Zumiez, Inc. (NASDAQ:ZUMZ) Q3 2019 Earnings Conference Call - Final Transcript

Dec 05, 2019 • 05:00 pm ET


Zumiez, Inc. (NASDAQ:ZUMZ) Q3 2019 Earnings Conference Call - Final Transcript


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Richard M. Brooks

trends and brand cycles, which can now launch from anywhere in the world and quickly spread globally, due to proliferation of smart devices and social media. Our international businesses are primed for future growth and through exporting our operating model. We are taking our processes and tools from the more mature US operations, and seeing good results internationally.

In the third quarter, our businesses in Europe and Australia again performed ahead of the consolidated comparable sales growth. With the strong comparable sales, margin growth and overall store growth year-to-date, we have seen improved operating performance as well. We're excited about the progress being made by the Blue Tomato and Fast Times teams and continue to build upon the benefits of a globally integrated business. We are the only retailer in our lifestyle niche that can offer our brand partners global reach in major markets that meet consumer demand.

With regard to our financial model, we believe two key factors have contributed and will continue to contribute to our ability to drive improved results over the long term. First, as a lifestyle retailer, we have built our business to be exceptionally nimble, continuously evolving with customer trends and preferences. The capabilities we have built continue to provide us with a defensible strategy in maintaining and growing share, with our segment of a lifestyle market that seeks to be unique and different.

The first nine months of 2019 is a great example of this, as we saw a category shift in our business globally, with footwear and hardgoods leading the comparable sales trends, while men's and women's apparel have posted softer results. This is a meaningful change from one year ago, when we saw the apparel categories driving our positive comparable sales. Overall, the goal continues to be selling at full price and full margin, while listening to the customer with regards to the categories and brands they want to see at Zumiez. This focus has resulted in growth of comparable sales in 34 of our 40 years and is something that we believe will continue to be an advantage into the future.

Secondly, as we transitioned into the digital age, we've done a tremendous amount of work, creating an operating model that positions Zumiez to win with the digitally empowered [Phonetic] consumer, by combining our digital and physical sales channels to work seamlessly in service of the customer. With one inventory, that is accessible from all customer touch points, localized fulfillment, integrated sales teams, aligned goals, and our strong cultural values, we are well positioned to scale the business in today's integrated world. This strategy directly contributed to our 2018 results, as we increased operating profit by 25.3% on a 5.5% growth on revenue for the year, and we've continued that trend into 2019, delivering operating profit growth of 58% through the first nine months of 2019 on sales growth of 4.6%.

I'll leave you with this by staying true to our customer, culture and brand, with an intense focus on