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Zumiez (ZUMZ) Q3 2020 Earnings Call Transcript

By Motley Fool Transcribing - Dec 4, 2020 at 5:00AM

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ZUMZ earnings call for the period ending September 30, 2020.

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Zumiez ( ZUMZ 3.61% )
Q3 2020 Earnings Call
Dec 03, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good afternoon, ladies and gentlemen, and welcome to the Zumiez Inc. third-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.

Rick Brooks -- Chief Executive Officer

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 third quarter, then I'll share some thoughts on sales for the fourth quarter to date 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.

Our teams continue to do an incredible job, navigating volatile market conditions. After successfully executing the reopening of the vast majority of our stores during the second quarter, we faced a back-to-school season that was very different from prior years. As many states and districts around the country delayed the start of the new school year or decided to begin with virtual instructions due to the pandemic, we did not see the sustained lift in demand we typically do starting in late July and running through early September. As a result, the second most important selling period of the year got off to a very challenging start as sales were down in the last week of July and every week in August.

Though negative, the trends improved week over week throughout August turning positive, the first week of September, and remained very strong through the end of the quarter. This supported our hypothesis that we would have a prolonged back-to-school season with some demand shifting out later in the third quarter. These trends exceeded our expectations and were able to show sales growth during the quarter. Our ability to capture as much late-season demand as we did and more than make up for the lost volumes during the historical peak weeks in August, underscores the strength of our brand and culture and speaks to the ability of our business model to adapt to change.

For the third quarter, revenue increased 2.6%, despite the slow start, a difficult selling environment, reduced hours, and stores being opened roughly 5% fewer days than a year ago. Strong digital activity and robust full-price selling across all geographies highlighted our top-line performance as we continue to experience solid demand for our distinct and differentiated merchandise assortments. Our total comparable open store sales increased 8.1%, led by 39.6% growth in web sales and 2.2% comparable sales growth in our stores. Our teams were relentless in their commitment to serving our customers, which contributed to stronger results than we anticipated and positive comparable sales across all geographies.

Our performance was once again highlighted by strong product margin gains, fueled by full-price selling. At the same time, we experienced meaningful leverage as a result of the efforts we've made to refine our model over the last few years, as well as the adjustments we made to our expense structure in response to the pandemic. Looking beyond the pandemic, we expect many of these costs will come back into the income statement, along with lost revenue, as we return to more normal operating environment likely sometime next year. The combination of all these factors contributed earnings per share increasing 54% in the third quarter to $1.16 and favorable cash generation was well over $300 million in cash on our balance sheet and no debt, we are well-positioned to navigate what is likely to be a volatile operating environment over the next few quarters while investing strategically in the business.

Our recent performance has been years in the making. We've spoken before about the significance of our culture and brand and how they serve its critical competitive advantages that have helped us win throughout our 40-plus years history. This has never been more true than in 2020, and it starts with our people. The investments we made on our people coming into this year and through the pandemic have allowed us to maintain our high level of service and timely fulfillment, despite the disruptions to our operations caused by the virus.

As it has in the past, I am confident that our unwavering commitment to our people will continue to further set Zumiez apart from the competition and meaningfully benefit our long-term performance. Looking ahead, while there's been positive news recently about the effectiveness of certain vaccines, there's still a great deal of uncertainty about the state of retail and the global economy due to the impact from COVID-19. We are currently expecting that given the demographics of our customers and employee base, generally speaking, they'll most likely be at the latter end of the vaccination process. We are currently experiencing the effects that the health crisis is having on our holiday season around the world, has many local, state, and federal governments have forced nonessential stores to either reclose or operate under other restrictions.

In our European market quarter to date through Tuesday, we've had roughly 17% fewer open store days than one year ago. Stores operating on reduced hours during the holiday season, governments encouraging the customers to stay at home, and a slow start to the important winter sports season. Meanwhile, quarter to date through Tuesday in North America, we had roughly 2% fewer open store days than last year, reduced operating hours during the important peak Black Friday weekend, and significant meeting of traffic tied to both government orders, as well as potential safety concerns. We expect that the store closures and various other operating restrictions will fluctuate as we move through the quarter.

Through the store shutdowns and industry headwinds, fourth quarter-to-date sales through Tuesday, December 1, decreased roughly 3.9% from the comparable period in the prior year. North America, sales were strong through the first three weeks of November. The Black Friday weekend was significantly impacted by traffic declines, closures, and traffic metering across a meaningful number of our locations. Much the same as the back-to-school season, we are seeing better performance versus last year in the off-peak weeks and more challenged results during the time that have additionally relied more on heavy store traffic.

Internationally, Europe has experienced meaningful sales declines in the fourth quarter to date, as previously mentioned, while Australia sales growth has been the strongest in the company. It's unclear at this point how the remainder of the year will play out. Regardless of what unfolds, Zumiez, as it has been, is well-positioned to pivot to the needs of our customers, wherever, whenever, and however they want to engage with us. Thanks to our dynamic teams, our one-channel mentality, and advanced fulfillment capabilities, including Zumiez Delivery, which we expanded in the fourth quarter to take our best-in-class sales teams directly to our customers' door in select markets around the United States.

Periods of significant change create opportunities. Companies that have the right people, strategies, and resources in place can take advantage of times like this to advance their brand and business. While Zumiez isn't immune to the disruption created by the pandemic, we do believe the current environment will accelerate further consolidation globally and that our focus on our customer will lead to further wallet and mind shared gains as we emerge from the crisis. We must be smart in how we navigate the business challenges.

We're also looking for long-term strategic investments that will set us up for the future. These include great real estate opportunities, new tools within our one-channel strategy, and other strategic investments to support the next era of intimacy and now with our customers. The strength in our financial position can be a significant advantage in these times. I have great confidence in our teams and the proven ability to navigate through unforeseen changes.

Our response to pandemic has highlighted the strength of our culture and brand and bolstered my optimism about the future for Zumiez. With that, I'll turn the call to Chris to discuss the financials. Chris?

Chris Work -- Chief Financial Officer

Thanks, Rick, and good afternoon, everyone. I'm going to start with a few high-level comments on the financial strength of the business, review our third quarter, and then provide an update on our quarter-to-date sales through the past Tuesday before discussing a few updates on the full year. We entered fiscal 2020 in a strong financial position, with cash over $250 million and coming out the highest earnings per share in the history of our company. This resulted from years of commitment and hard work by our teams, coupled with strong financial planning.

Now, through the initial store closures in March and continued challenges to date, we have seen the strength of our one channel model with our teams working diligently to serve the customer. The business ended the third quarter in a strong financial position. Cash and current marketable securities increased 77% to $316.2 million as of October 31, 2020, compared to $178.6 million as of November 2, 2019. The increase in cash and current marketable securities was driven by cash generated through operations, including deferment of $53 million in payments composed of lower inventory levels, landlord obligations, extended vendor terms, and deferred payroll tax payments, as well as net income improvements related to abatements, credits, and expense reductions.

This increase was partially offset by $13.4 million of share repurchases through the company's stock buyback program prior to our stores closing in March due to COVID-19 and other planned capital expenditures. As of October 31, 2020, we have no debt on the balance sheet and continue to maintain our full unused credit line of $35 million. We ended third quarter of 2020 with $161 million in inventory compared with the $183.4 million last year, a decrease of $22.4 million or 12.2%. And after delaying or canceling orders during the first quarter, we have continued to work with our brand partners as demand has exceeded our expectations in the second and third quarter.

Overall, the inventory on hand is healthy and selling at a favorable margin in entering the fourth quarter, and we continue to increase our levels in key categories. Turning to the income statement. Third-quarter net sales increased 2.6% to $271 million, compared to $264 million for the third quarter of 2019. The increase in sales was driven by an 8.1% increase in comparable sales, which includes reopened stores and our digital activity, partially offset by store closures during the period.

Breaking down the comparable sales further, we saw meaningful digital strength with comparable web sales growing 39.6% for the quarter, while comparable sales for physical stores grew 2.2% year over year. Our stores were open for roughly 95% of the potential operating days during the third quarter of 2020. From a regional perspective, North America net sales increased $1.9 million or 0.8%, $240.3 million. Other international net sales, which consists of Europe and Australia, increased $5.1 million or 19.8% to $30.6 million.

Excluding the impact of foreign currency translation, North America net sales increased 0.8%, and other international net sales increased 12.5% for the quarter. During the quarter, the hardgoods category was our largest positive comping category, followed by men's, accessories, and women's. Footwear was our only negative comping category. Third-quarter gross profit was $105.8 million, compared to $94.6 million in the third quarter of last year, and gross margin was 39% compared to 35.8%, a year ago.

The 320-basis-point increase in gross margin was primarily driven by 170-basis-point increase in product margin, a 150-basis-point improvement in inventory shrinkage, and a 30-basis-point decrease in store occupancy costs. This was partially offset by a 40-basis-point increase in web shipping costs due to higher web penetration. However, shipping costs leveraged to the prior year were compared to total shipped sales. SG&A expense was $67.9 million or 25% of net sales in the third quarter, compared to $70.3 million or 26% of net sales a year ago.

The 160-basis-point decrease in SG&A expense as a percent of net sales was primarily driven by 90-basis-point decrease in our store wages, a 40 basis points of leverage in other store costs, 40-basis-point decrease in corporate costs, 30-basis-point decrease due to governmental payroll credits, and a 30-basis-point decrease in national training and recognition event costs. These improvements were partially offset by a 40-basis-point increase in annual discretionary incentive compensation and a 30-basis-point increase in impairment on fixed assets. Operating income in the third quarter of 2020 was $37.9 million or 14% of net sales, compared with operating income in the prior year of $24.3 million or 9.2% of net sales. During the quarter, we recognized flow-through on incremental sales of almost 200% based on the factors outlined above and our ability to adjust quickly in this challenging time.

Net income for the third quarter was $29.1 million or $1.16 per share, compared to net income of $19.2 million or $0.75 per share for the third quarter of 2019. Our effective tax rate for the third quarter of 2020 was 24.7% compared to 25% in the year-ago period. Looking at year-to-date results, from a sales and earnings perspective, this year has been incredibly volatile quarter to quarter. Year-to-date sales through the third quarter are currently down 6.6% or just over $46 million, while earnings per share have grown 15.8% to $1.32.

We continue to benefit from both our optimization efforts within the model, as well as from one-time adjustments we have made in response to the pandemic around managing our payroll costs, reducing events, travel, and training, managing marketing efforts, working with our landlords and receiving governmental subsidies tied to continue to pay our people. As we move into 2021, we expect quarter-to-quarter volatility to continue as we transition back to a normalized sales and expense environment. Now, to our fiscal fourth quarter-to-date sales results. Total fourth quarter-to-date sales through December 1 were down roughly 3.9% compared with the same time period in the prior year, ended December 3, 2019.

Our stores were closed for roughly 3% of the potential operating days during this timeframe due to the ongoing mandated store closures, both domestically and internationally. We also experienced significant traffic metering and reduced operating hours. Total comparable sales for the quarter-to-date period, ending December 1 were down roughly 1.7%. By channel, our quarter-to-date comparable store sales decreased 7.8%, and our e-commerce sales increased 16.7%.

Our sales were stronger in the first few weeks of the fourth quarter as we saw customers look to purchase when store capex was lighter. Sales were challenging during the important Black Friday weekend, as noted by Rick earlier. From a regional perspective, our North America business has experienced a 0.6% increase in the fourth quarter through Tuesday, while our European business has seen an over 30% decline with store closures and reduced traffic across the business, as well as a slow start to the important snow season. The quarter-to-date comparable sales decrease discussed above was driven by a decrease in transactions, partially offset by an increase in dollars per transaction.

Dollars per transaction increased due to an increase in units per transaction, partially offset by a decline in average unit retail. Quarter to date, footwear was our largest negative comping category, followed by men's and women's. The hardgood category was our largest positive comping category, followed by accessories. Due to limited visibility in the business, we will not be providing guidance for the fourth quarter of 2020 or the fiscal year.

That said, we do want to give a few thoughts on how we're looking at 2020 wrapping up. We believe sales during the fourth quarter will continue to be impacted by closures, traffic metering, and sales trends that are hard to predict. To prepare for this, our teams have built multiple scenarios to navigate the range of possibilities and we are continuing to monitor our results against those scenarios. We are expecting that our total sales for the full quarter will be better than our quarter-to-date results, down roughly 3.9%.

This includes our North America sales trending flat to up low single digits for the quarter, and our European business being significantly impacted by store closures, as well as reduced winter sports activities. We drove a product margin increase of 170 basis points in the third quarter and have had a positive start to the fourth quarter. We are managing inventory tightly and working with our brand partners to navigate this environment. In the fourth quarter, we expect to see a benefit in product margin to the prior year, but do not anticipate that it will be as significant as a year-over-year growth experienced in our third quarter.

We continue to manage costs across the business, understanding this challenging environment, and limited visibility. Through the first nine months, we have seen significant reductions in certain expenses, as we work to align the cost structure to the sales lost during our closures. We are currently planning SG&A expenses across the business to be down approximately 9% compared with 2019 associated with reduced hours in stores, the reduction of travel and training, reductions in planned and capital spending, reductions of incentives, and many other benefits. With the potential variability and performance over the important holiday quarter, this estimate could increase or decrease as we gain more visibility to the sales trends, our ability to further adjust expenses, and the potential for noncash impairments.

We now expect to open approximately 12 new stores in 2020, including three stores in North America, seven stores in Europe, and two stores in Australia. This is down from our plan coming into the year of 20 new stores. We expect capital expenditures for the full 2020 fiscal year to be approximately $11 million, compared to $19 million in 2019 and our original plan for 2020 of between $18 million and $20 million. The majority of our capital spend will be dedicated to new store openings and planned remodels.

We expect that depreciation and amortization, excluding non-cash lease expense, will be approximately $24 million, down from $25.1 million in the prior year. Yesterday, our board of directors approved the repurchase of up to $100 million of our common stock. This repurchase authorization replaces the previously approved $100 million repurchase program and is expected to continue through January 29, 2022, unless the time period is extended or shortened by the board of directors. Lastly, we are currently projecting our share count for the full year to be approximately 25.3 million shares, excluding any impact of potential future stock repurchases.

With that, operator, we would like to open the call for questions.

Questions & Answers:


Operator

[Operator instructions] Our first question comes from Janine Stichter with Jefferies. Your line is now open.

Janine Stichter -- Jefferies -- Analyst

Hey, thanks for the color on the gross margin. Two more questions about the drivers there. I think, first, you called out some pretty nice shipping leverage in the third quarter. I was wondering if that's something you think can continue into the fourth quarter and maybe talk a little bit more about what's driving that? And then shrink, the benefit you saw in the third quarter, is there opportunity in the fourth quarter as well and maybe help us compare the magnitude? Thank you.

Chris Work -- Chief Financial Officer

Sure. Let me tackle each one of those in order here. So from a shipping perspective and leverage, this is something we've worked on for a long time and how we manage our shipping profile. As you know, we're one of the few retailers that exclusively shipping 100% of our digital orders from stores.

And this is part of our model. And we think it's a really competitive part of our model from a standpoint of thinking about a one-channel cost structure to serve the customer. And as we have continued to refine that, really, over the last five years, we've been operating like this. We continue to get better at what we're doing from a shipping perspective.

And obviously, with increased demand here during the COVID time period, we've been able to continue to make strides in what we're doing here from getting inventory in the right place to begin with and minimizing splits, to seeing higher DPTs in the cart, that's driving a better shipping volume to continue to work with our carriers and how we're managing costs. So all of these things really play into the model and how we're trying to push it going forward, as we want to be fast to our customers, we want to get them what they want, and we want to try to optimize on the back end. From a shrink perspective, shrink has been a pretty significant benefit to us, as we move through the year, as we laid out in our prepared remarks, clearly, the store closure period, coupled with reduced traffic and metering has been a benefit to this. But we've also been working behind the scenes for the last couple of years.

As you may recall, a couple of years ago, we were talking about this trend going the other way. But our store team has done a really phenomenal job putting practices and procedures in place, working as a team to bring this line item down. So I think you kind of take those efforts that we had throughout 2019 and coming into 2020, coupled with the operating environment we've had here in the first nine months of the year and how we would see it playing out into the fourth quarter, we would expect to see some benefit in shrink, just based on how store volumes are being measured.

Janine Stichter -- Jefferies -- Analyst

Great. And then just one more on the delivery. I think you mentioned Zumiez Delivery, the sales team going directly to the customer store. Can you elaborate a little bit more about what that is and how big it is and maybe what the potential is there?

Rick Brooks -- Chief Executive Officer

Sure, Janine. I'll start and then let Chris follow up with some comments, too. So, I mean, some of us are really excited that we're able to roll out our Zumiez Delivery effort for this fourth quarter. And we're really excited because we think it could give us an advantage this year, particularly when shipping is coming through restricting shipments due to capacity constraints in the system because of so much digital shipping demand.

That said, we are really prepared for this opportunity in Q4 because we've been working on our ability to do delivery for the last two years. And I would like, I guess, everyone to think about this on our kind of innovation spectrum for us, our innovation road map, and we've been on this march for many years, but how we think about involving our touch points at every consumer need at every consumer touchpoints. Our teams did a really great job of rolling out the program quickly with great training materials based on the learning we had throughout the test phase over the last couple of years. And I can tell you that the rollout has gone really well.

And for me more broadly, I'd like to think this is, again, another example of Zumiez as a leading innovator in specialty retail. How we evolve to meet the needs of this really modern empowered consumer? Our goal is to really, again, as I said, evaluate every consumer touchpoint and challenge ourselves to how we can improve the experience for our customers. So I guess I'd ask you all the things about putting Zumiez Delivery in the context of the other programs we've discussed, including fully localized fulfillment that Chris just mentioned, which we've been doing for about five years now and has clearly proven to be a winning strategy, to put Zumiez Delivery in context of their trade area assortment planning initiatives you've heard us talking about, we're striving to meet total customer demand, both physical and digital, always transparently available in each trade area we do business. To put the Zumiez Delivery effort in context of the broader idea of trade area profitability, which you've heard us talk a lot about.

And now, we're striving to optimize the experience, again, as you just heard Chris mention, for our customer and our business and put all these efforts in the context of meeting customers' expectations in any way they want to get their product, as we strive for next-day or same-day capabilities over the long term. So I guess from you, Janine, due to the sum of the ideas that you're -- I want -- hopefully, our analyst and investors to see us execute that we believe are driving our results including new ways to bring our brand experience right to our customer's door. And we have a lot more ideas about how we can innovate and how we can be able to continue our lead in innovating in the specialty retail. And we're focused on meeting what we think are really rapidly evolving consumer needs.

So to wrap my part of this up, I just want to -- we have a really clear vision of where we're going and what we need to do, and how we need to innovate for this consumer. Over the next few years, we have really clear road maps and a lot of initiatives in front of us, a lot more interesting things besides just Zumiez Delivery to roll out, and a clear vision to go achieve these objectives. So again, I hope everyone can think of what we announced in our Zumiez Delivery capabilities in the context of being innovative in how we take steps to serve our customers and then connect our customers with really what the strength of our business are amazing salespeople. So now, I'll let Chris talk a little bit more about the delivery process.

Chris?

Chris Work -- Chief Financial Officer

Yeah. Thanks, Rick. And let me just echo my excitement for the program, too. This is really cool that our teams are even in a spot to be able to execute on this.

Obviously, as we started to open stores and starting to operate at full capacity here in the second quarter, we very quickly realized that we could have carrier constraints as we moved into the important holiday peak. And we started brainstorming around those challenges. So while we certainly do not have full clarity into what's going to happen over the next month, we believe, we've built a model that we can continue to prioritize our customers. This includes really working with our incumbent carrier to prepare for the increased load and web penetration, discussing modeling and potential capacity limits that we've really been working with them on a daily basis, for now, months, we brought on additional carriers to diversify and help with some of the constraints that are out there and the potential risk that we saw around holidays.

And we've launched Zumiez Delivery that we're talking about right now in 24 trade areas. This accounts to as much of 5% to 10% of our daily deliveries right now. This accounts for roughly 150 of our stores. And it's a program, as Rick mentioned, we piloted now for over a year.

The concept is pretty simple. We hire our employees, and we bring that great customer experience right to the -- the great employee experience right to our customer's door. And we're really excited about what this opportunity is. We're in the early stages of this large rollout.

We actually launched the 23 markets beyond our initial test market in late October. So we have a lot to learn here, but we have proven through our testing that we think we can be efficient in this type of environment. And we've really proven in our testing that we can exceed the customer's expectation with speed. And similar to our fulfillment five years -- as in-store fulfillment five years ago, we had concerns back then about some of the financial implications of fulfilling from store, but we knew we had great teams and we knew we had smart people.

And if we put effort to it, it was the best thing for the customer. And I think over the last five years, you've seen us really refine our model, and that's become an accretive service that we've been able to do. And we feel comfortable with where we are here on the delivery side, too, that we can continue to do that as well. So more to come on where this goes for us, but this is a great new capability that adds to our suite of capabilities that Rick touched on earlier.

Janine Stichter -- Jefferies -- Analyst

Thanks for the color and best of luck for holiday.

Chris Work -- Chief Financial Officer

Thank you.

Operator

Thank you. Our next question comes from Sharon Zackfia with William Blair. Your line is now open.

Sharon Zackfia -- William Blair and Company -- Analyst

Hi, good afternoon. I actually find that I have a lot of questions, so I'll try to narrow it down. I guess, Rick, you talked about strategic opportunities, and I know you talked about real estate within that. So I guess, a question there, if you're prepared or willing to take advantage of a more favorable real estate market currently? I know as some of the companies, I follow, in other sectors are doing so, but I haven't seen anybody yet do that in your neck of the woods.

So just curious on your thoughts there. And then on the one-channel dynamic, are there any M&A opportunities there that would help you accelerate some of what you're doing? I mean, it's tremendous what you're doing. But obviously, developing your own capabilities could take longer than buying them. So just curious about that.

And then lastly, on the delivery, is that actually cost-effective relative to traditional, like using UPS or what have you? Or is it more because we're in this high-volume season, and it's important to have that optionality for the consumer and what's a really constrained channel right now.

Rick Brooks -- Chief Executive Officer

OK. Those are all really great questions, Sharon. So let me start on the first couple and let Chris take Zumiez Delivery the cost structure as we're thinking about it. So, yes, we are willing to take advantage on real estate.

And obviously, we have the capital to do so. So, Sharon, I would tell you that we're already doing so in our international markets, where I think the opportunities are really great. So we're already leaning in, in those markets to where we're really seeing significant drops in rent. Here in North America, where our business is a more mature business, but still has room for growth, we do have a list of targets of centers that we'd like to be in.

And we're always engaging with our landlords on those targets, and these typically are higher-end centers where either we've not been able to negotiate the right rent structure, economically, to match what we believe are our business, our sales forecast for those markets or we haven't found the right locations in these centers where we feel strongly about our willingness to take a location in the center. So we are clearly here in the U.S. and North American market, still looking at opportunities there, too. And in some cases, it might be a relocation or a repositioning of an existing location that -- there may be some of that in there, but we'd be moving into higher volumes centers in doing that.

It would still be a net plus to the business from a revenue point of view. So we're still looking at those, Sharon. And again, I'd step back and put the concept of what we're doing, particularly here in North America. I put the real estate concepts back -- the real estate potential for opportunities back in the context of the concept of trade area and thinking about how do we optimize to serve customers in these trade areas.

And we have to find that trade areas are a group of stores that work together in a geographic region to meet all the needs of the customers in that region. And so these are definitely factors that come into our thinking about the evolution of our store portfolio over a period of time. So we can find those opportunities, beside our real estate team is always working on here. We will take those advantage here in North America as well.

But I would tell you right now, I think the big opportunity is where we still have a ton of growth in front of us, are looking at our international markets, particularly Europe and Australia. And your second question, again, which is an excellent question about our one-channel approach and both the one-channel mentality, as it relates to serving customers, but the one-cost structure that then underlies that, which, as Chris mentioned, we are working hard to optimize the experience. And I think these two things go hand-in-hand when we can be fast and responsive, always have whatever the customer wants, completely transparent in those trade areas available anytime they want it. That really gives us the option then, it gives us the ability to really optimize the business and the one cost structure mentality.

So I think the one-channel mentality is being that our customer focus about. We're going to empower the customers to choose, and then the cost structure is about optimizing around that customer experience. So it's a really great question you're asking about the buy versus build around capabilities. And as I said in the comments regarding Zumiez Delivery, we have a long list of initiatives here of how we think we can innovate around this consumer experience.

And we do, in some cases, Sharon, where we don't have the internal capabilities on some of these initiatives, we go outside the business, whether it's development partners, we have really special expertise in a particular area. And we've looked at other parts of our business where we think we could potentially add strength and capabilities and talent by hiring the skill sets we need to do it. To a great extent, though, so we're not opposed is the headline, Sharon, looking outside to acquire the skill sets we need. But I would tell you that most cases, it's not so much M&A in terms of business, it's really about talent that we need to acquire the skill sets in most cases where we need to supplement our own Zumiez talent pool to achieve some of the plans we have in place.

And we have been doing that around some of these initiatives where we're outside the company, locating what we think is really outstanding talent to help us drive out some of these new goals and ideas we have that we're working on. So we're not at all opposed to it, though, again, whether it's through consultants and developers or talent acquisition, we are doing those things. And if we found something big enough, Sharon, where we thought it would add, we would definitely take a look at it. There's no doubt about that.

And, again, we have the capital resources. And I think the skill sets and the dominance in our market to be able to lever those opportunities. So if they come up, we're certainly taking a look at them. If we identify them, as something we need, was certainly something we'll consider, but we are constantly looking to add more capabilities.

And I just won't leave it to M&A, I think, again, it's about talent acquisition or the use of outside experts in certain areas where we may not have the expertise internally. And the last thing, I guess, I'd say about that is, one thing that is a challenge for us, Sharon, on these topics is find cultural alignment. Believe it or not, we just can't hire any outside consultant or developer to help us. They actually have to be willing to think creatively and culturally the way we do.

And so we have to find those culturally aligned partners from a values perspective, really to get the buy-in to what we're trying to do. So that's not a restricting factor. Those matches are out there for us. We just, in some cases, have to look a little harder to find them.

So we're open to finalize that thought, Sharon. We're open to all sorts of angles, not just in potential look at the M&A activity, but also in talent, in looking and broadening our talent acquisition where we need to outside of our historic strengths internally, and then looking for outside consultants and experts who can help us in specialized areas. And I'll let Chris talk about the Zumiez Delivery cost structures.

Chris Work -- Chief Financial Officer

Yes, absolutely. And I think it's important to note as we delve deeper into this, this is not a one-store-to-one-customer relationship. This does tie directly into what Rick talked about from a trade area perspective. This is a group of stores serving the customers in that market which allows you to increase the inventory base and manage volumes.

Now, Sharon, you've followed us for a long time, so you know that we are always mindful of costs, as we navigate through things. But we're also mindful of what's right for the customer. And I think one of the beauties of being able to test this program now for over a year is we've been able to see how the volumes react in trade area as we seasonally move through the year, we've been able to see the peaks and see the values and being able to adjust and tweak the program to try to drive effectiveness as you do mass rollout. So at this point in time, we have certainly seen that we can do this for sustained periods at or near what the cost of the carriers are.

Obviously, we've had time periods where we've been above and time periods where we've been at. And I think the best part about it is, again, ties back to what I've mentioned earlier is the experience that the customers had. So we feel pretty confident in moving out into the test group that our teams will be able to manage this. And over time, we'll be able to optimize it.

We still have a lot to do. We obviously accelerated this rollout based on the current environment we're in. So we have more technology, more process improvement, and things we'll put in place. But in rolling it out, it was a pretty calculated effort on where we thought costs would go.

And obviously, as we move through the fourth-quarter months here, we'll get a much better read on it.

Rick Brooks -- Chief Executive Officer

Maybe, Chris, you could give a little bit color on how much delivery we're doing ourselves within the trade areas we're using the program.

Chris Work -- Chief Financial Officer

Yeah. At this point in time, as I mentioned, from a total company, we're at that 5% to 10%. And within an individual trade area, we've gone to 25% to 30%. So we're able to get more capacity, and I think that's a number that we can also see increase, as we continue to move along.

And as we're able to increase that overall capacity, obviously, the economics of the program become better. And this is where it actually all feeds itself. And you know we've worked on this for a while as we've localized fulfillment of getting the right products in the right trade areas. And it's a total company effort because it starts with our buyers, really thinking about the product they're going to buy upfront and then the allocation process.

And obviously, this delivery drives through to those initiatives to make sure we have the right product in the right places.

Rick Brooks -- Chief Executive Officer

Yes. It's a classic old retail maximum, right product, right place, right time. We're just taking it to all new level, I guess, Sharon, in terms of what that means from the concept of trade area and total demand within the trade area. So when we talk about demand and trade, we mean both physical and digital demand, and then how we serve customers and plan products for that.

And again, then, what we're looking to do is we're really looking to create amazing brand experiences at every touchpoint. And so while we don't always share what our road maps are, if you just take that idea alone and think about what it means in this empowered consumer world, and then we're thinking about how we can do that and make it as human-to-human connections as possible across this. And then we have evolution plan. So while we're in the process now of just making sure that it was going to be a very constrained delivery time period, a holiday, and maybe we're going to be able to deliver product closer to the holiday season we've ever been able to deliver it, up in those final days.

We have some more work to do to make that transparency available for customers to do, and I hope we're going to get there, but it could give us a tremendous leg up in the days in advance of Christmas. So we have more work to do to get there to be clear in this process. But I mean, these are one of the cool things, I think, Sharon, that, again, I'm just so proud of all of our teams to be able to execute. We're able to pull a lever that no one else really can pull.

And I think eventually, we're going to find our teams can really tune this, we're going to know what's a profitable order for us to deliver and what's not. And our algorithms will take care of following those orders if it's right into our own delivery capabilities -- into our own system for delivery capabilities. And then as we think about the evolution of this, think about the point in time then when we're going to get to the customer's door, and we're going to add on to the sale. And this gets back to our way of thinking about our point of sales and how we connect digitally into the customer experience.

What happens if we can add 1% or 2% more to sales across the delivery process? What happens if we can correct sizing and we're out there able to deliver the customers in all-new ways? What happens if we're out there with the customers first skateboard showing that young girl how to do her first kickflip in the driveway? This is what we talked about, the power of the Zumiez brand experience, the power of our amazing people. We're bringing it all together and then optimize the experience around the customer. And I think that's just going to be -- again, all these ideas have multiple, multiple levels to what we're trying to do. So I think there's going to be one of the fun parts about how we think about our future and where we're going to go.

Sharon Zackfia -- William Blair and Company -- Analyst

Thank you.

Operator

Thank you. Our next question comes from Jeff Van Sinderen with B. Riley. Your line is open.

Jeff Van Sinderen -- B. Riley FBR -- Analyst

Yes. Hi, everyone. Just a follow-up on the delivery. Did you say if the plan is to have Zumiez Delivery to all trade areas or all stores? And also, will that run all year? Or is that just during peak periods? And I guess, how much of your e-com delivery do you expect to be Zumiez Delivery?

Chris Work -- Chief Financial Officer

Yeah. Jeff, thanks. Obviously, as I mentioned, this is very early on. And right now, we're in 24 trade areas.

We definitely think there is the potential to expand from 24 trade areas. As you could imagine, there are certain stores that represent their own trade area because of their remoteness in connection to other stores. So we haven't really gone down the path of what it might look like in those types of stores. So this isn't something that we're thinking would be rolled out to all of our stores across the country.

But certainly, all of our stores in metropolitan areas that work with each other to serve the customer. We think we can operate in all trade areas like that. And I think, as Rick talked about this kind of innovation lab of the different ways to serve the customer, this is a key part of our strategy, to innovate and export. And we have done it with Europe and Australia already in many different examples, and Canada as well.

Everyone's at different points on the path here. Obviously, in many of the markets we're operating internationally, we just need to get to scale of stores and digital to serve the customer. But as we continue to push, we're already seeing that today, including being able to fulfill from store in Europe, which is obviously a challenged market with some of our store close there. So as we push long term, we do think it's a program that can roll out internationally, has the potential to roll out internationally, I should say.

We think it's a program that we can roll out further domestically. I don't think we're prepared at this time to say what percent of our digital share that's going to be, but we do think it's a program that could work in all metropolitan markets.

Jeff Van Sinderen -- B. Riley FBR -- Analyst

OK. Fair enough. And then can you speak a little bit more about how you're thinking about and managing inventory in Q4? I guess, maybe where you feel like you might be running light? Or if there are areas where you feel like you may need to lean into a little more? Just wondering if there's anything around that.

Chris Work -- Chief Financial Officer

Sure. Let me just kind of start with some of the numbers, and if Rick would like to add anything in, we can go from there. Inventory, obviously, has been a roller coaster. And our buying teams across all of our entities have just done a phenomenal job, navigating through it from what seemed like a very difficult situation in Q1 and canceling orders, and trying to get things right.

And as you know, we ended the first quarter roughly flat in inventory year over year to then seeing our stores reopened and the incredible demand that we saw, as stores were reopened and the online demand, and we finished Q2 with inventory being down about 16%. To get to down 12% continues to be that effort of chasing and really working with our brands to get product. And overall, we feel really good about where the inventory is at. As we move through Q4, we're being really opportunistic about where we're going to increase penetration.

Our goal is not to be down 12%. We certainly would like to have some more inventory in certain key categories, but we've been chasing that and growing our inventory levels to meet the Q4 demand in where we think we need to be within our ecosystem. And as we move through the quarter, we expect to continue to make headway in the year where we'd like to be.

Jeff Van Sinderen -- B. Riley FBR -- Analyst

Do you feel like you have enough hardgoods inventory given the supply chain constraints around that?

Rick Brooks -- Chief Executive Officer

It's clearly been a challenge in a lot, not just target but across a lot of categories of business over the last few months. And I would tell you that, again, pretty much, as Chris said, Jeff, we're getting sequentially better. So I feel like we're definitely better positioned in hardgoods than we have been throughout the earlier parts of this year. We're better positioned now than we have been in most target categories now than we were earlier in this year.

So I think our teams have done a really good job. I think we're prepared to meet the consumer demand. But it's been a challenge in a lot of areas. Footwear has been a major challenge in terms of supply chain for us.

And that's where actually where we're down the most in inventory is in our footwear business. So I feel pretty good about where we're at. I think, as Chris said, our teams have done a really good job across the country and across our entities to really manage inventory and focus on the things that are most, as you might guess, most important in terms of where we're trending at this point. But in most cases, our skate hardgoods department and categories are in a better position here in holiday than they've been earlier in the year.

Jeff Van Sinderen -- B. Riley FBR -- Analyst

OK. Thanks and best of luck.

Rick Brooks -- Chief Executive Officer

Thank you, Jeff.

Operator

Thank you. Our next question comes from Jonathan Komp with Baird. Your line is now open.

Jonathan Komp -- Robert W. Baird & Co. -- Analyst

Yeah. Hi. Thank you. Maybe just one quick follow-up on the delivery initiative.

I see online it's quoted as a five- to seven-day window. I'm wondering how that compares to your existing options. And just any more perspective around speed for that initiative?

Rick Brooks -- Chief Executive Officer

Yes. We are pretty darn fast is the headline on Zumiez Delivery. So I think that -- just our team given a little bit of room maneuver because we're usually in a day or two.

Chris Work -- Chief Financial Officer

And, Jon, we totally encourage you to test this out. Order a few things.

Rick Brooks -- Chief Executive Officer

Yes, order a lot of things for that matter, Jon. Let's see if we can get it to you really quickly in your market. So that's probably just our team being a little bit cautious in the early rollout in the markets we're in. But again, remember, we're not doing this systemwide at this point, we're only doing this in the 24 metropolitan markets that we're in today.

So with room, if we need to, over the next few weeks to pull more triggers, depending on how we're doing in the marketplace, we can activate more markets, we're ready to activate more markets if we need to. But we're pretty darn fast on is the headline. I would say this. We're faster than any of the other options in our delivery menu.

Jonathan Komp -- Robert W. Baird & Co. -- Analyst

I'm hopeful. But here, I don't know. I'm going to target metro of yours in the top 20 stores, but I'll take your word for it. Maybe one other quick follow-up, Chris.

Just the thought on North America improving during the balance of the quarter, any more color there on what you expect?

Chris Work -- Chief Financial Officer

Yeah, sure. I can talk a little bit about Q4, about how we're thinking about it. I mean, obviously, we -- in our prepared remarks, we talked a little bit about what the cadence has looked like. In North America, included a positive week 1, followed by a really solid week 2 and 3, and actually a really good lead up to Black Friday weekend.

Like I think many retailers will have reported or will report, obviously, Thursday and Friday was definitely challenged by store closures, reduced hours, metered traffic, as we would expect. And then since then, things have been better. And so I think we are looking at Q4 very similarly to how we looked at Q3. The peaks are just more challenged in this type of operating environment.

We will not see the levels of mall traffic we've had and actually traffic overall. But yet, you're going to see that spread out much more. So our anticipation that's built into the general comments we gave around getting better than our current run rate and where we think North America will be is really built on the concept of, we'll be stronger here, as we move through these weeks, which are actually, for the better part of last five to 10 years have declined as the peaks have gotten more important, but we would expect that to be spread out a little bit here in these lower volume periods between the two peaks. And then it will be more challenging the week of Christmas, as volumes have historically picked up, and then maybe spread out a little wider.

And then we could see after Christmas, still be stronger, even into mid-, late January. So that's what's built into our thought process for North America and how we're thinking about the remainder of Q4.

Rick Brooks -- Chief Executive Officer

Yes. I think that's exactly -- just to echo Chris's comments, Jon, I think that's exactly what we think about it. It's going to be very similar to Q3. I think this is being driven by how consumers are thinking about the current environment and safety in this current environment and spreading out their spending probably for conservative reasons on their part, too.

But I agree with Chris. I think we may think about, as we said, an improving trend line to where we're at today for the whole quarter. But as Chris said, that may take through the end of January to play out because there's no way that we can achieve our store volumes on the 26, with particularly, this year falls on a Saturday, 26, 27 and 28, we're talking monstrous days for us in stores when the kids always come in and use their gift cards. So I think that volume spreads out, as Chris has said, that volume also spreads out, potentially it spreads up all the way through the month of January.

Chris Work -- Chief Financial Officer

Yes. And I'd just add to your question, Jon. I know you didn't ask about international. But I do think it's important to talk a little bit or just about where Europe is.

Obviously, the business has performed extremely well through the first nine months of the year, coming into the year with digital being about 50% of our sales. Even when the stores closed, it performed much better than the consolidated run rate. The second quarter and third quarter were really great results for the team there. And we're really proud of the progress that we've made entering the fourth quarter, obviously, we've been more impacted by some of the governmental restraints over there with pretty significant closures here.

We talked about 17% of our store days being closed through December 1, pretty significant reduced hours, and maybe even more challenging is extended stay-at-home orders. So even where we're able to keep retail open, there is the encouragement that you should be home. And so it's really created a challenge and a slow start. And as I mentioned in my comments, we're down 30% in November, and Q4 has always been very important for Blue Tomato and a higher penetration than our domestic business.

And we're definitely feeling for the team working through these challenging times. That being said, they're doing awesome. They're doing everything they can to gain sales. And we do anticipate that we're hoping, based on what we know today, that we'll be opening stores here, as we move into December in the next week actually.

And we're hoping that we see some of the pent-up demand we've seen when we had to open and close stores across the year in other markets. So definitely factored that into our guidance thoughts as well. And we're hoping we're able to exceed that. We'll see where the customer is at as we move through the quarter.

Jonathan Komp -- Robert W. Baird & Co. -- Analyst

Yeah. That's really helpful. And maybe just last one. Chris, you brought up a more normal cost environment looking into next year.

Any more color on that? I mean, the fact that you've growing operating margin like you have year to date on a down sales number, should we be thinking of anchoring more toward 2019 operating margin as a starting point? Or just trying to read what you're signaling there?

Chris Work -- Chief Financial Officer

Yeah, totally a fair question, Jon, and something we've definitely been thinking a lot about as we've been building budgets and moving into 2021. And obviously, let me just start by saying, we are extremely happy with where we stand from an income statement perspective and balance sheet perspective through the first nine months of the year. That our teams have reacted in a way that I don't think we ever could have anticipated. And so we're really proud of where we stand.

As we look to 2021, clearly, there's a lot of uncertainty and what that environment may look like. We're certainly not prepared to give guidance at this point, but we do think it's important to kind of lay out a few things. We're contemplating and hopefully, this helps answer your question, overall, we do expect sales to come back, assuming a more normalized operating environment, our ability for the customer to really come into stores and shop, how they want, when they want in the physical environment, while still utilizing the digital platform. We're expecting quarter-to-quarter volatility in the financial results to be pretty significant, with the first quarter performing much stronger than what we saw here in 2020.

The second quarter is going to be more challenged. And the third and fourth quarter, we're hoping to see more normalized results compared to where we've been. We're expecting product margin to be a pretty significant challenge, given the growth we've had this year. However, we're building plans to really maximize our results there, and our teams are really thinking about this in a new way.

We're expecting more meaningful occupancy growth and step-ups in certain areas of the business as we're not planning on receiving rent abatements or governmental credits around payroll, and we're planning to reinstate some of these important cultural events you've heard us talk about over the years in trainings and travel as we continue to invest in our people. I mean, we think this is a really big differentiator of ours as we move through 2020 and something that's important for us to go back to as we look to a more normal operating environment. Obviously, we expect hours to go back to normal, driving additional payroll expense and operating costs and all of that, it makes it hard for you guys and hard for us to predict what it looks like. But in 2019, we grew SG&A, 4.7% on sales of 8.8%.

We've done a good job, I think, managing SG&A. This year, in my prepared remarks, I talked about a decline of approximately 9%, is currently where we're planning based on expense cuts and credits that we've discussed. So as we think to 2021, at this point, and obviously, we'll update you more in March, total SG&A dollar is growing. I think looking at it in relation to 2019 is probably right.

We actually would expect SG&A to grow even on 2019 levels in total dollars. But we certainly believe we can manage it lined as a percent of sales. As we think about where SG&A was as a percent of total sales in 2019, might be a better starting point as we look to 2021. So I think it will be a difficult operating environment, but I'll tell you, 2020 has given us even more confidence in our team's ability to navigate through it.

Jonathan Komp -- Robert W. Baird & Co. -- Analyst

Understood. That gives us plenty to contemplate, so thank you.

Operator

Thank you. Our last question comes from Mitch Kummetz with Pivotal Research. Your line is open.

Mitch Kummetz -- Pivotal Research -- Analyst

Yeah. Thanks for taking my questions. I've got a couple. Let me start with Europe.

And on the snow business, can you say how much exposure you have to snow in the fourth quarter? And is the issue or part of the issue that some of these resorts might open? Or if they are open, they're closed, I know there have been some headlines around that. And I've got maybe a follow-up on that and then another question.

Rick Brooks -- Chief Executive Officer

Yeah. Mitch, that is exactly the issue we have in the snow business, which is -- there's always an issue of when it snows, but it always snows at some point, right? So usually, time has told us that that usually will -- the volume will follow the actual weather conditions. The bigger challenge in Europe relative to the snow business at this point in time is related to pandemic. And right now, a lot of the resorts just simply can't open.

And that is true in Austria, our home market, with Blue Tomato, there's going to be some restrictions in place for quite a while there yet. There's tourist restrictions for cross-border tourists coming into Austria to use the snow resorts there. So there is a lot of complications around this issue of just whether and how much the resorts going to be able to be open for business during the season. And here that's been answered a bit differently, I'd say, right, with the season passes and reservations to use the mountain, right? They have approached it differently here.

But we're going to have the same challenges here in the U.S. in a different way, and that's still not going to be a lot of tourism for traveling. As usual, like up here in the Northwest, a lot of trips to Whistler or up in the Central British Columbia. That just can't happen now.

So we'll see some of the same effects here, but differently. But Europe, it's definitely a more constrained environment in the snow business. Now, all that being said, Mitch, the other thing I'd want to point about is snow business in Europe is that we've been diminishing snow as a percent of our total mix over the last number of years because we've been growing our store base. And as you're aware, the digital world attracts particularly larger portion of the snow business, so our store base, and digital, snow business that tends to have lower margins in our apparel business.

So when doing this is one of the things that as we grow our store base in Europe, will decrease our dependence upon the snow business, while improving margins, as we do that, is kind of the magic of building scale in the marketplace. So that has been happening over the last few years. And as we continue our growth in the marketplace, we'll continue to see snow will still be important to us there, to be clear, but it will be a declining portion of our business as we grow our store base over the next five years.

Mitch Kummetz -- Pivotal Research -- Analyst

Got it. And then just a follow-up on Europe and then, again, one other question. So I guess, I'm a little surprised to hear that Europe is down 30% quarter to date, despite all of the issues over there, partly because I know you guys have a very robust digital business in Europe, more robust than you do in North America. So as stores close and hours come down, I would have thought a lot of that volume would transfer online.

Is that not happening with COVID kind of spiking again in Europe? Are people just not shopping in general? Or again, some of this, again, go back to site that they're just not stopping for shopping for snow in general.

Rick Brooks -- Chief Executive Officer

Yeah. It's two things, I think, Mitch. The first is, as we just commented on, is that the digital business had the disproportion of the snow business, right? So that is one aspect of it, for sure. Because if you're not going to spend a lot on gear, if you're not going to be able to go to the mountains, right, I think that's the simple calculus there.

And the second, I think, issue that's a factor in Europe is there's no additional stimulus with the shutdowns. Across virtually all the countries. And it's kind of the worst world for retailers in that sense is because they haven't shut retail down, but yet our operating hours are constrained. There's curfews in place.

And in the case of Austria, our stores are actually closed. But there isn't as much stimulus in the economy to drive demand. So I think that's the other aspect of it that has been more difficult for the digital business in Europe.

Mitch Kummetz -- Pivotal Research -- Analyst

OK. And then the last question was on footwear, which, as your worst comping segment in the quarter, I think it's been your most challenged segment for a few quarters now. Rick, you made the comment that it's the most challenged business from a supply chain standpoint. So does the comp performance reflect the supply chain situation? Or is there something else happening here? I know that I've covered you guys long enough to know that in response to some of these questions, you often talk about how things sort of cycle up, cycle down.

I know that footwear is lapping, and a couple of years of really strong performance. But I'm also wondering, is maybe some of the issues in footwear that with COVID, there are these trends toward sort of fitness and comfort, and that's not necessarily your sweet spot in footwear?

Rick Brooks -- Chief Executive Officer

I'm not prepared at this point to be able to answer that question, Mitch, and partly because of the constraint in the supply chain is. So when you lack a lot of inventory, it's hard to know what the issue is. So I'm not prepared to -- I don't think we know the answer to that question that you just asked at this point because it's hard to know until we have the product to do it. And to really see where the demand is in the marketplace.

And again, this isn't just a U.S. issue, this is a global issue for us with footwear. And so this has been one of the tougher performing businesses, again, supply chain wise across our global platform. Now, we do have some things that are working in footwear, but again, I would tell you the same thing.

Those things are working, we don't have enough inventory of. So I know our partners here are working their hardest to get product in place for not only us but for all of their partners and probably for their own direct businesses. So I think that what transpired in footwear is just that it's such a size-intensive business that when the pandemic hit, people took some pretty dramatic actions relative to managing their own inventories and supply chain structure. And it takes them a lot longer to get it fired back up, again, particularly with the size complexity you have in footwear.

So I can't answer the question because I simply don't know. It's hard to make that read with no inventory.

Mitch Kummetz -- Pivotal Research -- Analyst

Got it. OK. Thanks, guys, and good luck for the holiday.

Rick Brooks -- Chief Executive Officer

Thanks very much.

Operator

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Rick Brooks for closing remarks.

Rick Brooks -- Chief Executive Officer

Again, thank you, everyone, for your interest in Zumiez. We always appreciate it, and I just want to close by wishing everyone a safe and healthy holiday season. And we're going to look forward to talking with you again in 2021 when we get the chance to report our Q4 results. So thank you, everybody.

Really appreciate it. Talk soon.

Operator

[Operator signoff]

Duration: 68 minutes

Call participants:

Rick Brooks -- Chief Executive Officer

Chris Work -- Chief Financial Officer

Janine Stichter -- Jefferies -- Analyst

Sharon Zackfia -- William Blair and Company -- Analyst

Jeff Van Sinderen -- B. Riley FBR -- Analyst

Jonathan Komp -- Robert W. Baird & Co. -- Analyst

Mitch Kummetz -- Pivotal Research -- Analyst

More ZUMZ analysis

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