ZUMZ - Earnings call transcript Q4 2020

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Operator

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

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

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

Rick Brooks

call forward, on After going through you Hello, on with the and it financials what Financial today Work, Zumiez to joining over share handing about thank the we'll overall Officer. for operating you, very everyone, means call thoughts quarter. few Chief holiday a that, will given the open is past your coming before for Chris, the us fourth year thoughts environment. our performance take call me who the call. challenging pleased I'll the with and to on year. With and today's remarks questions. our some I'll We're begin Then the Chris the up some

closures and delivered operating we our Canada the reduced fourth of store increase restrictions The and of and X.X% sales as total For quarter, Europe, capacity well hours growth efforts our in a meaningful across teams temporary offset business. governmental sales of comparable as significant X.X%. of store much helped to

and per $X.XX with deliver cost while despite the to rest record lean how driving performed quarter. face the results the for no structure diluted of year. to different fourth we selling a Delivering of earnings efficiently full price was share the we quarter Our operating headwinds throughout

our of that Our year. propelled this and power culture demonstrate once again have us the throughout brand unusual results

of inception. I our adapt change organization's our how ability cycles years. earnings comments per requires in and the teams, growth as by tremendous over the industry delivered this how the for next to was I confidence we share next we long-term state with the highlighted over we've desired diluted and built about the the year results comparable sales attributable of foundation execution X.X% our my QX for of well agility in over the the a and the how despite further we the trend positioned Company of and year, to our as to growth being strategy That closed achieved of recent strong in since U.S. sales been that a call and the customer. before Company to down the the significant our strategy building were $X speed convene year President record On navigating with I consumer-centric and winning buying past XXXX, declared took XX.X% years leveraged COVID-XX outbreak. place directly X earnings talked For total about Zumiez's consumer XX-plus the has behaviors decade ago, day a then to XX evolving response work evolve. emergency call

winners respect in of number to accelerated. next daily it of happen anyone terms the expect that what have globally of would impact we were don't several has I escalating retail, losers significantly consolidations months. and the over anticipates While think full new in XX cases pandemic With over industry, the years quickly, the retail to

and people cornerstones results. be strength which we will seasons drive fiscal and one we navigate Delivery, fulfillment we've share gain to our experienced to culture. respond Zumiez teams, to quickly channel including fourth unlike door. our underscore mentality with confidence enter expanded foundation, to of in and demonstrate has dynamic continue to that of the and and our directly our model sales Thanks competitive and ever anything ability in-store were our been unfolded holiday that these to customers' the continue back-to-school changes capabilities, Our XXXX advantages and to dramatic to the advanced this success in our successfully ability our our quarter team Key best-in-class our take our to of

strong they them what to focus our customer want a us have While partner We've the in channel which get remain they they rooted visibility our less the will back-end expenses the customer. great all to business culture marked to individuate. continue serve in fast, elements diversity our bring leverage us an capabilities a faster business to want, consumer-centric We to allow of shop into to even when the they our work with touch overarching allows get want, inventory with been want. The points here but regardless model will our as which that to organization and and evolve sale strategy how constant. to in from build originates. We customers as of further brands path will uniqueness which can years ahead channel built in and ahead, that and move the significant, infrastructure in to with we require has brand effectively

the strategies balance invest across pandemic continuing of our people, in While rollout the we remains in We uncertain the right vaccinations time to with ties place. know steadfast and environment, much future. with in resources ongoing our macro globe, the create remain opportunities, that to static we in commitment as the

stronger positioned We this a to than ever from are well crisis before. emerge brand

their commitment immensely and success. With date I'm Before like thank over year. our partners to ability Zumiez and and future turn drive I to last Chris call I'll discuss teams the in the of achievements our would the more confident our to proud I close, all even to to that, financials. to over for of brand our dedication

Chris Work

the in sales first was update partially net sales I'm quarter. and Rick, start million, up we quarter thinking sales of comparable comparable provide going quarter-to-date our XXXX providing to the year, X.X% full X.X% digital by physical quarter, Breaking everyone. Fourth perspective three during then how review by a X.X% our net the on comparable saw in fourth year closures Thanks, and before with while to for I'll stores driven of afternoon, good trends quarter sales were the new full meaningful XX.X% million down sales results. the addition further, increase pandemic growing year-over-year. for strength an temporary $XXX.X $XXX.X and from XXXX. of due quarter we're a sales were stores the on offset fourth store the some year. in during down with sales comparable about web increase the The

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

translation, respectively. operations of impact we're available fourth European America temporary increased the X.X% XX% and approximately impact had COVID-related for sales currency of and foreign quarter. net Both Excluding for store North and sales our international and the only days, quarter XX% other closures XX.X% the operating both open Canadian net the decreased in

or of basis The was point XX These basis or by compared margin. XX in compared expenses. ago. the obsolescence, largest category, decrease XX.X% as payroll and quarter was followed compared XX.X% was with quarter quarter, in net web shipping primarily in by XX.X% net shrinkage $XX.X in and in Fourth sales XX income increase of administrative costs in web category offset negative SG&A sales And of product leverage basis expense primarily of followed the gross our SG&A basis occupancy XXXX negative the prior point of offset and women's. leverage basis was basis year, profit positive STASH year. by inventory pandemic, increased our gross a by point corporate basis primarily in fourth in to driven compared impact net XX XX.X% costs due XXX $XX.X recognition by or to expense year. XX accessories due revenue basis point partially year to XX.X% comping partially point to was professional basis in sales expenses points ago. the margin largest margin adjustment hardgoods costs such related basis a an million loyalty in quarter prior year distribution the in $XX.X increase fourth improvements million men's. basis made million million an in quarter wages, and net activity. fourth was other The to net in and and $XXX.X program a points store the category, increased driven increase to XX a to events, XX training improvements XX decrease $XXX.X XX of associated XX% These in sales. were and last by increased Operating percent decrease as advertising basis our costs, fulfillment in points a were income governmental operating point in point credits improvement gross sales of costs web-related During in decreases activity web comping was $XX.X related with million deferred fees the million Footwear of was XX national improvement point or the XX point in

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

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

volatile Looking quarter-to-quarter a XXXX year and quarter. at earnings perspective, from months sales across full was results, our and within each incredibly

sales earnings X.X% increased $X. $XX.X million, the per declined XX.X% year, share or while diluted to For

our working have tied receiving expense In marketing line in well uncertain expenses pay optimization discuss from within as managing the pandemic sales to travel managing transition bottom XXXX, adjustments with we projects which given we efforts landlords, events, expect response environment, reducing model to towards our the and a and the benefited and from shortly. we'll continue subsidies feasible, the to of reducing to continue environment. nature governmental quarter-to-quarter onetime and other our people our we more as both payroll volatility as Our normalized costs, efforts, back training, around made performance as

abatements, XXXX balance in a increased marketable million the The of increase January XX.X% XX, cash to million by credits X, in and extended obligations The landlord Cash terms, current to as XXXX. million as and the composed deferred lower as Turning $XXX.X of securities vendor marketable very and tax operations, as including levels, well ended and $XXX.X through to deferment the February position. payments cash business income was strong sheet. payroll in financial of to payments current reductions. of $XX.X driven expense compared improvements generated net inventory related securities year

XXXX. that buyback closing to expect XXXX to this cash our the in capital partially million will $XX.X We Company's positive by and planned reduction be due The offset was increase of in our expenditures. stock share a to other repurchases through March COVID-XX prior program store flow

As continue XX, no to decrease constant Overall, $XXX.X a and January of inventory ended entering the healthy inventory On full maintain favorable the X.X%. margin our levels with XXXX. debt X%. down is $XX year and have we sheet million XXXX, million year, at of of our a compared hand $X.X with currency, the line balance in on inventory million. credit or $XXX.X We unused last on selling million were a

sales decreased the to March the March X.X% X, sales same XXXX. quarter-to-date compared time Now fiscal quarter-to-date year total through results, in with first prior ended our period first X

including due we drive year. followed recapture seasonality high caused seasonality, XXXX to operating total store full in an thoughts basis, levels our as X, was in compared store the frame open perspective, international seen store lower the was of our offset days reduced foot XX.X%. well storms as an were factors as sales by some the XXXX Throughout shift are return that during potential comping Canada. play sales comparable North for due to visibility with XXXX, fiscal in in first March last few XXXX category, and experienced and regional that by traffic, this on we to results a and increase well closures increase our not year XXXX only for the to be closures significant hardgoods category, the south start. closures, largest in in stores winter while first comparing comparability quarter in delay -- be XX% our On normalized we XXXX, quarter. from to a and both Due want providing and of year, more metering off increased factors impacts we with an environment. more the time pandemic. will impacted we'll dollars in said, you significantly macroeconomic or will the There several women's total the how the internationally comping average comparisons for also men's. comparable That there in governmental returns, in By specific mandated a the the year, appropriate in note give and decrease do the not between guidance slow America comparable and primarily by in decreased From out. other transaction quarter-to-date to limited fiscal well decline followed be has the are XX.X%. e-commerce expecting X hours. XXXX the domestically to Total believe The Our In but due was our of fiscal XXXX, of the roughly quarter-to-date from anticipate to anticipating ongoing no March the be have positive absent Saturday, as through gotten directional an Dollars increased we U.S. business negative largest and a circumstances. Examining levels sales partially transactions, XXXX, business a decrease fiscal experienced lead X.X% of driven making sales business, America level quarterly quarter quarter of the to first the year ended Starting our business, sales currently for challenged the X.X%. offsets sales short-term period for are as the transaction. a a accessories. per the by revenue, X.X%, sales us XXXX by following. contributing as channel, decreased that Footwear lost the tax quarter But that a North deterioration a correction Quarter-to-date, there XXXX will we XXXX, has increase within quarter-to-date increase to to positive retail ahead full our to unit year-over-year will category of per we've by transaction. per units XXXX, closures we the

quarter due Specifically, of XXXX without results will COVID-related stimulus we to the scheduled snowstorms same store our be domestic approximately first otherwise, when quarter. XXXX, the or began tax of the to in XX% of our the results stores our to delay same early for that be open closures quarter. If our across lift, second closures believe south, only and results the meaningfully signed COVID XXXX were the open closures were significant results restrictions the meaningful potential ahead is during returns, in persisting the days approximately operating for open quarter of in quarter the in further due today. the quarter for during XXXX, will for of our the available quarter and stores In XX% ahead the package stores our days of as

the from Company XXXX sales grow quarter quarter In XXXX of record down XXXX, the will total in in in the that fiscal will normalized lost despite the earnings. fiscal XXXX XXXX. normalizes environment. in addition, seasonality But a first from as second some be operating second more sales believe producing sales a demand, for the second surge total, in modestly we experienced of and and recapturing quarter quarter of from both We a

we fiscal of in and the pandemic quarter year-over-year third year, the quarter As in holiday with of fiscal grew and sales back-to-school to challenges compared look the seasons. of both XXXX despite continued half we the fourth back XXXX, the both

projection and current sales quarter would Our in fiscal compared show growth XXXX third XXXX. the with fiscal total fourth of

down to by shrinkage modestly, driven was penetration primary XXXX in margin the were and XXXX web related and fiscal below in cause costs increase These inventory store product mostly the gross and XX related offset shipping occupancy store gross points to fulfillment deleverage increase improvements The in basis revenue margin, costs. levels. to of was closures Moving the finishing costs margin. by

XXXX are XX as in in versus to grew basis by XXXX year-over-year the we planning we costs a of margin, our As in web year open and fifth improved revenue a XXXX, growth sales. currently with driven look row. leverage on margin for by shipping being stores costs occupancy gross reduction in normalizes Product points increased and

to an grow reasons compared XXXX operating slightly to sales however, we down sales percent On grow margin expenses operating outlined. fiscal of ahead XXXX, just basis, fiscal dollars that the be expect the flat costs will will net include XXXX this for SG&A anticipate while product travel in drivers planning restrictions increase in XXXX of be SG&A several spending store were of the not not reduced in in very In in Governmental increase repeat with half to events reductions closures pandemic, in to training to XXXX are in year-over-year. expect gross XXXX. XXXX costs significantly are fiscal not in the and to reduced growth increase marketing summary, and for we XXXX repeat results. to XXXX XXXX We increase were mall included expected due in see down Fiscal costs related pandemic. an an recognition anticipated and are to little for travel our and margin, possible in related benefits of hours slightly reasons in and XXXX with anticipated margin to of we due XXXX store to in margins that while a sales wages in The excess in back XXXX, that events subsidies to in a year-over-year. as expansion the fiscal received

XX.X% We planning business are XX.X% of fiscal rate compared effective our assuming an annual currently with in XXXX. in tax approximately XXXX

to in XXXX earnings with fiscal a significant more comparison are compared quarter-to-quarter in variability to share in normalized We increase per XXXX and to planning comparison fiscal XXXX to XXXX.

new fiscal are XX five in stores Australia. XXXX, in America, five We to in stores open and planning XX approximately stores in Europe stores including North

The to close fiscal million the year. planned dedicated the capital six We in $XX million are to openings five fiscal to between are during approximately store planned remodels. be to Capital XXXX. $X.X compared of XXXX to planning stores and $XX will spending million new and majority be expenditures in

the expect including noncash approximately fiscal We million fiscal expense, XXXX and amortization, million in in depreciation lease $XX.X be will compared $XX XXXX. with

are repurchases projecting that, share up approximately our share with currently count million reduce to full like We open for share operator, be during will the call your questions. year for this XX.X count the the estimate. year we'd Any And shares. to our from

Operator

Instructions] first [Operator with Our from Janine question comes Stichter Jefferies.

proceed may your with You question.

Janine Stichter

really about hopefully for we're as well seeing a things and I'm seeing start in as about help seen more if quarter-to-date we hearing proxy through? you what we so you've I to about tax that what trend. of you're some the last when us think what Maybe positive like your then over the you. see And a curious bit out U.S. those just Australia, to refunds ask to you're business as the wanted the you also reopen. parse little or Thank trends how flow could curious looks in maybe start that week there.

Rick Brooks

Janine. Yes. Thanks,

through kind coming as some that. I think where talk here I year, good be of first weeks. they are below And guess for there thought the they gave would the were five the generally, first we results but So into about we reasons I think we quarter,

down on were we sales So overall, down sales, were in just while call, what said -- to X.X% total our the comparable X.X%. about reiterate we

did last as February a weekly move get through this move tougher even week into we as and better then So turned now and on through, cadence, we week. this much

about X% of weeks. had a closures January called And us. we've late store think before. five We storms, have here days So Canada challenged we to operating about being try again, specifically closures the versus Europe. about as through out was of maybe first the the understanding, the But related weeks, and dissect delay about year we as talked factors five days winter more was and first that closed we towards we're in significant of are returns we February starting well, to including in closed that, Europe closures the seen there about and some the distributed south. closed XX% time. operating the Domestically, had what through in some as were U.S. tax to end of the XX% the weeks, from of get the Canada our I other five think of that through some first ongoing pretty

will here caught that that our as tax we move substantially results. seeing rest expectations, our already is we be and So is the in open. get through of may Canada the up, quarter refund the

back through have We quarter, meaningful are move as in the If we summer for the to today, a our January with well. then and look we'll see this stimulus definitely more optimistic, signed hopefully, And the we first we as expect the we in boost saw of up. open XXXX, bill a year stimulus positive of Europe at business. boots

quite opportunity date, but like how So to there's good I to be about think kind think QX. that's it ahead not I thinking we're us. where of we'd Obviously, of

mean, of As this us in very end I managing and and but Australia, operated. October. of through closed job of closed stringent really almost They, pandemic, year their it have from done being about April, of great end like closed the they've July all to until through March substantially shutting down they last borders relates a they were also how the

actually have pretty result. driven higher have did and great of really a lockdowns to much they So been a level seem

both happy performed. a has was down line line. them and the you Australia we're great I'll how So on XXXX tell for with bottom top really there, year

we while still to down how coming us, excited think quite really well an there. the have growing growth have business and I about a is of of area our form performed the business. we're teams where ahead This lot is

it. that's think I

Operator

you. Thank

Our question Zackfia Blair. Sharon from with comes William next

You with question. proceed your may

Sharon Zackfia

don't the ended I'm of learnings international issues I kind you inventory. questions. also, few a or with potentially delayed for go any comments. guess think whether your and seeing curious And markets? guys mentioned curious throughout Zumiez then Delivery maybe XXXX unfolding just we prepared just up I any during as you're how even that

Rick Brooks

going Great, I sure with this trying off get Delivery there how I'm of a ideas out customers. context about really just again, for aware start to we this. we Zumiez in everyone, make terms Delivery. But do the this innovate sense well Sharon. for just is of And getting to Okay. what how bit for want Zumiez know to you're in and we're to for really context of about think around me our we're of like trying I

I'm to to going on follow going make question Chris few around ask Zume's specifically I'm Delivery. to a comments. up your So

about the So sure only way thinks special how and we fulfillment this localize in about leading optimize make we customers. structure not is I And retail around how doing about everyone like we serve our can to cost customers, all what Delivery those how with or innovating serving customers. redefining we're Zumiez serve

because half early about months. of the course, have areas then of fulfillment, trade United our -- for unique time which in about believe Delivery, we've our And the to pilot been in talked of United late XX long door States in, and trade expanded now, holiday really we've of season. we'll are in it States, the capacity with be playing to third-party for obvious important the our November, we've Zumiez lot was about across again of which October, So rapidly to XX been we right we the to the examples operate localized to restraints being customers. expand course, our pressure a doing And under ability which and also, of most that really throughout were experience of we relative knew that shipping areas were that a place taking going

to simultaneously think we've innovating So business as and our I working examples business everyone model one channel on these customer this to serve just of concept. why led optimize want around the to about how

to next, road map the really, So and then want our just is I innovation that future for really strong. understand

you better many out the and in to testing of we're customers and in built next building lot a to remind share thinking. themes new initiatives the five of the you our areas, these a number three do of plans. I'm years. are to That with have over serve that process specific our I We already want drive innovations. of in to continue going consumer to not initiatives just

is and first heard of importance a the The number you that speed, our of script. in times

over fact, they when they Our getting as those more to all they they're I increase expectations want, consumers, want, they just for our years. not are consumer, consumer, in what expectations, and believe has want how higher, think, fast we next even been speed the want five going never

going and brand Another fastest is assumption we increase. to believe ever, cycles cycles, already also continue trend are the to to be true that the of speed

innovate for theme us that know, stores. We our this in key around particular, consumer. need consumer Gen is we second prefers to The Z shop why to around in

external initiative even create consumer stores. of make about just with the local and of how point themes care we're for that thinking local our that three increase internal really And are more research of shop do governing to Z Gen strive the are the to our want and customer with connections, for experience. kind our of whether physical, last the people that And they stores customer All in prefers from going be innovating through ability to our we research that the of customer, read, concept don't indicates We the to digital overwhelmingly to connect of our we is human-to-human our right? or we me our our view. center We global.

customer expectations bringing is store. the concept brands personal the will that their consumer world passion global Z their Gen the our active cool be communities. Our to a in be areas pursues their in in consumer. of how in local source of their global local same local communities part being and They -- while simultaneously they a and to of new want from applies This anywhere

in these we're are things are just initiatives as meet culture we're to you are our in serve our to the innovation. guiding everyone, execute do, of even and the and we optimize So course, again, place, align about and us. results. current I for have with And trying of to These gain to think business brand what share, our better, that Sharon market course, to the think, expectations customers consumer themes, going to

meet So Zumiez of one these just just to I be in to consumer special of I how is those believe reinvented needs retail Delivery, context, examples rising expectations.

details some the efforts. the more I'll Zumiez Delivery to -- of Now Chris Delivery our about share ask

Chris Work

Sure. trade some test mentioned, started kind year, the shipping just we to area, I'll and prudent with Rick ago roll in really that obviously, this we out. areas. thought just this something is we to trade definitely it. operating had jump landscape we understand years it And XX two into But in of the are out one was data. of

did we to of of We daily the right X% So areas that. around the to about end third of quarter. for stores, XX% This the at put encompasses quarter, it. the just trade deliveries. that perspective our XX did account And beginning XXX fourth about some

packages, comparable carriers. bring XX,XXX experience our was quarter, is optimization to able to some outside down have deliver just of be perspective, able road. which to door. a we almost it that that cost From the the awesome During customers' were definitely brand our to We to

stores. I key fulfillment, are. ago, fulfillment Five this followed lot years phrase your center what questions of that time. shipping some And think learnings of us for kind we up of one to XXX% our localized just and moved to you was I closed from a the

in are I ahead. optimize things lots think going There the different. learn, year and to we're this of to going is we're no

I at how we're work trade areas. we're we've think look And to through. with roll some got considerations out going going XX seasonality areas, to to additional we it trade

would in very preliminary I of to try with accomplish. challenging feedback to work to So say done we're overall the that's our get something teams our customers and pretty and to happy start from the put

all ship it's of around store, online, in this or here, well. pieces Rick as pick to here innovating globally question us these The second in store gets a with piece are pay in of done to from of and what up store, your opportunities of online, exporting, tools lot move reserve reserve said for international, of like whether we've our sort back

we to these out start connect And do we some that, in as teams. markets, so of certain scale our And we roll we tools. have

domestic I the levels. things more this look is for Delivery second question, just we then is operate inventory will But around just overall, think these opportunity inventory your a as globe. we be And around point. So and us. there as we scale, tool gain at at

challenging for year As really happy inventory. of XXXX. you managed a have with ended through We're teams pretty in can spot our time tell, good we how a very the in inventory

inventory was Our down slightly.

you much the it's down been more quarters. As meaningfully across know,

a able been to the And we're of even catch-up so where little still to in chain It had Typically more want back more We fourth Hardgoods trying we've I business have over up some of inventory perspective, footwear were chasing We quarter. So bit. lagged. the an and areas. areas like the get supply areas, kind say intense still many were have screenable, did been to of we of we labor footwear, some the to tougher perspective. that the still would be we're are still in from in from to speed quicker. and and year. certainly get chasing able stock and a get that some the challenged areas

the overall, inventory clean though, into I my was prepared at heading So remarks, year. super good a mentioned as ended the selling in and year margin

Operator

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

You may question. with your proceed

Jeff Van Sinderen

European you your more I overall the a FY for including 'XX? outlook speak guess business, Just about bit for segment what And is component. wondering, the the European digital if can little

Chris Work

go and I I'll and question. was that, We bit Australia to get chime and Rick of strong both Europe the being really, take coming I'll Europe benefit, Europe let business nine operating. coming And QX XXXX ahead. give strongest the areas ahead the really into I'll gist into through just for of I'll months. 'XX-- of anything as first in there's little just called one on if Sure. background missed. your of out a our Yes, the go Jeff, everybody's

into its Specifically, because pretty heading through months the I pandemic. performed XX% first were the sales think nine online Europe well of

as still growth I stores, the in would additionally, we we as markets, saw we close where good had both year stores teams where well based throughout the So as digitally, we think over the to we've really executed us high expect been executing a way this the level. been they've And years, propel have here. share. the on we future at Overall, taking long into

Now as was extremely we challenging. think about XXXX, QX

holiday of were quarter, the days the season. across Our XX% including stores closed the important a over

restricted pretty these and you dealt business. lot tourism, with stay-at-home closed. know, to we a resorts limited or And hours and things governmental important reduced of as orders closures, are our Beyond

where was financial strongest our quarter challenged, it's QX And historically from a perspective. so been very

a to started expect, the for being And through Well, we forward, years. basically does in now believe, do And long this nine number here, we of really as our we as I mean the have so after term? Europe. look of did we on largest loss in months, what long-term kind answer budget

meaningful today to think Europe investment. is grow I what taken to a has

market. of we you think I a we're in global place retailer, capitalize both retailer believe on lot place and in Europe. really serve benefit that in our in us think in how and brands a you we that lifestyle in all-in a being to We customer. the And the niche to put how service identify believe largest brands of there's investments

possible we're for close I days. We the XXXX, We're the our think out of woods. we So about In of XX% weeks reported. the not talked five stores.

there. the fulfill but because from percentage in large stores have that. sales, with seeing overall model still there. We it we're over We're chasing a is some closures So there do of deleverage web XXX% of not

our And turning really our turn probably results to focus profitability. not although as drive XXXX, to we is to stronger, so

continue can still that about believe at real And make we're progress. we're, we where we there. again, to excited However,

profit continue And variations really that's believe absent that to we're a good our aware there think of further not time get there, And what on on. in we're I path COVID conditions today. for pretty are And of XX focused focused teams have month We to path on. to we that we're kind frame. XX that macroeconomic were

Rick Brooks

base, add being to unfortunate months business combine the just our December think through fourth to of we're great for I'd that year, it, volume obviously, And three shut leader the particularly hardgoods it. I with worse timing again could with Jeff, on business a clear, of store marketplace, snow November, where we for have a really peak the in team, your just our the quarter having when comments, in strength European Yes. off because timing you of been arena, Chris and quarters job the we through year. did the as bullish said, the the working so were first right be on remain, plan But Chris'

best we're marketplace. seeing I the deals that of our think real ever we've European some In fact, in seen estate

comments, as to And XX stores we opening in we add our this really Europe. intend So business drive said year in new this forward.

hard really what I'm I remain positive of last it around terms it XXXX. it resorts, fourth It's closures not, hard we year on my this we're to snow the we're head accomplished year. And just worse imagine, quarter of this, that at. so this in where imagine could the going resorts, the work love to was very closure figures into could Fingers then it we the in when And crossed. of back our confident possibly the last and it's Jeff. teams get any hard across over than be to

Sharon Zackfia

exactly. Yes,

Okay.

in to not 'XX, kind puts just So margin going Company in your all and of FY a overall recent bit and ways. levels you've I probably which What's an it's thoughts operating odd recovery little of mind the versus on know sounds follow-up. a guidance, but a just maybe -- about been some hitting? be your bit the year latest for like you of longer-term takes keeping the gave quite thinking

Chris Work

appreciate going a roller XXXX XXXX that, -- for sympathy to the as I challenges because it is your be just of Jeff, and Yes. coaster Appreciate was.

kind I directional ago gave, single drive think probably long-term recently here three talked was that. But digits. prepared to what we've of people to of sort we the we about hopefully, we operating higher remarks as And are. trying as help the as about outline So years think margin,

their really that. I so we're of think our execution proud in And teams of

strategy but financial we like I just need this what do the not to think take you it's happen? business? of And from fulfillment. something come we planning, what of the are streamline can do And we how in-store results to our and planning make in do multi-years need to and investments make

refine results, put we levels drive today. to it and I but think it's taken it these to it's been a us huge contributor years of place, to in to are it where

operating is a do we And this profit have we forward, it. we do can believe path those look I low drive digits we to into double a as levels. So business think

metrics drive think of different I for the business. we're We've focused that. areas got how we on different

Internationally, and for Australia. huge is ourselves have we of has North us. growth reasonable growth in much And is we pushing drive So is also landscape Europe optimization here a know business growth of about that. where and saying, in kind North grow have and America, unit around -- leveraging not mature, on ahead we a we really as us, going And we're a there of we that's more to look a of growth of ahead the looking America. lot of much earnings significantly and us. at in do ahead how sales It lot level at of how

lot those And sales. like historical markets, to our it We're so probably market, area where in to looks trade we're grow going units. of a U.S. continue adding total

to of as They're using earnings So top drive pick only the within will help whole through brick-and-mortar the four-wall area, line, flow we're a meaningfully those other. not so elevated units of should see and experience and the to omni up see we'll each kind the we sales. ahead leverage trade channels on both that experience growth going

and this the is focus something our double digits. really is into there, we operating can think So we drive profits

Rick Brooks

now. how done tying they advantages. And doing innovations And sales as able around add, those we're the to again, to these back place. process. innovating just That lever going world coming export. U.S. And able Europe But tools thinking same to kinds Jeff, need business, well. able scale really and said, lever my being we're -- export those comments in about the made you the able in business we're margin then it marketplace, for and I lever around to the putting to that be but to to the think, markets -- be drive in as in also And will I'd new skills the I to the tools as we're that, scale the be we've the of gain through, be will Chris to and

three-to improved years a sales at I window, are to them if process yield behavior look of around the to consumer that serve long-term and better. to the both say, think five-year and five So margins. back three achieved innovate optimize our We and improved about that we've would investments last to is you what going goal continue

So what scale, map a I roll think expect markets, again, the last different innovations, larger those but but business, Europe five out kind road and new Australia what with not we U.S., the with the initiatives only will years is we can of be the here of in too. future as

Operator

with Komp Jonathan Our next question comes from Baird.

You your may question. with proceed

Jonathan Komp

more commentary compared clarify, that than second quarter to be could quarter, to first just up implying the first, your said first are the XXXX. modestly. I think you second maybe Chris, you XXXX for and the to compared quarter which you Are quarter up

just wanted I clarify to So that.

Chris Work

Yes.

we would at believe be we'll think QX our up as QX, will in and at we XXXX. we sales lost QX, I look look in commentary we comparison, at least and sales the XXXX, be regain think in and XXXX XXXX. as ahead of that And we QX in QX, the right, was down over to

Jonathan Komp

like then hard could through you category, that category. in -- be customers And question you Okay. on goods seems just maybe comment it might new a drawing the

them store a I'm So the then to and across of and your ability new shows your cross-sell categories? keep terms customer in or buying what capturing online just data base different them curious

Rick Brooks

this, there's start. know than look -- mean, I'll couple a clear, And of up is us -- some for last it's taking that, over one if Chris do be year, been women more you lot things be I over the the exciting the to of skateboarding in think pretty last But participation first the last to the you I skateboarding, years. I I been the too. able the John, at share over data -- on for time. of remarkable Yes, will with data

the of So from there that's out in business. again, groups industry you'll it. that exciting aspect participation a the And super data that publish our been see

So on when the of this across early I we think much side, 'XX, from ought to exploded globe. kind We in I decade February that we we ought just 'XX, that where a trend, own share. and we've the we're looked just skate we're said, really January, got think And are. of share consolidation in in yes, beginning 'XX, seen last so that because own retail over at bigger we more to that -- of market it that

scale And this so business share globally. simply thought the skate a I would team know the and We as previously more a Chris we of our see we'd at we ever peak a that, share cycle because in product own predicted through our cycle. has predicted trough market we than it higher multiyear actually level and

now. particularly saw come And than component so customers particularly seen of think, destination I on female in, the anyone assembled side. We in new at new because seen the we are yes, the skateboards also customers We've more point. have world this we the

of let that. the some we think that. around I share So I'll Chris benefited data And

Chris Work

Yes, absolutely.

And us and In and really for flows. in for of was I then tough. we we 'XX. see trend we beginning a Between think, saw last our the as through and strong of really lot business, it the skate Rick a pretty XXXX that's ebbs happened what pointed XXXX, out, cycle like in this trends saw definitely was years. is runs two

As business, movement to our and business movements break normally, apparel, both we saw of and snow driven seismic come skate specifically go some next our this actually relatively week. we constant of guys but of XX% from apparel we goods, by hard here stayed men's but performance, XX-K between typically some business. in you side our know, out year but the primarily category year-over-year, skate, early a the women's out to with accessories But XX% of we had that start will categories, our have pretty

that look our business of from you year stack, a XX% XX%. if two- over to gone So at it's

a of got I our we're drive footwear really propel in was levels this this you the it's good that we of into categories offset got think see next that think of XXXX, happy that is with. all So trend plans us ever year. one across think into to we've we really higher something to mostly albeit, And we've it. to seen. we've could happy We're continue that The but penetration

Jonathan Komp

the given isn't And of footwear then translated? on hasn't is that today? is there just meeting level something selling, some pent-up any thoughts nature Or maybe demand why that of the sort just supply you're that of higher

Rick Brooks

issues. I We've seen think these in it's are, movements trend -- business. related our again, always Jon, -- it's really

you a we footwear had last moved huge off a into skate run. So remember, big time, run. Really we when tailed footwear

And the of started our point, it on its these trade-offs years. for And you and think are forward in at the some mix then so see couple way last achieved near high there I down of unusual our here business not and us. over

you And these cycles the our our go So are always that our is to customers' share maintain us. for And wallet. mission of through. normal just

in accessory and recaptured the relatively footwear, from we've said, grouping. as And in those Chris move skate. mix, they as speaking, apparel why So dollars holding, the categories

covering think Jon, the customer. view offer all So about as where lifestyle this we both our portfolio how just approach, I on aspects we that

thinking portfolio As and new concept brands brands well with as to and the against about we're managing approach how brand that. same and our management

changes. then we normal, and had where footwear evolution 'XX to years we come fall then kind negative our and these of is a skate-run business big on. off see this and it changes there, Chris, and I So in 'XX seen think, cycle we've saw from

cycles, And our I the think we are just business. so see in these normal

-- are losses we say, minimize footwear too. clear, how so we be also we to though, and run can And looking the in

in not those they departments we running said, about the plans higher gains so are to drive volumes that across think down, only other have Chris diminish how As how we running we areas. don't or all the do do but minimize

this view multiyear the just on management a see normal we business tend of to as play our out I basis that portfolio So consistently.

Jonathan Komp

last just for And me. one

given in Is targeting Just on unit that it to the the growth the metrics can return you applied plans you're Europe, capital unit growth? more there? just comment

Rick Brooks

economics. we seeing everywhere. talk on estate again, today. pretty how And long I'll And It's And and time. the Chris this for is in true as about estate briefly, what unit think our economics we about is some let in the I'll of as consolidations definitely seen I It's earlier Australia. partly in the talked say in true we've that a landlords. to And in in prepared taking Canada. in true long, it's Europe. that retail, U.S., -- that is comments, has due definitely that's long, true would for meant about in real environment. environment Yes. of us much this We're Europe best said about talk markets the the growth true I just true in kind This of real terms place

great time. a So it's

I we we all investments. let with maybe position this build the a we a even you've of a to expand think points performance out some I look got Europe, there again capital globally. it retailer, in before in to to share happens country-by-country think point, to in if at take I'd and really about more talk contributions, tipping the be you in broadly markets, And you're that Chris about out think advantage of is all four-wall is you resources where at really What basis. we'll our like our

countries be not it's to I business. where across those -- able recovering number investments markets. Europe of may markets, multiple our in we're to that built we've make we're that mean, those tipping in we're profitable the stores -- about it out So because And a we have very

our omni-channel of see we then, base, we do significant growth in web in store the the of we scale because Now can countries. a same business as And time. of those programs at some have course, the the

one the thinking So lever in will areas business, our a think tipping we'll markets from volume on total omni returns the and trade points this with about about of thinking drive Europe. and we this in be perspective out able about where be more basis then European more and I programs a we're where area to country-by-country the and this build of to think tools as and going

in sure now in So a lot tipping and doing we have in we that the way about that it where points future market, investments think countries market. we'll the we're expansion making really think larger a we how those deep understanding our of we those and around about how the occur work tipping smaller and points economic the plan about between and countries go about

said, own of basis, Everything deals. that to returns. model economic we their Now expect in four-wall omni That to they and stores on on on generating of be that that thresholds going the clear, meet still are profitable be for to bit. is hasn't our one else changed top terms have

share So we the think about how let I'll store economics. Chris

Chris Work

XXXX All test in do things just we and really from said to we tell for snow, fact specifically, if working what new how But stores off of just in streets? lot lot a add have would XXXX this And Jon, Germany, on And take the dive really know, doing streets? markets, right, to the given I multi-years XXXX. was table XXXX, there's not have things markets hey, have their a we have an high -- stores of for to here there expansion there's to time. performance trying us off Do us testing, in malls? our you, we the snow, a at been trying work you to now on that in to increased look over Sure. we mode. expect of in you'd where that's closed. Rick confidence where we based I'll Europe, new -- and the class you high just acquisition markets work market us Europe, Switzerland, of one out is is were say, Are the as test

web a beauties One very model of that do high is have we this of penetration. the

web And allows stores penetration, our Western to different the Eastern in where parts us we guide so penetration do all across Europe not stores. can We might where only it work. a have exists. for web visibility and languages over really of where us customer so good operate good we be XX into have Europe, And

that our here look So of we stronger. continue and as gotten North kind working. more I expect back decade, last to saw And testing a And we think have in in America. what of stores our format, class we after past we groups talking middle get And on be get the classes results what as did class part a format, we and we from doing? should of stronger we of and what what expect ourselves bit the we So into each just at stores is stopped we put street we be we did put stores, pre-XXXX stores in a wasn't that, would those about had get through stores as anniversary little as doing? what putting educated I transition XXXX we were Or we say, should of was was because to play. if did mall see stronger scientifically we see when what stronger same working actually

an As we at said, everywhere payback there's because we're But XX- from we've increase a an we out, we web. cash-on-cash on trade at XX-month know a period. Rick look That overall we've looking look can seen get unit as metrics, opened pointed to at, stores, area we do being them in lift four-wall. in the

typically look and return And five-year we'd out, okay, level three- window to like on these us, rate of we return and to warrant a as return the these rate and where there's kind we higher higher less very of TA internal internal get risk, a a X threshold. stores? newer differently to there's hurdle other at in doing then XX but that of we to where than we things at a years high can and out a risk they're net say, As in, over of might get markets we might rate a that established we get little location, we And in out, look maybe are markets cash. that of a very high that model would

market a said we've We're we're it happy getting or to I there. point, load like like corporate and said, here to with stores. And the is before, execute this so will a that's a us. for And got got trajectory today, I've SG&A have turn years, few reiterated we can if there we've I think we last we where the really think to Rick support tipping an the continue over way profitable these that

Rick Brooks

metrics returns for globally returns thought stores. In fact, we four-wall the Jon, just same on finish, to on there, Chris' use

of So that we internal high to from do don't internal cash-on-cash hold as change returns, we've those well very thresholds. on what to historically rate payback rate standards learned as we ourselves metrics

Operator

next Instructions] question Mitch Kummetz [Operator comes with Research. from Our Pivotal

may You question. your proceed with

Mitchel Kummetz

I've got them. think three of I

your first, guess, So on inventory, I product for were margins your up. the quarter,

happening. maybe would comment little But you also bps. in not then, made ski have better. thought XX said, think about season a you I a bit be Rick, there I really would Europe, the Chris,

lap have I'm of clearance am that an that snow much in that Or So quarter could opportunity? was 'XX in into that to there QX too be negatively reading took an impacted wondering, I opportunity something? the product now you margin any place

Chris Work

is Rick tell it anything the I'll two you in a if crack tale jump at you, ahead I'll look and let it and go really tapes. of at to as take there's Yes. add. QX,

we open on they part specifically think of in Canada a And during also I and the here inventory. both on the have weren't happening. tourism in margin closures and Europe, significant snow resorts where we the and well. In the sales such in terms Europe period had They and wasn't business, performed of Australia, QX, an terms product holiday where had closures, had of U.S. important in impact pretty important extremely user we is impact in and and an an

product product Canada stronger and where U.S. you the tapes in think Europe saw kind we have So I saw closed. two Australia, in being we consolidated and were the tougher than of and results margin the margin we

Rick Brooks

And you're it closures, said, the inventory. conditions. Europe, right, own the to was winter was driven, driven and Mitch. by Chris it store particularly mean don't I the want by as in carryover exactly We

very did got got think cleared it. We -- market of is there, I never where So Inventory want is -- and clearing. promotional. we job you a not out we good actually

blew at We everything different. through almost is U.S. in owned snow the the we U.S. here Now

partners clean we right. the there's But want super have thinking brand to product inventory. snow in how U.S., we about don't number you're I When a with with -- about -- in place year. strategies know the we're in but dealing you we're we and did So next own our exactly here of Europe the

move we it, to did we it. took So move through in through and Europe markdowns the

Mitchel Kummetz

And it. penetration? Got just your XXXX margin digital digital land terms you up you imply it then of you its sounds that would that And then did Can remind in final I And question. on do think so in outlook, us your where XXXX gross versus business, your where Chris, ends terms one percentage XXXX? expect less like comes shipping, XXXX in in digital of have down.

Rick Brooks

you are All heard because we last times we a this like you operating right. the it's pick model level, you no these digital side whether particularly one-off, at be years, will if physical as surprise, and can sale Mitch, little measures, not to channel from where I'm few lever me no over -- this critical or the private do sale business matter is, a one bit think have going just costs many their say do, where a sale. my a

physical the digital for We job our we just journeys. touch empower of to interact preferred following is we their goal so don't focus that's business at tend And our is their and our own on us. around And let choice to that choose much on plan and want customer that consumer pick basically want And to around to those evolving customers' around with our journey. -- meet optimize matter just on and us. to They innovating how customer points. experience behaviors sales. to their them customer get needs mix why all the I they our everyone with journey remind Then to

the though, the to said, let we're that and data. data, So Chris share share going I'll

Chris Work

for quantify Yes. And the just I'll year. kind of

to did XX.X% web in up we penetration about So compared end at year. XX.X% last

how you kind gives that So of a much we perspective of grew.

to web sales was comp up about our with year. down was store store XX.X%. down prior And total XX%, X.X%, So compared the the XX.X%

get do feeling you So across we've how moved a of channels.

an I has type comments, on of margin. that gross expense to growth my in impact think web

the the it that profit think, operating our is a I levels impact fulfillment. over so we have sure so they're of grow to to function part Now on I'm -- same operating not ability profit. has actually integrated, of I integrated time, our

about think we how it. that's So

Mitchel Kummetz

to for little Okay. giving numbers. afraid We're thanks a the digital, ask but about Rick,

Chris Work

Sorry, fill Mitch, and that. didn't me had because on said I you let just -- comment XXXX, I out

think So XXXX, actually we those levels. as two we're to targeting between

know have wants one the that but to that And out. of that be lockdown stores. to open the back get They we're to we're as first think ones people, out. penetration you high constantly go know I in the to and web a one want it stores, So people ones see in this, pull will our was of last customer and experience. we not going because going I we remind physical They to as XXXX were

the was lower XXXX penetration to and XXXX, grow how continue plan in we So it expect that's on will be than it web to but our from we the believe business. levels,

Rick Brooks

love you I too. Mitch,

have Just say so you still I made. that I

Mitchel Kummetz

response. were with you that going knew I

management. last through go and just about these that So know can appreciate on it's you and business, I thing, footwear a and I and -- guys cycles, the portfolio

all they into similar curious, I I of and kind great footwear talked they this one business But break to athletic, casual two sort which of competitors morning about You buckets, your they a and have kind mean, other -- of reported am of is fashion, they're a guys side. yours and do then job. footwear somewhat

that's athletic. a morning business, of to You you it about customer, and casual footwear how than it's the opportunity fashion better I'm that if really fits potential piece the a don't do And you your think if your have they that? mentioned guys much doing side guys with for casual that's just wondering this and

Rick Brooks

here. again, -- get wrong we me don't Mitch, Yes.

it the best We our are can level make sure footwear at. perform pushing hard to at business perform can

business everything footwear small on aren't I there globe footwear, across Now drive of really like particularly brands the about these business. a when mean with we're footwear our brands all days. really that talking and left many the handful of

we of with We're the locked I the guys the understand with have of So both discipline, aspect channel And I good the those components variant the have think partner of about with own of key are Vans. major partners our partner, your Nike. their do partners. certain part what for based business. relationship good outside big you you into direct of get partner upon brand of We're to business your a niche a think, retail with is

for have in matter. So those a because major brand it major ability we the both of function of in a certain and is all with partners that the probably partners too, some that cases, position brand we're

to be you're here that somewhat experiment So regard. push business forward. brands months. stay footwear in see business experiment. we in show push over can our to having to said, you're the few see lanes that any continue up And try us in to continue us we we to going next the new But We'll place going on our believe

like our business. down in department change, in doesn't don't attitude general running the we which So is any

look push of at our So new things, we're partners and through with our optimize best we'll our going minimize and brands, this cycle. hard to on the we'll portfolio do to existing brand working it, loss

Operator

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

Rick Brooks

always, everyone's interest well, I you very always, and where doing going. what really And thank we're Zumiez appreciate much. right, in and All as we're

many thank not our are retailers profitable they all their as I be saying say specialty partners a want really to retailers what non employees, and So such our just can ever, year phase. year. had this that remarkable many not was I who again, at There most can of think that

proud our us cycle. through we're our teams. this of We're and supporting So of really brand partners proud

with So, here quarter results Thanks. and then a thank in few first to everybody, you, to look we talking months. forward everyone

Operator

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

You may now disconnect.

Zumiez (ZUMZ) 12 Mar 212020 Q4 Earnings call transcript