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

Dec 05, 2019 • 05:00 pm ET

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

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Q & A
Operator
Operator

[Operator Instructions]. First question is from Sharon Zackfia from William Blair. Your line is now open.

Analyst
Sharon Zackfia

Hi, good afternoon. A couple of questions on -- I guess most obviously on the rate of SG&A growth, which has been really, really low in terms of dollar growth through the first three quarters that you're driving kind of the mid-single digit sales gains and I know, Rick, you alluded to this some in the prepared commentary, but how do we think about SG&A going forward? I mean is this kind of a new normal where you can grow SG&A at a low single digit percentage rate, or is there something unusual this year that you are really harvesting and it will tick up again in future years?

Executive
Christopher C. Work

Sure, Sharon. I'll go ahead and take that. So thank you for your compliments on our SG&A growth, we're pretty happy about it as well. This has been a big effort of ours, as we've been thinking about the business over the last couple of years and setting goals really by entity and how we're planning the business. And as we think about 2019 and how we've exited the last couple of years, I think that -- the one benefit we've had in growth rates is -- last year we performed pretty well. The year before that and 2017 we did as well. Throughout that time we were growing the incentive pool, and we've got that kind of to that targeted level and and beyond. And so, there is a benefit in incentives to a modest amount in how we're planning 2019 right now. So that's one area, but beyond that, it's really strong expense management across all of our entities. This is something, again, we kind of talked about in our long-term plannings of how do we think about SG&A and really all costs to really try to optimize the business. And it starts with some of the things Rick talked about, as we have talked about localization and how we're thinking about one sales channel. We've really tried to break the business apart and say, you know, the customer only sees us as one sales channel. We don't need to see our cost structures too. And so fulfilling from stores, and the way we've been able to ship closer to the consumer, all of those things have been benefits to our overall business. That being said, we've had many other areas within SG&A, just in our management of store wages, how we've looked at store operations and the management of store costs. We've really kind of gone back and looked at our web businesses across all of our entities, to say where can we optimize some of the costs there, and of course attacked some of the areas of corporate SG&A as well.

So all of those are contributing to what we're seeing on the store growth -- from a store growth rate, I think, I'm sorry -- from an SG&A growth rate. I