”) may re-vest in itself the authority to administer, interpret and construe this
Policy in accordance with applicable law, and in such event references herein to the “Committee” shall be
deemed to be references to the Board. Subject to any permitted review by the applicable national
securities exchange or association pursuant to the Applicable Rules, all determinations and decisions
made by the Committee pursuant to the provisions of this Policy shall be final, conclusive and binding on
all persons, including the Company and its affiliates, shareholders and employees. The Committee may
delegate administrative duties with respect to this Policy to one or more directors or employees of the
Company, as permitted under applicable law, including any Applicable Rules.

Interpretation

This Policy will be interpreted and applied in a manner that is consistent with the requirements of the
Applicable Rules, and to the extent this Policy is inconsistent with such Applicable Rules, it shall be
deemed amended to the minimum extent necessary to ensure compliance therewith.

7. No Indemnification; No Personal Liability

The Company shall not indemnify or insure any person against the loss of any Erroneously Awarded
Compensation pursuant to this Policy, nor shall the Company directly or indirectly pay or reimburse any
person for any premiums for third-party insurance policies that such person may elect to purchase to fund
such person’s potential obligations under this Policy. No member of the Committee or the Board shall
have any personal liability to any person as a result of actions taken under this Policy and each member of
the Committee and the Board shall be fully indemnified by the Company to the fullest extent under
applicable law and Company policy with respect to any actions taken under this Policy. The foregoing
sentence shall not limit any other rights to indemnification of the members of the Board under applicable
law or Company policy.

8. Application; Enforceability

Except as otherwise determined by the Committee or the Board, the adoption of this Policy does not limit,
and is intended to apply in addition to, any other clawback, recoupment, forfeiture or similar policies or
provisions of the Company or its affiliates, including any such policies or provisions of such effect
contained in any employment agreement, bonus plan, incentive plan, equity-based plan or award
agreement thereunder or similar plan, program or agreement of the Company or an affiliate or required
under applicable law (the “Other Recovery Arrangements”). The remedy specified in this Policy shall
not be

exclusive and shall be in addition to every other right or remedy at law or in equity that may be available
to the Company or an affiliate of the Company.

9. Severability

The provisions in this Policy are intended to be applied to the fullest extent of the law; provided, however,
to the extent that any provision of this Policy is found to be unenforceable or invalid under any applicable
law, such provision will be applied to the maximum extent permitted, and shall automatically be deemed
amended in a manner consistent with its objectives to the extent necessary to conform to any limitations
required under applicable law.

10. Amendment and Termination

The Board or the Committee may amend, modify or terminate this Policy in whole or in part at any time
and from time to time in its sole discretion. This Policy will terminate automatically when the Company
does not have a class of securities listed on a national securities exchange or association.

11. Definitions

“Applicable Rules” means Section 10D of the Exchange Act, Rule 10D-1 promulgated thereunder, the
listing rules of the national securities exchange or association on which the Company’s securities are
listed (as of the Effective Date, Listing Rule 5608 of the corporate governance rules of The Nasdaq Stock
Market), and any applicable rules, standards or other guidance adopted by the Securities and Exchange
Commission or any national securities exchange or association on which the Company’s securities are
listed.

“Committee” means the Compensation Committee of the Board of Directors, or in the absence of such a
committee, a majority of the independent directors serving on the Board.

“Erroneously Awarded Compensation” means the amount of Incentive-Based Compensation received
by a current or former Officer that exceeds the amount of Incentive-Based Compensation that would have
been received by such current or former Officer based on a restated Financial Reporting Measure, as
determined on a pre-tax basis in accordance with the Applicable Rules.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Financial Reporting Measure” means any measure determined and presented in accordance with the
accounting principles used in preparing the Company’s financial statements, and any measures derived
wholly or in part from such measures, including GAAP, IFRS and non-GAAP/IFRS financial measures,
as well as stock or share price and total shareholder return.

“GAAP” means United States generally accepted accounting principles.

“IFRS” means international financial reporting standards as adopted by the International Accounting
Standards Board.

“Impracticable” means (a) the direct costs paid to third parties to assist in enforcing recovery would
exceed the Erroneously Awarded Compensation; provided that the Company (i) has made reasonable
attempts to

recover the Erroneously Awarded Compensation, (ii) documented such attempt(s), and (iii) provided such
documentation to the relevant listing exchange or association, (b) to the extent permitted by the
Applicable Rules, the recovery would violate the Company’s home country laws pursuant to an opinion of
home country counsel; provided that the Company has (i) obtained an opinion of home country counsel,
acceptable to the relevant listing exchange or association, that recovery would result in such violation, and
(ii) provided such opinion to the relevant listing exchange or association, or (c) recovery would likely
cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees
of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and the
regulations thereunder.

“Incentive-Based Compensation” means, with respect to a Restatement, any compensation that is
granted, earned, or vested based wholly or in part upon the attainment of one or more Financial Reporting
Measures and received by a person: (a) after beginning service as an Officer; (b) who served as an Officer
at any time during the performance period for that compensation; (c) while the issuer has a class of its
securities listed on a national securities exchange or association; and (d) during the applicable Three-Year
Period.

“Officer” means each executive officer of the Company, as defined in Rule 10D‑1(d) under the Exchange
Act.

“Restatement” means an accounting restatement to correct the Company’s material noncompliance with
any financial reporting requirement under securities laws, including restatements that correct an error in
previously issued financial statements (a) that is material to the previously issued financial statements or
(b) that would result in a material misstatement if the error were corrected in the current period or left
uncorrected in the current period.

“Three-Year Period” means, with respect to a Restatement, the three completed fiscal years immediately
preceding the date that the Board, a committee of the Board, or the officer or officers of the Company
authorized to take such action if Board action is not required, concludes, or reasonably should have
concluded, that the Company is required to prepare such Restatement, or, if earlier, the date on which a
court, regulator or other legally authorized body directs the Company to prepare such Restatement. The
“Three-Year Period” also includes any transition period (that results from a change in the Company’s
fiscal year) within or immediately following the three completed fiscal years identified in the preceding
sentence. However, a transition period between the last day of the Company’s previous fiscal year end
and the first day of its new fiscal year that comprises a period of nine to 12 months shall be deemed a
completed fiscal year.

[remainder of page intentionally left blank]

ACKNOWLEDGMENT AND CONSENT TO
POLICY FOR RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION

The undersigned has received a copy of the Policy for Recovery of Erroneously Awarded Compensation
(as amended from time to time, the “Policy”) adopted by Zumiez Inc., a Washington corporation (the
“Company”).

In consideration of, and as a condition to, the receipt of future cash and equity incentive compensation
from the Company, the undersigned agrees to the terms of the Policy and agrees that compensation
received by the undersigned may be subject to reduction, cancellation, forfeiture and/or recoupment to the
extent necessary to comply with the Policy, notwithstanding any other agreement to the contrary. The
undersigned further acknowledges and agrees that the undersigned is not entitled to indemnification in
connection with any enforcement of the Policy and expressly waives any rights to such indemnification
under the Company’s organizational documents or otherwise.

Date

Signature

Name

Title