Zumiez Earnings Call: Growth Amid Challenges

Zumiez ((ZUMZ)) has held its Q2 earnings call. Read on for the main highlights of the call.

The recent earnings call for Zumiez Inc. presented a balanced sentiment, highlighting strong performance in North America and growth in private label sales, while acknowledging challenges in international markets, particularly Europe, and specific product categories like footwear and men’s. Despite increased SG&A expenses, the company remains optimistic about future growth, buoyed by strong back-to-school results and strategic initiatives.

Positive Comparable Sales Growth

Zumiez reported a 2.5% increase in comparable sales for the second quarter, marking the fifth consecutive quarter of positive growth. This growth was primarily driven by North America, which saw a 4.2% increase in comparable sales, showcasing the region’s robust performance.

Strong Back-to-School Performance

The back-to-school season was a highlight for Zumiez, with comparable sales in the U.S. experiencing low teens growth on top of a double-digit increase from the previous year. This performance provides optimism for the upcoming holiday season, indicating strong consumer demand.

Private Label Growth

Private label sales have reached 30% of total sales year-to-date through the second quarter, up from 27% a year ago. This marks the highest private label penetration in Zumiez’s history, underscoring the success of their private label strategy.

Improved Gross Profit Margin

Zumiez’s gross profit increased by 5.9% to $76 million, with the gross profit margin improving by 130 basis points to 35.5%. This improvement is attributed to better product margins and store occupancy leverage, reflecting efficient operational management.

Encouraging Third Quarter Trends

For the thirty-day period ended September 1, 2025, net sales increased by 10.6%, with North America seeing an 11.7% increase in comparable sales. This growth was driven by strong performance in the women’s and accessories categories, indicating promising trends for the third quarter.

International Sales Decline

International markets, including Europe and Australia, faced challenges, with net sales decreasing by 4.2% year-over-year and a 5.5% decline in comparable sales for the second quarter. This highlights the difficulties faced in these regions.

Footwear and Men’s Category Challenges

The footwear category was the largest negative comping category, followed by men’s, indicating ongoing challenges in these areas. Addressing these challenges will be crucial for future growth.

Higher SG&A Expenses

SG&A expenses rose to 35.4% of sales, driven by increased corporate costs, legal settlements, and wage costs. However, these were partially offset by benefits in non-wage store operating costs, reflecting a need for careful cost management.

European Market Difficulties

The European market presented challenging conditions, hindering improvements in sales, product margin, and operating results. The company emphasized the need for distinctive product offerings and expense management to facilitate recovery in this region.

Forward-Looking Guidance

Zumiez provided a positive outlook for the future, despite ongoing macroeconomic uncertainties. They projected Q3 sales between $232 million and $237 million, indicating a 5.5% to 7.5% growth over the previous year. The company plans to open six new stores in 2025 while closing approximately 20, mainly in North America, and anticipates modest year-over-year growth in product margins. Strategic priorities include driving revenue growth through customer-focused initiatives and optimizing profitability.

In conclusion, Zumiez’s earnings call reflected a balanced sentiment, with strong performance in North America and private label growth offset by challenges in international markets and specific product categories. The company’s forward-looking guidance remains optimistic, focusing on strategic initiatives to drive growth and manage market volatility.