ZUMZ - Earnings call transcript Q2 2021

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Operator

Good afternoon, ladies and gentlemen, and welcome to Zumiez, Inc.'s Second Quarter Fiscal 2021 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 would like to remind everyone of the Company's safe harbor language. Today's conference call includes comments concerning Zumiez, Inc., business outlook, and contains forward-looking statements. uncertainties. all that that historical are subject risks and on be facts statements to call this not and forward-looking other may statements made are These based on Actual results materially. may differ

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

Richard Brooks

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

two-year of strong for the results while sales total Therefore, year-over-year potential result Reflecting our and full-price QX first growth our pent-up all that increased XXXX days the as model, grew posted sales we we the of second-quarter ability our and the of second business capitalize due of opened on of trends Despite increased as over quarter strength XX% XXXX pleased XX% strong on for in top-line our Our second were XXXX profitability the XXXX. a quarter and upon closures our pandemic. X% of more basis, stores total to demand tougher solid of in selling. back driving quarter roughly face comparisons. in sales significant closures, XX% to better-than-expected of a XXXX, operating reflect those

earnings per from over returned of record, and to $X.XX just subsidies, share levels quarter diluted shy side, more and second savings of actions of following last expense XXX% government up temporary resulting the year's On XXXX. cost $X.XX, in normalized the year's spending last $X.XX

as again our reflect to to store once This more did back results turn for fulfill offering. development year's the teams Our terrific customers and current increasingly between experience mix their job digital a our shift the distinct that the is This historical connections. channels can to environment through physical achieved enriched a merchandise our demand very shopping. be to brand given positive human-to-human a adapting

levels of we feel Looking about sales the to second the ability XXXX good ahead, year. half to over our exceed continue

we learning, QX some sales competition school With to cases Even seen year-over-year were business comparisons good with business. COVID tougher are conditions uncertainties back-to-school consumer behaviors the more season, country uptick the as and variant in Delta face same despite pandemic and and challenges the for we've recent through created X% resuming the quarter. the The about results begin near to to up in momentum of by across additional around third provide start term. the XXXX. of related caused continued normalized Day, in-person date to with the more spending. a which Labor will a discretionary the districts majority total up has These compared XX% the period operating

directly drive help our takes confident to ahead. that adapt and our years in business pandemic, and our our brand, strong agility our are risks ideas continue is best-in-class our to and capabilities, financial ahead. to to which on in-store gains Zumiez across our share be, lie weather throughout that market ability customers' the key We teams model needs. evolve us proven to Well, the the potential best-in-class continue the in consumer like including will culture, our will shown the sales and sales fulfillment doors. to This Delivery, and been have The elements changing of mentality any have teams teams business. incremental our success agility to has X-channel based includes our to of The strength

steadfast customers. infrastructure of footprint shop with We as which want, inventory locally will back-end visibility brands in want, effectively expenses us a Our and with emerge a they We've in in from rooted they with into overarching organization, of want. they our get capabilities the in a been require and them Therefore, customer when a partnered fast to how serve uniqueness together to touchpoints better strong serve built grow great to to consumer-centric in in to brand strategy and individuate. will to leverage and We constant. customers us commitment ahead path channel-less moving originate. allow further remain that they to us our trends channel morphed that diversity in and all a and globally regardless allow as brands informs the business which to The culture bring we which with remain want, our the We an works built customer. work sales built can our business global has future. our significant to investing what faster we focused,

time these We such such believe continue to create opportunities. that as that -- great

from Chris we That before. the this ongoing to in than the in the strategies, Chris. people, well-positioned call of place, turn a And to to ever I'll and crisis, discuss winner clear stronger financials. the brand right the emerge consolidation With are resources retail.

Christopher Work

Rick. Thanks, afternoon, Good everyone.

second year closed where XXXX the of last for and that to our year quarter the were stores due the I'll fiscal pandemic, appropriate. approximately to of the both Given comparisons quarter XX% prior provide

an review Following current our trends second-quarter on full on the provide year. of third and perspective update results, I'll quarter-to-date our my sales

the $XXX.X Compared the quarter second we our of and XX.X% of $XXX.X of addition million continued is by impact and in the sales of business and domestic trends, with driven economic were year-over-year X.X% from second net the XXXX. Second-quarter the The from XXXX, current XXXX, sales of on on quarter growth increase million, saw sales the $XXX.X XX was capitalize reopening to million in net up stores. stimulus ability up in quarter. XX.X% second the second comparable during of the primarily stores, quarter

Our quarter XX% the the in ago. $XXX.X Australia, year, operating from XX.X% sales, From from a and X.X% and in international Europe perspective, stores increase million, to last America's were XX.X% up the up net XXXX XXXX, of were the period compared an XXXX which XX.X Other were consists same the North of second sales up and during of of compared to of days million quarter XXXX. $XX.X XX% X potential second and XXXX. open for approximately quarter years over of XXX% second in regional net

net of respectively. sales noting X.X% the America were experienced North impact open currency compared other and COVID-related XX%, operating and Canada, of they for Excluding the foreign significant X.X% and Australia, XXXX. store increased We in during approximately XX% Europe, sales increased XX%, translation, closures the quarter net with days second international available

category, the category our the by followed the Hardgoods growth largest During footwear. was accessories followed men's largest quarter, and was category by women. negative

inventory wages, a point the gross $XX.X $XX.X second quarter of in increase rate profit a pandemic last the point reflects XX a store of was in basis The XXXX. online. driven our margin point XX.X add year $XX net from deleveraging $XX.X last point a second primarily million include incentive second net expense A largely XXX-basis the of in points quarter significant basis a improvement to partially closures distribution and basis in in the to points point of to store year, point basis second we of year. a by the due due leverage points, shipping to and net million product XXX the by million XXXX, $XX.X margin, a year in was as quarter XX of web of XXXX to was of percent or margin Compared The in increase the governmental XX improvement improvement sales to XX-basis of shrinkage, decrease quarter points to XX.X quarter SG&A shrink in inbound a the subsidies. of SG&A two ago. costs. percentage points benefit ago, a XXX compared when tied of $XXX the and XXX XX.X% XXXX costs, in of XX.X% web product expense of Gross as second XX.X% and quarter million XXX-basis The compared XXXX, offset of Gross changes and and million in deleveraging points from XXX costs last second in sales was sales the and in to occupancy million or or cost shipping in higher sales basis most savings temporary sales sales XX-basis a incorporate of deleveraging basis improvement second-quarter from improved compensation, for basis increase years XXX-basis decrease quarter related customers XXX-basis basis decrease compared points. annual points, XX of second from driving in the XX.X% largely margin XXXX. quarter of

an quarter we of income sales. income XXXX. for also the XXX second second XX.X% million XXXX quarter, diluted of or the impact. or compared net In net for $X.XX $XX.X net income of $XX operating a share. of legal in $XX.X $X diluted per of or quarter we of quarter Net During was of million second share net million, quarter This of million, million accrued profit of last in quarter the sales, sales, of second $XX second net X.X% $XX.X basis XX.X% per a or with for $X.XX year. to compares points or negative income the was $X.XX diluted resulting share, per XXXX, had the Operating the million, a XXXX. or settlement

period X ago. second tax was quarter XXXX rate XX.X% effective with for Our year ago XX.X%, and the XX% of a compared years

per securities to XXXX, was of XXXX. a strong generated securities Turning ended and XXst, the XXX,XXX cost as offset The business total the a August of of marketable cash operations, million. cost repurchased cost Company's -- total of $XXX.X first, XXX,XXX driven increased as $XX.X as current by shares the to a average quarter Cash X, repurchased Company marketable The XX.X% financial partially Year-to-date, through million shares sheet, average an cost by the Company has cash to of position. the July and and and current September quarter of $XX.XX $XX.X million capital compared in share in very $XXX expenditure. increase the balance of at million. at XX.XX XXXX, an during

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

to September XX-day period September the to increased for Now sales the quarter our results. date Net XXXX. XX.X% Xth, XX-day XXXX, period to ended compared third ended Xth,

As September sales X, XXXX, we learning the of saw Compared to we which majority XX-day in operate. and total in-person back net go X.X%. our on to regions increased the customers the period

other perspective, business From quarter in the increased From stores X.X% the Our over Due to September footwear, we'll on two XX-day in and period last specific category Total X.X% period for perspective, business, one-year XX.X% same of third guidance the by X.X% September of the last a year. increased XXXX a the sales XX-day period XXXX, American expectations our with XXXX regional compared followed over from ago. for the only year during ended XX% XX%. period category. our September increased X, visibility basis with comparable to year. grow on North XXXX. translates in are full to just update low to to versus the for the and XX.X% available providing positive and net same XX% to Men's and to year, but compared opened XX-day revenue, between our high be fiscal projecting XXXX the the year X, for not international most increased the comparable we sales years period up increased XX.X% period ended fiscal directional compared the were This sales for XXXX. Meanwhile, the six, or provide limited XXXX to net of into were the compared businesses from a XXXX. teens accessories, Concerning last days in period net negative a the women's. fiscal category, was growth was Hardgoods mid-teens want XXXX, do our for sales

year, growth above of anticipate back XXXX XXXX were results. to the top-line that we half results on continue For the

fiscal in absent fourth and restrictions from third lockdowns. high-single-digits fiscal the XXXX, For mid quarters XXXX, sales we'll grow to we the of COVID anticipate and significant

For is from slowdown the this quarter, have specifically, just what quarter-to-date. a reported third we

However, we XXXX in we've we slow start October had anticipate late as September to believe strength were saw be will October cadence a through This and and a back-to-school not normalized it more strong continued year, to September warranted, that back-to-school as season is they year. a XXXX. in and last do and as seen

margins. revenue XXXX, increased margin by grow sales, storage reduction a to planned with gross leverage and as margin, shipping currently gross costs to normalizes on year-over-year, is opened, on occupancy driven being costs in product web Moving improved of

our an SG&A marketing travel and growth the margin be increase X expected to that XXXX not are Fiscal not include quarters. to in costs related increase XXXX pandemic, due recognition that pandemic. drivers accrued in to performance, anticipated much related than spending in and we however, significantly in an due anticipated we to grow with to an XXXX was third discretionary in of travel with that store our other subsidies of benefits SG&A XXXX, events sales. of improvements expect modest closer compensation reduced fourth improved restrictions XXXX expansion increase wages accruals to line quarter, growth our the now in incentive for year-over-year were reductions training much gross costs fiscal anticipate and increase received XXXX and expenses overall back anticipate to sales quarter, from the more margins another increase costs XXXX, basis, with operating in reaching a in see mall to in the the very possible In events several XXXX fiscal second be included will closures while the not store related an related as half sales. governmental settlement XXXX, repeat we in in many results. On percent the double-digits summary, with are in reduced up in in of in reasons, year-over-year in first While and increase little our fiscal gross XXXX will to illegal during hours margin repeat net XXXX, and The a and

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

XXXX We are Quarter. in planning with a by primarily diluted we earnings per First achieved increase share to increase fiscal meaningfully the significant in compared fiscal driven XXXX,

As we as back model restrictions to capacity training, and payroll-related are costs into are quarter, above. saw expenses the in as the travel reduced, other hours, store coming discussed more second such COVID and

expect In from outlined strong incremental a sales. EPS the in flat half of of We would months are our currently diluted six be the on we earning exceed XXXX. down year to modestly back to those estimates today, the last the top-line event flow-through

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

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

will We fiscal be to XXXX and approximately non-cash million $XX in fiscal expect depreciation amortization $XX.X lease compared in that excluding XXXX. expense million

count million like estimate. repurchases be to today that, open our disclosed approximately shares. from for our We questions. will share Operator, And after share made reduce up Any call with currently this count to full are we'd diluted the the year share for projecting XX.X those

Operator

Please Thank Q&A we you. [Operator the while Instructions] roster. by compile stand

from Our first question Janine Jefferies. comes the of line with Stitcher

open. is line Your

Janine Stitcher

Hi, good my taking Thanks for question. afternoon.

you're and chain acknowledged you're then it of hoping work brands environment. on You was you private some what with. what third-party from seeing you could that supply this brands maybe elaborate -- challenging up the your more just between the seeing, I break

seeing what you currently any us you. the in you're are to where feel help business. speak like in product Just challenges understand and in areas the there getting Thank

Christopher Work

Sure. level, the Thanks, few and maybe crack Rick I'll anything try comments I'll Janine. he'd add different high about lines. and maybe then the if a at address this a just let like. take to

extremely pricing, shortages, we I capacity, challenges with this inflation are commodity from XXXX. chain the the us with how something start just brands general transportation labor our work vendors parts and It's dealing a including to capacity, I receiving, this. that throughout our think this; the and with there, supply raw to challenges, to and affects challenge is I early guess pandemic really this, navigate challenges our transportation and not factory about then of tied different how perspective, We've required and really, been this close think logistics timelines material new. out that country-by-country are obviously, the costs,

working have we I that address vendors. receive, how wanted this to we done job moving to a teams with what our forward. as And be an perspective, in for We but really it to inventory than up. our we but we've very the and we've about, back in good have, they really year So, do I because the ago, so of with like much we it spot, happy we it, in strong think inventories been we just inventory those wanted this in I dealing product, we're we teams demand, we're navigated was XXXX lower of a have some QX planning it to time yeah, think was with delays plan Clearly, resulted really mean, that's happy built the amount from our impacted well. our feel think has and been are has I think levels. overall as a around talked good this

to how our challenges these the through we really experience provide work the try of end day. the best and continue I brands with we think customer to on get at

supply at back forward, I look moving there of to we are think chain going year. this through expect the as half the we to be continue issued

good of moving back-to-school we'll of to see business-to-consumer laid side. saw think and some I side challenges Rick last shipping think in said, our we some got on with I've expect our plan that. be year strategies to here. start continue challenges really to also I to QX mitigate deliver out about that navigate all the good out got carriers the working to we've there And and products on to our I we've I inbound in already we're the that to customers. But on think how think ability and place. we a getting talked Like pretty

And not on just through year as on material we're the coming think I result we've teams you thing we've as think good able date. the laid So, forecasting that we from. this long impact the we we'll diversified. done ago to on was too it for last I were we're tack keep in at for this, it where really out -- a wasn't about talking And job. the I'm business we in manage go. I'd of supply We'll point product entire the guys, our we to estimates the add about chain, think to -- but proud a really how

years We we than origin much layout today three more within business or ago. have country two a had our diversified of

about a question work good smart, they've their tried your obviously, and branded So, that I too, logistics, label, diversify We've to own are say in private brands label to run really right? very our we how try in of brands, really and their And thing. we goods. category our offerings. versus our with with We that that's and to have, private built think more think how helps diversify

challenge. It's challenge. a it's So, a

I move we got and strategies see year. plays through how think we'll the it we've good around out as

Janine Stitcher

views Great. trend negative and what the you're And there, maybe cycle to the on guessing just then on what we're but of is of any surge just side where speak the more ending fulfill on hard the just what you. felt comparisons what that of you on COVID, a seeing just to I'm in, your during goods business, just maybe you thoughts Thank the from thought that. function year of are we last

Richard Brooks

Sure, Janine.

I categories here closure is of forward. of we is and volumes as being skate much and a really hard -- it remote everyone that camping, of -- the pulled of got look a lot nature got the home, -- and seeing the I one cycle, at relative good think stores, and to lockdowns, in and we're think those goods pandemic I skate because think we're the shutdowns what example hard goods skate, the schooling everything like of where

business this expect well, apparel that that think by that on port still a to think forward it X in plus pandemic. and I much so, our all out selling hard tough I seeing, X years years just - it well -- We'll has if And think which great like running we're But plays and of we're responded case. coming so really hard and -- this goods, could because been the point because across in having remind running comparison's next responded have skate this how gains is, cycle, that despite down-trended that's some our what is we see always partly the year. everyone goods, to of so the more I at volume again, thing business I skate

driver the good business our see So, how predominant business, it's been the really to so of responded.

our We business. are maintaining customer's wallet our of share

manage quickly is, of relatively those to of just this thinking we're at, skate head position. we're inventory response great big terms I where see as Janine, in that how is our categories when think business an that's this pull-forward So, where I inventory year our think we saw from perspective we'll we but can next

feel side are So, good where on about that we I too.

Janine Stitcher

much. Great. Thanks very

Operator

Thank you.

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

is open. line Your

Richard Magnusen

can the thank but Magnusen hello, then any in-store you you know and Richard that and recent this Sinderen. in last Jeff you Van that longer We behavior environment in us is is I Yes, business for seeing as COVID the more taking for changes traffic, what question. consumer tell e-commerce, this omnichannel, significant And out? trends could impacted plays are our delivery? about

Richard Brooks

start I'll me they is they is remind let us. to really to you, again, want with but our the ask get And to customers journey with some empowering then data you Zumiez how our choose Richard, right. Chris choice about shop share with -- world. All just on own in their job about

our So, channel the to is sales meet designed But our one how no tell said, the you really where I needs then model I locally. business am. leverage matter structure that happy to cost And customer's thrilled are digital or physical. am

the in that's chosen because said when that our stores. our I I the case. for research we get in way shopping. very stores very, to that in have As to customers the believe preferred Z say richer work And I their script experience shows a you All see shop actually return can to brand Gen really strong a they

human-to-human that our So, and with the our shopping deep get I connect we in a when experience to employees. they -- really at makes deeper when brand that them our -- customers get a stores, in we connection, think Zumiez get experience powerful

data. let I'll that, with So, share Chris some

Christopher Work

Yeah. into heading Richard, a into we I is thought of this obviously the lot year. put think something

And know, year. and in okay, at we're ecstatic of our be said, XX% somewhere XXXX there. compared quarter penetration increase kind when that close, we we're last the relates point, Rick's XXXX, looked just closer were the it originated think to we to about web we online year-ago it's in so saw just given stores our to and about from And the for the kind digitally demand between to we levels, here, and XX%. XX% in XXXX second and going we said, you XX% in Just we as it had even much to of to

things And think you that favorable are so, the I really in here. see model some

offsetting by the almost is things talked what's year. leveraged points. shipping had basis in see What's QX, you'd interesting back One that to you we last the was gross XXX go margin about if completely I last web of

I So, financially the richer customers. of really, as and the for for it's experience fee It's in-store experience think a a customers, product. immediate our good our there gets us

back see how to here half of back levels we'll plays to go obviously that those excited the out and really see So in XXXX year. the

Richard Brooks

And businesses, a -- response to this including across Richard, our our the returning more We've -- Europe, our more just where return broad -- U.S. a I'm issue. in mix swath just our seen across just isn't so this the clear we're on XXXX businesses. we've is, lastly, to this of seen levels

So it trend relatively as And intimated behavior. a your what our and global base. seeing probably our experience think it's how I in question again, we're to is, our seeing brand we're consumer's and of unique nature consumer to relative the

Richard Magnusen

causing And this you terms chain detail on little that And the hard pull thought sales? some situation then -- in Okay. some supply is referenced Again, other effective then you there's anything I You are the supply been of more alternative seeing to ports? bit, ships an regarding situation. such as has a maybe there. being routed to

Christopher Work

possible we've pulled Yeah, dry to we chain tried it of be it the where kind supply as tried the this, to lots I discussion, we get There demand situations and have of the going becomes really to sooner we've navigate depending are forward. our different issues. a to product, a on perspective, from have selling vendor-by-vendor think expectations as where creative forward, are patterns and of for what navigate

from forward lots out for in don't you ways All potentially really of tried So, things. to depending have for the navigate specific on different the the call moving need have than other to airfreighting teams I this think I a product.

Richard Magnusen

All right. queue. the Thank I'll in you. back get

Operator

Thank you.

of with Jonathan Komp the comes your from line open. question Baird, Our next line is

Jonathan Komp

the to Company over question follow that, just for X offset goods view If have that you if that I the Maybe of last and if wanted XXXX, risk goods? growth follow-up you do? the on than you up then are in don't just look accounted back the all to that I a Hi. the do think could good. other seeing first you X hard Thank and ask, I at all you. trends believe I for go you hard categories the of period. a related years there think for way or more is it know there and you hard a

Christopher Work

I'll go to like. ahead long and categories over happy trends huge to growth falls of of see It's model offering. our driver. periods our John, We've been like time, overall been been core hard has all anything really take back Rick part been of From a goods the will I super of it. an And a have you'd flowing. crack this and a we add if have guess, perspective, let

And to so, like, question, not we second going sure. of I do part think really I'm your was far it's go? to how the

I do that the we things gains. part best overall got that of going offsetting are running it, we've have and think we is what

seen been and yeah, to has a have decrease in So results hard we're strongest there, we've mentioned little that we've now We our bit. seen footwear, really category, continue increases increases strong goods Men in we accessories. seeing

really all as those as I growth we those So, as our all three mentioned across to business. think flip areas see good well I we signs back-to-school, the of of are just women's

a multi-year down, because seen doing or goods offset as running the results diversification what QX up things here me, the have other phenomenal we're to that's that we that's bit a offer we gains QX, model them. with and are hope and we're So, great still And in of so of we've hard trend other trend to And things that's the stack. for areas. the pullback in a now over into the little big that pretty

Jonathan Komp

categories mentioned, see favor that's just Yeah, fall product trend the you and across mean back could And may follow-up, your helpful. but as this be you relative on just maybe do that as the product categories, hard predicting other towards, for margin theoretical, comment goods major you a really will of categories, what where if margin? then in might

Christopher Work

we sure. where to we speak that, from Yeah, I'm and be not perspective, could of margin happier a And kind stand. happy a just with I to think product

snow our we of highest or lower think the for that business margin categories look I if us. year us And running this goods margin product and X hard you the at is the offering product the are accessories and are margins now have, gains. footwear apparel the and typically

last is grow grown both as departments the at across as goods Now, the few right? as continued to grow the been We've we've well our X of nature within So Company happening, we these to margin. years. in last able over hard look with years, this beauty the have product changes margin

as piece grow last really our five interesting of the years teams a I'm as is seen seen continue margin well cycle, as international Another we strong to over internationally this teams we've our as decline in because label growth proud such private been product businesses to as penetration product that we've well our U.S. branded margin. we've scaled. those

are is similar my whole There to So, both a the the our doing pool. mix we to, commentary, if or they typically challenges almost we sales can are high trending have margin drive it's footwear, everything, I lot mix even maybe things, we is of from countries goods and to how can, different not results overall our think still wrong a across way. as about which all transition as are the which time from But we see times, say, when time focus at product hard teams categories drive product really perspective. margin

Jonathan Komp

Okay. me. Great. one last And for just

we framework double-digit you. think margin. for hold think about to margin a to Thank on the and to your beyond ability operating any puts takes As XXXX, and

Christopher Work

we even first our as John. but we're be script in And going we this I'll that talk too here challenging be to because not Yeah. in very the XXXX high to anniversarying XXXX. we are quarter move QX saw Thanks, XXXX, will of much we what level call -- to have about

to And would of in to than extent expecting continue retailer. are first XXXX quarter I'm to to view stimulus-related trying try offset that step We're Fortunately, have But a things. to the some going saw hard XXXX. we first talk ourselves to and specifically, to that possible. as a the of ourselves we growth lot view do a a and a quarter. we offset working the model benefits in plan we we're do not other backward for of greatest the build

were long these rewound X think to calls the back has in double-digit proud go And really driving. the is single-digits. teams been of I have mid-single-digits term, the If I'm over about getting the profit talking we or what the and ago, same high to we to years X operating where business Now, getting done.

of we've lot we've strong a really built into and drive can value a driven think now shareholders our I for model that double-digits.

And XXXX think beyond. so, build here and into XXXX, in I models that and we focus think we're continue can on that track I that for

Jonathan Komp

again. Thanks Okay.

Operator

you. Thank

of line Mitch question Our comes with Research. from Kummetz next Pivotal the

Your line open. is

Mitch Kummetz

for questions. Thanks my Yeah. taking

the of QX, first a through differently. sales early Let bit in look I hard-good -- all is question a ask Q that at it me the even If look basis, the deceleration goods you’re the category? seen due that of sequential and growth we've fair I half your if at the little on hard to of to of softening growth. the the two-year Is say

Christopher Work

am Mitch. -- sure Are fully I mean, understand question, you not I I your

Mitch Kummetz

I Well, in you're was over XX% QX so up QX, years up high were think trending XX, said single-digits. QX sales X something the ago, you

that of this two-year hard on qualitatively deceleration stripped curious if goods. So, say numbers I'm be but skate you most those softening you has gross can know goods I'd the to hard to of there's deceleration I rate that, what me tell you out know -- been a won't been that of hard if were a due don't guessing basis. goods?

Christopher Work

before, the look we're to complicated you were August growth at XXXX, an where on let's up this I I as go year than back is back-to-school. the this major of example, of were to I years too, think -- where something because Yeah, be if we probably it's take mean, think QX more XXXX, pretty just at X.X%, we now our X.X%. that, we've like run-up have I X.X%, for we’re and up XXXX, actin August August fifth would XXXX, and

multi-year you mean, time. to this are pretty and that it's been long I And balance think following for across year. where stacks, a in you know, I you've have you as So, the significant

at haven't first cycles first been our in second and the seen pretty couple is XXXX, of all growth same have biggest peaks quarter. growth couple Our is outsized had what years peaks really least since last the quarters, in those we've we now or in the -- XXXX and in and so

how I think out. we have plays that see to

how Mitch, yeah, drive are -- we me, For goods think still total declining, it's growth. hard -- can on -- And but it's kind that a again, of it's multiyear perspective, we I

Mitch Kummetz

I stuff. offline. a snows Snow, some longer challenging of I if you to hard part that I is Rick, X.X how steady to rest can correctly, Do in for sense year, on there of pent-up was year resort Europe doing this maybe we why But the understand. been last the have. I it's is season normal some declining mean, take course if the to COVID, of snow question we over asked I business pretty have more it's been if the mean, I No, a as get goods? due a been this quarters, soft Europe bunch doing last anticipate the demand or based than -- trend. and probably you've of closures, recall just holding If also in that both

Richard Brooks

have answer I we normal I Europe. snow a think, question more Mitch, that in our is yes, think we to do if season your the --

season U.S. the that had side an in snow outstanding is the we Now, of flip here

of businesses the always of two of there's geographies. that balancing think I two So, the the aspects

have are there some I would snow I lot Schwab that these too. catered was season a there, than people upon what here be -- it -- yes, worse can't that and but couldn't our time, clear, in how it is to some -- But cater that So, depend are be year stores to really kind Innsbruck snow, that really Right. it for including still was much Europe, an being of depends like same thinking the the only be U.S. ago. think Not I upon -- get we not there, a not of will only was overall closed. think customer. results At that stores

going you good. year So, so a mid decent do think worse couldn't is get I snow be much to

beneficial be for Europe. better us You in

Mitch Kummetz

there outlook? sound like has selling all other lastly, it dynamics strong, channel XXX your to Okay. margins. and sort And QX. you're some selling, ago, gross I'm half. basis It the years if that sounds on that you're be the X-year -- for liens look guess at full-price that that continue because are you're factoring to back up I your I X of full-price do running gross And a margin and is the versus the expansion doesn't like QX points margins over to both the Again, curious, same with in expect you of expecting inventory, given as not then just into or lot

Christopher Work

basis If Yeah. points, in We QX. are QX product gross occupancy XXX had in but an We the improvement basis specifically, margin break quarter. points basis talked XXX increase I leverage margin about in of shrink. points that the out had same in of down, XXX itself. play then second We and

started a couple QX seen the that growth reason year. and back we're half factor of that level maybe actually we've last a really of same into year, really product not in QX back margin the half in now talking in and is that we to growth I about think we're that the the QX even of last areas. the why of As of year, forecasting move One,

strong a saw year. So, growth in really X we and product last QX margin

not forecasting primarily throughout our and we're numbers really to run also what So, pandemic in we're significant, excited quarter the be now being about and that extremely first we've really strong shrink open. is

but year good gross run probably aggressive and a less we seeing bit little benefit on the and about why the we've margin, back multiyear basis, again, on you're so a QX excited So, in of the That's through side, the numbers don't have in second shrink here half the really shrink QX results. on the quarter, either.

Mitch Kummetz

luck. Good guys. Thanks,

Richard Brooks

Thanks, Mitch.

Operator

Brooks like call back you. [Operator the showing questions remarks. turn closing Instructions]. Rick to would for to now I Thank I'm no the queue. Mr. further in over

Richard Brooks

to And you. happy always all you appreciate we'll you, today. to it, you, call Thank on so our December QX everybody. you in with again, Thank Right. for We're the look results. thank talking to us engage and for forward really joining

Operator

today's conference disconnect. for you Ladies call. now and participation, may you Thank gentlemen, your this concludes

Zumiez (ZUMZ) 10 Sep 212021 Q2 Earnings call transcript