Zumiez, Inc. (NASDAQ:ZUMZ) Q2 2020 Earnings Conference Call - Final Transcript

Sep 10, 2020 • 05:00 pm ET


Zumiez, Inc. (NASDAQ:ZUMZ) Q2 2020 Earnings Conference Call - Final Transcript


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Good afternoon, ladies and gentlemen, and welcome to the Zumiez Inc. Second Quarter Fiscal 2020 Earnings Conference Call. [Operator Instructions] Before we begin, I'd like to remind everyone of the company's Safe Harbor language.

Today's conference call includes comments concerning Zumiez Inc. business outlook and contains forward-looking statements. These forward-looking statements and all other statements that may be made on this call that are not based on historical facts are subject to risks and uncertainties.

Actual results may differ materially. Additional information concerning a number of factors that could cause actual results to differ materially from the information that will be discussed is available in Zumiez filings with the SEC.

At this time, I will turn the call over to Rick Brooks, Chief Executive Officer. Please go ahead, sir.

Richard M. 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 remarks about the second quarter. Then I'll share some thoughts on back-to-school and the rest of the year before handing the call over to Chris, who will take you through the numbers. After that, we'll open up the call to your questions.

Amidst the most difficult operating conditions the company has ever faced, we delivered better than anticipated results. To put some context around our recent performance, when the second quarter started in May, we had only 65 stores opened, which is just 9% of our entire store base. By the end of May, that number had increased to 492 stores or 68% of our store base.

By the end of June, we hit our peak with 691 stores or 96% of our store base open. Then in July, as a result of governmental orders, we closed a total of 69 stores in California and Australia and ended the second quarter with 645 stores or 90% open. For the quarter, our stores were opened for 73% of potential operating days.

Despite stores being opened 27% fewer days than a year ago, second-quarter 2020 revenue increased 9.6% as stores that were open, combined with digital activity, comped up 37.3%.

Our top-line performance was highlighted by robust full-price selling across all geographies as demand for our distinct and differentiated merchandise assortments and the continued efforts of our teams drove much stronger results than we had anticipated.

By geography, we experienced stronger growth in our international markets with Canada, Europe, and Australia, all showing significant comparable sales gains and double-digit total sales growth, despite closures in the period.

As we discussed on our Q1 call in June, from the onset of the pandemic, we made some difficult near-term decisions around our expense structure in order to weather this crisis and emerge in a position of strength. This included laying off virtually all of our part-time staff, suspending all hiring, eliminating substantially all planned fiscal 2020 bonuses and eliminating the majority of merit raises.

Other operational changes we've made during Q1 and across Q2 include reducing store labor