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01/11 12:32
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call provided mixed signals: net sales and comparable sales showed growth, and there was a significant share repurchase program, which are positives. However, there are concerns about macroeconomic uncertainty, European market challenges, and a notable operating loss. Additionally, the Q&A section highlighted unclear strategies for international growth and the impact of tariffs. The overall sentiment is neutral, as positives are offset by risks and uncertainties, suggesting limited short-term stock movement.
Net Sales $184.3 million, up 3.9% from $177.4 million in Q1 2024. The increase was primarily driven by the North America business, which showed outsized strength despite macroeconomic uncertainty.
Comparable Sales Up 5.5% for the quarter, marking the fourth consecutive quarter of positive comparable sales growth, driven by successful execution of strategic initiatives.
North America Net Sales $149.7 million, an increase of 4.9% from Q1 2024, with comparable sales up 7.4%.
Other International Net Sales $34.6 million, down 0.2% from last year, with comparable sales down 2.3%.
Gross Profit $55.3 million, up 6.6% compared to $51.9 million in Q1 2024. Gross profit as a percentage of sales was 30%, up from 29.3% in Q1 2024, driven by leverage of store occupancy costs on higher sales.
SG&A Expense $75.2 million or 40.8% of net sales, compared to $72.1 million or 40.6% of net sales a year ago. The increase was driven by a one-time $2.9 million legal cost, partially offset by leverage in non-wage store operating costs.
Operating Loss $19.9 million or 10.8% of net sales, compared to an operating loss of $20.2 million or 11.3% of net sales last year.
Net Loss $14.3 million or $0.79 per share, compared to a net loss of $16.8 million or $0.86 per share for Q1 2024, inclusive of a one-time legal settlement.
Cash and Current Marketable Securities $101 million as of May 3, 2025, down from $146.6 million as of May 4, 2024, primarily due to share repurchases and capital expenditures.
Inventory $149.9 million, up 2.1% compared to $146.8 million last year, with a constant currency increase of 1.1%.
Share Repurchases 1.8 million shares repurchased at an average cost of $13.82 per share for a total cost of $25.2 million.
New Product Launches: Successful launch of over 120 new brands in 2024 and 150 brands in 2023, with newer brands representing a larger portion of sales.
Private Label Expansion: Private label sales reached nearly 28% of total sales in 2024, increasing to 30% in Q1 2025, up from 23% in 2023.
Market Expansion: Plans to open 9 new stores in 2025, including 6 in North America, 2 in Europe, and 1 in Australia.
Operational Efficiencies: Closure of 31 underperforming locations and optimization of staffing and logistics to create a streamlined operating model.
Strategic Shift: Diversifying sourcing to reduce exposure to China by the end of 2025, alongside selective price adjustments to mitigate tariff impacts.
Macroeconomic Uncertainty: The company is navigating an increasingly complex macroeconomic backdrop, which includes uncertainties related to global trade policy and tariffs that could impact consumer sentiment and spending.
Trade Environment: Ongoing trade negotiations and potential tariff reinstatements pose risks to supply chains and may lead to increased retail prices, straining consumers' discretionary income.
European Market Challenges: The European market environment remains challenging, with a slower start in 2025 compared to 2024, impacting sales and operating results.
Store Closures Impact: The planned closure of 20 stores in 2025 is estimated to negatively impact sales by $14.7 million for the year.
Legal Settlement Costs: A one-time legal settlement cost of $2.9 million has impacted SG&A expenses and overall profitability.
Currency Fluctuations: Unfavorable foreign currency movements are affecting the company's performance, particularly in the European market.
Interest Income Decline: A decline in interest income due to lower cash levels is expected to pressure total earnings.
Operational Costs: The company is focused on maintaining SG&A costs relatively flat as a percentage of sales, but ongoing economic pressures may complicate this goal.
Top Line Expansion: Accelerating top line expansion through strategic investments and winning with consumers, including the launch of over 120 new brands in 2024 and 150 brands in 2023.
Private Label Expansion: Private label sales reached nearly 28% of total sales in 2024 and increased to 30% in Q1 2025, up from 23% in 2023.
Customer Engagement: Investing in customer engagement through best-in-class service and technology to strengthen customer relationships.
Profitability Focus: Maintaining a disciplined focus on profitability across all markets, with a focus on full price selling and operational efficiencies.
Financial Position: Leveraging a strong financial position with over $101 million in cash and marketable securities to navigate uncertainty and invest in growth.
Share Repurchase: Repurchased 1.8 million shares in Q1 2025 and announced a new buyback plan for an additional $15 million.
Q2 2025 Sales Guidance: Total sales expected to be between $207 million and $214 million, with comparable sales growth between -1% and +3%.
Q2 2025 Operating Loss: Consolidated operating loss expected to be between $0.7 million and $4 million.
Full Year 2025 Sales Growth: Expecting year-over-year sales growth despite store closures, with a negative impact of $14.7 million from closures.
Capital Expenditures: Projected capital expenditures for 2025 to be between $14 million and $16 million.
Effective Tax Rate: Anticipated effective tax rate for fiscal 2025 to be approximately 50% to 60%.
Diluted Share Count: Projected diluted share count for the full year to be approximately 17.5 million shares.
Share Repurchase Program: In the first quarter of 2025, Zumiez repurchased 1.8 million shares, which is 9.4% of the company based on year-end 2024 outstanding shares, at an average cost of $13.82 per share, totaling $25.2 million. A new buyback plan for an additional $15 million was authorized by the Board to continue driving long-term value for shareholders.
The earnings call highlights strong financial performance with significant increases in gross profit, operating income, and net income. Product margins and SG&A efficiency improved, and the private label business is growing. Despite some challenges in the footwear category and cautious guidance, the overall sentiment is positive with optimistic guidance and strategic growth in private labels. Market reaction is likely positive, driven by improved financial metrics and strategic positioning.
The earnings call reveals strong financial performance with increased revenue, gross profit, and net income. Positive trends in skate hard goods and private label products, along with a cautious but optimistic outlook, support positive sentiment. Despite a slight deceleration in North America and challenges in footwear, improved margins and efficient expense management are encouraging. The Q&A highlights optimism in skate products and private label growth, despite some management evasiveness. Overall, the positive financials and strategic positioning suggest a positive stock price movement in the near term.
The earnings call shows mixed signals: positive product margin improvements and controlled SG&A expenses, but net loss increased and cash reserves decreased. The Q&A highlighted cautious optimism with growth in private label and AUR, but challenges in footwear and European markets remain. The guidance suggests stable but not strong growth, with operating losses expected. The lack of a clear timeline for margin improvement and challenges in key markets suggest a neutral market reaction.
The earnings call provided mixed signals: net sales and comparable sales showed growth, and there was a significant share repurchase program, which are positives. However, there are concerns about macroeconomic uncertainty, European market challenges, and a notable operating loss. Additionally, the Q&A section highlighted unclear strategies for international growth and the impact of tariffs. The overall sentiment is neutral, as positives are offset by risks and uncertainties, suggesting limited short-term stock movement.
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