Zumiez, Inc. (NASDAQ:ZUMZ) Q3 2018 Earnings Conference Call Transcript

Dec 06, 2018 • 05:00 pm ET


Zumiez, Inc. (NASDAQ:ZUMZ) Q3 2018 Earnings Conference Call Transcript


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Good afternoon, ladies and gentlemen, and welcome to the Zumiez Inc. Third Quarter Fiscal 2018 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 the conference.

(Forward-Looking Cautionary Statements) At this time, I'd like to turn the call over to Rick Brooks, our CEO. Rick.

Richard Brooks

Hello, and thank you, everyone, for joining us on the call. With me today is Chris Work, our chief financial officer. I'll begin today's call with a few brief remarks regarding our third quarter performance and our start to the fourth quarter. Then I'll share some thoughts about the future before handing the call to Chris, who will take you through the numbers.

After that, we'll open the call to your questions. Our third quarter was highlighted by successful back-to-school season and solid full priced selling throughout the period. The combination of a mid-single-digit comparable sales gain and a 100-basis-point increase in gross margins helped us offset the loss of a high-volume week that moved out of third quarter and into the second quarter. On the earnings side, we ended the quarter at $0.55 per share, up from $0.48 a year ago, which was $0.04 ahead of the high end of our guidance range.

Our ongoing success continued to be driven by the strength of our diverse and differentiated assortments that are presented through a seamless shopping experience across all consumer touch points, accompanied by the world-class customer service that our teams continue to deliver globally. The third quarter marked our ninth consecutive quarter of comparable sales growth and transaction gains. And the fourth quarter is off to a solid start with November comparable sales of 2.3%, highlighted by the Black Friday weekend comp of 4.1%. We're pleased with our year-to-date results, and we remain confident in our outlook for fiscal 2018, which we're forecasting to consist of strong sales gains and operating profit growth and exceptional earnings growth, all the while growing cash and strengthening our balance sheet.

Chris will outline all these items for you later in the call. As you look out to next year and beyond, we continue to believe that Zumiez is well-positioned to expand market share, and equally important, mind share with our consumers. Our belief stems from our relentless focus on serving today's empowered consumer and our focus on enhancing our culture-driven lifestyle brand to serve them. In order to do this successfully, we've adjusted our operating model to reflect the changing world of retail and we'll continue to test, learn and adapt based on how we think the industry will evolve further.

We've talked about how we see the future unfolding during recent earnings calls and conference presentations, and our performance during back-to-school continue to reinforce those concepts. Let me again restate some of our views. With the increased rate blurred lines between retail channels, we've moved toward a channel-less world in which the empowered consumer isn't focused on going into a store or