ZUMZ - Earnings call transcript Q3 2020

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Operator

Good afternoon, ladies and gentlemen. And welcome to the Zumiez Inc. third quarter fiscal 2020 earnings conference call. At this time, all participants are in a listen-only mode.

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

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

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

Rick Brooks

a Hello call me the remarks quarter. third that, I for thoughts today share everyone Financial the about joining the With over to Work, some Then will you Chris the will who sales with we numbers. our open Chief your call. begin call and few on through thank quarter-to-date handing is take will the Officer. questions. the will to us you Chris After I before on fourth for up call today's

continue we to season was conditions. of reopening very stores navigating from majority volatile second the an successfully back-to-school executing Our teams the incredible After of the during years. prior our faced vast do the quarter, job market different that

pandemic, running or states we late July not districts did demand year with September. starting of through to in decided around lift to we early school and sustained many new begin the As instructions the do start country the and see the delayed typically in virtual the due

August very in and demand and Though of positive week a the last in first shifting the very back-to-school year season remained second and of of the through would week of sales some have throughout sales supported trends with These were August. strong the turning most down show period later saw, growth third the the trends As as able got in in prolonged that the the week-over-week hypothesis This our we a to off to the quarter. start during selling end were out expectations week improved quarter. challenging negative, to September July every our we important quarter. exceeded

to our season did more strength the our than late change. demand volumes capture and weeks to underscores as lost ability August business for brand adapt the to Our the much we historical model to speaks ability and culture as of makeup during the and in peak of

differentiated revenue and difficult and distinct as across third selling the we demand assortments. year highlighted slow stores hours For quarter, robust and selling X% continued our our topline solid days geographies fewer all a increased digital being despite X.X% open for ago. price environment, reduced roughly experience full a start, the activity to Strong performance than merchandise

increased store Our in by growth X.X%, growth sales led comparable sales total open in our comparable XX.X% X.X% web sales and stores.

commitment geographies. sales Our results serving anticipated in stronger relentless to comparable which contributed customers, and positive teams were we across our their than all to

we to result selling. as the over At last efforts once product same few the we as was response to fueled leverage the the strong in meaningful performance highlighted full price model years Our gains our of expense as again made time, margin refine to a by pandemic. well experienced by we our structure reductions the made

next all combination statement volatile more these our million to balance next cash are costs a to no to lost few navigate in will is a Looking as year. the we the to generation. beyond back with in investing contributed share the well operating on environment factors With pandemic, we quarters, of along income to in come environment earnings $XXX XX% third revenue while well-positioned expect The likely into likely many $X.XX per these of what the normal over sometime return business. increasing debt, be quarter cash the and and strategically sheet favorable over we operating

Our recent performance has been years in the making.

caused have This starts brand with our they virus. never how significance and advantages our spoken more fulfillment allowed us high through as we people. XX-plus The critical coming and timely of our maintain made helped pandemic win in year despite a competitive before throughout people our disruptions of and our year that this to than XXXX has the serve level have to service We investments and culture by about and operations true the in into the history. the been it us

confident Zumiez apart I our in our and to it to meaningfully competition the people As am past, long will has performance. continue term from that commitment unwavering our set the further benefit

there of been and there while about the news due Looking of the great is retail has impact COVID-XX. recently to effectiveness a the still about vaccines, of certain economy the positive deal uncertainty ahead, from global state

base, employee most currently they the end that are are the the We at of be to generally our of vaccination demographics process. expecting likely customers latter speaking, and given

winter XX% our either having to our store holiday year, home currently than the governments as had crisis experiencing well one traffic Stores significant around days last X% federal Tuesday, forced fewer as ago. operating both concerns. to in nonessential open important we have the open have through than or restrictions. operating under reduced we stores of Meanwhile, quarter-to-date market orders effects government government stay as a safety weekend are had re-close Tuesday America, is is In health We and of potential hours reduced important Friday operate state year store during season tied to European the during other fewer peak through metering the and Black crisis, encouraging the current roughly quarter-to-date have on North roughly season, days and holiday the that world sports to the slow health many season. hours local, customers

X advantage we and store traffic and fulfillment versus of weeks as Periods opportunities. year like business. the our previously was and in of Black from X.X% this across have fluctuate team times Zumiez what period headwinds, times strong the the best-in-class shutdowns take first Much to and Delivery, the Europe December sales wherever, are the has States. relied in declines sales through closures America a their the our quarter closures markets how are Zumiez, the performance strategies resources at has and create prior however that fourth metering in as the we want Through three It heavy the been significant which capabilities the in that strongest whenever while mentality the channel out. decreased our has well-positioned fourth additionally year. meaningful by on is North fourth seeing that locations. United quarter-to-date, move store people, industry in November. growth expect meaningful the play roughly take and instructions quarter. traffic. better mentioned, expanded results back-to-school same of advance of comparable The around other to select to is of Australia been, unclear significantly the to Thanks to store our were experienced off-peak the it our the sales Regardless they sales customer's change during declines, one in will place traffic quarter-to-date to last challenged number through and including us. Internationally, of season, remainder various we more weeks sales company. that our more We can impacted the weekend operating through Companies in will Friday Tuesday, advance as the brand customers as the engage door pivot right of this unfolds, directly year teams, with needs point dynamic the and

our We from must by we business gains navigate term that believe environment isn't as how looking smart our will I our channel accelerate strategic include opportunities, and current will while and up of next for consolidation strategic that Zumiez now real be tools the globally advantage customers. to to estate times. customer through strategy in lead in we emerge the While their focus to set other ability navigate the challenges, investments a strength and wallet can confidence proven The our these within position to the teams challenges. further disruption significant us era our immune intimacy and be the one and unforeseen we great financial future. with long great our in have support on the further do will new mindshare pandemic, created for These crisis. also investments the in

our will turn my and culture the highlighted that, With to bolstered Chris future optimism for financials. I Chris? and the brand pandemic response the to discuss strength call the Our Zumiez. to of has about

Chris Work

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

to million as including levels, extended XX% driven as composed strong quarter other This The $XX in net well and to-date, lower abatements, repurchases the operations, our terms to the cash stock deferred through to company's X, Cash compared Now, prior offset The as expense one and cash closures COVID-XX strength teams reductions. and vendor million expenditures. million in store a we payments in in capital position. diligently program increase of current of $XX.X was stores by in the $XXX.XX current XX, seen increase by due to XXXX. income marketable as marketable working through our planned have tax inventory and buyback payment customer. continued challenges obligations, improvements of with securities securities payroll channel generated March initial $XXX.X through XXXX, share March ended of model increased the to of partially to financial and of November our was the million landlord related October credits third serve business and deferment closing

continued as quarter, healthy key third demand categories. expectations has margin our orders partners to $XXX.X during is XX, unused million million. no After XX.X%. As inventory, a delaying maintain of third compared We million have canceling debt $XX our in credit our of of the inventory work the and and balance Overall, and continue with hand favorable decrease to XXXX, selling second increase and continue line exceeded ended or of the or we at a $XX.X in quarter million in the year, with levels fourth quarter entering on full last $XXX the we brand first with October we on have our to XXXX sheet quarter.

the to statement. Turning income

X.X% partially the Third quarter million third increased of during strength in to was comparable down driven XXXX. quarter the an increase which The for activities, our by offset physical store sales quarter web grew for the $XXX further, comparable for reopened million, the comparable net sales sales year-over-year. compared we to includes sales, XX.X% Breaking stores sales digital X.X% with X.X% and saw while sales by comparable in meaningful stores growing digital closures $XXX increase period.

XX% million Other Europe Our $XX.X were increased consists Australia, $XXX.X which or or roughly net for the million. regional $X.X perspective, sales, days From of to increased the and during $X.X stores XX.X% XXXX. of net to million. potential million of North third operating America a quarter X.X% international open sales

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

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

compared shipping basis basis point shrinkage point increase in offset web XX.X% by was occupancy driven XXX $XX.X million web improvement And quarter to cost. margin, point increase product by decrease in third basis basis in the and XXX compared Third quarter %XXX.X penetration. due costs a in gross in margin point year This The gross to of XXX margin gross year. in to was ago. inventory million XX store XX higher XX% point last partially profit a increase basis was primarily was

of and quarter prior ago. leveraged in a decrease as XXX total XX $XX.X to third shipping sales wages, leverage of primarily that credits were XX the point the basis event year incentive in compensation a decrease point to costs. XX governmental to a discretionary was partially of increase basis in training in and and point XX percent net basis XX% compared costs by decrease points decrease due payroll of sales $XX.X XX point of million million net store annual operating XX costs, net corporate sales. year increase basis or compared was or However, improvements shipped national costs, by recognition driven fixed These in SG&A were in in year income SG&A other XXXX a The basis store the point net point our this XX $XX.X Operating was basis $XX.X assets. in compared X.X% with sales million sales basis of XX% the quarter sales. or impairments expense of net third decrease on of income prior XX% point in or million expenses a in

share of During flow the or or the the this our quarter, million for to million factors income and through sales for quarter challenging ability XXXX. quarter above XXX% time. $XX.X $X.XX per we adjust Net was on to share per net of $X.XX quickly of income the recognized incremental on compared $XX.X outlined based third almost in third

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

Looking this $XX XX.X% and to at sales quarter sales the while earnings has have earnings incredibly are million, share or quarter-to-quarter. a year results, $X.XX. per X.X% year-to-date from Year-to-date third perspective, just currently over grown through down volatile

to continue governmental within marketing payroll our our from as optimization working subsidies response reducing our to training, well to the as managing the travel efforts, We tied one-time have events, made landlords adjustments our model from and continue receiving managing both and we cost, pandemic to efforts with pay people. around benefit in

continue expense expect back a quarter-to-quarter As to as environment. move to and into we XXXX, sales transition normalized we we volatility

down time fiscal quarter our fourth same sales results. to-date X.X% X sales with quarter the X, Total ended year the were to-date XXXX. through fourth December in roughly to compared Now period prior December

closed operating X% potential mandated were for this roughly the due store and during internationally. domestically Our ongoing days both of closures, to timeframe stores the

store ending metering X increased our decreased sales and comparable down experienced hours. were XX.X%. for December X.X%. our comparable the sales also sales period By X.X% significant channel, and operating roughly We Total reduced quarter-to-date quarter-to-date e-commerce

look sales were in the quarter Friday the lighter. were as first purchase store noted challenging stronger fourth the imported when to earlier. weekend customers during Rick Black saw Our as weeks few of traffic was Sales we

monitor the accessories. thoughts quarter at want good or fourth impacted a our quarter for That we do We guidance scenarios. not navigate our we give to trends and are was and men's will believe units fourth has to transaction, the our results a season. hard of that business on transaction business providing we discussed the said, continue over To multiple by as negative a Tuesday sales X.X% as comping in reduced across perspective, was comparable by increase business, those teams by to built in followed per followed wrapping For our experienced are footwear decline are to closures positive by business fiscal above partially start a prepare category to comping will fourth by unit sales partially The America well quarter-to-date offset visibility category regional hard seen North a decrease year. to was largest for transaction, store by offset we driven to range has the a European in continuing increase through this, and to few in our The how an traffic quarter looking while scenarios due XX% and increase XXXX increased Quarter-to-date, the be up. dollars limited snow XXXX closures, in sales with slow decline decrease per during have our Due average possibilities retail. an per transaction. an largest of category predict. Dollars in women's. the the against be important metering

than activities. as our We have sales to fourth of the winter margin third We will roughly quarter basis our had European start reduced in the are business as quarter well closures America for expecting by points being the quarter down for that significantly sports digits be a sales includes product X.X%. positive full This quarter-to-date a total drove better store our trending quarter. North low XXX to impacted single and up and increase of result the flat our

tightly We quarter, our benefit fourth margin partners to In as that to are inventory working environment. our we year in prior year-over-year not in experienced and product with will the anticipate brand quarter. growth a expect to it managing this but see navigate the be significant as do the third

environment during We we cost structure seen business, first continue Through to the and closures. to limited months, to our the align nine understanding loss manage cost this we challenging expenses reductions significant in the have the sales across as certain work visibility.

SG&A be many travel X% XXXX planning associated currently and to the in and business approximately spending, of reduction across with stores, are reductions planned with incentive expenses We training, benefits. in reductions other compared reduced capital the hours down in

now three estimate potential the new we and for expect variability the ability XX America, approximately in in Australia. performance decrease XXXX, North impairments. holiday to in seven We important the year expenses open This With potential of to Europe as the including our visibility sales could into coming stores the non-cash in plan our two and further stores in stores over XX stores. down this new trends, is stores quarter, from adjust gain or more to increase

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

approved the be repurchase XXXX, excluding $XXX and our non-cash million of by the January year. unless continue repurchase expense, million of or is is will probably period to program prior repurchase lease of $XX Board up replaces Directors from Directors. down We $XXX extended stock. authorization the in $XX.X million million, through the Board expect that This approved common XX, depreciation Yesterday, the time of and expected previously to our amortization, shortened

share currently potential to the are our for approximately open that, stock the to XX.X projecting count would million operator, repurchases. With be impact we for like Lastly, future of full shares, excluding year any questions. we call

Operator

Instructions]. [Operator

first Our with Janine question Stichter comes Jefferies. from

now line open. Your is

Janine Stichter

Hi. about more gross there. on the all Two driver the color questions Thanks the margin. for

about talk more I I quarter? some third in nice a you out something pretty the little can what's the shrink, think may may called bit fourth in in well? the quarter. benefit help quarter, that's you the opportunity driving first is the third that? as saw into And fourth there continue then shipping Thank was the quarter compare the if you. be us wondering leverage be And you And magnitude?

Chris Work

Sure.

here. me order each one Let tackle in those of

So we this we shipping and manage how shipping from is profile. for a worked time long on something in perspective leverage, a have our

work minimizing carriers model. know, a driving to you And able retailers we this make period, of and model our shipping what to orders right part in of at And better with are one the a in splits to stores. exclusively part shipping it's how continue are competitive really As standpoint here a a are shipping we strides COVID we our with the been cart really few from continue have our to XXX% to time been we in obviously have begin demand think that's our of costs. to from the DPTs with here inventory of we And about doing digital and from thinking managing operating serve higher as we increased during doing continued have better continued one what to getting we this, seeing are have get that's structure place that to the perspective. last from of volume, over refine like we years we the five channel customer. the cost And is to

has want. the really perspective, all customers. try our how want we period, trying but as We working through Clearly, traffic to backend. a laid years. the these to we So From to want into to store for to of benefit the shrink we fast us been a to reduced want have our to are push things closures coupled remarks. we also move been they shrink couple pretty year, with in get significant been model forward. behind what of this out optimize scenes prepared play it on going the in benefit to metering the has We them And and the as last

a team job store going down. has this recall, trend item may the and But you bring of in a were really to years our other this about As couple phenomenal done we working way. place, a ago procedures team putting talking practices line as

and are operating quarter, So the of it I XXXX, you kind we measured. the out on have had year XXXX benefit those first here we months and had being the into how environment in that playing efforts how we expect with coupled shrink into to think see coming just the throughout would of some fourth store we would see in based volumes nine

Janine Stichter

then And Okay. the delivery. on more one just

there? the how sales to directly think the and I is, about maybe is Delivery, team the you more mentioned elaborate a what potential going that Zumiez you Can bit big little it customer's door. what is

Rick Brooks

Sure. will Janine, and some with I comments follow-up have will start Chris I too.

for for points we have every roadmap. consumer it's an think I an able we give we are to points. fourth because been really are I for Zumiez delivery to exited are us rollout on innovation been do excited constraints that years. I opportunity consumer so of because mean there's something we capacity when That the shipping two to are in effort evolving working prepared about for kind we how this to touch our our have like, on the for ability about our shipment to demand. could due advantage spectrum really at And because or said, everyone our about us every quarter. are this need last for restricting much it Delivery many system, So guess, year, march And really And this on in companies we this innovation QX, think particularly touch years we shipping would this digital

this out has evolved gone like our broadly, to great meet this couple It's program retail. is really Zumiez based quickly innovator in leading rollout I the needs great empowered another of last of had think phase all the the again example well. over the And materials Our how the to rolling we I training that as through we of job learning And teams for a tell on test consumer. can really years. did really you a me, modern more specialty with

Our goal to really, as customer point evaluate I how is and ourselves we customers. the touch can said, experience our to again for every improve challenge

as put get of So want Delivery be clearly customer's our Zumiez has day available expectations same next you it in have our customer the for we of meeting term. to both put business. and strive strategy. the I to been strive day context area meet efforts all business. now idea the we way fully of and you product their in about in the and localized trade do always these have which including trade ask any context you to the experience, I heard for talking talk they capabilities physical in broader or of discussed guess lot that context just again a over would all have us the demand, now striving you To mention, total things customer the as have each about digital, we the and for And of of which area planning Chris just heard are fulfillment putting we long Delivery about in Zumiez Chris put where Zumiez winning effort Delivery profitability initiatives years a us programs we optimize context about mentioned, assortment to area heard doing five other trade proven we To transparently in

ideas meeting and we investors ways focused to driving to door. ideas believe, we innovating, Janine, our customer's and our to are think can needs. consumer analyst including our us experience we me, a And about our we the are lead guess the of I And So retail. results, continue really right from innovate we hopefully, to sum see to how lot are evolving bring what especially have that, brand due more execute that our can able be on we at how rapidly in new

I and part have we need my consumer over to few vision need are going the we this innovate know, really just up, how to a of wrap we and clear to you next to we So of do want for years. what this where

us, Zumiez vision roadmaps a clear things the and lot Delivery besides more really of and initiatives of to to have clear these rollout achieve lot interesting a go front a We in objectives.

hope can what So of to in steps are our announced how again, really amazing we Delivery our innovative I of then customers customers and Zumiez our salespeople. the we of our in serve being business connect everyone context the take capabilities in think is what strength

a more process. So the now about I Chris? little talk will delivery let Chris bit

Chris Work

And at to execute this. the we And in realized to could This are into me challenges. we to we moved for around here that peak. stores we important able carrier have operate brainstorming echo quarter, Rick. on Thanks those Yes. as let the just constraints even we started in and capacity Obviously, open quickly second starting as full very excitement spot holiday teams my the our be started that program too. to is cool really

for capacity for limits we really we with on months. includes modeling working not as to basis daily increased our customers. carrier and been on going them really clarity and happen So we have incumbent web to, do what's the to while believe a went prepare penetration, now the currently potential that continue prioritize we load a to full working with discussing next This over we have model we can that month, our built

to And constraints of for are program, Zumiez to excited that XX% opportunity bring is are great talking there in daily and around This about customer's our saw we We We mentioned, right of risk trade The and have brought a our roughly pretty X% really XXX XX on right it's this we of areas. what potential to over as employee that accounts simple. we help This concept a out accounts hire deliveries for our about that as holiday. additional Delivery year. some right carriers are now experience much and stores. we And with is. to And the that we as employees diversify now. we door. have launched now the Rick piloted our

We are in beyond the October. test the early stages our rollout. in of initial markets this launched We large XX late market actually

we So fulfillment we do put last that the that refine and we this seen had learn we we of testing we to proven then we become customer. that's think with we was it, concerns in through us years people. we great side where I thing have we the here we back be And and over knew five five smart really knew continue service our as accretive think been feel from we model customer's to the on out And the teams about speed. that to effort our have our best really a well. to fulfilling years, do can lot And had able of it that in-store had have for and we delivery the that five similar to but years, But can environment. are And here in too stores. implications we some can with ago if financial you we have comfortable we expectation have testing efficient proven type exceed the of our element

on that earlier. capability to more this to But of add us. to our a great where for suite So come is touched Rick goes this on new capabilities

Janine Stichter

for the and for color best luck Thanks Great. holiday. of

Rick Brooks

you. Thank

Operator

you. Thank

Our with Blair. William next Sharon from Zackfia question comes

is line open. now Your

Sharon Zackfia

actually have find a afternoon. Hi. questions. that Good lot I I of

you estate try it to will I strategic So talked I about opportunities guess, narrow know within real talked and you Rick, down. about that. I

take the a you follow in I more of of to advantage of question estate some the so. haven't that market other are currently? your do or real So I doing willing companies a are guess sectors prepared woods. I know anybody there, But as in favorable neck I yet if seen

them. of could channel are And you are you curious are But help there I just would your mean, M&A then dynamic, what on there longer buying developing you on obviously, So it's thoughts the some that there. doing. take what your own tremendous any capabilities doing? opportunities one than accelerate

curious have the using you? what's about season And is now. more this that. have and are relative in channel lastly or optionality because important Or UPS a really actually then in is we consumer right it's to for traditional, just delivery, like it high-volume constrained that So to cost-effective what on the that

Rick Brooks

all Okay. great Those Sharon. questions, are really

So it. first Zumiez couple let start on Chris thinking the let me are I Delivery about will and the cost structure take we as on

are we to the capital take have real so. yes, we obviously, willing to do estate. And advantage on So

great. that so markets, we the would I our international are where Sharon, So I you already are think really opportunities in tell doing

in we in, we already rent. seeing significant really So where markets drops leaning those are to are in

we business, North what a business our list America, And in. we believe we in have we room not centers or business, a economically targets our are higher-end take has right willingness targets right to for landlords where the our to are more Here that of markets those the our of we be to negotiate do those locations have about typically is still location like where match haven't centers with either centers a been center. on we engaging are forecast for growth, in found sales always in strongly feel to these and we mature where but would rent structure able these our the

volumes are doing in too. might would point revenue an the still North but to we It relocation here may of opportunities moving a that cases, from in U.S. And be So be still repositioning would the centers location, a view. some there net in it of we some at market, higher there, that. be a plus existing be there, clearly, into business and of American or a in looking

I still the back back. step then doing, Sharon. all are concept trade the The how looking in trade opportunities those, back the we customers that at optimize estate these of of the stores put work for of area thinking do concept of what a define particularly And again, I And meet as a would trade are area North a we context real potential group of to the and put in that we and about we serve estate together geographic needs the concepts region in real to region. areas. in So customers here in America.

a come our over definitely these so of our period of are that portfolio into store And the thinking about time. factors evolution

us our we will again, excellent on both channel still advantage an I think mentality can question those mentioned, here, particularly right America is And fast our but it relates these international wants, and cost hand-in-hand to working serving working have areas optimize a and we it. customers, I option underlies gives is our approach business Chris transparent tell That we about looking find North estate team the I the So ton that of trade now, growth But that opportunities you mentality. which, Europe which anytime two channel have structure one well. to those On the Australia. where when we the in real it want experience. and is in in always as question, at as which second customer front take hard always as cost opportunity think really of go here really one the markets, be and ability us, completely the your one now things the those available big would us the we are are the gives whatever one they then then, optimize to can responsive, structure

structure So about to is and just, customer mentality customers the is experience. choose think then the channel I that empower around cost going focus it's customer one that not meaning that our we are optimizing the to

so these of long we Sharon, and capabilities we business expertise we think add versus around we To this And we list great how you question talent don't a cases, do a some we need opposed, the And and we have supplement around by could of it's And as some capabilities. business, really you we not in need. parts Zumiez strength said of the So business, area. in regarding to achieve great on looking Sharon, the the think initiatives, we have some help at go that doing other around acquire it's we been skill in headline, think special on. build we need And really most particular sets a us the do, looked of sets outside are to have of where sets the internal to have in we we we tell we we we new is these is working are own some talent much to out where goals drive our of we acquire some outside of need it's not these cases, would Zumiez have that terms most our potentially we consumer outside development partners, about extent, of the it's cases company, so and ideas in initiatives here M&A asking the capabilities plans whether what a talent have experience. really though, But the have to it. I innovate hiring the about skill really I we are that skill place. that where Delivery, where can we pool buy initiatives are locating to comments outstanding talent in

something to things. it, look lever and or I Sharon, again, dominance a if So have we we to though, the those the at those talent add, take resources we we in thought think big again, not at no it and be consultants our market capital definitely doing able acquisition, it's sets are enough, There's about And And it. skill would to we where we all that. whether the are opportunities. would found through doubt developers and opposed

not again, something or areas won't of they in consider. looking certainly a experts as will use outside think, come to to just the we more one certain the are for alignment. look say guess are on where consultant that something internally. is, we capabilities. If think up, creatively thing And But culturally we not, we M&A, way expertise we certainly us. any is They may and acquisition is willing Believe it's constantly last developer need, cultural or can't or at we actually we it to add help them. the I to I taking we identify just thing finding to have it us, have if leave I would outside topics do. be So hire challenge about these Sharon, that them And talent is I about a it the

get trying so do. really culturally we a to partners buy-in to what aligned to have are the those to from values And perspective find we

them. in a that's some are find harder a to not restricting for factor. look cases, there matches So have Those out just, We little to us.

at look and Delivery I of acquisition can we we and then outside activity, need our finalize all where are Sharon, talent potential also consultants the to that talk talent who and will M&A about just So to thought, structures. looking broadening looking sorts help angles, for to let not of Chris in us open areas. internally the outside historic but and in at strengths experts Zumiez specialized our cost And

Chris Work

tie of think area trade serving a note This group into I volumes. the this. market This the we that talked you stores as directly one delve from customers perspective. store deeper is And inventory increase not customer in allows is relationship. a it's to Absolutely. and about does Yes. a manage This which base to one into important what Rick to

know followed able of right test of you have what's And long of things. the of so you over always program Sharon, through now we costs time, and us navigate being see to a do beauties peaks Now, and mindful is mindful we effectiveness values the to have we are being year see I as able through we as adjust the the tweak year, But in we able are for customer. one for to this think been the for we been a trade that to as have the mass try the rollout. to program react drive area able and see move seasonally to also volumes you how

I back had. experience the have where been And is, we customers certainly can that periods have about we best seen for have time cost the near time, mentioned is, above and at periods carriers think it what been do have we to had I in are. part the point again, at. we have earlier what or time this the this at ties that periods the we Obviously, of So where sustained

We our a So will this. manage we in. current in the be still able do. into have accelerated And lot the obviously to that are environment it. teams able on over moving test based we rollout feel pretty confident to optimize out group we will be this to time, We

through So a process we where we we and read much costs fourth it. a would was But technology, quarter things the on it as we effort go. thought out, have And we on better obviously, improvement in here, move more it in calculated get place. more pretty rolling will put will months

Rick Brooks

are bit much delivery areas Maybe, program. the using could within are trade little how on color we a we the ourselves doing Chris, give you

Chris Work

area, I At mentioned, from point total have at to a an XX%. this XX%. that are as in individual Yes. to to trade time, company, we we gone And X% within XX%

is localized make the it we we the a program the the total this feeds are more in increase effort a then the able in of this that able And And we those overall continue upfront delivery we So move they we trade get where because the this right to actually areas. our become getting for economics capacity, fulfillment all number obviously, while we And as to buy it's on of right the a are allocation better. with places. it product and right starts also have And worked buyers, you company can really have know itself. that's to sure the and about drives right we capacity to to products that And as thinking to think process. through initiatives are going obviously, product have see as I along. increase,

Rick Brooks

a classic right Yes. time. maximum, right product, It's retail right place, old

to area that taking the trade terms Sharon, what of trade area. guess, means within total concept demand I from in it level, just and the new are of We all

demand serve looking products plan and experiences customers we are to So point. how when really brand then we demand again, talk and and digital every touch and what we do amazing that. create remember, both And are about to for trade, we we looking physical at is mean

how think what empowered we share what just we we then this. are, can and our possible world consumer alone roadmaps take and and And make as about you as so And that idea plan. connections don't thinking have across it we this it that while about if human-to-human then always do evolution in are means

those was of deliver time in holiday be final deliver So sure just a now able to we been to the very to product are it ever days. are we be we process holiday it, in making delivery to to maybe period, up and closer a able that going constrained the while going season have

more one We am are of work again have that teams some up to so going get hope that our all customers do I of to But to a things, more the we Sharon, do I execute. work I of are get cool tremendous process. transparency of Christmas. be give could these we and proud make But us for mean, to this to advance the have think, leg do to I to just able to be days there there. available in in But to clear it in

that capabilities. this, we are able are sales we What will are can about when delivery can back the And happens of into sales to sale. And We X% the way on And the the add there profitable what's of our of process? to we find on happens to in it's into to capabilities, we what's a Zumiez care going think those for then about what first experience, showing going and we to tune orders really for this evolution and pull the think in correct are out What first think our going about across about I are we a to to more if our gets door of do we What amazing add connect own pull. how customer's happens we the our delivery customers time eventually order to to there the the our ways? one we lever thinking in really is brand power our if all-new power able teams kickflip funneling her deliver right And the out get to into own skateboard experience. are take can this, can as digitally people. the are This to of driveway? we and the know point customer's X% sizing with no or talked if our of to delivery point how system going then young customer the and if not. we that girl algorithms else us deliver

just experience together to trying customer. around multiple, have again, ideas all we it going bringing are multiple these optimize the then what levels be, the to think that's are all And I do. to We and

going about going we to think rally, fun of it's parts and where So are think go. I how future to we one be the about our there's

Sharon Zackfia

you. Thank

Operator

Thank you.

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

Your line open. is

Jeff Van Sinderen

Yes. Hi everyone.

follow-up areas your a on trade of Delivery? if e-com is delivery that the Zumiez to do Just And plan periods? delivery. during peak the that be is stores? just you all guess or say you have And Zumiez Did to Or all much all I expect Delivery also will run how year? to

Chris Work

XX now, expand Obviously, areas. in as And there trade areas. we thanks. from very We mentioned, on. early is think is definitely the XX Jeff, to right are trade Yes. potential this I

of stores. other in As you could certain stores there are represent remoteness their because own imagine, connection that their trade area to

of those it down stores. we of types what gone really like haven't the look So path in might

But all all be kind something is we think our I talked each stores to a this ways can customer. that the key Everyone's to Europe to stores being able points already metropolitan about the examples isn't internationally, which markets the on and stores fulfill work as scale And many this of the the Australia we innovate our in serve and at we we this trade Obviously, think, in different from with serve customer, all operate path of of would a in Rick Canada today, there. export. is already Europe, that lab are different rolled store stores different to we here. other seeing in to we challenged to thinking the many And our push, continue out to So are that in closed need areas as areas with done obviously have operating market country. serve just across But like the and customer, to it of and are including get with as we well. innovation that. strategy, of of certainly, to part of some digital path we of our

don't we do we long we program term, as a can are of push it's percent metropolitan could we share program this to internationally, prepared do what but think We domestically. rollout think work to it's has that So I rollout time that potential our can digital all program think it's we rollout a internationally, to should a be, I markets. that further say. the say at going that's think in

Jeff Van Sinderen

running you like you can in QX? Just feel may speak might managing Fair about a a little And guess, maybe are are you be Or little about thinking lean to if you you inventory Okay. more anything where around you if more? need feel enough. then where areas there's and into that. like bit light? how there I wondering

Chris Work

Sure.

some down and roughly down the were inventory demand online inventory feel year-over-year chasing as first QX it the through Inventory, reopened where get with in, in from seeing canceling the our about ended stores anything Rick then like you orders our like brands been flat XX% me be And is of buying we at. in our of And as and a good really quarter and finished the rollercoaster. very of stores to job to get saw all to know, just seemed To to and what demand things just and has product. reopened we entities XX%. across start kind with of would can add teams if inventory about Let difficult we we get that to right. continues and effort situation a that our phenomenal there. we And navigating incredible from a with to QX being have working and numbers go done overall, obviously, the trying really

through QX, about increase As to where we opportunistic going move really are we penetration. are being we

to have be not is to growing key categories. to like be we as We ecosystem. would to the to we in like chasing some that think And XX%. we the demand our make inventory more to goal where been need Our we But move continue we certainly inventory meet we the expect within headway would certain where down quarter, levels to in in be. through our have and QX year

Jeff Van Sinderen

feel inventory given enough Do supply chain constraints the you around you like hard goods have that?

Rick Brooks

in I better. would challenge a been again across business lot, just It's it's months. of a not goods, but we getting clearly And much said, a last hard you few Jeff, categories lot over as that, been of tell Chris pretty sequentially the are

this I So the than goods throughout earlier hard like of are have been feel positioned in definitely we better we parts year.

have positioned this earlier were than in been better than are now categories in We target year. most now we we

I think really have our So teams done job. good a

most meet in actually has that's consumer lot challenge in we chain business. the challenge is in we been think footwear to in And down terms a are the it's us. our major are a of prepared But Footwear where areas. inventory for a supply where of I been demand.

So I we where at. feel are pretty good about

at we department the and better position in where as categories are a Chris our guess, most, of inventory are hard job as things teams important a country point. and the in in and have our been goods this earlier really skate said, they trending cases, think, than terms you have But really might to manage done I in most holiday focus on year. here across are our entities in across good most the that

Jeff Van Sinderen

luck of best holiday. and Thanks Okay. for

Rick Brooks

Thank you.

Chris Work

Jeff. Thanks,

Operator

Thank you.

Jonathan question with Baird. Komp next Our comes from

now Your open. is line

Jonathan Komp

to Yes. and initiative? day just options compares delivery see you. that am it's five window. perspective follow-up existing for quoted one any a Hi. on around your just seven Maybe more initiative. wondering to the Thank as I online that I speed how quick

Rick Brooks

Yes.

pretty the on headline fast Delivery. are We darn is Zumiez

our or room usually day given little just we are that think a bit I because of maneuver two. a in So team to

Chris Work

encourage totally few test to this a we Jon, And things. you out. Order

Rick Brooks

a lot things Yes, for that Jon. matter, order of

to market. Let's see you your it quickly if we can get in really

this cautious point. in doing at in. just probably again, are a being remember, not markets bit this are little we that's early team the But in our the system-wide rollout we So

in only that the are We markets XX this we doing metropolitan in today. are

weeks triggers, doing can depending So need on next how with to, few more markets. the we over to more the room, if we are pull activate marketplace, in we

pretty the need on fast I we this. is darn activate more if markets headline. to ready are would say are to. But We we

than options the faster are We other delivery in any of our menu.

Jonathan Komp

I it. Chris. I take stores, I your quick XX here, in am hopeful. top But follow-up, other word know. a in I am Maybe yours will but the don't for metro target one of

thought more improving the on expect? the Just quarter. of color Any balance North America you there the what on during

Chris Work

many really a a prepared two week what can thinking Yes. we by about like. remarks, it. has included we I Thursday weekend, good as positive talked up about then, a Sure. reduced are we our like little QX, about bit metered week a bit report. how been to or better. by little and would definitely expect. three talk challenged the obviously, one, And I a I retailers followed mean, Friday looked have in things solid lead will think have and then about reported North Black traffic, Friday really hours, cadence actually In store Obviously, and closures, was since America, will

think we challenged type operating more of at this And so QX similarly I at The we just peaks are very looked how to QX. are looking in environment.

the you out levels overall. spread mall see have not yes, But had to will we of traffic see are that much traffic actually We and more. going

is more around concept will the important, into two we would that it be So general think America our of these volume for these out lower where part we up we of rate here after our better have as really late but actually, the of, last be as the a we on challenging between periods week mid, stronger comments now are be be peaks. out spread expect North better run current built stronger, getting picked will in see built then to Christmas little spread And to as bit And wider. maybe we little a move could anticipation XX still into the have gave and here we Christmas, then and more historically five be that's gotten through January. weeks, years will the which peaks declined than even have volumes the

our So and that's what's thought built how into process North America remainder of the for about we QX. are thinking

Rick Brooks

Yes.

very QX. Just I think to it. to exactly think to going that's echo It's we Jon, Chris's what similar be about comments,

and But I I agree probably think about this this are and driven current their the spreading for safety is too. with Chris. reasons out on by how part, environment conservative being thinking current their in environment spending consumers

we take can achieve XX, about, I are stores that us January and the in think quarter. volumes the an the talking with cards. on monstrous on to for we of But said, come through think in their may Saturday, XX Chris falls when where whole we end as the today always play and out trend way are use gift may no to our store for we that at kids line XX, we improving because as particularly, there's a days this XX, year said,

has out, spreads it Chris through said, of So the I month all volume also that January. spreads way spreads the volume up potentially out, that think as

Chris Work

business well a of through it run is. it's just first than better into or just months didn't the of to I But ask Europe digital to XX% And I rate. important stores extremely much about Obviously, Jon. the sales. your international. about where question, the do would performed think the has I add the Yes. performed closed, year, about the our coming you nine little when consolidated know Even year talk bit with being

made. reduced closed restraints at hours XX% talked we been days really great there. challenging We are the there being through governmental really were of is the extended pretty for with maybe the about the obviously, our over progress closures And even here. we orders. quarter quarter, X, second December store stay pretty of third of significant proud significant Entering more that home by some and results team and more have The quarter we impacted fourth have

keep there encouragement be is where the retail are open, we home. you even So to able should that

really so created start. and And a challenge slow it's a

are I mentioned we feeling has being working for in They the As than down Tomato in sales. comments, challenging always higher hoping, they the based see are And actually. everything they will here or times. as we week in some to XX% move we into stores penetration said, stores next and And we my these our that very through And have doing do definitely a year demand domestic we business. of November we are in anticipate close are we doing seen be that pent-up to the when the are across open know are December, Blue QX today, gain That been hoping what we can important markets. awesome. for on other and we we team and we opening had

are So we that exceed as our hoping definitely thoughts to that. into and guidance are able well factored we

move will through customer we see quarter. the the as We where at is

Jonathan Komp

more of a you Got anchoring looking you just Any we like you sales starting more margin brought it. I That's last are mean, number, Or a color year. growing as read on towards really margin helpful. be have And that point? there? into signaling up next cost the year-to-date have XXXX more maybe one. trying Chris, just to environment thinking what operating down a you normal fact on should that? operating

Chris Work

through fair nine definitely building saying, from and income sheet a by me the XXXX. been something thinking and of and Totally Yes. an moving question, perspective about months statement where we been we year. start into extremely perspective just the have first balance And happy Jon let lot we with we stand a obviously, as have are budgets

anticipated. ever Our we don't could I way have reacted have think in a teams that

And so we are really proud stand. of where we

lot As uncertainty that look like. may a we what there's environment look in of clearly, to XXXX,

few things. not this it's guidance point. of give We kind out important to a lay we But are to at certainly think prepared do

and question, come to environment, the hopefully, are come while sales We still platform. do the customer our want environment, operating when for want, digital how and contemplating answer overall, expect a this back, stores we utilizing more really your into shop, normalized they in they the ability assuming physical helps to

stronger the We results in pretty first volatility quarter financial to are the expecting what significant, here performing quarter-to-quarter much in XXXX. we saw with than be

the going we have we is results And more The compared to been. second where quarter hoping to to challenged. be normalized more see third quarter, and are fourth

We be challenge, are we to a given product have the pretty year. had margin growth this significant expecting

maximize there we about are a and new However, our thinking to really are our building in this teams results plans way. really

we events are these trainings growth in important payroll. costs and looks predict planning SG&A ours areas X.X% of on hours move of and more to expect guys a occupancy are step-ups not of certain as our we credits normal for go like. governmental all And in mean, planning Obviously, I the and some normal, to back we hard we the is you in what us as to and and to driving environment. to in through to reinstate are and we grew meaningful of We to you as around of people. But differentiator X.X%. travel or more expecting operating for business something on talk rent makes to invest XXXX, receiving really years operating we heard cultural over this it look we have XXXX we about hard as sales big for think a continue go that. important additional expense payroll that's us back us abatements It it

good We discussed. approximately my a have where credits managing decline X%. SG&A. that This remarks, about prepared think, of cuts expense currently on we based we are year, in talked job, and have done I a I It's planning

XXXX, point we update think more we growing. at as in you SG&A total this at will look and So March, dollars obviously, we to

sales. relation actually can total even probably We percent think it believe lined to SG&A expect grow would at is in I as it But XXXX we on of manage a to looking we in right. XXXX levels certainly dollars.

we where XXXX a we as point think SG&A a be about better in might was to look XXXX. of As total percent starting sales as

us XXXX confidence to be will it. team's ability So has through I environment. in given tell a it difficult even But think you, more operating I our navigate

Jonathan Komp

to us That plenty Understood. gives contemplate.

you. thank So

Operator

Thank you.

comes with Kummetz last Pivotal Our question Research. Mitch from

Your open. line is

Mitch Kummetz

a I got questions. my couple. taking for have Thanks Yes.

exposure they have say some that. on know they been some in question. issue if how And and headlines you snow Let Or another are the the got the open? quarter? have closed? with much to part Europe. And the me or might is start I on a resorts you of these have are then follow-up there around can that maybe of And snow open, I fourth business, that issue

Rick Brooks

that some issue snows, point, Mitch, of it we is snows is there's Yes. but exactly in always snow always the have right. it the an which at issue business, when

restrictions at conditions. us And Austria Austria, cross-border resorts this place relative snow told will has market, weather be actual coming yet. use time now, usually, there. the There's lot to challenge Blue that pandemic. just Europe open. follow to time usually with there So simply snow will, And in The home can't is in There's a to while the point is the tourist the restrictions for tourists some resorts our volume bigger business related quite in true that in for a right into going that Tomato. of the to

say, have approached use way right. in to a we season. the to reservations how have been around differently able of bit going still different here it So But the traveling. open answered They just complications there is tourism a and passes in lot of going season much mountain, going here. a the lot of issue would for here the that's and to and be this to right, same be be business are differently, I And that's U.S. resorts a whether for with to are challenges during the the not

now. up happen here or the the trips usual, Northwest, As of a to Whistler British can't up like lot Columbia. Central in just That in

the So we more here, will the a see effects same in some differently. definitely but it's of constrained environment business. snow But Europe,

are that percent point of that is snow our digital we years you total want the base. diminishing world mix business. have growing particularly the Europe number business the all being would because have snow attracts thing I last been aware, over store And as as been about larger said, in of portion other of the a Now, to we snow Mitch, our the

our our base to tends store So and have snow in business. apparel lower digital, that margins business

the do our of dependence marketplace. one base is business magic the as is as building scale in this we we that margins, snow we the doing while that, our upon will when kind decrease grow store of things of improving in the So Europe,

but over we of will our the in grow And that a see, So to years. us we clear, be it has be over important last the be been growth business snow few our there, will portion next our happening the base to as as five marketplace, still continue will continue we to declining store years.

Mitch Kummetz

then, And Europe again, it. Got one follow-up then just a and on question. other

is quarter-to-date, than partly So I XX% digital despite that more do guys guess, Europe, I robust there, Europe a know America. all business down am hear very have over surprised of in in North the robust a because little you to issues I you

come would some stopping again, go for lot and of are for Is Are just again, Europe? general? shopping thought to COVID a in volume have just snow stores in not in of I back general? online. hours that as that would with that again kind of spiking shopping happening down, Or not people decide So close this, they not transfer

Rick Brooks

two It's things, Mitch. Yes. I think,

the the just is, first right. of that snow had we business, the commented on is disproportion The as digital business

go to one you going not to Because able gear, lot that to it, is aspect the mountains, right. of a spend for you on are not sure. be going to if So are

the that's I calculus in kind shutdowns simple second, I the that in all factor there's with Europe that's issue for worst the stimulus additional world a no there. the countries. virtually think And of retailers the curfews sense is it's much to they the down, there And And across as the in is are haven't but shut in place. yet stimulus actually constrained. isn't because But demand. our operating stores economy drive Austria, retail There's hours in are case of think, our closed.

difficult think aspect I in that that's for the Europe. other it the more digital business has So of been

Mitch Kummetz

it's segment a standpoint. the that think most challenged then you Rick, made been on your was quarter, question was the supply segment footwear it's your a And worst comment business last Okay. for I in chain the the now. most challenged from quarters few which comping

and the comp questions, that how to often know cycle know of chain guys have So issues I of of strong your about is that there not in sort talk of of that spot some I things in you sweet long toward these to lapping I trends footwear footwear? something cycle situation? that and covered But that's know COVID is really a down. the fitness couple years up, with performance necessarily the comfort here? does supply you is sort of response happening Or also I some in am maybe enough reflect performance. these there else wondering, footwear are

Rick Brooks

and to in not be that constraint am point Mitch question, the I the at prepared of partly chain. this to because able answer supply

So a is. when of you lap hard inventory, the it's lot know what to issue

again, you not to, think question a product point with isn't marketplace. it's know for to global So the to until this where do hard issue asked the in U.S. we just have we that to really I know is And at issue, don't us a prepared the demand that is it see footwear. am because this I this to and the answer just

performing supply across has platform. our businesses, so global And wise tougher been this one chain of again, the

same don't in are some things the that Now, that tell have are footwear. of. thing. you things enough would we we Those again, But I do inventory working have working,

are working not place here I product businesses. their their their to and So for partners all probably know only for our own partners us for direct but hardest get in of

such with pretty footwear have actions And you back hit, is size-intensive it and size took some them managing inventories in that in dramatic what up So particularly longer it's complexity a a pandemic fired business chain to supply the own their just I that people that the lot transpired relative get think footwear. structure. when again, takes to it

because answer know. no inventory. can't with to question make don't simply I that It's the read hard So I

Mitch Kummetz

it. Got

good holiday. guys for the and Okay. Thanks, luck

Rick Brooks

much. very Thanks

Operator

turn not am I questions any would time. to Brooks over you. back to closing showing call I the remarks. Rick for like Thank now further at this

Rick Brooks

close we in Again, season. XXXX to again and results. our always We want going in for a everyone, you when it by with I holiday talking wishing QX thank report interest we healthy your you, appreciate are the to and And to to chance look get forward safe everyone Zumiez. just

it. So thank We you, everybody. Talk soon. really appreciate

Operator

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

You now disconnect. may

Zumiez (ZUMZ) 4 Dec 202020 Q3 Earnings call transcript