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Zumiez buys European sports retailer

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By Michelle Dunlop
Herald Writer
  • Everett-based Zumiez is buying Blue Tomato, an Austrian-based maker of snow and skate sports gear and apparel.

    Herald file photo

    Everett-based Zumiez is buying Blue Tomato, an Austrian-based maker of snow and skate sports gear and apparel.

EVERETT -- Zumiez Inc. ventured into the European sports retail market Tuesday, signing a $75 million deal to buy Austria-based Blue Tomato.
A retailer of sports apparel, footwear and accessories for teenagers, Zumiez has been on a roll, beating analysts' profit estimates for the first quarter. The Everett-based company's stock soared to a 52-week high on Monday, even before the company announced the Blue Tomato acquisition.
Buying Blue Tomato puts Zumiez on the international stage. It already had 11 stores in Canada and 448 in the United States as of May 26.
"Joining forces with Blue Tomato represents the next step in our strategic plan to build the leading global action sports retail business," Rick Brooks, CEO of Zumiez, said in a statement.
In addition to the purchase price, Zumiez also will pay an additional $27.8 million contingent on Blue Tomato achieving certain performance goals over the next three years.
Zumiez shares briefly touched a four-year high Tuesday before closing at $41.16, up $1.79 for the day.
Blue Tomato was founded in 1988 by European snowboard champion Gerfried Schuller. The company operates a robust sports retail website, accessible in 14 languages, and operates five stores in Austria. Blue Tomato carries an extensive selection of snow and skate goods and apparel.
"We have built the leading action sports retail company in Europe and now we will be a part of the leading action sports retailer in the United States," Blue Tomato's Schuller said.
Blue Tomato will continue to be headquartered in Austria. Senior managers of the company will be led by Schuller.
For the fiscal year ending April 30, Blue Tomato reported a sales increase of 27 percent to $37 million. Roughly 75 percent of those sales came through Blue Tomato's website. Blue Tomato's net income for the year ending April 30 was about $4.4 million.
Jefferies analyst Randal Konik said the deal is a positive development in Zumiez's long-term growth.
"The company has done a great job expanding its store base and gaining market share domestically over the past few years, and we believe an entrance into the international market is the next logical step," he wrote in a research note.
The deal does increase risk for the company, given the uncertain economic picture in Europe, but Konik says the company's decision to buy a local company with an established brand and management team could give it an edge.
"Europe has a large, vibrant and growing action-sports community, which Gerfried (Schuller) and his team have skillfully tapped into through a broad offering of authentic brands and products, a differentiated retail experience, and superior customer service," Zumiez CEO Brooks said.
Through Zumiez and Blue Tomato's combined expertise, Brooks suggested, the company will be able to "support future international development."
Zumiez also increased its earnings forecast for 2012. The retailer expects sales to increase about $2 million to $136 million, assuming the Blue Tomato deal closes by July 1. Net income per diluted share will increase from 4 cents to 6 cents.
Zumiez recently moved e-commerce operations from Everett to Kansas. The company also plans to move out of its Everett headquarters to a new location in Lynnwood by the end of June.
The Associated Press contributed to this report.
Story tags » Major Locally Based CompanyZumiez



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