Zumiez Inc. (ZUMZ) 2026-09-10 Earnings Call Transcript

Good afternoon, ladies and gentlemen. And welcome to the Zumiez Inc. Second Quarter Fiscal 26 Earnings Conference Call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. Before we begin, I would 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.

Call. With me today is Christopher Codington Work, our Chief Financial Officer. The trends we are seeing so far in the third quarter before providing an update on our strategic priorities for the remainder of the year. Christopher will then take you through our financial results and along with our outlook for the third quarter. After that, we will open the call to your questions. Our second quarter sales decreased 2.5% from the prior year, While we are disappointed that results are short of expectations, due to softness in the US, encouraged by diversification of our global business where our international energy provided positive sales growth for the quarter.

Thanks, Rick, and good afternoon, everyone. I am going to start with a review of our second quarter fiscal 26 results. I will then provide an update on our quarter to date sales trends before providing an outlook for the third quarter. Net sales for the second quarter of fiscal 26 decreased 2.5% to $209 million compared with $214 million in the second quarter of fiscal 25. Comparable sales were down 2.1% for the quarter. With Canada, Europe and Australia all having positive comparable sales growth for the quarter. The negative comp was driven by softness in the U.S., as Rick previously covered. The second quarter, North America net sales were $174 million a decrease of 3.4% from fiscal 25.

Certainly. Ladies and gentlemen, if you do have a question at this time, please press 1-1 on your telephone. If your question has been answered and you would like to remove yourself from the queue, simply press 1-1. Our first question comes from the line of Mitchel Kummetz from Seaport. Your question, please.

Yes. Thanks for taking my questions. Rick, I was hoping to just get your take on what is happening in footwear. Number of retailers have already reported. Not necessarily maybe the most direct competitors of yours, there is been talk about weakness in legacy silhouettes. there is also been some talk about maybe a shift away from athletic to nonathletic. I do not know to what extent you are seeing some of that, and how are you sort of planning to kind of pivot the assortment so that you are bedroom better aligned with any sort of strength that might be in footwear right now?

Yeah. I mean, thank you, Mitchel. I think we are clearly seeing that it is been a challenge for us for quite a number of quarters now as we said. And it is I think we are aligned around the idea that we are selling lifestyle athletic footwear. So it is been, I think, we are in a kind of sweet spot. it is really been struggling. In terms of just, again, what our mix of products has always said. So as we look at this niche, as we look forward, we are certainly trying a lot of different things.

Yeah. And there is also been a lot of talk amongst some of these retailers that this has been a particularly promotional back to school season around footwear, and I am just wondering how are you guys addressing that And to what extent is that putting pressure on your margins? If to the extent that you have to compete with some of those promotions?

Yeah. Good question, Mitchel. And first, let me say I think we feel pretty good about our position, our inventory position in footwear. We have been working closely because this has been with our partners over the last few quarters really to manage what our inventory exposure is here. So again, appreciate our partners support here. And I think I do not think we have a lot of risk around our inventory position mix So we have not been as promotional as I think some of our competitors have been on price point. That said, we are, as you can see on our website, we are certainly trying to clear some footwear out.

Okay. And then maybe last 1 for me. As far as the third quarter, comp outlook is concerned, the range that you have provided is I guess, I would say worse than what you are seeing quarter to date. Maybe 2 questions. How much of the quarter is essentially in the books through September 7th? And the expectation for that comp to deteriorate over the balance of the quarter How much of that is just sort of conservatism that you have baked into your guide versus just the thought that the pattern that we have been in for a while, the consumer of disappears in between events.

Yeah. Thanks, Mitchel. I will go ahead and take that. You know, I think you kind of hit on the 2 points we tried to factor into the guide. We are just over 50% of the way through from a sales in perspective. And as you can tell with the guide that is worse than where we are trending, we are expecting the back half of the quarter to be worse than what we experienced through back to school. That would be consistent with what we have seen the last at least the last couple years, but actually for number of years. Where we have just performed much stronger in the back to school time period.

Thank you, and best of luck.

Thanks. Thanks, Mitchel.

Thank you. Once again, if you have a question. This does conclude the question-and-answer session of today's program. I would like to hand the program back to Rick Brooks for any further remarks.

All right. As always, I just want to thank everyone for their interest in Zumiez, and we will look forward to talking to you in December with our third quarter results. Thank you, everybody.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.