Zumiez, Inc. (NASDAQ:ZUMZ) Q3 2019 Earnings Conference Call - Final Transcript
Dec 05, 2019 • 05:00 pm ET
Christopher C. Work
consolidated comparable sales growth to be approximately 4% compared to our previous guidance for comparable sales growth to be between 2% and 4% for fiscal 2019.
In fiscal 2018, we achieved peak product margins, improving from the previous high point in 2017, despite a heavily branded cycle resulting in reduction of private label share of 370 basis points. In fiscal 2019, to date, we have also experienced mix shifts that have impacted margin. These mix shifts include our category sales, trending towards hardgoods and footwear, which have lower product margins in the apparel categories, as well as higher top line growth in our international businesses. While international product margins continue to grow and have additional opportunity, they are currently lower than our US operations, based upon where those businesses are in their lifecycle.
For 2019, we expect product margin to be down between 10 and 20 basis points from the prior year, consistent with our Q2 earnings call update. We continue to manage costs across the business, with the more mature concepts in North America, focused on leveraging at a low single digit comparable sales growth. Internationally, we are focused on managing costs well within the current sales and unit growth rates, and driving our concepts closer to breakeven, reducing the impact of the losses on the overall business. We currently anticipate year-over-year operating profit growth of approximately 25% to 30% for fiscal 2019. We are currently planning our business, assuming an annual effective tax rate of approximately 26%, comparing to our prior year rate of 27.5% and diluted earnings per share for the full year are now expected to be between $2.38 and $2.46, up from our previous guidance of $2.10 to $2.20, representing a year-over-year growth between 33% and 37%.
We have opened 15 new stores in 2019, including five stores in North America, seven stores in Europe and three stores in Australia. There are no further store openings planned during fiscal 2019. We expect capital expenditures for the full 2019 fiscal year to be between $19 million and $21 million compared to $21 million in 2018. The majority of the capital spend is dedicated to new store openings and planned remodels. We expect that depreciation and amortization, excluding non-cash lease expense, will be approximately $25 million for the year, down approximately $1.6 million from the prior year. We are currently projecting our share count for the full year to be approximately 25.5 million shares. Any share repurchases during the year, will reduce our share count from this estimate.
And lastly, on December 4, 2019, the Zumiez Board of Directors approved the repurchase of up to $100 million of our common stock. This repurchase authorization replaces the previously approved $75 million repurchase program, and is expected to continue through January 30, 2021, unless this time period is extended or shortened by our Board of Directors.
And with that operator, we'd like to open up the call for questions.