ZUMZ - Earnings call transcript Q2 2018

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Operator

Good afternoon, ladies and gentlemen and welcome to the Zumiez Inc.

Second Quarter Fiscal 2018 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

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

Richard M. Brooks

strongest performance. us through hello in over numbers. the Chris have to questions. about thoughts Thank and Officer. with to strongest We our the you were and call share before to Then everyone future earnings years be planning Chief the quarter brief our After the today. thanks XXXX I'll the history. that, is I'll our for me quarter take who share few to call joining today's up will call open regarding a on the some and are your second With per Chris, begin pleased handing currently our Financial call in several you remarks we'll Work, delivered second

today’s line with which empowered a the second consumer. direct Our results, quarter, both top winning exceeded and are commitment relentless result bottom of expectations to for of our

that differentiated to by service consumer to customer Our presented all globally. the teams assortments and continues be a success are our continue class diverse seamless strength driven that world the accompanied experience our through by points, touch across deliver shopping of

growth share sales points comparable our X%, from eighth operating established This guidance ahead the to guidance quarter comparable margins loss of X%. per increased improved of compared X.X% call For was to initial above our to year improved transaction and on consecutive June. basis to and gains. of marks and last income of high-end of we our sales X.X% of Net $X.XX $X.XX XXX a guidance QX X% $X.XX the our the quarter, in

our We that on Chris encouraged current our expectations half by touch are and shortly. also back-to-school for of back the XXXX will results,

and We trend that expand are [ph] equally customers. well important believe the is Zumiez market business pleased the share to to with positioned share, lines continue of current and with mind our

to during think I think changing and and discussed from based stems of of on earnings learn, model belief enhancing focus and will have operating Our brand it relentless we view the culture evolve repeating. do we bears how adapt recent continue successfully, the our serve serving our test, to driven our consumer on on and them. In empowered adjusted we today's conference presentations, world our to calls We order will retail lifestyle the this reflect future to industry our further. focus but

transacting With store the in increasingly consumer but a retailer. online retail empowered rather blurred buying a moved into or trusted between isn't world channel-less which on lines going channels, focused with toward we've a the

retail to well the the in at the segment believe speed in and brands within emerging in consolidation positioned information, market and out With is demand so of we coming access much before. are the can a our Through level this driving go faster ever type down which trend is rotating that being consumers global inefficiencies player be in created dominant are new consolidation, the lifestyle where local pace can true digital of transparency the industry. market. holds we forcing to from than the In environment for increased same the individuals which barriers worlds physical for between communicate, of this global at and cycles The nature.

in change created being up, struggle keep capitalizing state is to by we on opportunities Zumiez of the others retail. the believe While constant

Let a we're of few ways me about on this. touch going the

First, new matter and for to the locally interact with enabling brands identifying our marketplace process they where offer trends us brands. in to when we or to by both looking our consumers globally no are and choose continue the on build product our

to strong our use recruiting, we training, customers. and our resonating which Second, sales is connections personalized more drive culture with human-to-human

we us. to which further service We about through they're each speed interact communications sales with get our of continue learning with customize more optimizing for elect these our they aspect physical methods enhancing experiences, our what the business lifecycle. customer across From the looking the of and and digital expect customers learnings to customers the that in customers’ our

period the long-term built we for the believe continents future in presence strategic phase our a emerging to us bright. years, around assisting had strong empowered consumer This meet the We're This domestically with world, in to we to three together changing within further. the brand partners our points globally. of work localized even learning very outlook rapidly digital in and a established presence our but from serve in and will six us are customers' to across growth us a includes challenging with scale upon and This over success countries a measuring foundation local global on we've with evolution customers their our to Zumiez, XX Third, how fulfillment emphasis and reach fourth, expectations. that allows evaluate brands, past new with and brands. inventing included on And both improving the the think on and internationally, is testing the touch transform new of Zumiez dynamic continuously ideas past, global our we the ways with number middle to customers STASH enhancements allows ecosystem. for optimal in about the

profitability to the be culture I'm This to While company's to interact value with brand we financials. shareholder being and years key Chris. the environment, hand in for of the Chris our be will our the lead customers consistent evolved that the continue to confident will positioning. and has driving to greater continue engagement it tenets the is reflect that, way authentic be customer -- I the ahead. a current long-term history, of driving to review continue long-term will throughout rooted in success the increased it call With to will and

Christopher C. Work

good going will our of results, everyone. to with provide second quarter guidance a and brief our third then discussing perspective review quarter I'm Rick XXXX on Thanks before year. afternoon our start current full I a update and on the August

in last end second $XX.X year's positive net stores XX quarter and million addition XX.X% net increase $XXX second the comparable million $XXX.X to the Second XXXX. or from Contributing X.X% of million to quarter of quarter. was this sales growth increased sales of since the to

school line from several into calendar year movement August by days million XX Our the benefited last of also approximately in early QX top versus the year. this back to in the are QX which season which shifted

During volume the dollars transaction XXXX decrease per partially per dollars quarter in transaction increase increase partially an second retail. average per offset in units in by sales unit in by a transaction our transaction. lower resulted decrease comparable driven by offset were an The from

$XX.X accessories. footwear quarter the was comping million negative category largest positive North million. America sales to During increased women's. followed by men's net category perspective our comping the was a or XX.X% and regional $XXX.X From by largest category goods Hard the followed

XX.X% increased and of consists million. which Europe or sales net international million $X.X Australia $XX.X to Our

sales XX.X% the for Excluding sales net grew and grew quarter. other the XX.X% international impact of American North foreign net currency translation

SG&A or to in our million XX second of timing loss due $X.XX points the was the offset basis in XX increase of million quarter compared to an expenses. benefit increase by negative basis XXXX. XX second costs, per offset accrual store calendar XX income This the driven increase of or operating were of was sales the Second our of point was training from points was annual of SG&A dollars margin quarter incentive $XX.X and $X.X loss in second prior XXX These a was compared XX% partially shift share points increases $X.X store to gross second million million, by XXXX events share to of negative net leverage of XXXX. profit the XXX ago. million Net second net a to of XX.X% with operating per was basis points points increase the $X.XX $XX.X product quarter basis improvement inventory in basis by quarter points point sales in costs was increase the margin, $XX.X The or which XX.X% an $XX.X quarter million annual related $X.X for decrease year as of a net XX leverage compared X.X% our of XX.X% XXX XXXX. in of in quarter basis for prior decrease year. the to shrinkage. quarter expense compensation. of of the year the compared basis lower included primarily occupancy the Gross or compared million income XX.X% a percent to of or in of and approximately second quarter, a driven of year of mentioned XXX Operating share basis net million primarily $X.XX was shipping compared partially per basis ago. sales previously points $X.X by for the of X.X%

jurisdictions to the of losses compared was rate in tax net XX.X% in reduction exclusion rate our estimated U.S. from rate. effective tax increase European a a for The the XX.X% year was federal XXXX quarter with annual offset Our period. second tax due effective certain for ago primarily the by

annual to continue be tax effective XX%. approximately We anticipate that rate will our

primarily XXXX current last $XX.X marketable inventory ended store XXXX. by cash up quarter XXXX of up X, the million X.X% $XXX.X was new Turning sheet, driven capital as second year. to July increased August primarily remodels. million $XXX.X with We of offset cash related increase balance from XX% from of in partially The million from operations of to expenditures flow million the $XX.X to growth million and by and $XX.X securities XX, in as

of sales impact the foreign Excluding year count. grew prior trends recent inventory our of by global currency store primarily the increase year-over-year and X.X% driven translation for

August Now the per comparable September The the driven was sales ended four XX, period week sales in the ended sales XXXX four due increase increased transaction the an an and week period retail period of four XXXX. decrease users for to to partially per ended XX, X% average transaction. to compared for XXXX. comparable X.X% comparable million September increased increased million by in period transactions our in week by dollars increase into sales increase week a the increase transaction. offset increase XXXX period week per $XXX.X sales in August for unit four to X, an $XX.X Dollars X.X% during results, X, to our Total for compared four net August

and Women's, the Hard During accessories. for our the Men's, four category footwear comping our was highest followed category category week period. comping negative the period goods positive was by only

million, at sales year in operating With be margins are QX. losses will third once uncertainty amounts currently on Looking negatively of mind tax Europe, our share to our third for and per with increase in jurisdictions that $X.XX $XXX earnings some diluted per the in operating start million, operating the for a everyone this guidance X% I'll inability We X.X% share This external compared earnings second share that sales growth that range that and margin, the third XXXX $XXX $X.XX guidance and same our $X.XX will to in negatively of Included the in calendar guidance by benefited in of within certain by the per that the earnings quarter expected negatively impacted and the this that performance. X% approximately also is is quarter. margins compared year. XX prior that an to per issue be we factors guidance and X.X% recognize between and impact shift XXXX sales, estimating by between the again sales inherent Consolidated million of of anticipate complexity given variety sales profit by approximately between to QX related of and first year to X% quarter. impacted also to has net share prior with total $X.X million. comparable formulating our internal earnings benefit and in quarters expect $X.XX, product by involves impact approximately $X.XX reminding off

to in benefit minimal quarter earnings generate we expect to results be During it as associated our a expense. we Europe tax with the fourth

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

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

the to for the quarter teens for despite profit increase million our XXrd per rate across XXXX in had slower fourth This quarter a by XXXX grow while in year the of this profit, mind the year XXXX. from the the we we in we high $X.X an in in fiscal fiscal perspective fiscal incentive the sales to growth in in a are XXXX. quarters including comparable million XXXX. and a both XXrd consecutive and as from single-digit fiscal From $X.XX to operating high now an sales low is slightly U.S. not $X.XX continue headwind XXXX. increase in will the be eight North to we're expectations to of on to earnings addition deferred in are consolidated comparing is range, perspective earnings range million earnings from in benefited of quarter in by in previous of comparable had in X.X planning grow product operating XXXX growth profit $X.X fiscal that from extra XXXX We be the per is second XXXX solid to anticipate sales America benefits XXXX STASH from XXXX. now in significantly to expenses planned all in tax program $X.XX which in the our significant in compensation flat in sales the growth. the previous mentioned $X.X experienced full mid increase loyalty XX% record single-digit SG&A a to With important prior we have to than mentioned This week represented compared manage have we operating We From margin represents growth just planned mid previously reform. adjustment positive and to detriment will This operating comparable year. diluted week growth an our is profit same the revenue prior the guidance out accretive XX% to basis. that up in and growth will rates year-over-year fiscal the planning for single-digit our a of share that we in approximately fourth and profit was operating margins benefits and share driven for worth week point It $X.XX expecting entities a XXXX. XXXX as XXXX XXXX at product sales, of XXXX.

This While our effective rate rates fluctuate to XXXX. XX.X% are planning business quarterly fiscal XX% tax expected of we the tax approximately of are our to an tax year. assuming rate an for compares for effective

are U.S., two in XX one new in including North have opened and and in approximately to America four including in open stores track we the store Europe, six Year-to-date We seven in five Europe. on locations Australia.

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

the in for offset be decrease is in and remodels by the store increases our decreasing count year. growth related XXXX While rate capital

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

Operator

first question Sharon our line William And Instructions]. the [Operator Zackfia comes of with Blair. from

open. now is line Your

Sharon Zackfia

I your good category, to it literally I that years afternoon. footwear Hi, time be was think. has the comping but highest can't remember

and the a or there back you've it's getting to footwear, I this shrink, inflection that in sustainable seeing something you're what talk a unusual you to if is be it's and So shrink year? the season, while a then help as last there shrink first you doing I think been stronger might on what positive been you seen well for seeing know at while school about think if whether much could of for you've were that mitigate in

Richard M. Brooks

I'll Hi, you Chris follow ask on. to Sharon. and footwear start then thank taking

on wants too. think probably I some Chris footwear follow to commentary

multiple in what footwear terrible we For are you're a had for right we me, run years. Sharon here, reflecting

diversity us, the glimmers about lifestyle. really business a to bit about negative and all of couple of is think of seeing quarter, we -- the seen it we've tougher could would categories, a now bit the and going what footwear our business is pretty what entire think trend pick little what of negative part previous seeing couple for and are -- over performance athletic And a across the of had here over tougher diversity consumer of part that And footwear back I up to in is think a footwear/basketball the we last part is see reflective as we're know of us our of good is footwear brands, we're run cycle and look footwear, our I just last was we're model, business we bit but simply in in. a so with this -- all years I favor years. seeing play course been little cycle that's a not we footwear our the five-year

for of footwear what what in I a it coming our this that for take we're I us couple buyers customers we holiday the to ride. you planned to tell for is back-to-school last we trend was that well finding will felt has season rebounding us or that think I this been could of and footwear, years, for and over advantage think our back steadily So

let years, Chris the is the ways the our I a terms mix trend, think again Sharon, would numbers only is guess of of driven over being really in footwear share think in we business. have for our kind be come has that by will buy caution the terms to I’d but get you this still that. can outfit But for a a caution this the -- from last And our and steady Now, great and only bottom, to we what customers it, what team. is like sales in us footwear say them I place and put are a we to of we I of couple that customers. our a been where long it’s whole we're also would brand the in to for now of strengths that's the on of and of want it another people particular can build one way I would I for do is

by me, years the is of tell been over again, the for about thing out as about, three we've Now couple what's the on last in reflective of Sharon as apparel real ago brands into also trends, in has it has been driver, cycles the we that business, would couple you phases. those itself. real model I about apparel I being of the same going think and but talking talked it moved about growth really started emerging driven a trend years

top I So we're year, we'll we're part business. for this all it us get drivers see volume a XX becoming think also when the and relative reconcentration top for ago few a at XX of talked whole as bigger the seeing brands growth of this being we and XXXX a about in we brands brands and three those through point, to seeing, the within years growth

the that, model and and you're what really of cycle footwear how our of trends seeing around of about customers. and ride itself, seeing we’re customers we think do what strength of and the brands how way model brands saying service for what in cycle we the our to try our is works in kind long the a So, I in around

a you little do there. color add Chris So, want to

Christopher C. Work

I of XXXX how Yeah, just out, shake numbers XX% about sales. talk mean about our footwear overall to represented the

it five from its peak of Now which down years about was ago is XX%.

we've obviously see been footwear for do So, trend, this we are at when and that a last a in has historically. quarters that, is your us. quarter few From to that challenged the room footwear starting we there's -- third shrinkage this for look the back for to in growth relation been question mentioned to is that think has so footwear perspective, challenging to performed we've we row go where area an on positive,

part done made in half in this the winter has has and very team actively to the the we in inventories manage saw kind hard the the been of progress back second working cycle of worked We which first happens of first quarter. our were that issue. some quarter kind some rolled our quarter. improvement We in the team as into specifically first Our of

business. second been program what back stores to which consists really of higher was were looking quarter risk has refer the favorable our we of some even came of the Our U.S. line where what about as our XX% from trend at And results population. inventory planning we and the

good sign. So that's a

area. I making we some area on. work in think we're progress continue to is This an that

on, heavy is on we where While to hard and what XXXX places, this million many we to we cycles it's have apparel aren’t issue about see brands on in trend work the when brands too $X.X have we area consistent find with still number we that the any disclosed these impact of an think get know was I and XXXX. some that was in you

encouraged the some leverage but some the more item in gaining that So that results by make to we've second in up on got we room of are quarter.

Sharon Zackfia

Okay, you. great. Thank

Richard M. Brooks

Thanks Sharon.

Operator

comes our B. question Sinderen Thank Jeff FBR. Riley next the Van of from you. with And line

Your line is open. now

Jeff Van Sinderen

Hi, everybody.

how my are let me first bear the sort first you wind continued makes team evolutionary going branded can in with year, in seeing the anything shift soon? to given a process about just this business you also feeling to down guys there Just and little peak school it up holiday strength whole calendar question the anytime those you're wondering the top of to congratulations back is your just else your touched and back then the say of I performing are shifts can follow here, you wanted putting think the for strong question, brands, that we aside so on you you there's on guess is that if school. cycle bit, me that know to kind your there if multipart of anything to on to strong I peak a performance add

Richard M. Brooks

Alright thanks in want to join sure conversation me that I'm let and tackle the and Jeff, again Chris and will too.

across I'd say of guess I today I world and strength due boats all first, the been Jeff most this that -- is think seeing the retail the that So [ph] we're economic of to have many lifted cycle.

we what you're in is most to than the we exactly quality our what expect So an do is And that sales position of cycle team our would up that leading position that on assortments, unique in better our based retailers unique maximize would based on market, seeing. I is our the think cycle.

we fulfilling we when are internal economy expectations sector higher strong to level a have at to the us. supporting a while broader We our relative ought perform retail

holiday would So window of holiday this through feel as is to at the start we going I continue probably point. like as where guess economy this I we that's the think we there's think

great of again opinion is if our retail group all the relative end of of and continue I that uniqueness presentations to outperform our the hope continue we the that's and quality does So to that we would the provide it to that overall. service it will our teams

XX that seeing expect we relates growth seeing emerging addressed to consolidation a top is kind in in moved it is we're what that been I into here as our top have that we've key some and really these years top couple from performing to we're group. Sharon's brands brand XX brands brands would normally three as Now question of that

exactly cycle But real things there's expect would in expect, have what be drivers. that's exactly kind footwear one concentration by a the mirrored of So this we is that of also really we brand we'd dominant strong where a that's where brand. the

the I good take want commentary are this add in track pipeline that we number brands. that set year. many for to our new this Now our of that Jeff brands target be feel very we launching does for emerging brand not to scripted as in right our And comment buyers our that about just on to at from away efforts point

couple with customers to right us ways ways on continue really front years a partnership forward with are we are you across in unique that too them track brands the we we been and now push position a those more We try of to multiple can our broadly and for on trying brands in that expose if to to brands push find some geographies. have really have to more

I don't those give the percentage constrained, part that's are and driving are we our to because are you just interesting hard to track hit at pushing on customers brands want that the fun normal for we to hard launch we and of So new and process continuing targets.

young upon on based I So to in to the the continue that based ability of this was to platform. potential cycle. their grow is think take across them brand to at last discover, our brands the achieve see launch about changing question The strong to as pipeline the marketplace point part our your don't those see, help global and they of strong be pipeline I and goal that and new then seems brands. our

now position economic I think supports holiday So feel position. our that, I and the at relatively to brand cycle right in and I I the seems strong a summarize good, all backgrounds think be

Jeff Van Sinderen

Okay, Yeah Chris. great.

Christopher C. Work

too that Jeff, see the only XX% piece that the within that months new as first to while right speaks I when about six I that along talked the well. again healthiness Rick's we're brands to brands other at we'll said to pretty of about the thing would coming now are just through turnover turnover what below add piece slightly is we the and to brands, we've of is which think we're of and actually close just talking number one just the that XX% look typically we the do

Jeff Van Sinderen

that your Okay, that and sort evolve is on your business just you or the to there and especially more, business need things grows? from could as that guess in of to might peak process there I wondering about I like hear. just think squeeze digital fulfilling of are grows is tweak we in one that good that period stores, as If holiday,

Christopher C. Work

you Yeah, really it's I have we fulfillment as you good because stores. are at almost think we mean XXX% indicated question a of -- our I doing know our

is doing for is holidays refining it. the Now our our actually now this done of teams. multiple remind feel I will really it the We've that We working and the good how first execution teams process even you process. not holiday are I about and think

and I on it. about get think how go we every we year every smarter quarter

volumes our of this So, of our have processes. level right up, have store fulfillment planned mean process the even we what as picked out we knowing of manage I into can

we be feel good able how to about I execute. So think we'll

But think that to of labor places where stores some put in our well model. will on very has into plus I will physical digital XXX there it to of assist here and in the locations the the as lot refer now these room this in with customers XX U.S. Canada both we are model be locations a to as servicing of hours customer. models that operating carefully have

demand. We meet to scope we web has meet have to the scale enough been and future web able model our believe current and demand

able to opportunity our it's it's been holiday. our a So a we're encouraged think customer. I be of so how are and out, happy experience us And their providing I speed really customer service teams in by good benefit really local working with it's to local allowing we think in ahead overall

Richard M. Brooks

you the I consumer right new, this And talk Jeff, this a is me this channeless model, about as you've heard us integration need the the a so us would that of for add for world of new just concept business in world. is to

that we We're Chris faster and localized all we to in at their example tweak our localized we be We're we're speed of algorithms a real now advantage this in ways basis, for ever But levers more the closer before. be same So every lever pure the localized course and experience structure. and and regard. a a right, the more. this fulfillment. assortments is to physical it tweak more getting need can idea cost constantly be just model thereby for to that have and cycle and even economic we a from than consumer, looking is more going more sale do a only can a learning or can cost structure we can store said one digital the which for good as And our sell, this

ways we we way we're talk retail this you're in I that this going great of that. And leading is economic all XX emerging are going whether about are this to a single able you idea when a be going you to we next find or the is months structure there's this next over cost So specialty example about think talk model to lever again XX the sales and to new for to find -- that digital to physical. think find months, as additional that we

Jeff Van Sinderen

and success. great, for helpful questions really Thanks that's taking my to continued Okay, understand.

Richard M. Brooks

you. Thank

Operator

[Operator comes R.W. Baird. our next Komp line Jonathan question Instructions]. with And the from of

now is line open. Your

Jonathan Komp

running half guiding than have up have mostly roughly above I you. the they -- to are the guidance so including thank start I of on are kind year I terms related half strong year in mid of you more clarify and a Maybe hi, I think of of know you recorded Yeah, after questions your thinking updates. sales, the full couple kind such August, comps, and a single-digits just wanted the far? you're first X%, of so comps to essentially the on running

Christopher C. Work

take Sure. I am happy to that.

our are we've I great inclusive results a of been think, August obviously that. on run and

the point and QX look then that thinking as as things we of think year to few out for ultimately QX I the the remainder are try as can we a we were well. there to both So,

a overall and August here seen think and in strongly peak that we've is little historically volumes I outside peak. school very of back to moderated in we've bit performed have our what that

see do a to move And we bit little as we moderation forward. of expect so

to I is the during similar quarter, what saw kind think we this of then in June accelerated in July. second

year a For to comp QX compared specifically in September was in in stack coming a and a a XX.X X.X on October. August two XX.X

think stronger a over of kind with kind this mostly as of I we're the and slowdown back think did a So of we the period quarter. weak see And we some factor consumer back evening to bit bigger up four half a for little we know here confidence. of against lastly numbers August in I sales the third see in school of out

the full whole week running the Day that's probably six the through think the at for we at July look all Labor X.X about I last period we're of it. piece way the [ph] bigger When including a of comp week period.

you that good piece we it. So of pretty about know feel

said year we clear third business that the a quarter And we about third out strong better of well. manage really going I think a call have areas the to flow. all seen the we while would a sales. have on we and declines there I Europe be company we the was month as highly promotional earnings little down a there as our That encouraged challenged Europe probably some extent speak our much a last saw being we those very of have receipt to couple across European last lesser week XXXX stronger position year was week how extent our trend and of the promotional talked slowdown were product from a of entered piece a there are be during by specifically here to over in so it's then some to bit us, in could in the August was last quarter for QX managed bit that point we of last bit day. a the ability where liked is there a little we little little anniversary as just we margin to sales margins. QX much last inventory in a to more And to of feel

as better the overall a and it's for entity profitability experience think well. we So

to those little think out rate I run call after down come are we're I the forecasting So while here August. things bit would a our

high the As we thoughts those a is on our I still some we're not whole challenges quite just some the range. would run of It that months on going two first at of same through the echo the of stacks and and probably based comps end out think guidance there laid we've think pretty to six good year level the about QX that that here. we of the experienced year we've what

Jonathan Komp

on up I seems called while out branded the know like some to and you have of early Okay, that's been you hear of I thoughts of you've expanded exclusiveness wanted the have and the what seeing. to big the kind of the and broader is of in But trends of some just or that kind follow on those capitalizing brands certainly of some there's you on trends terms on those on three change for maybe in helpful brands apparel that just distribution. the some degree it side a side, are you're now see the any availability? apparel not those your if of maybe

Richard M. Brooks

taking Jonathan me start question. Let your

been just relates because us seen we're had brand And changes partner growth brands great I we've of that's growth pretty to level as becoming that the any significant sides for our tremendous. it and business. we the has partner -- a on brands the of think relative about we so emerging really talk they're as end to have great and distribution for branded, we And haven't on both

of in are have it their pretty our up helping brand through our been steep of meeting them growth in course they partners think to the challenge and we side and curve. I So terms on are clearly

just So been per more current busy distribution additional base and fulfilling they including us. any because haven't significant they've pretty their se serving needed on

about have is even those there, feel so the I'd about launching where brands. good we that I out pretty we around good launching clean distribution more pretty we the are brands same So are say

things those we certainly in are I our but widely relates get say for -- label think to things what than know be relatively it market those in one our certainly expectation teams be that, private first businesses, of carry available and to early to they expects more right and direction about trends, across a would that trends set was do would where we trend can that. -- our us that customers those their As purely customer they is case buying put -- that there broadly him teams. that's brands generally we and that again I But a brand found play, the our are consider great the

there because the for -- to we is garner relationships we think categories job of all work early riding in the I I and trends we relationships with we we I to as good as with them as very we terms how and as how that share a again cycle. have brand But them in that we have the continue a do partners driven, maximizing there be driven them marketplace our are trends mean and job trends these work partner to build the on brand build, our out trending for with will very good the our these result are strong how brand very great around of stores, those together well bring think on we we outfits merchandise customer. it teams there our

they a to we a partnership have we side move expect window to those expect and for driven tight of trend are as I limited So urging areas that long in probably distribution on branded the those partners think our help lead and brands. relatively we growth from the and

Christopher C. Work

just is a add Jon this global well. distribution as to And also I would that that,

we of network the and we which point kind as these global international think them our well So jumping a to there see think growth penetration the good some about helps domestic entity. of overall take brands within is often about grow the to as of them

some has within Zumiez that kind think of of growing I So, helped to avenue to these ecosystem. as keep the another keep brands and detailing thriving

Jonathan Komp

you headwinds to and out, wanted an understand have growth on perspective pretty now third underlying factors in the but just profit side guidance some you and I maybe the from you operating think Okay, implied quarter from just the those, operating the both there? half takes profit a in of for modest maybe adjust called and me, the from I the profitability fourth of so implying for when even you're basis, significant puts second and great pretty last some one quarter

Christopher C. Work

the let Yeah let it looking for to out lay dollar and how Jon of you me me outline we're try at kind total impact. them at

here. have a have items we as think few noted we I

QX. million $X.XX QX was included to to calendar in that, negative was out QX our it QX about QX or related last million STASH and the profit. This revaluing to deferred operating year's operating the week million is moving prior EPS. benefit program. a also year. with included shift of year sales first $X.X of last associated classified adjustment also We about And So the with which $X.X year operating in a of the worth is $X.XX $X.X benefit revenue a profit last into XXrd profit

take of the back on profit around you those of about I right So think operating $X.X XX%. all impact six months and and it's million

operating adjust growth you obviously showing those are profit if items. we those some So beyond out

in on the to think have moderate layer we expecting are annual is out. you last to the comps I we've in there guidance piece QX based laid

being $X.XX meaningful. or well operations share half a positive targeted year we back that is the And which last be recording is have we XX% recognize quarter. to of year U.S. earnings So year pretty And do this from European million of together in XX% little our pretty where represents you a both to in still have valuation a our around as the meaningful have for $X.X year a which fourth where on the with growth I in we're earnings operations side the operating a know, on on profitable looking impact profit operating per some European as quarter profit to And perspective will a tax earnings unadjusted. then we there, substantial. $X.XX you this all benefit being some will growth guidance allowance things the bit fourth the at we which and stand very put $X.XX the still have, earnings of then with growth those adjusted coupled we think the be detriment. It of will is reform getting our

little together. half the of it at anniversarying the show these we're here landing business But of it we're year challenge really good a where bit full the as I on this about a So specifically all year and does feeling items. results a overall when look perspective we think we pull of the from back

Jonathan Komp

walking through Understood, thanks you. all for of that. Thank

Christopher C. Work

you. Thank

Operator

remarks. and Brooks Mr. any that conclude the Q&A Thank today's to call to like Rick does session you I for and return closing would

Richard M. Brooks

look support talking quarter serve our the their third Alright, everybody. I for encouragement also want and to thank shareholders back results their particularly Thank I to thank for school all With Zumiez results. our you at everyone you want again to great brand us our and and that you team all to we the likewise for in and in partners I'd to to our thanks forward mutual thank helping about customers. say when just talk December just

Operator

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

Zumiez (ZUMZ) 6 Sep 182018 Q2 Earnings call transcript