ZUMZ - Earnings call transcript Q4 2017

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Operator

Good afternoon, ladies and gentlemen and welcome to the Zumiez Inc. Fourth Quarter and Full-Year 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode.

We will conduct a question-and-answer session towards the end of this conference.

Before we begin, I’d like to remind everyone of the company’s Safe Harbor language. comments Inc. includes call conference concerning Zumiez Today’s business contains forward-looking statements. outlook and statements These this statements that facts call all may other are risks uncertainties. forward-looking to based are and not be subject historical on and that made on Actual results materially. differ may

over of a time, turn information results with the go that could will the Rick Zumiez’s I filing be to discussed to SEC. Additional to number cause call Executive materially this differ would Chief information like Officer. the sir. factors ahead, concerning in At from that actual Brooks, is available Please

Richard Brooks

us Hello ended up in the is the then quarter of we’ll I'll to and and to call comparable thank top Financial call you represents your Chris positive After comes handing everyone thoughts period which our remarks some successful Work, share numbers. few With for who of We consecutive Officer. sixth today quarter the joining regarding our that, and on a with meaningful year begin future fourth before today's on sales. the over on will a with full you me performance, holiday Chief call about I’ll the sales through call. performance, Chris XXXX selling brief strong XXXX open take questions. quarter comparable fourth our

to sustained continues as tougher topline we've Our growth of half traction. done company results were stronger the work comparisons for position second year despite during the the to the gain

we Chris you results shortly. that there while our line parts a contemplated moving excited those For when number in comparable the about our X.X% quarter, are through established topline will performance increased we're sales guidance. and bottom walk our weren’t of

our XX% full they product and them to experience strong were teams for. with provide are operating These Our of the listen the reflect profit X.X% continued annual significant our to looking and for efforts up customer the increased operating results and year. comps that

our expand in earnings and continue we going growth, to believe Looking forward market are return share, greater to to ahead. we shareholders years value accelerate the

and call our to let believe the the start and To the are we've hand consumer of with, trends, established Chris, product around immense I future outline in the some global have continents price me digital consumers presence driven availability presence countries a boundaries. transparency about Today Before world. strategic in over that physical beyond brands, well power of across by of date extends with world. retail. a we six a those To three beliefs

in identify multiple to engage in believe tailored, what With fulfillment through continuously lifestyle shopping purchase delivering innovation years all substantially where technology approach of and initiative in our speed want, in world in a addition, same not new To part brands of emergence place, where they to community. order lead them on shopping they top evolve innovate have seamless and expecting want, end, local all In current of localized order our new to physical want to across on want of create new and our that solid channel fashion us hyper a add we power through demand investments our allowing we ever well see themselves customers, We needs. their the they our and are trends digital consumers made do a a or significantly this changing store, consumers with stores. rather foundation positioned our online brands serve platforms. improved as the how and localized this succeed believe platforms and to need experience retailers they trust, with the meet time, consumer but consumers retailer for globally over their touchpoints. past less the to to several to in we as At

brands into our retooled their measures, launched wants ever peers. in XXX have In XXXX are to customer, constantly expressive front. omnichannel driving new a for and of moving further in entering now self we than capabilities a we're with We new processes, beyond higher over than our customer servicing our phase be service new this on more improvement into and yet more who critical consumer believe environment before We expectations.

innovation, we're area, the themes as this and will call localization, not engagement, by While phase, optimization, such World characterized key sure speed, consumer trade words, what new to and New intimacy, be connection, community.

constant and and established into next new test to of set initiatives a which the move executing three will consumer new this five evolve XXXX that now have learn us we over We One as began consumer do every this in phase, we'll power in years. belief we our our culture our aspect thing and at is Zumiez of is all among underlying what position. the change brand world the remain in will that of

with in alignment we service for and Our the are our customer how of we're These to our guide what that our brand. brand guides in values reason do serve all us in us holds in our beliefs future the Zumiez. customer primary cultural about execute that we excited and

to tailwind the last consumer beyond. shareholders. created and these to have and for call changes our confident we I'll employees, results hand create his on for our retail our further to we brand a our will lead scale. the well-positioned It experiences we building niche in of customer we culture partners that, competition discuss world by capitalizing evolve, continues an that financials. the XXXX extend Chris? in our value from lifestyle for the ourselves global Chris rapidly brand by customers, a time to the review and what and our years With creating on is today to the in As are opportunities believe are done look and exciting XX our separate We unique significant we for be forward

Christopher Work

to fourth of loyalty last net sales the revenue foreign growth XXXX. million. Contributing exchange were the since on XXXX quarter high of a deferred adjustment the sales how million impact everyone. guidance to stores quarter and net brief full quarter, fourth our million $X.X provide year's good positive of year. to the quarter some X.X%, about then fourth program update a with quarter end of the start addition $XXX.X discussing Rick an the increase and of results. XXrd $XXX.X quarter Fourth February from fourth $XX.X to this comparable positive were thinking I'm and perspective XXXX year $XX.X our XX benefiting before were of at XXXX week were we're on million sales million. Thanks in going to I'll increased review Also is XX.X% net related or million full STASH afternoon and first level $X.X our in

The During in average the lower in in dollars from partially offset increase per transaction resulted retail. transaction XXXX partially by per fourth quarter, we in unit saw decrease per transaction offset an an transaction. a dollars units increase by decrease volume

transaction represented quarter of consecutive quarter sixth This our gains.

$X.X the largest largest category million, was American category North $XX.X comp sales quarter followed perspective, of consist to net or the Australia During $XXX.X by and million hardgoods. our in regional and positive men's Accessories $XX a Europe category was From in which XX.X% million. comp or the increased XX.X% the million while sales net international increased women's to followed negative footwear. by

an and and million compensation. estimated basis in quarter was been Operating product with fourth to points the loyalty XXXX. will points area Inventory XX store related basis for XX our partially to difficult believe Gross remain quarter other million prior of recognition quarter driven margins. increase income incentive level. of or share million XXX of XXXX million causes translations, points compared XX basis operating the $XX.X point our of of is leverage required basis has of gross was $X.XX compensation offset basis $XX.X improvement $XXX.X of This increases drive the primarily by show a basis quarter in for in store to XXX necessary point Net to million compared Excluding $XX.X XX% at for a the American improvements increase XXXX and point of offset quarter. income was we increase or fourth of the increase was share which foreign leverage net problem million increase rate, of X.X% profit the compared basis in value. to increase an grew by points currency sales by year operating XX% net points were incentive fourth driven was leverage The across the $XX.X net quarter costs. the XXXX. grew inventory solving The sales leverage deferred other as a us to compared XXXX. in year. year sales primarily XX partially of we and Fourth sales margin XXX expense of focused XX.X% XX.X% XX.X% in by per $XX.X increase shrinkage in fourth or ago. net of year or redemption basis fourth XX to or net per needed international of revenue the million quarter sales where on quarter in for an of of million in due SG&A These the changes occupancy, increase $XX.X as XX.X% North prior $XX.X percentage root point income XX of corporate this to make we the compared were XXXX. was STASH was income XX.X% basis impact annual program, the shrinkage in XX.X% the in compared assessing the to our in cost XX $X.XX XX% SG&A points fourth ago. related quarter net basis an in the We of

In $X.XX impact $X.X revenue line benefited the addition from deferred Europe updated valuation the per including $X.XX tax factors Tax at to million year's of per our in guidance. last unanticipated two $X.XX $X.X several items share STASH $X.X worth On the assets certain related adjustment million were these compared program million in U.S. shaped the allowance share. to enacted to recently cents adjustments to in valuation bottom which of with results were against tailwind accruals impact million of $X.XX per impairments. results headwinds touched per top on share, was $X.XX Offsetting operating per performance $X.XX or that year per this, Europe or by Reform asset our share. booked a this I've $X.X expense share which $X.XX a or a of were there combined per last deferred positive or related share and share expense was already were our inventory improved

allowance booked XX.X% of for to quarter was by period. by compared rate XX.X% Europe, the ago reform. certain fourth driven tax XXXX related valuation tax against the The year tax effective was benefit offset Our the with partially deferred the increase in assets in U.S.

were The from of full-year the impact North or the the million. fiscal $XX.X which the stores and net of Australia sales increase exchange an $XX.X Europe positive year. XX.X% net fiscal was or growth million International adjustment of increase consists XXXX for million. XXX, for of Contributing million addition year $XXX.X a to X.X% sales region, $XXX.X fiscal sales the the American $XX.X X.X%, XXrd $XX.X results, XXXX net million. year program By increased $XXX.X were $XX.X million to to comparable STASH loyalty deferred a sales also million positive or Turning foreign XXXX. million week and $X.X benefit with million million, of in XX.X% of the XX in to to revenue net were increased $X.X

XX in XX.X% and sales XX XXXX. shrinkage sales basis or basis million XX.X% year incentive inventory was point These points points, net loyalty for our margins. of to related currency increase $XXX.X gross expense were The of cost last higher a margin year. estimated due increase XX or was Excluding recognition offset to million was net net the percentage the of other increase to XX North STASH points XXXX product the annual XX XXXX. points was higher grew related international compensation. as to Operating compensation fiscal in store basis basis and XX X.X% impact compared of compared by year Annual point margin incentive translations, X.X% sales American offset partially and leverage costs. basis $XXX.X points net XX was margin of by to by basis a The deferred occupancy of changes increase redemption XX.X% basis prior driven sales related in in of the XXXX increased by program, to was gross of to net X.X% and driven compared for XX.X% XX.X%. leveraging revenue XX improvements grew sales in foreign points operating and basis rate,

year million, negatively an per share. was to profit Our deferred million income $XX.X XXXX our net by in certain of of $XX.X $XX.X against million deferred or profit in was offset XX.X% share was from reform operating XXXX compared $X.XX $XX.X income increase by of Full tax impacted per net program for or XXXX XXXX. operating $X.XX related income all Europe U.S. and a to Net allowance adjustment revenue tax valuation the partially previously assets booked discussed. STASH million

capital partially securities driven as $XX.X the primarily million growth sheet, XXXX XX, store of flow by January $XX.X by as expenditures $XX.X and new increased was X, balance The to up of $XXX.X marketable XX.X% of Turning in million from remodels. to to million and operations million cash current increase cash offset primarily related XXXX. from February

including XXXX Europe, America, two North and store in in five During in we XX locations Australia. XX added

evaluating ensure presence have discussed in area. right physical we we As locations each we are the trade number that our of the have right continually within store to stores

in week locations Europe end including and XXXX six the XX to openings increase As X with in and the XX.X% spring timing at week from same the to ended include merchandise increased X.X%. compared year in count. up North basis XXX in million impact ending XXXX. factors a the February our inventory with calendar sales XXX net for in XXXX XXXX, Australia. million the increase week. XXrd store inventory February by in of store We XXX comparing When we X, growth $XXX.X the stores is Other the inventory received the We primarily global the America, with result, of foreign year, shift the XXXX X, to ending and inventory ended calendar trends, bringing was strong driven points year. to currency week XXXX XX This $XXX.X fiscal contributing of the exchange, fiscal in last closed retail

of feel to general quality continue our We inventory. confident the in

Our as prior from inventory total inventory has a year. aged decreased four inventory defined as the percentage months of older than

sales X, million February period to XXXX $XX.X the $XX.X March for results, XX.X% Now sales total the four-week period to net XX, ended ended increased million our compared four-week February for to XXXX.

average transactions four-week offset the was compared per to in transaction. four-week sales driven X.X% XX, transaction. Our in increase period in ended comparable and X, increase March per to an increase X.X% four-week per decrease February dollars increase comparable The decrease by increased due period Dollars transaction the retail by sales partially increased of during in XXXX. comparable the XXXX an a for an period ended sales in units for

the our and highest During comp our by the four-week period was category category the positive comp was hardgoods women's men's in followed footwear. Accessories only category negative for in period.

sales product in With by Looking reminding our start our at estimating uncertainty that off variety mind, complexity we again inherent sales, that and growth given XXXX, external factors X% the the guidance I'll and be of of impact everyone XXXX will the sales quarter comparable by the with in of in to Easter total $XXX the the for the $XXX million. note million holiday. increase sales during will expect shift quarter Please X% between that our gains impacted and some and margin involves performance. internal in currently guidance formulating for once that monthly earnings range first

March loss of and quarter X.X%. and between sales certain an Consolidated Europe. in anticipate would between losses negatively negative approximately expect We guidance earnings recognize to our the per inability from expected is We on benefit loss shift At to to to loss per compared are per $X.XX margins in our detriment a of related The first year. positively share and quarter. prior to be XX% the sales this a to $X.XX our our $X.XX operating approximately first XXXX. impacted impact tax declined with share prior the compared to per within negative April share fiscal the $X.XX year by our the operating X.X% high-end a be be guidance jurisdictions share

will and third that second impacted. quarter per expect be the negatively We share also

to to During a the generate earnings quarter benefit this as results we our Europe. fourth expect we be in

you I'd XXXX. give like up, few to thoughts wrap I at we're on looking a Before how

to above, margins topline positioned operating XXXX As grow we to and mentioned momentum and believe continue we the positive well business in experience beyond. we're leverage and

top We six the of comparable in the consecutive positive fourth quarter including at quarter have growth on of sales of strong of growth now XXXX comparable comparable XXXX. X.X% of X.X% quarters solid sales sales growth of fourth in

that momentum February in continue started sales XXXX feel we product strong We and X.X% positive offering. our with have in comparable to growth some in have

increase look in approach in we that and and the a to compensation high in in planning low the product incentive to million pretax comparing that XXXX we management the important that top to investments the will all unique From and planning creating in fiscal we at for not continue earnings growth perspective, customers, From sales drive comparable share beyond, growth be profit from bottom-line per across or the in a slightly had the XXXX. XXXX to sales in and earnings growth. perspective as $X.X our experienced mentioned our expect XXXX. grow operating to in XXXX detriment that those significantly in our our make margins fiscal benefits to to we are well planned have approximately despite to that our America mind both planning grow XXXX reform. is team anticipate digit we than see continue are merchandising, With previously range entities The Zumiez in expected in XXXX. sales XXrd we planned $X.XX of in With headwind accretive the rate significant week single we long-term range. experience are It week made as to SG&A flat as out infrastructure believe we and U.S. slower mentioned. worth when XXXX. XXXX extra in will we As XXXX just we in growth week margins of will XXXX an be to year-over-year seamless for consolidated strong XXXX we've fiscal investments is record in point to extra represented single-digit basis. rates to is on product and from North are the expense earnings an tax mind we in a

our assuming an inclusive tax We of of the are planning effective rate XX% business impact. valuation annual the for allowance approximately year

to new X season. in in and occurring approximately planning in the including ahead are with We open roughly of stores U.S., openings XX X the Australia X the of back-to-school Europe half

to expect majority $XX We for year million $XX spend million expenditures in the the between full be dedicated will openings XXXX. million capital $XX be and capital compared remodels. fiscal new to planned XXXX to and The of store

While decrease for remodels be related is decreasing count the in by year. the our in will in rate increase XXXX, offset growth an store capital

and full with $XX.X depreciation to projecting we be will our amortization year to approximately currently for that like prior approximately million be year shares. we'd the expect operator, We up And with open in are $XX.X for the call lastly, count million that questions. and share the line

Operator

of Van Our Riley. Jeff Certainly. line [Operator question B. the from with first Sinderen comes Instructions]

now is Your open. line

Jeff Van Sinderen

you segment to Europe and a touch on your for you're any results let initiatives First more at you're are key guess little say for this on the all that really your could new this Maybe bit then what I on what in Europe, year, team QX. how expectations just congratulations year? focused looking most that business. me overall strong

Richard Brooks

of I'll ask to Jeff let I’ll Chris? - All then bit little me Chris start up right, follow background a there. from and ask

Christopher Work

had Sure, in disclosed clearly have loans Jeff that out we us laid devaluation some to today. as have Europe we right, losses led we

countries, both we taken is web place to talked increased And to some a what a last stores and have retail our think this as the really Europe from a the platform. beyond even it network is European today meaningful three retreated distinct pretty that I not XXXX, backwards we across before due have us cost investment is investment topline in sophisticated strong not investment business well we've and marketplace, in as we web with in a but believe capitalize business. investments years, said, platform had the a of and hoping. grow we're has Europe has That to we put really met the date in the drove to that about headwinds to including to and two results that and this breakeven operating expectation

we even spot path positive comps region. So, as gotten we have, have got not a we this the to be. we've But to we good driven need we've forward there, believe in

had the in have care spot. a – that we of taken we the feel of old and had that XXXX an we deliver good like think had to age really of we've challenges there. impact good some we I inventory we've team we've gotten a has spot had

remarks inventory a are where in As also mentioned to prepared speaks our spot, good that but Europe. consolidated is we we in in

much us couple XX more underperforming I impairments some think that we kind ago we've have had helped as our here with months of of a than much, taken well current we've that stores. We’re and were of,

perspective feels from team the value driving the to in go come. here forward good So over years strategies a their of

Richard Brooks

Chris, challenges. bit of I right, and add guess All little thank Jeff, even a clarity the that greater I'd you sales just around

– results I XX considerably be point. that difficult to you went we to the that driven still was and which growth many when are assumed playing relative what it sales I and of as got long more we course appropriate pace said as we trend XXXX in at were about out of then amazing Chris in investing building completely point huge business actually at about and think reversed really of talked basically board think know

of kind it's where So us led to today. are we

and the execute in do initiatives seen going saying we here mature that the to omnichannel I and in us our investments. Canada serious our time give lot by investment to over there. strategies. believe and guess a the those Now I you've into that them conclude believe U.S. I to in we of I markets know new take We're team need I Europe Canada of pattern is there tell a we expectations feel profitable have over where sustained we're for running really you leadership know and exactly is to doing to that. in a a committed do can And we've in platform ahead Europe and that that we few going that's reached and their in Canada point years my team I the what

Jeff Van Sinderen

Okay, then that's leading you? can evolution talk a the latest new brands on brands really have you And thoughts of more a about helpful. I that introduced XXXX. your in for you little more than been XXX know

Just sort could this just footwear to turn the can you a a year? it prior started know which will lXead last when thinking the on update there what and for us on about if segment, segment wondering of penetration year of you penetration changing the on your then Thanks. And recent positive, I versus you if us charge brands you speak which current the is for and was you that historically anticipate footwear? in if touch to guard and remind that your larger improvement

Richard Brooks

time will high for But brands we from are important that and to the I talk three remind Jeff, through so about the stage expect pipeline again brands our excited business that now very we glad why the that with All us be about of an these that and the all brand we've past to our which it. do us was think to new is years so XXX this it. launched of work as this everyone just think right, comments our is development we've I'll it's, and I great about brand to in year team important in understand like

certainly right We've of big really got brands And the into being are marketplace. pipeline lack emerging great and there's so, such that not a a news there. started

so, unique new And exciting I deliver sport them to customer products idea think their But and of customized so I because think a great annual as and we the to give let of we've Chris, basis this assortments personal view. community. he'll to in our with that’s expects that the that of from it with of stats newness, said want of the for everyone me kind steps and Jeff really thinking a some kind around as you I'll we’re us how thing, it traditional investment of point own you turn with our intro have to Chris, share that been of the individualization take I some over on there? whole let’s

Christopher Work

Sure, yes.

at have the look business things XX% of here brands has that think is portfolio the probably kind and to some brand of looked we consolidation how for brands we we but just of the XXXX our brands XXXX in turnover the XX% top shared and top over turning to external as each XX, and one As compared XX overall Top the performed, XX here Zumiez’s, appropriate XX of at in we seen you we’ve the XX with have guys is see the continue to year. actually top

coming since brands. that of rhythm talked brands of three kind were those X% between think growth. represent total three brands to kind really kind to seem have the when and June healthy actually good of of they I Those individually, three XXXX brands reaching about of collectively we on our sales brands had still think we individually. the some X% So We've peak within a XX% is of step how which

plus talked pretty those healthy. some about the feel it heritage more structure brands. brands about of overall filled in We’ve three good core So still around brand is and that have we I the think

to of too, penetration a percentage private over points, where remarks, to label of private was light highs and it product being a margin a perspective product this cycle and we team. prepared we’re to our a time that’s in overall to the sales highs and in doing then decrease I a us mentioned testament not all of all we product cycle overall drive XXX able as branded are our fact our still margins in job. the is still time think basis from callout in seen fantastic As and a I just our is truly speaks are think specifically label have teams that for which worthy obviously

So we we’re feel at for pretty healthy where is that the still mix brand pretty today.

Richard Brooks

that cards they right of in place, mix we’re as now in what's diversity that's we've of why comments, And dramatic and again, about and sales proud pipeline in been about and in really our still put the margins disciplined new with this decline, significant is that more brand customer part one talking what in that's where and the think product private a intro even shift we pretty label. talked I a why we product it’s calling our is in a in measures teams about our of point Yes, Chris want overall ever again our broad decline the Jeff fact this said, mix. that my shift private of volume at this in about for very terms always got I peak than doing we're the label as process. the And I’m as our

brand about cycle, think feeling So on where we’re sufficed to the good we’re pipeline. brand say the I at

over and last footwear kind will about the is ask that a but footwear yes for long I we’re excited moment it, percentages we've positive would But in a very as with because don’t here moment Let’s some guess of of characterize bottom share it, about wrong. a Jeff, happy I footwear the the couple it's you you Chris bouncing with number talk obviously I'd I don’t off and of we’re here to what tell me months get years. and of we’re I still a struggle had

be always to perspective yet. and I’m think the in still going happy footwear positive, from I but - not to marketplace trend is sure a We where are don’t clear that's happy be

I think that's out. still being sorted

men’s. So by all to want to sizes we see while it’s in play I’m keep on would and with I the me pattern lot going. sure running Again experimenting size, happy we by footwear the but women’s of these pattern brands, think mix penetration move world looking like at confident in carry forward. depth how I'd various that have things a and how do to brand, location, We're say from footwear are clear the is all believe new you it's not trends I'm I’m different about at as of share Chris, still, not because also we're can these we’re and this footwear testing positive to this still we point, things up, to to that don’t, we numbers? and ideas Jeff fronts some in clear a that working we yet a we

Christopher Work

footwear it more the in total we’re seen first number to closed been Sure, I XXXX is but out And represented happen in what positive add in model just as despite that we've XXXX to footwear of and overall now quarter yes, able think are as and in I point so represents the percent we've X%. Rick’s still and QX also since too, it’s up of this speaks positive in of footwear comps up, a here we think happy men's XX% of to and happy - of run the business XXXX that I'd we've overall our XX% the business business. definitely

Richard Brooks

Yes, think this their of they strength anyway the and I’m dollars the think model, where customers our the apparel forward cycle, particularly diversity to spend to when our becomes want prevalent, it’s footwear it’s think is they category If we’ve around of across less with this is as other and and that managed strength of help help of broad ends we those win a multiple I I tough happy the Chris pretty footwear do through I’m the think thrilled them we out broad the we've course departments to cycle that The model. I seen so and again all helped. world selection to some us be brand I can Jeff and come strength want said, consumer – in dollars. presentations of model

Jeff Van Sinderen

Okay. That’s really helpful.

sure luck I’m You of QX. Thanks terrific brands point here, best next the for managing job will at trend for we guys see rest have my a and questions the and taking some of in footwear. done

Richard Brooks

Thank you, Jeff.

Christopher Work

Thanks Jeff.

Operator

And Thank line next William Zackfia our Sharon of comes Blair. you. question the from with

line now open. Your is

Sharon Zackfia

you can Sharon, is hear okay? this Hi me

Richard Brooks

fine. just Yes,

Sharon Zackfia

Okay, great.

evolving of more of about trying beginning very Rick you helpful I at you what that the the think a couple about guess talked end. are of was of questions, the kind quantifiedly So terms on how guess in to I I’m quick our thinking business.

kind So the of different that three way kind next growth that targets of translate timeframe? bucket five into you can years any or any three and in line primarily where of trajectories revenue years, think if versus to there bottom then you about the is two business, from growth comes the over the the next to

Richard Brooks

year that the because do Awesome, we’re maybe kind willing Sharon, Sharon. so share our say more will that patterns into we’re guidance that thank we XXXX. you looking modeling the gave and as not ready I to my questions a on help of of we over I us all for we’ve just some you little five for given that bit maybe think of that I these to kind so will at don’t windows you I’m far think and at the phone top. calls outside be obviously I'd think about go directions about thinking, I But of these know

I So Sharon. things going to come of is where kind the and from we about the of a growth beliefs group have talked

I is it channel this has I new, have of I again I new actually this consumer, is maybe how been in a it as some unique that what have in consumer expressive is particular think help consumer can it’s terms in. around probably can we have evidence of would about I or channel share the is what think a thinking this so each that belief target that then to our tell self So world be there you our bit, And a we not than moving share this be you with - where But you think power unique more customer. we're peers not to about, phase we their you serve definitely this is what who assortments in new position less global I consumer about that you customer. for less may consumer, much our with I special is doing working. serving those global world think will that wants consumer and we’ve this, to been that be

in case the with across consumers our trends that it that brands are flowing Australian the belief is consumers just multiple consumers, this And and into consumer, brands on Australia, well multiple and oceans brands flowing stores. our American working our continents. are are trending stores global in into us and flowing North again Sharon the growth global we new So and for brands going directions, it’s includes and brands all fashion brands, today our of includes have North as America, not as transform already brands North it from Europe European and American

this what's desire numbers to their talking we’ve so of to choose social about power for So, I this going these this, in I we and unique own have part this They think that their to how expect thinking. think serving of about the and think are been these directions, insignificant not is be us customer. media

really important. So this positioning long-term is

channel digital this you I’m we seamless idea and retailers world, you cost module all thing integrate that web able business say of in as channel say is neutral store, spent would an to service second teams what you unit course looking localized time today, to business idea to a I our store few sure the a prefers. model measures store of best integrated how do physical you know here that, this fulfillment. giving I can an seamless structure. we integrated digital our sales have innovating could physical of how of is Probably and how now, in have The give the of you an as of around And And platform. at a this channel is, our new points drive omnichannel integrated less but executed the lot easiest they today I into the when not example, And about the we’d of kind talked teams and consumer the I experience and our everything of consumer we of to customers. evidence you sales examples business Sharon, example me consumers is of we’re it whatever lever you right, this one grows experience can lot you integrated tell the guess this about mean touch now of empowered have this, all recreated when of work

a revenue successive when store algorithms, levered fulfillment talk, retailers talk we an they So allows revenue our fixed holiday business. now hear and model we've integrated order web And de-leveraging about that where in over their can routing cost how already through structures a significant our store lot two payroll particular of lever us in is growth store that got We've and seasons. to idea cost web other of localized in I our basis.

the evidence at some I trying to the are as way easiest think this see to the evidence this really of we is do and others what of get one we're is when So too.

brands speed all those these even So about to customers and is want. performance some already to niches again one improving that I've and And think key we're the about great speed I was there's again, people our brands, we're like importantly, about because all tough want able customers their for that more think talked would process store brand footwear to I I've feel pipeline that. spend in athletic of I you basis cost money at it when tell that's leverage was dramatically and of of us. cyclical I talked footwear, things a

localized of we circle, of a developed to retooling cycled think done our back put assortments longer they've more some and term and measures our product capabilities but teams over can and sharing the the again this years. our have few that and large processes last I the we've within part on runs of areas that is to the Now so uniqueness new

Zumiez we the and from extent large for mutual to are our needs a on are attracted we're great us this stress also to expects we So also why brands merging because to due here this serving I fact emerging it's brands customer that delivering brands I that's have and that that's think too. why and customers we're that customer them, attracting because really and that emerging that our

Sharon So I feel areas a in lot those all like of we first to good that. think In three. room about have I improve still

think at I to beyond we - I this that think it's guess game. world phase believe I is was this I have talk time like consumer a now this the most talked new I saying XXXX and of really to is, move that, one of stage omnichannel omnichannel mantra enter last the idea thing I'm the what about of

think there where a If whole of I'm kind problem different I at. of have you built telling big you haven't you at we're model point business this got got and and we've there a now

is So this few innovation to challenging can as phase. with I don’t new I time optimization, Sharon phase about shared not got that And at to and the going to so start many engagement, we that that we're some it's we've want this. and going of play really words think these that this we're doing, we've we're initiatives will it and of we're players talk it, just developing think new But to guide going those one it's localization, of now on us. start testing will then guide but about going and think have phase. speed, share those with you bit we like I a and some I us what those ideas new them. of think about that we don't I exactly give you trade area, a kind of initiatives that not kind goes fun these of there's little will context each of consumer can community I’m think are,

to actually targeting of and to will involves kind is experience that a of believe consumer specific them of that levels reengineer the different we touch be, have I that on service processes that multiple will One business.

initiatives detailed last our of all across assessment one on and Another the involve another improving again will assessment involve each to of that the fronts on detailed touchpoint. a is costs, experience business. lowering consumer going at the is initiative consumer a focused And speed one multiple really of

buy the think I what I So I've would already tell we is, I in have you think marketplace, seen position. think I unique if you what guess an I'm have, product we

further in begin, we're our even I think our omnichannel, on what we ahead moving start engage years. think things And on yet, direction bigger and can the - do the still know And move to have a to we're doing yes engagement. I can certainly of next drive some on lot to competitors of level working trends we we changing competitors our to that I whole I'd by through values. consumer in we I going are there we as and I going guess we similar it going put is how make some we going think we over culture that is is, of context they now be, new working terms the things. our move everything consistently of believe these ideas think our we we're some to and things can a omnichannel are Everything few brand how of about very puts rapidly lens positioning the improvement when but sales comments, of say driving just important are of the just cultural guiding we're our thing do last in be be two is change. do going it will we this that in the And to done these context important never guided those everyone that things brand the do to will is me, how

these into as but the where are can to reasons get to we couple the a next at. Chris those with through the community, are over into think that and pretty at to of specifics ’XX we actually look next some us investment not we're tailwind this about years working I I like of These that's So excited the I down couple have I'm point feel behind willing do I reasons of and think we and I Sharon, you, something would think guess years. that

Sharon Zackfia

how kind I all of look more figures. helpful. that hearing of about to kind Okay, that’s forward

and now think what years comfortable when the be that of so next XX people five struggle helpful. path in for the XXX would I to stores then kind that you’re with a is, look bit the little growth Zumiez think like U.S kind I of specify what

Richard Brooks

consumer into thinking maximize again to to how of And your stores just will the And trade what put area context the concept it one about is, of we and that care of ways our optimize many don't engagement I want and do as and is all on we Sharon of do business. topline I in I of the new one said both this want I'd just last comment times trade capture we get of the is all. number the think of

think about some we're see come in of words in how what I you to customers. we of terms do to service think So the of start alive going

Sharon Zackfia

you. Thank great. Okay,

Richard Brooks

you. Thank

Operator

you. Janine comes our question And Stichter the next Jefferies. from of with line Thank

line now open. Your is

Janine Stichter

you. for margin in March it sounds thanks taking gross think setting then costs such to leveraging with like at the source the leverage? past as year, other that follow about margin shrink little kind you've Hi, some up should inputs assume gross question. X%, and and also puts would that our low think a takes as continue do so been of digit the a from margins to in and including you Thank on the be how of puts wanted about just bit and on We of for the I and deleverage some you're assuming single occupancy? comp

Christopher Work

correct? to just XXXX, Yes, to clarify, speaking you're

Janine Stichter

Correct.

Christopher Work

Yes, about high the think digit said to profit I'll operating level how high we talk and we're Yes, your we single low in we of sales grow kind digit at grow XXXX single just about question. can range. thinking

to going again at planning an P&L. time see we're the XXXX enter throughout we're all a From some inherently high. margins, product perspective leverage So gross margin we

to of in kind other we're So some and for those relation slightly occupancy year the areas of to there. planning flat accretive

into that's to digit for item also we're today's have areas. U.S. business but here we up the markets the can localize we low the structure kind our have our really and in America focus hold on trying is and right market in is comp But sales in we and North least do we of Canada how and ground push still down an maturing take believe that we our probably really optimize other Australia then or get cost this growth the our do single build that efforts market a the that which area digit in really at we environment, and in I today but to Europe And leverage specifically. grow on to where investment think the business while smart low whole are really that platform, mature out single mode so it while experience, a really split customer customer need way and to the in we're business. P&L to make going some to we costs in make the investments trying

unless out at in at programs fund to we our to to is in here we able we going So that the mention laid impact incentive what laid fully move as on million. grow that lower we on from as it this and worth SG&A into year. significantly remarks results further today concept. was did on we were We based XXXX to expect prior know obviously prepared And our the expect that we $X.X ’XX funding time than we out which based results we’re level these exceed don't significantly a our be you a XXXX that – had

responsible kind really stages being really So is we expenses. overall, and building and the build this we about I our of believe next of line how top the think growing

digit of the categories leverage are gets operating. the low inherently And single so different we expecting which top digit on with single variety over high the a you comp to line

Janine Stichter

Great, you. thank

Richard Brooks

Janine. Thanks

Operator

from of Thank with you and line our Komp comes question Jonathan Baird. next the

Your line is now open.

line now your Jonathan, open. is Okay

Jonathan Komp

Okay, me? can hear you

Richard Brooks

Yes.

Christopher Work

you. go We

Jonathan Komp

the Okay, doesn’t XXXX and running want you’re specific expect low it understand kind of the what for like planning guidance comps digits, the followup slowdown great. to I single business first to I sound on appropriately. material reason any up is there from

of behind So the digits areas single maybe low I projecting to just clarify for different year? wanted thinking the

Christopher Work

of as is, And second to you had the look three next at visibility half tell Sure. the year going be cadence would regards the first in for the how you of opportunity current would in Jonathan, to the at XXXX, the next I clear than these is months look trends. always our half this we than more XX. I

here obviously good we've business, and is comp this we past first we’re the point we able But about how as started provided quarter time feel we little the to to feel drive multiyear of up through year. on and back at the the good we in four we our to move be given the So that. will move trends. half through as on goal guidance year, as more we've come up what going planning looking to at six is We the trends top always for color we’re the the business year and some now conservatively so come a across as

that beat of that doing we our year-over-year-over-year Now comps. our a history goals will XX-year have over had good driving be history to of and

year kind targeting at we So but are the low that that's point. think we of where single in are focused about digit purposes, this we as on, planning

Jonathan Komp

invest are reinvest to that the of the that then sales, over-deliver there And areas or on incremental how flow got to great. about the might think some in extent through upside were you investment Okay, you and to be scenario? over the would

Christopher Work

a I sales performance and the we've is I in funding prior things of one shrinkage like Well, mean mean items then with things had to that. here our of like as conversation, the tying back incentives clearly had like we XXXX challenges strong disclosed on challenges kind we've and I think that

the have XXXX target and on move end did areas by shrinkage we incentives as don’t So had make XXXX. that the we increases gains in is of to we to some where means we've like planned any into challenges our

any have the flow that So had digit, us flow don’t see increased exceeding would I us through significant of we on that performance. cause to single like would historically. good any solid We not on to through low get headwinds sales expect just

Jonathan Komp

lot incremental channel And the that then the I’m really sales now you comes of sale so curious bigger I that last costs. operating the a Great, the what not picture has fixed deleveraging time were have a come higher. the of my margin know been as necessarily it's your question Okay. back fact in question, certainly it regardless back discussing margin comps

be much I you're But should I'm of looking years single think been in now curious, that back recapturing? kind margin even term just the of and the this business double digits structure are about it’s of you you historically. the how mid and longer some how thinking

Christopher Work

have think maybe a challenging has price pretty had challenging. more Yes, profit bit taken I across a out has question and people retail much just told some for become of more here. There's it’s what obviously of a is of environment a operating great - I lot more lot retail. and There little retailers reset transparency a which it’s a retail everybody across that

of focused are than faster as growing in kind growing the bottom and coming today back really really from was of So and now, line as what topline we indicated the XXXX topline XXXX, bottom line guidance. our look years the biggest on at challenge and the on we really focused growing our

able continue is and faster here hope come, we we pattern believe on you say chance margins earnings years do to I and don’t should be path us the into if we in think digits. the we I the us. from to operating But to really our with we're environment, of teens. roll get this what expect that would growing able thought could business that obviously I that to that we’re So focus things that high is in today’s our is used business growing we we margins to you're future. this the a to from what than could as think over sales low they forward and driving and see can sales a single get That's operating this

Richard Brooks

and all period benefit think don’t period be Jonathan think over longer go is within our planning. recessionary to over you line, span things about and as Yes are that there I time straight things but long niche lot a consolidation those worried I term it be think I awesome, that it and will a a we will won’t us are necessarily of of our - still

really would have peak do product we and love do we to to I marketplace, rationalize to So consolidation can well love selling. what like full-margin I'd greater where the market selling, margins, full-price

have years is, a this we with consolidation through Chris, think so a operating the we in digit over margin I’m that and that marketplace agree dollars we And be more period rationalization we can great confidence I at and hoping of get when we in today and own are to do will that from the I where high single which marketplace. will

Jonathan Komp

for all Thanks great. Okay, perspectives. the

Richard Brooks

you. Thank

Operator

that, to with like conference over I'd remarks. for no at the questions this so And back Rick to Mr. I’m turn time, Brooks showing further closing CEO,

Richard Brooks

Thanks a customers Thank great staff thanks of guess support what is members here. brand of and to the our a shareholders their to here your partners I'd our hoping do quick of going Thank have been there. forward of to everybody. XXXX. really just loyal you we're appreciate we in offer us all and We work you to and great and who Andrew, our support like course for their and patient investors for with a I all Thanks XXXX. looking all what country always thanks we're Zumiez out across to our in year I'm to have and great

Operator

you does Everyone for day. disconnect. and you today's in a have thank conclude and wonderful the may This Ladies conference. participating gentlemen, all program

Zumiez (ZUMZ) 15 Mar 182017 Q4 Earnings call transcript