ZUMZ - Earnings call transcript Q1 2020

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Operator

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

First Quarter Fiscal 2020 Earnings Conference Call. At this time, all participants are in listen only mode.

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

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

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

Rick Brooks

sharing Hello, impact you times. our employees immense pedantic partners thank dedication our their the Chris many gratitude us lies on us feel and continued Work, for of call. by clearly scared these With has ahead Chief had Financial our and like of my for during what today last months I'd uncertain is major everyone business. to and on me Officer. anxious, to joining several start These unprecedented a to

values causes make inclusion week, communities last if our energy We living we and to as the by and platform can we promote all to strive support their invest a as share the our serve confident our and part team, hire them put again and reflect Zumiez impact and action, and they work in. we of their the witnessed the I'm a I'm some equity live to people opinions, justices assumptions At challenge in to together. in difference to Additionally, communities, we core support that of employees, towards try believe driving people Zumiez, and proud serve and the that of our that our communities. once in values. from within their

After core performance few before the share make the to through of thoughts open and with you to first ahead a Fiscal take and year, like call a strong we'll to then early I'll that XXXX the the current I the sales through will expectations remarks quarter some March. Chris the questions. on of tracking who EPS the first business rest our numbers. I'd on of got move Now off start status to your call

However, of soon the our slow markets including measures spread requiring shelter help home. performance as all to of COVID-XX, fell to businesses off many our non-essential and to people at close enacted

of local the order flexibility our financial to health service engage employees decision of emerge difficult we in are directing our health increasing and decisions. weather the managing resources effectively all and strength. through order XXth Following customers of operate achieve we our in in. record to The environments, temporarily position our locations focus quickly and and make of to March closed In to the stores of to as we've this governments, brick-and-mortar organization a to protect of With we to towards changing digital track adapting ability the officials public, communities our made guidance immediately close the to and our customers, virtually and we shifted to safety and in some crisis platforms. continuing Zumiez's had confident this, long capital near-term

unfortunately staff. all we part virtually First, to time had our for hours eliminate

XXXX majority bonuses raises. of all and suspended delayed potentially merit the all hiring, also We eliminated fiscal planned

openings new receipts, share balance also delaying our terms, to further projects, repurchase took program. payment and canceling select including inventory reducing store capital strengthen sheet our pausing steps planned We or by extending

investment while that as releases We've win in our of remain landlords the culture the and in stores year make people. be significant history. our With that plus business pandemic. discussed to how us this length to have to throughout they this has always years Finally, in many and and all the and had and was will at full mindset, area the serve period during culture about We've potential The rent, of our continue terms been short most closed. changes competitive helped we XX discussions while meaningful our of are One our us payments to that pay brand the we our a our most made we and benefit long-term. critical time decision always rent employees significance will commitment advantages of is suspended people. throughout our corner commitment response our COVID-XX constant brand and over our with pandemic. in This believe one we

fact, our to teams see is as selling and This through our results. with already pre-opening our to social benefits starting the continue stores, starting reopen our engagement started for this digitally we're since In only connect in customers and magnified to in process.

the safe to our as in fully COVID-XX, other Our most needs are and challenges new businesses exhibited benefits non-essential certain management proud care company operations. states created open customers, The still collaborate effort fulfill and of effectively and prior has inventory conditions of the number departments now the shopping to teams providing cannot or of be quickly, using order increased ended begin business, entire governments banded representing each been I and balancing as This comparable compared the work a believe expectations business ahead a the great our of declining the us by to what of in supporting doing stores open and store safety open faced. one weren't May, authentic with been well able that physically execute in and while has store and for they month. that consisting our successfully have model unprecedented XXX been collective digital demands activity, apart to They've has to first operating other of we've has evident maintain been XX% able at with strong quickly We the to reopening while to We stores navigate be The job learned optimize on quarter the for are incredible yet nothing of and May base. X% in stores decline ever amazing. manner. with with efficient our have teams of customers. first quarter, regulations a field our off May to up gotten operating more And channel We've accordance XX governmental local stores short done from employees safely, difficult to teams, of our X.X% store unique the the stores this in sales maintain of commitment and we experience. the of by the We together, situation. and our have open sales digital allowing our to our base. and the end resume to done XX% dedication XX.X% our to entire start total our work taken together, procurement

Thanks Zumiez These strategic proven these in also times. challenging now will business. environment the virus, is our next of customers our include accelerate we the in in while to to listening omnichannel to and this for with well downturns still throughout work challenges, teams learned the done long-term our of whenever great the has great estate ahead, great like positioned must they advantage this and gain real help globally. however times were will on time global our Looking impacts new still other the intimacy the within engage for to crisis. positioned future. our ahead deal mentality from pivot, financial believe great wallet investments to thinking as during to are with lot I unforeseen further period, there's of recessionary strength meet that our wherever, current era a further The be the Much uncertainty tools and confidence significant the how XXXX up customers. business a the navigate economic has needs adapt. to customer history, our deal one be its of our to navigate mind state support in there and XXXX through And a and to the their serve much current investments how a to to we COVID-XX past. of challenges. from in focus set us. the we that of consolidation about to channel due dynamic share looking customers from to about us to navigate well and and want the retail We position we We emerge have continue opportunities, environment teams Like strategic period smart and ability benefit be market like can economy and environment. recession a consolidation about to We're our and Zumiez the customer

Our I'll that, discuss response to optimism and turn call the have the bolstered stronger culture With emerging our to my the strength to brand, crisis. about pandemic and this over of from Chris current highlighted even financials.

Chris Work

the review financial good coming teams, off position few financial our of I'm business, of afternoon, few and our our to on earnings strong the the in everyone. first and Rick May and comments an company. before history resulted years We million update planning. entered on share with fiscal a with highest from $XXX full on the sales level quarter, a of a provide coupled per Thanks, strength then by year. strong work in hard updates XXXX commitment high the discussing financial going with over start and This cash

into we one working and and closure Now the the business and of a Cash in and marketable current The our strength see customer. our first serve in our first strong continued securities during position. financial compared to have $XXX.X diligently quarter model stores was million offset by executed the to subsequent to a flow generated million repurchases XX.X% expenditures increased channel in reopen, May operations, quarter driven to share by of increase prior XXXX. X, XXXX closings. store to that $XXX capital through of $XX.X cash million the were QX as This the

programs. As we on million debt X, XXXX, approximately and $XX.X have payments sheet governmental no deferred but in the balance with of have lease May associated payments deferred do

$XXX unused work compared in Inventory We of to last cancel maintain store out We curb continue million the to first million grew the prior our million. the inventory line teams of year. credit as to quarter closures. from inventory our year due only with with push in or sales impact XXXX $XXX.X access to merchandising ended orders to X.X% $XX.X declining

fulfill the rather to than stores, inventory remaining move to shutdown. of from large order during continue orders digital strategies to and stores our percentage Given our fulfillment, a stagnant

a up of inventory inventory percent as aged total overall is Our slightly.

However, well positioned move into overall we as reopen phase. we the feel

XXX,XXX or stock We our shares our million authorization. During million common remaining paused $XX.X repurchases have and quarter, these of the we first price currently repurchase purchase average and our closed in $XX.XX. stock of we've repurchased an $XX.X when stores

of Turning income commentary they to consecutive the will been have statement. sales, on calculation majority sales stores the for comparable total our closed be policy closed after removed The our as from here days. focused seven

view as indicator business we during best time. this, the sales challenging of total Given this net performance

decreased Other consists and the international stores to decreased net physical in first which across is million perspective, the regional net sales gains million by XX% by offset XXXX. impact world, sales the retail million. in of $XX.X our sales quarter From in First or million. our driven decreased throughout and sales decrease of $XX.X million North a Australia, quarter $X.X or American COVID-XX to Europe to XX% million net the $XXX.X of sales, period. The $XXX.X $XXX.X XX.X% of online the compared closure to

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

closings Now more the the store to results of COVID-XX feel post the closing We negative quarter, of provide store March. to and situation color our the like started little a impact week the to cadence of results. in about the sales prior the I'd including second

year. total five period X.X% sales the the Xth, through week were the same first quarter five prior up in For from of March weeks the

XX.X% shifted include eight footwear of timeframe, being majority final accessories, for least hard our XX.X% the sales closed we serving to growth of the quarter, our a online women's, nearly the category customers by goods total followed perspective, our were being store in despite all sales clothing. were weeks categories which men's in of as For of From digitally. sales down total down our and with efforts negative all that

basis decrease First million points by of last increase period of million was was compared a without $XX.X gross to quarter closures. XX.X% rent primarily XXX sales driven our $XX.X quarter associated ago. due store compared gross charges The the year during occupancy in profit year of the to in and costs XX.X% of first continuation to our

country the wage of quarter. a in continuation continues closures, to fulfillment distribution costs XXX the margin payments were to maintaining covered where of that order earlier. and our combined as all store the lower payments a due assets. closed, a get at made office, our the costs we portion These number system Rick pivotal took people investments in closures. right This from been was COVID-XX impairment per of or deleverage the XXXX. includes closures. compared loss of to million lower net as the significant in million. operating was compared we've culture in $XX.X the full maintained $X.XX to with Also, staff occupancy as the first business quarter home prior response due statement year well costs, COVID-XX million SG&A million COVID-XX in store across so. to actions expenses by the of time year charges increase Zumiez, income during XXX XX.X%. stores positioning fixed the ago, income $X.XX million driven a result the decrease or for expenses and in as a the in point to related in first while in overall store activity reflect decrease of $X have quarter in was possible well While Net decrease deferred, rent in ourselves during $XX.X and $XX.X center cash the share the SG&A were and of margin as in there safe back we also here by basis have of was gross it's do paid XX increase million income point quarter The to XXXX as driven first the strong loss the throughout increased when point all operating $XX.X impact Operating investments a first store decrease related was basis web of to including per basis The share across also our quickly compared as of quarter with to distribution product $X.X use the to

in compared quarter XXXX year first the was the for rate tax effective Our of XX.X% with XX.X% period. ago

four results. sales were XX, May X, down X.X% period XXXX our May week week the to the ended compared XXXX. May Now sales June for four Total with period ended

opening weeks week since XX.X%, exceeded of As the we authorities, we in our our XX.X%, to following and have total Overall the of month worth the the or X.X% local results move up noting with sales have through X%. the last prior the were month, opened up XXX close It's there comparable stores in sales up starting we the May. two despite guidance year XX% the state, fact month stores of four week of opened week store continue were with at that hundreds from of the the up one XX, of sales international down XX.X%. end down still Total base. expectations for XXXX period were stores, total ending May three week and our month

sales May increased sales average transaction May. an per dollars in XXX.X% units in due sales per the in our their As unit and as in e-commerce XX.X% increase increase our comparable increase increased a dollars to increased opened, store open day was they open driven first stores our the e-commerce are this well during The by channel, retail. and By transaction on sales per as includes reminder, transactions and period. increase comparable an comparable transaction.

a how followed we positive for comping give to quarter limited the on do hard in XXXX accessories, will second guidance men’s, to negative said, was we're year. thoughts our looking XXXX. the be juniors categories footwear. were want the and category, May, fiscal not we you goods That For highest comping There visibility at providing by the of business, no or few Due to month.

This understanding this align limited softer the potential cost as resulted we move as loss to sales year. continue and to in to the certain the manage expenses we visibility. the business, environment challenging reductions sales significant work in during our closure for the across costs through We and has results structures

areas. of or Due we the currently SG&A are with in significantly expenses more move planning variability incentives, areas into and compensation gain sales associated over performance be of increase removal through the XXXX, could planned other We reductions the business of down of and as training, visibility across travel this many the in year, removal back the decrease capital, to compared with the and to trends. year half other

new Europe, stores. planning in approximately into our We marketplace. is stores the XXXX, the America, This in in may open right see Australia. number XX to are in including This from opportunities stores the three one increase store North coming and we stores if of year in nine five down plan

store and be as the to expect will expenditures we to XXXX, be and to $XX million. original million are $XX planned The locations fiscal We majority in and for throughout able million approximately our million the and remodel, this move of for also amount increase plan secure to capital have XXXX advantageous capital between full new year spend we if dedicated may XXXX compared $XX the openings year. $XX

open With that are into shares. repurchases share for operator, your million further expecting million, the At the we'd projecting visibility point, we amortization, from And approximately count be call up will to non-cash prior business. this we until currently not to expect like are for full slightly new the year questions. excluding year. depreciation XX.X expense, down the lease approximately $XX we We be the share our have

Operator

Zackfia from Blair. first William Our Sharon with Instruction] question [Operator comes

now Your line is open.

Sharon Zackfia

starting kind over recovery you a up longest sales, stores partners any demand open if how That's across also that embedded think regions, just opened pretty seen a particularly in they're And and of that's Rick, really half tapering of the the pent curious the if have if seeing in see stores then do with did full your variation trend May. alluded Obviously, you are the Or guess numbers? been the the to impressive you've what with time back in time? I'm robust? is I you what if these off in really, staying of to you're helped.

Rick Brooks

for Well, like I your a money. It's weeks And on that question, actually really Sharon, thank your questions. good the we always, that to looks for this on the right opened. you what are trend that prepared stores questions the particularly Chris, relative here, question know

So I’ll let Chris from take there. it

Chris Work

as stores prepared our X% number remarks, increased store were today of of in approximately in XX the open the to about as quarter, store base Sharon, base stores are we at our XX% of So said XXX May our of end XX% had that we had open.

can So and work the field really here. through stores with see, kind we've this moved our opening of to teams The of in supporting make amazing. as second truly we’ve in is government accordance departments as regulations continued move you safely to been quarter and happen

to to In a open upon results stores to are results, At sales of we're happy We've comped to at our our performing be trade area multiple by the street opening. sales stores also and slice to of local hundreds believe what impact ways. understand we prior been the we're impact think, trade open. tried were each believe understanding opening, all trying results, by closed, declining focused really May the had of the on then the We've been well. opening. community, area, them getting the which this, first international week of formats we're open at dice end mean, the well encouraged until we've and stores the better maybe scenarios looking web X.X% area store engaged going with pretty with it to we have different early quickly all much to still mall, of with as all face only others, our June I the learn, to quarter by and point, openings understand the the first obviously at have stores than from with To some quick as versus tourists, We've building this variety in versus we I looked stores, few after as lot with domestic, have you extremely of up college, we've in looked in of this very decline saw results exceptions, our possible. a we And types XX% May. their end the down trade with that weeks markets, regards pretty opened-up, while expect. the total prepared have to

across we've have basis. seen our have XX% opened on buy XX% than stores Speaking have comping be indoor centers, of strong over opened to outdoor four seen that with positively We've stronger but domestically, both comped that highly just our and per roughly in high very stores the month. positive Currently, wall XX% remains comp intent a a our in Traffic direct double of driven actually strong. per very web where have stores We're seeing perform and remained moderately, units markets digits with transaction. stores Europe. by XXX% high opened transaction, organic meaningful but by running domestically extremely decreased have increases search. driven the over throughout in dollars centers The

as store comps border our as the markets, seen be expected by are college in we have some as part, most well weeks strong market our for tourist continued and and We accounts. challenges to seeing

today. to why of happening. a about With are going we our I'm a thoughts, is to that outline these are initial few And driving results, just lot things we this these while this try spend think time thinking

mentioned driving investment been that instrumental experience. people our has a we in customer great First, that in believe you

pandemic, consumers either methods engaged with to customer. Our their their been have through socially throughout people or through fulfillment and to connect different connected the

the place ability one as when are our customers of ready as provide for open the are people sometimes in non when Our open traditional our quickly well Zumies authorities to only to and we and local stores great customer, open mall. a by and clear

Secondly, trust. choices, is our two which to apparel in to looking of months merchandising May, well our the teams right interactions front customers as believe receive of other have trend as our or more governmental continue pent quarantine up some through be on some stimulus challenge we level product both.and or customer believe when form well extremely We continue most categories. the they may for from brand newness less in they than demand We likely dollars. working. believe making assistance in there's were this unemployment perform our and the And the and with be of competition for discretionary

landscape, at or only, has look restaurants travels we movies closed and As other sports, and venues been the bars as remote well. I limited closed mean have and are takeout

So cycle can we be and all, try this proud capitalize of best on our couldn't team. all we to the we more in

the to But Now other the as I'd look few this about cautious. I remain damage we add result. pandemic of happens fall the the what and of back higher months virus if the comes that we unemployment, less This of We're resulting with going have ability half rate this at are year, question, consumer's customers, the pleased the our thing to metering forward, what the measures we're a lot the and the and what's how some it will happens and think things peak, learn. impact in very and to pent-up with we and needed ability impact thinking the Sharon, do with unclear by back stimulus pandemic to serve next your in includes could spend, is caused demand, safety our us. cautious of

the all imagine, and working really of implications all through way our to are these with But As we're forward. today. results figure trying happy where out are teams our you in can these best

Sharon Zackfia

when how a is I rate look guess May? cohort, so following that have if you April. and then up locations it that base that's had of call open is see tapers using bang on those by those, at holding off, you was big that like that improvement, late I Has When kind that a through case? decelerating it them just that, you trended of been opened door or kind so the as XX steady of a

Chris Work

actually tracking we're Yes, this week-by-week.

every have in their what well we're stores, a stayed see opens they So web gets what's pretty store seen strong. then to associated week as that the opening good is effectively to as We'll see and those try of reporting classified classes we've strong. happening. when as of open sales that did see or strong pop May. And actually they my web remain and We down, they've throughout web extremely month weekly the remarks said continued of like class in to stayed a stores, stated slow we the I but pretty some

So with opened, have the consumer. and our stores resonated it's how we're pretty with happy think I

Sharon Zackfia

And [Multiple speakers]... then my last question

Rick Brooks

whatever say the of basically as go we paces be across those those to running is that progress. going of just was pace when maintaining the the classes gaining I comp across weeks we're as I clear. company to chain mean is we say that seeing store that they're

Sharon Zackfia

enough the back-to-school? like you inventory, is question the continues to I leverage ask I if up question have strengthen, on I to expected, guess expect into but demand mean, going have to inventory do you pull to and today not other didn't feel that it's I enough

Rick Brooks

these again, many XX% feel, reduced as been and Sharon, in have We results what of said uncertainties occupancy. doing majority there's is large like. in Chris certainly cases we're of remember We XX% has look most our traffic so between mall We where a metered hours. just about still, going locations back-to-school to

but in means, all be would what of uncertain inventory, apparel We season. that one still into how pursuing translate that there skate categories business certain about peak believe and we we're a So, skate, does out that particularly are likewise. obviously actively

good in As Chris results said, apparel. we had

our business, so a this, vendors So, definitely pretty by spot and uncertainties can good with what be to that demand use we around many the as some get well have chain back-to-school, that a point, from we a leader ideas so position product may in are always say lots on be pretty think think planning effective supply around how in Sharon, capture as this with And there. challenges bring work have that we peak before. the in our we'll we demand. we'll to terms believe best as experiment think be But to never in. There's the team we time a in good clear. that we I we're to and our consumer of perspective, in in there’s to tools whatever tactics that will catching can as working plan way We the done that's we a I at to pretty just to product teams react a about think is of

Operator

you. Thank

Jeff Our Van next Riley. from question with B. Sinderen comes

Your line is open. now

Jeff Van Sinderen

the in to your snap Terrific strong see business. back

wanted one component, I have model. touch sort on you digital of Just channel to know the

However, business of strong some the arguable that in you to of despite performance profitability which influence the digital endurance as doing? unknowns speak about scales, given Can are the of hanging the that kind major the seems and that of digital in balance. be it

Rick Brooks

But engage have of customers. is to different separate empower model. would channel to give from you our I tack and have with our engaging with people models customers my Yes, it, make for consumers. glad I'd want our a to keep they way but it the in job all that how if be Chris building empower to experience the our at sense. in to real tack And numbers, like And I’ll course again, a how, to when, they ways about we're choices one add we it do high And of level empower it. around sorts also same with, what to perspective, us. Jeff, it,

to So just or at. in customer the starts still where care the world. We we win is want it physical we're whether don't digitally

the as that Now, I will as tell disclosure always during said in here we've you period.

we with Our try, teams new pivoted, sorts all we things. of experiment

how transparent of exciting communicated and into that So the with with we pivot really our good really yet on and we a with coming this it I really can success all improve of how that our a And thing around communication is things. and that the the relevancy for of more go some consumers, think customers, and the theories but our teams. have seen broad these of I of we've we relevancy relevancy we've working let's there confirmed me local been think experimentation to our innovation make could out try we strategies digital lot

can some like from feel we this. have lessons I take real So away we

for I sales see do for is whether actually kind the normal patterns just all, the help I to valuable I previous want options and with when a Jeff, care return process I the line. they our going a or to lot a for learned But to improve to them think cycle, more Now, back we still that's lessons, consumers our sales we've how digital digital consumer of us think more we'll And from get in to large a kind us. term of digital still give sale? perspective, a experience physical the acceptance don't. interact

that. feel take I And Chris really there. then good I’ll like about So from it

Chris Work

pandemic it's growth work ago, talked we they one the results data Yes. about Rick And different web stronger of when U.S. about and this as I And together. in how years of we web. lot the did we the talked saw closure, as of we the stores. saying would another channel that, in has just increase saw with no what an with internationally, cycle obviously, of a us room where markets those and we in during have think opening is this opened given stores, period for yet I point significance echo stores I we across And think about

let we be they stronger where where we where expect. good internationally, results me stores both stores but were web would had our stores don't were and as you Now clear, have have we

to do of heart these challenging get a digital around think to is together from question profitability. This in I two know, the really as fulfill your because work we stores. model, So our you

together. very integrated are they So

levels So of four be actually we around the think as charges, into a at model. the a we store different metrics contribution the could overall, most they to walks shipping wall when and out about having store including contribution tend the that if web, pair our this, to the the look customer of efficient pretty be But similar.

additional don't of a within to lot fulfillment should, nor hours. to we I we the am back have sure remember a the all of store because outside our way if done is allocate labor web, Now,

to think trade think par. I a just the channels is ultimately look the profitability serve driving and on thing we listening pushing sales is So, customer and Rick area us said, bigger to stores at the And as towards to and community. I the see we how working web together

Jeff Van Sinderen

you hearing progressing, Any there, landlords, on about spiral? of doing we real see you're seem update you be in as specifics any what job an you're estate to give maybe how thinking us can from Well, kind how that's driving amazing of opportunities vacancies sales. certainly

Chris Work

Sure.

update challenge and Let of give retail term. this put longer we're me on a a a just bit quick segment. continued Obviously, then cycle the little kind where I'll on talk has at

Our physical strategy retail not with changed. has

We to given any one to try area. want to need have not we to manage continue store to than trade more in

landlord for a think COVID This in here term, to time is As difficult it with short work relates would of the I tell we partners, both continue our is to you. us. closely I what

to It's this our As rent we portions on into this abatements, into significant April compromise that in of partner, we May hold actions difficult done as includes partners. supporting progress deals point and teams we're our previously real mentioned, do financials. our get times time, well process a back working We've work we're to a lot and we’re got of lot making the us, making and estate behind a rent we teams of lot deferrals, and help and well. to were it. This in this have at landlord of with the other did

about fulfillment continue at like longer you the align monitor find term, how to area, and before. stores We to those I talked to bottom in we markets. think what XX% trade trying the each doing that we look to we're XX%, with

in making linking like think we our of XX to to up to wall stores four honing prior five, to in more over now make on X% our stash really money more is customers in overall next, this of us data understand our on years, was really first X% the how going about all not this a term. help three, quarter. in of I things I our going from profitable to profitability, this the is basis, are the only long have that improve think those right markets. And play Currently,

the XX% of And the to majority perspective, So lowest three of years. those many exit are ability XX% making that we positive. think like those from money, our have the next contribution as vast stores in I are those profitable, of roughly even that a about EBITDA aren't

So, we've risk estate. approach taken based a to very real

I don't, really invest market stores our quickly. that model the is omni to here going in think and it's the to wins thought that going their able on that their trade shorter in adapt to keep we're own leases that and term, it ones long the we're and and be

Rick Brooks

there. to either. left of And lot is Jeff front in Australia. to a growth terms future balance clear where of this us Europe are not we're helps, because be of this But in be that mean, going hurry opportunities we of true, out is think really to I and are globally, strength particularly definitely also have the I in sheet we particularly

tremendous in to world. be to already we're retail going consolidation there's as the see starting think I

to I play think that's take to while a out. going

on estate consolidation I So, XX months think obvious. real next deals get the even that better over as more could becomes front the

we're We'll some of back XXXX, we're from growth because So, definitely were a because the the that be optimistic, store really the of of we able that stores pull recession you've tremendous the opened know opportunistic have would at some patient time. deals this be heard to year. going I will as in the we decade were we during profitability XXXX, for to strike had those our but us, patient comments,

there are at this sense also would at to markets the thinking where we're out it and our teams be looking patient. about but makes definitely be So, point, we going

Operator

Thank you.

question Stichter next from comes from Jefferies. Our Janine

Your line is open. now

Janine Stichter

you. Thank

kind First picture question. modeling just and a of big one

pressure on bit first quarter. I product aged clean the just mentioned. had basis points very you It your margin, gross So inventory over a inventory of is just right XXX margin now, you of think seems the little like said in you

XQ? what And So you than margin in I product would hard about want you saw the to to then expect be ask pressure less goods.

pre-COVID it and like You seems really good changed. had hasn't momentum there that

Just social they your this impacting your to this customers, of then might time? or thoughts your the hobbies And cycle? that impact is and spending curious is having free on interests the you. thoughts their distancing how trend be on Thank how on

Chris Work

people very perhaps as will just people people guidance product overall stores still back pressure get here. in inventory we're the promotional was we some there forward in believe quarter. pretty through need the on generate an to to go meaningfully From trying clear do to going on open, clear navigate We say to true down with inventory, clear start as cycle. I'll out margin form. perspective, be obviously, give others not all did cash needing to I'm it quickly their and the Well, some first Sure. this liquidation

So, are it. to trying this and we through think navigate

significant first and as what advantageous is in Our the quarter the is year. quarter saw be that the here believe it our active second to of position inventory as back that not in hope in We is we on QX. the actually half

areas a those clean, job, in our inventory think really that good sales moving. really keeping teams and driving I have investing done are

to teams are to as navigate So we promotional but trying as it carefully our do cycle. a be it possible, expect

Rick Brooks

pandemic. relative some obviously to business. it's question QX Janine its trend on through of internally. about strength cycles this was clearly in consumer around this hard been into it's here the strong And goods year we've impact the question, ago time. spent likewise here, and time at And your really asking continued point talking kind hard ourselves of have QX a And the into We through stake, goods a and

and do by skating. friends So, can skate their something we or be we're out how with been seeing can socially really have and obviously kids talking about, out still of well, themselves this much distanced go they

that strong and has the so a the really wholesale don't the people to given we time situation our about forward. question seeing is And of externally with pull talking pent spent this real that general the category we is we're and that sure had we lot skate pulled just but so, a spend up that, us demand, demand And money we for we're have of they on side. do been this now talking go brands, like feel they on just feel is it’s the chance and has demand this partners our that big trend course internally would know anyway. answer, And our this their demand with how forward spend not

it's we But fitness So a we'll plays the our is strong of time. it business trend It's as pandemic. that of through categories, definitely like the sporting how previous. the We're it's but of or pandemic think reflective us. see as for about lot sure here a continuing not impact goods over out a was

Operator

Thank you.

question comes next with Kummetz Our from Research. Mitch Pivotal

Your line is open. now

Mitch Kummetz

understand as costs. to you'll sort your phase I you reopenings the Chris, the let of of you through where significantly, relative be lot last expect stores down the SG&A, on QX quarter. of a to you open of the I I'm of you think because kind balance that the some that expect would for QX made payroll because back expect year, just comment balance start the then think you and over on June. end the save you’re items And imagine by trying it think you to went a But to the I made cut half, the all just comment planning me line maybe about to year, then in that some versus you of how

the store pretty I guess, even that a think about year-over-year. least half, should at So I like standpoint, be, from back sort payroll of

trying to much save any stores So just around might the once open? are you helpful. that So I'm how be color can understand

Chris Work

best. is the as do top this nature directional because, of line and more you the to in lot where be know, in my to I'll tied a trends going Mitch. just business. other Sure, I'm

our talking that the closures, costs. led reduced of reduction quarter wages being in store SG&A first hours XX%, So down things operation to as around and have reduction hours, project we about of kind think some about store in you're

that going obviously way at play will the store things quarter, people other events, here our we together, generally forward significant We to second do here some reduced that should have this travel, in declines portfolio raises we strategy strike a and did that reduced challenge and quarters. also a like don't year. I investment, first while to teams reduced as future have in Some national pivot to for will not events point But been we making it be the sort our like plan. real the obviously, you about to out do live pushing we the the believe through of things are across openings. states larger and large you're obviously is marketing of as there's more know move and I we capital it right taper of types maintaining think mean, it right delicate quarter between thinking business would here. and is then if our the well trying to more of tied that preparing these balance down groups things of have that more digital areas, those We've events our bring in had have And then this incentive lot has year. XXXX events. marketing time, Those

about be how thinking to that's we're to call pretty So nimble. we're do expect it stay I the going significantly, it. but as We kind on down of said

Mitch Kummetz

of And for business you the to Is that if instruction. working you're back some about to you're as of understand constrained plans? think lines I'm kind you're wondering for back-to-school. And being if kind seeing, the continue to are trends about then I conservative person change the can business across just you schools if the the going what made that you're of assumption things the you're just inventory? comments your of along can your cautious on in know cautious, how how to or that balance year. country just school, for you reopen being kind planning extent the by the trying I'm planning Is

Rick Brooks

headline the back-to-school that question. is headline your the is first happen, I of think So,

then because of be back-to-school there's it's going the is perception upon different happen, to it And so view to regionally form question as does country I across no that, country be of different going what to one their we safe definitely the think based to answer appropriate their is the communities. think going parts for take. what And and what's

there's others In In out. some scenario all young as And that for as week back we way up, for those which fair schools, shot that terms a that. might who be providing know kids express the all are in we some in we long one cases, are no format. in in and we all and they alternate what a answer physical that think about a that it's says to their wanting we we of be out may self it's be digital, cases, that to it cases identity So, fact important might week digital, that going through is come wear, digital they schools and more even picture do they an think people, all week if represent that. us them versus to is have maybe open find at what physical in about maybe versus thinking it back their to kids and week

is So, is to operating still going back-to-school shape place. take form our -- or some we that way assumption

upside. but look we we to have also because being where are at Now to recessionary we think a we're cautious, going environment, in we want be might

chase. can make can where as sweatshirts, we where and in also than evergreen you chase we categories, And some in a cut what willing like in we areas that about of So your traditional have we more do on back-to-school large to know we we sure kind sow fast and printable think We're things can risks we is chase chase, basis hats, are having fashion. T-shirts, can quick inventory. asked conversations of our business how percent you we just to can take

in place forward just categories. can inventory, to it out that's So, capture we because in that and we later without exposing be demand ourselves push a really just the moving would to significant orders position be in would those we

can think upside to manage same high protecting but working or we downside chase we can all where the that, our and time. So, how to at through the keep we're trying Mitch, about

Mitch Kummetz

fair as I of up talking know a Rick, last to lot sense two that kind Do on that quick as you the the basics in if could amount that. there's that those over you down. three follow of that or of books months vendors inventory vendors that this went your you to cancellations chase saw real get tap the are could there a some of order there vendors into? all to you of inventories need the

Rick Brooks

private Our we’ll label. that, in buyers look up in will to do load of we to be can move label course what look at up those our private our Mitch, also relative might at

So, can is. the the and where combination of we after go opportunity it's what that

big will vendors I kind of a larger very that traditional vendors of you are of a this us most for not Now, business tell the industry point. us at for in part our

And overhead, we're they also majority there's because they're and as in cases those respond are are the brand think some of brands, us, they're really lot their they're with of drive small, concern smaller work cases categories of for the are. these where I So those really the quick it's traffic. in that the that nimble state really really and the significant shape, business, have key revenue good revenue. And in brands in about most emerging small they screenable been I our majority their and the we pretty to have of their think drives particularly of partners, advantage partner what don't finding

can there support long they and that need. we're us them back as as be know as So they they've to got to we them financially stable, and sure, make ready

we business this So, can representing we make sure you, have with brands cycle during can through say, this our your we period. working we're brands to properly those peak how too how help

what kind both we weighing fashion we key do versus where we're can what that's where is way the brands Mitch, So, really out the available more within of have private looking We're at a and then inventory category, at looking of we're and we're about our the differentiation it's it. what label. categories thinking of different

Operator

last our And Jonathan Baird. from Komp question with you. comes Thank

line now is Your open.

Jonathan Komp

I'm Just observations broader one you to or behavior behavior, other across could business follow of willing consumer of when observations of it's share in curious at one share share? brands online up. if only changes in reopened. that you either look that any Any was maybe would kind your now or terms that you're the you

Rick Brooks

good let's just From a say this. trend good It was is and brand good during and Jon, post. perspective, was before, it

during if And the it strong at strong, maintained so, beforehand, a maintained post. brand been strength relative it’s was closures strong was it's and

So generally about still is what's good pandemic. pre good, post think and

say those would I so, And things.

of in we with actually said, Now our direct we what Chris areas consumer the be traffic was would saw behavior, traffic terms of and Web load growth. saw as site organic real

this is encouraging super cycle. the in So, us to

they the traffic, And that's their what the said, significantly. the in what now when vast type with I into don't want the that true real you do tells is to relationship majority As brand mean But have we or they're traffic, what in too grew was directly another of seeing consumer us period important, care option. have organic search our might that coming see really box Zumiez the of And post really during the that's the they was where majority, that our is is they’re drive, they and that that's model. channel because one why to browser type and come How shop we literally whether drove load great. you're zumiez.com they direct us, because to box search closure the that me results at traffic I great a be employees in customers. with strengths their

in to Now the post, want consumers we shop for did how stores. see some reactions different

can And not come back-to-school to going learned maybe lot we're going to terms volumes the share techniques to think already But in in a but be employ, we going that have metered are and things that teams be out to us these about of customers larger happens we're many all so, we've cycle our are different those that's the of that inform where we things what I that will the seeing as customers, have as how are there. in even still there's door.

we’ll safety definitely have and protocols our place. in So, still

otherwise, I So, brand, love some to would behavior you, lot who have I particularly we But when to there's in the been them our digital in directly drove store. us. consumer come think see people tell consumers changes came call business Zumiez small back did was to a the for side the I that's the what of and

Jonathan Komp

but followup, that any in initiatives terms a asking early lead referred new not just what just or encouraging. maybe of normal, terms changes. you focus? that's And as maybe your of to thoughts to of might for to in in Yes, shifts operating the specifics, kind But adapting

Rick Brooks

good had is to perspectives of to those trends tell Yes, is I trends it's the think of question. discussion the we that we a I clearly, a do pre-pandemic same the the with the of is broadly. were or consumer ago terms in yours, consumer just our are accelerate still cycles. that am pandemic in is But is speed sure more place relative the And I’ll world that which going couple our think are days move this going a board you that as those, trends what to in of trend forward change trends

this we then and board, five the the about the environment, environment, across talked employee groupings, real environment, consumer supply environment. the at So really retail competitive environments estate the our chain

And moved so our that we down and where for Jonathan, right outlined a key we initiatives were of business directions. for believe these to clear our that really that pre-pandemic, lot we had consumer, really

properly scale principles, a speed of You've the as intimacy speed have dominant, those kind of to frame refer now and and always and guiding the need of one ideas the to function a to today's heard been us definitely is set world. in line,

series So investment we plan. had a of

past our discussion think So pandemic to some initiatives. is to change accelerate, do have of with to with board may is going we really this that readjust curve what areas week change our the about what going we those our

next the mean looking, didn't what come we time so with your question do And I months going have to the is. over to all clearly out do, few but the we work we exactly we're would answers are

instincts what of in work move underway. terms faster about but go needs to and priority, up some that have still is We

Operator

Thank you.

question Our final Capital. Bill comes from Tieton with Dezellem

is line Your now open.

Bill Dezellem

May? Would out of by break you the month to for comps be category able

Chris Work

something not that's done historically. Bill, we've No,

try kind largest to really we smallest, the the the what to out think period order or do I is of of magnitude we to lay try of in way. obviously, loss, them opposite

them point time, about that leader negatively the this lay in laid skate rest remarks in our and out comped We and at in So we being May. had those no the talked prepared categories out

Operator

turn you. question-and-answer I’d Ladies Rick and our the any for like remarks. Thank call to closing this concludes session. to back gentlemen, Brooks over now

Rick Brooks

again, everyone Zumiez as appreciate in I we'll you want everyone the our and just your here call. challenge the next we're And on I wish greatly interest of you, as health But to wish Daniel. we look it have through to Again, a everybody. forward talk safety Thank and we to we go. to not always pandemic, clearly this with to best. ways work you quarterly Thank

Operator

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

disconnect. You may now

Zumiez (ZUMZ) 4 Jun 202020 Q1 Earnings call transcript