ZUMZ - Earnings call transcript Q4 2019

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Zumiez Inc. Fourth Quarter Fiscal 2019 Earnings Conference Call. [Operator Instructions]

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

actual Additional information of available will differ number concerning in that Zumiez' from information discussed the results SEC. could the factors materially be to that a cause is filings with

Rick now Brooks, I At will turn ahead. the over go this Executive Chief to Officer. Please time, call

Rick Brooks

joining today's us performance. Chris is remarks for the a and call. Chief After today everyone Hello your fourth Then questions. share thank up we're operating brief about me on Chris Financial some With to before you quarter few our current that, regarding the Officer. call on our I'll you call Work, the I'll thinking how begin with through the will we'll who take call open numbers. I thoughts to environment hand the

year We drove concluding delivered earnings in our fourth X% comes that. a X.X% our quarter in XXth marking X% positive the compared gains. before year before the X.X% comparable of the gain X.X% increased to history over company. This per X.X% billion, sales original our which our highest share sales of quarter the delivered year year a the of quarter on guidance gain the $X Fourth to consecutive of a top consecutive increase ago, successful and holiday we that

XX% range. our $X.XX high-end in expense a increase initiatives share our combined above the numerous with margin drove savings earnings $X.XX, full original regions, of a per selling throughout benefits implemented and each guidance the of in full-priced geographic our to Solid we've from organization

to year increased X.X% $X.XX For the X.X% improved the last diluted top on year that, year, XX% while earnings or X.X% share $X.XX. and comparable per before of full sales

and business years with of last place underscores the in success put recent strength to serving growth in our profitability people our progressively model, the attention Our double-digit our our in the and strategic power increase relentless our initiatives decade. customers, in sales over of

years, centric has Zumiez’s short-term to consumer trend its speed that I've During results growth the the long-term the in calls, history. are building affinity the attributable customer. strategy XX of the execution and the evolving and navigating This company last few requires directly year been plus strategy cycles desired by over significant discussed earnings

we as used all Throughout brand As support bring in which for a the our elements them to our of starts culture. and plan continued build a decision to these great it making in individuate. business and critical our diversity brands with partner drive to customers, our that in to foundation have decade, we history, customer. uniqueness the investment We next with allows we our model

here infrastructure has platform the ahead all significant marked focus will want, from ahead with they with in and We’ve any way to next capabilities utilize further require back-end We've shop will business been service the want, decade organization get want. even which as customer can when inventory The want and global as our built they serve work us continue to leverage best expenses. fast channel-less[ph] touch-points the visibility effectively an us to and to what into customer. The customer. our allow path to our they they

trend complicated wave every in This needs moving of history. prioritize We customer's faster aspect today. us serving are ever to further we that meeting navigate getting and faster of our the are will speed cycles than allow will speed than in

a with the enhanced our build our with evolving us base. continuously interactions and behavior, an that buying ability both in improve experiences. management, and intimate in-store infrastructure our customer chain our working digital to connect improved and with brands serving Our customer in be trends speed to enhancing to will engaged through more preferences We'll assortment nimble with supply level be customer’s continued supports localized and

employees We ever social expect put care trend social and about and will media of as world. our subsequent social the the responsibility to condition because we causes and also the our more than customers this efforts generations, accelerate modern around with power of of

corporate Today, has plan over we've drivers years. citizen I'll more always initiatives out a calls number carried a and briefly our of I XX focused partners. on in on provide our elaborate on on future brand Zumiez and next key this topic the to being details good own with and

homeless which Zumiez has Our Foundation, to stronger of members responsible that’s our recycling, in the infrastructure to our on our investing through the among and and on base initiatives of United and encouraging them employees, investing clothing provided across philanthropy to manufacturing free focused shelters impact finding own the passionate minimize recognizing in promotes responsible usage. ways society make people that States, environment

taken Zumiez, organize social deeper to into further a means Over will what mission. guiding social task to that months we've months, principles creating the dive responsibility forces last our XX and various XX

ways over for employees employees – and shareholders. Key our ways the the customer, that right reflection and involved the in and projects include more our company's on the inclusive the customers communities that environment, operate. engaged We aiming finding of and learning is to customers minimize long to employees inspire be thing ways locally be impact our we an around causes, believe practices and outwardly term our our seeking have passions long-term our we finding to for to do teaching our their share and to to

adapt continue growing our behaviors company evolve. and margin well with today's remain only meet that win key win to and customer well I long-term the of positioned Looking is needs us buying positioned steadfast empowered remain profit. that their product also have by as future the priorities strategic the on extremely We sales, ahead our and believe but to consumer, the with and consumer in to to next change confident the industry ability decade,

in but focused the on tariffs, brand laser These teams market we of extremely culture with growth are move-forward. complicated impact recession, long-term we the and our are as continue have to the for to position. I the finding place ways strength in and confident of times fear of and we our remain pandemics strengthen and

Lastly, with monitoring top I fluid I’d up, comment wellbeing on of our We're priority. the the closely like situation to and the as Coronavirus. briefly wrap the before customers employees

focused business. have teams potential may any cause on and of We to monitoring, responding virus to for planning our impacts

We're have while seen the actively not in impact following remain results. merchandise to assessing as implications. close brand and health and local traffic We it implications year-to-date our We with about material are relates the potential supply potential partners on remain from chain. vendors a authorities. and both for guidance officials we We deliveries and contact cautious

financials. With Chris, Chris? that I'll will review who to hand our the call

Chris Work

decrease the and the before Fourth changes thinking $X our related million an afternoon then to partially $XX.X first going guidance adjustment comparable about this of February XXXX, – good of the Thanks, fourth trends update sales to of net stores end year's our $XXX.X increased to everyone. sales quarter million with a year review revenue X.X% currency start sales the an X.X some since our due provide a quarter and quarter how on Rick offset addition in STASH discussing of of I'm to results. I'll by and increase positive XX were full to quarter million XXXX net year. quarter million last and full fourth from fourth program deferred in where to growth million XX foreign X.X%, contributing $XXX.X loyalty rates. our we're on perspective or

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

category category. the largest followed goods quarter, comping by footwear. only men's, negative positive was was and During category, the comping hard Women's our accessories our

increased or million. a X.X% perspective, which increased and X.X% North $XX.X $XXX.X sales From American million $XX.X net $X.X Europe to consists to or sales, million. Australia million net international of Other regional

for other XXXX. margin XXX gross XX.X% compared quarter. translation, million year was sales was Excluding grew of quarter, net the of a compared currency in quarter XX% and of quarter Fourth the the American an basis impact an points of X.X% the to net XX.X% or profit million foreign grew fourth international North $XX.X ago. increase Gross XX.X% to increase sales $XXX.X

point The point in leverage costs; margin XX shipping due to margins. STASH improvement basis inventory basis points inventory related was improvement revenue better a of program a in a shrinkage, management costs and XX basis in decrease product lower the distribution driven and occupancy XX by factors numerous XX points including basis improvement our XX deferred point basis adjustment; loyalty and to store

basis the compared quarter net of in basis Operating XX.X% XX.X% was to from compared year XX.X% quarter $XX.X XX.X% $XX.X assets. XX or XX% operating net in sales incentive fourth sales. basis points a compared the year. points a by million store improvement percentage leverage and basis sales driven as in quarter SG&A our ago. The expense prior improved increase was to in points operating of $XX.X costs XX a to SG&A on performance. income by increased with million of income of million fourth XX $XX.X million net decrease prior improvements to fourth XX to partially the year points fixed were due offset impairments or business of increase the of of compensation of These in XXXX primarily

million $XX.X of $X.XX income XXXX. for had $X.XX. quarter share fourth fourth was of income a or of net quarter of million compared per up program in loyalty STASH adjustment to the per $X.XX previously this XX.X% amount approximately $XX.X the that positive Net the earnings impact mentioned share or revenue deferred to per share for was Included

The fourth to XX.X% effective was year in to quarter in our on businesses. to Our international the the assets increase changes for valuation rate the compared was in tax due allowance XXXX our deferred ago of XX.X% tax period. related rate tax

and million an sales year year XXXX decrease X.X% sales offset changes stores in fiscal full comparable $X.XX $XXX.X for XXXX increase to or a this in increase $XX.X the partially of to million of $X.X to Turning a positive million X.X% currency addition the were XXXX. of due net from XX result. rate. of was billion, foreign growth for Contributing by Net fiscal fiscal

$XXX.X North of By million. increased region or which and million. Other $XXX.X X.X% international net to X.X% consist increased million to $XX.X or million sales, America Europe sales Australia $XX.X

North margin and basis international year. sales XXX other The America year increase the translation, gross margin points was impact sales net currency the grew XXXX of prior from net for gross XX.X%. and the X.X% group to was of XX foreign XX.X% driven shrinkage; increased point shipping management Excluding points worth improvement basis basis due by basis leveraging costs; of distribution inventory improved in in and XX XX product occupancy points; basis lower margin. a and decrease point a costs inventory XX and XX.X%

$XXX.X point to a compared expense or net net a SG&A sales The by million Annual our $XXX.X of million sales increase or XX.X% of costs XXXX. percentage leverage decrease fixed as and in points XX in XX.X% basis XX was basis charges of store to in related impairment driven of net sales of assets. was

Operating X.X% margin in in XXXX. compared X.X% was XXXX to fiscal

$XX.X from of million increase an net Our income of share. $XX.X income Full XXXX share XXXX. was $X.XX to million, profit or XX.X% or year per of in $X.XX profit net $XX.X $XX.X million million per operating operating compared XXXX was

rate income fiscal assets earnings fiscal as tax in XX.X% effective there jurisdictions. of and XXXX tax is decrease to loss fiscal where for tax XXXX. jurisdictions uncertainty of compared losses the fiscal to taxes rate primarily net to in XXXX for different proportion related the to effective before certain compared income was in Our XX.X% was across XXXX for or the the realization The reduction

store translation; expenditures the We XX.X% excluding from million the capital year. by $XXX.X increased new XXXX and inventory XXXX, in remodels. by securities a cash flow Turning current $XXX.X of $XX.X ended operations, X.X% X, year-over-year primarily fiscal driven X.X% in balance cash and million X, increase from up as offset to last as of million to growth marketable from partially foreign XXXX. increased with to February This million was primarily from $XXX.X of of inventory, currency year prior $XXX.X million February sheet; up impact related

February sales results. to our Now

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

men’s category with highest followed comping by February, followed our by in was hardgoods, women's. footwear For largest positive category accessories our comping negative

involves the by sales, start-off external macro sales and are and again Looking factors the our product growth variety in-light of the of cautious for of at some going pleased in our that first the start estimating guidance guidance formulating I'll inherent on uncertainty quarter we reminding factors performance. XXXX, but given Furthermore, complexity some of globally. current earnings with of that margin are the everyone first once impact trends, and quarter internal the and

Given to total million earnings X.X% and anticipate the will between be between currently our for include the will between $X.XX. changing, X% expect are sales $XXX guidance X.X% to quarter Consolidate are speed compared sales we with in operating and does first the which With of increase of and the the the XXXX with circumstances impact mind, share $X.XX that be and comparable with range expected of X% in year's million. coronavirus. last earnings $XXX the $X.XX of not we margins per

how you do inclusive factor current in as thoughts for coronavirus. such this fiscal looking our operating for Now I give plans to thoughts few XXXX. at but unknown year, updated of the a These want items on we're of a impact are discount not

As in inventory, adjusting we we plans expenses this allocation and rapidly intend situation, accordingly. evolving monitor and continue and to flexible dynamic remain agile capital to

quarters We positive on sales. comparable of XX are now consecutive building

beyond we seamless our as in for we to first As creating and made quarter infrastructure the customers. look a investments the to that sale XXXX believe of we've our continue experience

to Our top to will we investments unique team as as in those long-term bottom approach Zumiez’s line merchandising growth. well continue and drive make

of low-single-digit fiscal peak once range. XXXX, fiscal we’ll achieved margins continued in we XXX that of and in achieved in a label high comparable point the In XXXX previously product in private grow improving With in anticipate approximately branded product we we fiscal cycle margins again XXXX, peak reduction consolidated sales share points. the basis mind, in from XXXX despite heavily a resulting

internationally. to driving and We product are working on currently continue initiatives margins domestically

product projecting we have will roughly but our product international be entities, sales that XXXX flat faster as up planning internationally. domestic product margin our are and We in than various margins consolidate currently all across sales be degrees growing are lower to margins

X% manage well break leveraging We America we're the comparable sales year-over-year approximately sales the Internationally, more between for our costs of unit on the business a We rates reducing growth North share our currently Diluted current in to impact mature currently year overall closer continue low-single-digit for X% earnings X% of on XXXX. and at costs fiscal the even, with the full and per business. growth to focused concepts $X.XX or losses across growth. within is growth the anticipate operating X% on to year-over-year. to planned and $X.XX driving focused concepts managing

of the We to our effective fiscal are XX.X%, rate effective tax tax which approximately an planning assuming rate XXXX. annual is equal business in currently

in eight the open to stores approximately new four year, and We stores are Europe; eight including during stores North planning in America; XX approximately Australia. in stores

We five year. are stores planning the to close during to approximately six

store be be $XX our million to $XX to XXXX year spend and million, expenditures of to fiscal million between plan depreciation capital will The million we dedicated new be capital prior in compared which XXXX. to the remodels basically $XX excluding approximately and full majority flat the expect non-cash will amortization the lease expect year. We and is openings for $XX and expense

year the count count repurchases are to shares. We million this full share our year from for will be during XX.X approximately Any share our currently share the projecting reduce estimate.

to like the open questions. we'd operator, that with Now to up call

Operator

from Jefferies. Thank Stichter our go question Please I you, from first sir. Instructions] [Operator see ahead. comes Janine

Janine Stichter

question. good taking my evening. Hi, for Thanks

the you pipeline of of any might chain there's the could be probably a disruptions, line the but on really you And potential visibility on helpful? would coronavirus; I sense say, too that you product first know give and then supply have just much just broader can not So into us if follow-up I have business.

Rick Brooks

you Chris And potential start. a you we're in I'll I'll market of let more Janine, then today. maybe to me of sense, the ask how impacts little the And give give bit detail Alright, to responding about kind little the business. a bit

of this we're employees of the a the quickly. what we said that others much more important thing every in are for situation change what be happening most our CDC Like health is the and really impact. really there's more course health guidance day local and we and as and laser is change welfare you customers we're the seeing we and think the focused actively following us as And So fluid is to the of has about authorities. and comments, – the continued is

We have teams all here set internal our up across entities. scenarios and in the address to both Europe

have our date, steps of we of you steps. those within And – give company, what cases me a aware what a any of of just let we but steps examples are confirmed examples taken number include. And few to not those

We've canceled company all people eliminated across in applicable home to non-essential we've all postponed large to and or where changed internal function. allowing their protocols entire travel. their We've role is First, that cleaning meetings. the work from we're

with is So the top of kind headlines. that

it bit turn we will may Let how over little potential impacts to about who you we what Chris the or think think sense Chris? a be. me give more

Chris Work

Yes. down business, of Thanks, and to the two it's we Rick. kind In impacting regards break how sections. this into results really

have you perspective. demand chain then the look the and obviously think to customer supply perspective at I

me let chain. supply start So with

that to monitor really working cognizant to with really what being partners We're chain. made. label be are brand closely for vendors supply private We we of as our own need the our as well changes use our merchandise

which QX the couple the and obviously alliance at years due XX% we As was about end down hard tariff of the China, saw ago. and a aspects. of last other quarters we've our down XX% you XX%, few receipts pretty issues currently And to almost over from right worked to we've on or XX% communicated to around QX from reduce

some and impacted instances these global supply there of of expect chain, we Overall, truly economy down do through lack coming strain a we're from raw slow is said working areas. are That aware we but of in it's materials the it. of out our level some of

inventory at some we the released saw the year you our our in growth As that of just from factor prepared remarks, hit. of results end the did

hitting and brand a in with to also to and see some into and things both get working we challenges pressures our to in that in strategic impact We're cost our and favorable to potential year aware forward to and inventory needed. supplementing January, well. running try some As we the as will a decision started as pull made freight see to cost we probably back with long-haul February partners manage had this through. work try closely vendors to expect air China We're up shipping of due demand traditional brand where

even a customer a From the major saw strong February our level comp of start that stronger on March, we some results bringing of X.X the experience over look larger quarter-to-date continue of the market QX X%. was in call comp very at to we've demand hard though, that see comp On week some had outbreaks. a one mentioned micro and and a we to perspective it's a we impact. to

give me let Now examples. of a couple you

our stores. in some those in last to up in down Seattle, week digits of in that low-single are coping area, Washington picking the meaning outlying continue considering stores lost but directly over web and the sales digits see physical demand the – the mid-single we lost trade is that entire areas, demand and Here strong epicenter very

providing as these an our those would days. example we lot travel still as well picked band up few of in seen where be But find Southern Austria periods Obviously base time very the that on second a are we we that border of our the diversity and model. some the have Italian stores measurements. last to A Italian quite we're these learn and in the has couple short in impact over the of are comfort a store There's here. resilience stores

to moves challenged virus as and that okay, this areas to other the be some and might over country. perform expect change across areas We time

agile and capital remarks an and in pretty sheet strong balance intend allocations trying our inventory, and prepared accordingly. we have to and we're as to mentioned we expenses We be extremely adjusting plan flexible and and

Janine Stichter

really really quarters just I That's for hardgoods color. a the now. And business, to it’s helpful want about few strong been ask

bit behind we Just some around a margin any of category? And then of shift lower should you. that? a I give us be because Thank thoughts believe mix what's aware that's little

Rick Brooks

Alright. address that Janine to business and Again, hardgoods I it. the I'd you be was I in wish happy you tell particularly could it for again, what triggered

the year. our We racked have brains last over

You'll businesses. really we we off last remember this – of hardgoods across skate seeing all hardgoods saw be take to take-off clear, year our and our our about it started was business time really global it across

the Australia, the almost pretty down Europe, So hardgoods saw coming started Canada, to U.S., really same skate week, dramatically. growing

to we've the the while add don't that, trend really we was at – we'll across there answer see businesses. point, looked was really one trigger is some that we've So what but the sometimes identify which and all we couldn't

me, that So business. just, is you’ll skate this represents remember negative of we four for had hardgoods years

in switch To And that's this really just the consumer. a across business we was cycle just and saw off why take all and the platforms our of accelerate. again generation of me the it

suppose too. other question like Because we a why in and got hardgoods Now, look to the at business up the bit about I have softer for itself, hardgoods guess as again I'd bigger process. also we're to just focusing back category on – thrilled the

to for actually of never to – usually – is me physical It's model is the is the actual this and So brands business what's itself, we within categories what going model. we're this this is happen departments because about really our why results. in supposed how to not works business business talk our relative

the terms the cycles. what were at tell end cycle in where middle, some the cases see in the where a the shifts things you you beginning, presence, about then model. hardgoods I Janine, with we're like And as this of in think to different business some at point in always things beginning is and we're trend We skate like that Other actually anticipate expect going in across some cycle.

diverse of lifestyle But really a covering that our model for think portfolio categories diverse a such portfolio I our has the and fortunate; brands of business we're consumer.

And diversity is overlaying I see of maximize to course really other so most at each different trends, than allows across trend different to all earlier at sales are times. these to see them. cycles is our typically people us goal this get that think Then

So we brands young global across benefit demand. take-off growth from can from fashion and benefit cycles we that retro go where that it us business. like our see for drivers local-to-global XXs and from We real become

brands XXs we the same retro – the young shift cycles we're We benefiting also benefit have riding have and from the And to been category that'll growth category shifts have business. of like while years at that business. the become we're seeing those from four that here We've brands for brands for business with become a the three driving emergence real skate year. hardgoods last but can driver are where we we our examples, were kind negative all hardgoods seeing the been we're see across I time, in of now skate

all at to goal products for share we're hopefully customer grow where cycles customers as those to turning sure, is across make to grow want various that unique trend those – right of matter individuality and the different no our So always express then our our our and again spending overlap, cycles. they

these and cycles. across business that we the these trend can We goal giving business. to is actually our gains shifts perspective again is in these this is, expect our shifts anticipate kind see in run So big actually the to we of try

trend cycle good see we for fact, our it to when their thing relative And peers. on our really changes, trend be because cycles leads business tends usually customer in a to

with little bit So of will ask concentration a to cover too. kind of to I'd And private-label brand this like you is about talk we periodically mix. why that you, give on Chris

want you Chris, to?

Chris Workf

I our try think out think really, us in we I'll men's half know drove of of to is since XXXX laid while Rick what period, apparel X.X% you is absolutely. prior is really and XXXX, the a point flattish women's to roughly I Yes, results. and it XXXX this comp. back prepared a comp; comp the multiyear remarks, important. put the real and And this when XXXX in comps now was running I really been Rick XXXX year for about was over some and I think XXXX X.X% but quantification in mean those some apparel. we've saying strong turning then a In comps started a X.X% were

gives you a stack. XX.X%, So three-year that

if about first couple saw actually over drive we And almost to of apparel we’re are business the think stack really years I I that of and apparel the really took when driven men's apparel you'll performance and XX-K well. by here you'll hardgoods our we when see report together. this now women's category footwear and What is, our as was see and year heavily XX% driven

the and Rick that what's with and donor think it and the what speaks XXX just being really I sales is points side footwear total So magnitude of talking the to almost what points basis hardgoods about. is, apparel speaks interesting in saying another to grabbing XXX it basis of of Rick's share

change. over about the down and driving time, end Top Top of this At And us categories within that the every XX and comp what's XX seen the important talked these our move-up we've preferences we And and consumer see for we've year is this really of most as day, as seen part we've this brands. call that continue meaning Top XX% about of our years been thing there brands our higher brands. concentrate, cycle overall to our no to couple One sales. last a we've percentage it’s concentration branded turnover is, XXXX seen than of years other in are the prior. and the XX heavily we see different or was XX% expect of

point that moves in de-concentrate being waves. we'll at us said, and will tell That some history

really It's to ourselves And those with business. thing on a thing and and numbers. happy wants so measure to customer overall move neither our is really we bad overall really what just comp the them we're

So...

Rick Brooks

Private-label?

Chris Workf

despite of business. a called percent performance. grow as out seen the fact decreased is we In row I peak another in as here. year really peak we're XXXX as our XXX% declined far private-label that And This that performance business. the like was margin that's actually what something the we've as about margin of also a the to seen think increase third a excited share again, private-label is that our we've

see on what label our see side Actually as private of don't on business. the we Now our business. more branded a that we the negative focus is

go we'll in style at in the penetration maybe the a at ways. play be some point private-label look where sure So as higher not may in these as point. and be brand way a we'll a future could important I'm

where continue go that we'll So and the takes us. customer to push

Janine Stichter

lot. a Thanks color. Helpful

Operator

Riley show from I next FBR. from ahead. you. Please go Thank question comes B. Van Jeff Sinderen

Jeff Van Sinderen

know I mentioned are comment on of you weeks couple you broadly Europe everyone. can seeing what in if that? Austria, more you last Hi but the in

Chris Workf

Yes. go ahead take that. Jeff, I'll and

I Europe a most – overall, touch of here think back what me today. where for stand of recently Europe. Europe And take on step briefly let just let XXXX about I'll kind then and we we think talk we've out when and and about me seen

So we've really capitalize talking investment. put you really over we been on know us prior is we've Europe in believe talked many and about guys to investment to European And a is meaningful marketplace. a take mean place for that something calls. grow I about this calls this the what to and today has now,

reaches five strong network in all distinct as real Europe. webs We’re including now and as that of platform well a a web countries across stores

performed room Germany kind our would we for markets. full-price comps. with Still in stores in markets the we for and digit at classify the really maturing this be continue probably XXXX Europe. growth. are single of we're we doing, We represent pleased Switzerland, point a really which as of been retailer trajectory in Europe at and in the what to lifestyle we've But high years, solid selling think year few largest have some including

Our been comps. Austria, the stores Finland in market stores which XXXX us is store happy new we opened the was Netherlands, with our there. mid-teen strongly. Finland. and most performed to really really mature saw market very have our in really in with a results which our happy first And and We're

XX right the taking it Europe up that seeing step in think meaningful So XX.X% all I growth of here over of all we're that take sales for really us fact direction the that And across EUR to departments. category Overall I really XXXX. were plus kind million. leads in a to we're strong

we saw million the loss. on X EUE And million from loss X.X the loss EUR decline side, to

opened saw and losses, incremental new and we we in through that into both we’re a the we've overall significant additional flow going provide So we And the future. lot believe saw here, a decline through sales to right? in stores that XXXX of on meaningful flow XXXX

customers the So Jeff, you in brands global mentioned typically ultimately the around prior that our the Europe. things and more efficiency working our working value. global a serve many operating and question allows us scale trends internationally is that our our are Rick that are are better that in and and of in to know this fundamental we on and customer hardgoods shareholder – even comments here We belief prior is at as see know, provide

and we Australia. We've same leverage we in grew investment seen the that Europe in that scale, expect and in as Canada business we the really

us and in be on the marketplace. of lots challenge that working have near recession. opportunity we're of that obviously that's in barring ahead really we profitability we believe And So a term a to

I we season. comes that challenged short-term, been part here it is as short-term, little the perform has in which to the part – is will think the of of that a to that a how more say and related big So I it snow

business season. is on highly know, the that you snow dependent As

core, is known our very grown we're have strategy it you away but very at the of for when risk. snow we there puts that out Alps large as what we of regions, a our move doesn't we're for It's moved of snow. a part Now store part do, are because from that, – seeing and which we

that our have in categories, the winter a it tough categories, categories, but seen us us impact start footwear great our strides QX, So accessory we our apparel and of seen impacted the we've to also year. in

even business, in first relates snow Austria here can the while the few put impact areas like of and a Southern The it So business. couple bigger weeks in the March in of finger previously my decline a on mentioned I in February to is the as coronavirus.

results something but that consolidated pandemic we as are rebound past as not again, our the stage. barring comps, this challenges that strong we move So as we'll global it's think

Jeff Van Sinderen

your going in a a you COVID-XX, And then I'm bit brick to what-if of little Okay. That’s fall-off mortar to traffic give stores substantially If were question. helpful. and due to that scenario? about it? substantial of would and offsetting sort a gets a then if managing levels to mortar expect how in brick promotional And are you be you e-comm thinking factor

Rick Brooks

Alright. about I I'm but how thoughts might about think to reluctant we're just headline as imagine Jeff, because of few situation, let's you give it. you scenario thinking address a hypothetical this the a like

the said – and to we of as comments the we to trying the So model different anticipate scenarios on impact are business. relative coronavirus, in we

supply we dates that. out products. may said, turn advantage terms us in manage see product Chris area the least or receipt out, an think around We is giving with frankly us be probably with about. could pushed we're flexibility for product In where worried dates some as we it to cases actually And chain of can cancellation through some

delays. So we actually flexibility around gain [indiscernible] may of our because

that gives the we at as process business, as I I'm course our that fall-off really a way our it question, two the traffic our And which beginning, in only through, your side there, the this the our us heart now when of of what have with also look difficult said who customers brand overall in we is point, traffic But brand, on have vendors the process. side diversity diversity the that they we and talking there. the more we of are more to give this, supply ability manage for shifts but the are we're of significantly anticipating a employees and at business? for of much us. things means So a our about think course out that not that think as is us not course of Chris we I staffs, lot such but us things these said, staffs, the of to thing safety about gaming should flexibility lot difficult diversity the is ship much side manage We're concerned

these we the again, around for business. way planning areas are I contingency we're that trying So and through. really think modeling have do would mean to what And to some our think that

But pay said, have we X% as we're over said all that are So, a weeks monitoring seeing advantage we're in think not, we'd going what's Chris experienced if don't a of five and actually whether those but card, – to, to than week that have of and there's more a but one is we know the wild lot or let things are all we're of to plays card about now what to recession I that see through seeing a not out, means play think overall I I pretty just a happening. March. traffic it stores. lot are if for have period solid whether of relative that to fact, schools to our weeks out have and plays, being worry how just in that's Jeff global that competence accelerated that results we Zumiez with

Jeff Van Sinderen

Thanks Right, luck questions the best fair of for enough. rest and for of taking quarter. the my

Rick Brooks

Thanks.

Operator

Thank you.

ahead. Jonathan Komp Please, go from comes Baird. from question Next

Jonathan Komp

you sensitivity I tied And could pretty reversed given back that maybe of If tells the comp a in today or this watching just ask there. Yes. or to strong Hi. range trends. very trends curious as monitoring of is you're historical more I anything period, Thank you're comp uncertain that back very if they out just to potential more you're even looking if you you there's economic know business and outcomes just quickly are and nervousness how I'm that of stands the that's XXXX, had you. question of if factors will broader, another to planning out for you terms are. in the sort negative

Rick Brooks

about Yes. just a bit I'm little Jon. talk glad to

is is is know different, discretionary XXXX, of your tell consumer that aspect on We that, would question. a I have thought In about this we relative you based a headline have we're to what the highly, upon though XXXX, XXXX. we again in It marketplace.

it, to discretionary drop most that are what the than at point Nevada hit relative we in in – didn't cycles. fall at later looked went of clear became that hardest at we markets. time. XXXX, lot retailers and back Southern hindsight we And XXXX did we think were And were was I to And those in of saw we Phoenix, products earliest, with consumer a were in time, Our that and areas earlier saw, our the of business than realize us, as housing it like California. the course, in getting really a we but killed and

here, in is to this that as earlier think over to time at to experience in nature indicator Zumiez think And lead, into I what's opposed coronavirus tended recession years into a not This even real seeing the that my my and year an we've time. we it's So of going the impacting laggard. tended the here XXth now be because of had at recession. in I We're the that [indiscernible], it's same everyone I time.

– alignment, so point be seem in I resilient. bit think more we fact to be to this more we're in at more going a And

maybe some other hearing I that are I'm what what about think the retailers at in marketplace.

we the it about a a business focused potential range this or consistently the why we've about but highly outcomes, looking But and are you having are is it's the as talked of that We about question, not balance model we strong now know have leveraged are So holds different downside. forever. our whole very our model here on sheet. what up what that both known also upside business, on we've know

sure and key the as that the return things to long-term business shareholders these makes to sheet, put to where respond having protect cycles in security And put a have always cycles to and balance in and continue we consumer resources through and adequate we strong make value strategy, so environments. in of jeopardy that invest appropriate interests our is we've sense these investments to on business. never that premium through be shareholders, goal And drive it a able our kinds

strong And no debt plus the balance that's debt such balance to today sheet mitigator, risk on long-term gain million that as while We in. be strategies. $XXX all the why view and sheet an having we can the – position on no is cash incredibly in our

and cycles the that long-term cycles. to manage We're the the and to decisions drive as the important we player. can retailer. through subject We We're the actually thing our most make a cycles, be only we right going but work discretionary for way and are those through invest we is can small

Jonathan Komp

And in and a very held, maybe tight G&A helpful XXXX dollars a leverage. of perspective. That's Thank lot then really you. drove Chris, for follow-up you one the

we Just you're how control to your about or the growth in about dollar as year? points, thinking at just ability XXXX how looking should leverage tightly think whether the the costs

Chris Work

put there I Yes, in me let mean, the our what start for remarks. kind with thought out of prepared I year-to-date

SG&A at rate than to XXXX grow higher a planning slightly are XXXX. We

planning by expense savings XXXX the we've throughout and As aided year. was some meaningful pretty mentioned,

with As and models sales U.S. that investment focused in SG&A we point, and Canada, really to now our comp on SG&A really growth But built point. on of a Europe markets America focused the maturity drives where low-single and right our point, sales we kind growing have of and we're being that so Australia which go-forward, where cost like on our the structure digit and are and below higher are our point, comp higher really of today. cost North of kind efforts planning localization optimization

of last flow cost that, we based the we drop point, our of to when point, being over single on as ahead the through the model expect One for on challenges grow business, are seen I We few the is slower fixed to the we what below That significant business. this said, see sales it we thing we’ve put than to about of mean, our a bottom digit into leverage SG&A grow years sales line. challenging. challenges fall-off more model year. out nature there slip is will or we that's said, sort low and as If that and have our really do you've Rick recessionary see

web across business channels, much I fulfillment cost we Now of others I has work up that more mean I was our without these center our dollars fixed you're a taking over and types do in set help our both fact having a of better things model because think allowing are than really our is fixed fixed to this cost, set sales. the fulfilled by have our the just employees fulfillment to think be how leverage store, those

and variable to cost model, card hurdles. its – still certain shipping, a set levels meet have So our units in we clearly target a our incentive whether will received obviously have we credit at it's

adjusted of be corporate a related rent could in costs. fixed to those and many but our types we costs labor our and have So things downturn, heavy of

those to for against in able two to if the And, slip challenges on to think should and profit, some there, see still we the we below that, we factors. leverage we we're be expect So grow but that provide and model. managing low-single some we put out are grow digit operating the business earnings would

Jonathan Komp

Okay, great. you. of Thank luck. Best

Rick Brooks

Thanks.

Operator

Kummetz Our next Instructions] [Operator from comes Mitch go question Pivotal from Research. Please ahead.

Mitch Kummetz

Yes. Thanks for taking my questions.

the Let me you kind November it turn quarter, February. in month most what it negative it in said of guys you and I of it's into that was know start which did. the for with that, comp reported too positive, don't will much negative footwear, read last

So the negative, you tell supposed in what the being not much, too on seeing that to why are me much read not I'm forward February side? so

Rick Brooks

I'm to back the right in the earlier But the footwear it we week comp comments month had don't the in Let is week Frankly, Mitch. it stronger address our a and – February, relative goal care. little negative drive why go was of to of result, mean me a X.X first to March. going drove got in let now I start actually bit more Chris to we is, of

So our our where model, our the with go and customers to with perspective, and business business, model, execute want go the business the share wallet of own is proportion from customers. to to our my is job

So most I many times through times. times. been positive these successful footwear been because we've footwear many negative of point, to We've just want we've cycles had running We've to cycles emphasize in cycles that many those, had and gains.

make little want to headline want Chris, to just bit more? the that that's here. I a talk So you sure

Chris Work

one a that after I I the of you and I in we bit add you footwear just was to nicely my pretty little those we thunder going thing think to rebound really only took actually And saw told as because did into at the tell and about right. periods, The you across footwear, November, and because look December December was January. Yes. we there, Mitch, selling of peak would it same thing,

would the As imagine, I summer and are footwear, larger portion. period school of about as back to the our think some you

move QX model overall on it as continue in see think here close up something more and So, here tied monitor a where we'll we the Rick QX focusing of and we're important as it's to percentage up period out I time getting is said, how into not the we'll are as really too business. and footwear and ends overall in February, the

Mitch Kummetz

you of you questions, other of your have it's off percentage that extent on know on mean too, of anything of to to guys you the have percentage fall out help Couple did is but what of guys do if terms rent, can rent hypothetical any recourse you, structures, – lease a don't a kind leases, do in even side? I – what’s Okay. lot, first kind I there how of can that traffic

Chris Work

think percentage It portfolio. occupancy I the we by not are I of what stores on is mean, our I that any of is, have would do means rent. yes largest Sure. portion say

the decade. at we've portfolio store to. a and of need past, for have than last been We the approach based more have portion to over look we in good said estate at with year looked a real our we've and doing portfolio the real risk this one this as not Trying

that with we what of means so portfolio short is manage the a pretty deals. And lot

long we and trade So areas in a through okay, Those going pretty in, centers. and really market, be with we the that's term. D trade every cautious know like B thought this multiple to area and stores invest one have the for a C to be in key want center we're want to that's said, in the we market, we has one with

for last been will tell cycle this have I that us performed those over quarters we've centers actually of you Now pretty well XX up.

from ability there, think to and it that's stores, in had fulfilling are that it's those dual amount look make to use think our because variety in inventory able I better there, of teams a I also them in we've product of put stores inventory. able as impact including our a been put we've buyer's for reasons, to been the

portfolio, the are as real I So of at think with about stores good on really looking our reaching feel we about now. at XX% short-deals that even estate really think of where maybe kind that right at. But we're we're bottom we beyond XX%, I and where

of really, we majority all vast the are mean of definitely, our cash them flow. stores I four I our more wall contribution, are four wall mean

about of in We get next five three can next XX% lowest those the XX% we have them the and of years. of our years XX%, in almost out

way. and like it kind fair other rent with get the more our I the as short-term to of the landlords, cases deals. way in and locations, able sometimes them So deals goes up. in of work these continue And to many to managing it we'll come we've been to with we're as ability a And in some said, relates concessions pretty honest work favorable

So we'll this kind keep working and goes. them of see where with

Rick Brooks

traffic just we all retailer think problem declines, them, than if I the I’ll a with that, a, landlords the bigger have And probably Mitch any add strong relationships relationships does. with is our major landlords. very have individual

that rent, that of think financial closely the can because And think understand them, to landlords as retailers. I a we've health afford for towards a you for course all work our of in mutual So we high-performer of more best their been to what's bit customers. are and would interests have know, landlords pay again, same high-performers I also, watching the

and that their long-term also entire they So position portfolio they the Zumiez, their were long-term at we're good retailers long-term understand there, we healthiest into about too. understand we factor thinking planning, is out across that

find respect but good you optimistic think guess, you I the that answers. I discussions, and of always landlords. We fair a a have conversation, as relationship, I'm yet it tough good both cautiously might see kind in about strength So when that, gives – we each our so always have other and always you

Mitch Kummetz

for just what going concerts, social in movies, any big kind lastly, on one stop Are you, of terms picture mall of to restaurants the distancing might they share? kids then wallet thoughts to going stop to question going it they And Rick, that? the before a can and online will maybe versus if on continue can't the they any apparel spend stopped thoughts to on mall, online other they spend – footwear to of other do and do some things they even going and things mean because

Rick Brooks

to on what one answer the I no, thoughts don't question, there is answer Mitch. tell have – your do I would Yes, would that, In be, question isn't the to there you answers the going I the to consumer question retailer, to of business, different in the there's retailer terms means each each type business to type of for be of grouping. each a consumer what

So we a have very aspect do a retailer. we community think what to strong we as

their our are our individuate fun that have stores, in where teams. seen being that into they people sure so like-minded think with who there, hubs expressing our stores they And our many our actually and young become salespeople. customers stores are And with our – working the I'm want you've these fun in these relationships for have to come for about identity, because

they're and gets for this each kind each to something back power has brand what it So answer I of for And will and retail doing position retailer. to think customer. their be different power that

positioning not with they've willing So you tell full I our relative price. dollars for much to in to across this, evidenced our plays more us what how retail, dollars out, fact, will and that spend I'm but customers I'm been more by doing spend that that confident more we're at sure the

their go retailer on life, that their is find mind, that in added. that is value winning customers where a because shows, is with my measure their they things valuable dollars the demonstrates in being In marketplace

feel would would Now, low very now. I'm wouldn't about sell price if – confident I just be at I clothing where generic right I

us, something a brand deeper, needs to And for it. little there's a tighter I so connectivity to think our

then work and shared stand from see the think think yet we'll happened teams are also off things but we what the customers I some about fun teams time digital Those we with move volume stores, the a our and we far see here we'd the see on. mean still to we as but Seattle, have kinds in at Chris our time. probably what same in the working do with would distance drop I – side, they of social are how less

Mitch Kummetz

thanks guys. All right. Great,

Operator

remarks. for no Brooks, am I showing to go questions queue to over Please call the CEO Rick you. further ahead. this Thank I'd in the back closing at turn like time.

Rick Brooks

much. very you Thank right. All

sure with look to interest lastly, here time safe release I say again forward just want when to QX stay to about we and just that say talk business that As you And to make sure thanks June. and everyone, to we'll today. and Thanks in stay always, want I healthy in what's for everyone going everybody. I I your results Zumiez make in our talking the on with

Operator

and this concludes Ladies call. you gentlemen, today's conference for you. Thank Thank participating.

disconnect. You may now

Zumiez (ZUMZ) 12 Mar 202019 Q4 Earnings call transcript