Zumiez(US:ZUMZ)2023-12-01 00:27Financial Data and Key Metrics Changes - Third quarter net sales were $216.3 million, down 8.9% from $237.6 million in Q3 2022, with comparable sales down 9.2% [14] - Gross profit was $73.2 million, compared to $82 million in Q3 2022, with gross profit as a percentage of sales at 33.8%, down from 34.5% [19] - Operating loss in Q3 2023 was $0.2 million, compared to an operating profit of $10.4 million in Q3 2022, resulting in a net loss of $2.2 million or $0.12 per diluted share [23] - Cash and current marketable securities were $135.8 million as of October 28, 2023, down from $141.1 million a year ago [24] Business Line Data and Key Metrics Changes - North America net sales were $181.6 million, a decrease of 12% from 2022, while other international net sales increased by 11.1% to $34.8 million [16] - All categories saw declines in comparable sales, with footwear being the most negative, followed by women's, accessories, and hardgoods, while men's category was down only low single digits [17] - For the fourth quarter-to-date, total sales decreased 4.6% compared to the same period last year, with comparable sales down 6% [26] Market Data and Key Metrics Changes - North America net sales for the 31-day period ended November 28, 2023, decreased 7.3% over the same period last year, while other international business increased 6.2% [27] - The men's category had positive comparable sales quarter-to-date, while all other categories were down [29] Company Strategy and Development Direction - The company is focused on adjusting merchandise mix and brand assortments to meet customer demand and enhance value through private label brands [7] - Strategic priorities include investing in people, optimizing performance by trade area, and continuing international expansion [11] - The company plans to open 19 new stores in FY 2023, including five in North America, ten in Europe, and four in Australia [38] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment remains challenging, particularly in the U.S., with inflationary pressures affecting discretionary spending [5] - The company anticipates total sales for the fourth quarter to be between $275 million and $281 million, with product margins expected to decline approximately 110 basis points from the previous year [33] - For fiscal 2023, the company expects total sales to be down in the 8.7% to 9.3% range compared to 2022 [34] Other Important Information - The company ended the quarter with $175.9 million in inventory, down 0.7% compared to the previous year [25] - The company is experiencing a more optimal lease expense environment and is evaluating potential store closures [66] Q&A Session Summary Question: Can you elaborate on the positive trend in footwear? - Management indicated that the improvement in footwear is driven by new product and full-price sales, with a combination of moving old inventory [41][44] Question: What is the macro outlook for Europe and snow exposure? - Management noted challenges in Europe due to inflation but expressed hope for improved disposable income as inflation rates decline [49][51] Question: How is inventory positioned versus last year and promotional cadence? - Management stated that overall inventories are down 0.7%, with a more promotional approach planned compared to last year [58][60] Question: What trends are working for men's and holiday trends? - Management highlighted the strength of the core male consumer and positive trends in emerging brands, with expectations for strong sales leading up to Christmas [75][84] Question: What is the outlook for skate hardgoods? - Management acknowledged that skate hardgoods are at a low penetration level but suggested that finding the bottom could lead to stabilization before a potential upcycle [93]