Zumiez Inc. (ZUMZ)

Symbol Overview

ZUMZhttp://www.nasdaq.com/symbol/zumzConsumer Services2005Clothing/Shoe/Accessory Stores

Latest Zumiez Inc. (ZUMZ) company news

Is There An Opportunity With Zumiez Inc’s (NASDAQ:ZUMZ) 38.65% Undervaluation?

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I am going to run you through how I calculated the intrinsic value of Zumiez Inc (NASDAQ:ZUMZ) by estimating the company’s future cash flows and discounting them to their present value. I will be using the discounted cash flows (DCF) model. Don’t get put off by the jargon, the math behind it is actually quite straightforward. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. Please also note that this article was written in June 2018 so be sure check out the updated calculation by following the link below. See our latest analysis for Zumiez

Crunching the numbers

We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second ‘steady growth’ period. In the first stage we need to estimate the cash flows to the business over the next five years. Where possible I use analyst estimates, but when these aren’t available I have extrapolated the previous free cash flow (FCF) from the year before. For this growth rate I used the average annual growth rate over the past five years, but capped at a reasonable level. The sum of these cash flows is then discounted to today’s value.

5-year cash flow estimate

2018 2019 2020 2021 2022
Levered FCF ($, Millions) $29.38 $40.37 $65.51 $68.73 $72.12
Source Analyst x2 Analyst x2 Analyst x2 Extrapolated @ (4.92%) Extrapolated @ (4.92%)
Present Value Discounted @ 8.59% $27.06 $34.24 $51.16 $49.43 $47.76

Present Value of 5-year Cash Flow (PVCF)= US$209.65m

After calculating the present value of future cash flows in the intial 5-year period we need to calculate the Terminal Value, which accounts for all the future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of the GDP. In this case I have used the 10-year government bond rate (2.9%). In the same way as with the 5-year ‘growth’ period, we discount this to today’s value at a cost of equity of 8.6%.

Terminal Value (TV) = FCF2022 × (1 + g) ÷ (r – g) = US$72.12m × (1 + 2.9%) ÷ (8.6% – 2.9%) = US$1.32b

Present Value of Terminal Value (PVTV) = TV / (1 + r)5 = US$1.32b ÷ ( 1 + 8.6%)5 = US$871.82m

The total value, or equity value, is then the sum of the present value of the cash flows, which in this case is US$1.08b. The last step is to then divide the equity value by the number of shares outstanding. If the stock is an depositary receipt (represents a specified number of shares in a foreign corporation) then we use the equivalent number. This results in an intrinsic value of $42.46. Compared to the current share price of $26.05, the stock is quite good value at a 38.65% discount to what it is available for right now.

NasdaqGS:ZUMZ Intrinsic Value June 22nd 18

Important assumptions

The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don’t agree with my result, have a go at the calculation yourself and play with the assumptions. Because we are looking at Zumiez as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighed average cost of capital, WACC) which accounts for debt. In this calculation I’ve used 8.6%, which is based on a levered beta of 0.800. This is derived from the Bottom-Up Beta method based on comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.

Next Steps:

Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn’t be the only metric you look at when researching a company. What is the reason for the share price to differ from the intrinsic value? For ZUMZ, there are three key factors you should further research:

  1. Financial Health: Does ZUMZ have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Future Earnings: How does ZUMZ’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
  3. Other High Quality Alternatives: Are there other high quality stocks you could be holding instead of ZUMZ? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!

PS. The Simply Wall St app conducts a discounted cash flow for every stock on the NASDAQ every 6 hours. If you want to find the calculation for other stocks just search here.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

Free Research Report as Etsy’s Revenue Surged 24.8%; Recorded GAAP Profit

Stock Monitor: Zumiez Post Earnings Reporting

LONDON, UK / ACCESSWIRE / June 13, 2018 / If you want access to our free earnings report on Etsy, Inc. (NASDAQ: ETSY), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=ETSY. Etsy reported its first quarter and fiscal 2018 operating and financial results on May 08, 2018. The specialty retailer outperformed top- and bottom-line expectations. Register today and get access to over 1,000 Free Research Reports by joining our site below:

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Active-Investors.com is currently working on the research report for Zumiez Inc. (NASDAQ: ZUMZ), which also belongs to the Services sector as the Company Etsy. Do not miss out and become a member today for free to access this upcoming report at:

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Active-Investors.com is focused on giving you timely information and the inside line on companies that matter to you. This morning, Etsy most recent news is on our radar and our team decided to put out a fantastic report on the company that is now available for free below:

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Earnings Highlights and Summary

For the three months ended March 31, 2018, Etsy's total revenue was $120.9 million, up 24.8% compared to $96.9 million in Q1 2017, driven by growth in both Marketplace and Services revenue. The Company's reported numbers exceeded analysts' estimates of $120.2 million.

In Q1 2018, Etsy's Marketplace revenue grew 24.7% to $88.0 million on a y-o-y basis, driven by growth in Etsy Payments, which continued to benefit from the requirement that sellers in eligible countries adopt the service. Marketplace revenue also benefited from growth in transaction fee revenue and, to a lesser extent, growth in listing fee revenue. The Company's reported quarter Services revenue grew 35.0% to $32.6 million on a y-o-y basis, driven primarily by revenue growth in Promoted Listings, and, to a lesser extent, Etsy Shipping Labels.

Etsy's gross profit was $79.6 million for Q1 2018, up 27.9% on a y-o-y basis and gross margin was 65.8%, up 160 basis points (bps) compared to 64.2% in the year earlier same quarter. For Q1 2018, Etsy's total operating expenses were $65.8 million, up 2.3% on a y-o-y basis.

Etsy's net income was $13.0 million for Q1 2018, with diluted earnings per share of $0.10, compared to a net loss of $0.4 million and a net loss per share of $0.00 in Q1 2017. The Company's reported quarter net income included interest expense of $3.8 million, including interest related to its Brooklyn headquarters and Etsy's convertible debt offering in March 2018, and a $1.9 million foreign exchange gain, primarily non-cash. The Company's reported numbers exceeded Wall Street's estimates of $0.05 per share.

For Q1 2018, Etsy's non-GAAP adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) was $26.4 million and grew 171.8% compared to $9.7 million in Q1 2017. The Company's non-GAAP adjusted EBITDA margin was 21.9%, up 1,190 bps compared to the year ago corresponding period. Etsy's adjusted EBITDA performance was driven primarily by revenue growth and increased efficiencies in the Company's operating structure which led to lower employee-related costs.

Operating Results

During Q1 2018, Etsy's Gross Merchandise Sales (GMS) was $861.1 million, up 19.8% compared to GMS of $719.0 million in Q1 2017. The Company's reported quarter GMS growth was supported by 9.4% y-o-y gain in active sellers and 16.9% y-o-y growth in active buyers. On a currency-neutral basis, Etsy's GMS growth was 17.6% versus 15.2% in the year earlier comparable quarter.

For Q1 2018, Etsy's Mobile GMS percentage was approximately 54%, up from approximately 51% in Q1 2017. The Company attributed the increase to increased mobile traffic, in-line with industry trends, and, to a lesser extent, continued improvements in mobile offerings for Etsy's buyers. The Company's international GMS percent of overall GMS was 35% in the reported quarter, up from 32% in the year earlier same quarter. International GMS growth was up approximately 30% on a y-o-y basis and grew faster than overall GMS in the reported quarter, largely due to currency exchange rates as well as growth in markets where Etsy Payments is not offered, global product work and seller outreach.

Cash Matters

Etsy's net cash provided by operating activities was $26.4 million in Q1 2018 compared to $3.3 million in Q1 2017. The increase in net cash provided by operating activities for the reported quarter was mainly driven by revenue growth and lower employee-related costs.

Under the stock repurchase program announced in November 2017, Etsy repurchased an aggregate of approximately $68.6 million, or 2,807,393 shares of its common stock in Q1 2018, including 1,588,500 shares repurchased concurrently with the convertible debt offering.

As of March 31, 2018, Etsy's cash, marketable securities, and short-term investments were $601.4 million.

Stock Performance Snapshot

June 12, 2018 - At Tuesday's closing bell, Etsy's stock rose 3.65%, ending the trading session at $33.22.

Volume traded for the day: 1.27 million shares.

Stock performance in the last month – up 10.70%; previous three-month period – up 18.98%; past twelve-month period – up 150.53%; and year-to-date – up 62.44%

After yesterday's close, Etsy's market cap was at $4.00 billion.

Price to Earnings (P/E) ratio was at 63.40.

The stock is part of the Services sector, categorized under the Specialty Retail, Other industry. This sector was up 0.6% at the end of the session.

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Edited Transcript of ZUMZ earnings conference call or presentation 7-Jun-18 9:00pm GMT

Q1 2018 Zumiez Inc Earnings Call

EVERETT Jun 11, 2018 (Thomson StreetEvents) -- Edited Transcript of Zumiez Inc earnings conference call or presentation Thursday, June 7, 2018 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Christopher Codington Work

Zumiez Inc. - CFO

* Richard M. Brooks

Zumiez Inc. - CEO & Director

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Conference Call Participants

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* Janine M. Stichter

Jefferies LLC, Research Division - Equity Associate

* Jonathan Robert Komp

Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst

* Richard Frederick Magnusen

B. Riley FBR, Inc., Research Division - Associate Analyst

* Sharon Zackfia

William Blair & Company L.L.C., Research Division - Partner & Group Head of Consumer

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Presentation

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Operator [1]

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Good afternoon, ladies and gentlemen, and welcome to the Zumiez Inc. First Quarter Fiscal 2018 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's filings with the SEC.

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

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Richard M. Brooks, Zumiez Inc. - CEO & Director [2]

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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 brief remarks regarding our first quarter performance, then I'll share some thoughts about the future before handing the call to Chris, who will take you through the numbers. After that, we'll open up the call to your questions.

2018 has gone up to a good start, as the strong sales momentum we experienced during the holiday season accelerated in the first quarter. Both our top and bottom line results exceeded our expectations, fueled by the strength of our assortments, our seamless shopping experience across physical and digital channels and the world-class customer service our teams continue to deliver globally.

For the quarter, comparable sales increased 8.3% compared to our guidance of 4% to 6%, and operating margin was negative 0.8% of net sales, an improvement of 72.6% compared with the prior year and ahead of the high end of our guidance of negative 1.7%.

Net loss per share improved to $0.10 versus $0.18 last year and above the high end of our guidance that was a loss of $0.13.

Our recent performance has reinforced our belief that we are well positioned to benefit from the shifts that are taking place in global retail. Our top priority is to stay consistent and relevant with our customers in order to expand our market share, which we believe will lead to accelerated earnings growth and value creation for our shareholders.

Before I hand the call over to Chris, let me review some of our thoughts about the future of retail as it relates to Zumiez. We believe there are increasingly blurred lines between retail channels. Our focus is firmly on embracing today's empowered customer and winning them over through authentic culture and brand. We believe the empowered consumer lives in a channel-less world and is not focused on going to a physical store or buying online but rather transacting with a retailer they know and trust. In this channel-less world, we believe that trend cycles are shifting at a faster rate than ever before. New brands emerge that can quickly move from locally recognized brands to global brands. We believe there is a level of customer transparency in retail that is driving out inefficiencies within the market and forcing consolidation in the industry.

With all this change, we are excited about what the future holds for Zumiez, the things that we have done and things we are doing to exceed customer expectations in our evolving industry.

We continue to build on our process of identifying new brands and trends in the marketplace, enabling us to offer the product our consumers are looking for, no matter when or where they choose to interact with our brand. We've used our strong recruiting, training and sales culture to provide more personalized human-to-human connections, which is resonating with our customers. We continue enhancing the customer service aspect of our business, enhancing the physical and digital sales experience, optimizing the speed in which our customer can get what they're looking for and learning more about the customers' life cycle. We've established a strategic presence in 6 countries across 3 continents, with a digital presence that allows us to reach even further. This scale allows us to work together with our brand partners to serve our customers globally. This includes assisting emerging local brands both domestically and internationally in their evolution to global brands. We are continuously testing and learning from our customers with an emphasis on inventing and improving upon ideas to meet their rapidly changing expectations.

As the world continues to evolve, we are set to extend our position as a leading global retail lifestyle brand, capitalizing up on the opportunities presented by the challenging retail landscape. At the core of all these efforts is our culture and brand position that remain constant throughout our 40 years history. This has been the foundation of our success and the reason we've been able to weather the storms better than others and emerge even stronger. It's an exciting time in retail, and we're confident we're at the forefront of great things to come for Zumiez.

With that, I'll hand the call over to Chris for his review of the financials. Chris?

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Christopher Codington Work, Zumiez Inc. - CFO [3]

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Thanks, Rick. And good afternoon, everyone. I'm going to start with a review of our first quarter 2018 results. I'll then provide a brief update on May before discussing our second quarter guidance and some high-level perspective on how we are thinking about the full year.

First quarter net sales increased $25.1 million or 13.9% to $206.3 million from $181.2 million in the first quarter of 2017. Contributing to this increase were positive comparable sales growth of 8.3% and the net addition of 12 stores since the end of last year's first quarter.

During the 2018 first quarter, our comparable sales were driven by an increase in transaction volume, partially offset by a decrease in dollars per transaction. The decrease in dollars per transaction resulted from lower units per transaction, partially offset by an increase in average unit retail. This quarter represented our seventh consecutive quarter of comparable sales growth and transaction gains.

During the quarter, our men's category was the largest positive comping category, followed by women's and footwear. Accessories was the largest negative comping category, followed by hardgoods.

From a regional perspective, North America net sales increased $18.7 million or 11.5% to $181.3 million. Other international net sales, which consists of Europe and Australia, increased $6.4 million or 34.4% to $25 million. Excluding the impact of foreign currency translation, North America net sales grew 11.3%, and other international net sales grew 17.8% for the quarter.

First quarter gross profit was $62.6 million, an increase of $10.5 million or 20.2% compared with the first quarter of 2017. Gross margin was 30.3% in the quarter, an increase of 160 basis points compared to 28.7% a year ago. This increase was primarily driven by 160 basis points of leverage in our store occupancy costs.

SG&A expense was $64.3 million in the first quarter compared to $58.3 million a year ago. SG&A as a percentage of net sales was 31.1% compared to 32.2% in the prior year. The 110 basis point decrease was primarily driven by 160 basis points of leverage on our store operating costs, partially offset by 30 basis point increase in corporate costs and 30 basis point increase due to the timing of our annual training events.

Operating loss in the first quarter of 2018 was $1.7 million or negative 0.8% of net sales, an improvement of 72.6% compared with the prior year operating loss of $6.2 million or negative 3.5% of net sales for the first quarter of 2017.

Net loss for the first quarter was $2.6 million or $0.10 per share compared to net loss of $4.4 million or $0.18 per share for the first quarter of 2017. Our effective tax rate for the first quarter of 2017 was negative 36.6% compared with 32.6% in the year-ago period. The change in tax rate was primarily due to the exclusion of net losses for certain European jurisdictions from our estimated annual effective tax rate, offset by a reduction in the U.S. federal tax rate. We continue to anticipate that our annual effective tax rate will be approximately 27%.

Turning to the balance sheet. Cash and current marketable securities increased 54.2% to $118 million as of May 5, 2018, up from $76.5 million, as of April 29, 2017. This increase was primarily driven by $57 million in cash flow from operations, partially offset by $20.5 million of capital expenditures primarily related to new store growth and remodels.

We ended first quarter 2018 with $128.2 million in inventory, up 4.8% from last year. Excluding the year-over-year impact of foreign currency translation, inventory grew 2.8% from the prior year, driven primarily by our recent sales trends and increased global store count.

Now to our May sales results. Total net sales for the 4-week period ended June 2, 2018, increased 12.2% to $59.7 million, compared to $53.2 million for the 4-week period ended May 27, 2017. Our comparable sales increased 7.5% during the 4-week period ended June 2, 2018, compared to the comparable sales increase of 3.3% for the 4-week period ended May 27, 2017. The comparable sales increase was driven by an increase in transactions, partially offset by a decrease in dollars per transaction. Dollars per transaction decreased for the 4-week period due to the decrease in average unit retail, partially offset by an increase in units per transaction.

During the 4-week period, the men's category was our highest positive comping category, followed by footwear, women's and accessories. Hardgoods was our only negatively comping category for the period.

Looking at guidance for 2018, once again, I'll start off by reminding everyone that formulating our guidance involves some inherent uncertainty and complexity in estimating sales, product margins and earnings growth given the variety of internal and external factors that impact our performance. With that in mind, we currently expect that comparable sales will increase between 3% and 5% for the second quarter of 2018, and total sales will be in the range of $213 million to $217 million.

Consolidated operating margins are expected to be between 1.2% and 2% of net sales compared with an operating loss of negative 4 -- 0.4% in the prior year second quarter.

We anticipate our net income per share will be between $0.04 and $0.09 compared to a loss of $0.02 per share in the prior year second quarter. This earnings per share result is impacted by the movement of the calendar in 2018, resulting in an increase of approximately $10 million in comparable sales base and approximately $0.10 in earnings per share benefiting the second quarter of 2018. This is due to the first several days of August, which are in the back-to-school season now falling into our second quarter this year versus the third quarter last year. We expect this calendar shift will also negatively impact the third quarter of 2018 by approximately the same amount as the benefit anticipated in the second quarter discussed above. The benefit to the second quarter of 2018 will be offset by approximately $0.04 per share related to our inability to recognize a tax benefit on losses in certain jurisdictions within Europe.

Before I wrap up, I'd like to give you a few thoughts on how we are looking at 2018. As we mentioned above, we continue to experience positive top line momentum and believe we are well positioned to grow operating margins and leverage the business in 2018 and beyond.

We have now had 7 consecutive quarters of solid positive comparable sales growth, including strong comparable sales growth of 8.3% in the first quarter. As we move through the remainder of the year, we continue to believe that the investments we've made in our infrastructure, creating a seamless sales experience for our customers, our unique approach to merchandising as well as those investments we continue to make in the Zumiez team will drive long-term top and bottom line growth. With that in mind, we anticipate that we will grow comparable sales in fiscal 2018 in the low single-digit range.

It is important to point out that the extra week in fiscal 2017 will be a detriment to sales and earnings growth rates in the fourth quarter and full year fiscal 2018. The extra week in 2017 was worth approximately $9.1 million and $0.05 per share when comparing to 2018.

2017 represented record product margins in both North America and our consolidated basis. With that in mind, we are planning product margin to be flat to slightly accretive for 2018.

From an operating profit perspective, we are planning pretax earnings growth in the high single-digit range despite the headwind of the 53rd week in 2017 previously mentioned. SG&A is planned to grow at significantly slower rate in 2018 than we experienced in 2017 as we are planning strong expense management across all of our entities and will not have the year-over-year increase in incentive compensation we had in 2017.

From an earnings perspective, we expect to see significant benefits from our planned pretax earnings growth just mentioned and from U.S. tax reform. While our quarterly tax rates are expected to fluctuate, we are planning our business assuming an annual effective tax rate of approximately 27% inclusive of the valuation allowance impact.

We are on track to open approximately 13 new stores in 2018, including 6 in the U.S., 5 in Europe and 2 in Australia, with roughly half the openings occurring ahead of the back-to-school season. Year-to-date, we have opened 3 store locations, including 2 in North America and 1 in Europe. We expect capital expenditures for the full 2018 fiscal year to be between $21 million and $23 million compared to $24 million in 2017. The majority of the capital spend will be dedicated to new store openings and planned remodels. While our store count growth rate is decreasing in 2018, the related decrease in capital will be offset by an increase in remodels for the year. We expect that depreciation and amortization will be approximately $27 million, in line with the prior year.

And lastly, we are currently projecting our share count for the full year to be approximately 25.3 million shares.

And with that, operator, we would like to open the call up for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from the line of Janine Stichter from Jefferies.

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Janine M. Stichter, Jefferies LLC, Research Division - Equity Associate [2]

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Just a quick question on the gross margin. You've mentioned that the primary driver or I think the only driver was occupancy leverage. Can you comment on some of the other components of what you're seeing with merch margin shrink? And then you're guiding to product margin flat to up slightly for the full year. How should we think about the opportunity, and which quarters we could see product margin increase?

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Christopher Codington Work, Zumiez Inc. - CFO [3]

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Sure, thanks, Janine. Talking about gross margin, obviously, we said we have been getting some leverage on the occupancy side. As we think about the other items, product margins, specifically, we ran phenomenal product margins last year. It's the highest in our history. And as we moved into both Q1 and Q2, we have seen those amounts kind of stabilize with where we've been. The Q2 guidance does assume that our product margins are down slightly, but we've got a few things going on in the business. The team has done a great job working with our branded partners. As you guys know, a lot of our sales have been driven by apparel, which are technically a higher-margin category, but we've seen some resurgence in footwear here too, which is typically lower margin. And I think the other thing to point out is despite how high our margins have been, our private label penetration has actually decreased here in 2017 and into 2018. And that's okay for us because we're really trying to serve what the customer wants. And there'll be cycles that are probably more trend-driven, where maybe private label plays a part, and there'll be cycles that are branded. And so those are working together. From a shrink perspective, we've mentioned this has been a challenge, really, for 4 to 6 quarters here. And while we still are working through it, and it is a process, we're on plan this quarter, and I think that's a good start to where we wanted to be. And as you would expect, we're planning that to get better. As we've said here over the last year that we think it's something that we can make a difference in and fix. So we're actively working with that. We just kicked off our second round of inventories for 2018, which I won't be able to comment on today, but we'll have a better outline here as part of our Q2 earnings call. And we're continuing to work on that. So we're happy to get some leverage there. We think we have some leverage to go, especially as we work through our shrink challenges we've had over the last 12 months, and we'll kind of continue from there.

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Operator [4]

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And our next question comes from the line of Jeff Van Sinderen from B. Riley FBR.

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Richard Frederick Magnusen, B. Riley FBR, Inc., Research Division - Associate Analyst [5]

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This is Richard Magnusen in for Jeff Van Sinderen. Could you give us a little more on how you have planned your business for back-to-school this year in terms of whether the lead brands have changed versus last year and maybe which categories you're leaning into more? And then if you could, give us your latest thoughts on how you see your footwear business evolving given recent tractions and potential for that to return to being a bigger part of your business over time.

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Richard M. Brooks, Zumiez Inc. - CEO & Director [6]

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All right, Richard. I'll start, and Chris can help me out as we go. And no, I'm not going to give you any specifics about how we're thinking about brands and where we're placing bets, educated bets for back-to-school at this point. And again, I just like to remind everyone that our model is about the diversity of the brand collection, remember the -- and not just at a national level but that relates to local store-by-store assortments. So our ability to micro assort small brands means that relevant and local markets is a very important part of our business, not necessarily for driving sales but for driving newness for a customer that cares about uniqueness in their assortments and is willing to wear those new brands first. That's really a hallmark of a big part of our business and how we drive our unique assortments. So our story is the same. It's about the portfolio of brands. And I think -- as you know, we launched 150 -- over 150 new brands in 2017, ahead of our plan. And at this point, I think Chris, we're basically on -- I'd say we're on plan this year for new brand launches?

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Christopher Codington Work, Zumiez Inc. - CFO [7]

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That's correct, yes.

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Richard M. Brooks, Zumiez Inc. - CEO & Director [8]

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And so I think we feel good about where we're at on that front, Richard. And again -- but it's a portfolio approach focused on localized markets. And the same goes for categories. And we'll say this about the categories and then we'll dovetail into your footwear question. So again, it's the same question on categories, big departments, lots and lots of subcategories that are underneath there, lots of diversity in our business as we serve the entire lifestyle for our consumer. So even in struggling departments like accessories, which have been more difficult lately, we have lots of subgroups in there that are doing quite well and driving a lot of volume, while we have some others that have been more challenging for us. So it's always a broad mix of, again, kind of a portfolio approach on our category business, too. And then as we think about the whole business overall, we -- and we'll morph the call into talking about footwear at this point, is we always -- we'll go through major kind of large cyclical cycles around sometimes, footwear-driven cycle, which we had one from '09 to '12. And then we moved out of that. Footwear moved against us in terms of what we can do, moved into more of an athletic-based business, and that was challenging for us. But then most of those periods, we actually comped up. But we did it by going where the customer wanted us to go. And now that we've seen generally footwear being more difficult across the footwear retailers, our customers are telling us that we need to be in apparel in a big way. That's where the interest is, that's where the newness is. And so that's what we're doing for our customers. So even in challenging times, in different departments, dollars move, customers' commitment to share their wallet with us remains, I think, the same. And hopefully, as we progress in what we're doing, we're going to gain wallet share with our customer base. Now footwear, in specific, if we narrow in on that category, I think we'd say we're very happy to have footwear comp positive here for a bit of time now. But we're still unclear -- my comments here, Richard, are going to be similar to prior quarters at this point. Our footwear business has really been driven by not a broad portfolio of brands but really a focused nature of what is working in our footwear business. And other -- we have other brands that are really struggling in footwear. So we're not sure we exactly know where footwear is going on a longer-term basis. We'd love to see greater breadth and strength to the department. Don't get me wrong, we are thrilled to be running gains in footwear. But I'm not sure where it's going to play out over the longer term at this point, so a little bit of caution yet on the footwear business. And again, that caution is overlaid with the idea that we're driving and happy to drive for quite a while now significant gains in both men's and women's apparel. And I'm -- again, I want to do whatever it takes. I'm happy to take a gain any way we can get it, any way customers want to engage in and spend their money with us. So no matter where footwear is at, I think, again -- or any department for that matter, I think our model is one about driving gains through diversity and newness and freshness in the portfolio and moving where our customers are.

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Richard Frederick Magnusen, B. Riley FBR, Inc., Research Division - Associate Analyst [9]

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Okay. And we know it's tough to separate out the digital part of your business. But is there more you can share in terms what you're seeing in omnichannel trends and behavior of the customers?

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Richard M. Brooks, Zumiez Inc. - CEO & Director [10]

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No. The key thing to say is that there is no -- it is truly a channel-less world, so all customers in all channels. And I think as we continue to get into looking at the customer journey through our experience, they're varied journeys. Again, each customer has their own view of it. But no one works in a single channel. Virtually no one works in single channels anymore. So it's all about the integrated experience. So we're looking forward, and we think we have one of the best integrated, experienced channel-less models in specialty retail today with the way we've executed it, culturally appropriate for our team and how we do things at Zumiez and brand appropriate for our customers and how we execute on behalf of our brands. We think we have one of the best models out there today. And the good news there, Richard, is we have a lot of ideas. This is in experimentation phase, we talked about in the prepared comments. We're going to go out and keep pushing this. Customers are going to want to expect -- as I said on the last call, I think, a new era of customer engagement is coming upon us with this empowered consumer. Moving beyond omnichannel, all new ways to engage with them over the next -- starting this year and over the next few years is we're going to be testing and trying new ideas and really pushing some new ideas forward so we can engage customers wherever they want, however they want and be out there, anticipating their needs in the marketplace. So I think we have one of the best models, if not the best model, out there in specialty retail today, and we're going to get better yet at doing it. So I would tell you that customers are in all channels all the time with a unique path based upon their interests and for example, what social media channels they follow or don't follow, and that's the great big thing about the world, empowered consumer is truly empowered to find their way, to be on their own journey, and we're going to be there with them.

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Christopher Codington Work, Zumiez Inc. - CFO [11]

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And I'd just add to what Rick said, what's really important for us is that they find us. So from a financial perspective, we are impartial whether it comes on the web or in the stores. We just want them to find us, have a great experience with us and come back. And so as we look at these results, we look at our results overall, obviously, having an 8.3% comp here in the first quarter, we don't have a web business of scale that could drive an 8.3% comp on its own. So we are comping meaningfully in stores. And when I say meaningfully, we're talking solid mid-single-digit comps in stores. And while our web is comping ahead of our stores and growing at a faster pace, we're seeing an uptick in both channels, and I think that's speaks to the strength of our model and where we're at. And again, we want the customer to experience us the way they want to experience us.

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Operator [12]

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(Operator Instructions) And our next question comes from the line of Sharon Zackfia from William Blair.

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Sharon Zackfia, William Blair & Company L.L.C., Research Division - Partner & Group Head of Consumer [13]

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I guess the question on SG&A, so it's nice to see, the leverage. I know you did a lot of investing on reaching the customer in a more holistic way over the last several years. Are you at a point now where you think you can sustainably leverage SG&A going forward? And then secondarily, the tax element is somewhat confusing this year, and I know you're trying to help us through that, Chris. But can you remind us if the tax issues in terms of the elevated tax hits continue into the third quarter and then there's a lot of recovery in the fourth quarter? I don't remember if you had a cadence for the back half on that.

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Christopher Codington Work, Zumiez Inc. - CFO [14]

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Sure. I'll start with the tax question then move to SG&A. From a tax perspective, your answer is yes, we are going to have some pulls here in the first 3 quarters that will be made back in the fourth quarter. And the reason for that is, we believe, laid out on the call. We are not able to take the tax benefit on losses in certain tax jurisdictions within Europe. So Europe is much more concentrated in the fourth quarter and very much more of their profit is driven in the fourth quarter. So for the first 3 quarters of the year, there are projected to be losses in that business, which will flow through to the bottom line at 100%. And then as we get to the fourth quarter, any income earned would also flow through at 100% because of where we are from a tax position there and the associated GAAP accounting. So that's why you're seeing kind of some interesting tax rates here. Obviously, in this quarter, it put us in a negative tax rate. And why we're trying to guide people to kind of get to that 27% for the year. From an SG&A leverage perspective, we also are happy to see some leverage in that category. As you know, over the last few years, we have had some investments in things like minimum wage and our new commerce platform. And also as we talked about last year, just the incentive accruals that had been not funded at 100% and were funded at over 100% based on our results for 2017. So now as we move to 2018 and we kind of have the incentive accrual baked into the model, so to say, or at least in the prior year numbers, we are able to leverage on that better. And from an investment perspective, we will continue to have investments to serve the customer, but we don't have large projective investments here in the next few years. We are -- they're probably more incremental and probably replacing some of the other historical investments that are falling off. So we feel good about our ability to try to leverage here over the near term, and we'll obviously update our investors if that was to change.

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Richard M. Brooks, Zumiez Inc. - CEO & Director [15]

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And I'd just add to that, Sharon, I think we have -- if you look at our technology platforms, we basically touch almost everything in terms of how we interact at the consumer-facing side of what we're doing, and over the last few years, 4 to 5 years. So I agree with Chris. I think most of the major investments now are probably behind us for a number of years, and we'll be making more incremental -- the investment will be more incremental in nature as we move forward.

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Operator [16]

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And our last question comes from the line of Jonathan Komp from Baird.

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Jonathan Robert Komp, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [17]

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I want to follow up first on the same-store sales. You've been positive for 7 quarters, and I think 8.3% is the new high mark you've seen for a number of years. But Chris, you're assuming low single digits for the year, which would imply pretty low second half assumptions, at least, baked into that. So just wanted to hear a little more color on your thinking there and the sustainability of what you're seeing currently.

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Christopher Codington Work, Zumiez Inc. - CFO [18]

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Sure. Thanks, Jon. I mean, I think what I would tell you is this a business that has seen positive comparable sales for most of its 40 years, and we've been able to comp on comp. And we've done that through the points that Rick really pointed out to earlier, right? This is a collection of categories. It's a collection of brands. We are trying to move and adjust with where the customer wants. And so that is our strategy. Now we have run pretty strong results here over the last 7 quarters, and as we move into the back half of this year, we are running up against some of our bigger results from last year and multiyear results, as we were the stronger in the back half of '16 as well. So we have planned results to moderate a little bit based on the experience that we've had, but you can bet that we're going to try to go out and beat those results as well, right? I mean that's our challenge to ourselves and to our team every quarter, every month, every day, every hour, at the associate level on the store, right? So -- and I think the bigger piece of our annual guidance is that on this low single-digit comp, we're planning high single-digit operating profit gains. And this is an important distinction for us because this is in our March call as well, pointing on operating profit because we think that's one of the better metrics to look at us right now. Because of tax reform and because of the valuation allowance that we have on certain European entities, we think this is really the true indicator of the performance of the business. And we're planning that up high single digit on a low single-digit comp, and we feel pretty good about that result. And so that's what we're working towards. We're working to really grow the top line, service the customer, but also do it as profitably as we can. And so that's how we're thinking about the rest of the year.

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Jonathan Robert Komp, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [19]

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Okay. And just a follow-up there. I know the high single-digit operating profit target for -- in terms of the growth you didn't change versus the last quarter, even though you showed some nice upside in Q1 and showing good momentum here in early second quarter. So any moving parts there, or just kind of -- any additional color on the assumptions would be helpful.

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Christopher Codington Work, Zumiez Inc. - CFO [20]

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No, there's nothing new to call out other than, I would just point, as you know, the fourth quarter is where we make the majority of our earnings, the third quarter being the second-most earnings, and we're only 20% through the year here, with first quarter in the books. So obviously, as we move through the year, we'll try to give more color if we think that those assumptions are going to change. But having the smallest quarter behind us, we did not make any changes to that from our March release.

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Jonathan Robert Komp, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [21]

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Okay. And just last one from me. Longer term, I know you've talked about getting back to high single-digit operating margin for the business. Is there any way to frame up in terms of guidepost, in terms of how long you think it might take to make that type of progress?

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Christopher Codington Work, Zumiez Inc. - CFO [22]

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Well, we certainly have it framed up internally, I'll tell you that. In this type of environment, we're not going to come out externally and put metrics around that at this point. What I would tell you is we're very focused on the type of growth that we've laid out for 2018. As you know, this is one of the first times we've given full year color to the level that we have, and that's because this is really our initiative. Again, as I said earlier, it's to serve every customer and to grow as profitably as we can and in that order. And so we're working very hard to that effect, and we're working hard to continue to build our models with a mature base here in North America and a growth base in our international subsidiaries to grow sales at a reasonable level and grow earnings ahead of sales. And so -- but it will take some time to get to that high single digits, but we're working very hard to kind of push those levers to drive more profitability of the business.

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Jonathan Robert Komp, Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst [23]

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Okay. And just to clarify, if you were not operating internationally today in a theoretical sense, would you already be towards that high single-digit operating margin level?

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Christopher Codington Work, Zumiez Inc. - CFO [24]

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There's not quite that much of a pull. I mean, to be very transparent, Europe is not operating profitably, but it is -- at about 10% of the business, it's not that big of a pull. So we have some work to do internationally, but we feel good about our path there. We've got a great base and a strong structure to grow off of here. Obviously, our task here over the next couple of years is going to be to scale the investment we've made there, to continue to grow the existing units and to add profitable new units as well as online sales to those businesses. And we think we've got a good path to do it. So it's not that much of a pull, to answer your question, but I think we can grow both as we continue to move forward.

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Richard M. Brooks, Zumiez Inc. - CEO & Director [25]

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And I'd just add to Chris's comments there that we all always have known that building international markets takes time. It takes energy, and you have to reach those leverage points. So that's kind of how -- what we're looking for there, doing that. But the most important reason that we're growing internationally is because our customers are truly global consumers now. It gives us insight into what's going on, on other parts of the world. And brands can emerge anywhere and become global brands quickly, they'd become drivers across our whole platform. So also I want to just keep in mind that, yes, we'll work through the profitability challenges. We'll drive better results as we build towards those leverage points, and like we have in Canada already at this point. But the more important message of why we're pursuing international growth is because our customers in this world, a shrinking world being driven through the power of consumer technology, demands that we're there. We want to be there and leading on new brands, then we need to lead on new brands because brands become global so quickly around the world. We need to be there to see them, so we can serve those young brand partners and get their brands -- help them grow as they trigger those global growth points and more importantly, serve our mutual customers. So the long-term strategic point, Jonathan, that's really the key thing for me is we've invested now, starting in 2010 in Canada, over the last 8, 9 years in doing this, it's always been about the customer and where we think this customer is going and our ability to serve them based on this, the power and what customers expect from us from being global citizens and global consumers.

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Operator [26]

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And we have a follow-up question from the line of Sharon Zackfia from William Blair.

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Sharon Zackfia, William Blair & Company L.L.C., Research Division - Partner & Group Head of Consumer [27]

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Just, I guess, 2 questions. I'm just wondering if you think you have a shot at hitting the $1 billion mark in sales this year. And then secondarily, I don't think you've repurchased shares in a while. I don't remember if you have an authorization out there, but if you could just give us an update on the thoughts of what you're doing with your free cash.

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Christopher Codington Work, Zumiez Inc. - CFO [28]

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Sure. I'll take the cash item here first. We have maintained a very consistent position when it comes to cash. First and foremost, we look at cash and say, where do -- where can we invest in the business in service of the customer, to grow top line or to help control expenses? And we put a lot of money into that. Obviously, you've seen our capital spend over the last few years driven at those levels, and there are some operating spend as well. And then secondly, we look -- we're outside the business, if there are good opportunities to grow the business through acquisition or other types of partnerships that we think could add value for our shareholders. And you've seen us do that with Blue Tomato and Fast Times here over the last 5, 6 years. And then lastly, we return to shareholders. So at this point in time, we do not have a buyback program in place. As you're aware, we bought back a fair amount of the company and spent over $176 million since 2012 and feel pretty good about where that investment stands in relation to our stock today. So this is something we continue to review with our Board of Directors and -- to get their input on how they want to drive. But we stayed pretty true to that philosophy and really go over that with our director group every quarter as we meet with them ahead of our earnings release here. So from a billion-dollar mark, we're pushing. We would -- we're just as excited as you probably are, having been a follower of Zumiez for as long as you have. That will be a metric we will be excited to get to, and we're pushing, and we'll see what the rest of this year has in store for us if we're able to get there.

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Richard M. Brooks, Zumiez Inc. - CEO & Director [29]

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Yes. And I'd just add to that -- sure, go ahead.

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Sharon Zackfia, William Blair & Company L.L.C., Research Division - Partner & Group Head of Consumer [30]

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I was going to ask if Rick has to get a tattoo if you hit $1 billion.

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Richard M. Brooks, Zumiez Inc. - CEO & Director [31]

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No tattoos on Rick ever. That's the rest of the stores -- the buyers, they'll cover that for me, Sharon. I just -- the billion number for me, I have to tell you, it's been a goal for a while and because when I give you sense when I -- the year before I started here at Zumiez, in 1992, they did $10 million. So for me, there's a symmetry around the $10 million to the $1 billion number, that it's a milestone for us, and it's an important milestone. And again, I'd just say that other people have gotten there faster than we have, but they did it differently than we did. They did it by doubling and doubling units. As you know, we've been the one that wants to do it the right way, through growth and quality people, through building our teams. It's taken us a long time, but I think the quality of where we've gotten is worth it. And so yes, I'm excited about trying to get there, too. I'm with Chris. I want to get there as soon as I can. Like I say, the $10 million to $1 billion, it will be an exciting day, I think, for me personally and for a lot of people here in the building.

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Operator [32]

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And that concludes our question-and-answer session for today. I'd like to turn the call back over to Rick Brooks for closing remarks.

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Richard M. Brooks, Zumiez Inc. - CEO & Director [33]

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All right. Thank you very much, everyone, and we appreciate your interest, as always, in Zumiez here and our Q1 results. And we're looking forward, I think hopefully, to a strong Q2 and a good year, as Chris kind of outlaid for us, for the full year of '18. Again, I think it's a very exciting time to be in retail, really interesting challenges but great opportunities. So thank you all, and we'll look forward to talking after the Q2 -- with the Q2 results. Good day.

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Operator [34]

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Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, and you may now disconnect. Everyone, have a great day.

Zumiez Announces Participation in the William Blair 38th Annual Growth Stock Conference

LYNNWOOD, Wash., June 08, 2018 (GLOBE NEWSWIRE) -- Zumiez Inc. (ZUMZ) a leading specialty retailer of apparel, footwear, equipment and accessories for young men and women, today announced that management will present at the William Blair 38th Annual Growth Stock Conference in Chicago, IL. The presentation is scheduled for Tuesday, June 12, 2018 at 10:10 am Central Time.  The live webcast can be accessed via the investor relations page of Zumiez website at http://ir.zumiez.com.  To listen to the live webcast, visit the Zumiez website at least 10 minutes in advance to download and install any necessary audio software.

About Zumiez Inc.

Zumiez is a leading specialty retailer of apparel, footwear, accessories and hardgoods for young men and women who want to express their individuality through the fashion, music, art and culture of action sports, streetwear, and other unique lifestyles. As of June 2, 2018 we operated 700 stores, including 608 in the United States, 50 in Canada, 35 in Europe and 7 in Australia. We operate under the names Zumiez, Blue Tomato and Fast Times. Additionally, we operate ecommerce web sites at zumiez.com, blue-tomato.com and fasttimes.com.au

Company Contact:
Darin White
Director of Finance &
Investor Relations
Zumiez Inc.
(425) 551-1500, ext. 1337

Investor Contact:
ICR
Brendon Frey
(203) 682-8200

Zumiez (ZUMZ) Q1 2018 Earnings Conference Call Transcript

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Image source: The Motley Fool.

Zumiez (NASDAQ: ZUMZ)
Q1 2018 Earnings Conference Call
Jun. 7, 2018 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

[Operator instructions] Good afternoon, ladies and gentlemen, and welcome to the Zumiez Inc. first-quarter fiscal 2018 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 or factors that could cause actual results to differ materially from the information that will be discussed is available Zumiez's filing 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 -- 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 brief remarks regarding our first-quarter performance then I'll share some thoughts about the future 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.

2018 has gotten off to a good start, as the strong sales momentum we experienced during the holiday season accelerated in the first quarter. Both our top- and bottom-line results exceeded our expectations, fueled by the strength of our assortments, our seamless shopping experience across physical and digital channels, and the world-class customer service our teams continue to deliver globally. For the quarter compatible sales increased 8.3%, compared to our guidance of 4% to 6%, and operating margin was negative 0.8% of net sales, an improvement of 72.6% compared with the prior year and ahead of the high end of our guidance of negative 1.7%. Net loss per share improved to $0.10 versus $0.18 last year and above the high end of our guidance that was a loss of $0.13.

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Our recent performance has reinforced our belief that we are well-positioned to benefit from shifts that are taking place in global retail. Our top priority is to stay consistent and relevant with our customers in order to expand our market share, which we believe will lead to accelerated earnings growth and value creation for our shareholders. Before I hand the call over to Chris, let me review some of our thoughts about the future of retail as it relates to Zumiez. We believe there are increasingly blurred lines between retail channels.

Our focus is firmly on embracing today's empowered customer and winning them over through authentic culture and brand. We believe the empowered consumer lives in a channel-less world and is not focused on going to a physical store or buying online but rather transacting with a retailer they know and trust. In this channel-less world, we believe that trend cycles are shifting at a faster rate than ever before. New brands emerge that can quickly move from locally recognized breads to global brands.

We believe there is a level of customer transparency in retail that is driving out inefficiencies within the market and forcing consolidation in the industry. With all this change, we are excited about what the future holds for Zumiez, the things that we have done and things we are doing to exceed customer expectations in our evolving industry. We continue to build on our process of identifying new brands and trends in the marketplace, enabling us to offer the product our consumers are looking for, no matter when or where they choose to interact with our brand. We've used our strong recruiting, training and sales culture to provide more personalized human-to-human connections, which is resonating with our customers.

We continue enhancing the customer service aspect of our business, enhancing the physical and digital sales experience, optimizing the speed in which our customers can get what they're looking for and learning more about the customers' life cycle. We've established a strategic presence in six countries across three continents, with a digital presence that allows us to reach even further. This scale allows us to work together with our brand partners to serve our customers globally. This includes assisting emerging local brands both domestically and internationally in their evolution to global brands.

We are continuously testing and learning from our customers with an emphasis on inventing and improving upon ideas to meet their rapidly changing expectations. As the world continues to evolve, we are set to extend our position as a leading global retail lifestyle brand, capitalizing up on the opportunities presented by the challenging retail landscape. At the core of all these efforts is our culture and brand position that remain constant throughout our 40 years history. This has been the foundation of our success and the reason we've been able to weather the storms better than others and emerge even stronger.

It's an exciting time in retail, and we're confident we're at the forefront of great things to come for Zumiez. With that, I'll hand the call over to Chris for his review of the financials. Chris?

Christopher C. Work -- Chief Financial Officer

Thanks, Rick. And good afternoon, everyone. I'm going to start with a review of our first-quarter 2018 results. I'll then provide a brief update on May before discussing our second-quarter guidance and some high-level perspective on how we are thinking about the full year.

First-quarter net sales increased $25.1 million, or 13.9%, to $206.3 million from $181.2 million in the first quarter of 2017. Contributing to this increase were positive comparable-sales growth of 8.3% and the net addition of 12 stores since the end of last year's first quarter. During the 2018 first quarter, our comparable sales were driven by an increase in transaction volume, partially offset by a decrease in dollars per transaction. The decrease in dollars per transaction resulted from lower units per transaction, partially offset by an increase in average unit retail.

This quarter represented our seventh consecutive quarter of comparable-sales growth and transaction gains. During the quarter, our men's category was the largest positive comping category, followed by women's and footwear. Accessories was the largest negative comping category, followed by hardgoods. From a regional perspective, North America net sales increased $18.7 million, or 11.5%, to $181.3 million.

Other international net sales, which consists of Europe and Australia, increased $6.4 million, or 34.4%, to $25 million. Excluding the impact of foreign currency translation, North America net sales grew 11.3%, and other international net sales grew 17.8% for the quarter. First-quarter gross profit was $62.6 million, an increase of $10.5 million, or 20.2%, compared with the first quarter of 2017. Gross margin was 30.3% in the quarter, an increase of 160 basis points compared to 28.7% a year ago.

This increase was primarily driven by 160 basis points of leverage in our store occupancy costs. SG&A expense was $64.3 million in the first quarter, compared to $58.3 million a year ago. SG&A as a percentage of net sales was 31.1%, compared to 32.2% in the prior year. The 110-basis-point decrease was primarily driven by 160 basis points of leverage on our store operating costs, partially offset by a 30-basis-point increase in corporate costs and a 30-basis-point increase due to the timing of our annual training events.

Operating loss in the first quarter of 2018 was $1.7 million, or negative 0.8% of net sales, an improvement of 72.6% compared with the prior-year operating loss of $6.2 million, or negative 3.5% of net sales, for the first quarter of 2017. Net loss for the first quarter was $2.6 million, or $0.10 per share, compared to net loss of $4.4 million, or $0.18 per share, for the first quarter of 2017. Our effective tax rate for the first quarter of 2017 was negative 36.6%, compared with 32.6% in the year-ago period. The change in tax rate was primarily due to the exclusion of net losses for certain European jurisdictions from our estimated annual effective tax rate, offset by a reduction in the U.S.

federal tax rate. We continue to anticipate that our annual effective tax rate will be approximately 27%. Turning to the balance sheet. Cash and current marketable securities increased 54.2% to $118 million as of May 5, 2018, up from $76.5 million as of April 29, 2017.

This increase was primarily driven by $57 million in cash flow from operations, partially offset by $20.5 million of capital expenditures primarily related to new store growth and remodels. We ended first quarter 2018 with $128.2 million in inventory, up 4.8% from last year. Excluding the year-over-year impact of foreign currency translation, inventory grew 2.8% from the prior year, driven primarily by our recent sales trends and increased global store count. Now to our May sales results.

Total net sales for the four-week period ended June 2, 2018, increased 12.2% to $59.7 million, compared to $53.2 million for the four-week period ended May 27, 2017. Our comparable sales increased 7.5% during the four-week period ended June 2, 2018, compared to the comparable-sales increase of 3.3% for the four-week period ended May 27, 2017. The comparable sales increase was driven by an increase in transactions, partially offset by a decrease in dollars per transaction. Dollars per transaction decreased for the four-week period due to the decrease in average unit retail, partially offset by an increase in units per transaction.

During the four-week period, the men's category was our highest positive comping category, followed by footwear, women's and accessories. Hardgoods was our only negatively comping category for the period. Looking at guidance for 2018, once again, I'll start off by reminding everyone that formulating our guidance involves some inherent uncertainty and complexity in estimating sales, product margins and earnings growth given the variety of internal and external factors that impact our performance. With that in mind, we currently expect that comparable sales will increase between 3% and 5% for the second quarter of 2018, and total sales will be in the range of $213 million to $217 million.

Consolidated operating margins are expected to be between 1.2% and 2% of net sales, compared with an operating loss of negative 4 -- 0.4% in the prior-year second quarter. We anticipate our net income per share will be between $0.04 and $0.09, compared to a loss of $0.02 per share in the prior-year second quarter. This earnings-per-share result is impacted by the movement of the calendar in 2018, resulting in an increase of approximately $10 million in comparable-sales base and approximately $0.10 in earnings per share benefiting the second quarter of 2018. This is due to the first several days of August, which are in the back-to-school season, now falling into our second quarter this year versus the third quarter last year.

We expect that this calendar shift will also negatively impact the third quarter of 2018 by approximately the same amount as the benefit anticipated in the second quarter discussed above. The benefit to the second quarter of 2018 will be offset by approximately $0.04 per share related to our inability to recognize a tax benefit on losses in certain jurisdictions within Europe. Before I wrap up, I'd like to give you a few thoughts on how we are looking at 2018. As we mentioned above, we continue to experience positive top-line momentum and believe we are well-positioned to grow operating margins and leverage the business in 2018 and beyond.

We have now had seven consecutive quarters of solid positive comparable sales growth, including strong comparable sales growth of 8.3% in the first quarter. As we move through the remainder of the year, we continue to believe that the investments we've made in our infrastructure, creating a seamless sales experience for our customers, our unique approach to merchandising as well as those investments we continue to make in the Zumiez team will drive long-term top- and bottom-line growth. With that in mind, we anticipate that we will grow comparable sales in fiscal 2018 in the low single-digit range. It is important to point out that the extra week in fiscal 2017 will be a detriment to sales and earnings growth rates in the fourth-quarter and full-year fiscal 2018.

The extra week in 2017 was worth approximately $9.1 million and $0.05 per share when comparing to 2018. 2017 represented record product margins in both North America and our consolidated basis. With that in mind, we are planning product margins to be flat to slightly accretive for 2018. From an operating-profit perspective, we are planning pre-tax earnings growth in the high single-digit range despite the headwind of the 53rd week in 2017 previously mentioned.

SG&A is planned to grow at significantly slower rate in 2018 than we experienced in 2017 as we are planning strong expense management across all of our entities and will not have the year-over-year increase in incentive compensation we had in 2017. From an earnings perspective, we expect to see significant benefits from our planned pre-tax earnings growth just mentioned and from U.S. tax reform. While our quarterly tax rates are expected to fluctuate, we are planning our business assuming an annual effective tax rate of approximately 27% inclusive of the valuation allowance impact.

We are on track to open approximately 13 new stores in 2018, including six in the U.S., five in Europe and two in Australia, with roughly half the openings occurring ahead of the back-to-school season. Year-to-date, we have opened three store locations, including two in North America and one in Europe. We expect capital expenditures for the full 2018 fiscal year to be between $21 million and $23 million, compared to $24 million in 2017. The majority of the capital spend will be dedicated to new store openings and planned remodels.

While our store count growth rate is decreasing in 2018, the related decrease in capital will be offset by an increase in remodels for the year. We expect that depreciation and amortization will be approximately $27 million, in line with the prior year. And lastly, we are currently projecting our share count for the full year to be approximately 25.3 million shares. And with that, operator, we would like to open the call up for questions.

Questions and Answers:

Operator

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

Janine Stichter -- Jefferies -- Analyst

Hi, guys, good evening. Just a quick question on the gross margin. You've mentioned that the primary driver or I think the only driver was occupancy leverage. Can you comment on some of the other components of what you're seeing with merch margin shrink? And then you're guiding to product margin flat to up slightly for the full year.

How should we think about the opportunity, and which quarters we could see product margin increase? Thank you.

Christopher C. Work -- Chief Financial Officer

Sure, thanks, Janine. Talking about gross margin, obviously, we said we have been getting some leverage on the occupancy side. As we think about the other items, product margins, specifically, we ran phenomenal product margins last year. It's the highest in our history.

And as we move into both Q1 and Q2, we have seen those amounts kind of stabilize with where we've been. The Q2 guidance does assume that our product margins are down slightly, but we've got a few things going on in the business. The team has done a great job working with our branded partners. As you guys know, a lot of our sales have been driven by apparel, which are technically a higher-margin category, but we've seen some resurgence in footwear here too, which is typically lower margin.

And I think the other thing to point out is despite how high our margins have been, our private label penetration has actually decreased here in 2017 and into 2018. And that's OK for us because we're really trying to serve what the customer wants. And there'll be cycles that are probably more trend-driven, where maybe private label plays a part, and there'll be cycles that are branded. And so those are working together.

From a shrink perspective, we've mentioned this has been a challenge, really, for four to six quarters here. And while we still are working through it, and it is a process, we're on plan this quarter, and I think that's a good start to where we wanted to be. And as you would expect, we're planning that to get better. As we've said here over the last year that we think it's something that we can make a difference in and fix.

So we're actively working with that. We just kicked off our second round of inventories for 2018, which I will be able to comment on today, but we'll have a better outline here as part of our Q2 earnings call. And we're continuing to work on that. So we're happy to get some leverage there.

We think we have some leverage to go, especially as we work through our shrink challenges we've had over the last 12 months, and we'll kind of continue from there.

Janine Stichter -- Jefferies -- Analyst

Great. Thank you.

Operator

Thank you. And our next question comes from the line of Jeff Van Sinderen from B. Riley FBR. Your line is now open.

Richard Magnusen -- B. Riley FBR -- Analyst

Hello. This is Richard Magnusen in for Jeff Van Sinderen. Congratulations on the quarter. Could you give us a little more on how you have planned your business for back-to-school this year in terms of whether the lead brands have changed versus last year and maybe which categories you're leaning into more? And then if you could, give us the latest thoughts of how you see your full or business evolving, given recent traction and potential for that to return to being a bigger part of your business over time.

Richard M. Brooks -- Chief Executive Officer

All right, Richard. I'll start, and Chris can help me out as we go. And no, I'm not going to give you any specifics about how we're thinking about brands and where we're placing bets, educated bets for back-to-school at this point. And again, I just like to remind everyone that our model is about the diversity of the brand collection, remember the -- and not just at a national level but that relates to local store-by-store assortments.

So our ability to micro assort small brands means that relevant and local markets is a very important part of our business, not necessarily for driving sales but for driving newness for a customer that cares about uniqueness in their assortments and is willing to wear those new brands first. That's really a hallmark of a big part of our business and how we drive our unique assortments. So our story is the same. It's about the portfolio of brands.

And I think -- as you know, we launched 150 -- over 150 new brands in 2017, ahead of our plan. And at this point, I think Chris, we're basically on -- I'd say we're on plan this year for new brand launches?

Christopher C. Work -- Chief Financial Officer

That's correct. Yes.

Richard M. Brooks -- Chief Executive Officer

And so I think we feel good about where we're at on that front, Richard. And again -- but it's a portfolio approach focused on localized markets. And the same goes for categories. And we'll say this about the categories and then we'll dovetail into your footwear question.

So again, it's the same question on categories, big departments, lots and lots of subcategories that are unique there, lots of diversity in our business as we serve the entire lifestyle for our consumer. So even in struggling departments like accessories, which have been more difficult lately, we have lots of subgroups in there that are doing quite well and driving a lot of volume, while we have some others that have been more challenging for us. So it's always a broad mix of, again, kind of portfolio approach on our category business, too. And then as we think about the whole business overall, we -- and we'll morph the call into talking about footwear at this point, is we always -- we'll go through major kind of large cyclical cycles around sometimes, footwear-driven cycle, which we had one from '09 to '12.

And then we moved out of that. Footwear moved against us in terms of what we can do, moved into more of an athletic-based business, and that was challenging for us. But then most of those periods, we actually comped up. But we did it by going where the customer wanted us to go.

And now that we've seen generally footwear being more difficult across the footwear retailers, our customers are telling us that we need to be in apparel in a big way. That's where the interest is, that's where the newness is. And so that's what we're doing for our customers. So even in challenging times, in different departments, dollars move, customers' commitment to share their wallet with us remains, I think, the same.

And hopefully, as we progress in what we're doing, we're going to gain wallet share with our customer base. Now footwear, in specific, if we narrow in on that category, I think we'd say we're very happy to have footwear comp positive here for a bit of time now. But we're still unclear -- my comments here, Richard, are going to be similar to prior quarters at this point. Our footwear business has really been driven by not a broad portfolio of brands but really a focused nature of what is working in our footwear business.

And other -- we have other brands that are really struggling in footwear. So we're not sure we exactly know where footwear is going on a longer-term basis. We'd love to see greater breadth and strength to the department. Don't get me wrong, we are thrilled to be running gains in footwear.

But I'm not sure where it's going to play out over the longer term at this point, so a little bit of caution yet on the footwear business. And again, that caution is overlaid with the idea that we're driving and happy to drive for quite awhile now significant gains in both men's and women's apparel. And I'm -- again, I want to do whatever it takes. I'm happy to take a gain any way we can get it, any way customers want to engage in and spend their money with us.

So no matter where footwear is at, I think, again -- or any department for that matter, I think our model is one about driving gains through diversity and newness and freshness of the portfolio and moving where our customers are.

Richard Magnusen -- B. Riley FBR -- Analyst

OK. And we know it's tough to separate out the digital part of your business. But is there more you can share in terms what you're seeing in omnichannel trends and behavior of the customers?

Richard M. Brooks -- Chief Executive Officer

No. The key thing to say is that there is no -- it is truly a channel-less world, so all customers in all channels. And I think as we continue to get into looking at the customer journey through our experience, they're varied journeys. Again, each customer has their own view of it.

But no one works in a single channel. Virtually no one works in single channels anymore. So it's all about the integrated experience. So we're looking forward, and we think we have one of the best integrated, experienced channel-less models in specialty retail today with the way we've executed it, culturally appropriate for our team and how we do things at Zumiez and brand appropriate for our customers and how we execute on behalf of our brands.

We think we have one of the best models out there today. And the good news there, Richard, is we have a lot of ideas. This is in experimentation phase, we talked about in the prepared comments. We're going to go out and keep pushing this.

Customers are going to want to expect -- as I said on the last call, I think, a new era of customer engagement is coming upon us with this empowered consumer. Moving beyond omnichannel, all new ways to engage with them over the next -- starting this year and over the next year is we're going to be testing and trying new ideas and really pushing some new ideas forward so we can engage customers wherever they want, however they want and be out there, anticipating their needs in the marketplace. So I think we have one of the best models, if not the best model, out there in specialty retail today, and we're going to get better yet at doing it. So I would tell you that customers are in all channels all the time with a unique path based upon their interests and for example, what social media channels they follow or don't follow, and that's the great big thing about the world, empowered consumer is truly empowered to find their way, to be on their own journey, and we're going to be there with them.

Christopher C. Work -- Chief Financial Officer

And I'd just add to what Rick said, what's really important for us is that they find us. So from a financial perspective, we are impartial whether it comes on the web or in the stores. We just want them to find us, have a great experience with us and come back. And so as we look at these results, we look at our results overall, obviously, having an 8.3% comp here in the first quarter, we don't have a web business of scale that could drive an 8.3% comp on its own.

So we are comping meaningfully in stores. And when I say meaningfully, we're talking solid mid-single-digit comps in stores. And while our web is comping ahead of our stores and growing at a faster pace, we're seeing an uptick in both channels, and I think that speaks to the strength of our model and where we're at. And again, we want the customer to experience us the way they want to experience us.

Richard Magnusen -- B. Riley FBR -- Analyst

Oh, thank you. That sounds great.

Operator

Thank you. [Operator instructions] And our next question comes from the line of Sharon Zackfia from William Blair. Your line is now open.

Sharon Zackfia -- William Blair & Company -- Analyst

Hi, good afternoon. I guess the question on SG&A, so it's nice to see, the leverage. I know you did a lot of investing on reaching the customer in a more holistic way over the last several years. Are you at a point now where you think you can sustainably leverage SG&A going forward? And then secondarily, the tax element is somewhat confusing this year, and I know you're trying to help us through that, Chris.

But can you remind us if the tax issues in terms of the elevated tax hits continue into the third quarter and then there's a lot of recovery in the fourth quarter? I don't remember if you have a cadence for the back half on that.

Christopher C. Work -- Chief Financial Officer

Sure. I'll start with the tax question then move to SG&A. From a tax perspective, your answer is yes, we are going to have some pulls here in the first three quarters that will be made back in the fourth quarter. And the reason for that is, we believe, laid out on the call.

We are not able to take the tax benefit on losses in certain tax jurisdictions within Europe. So Europe is much more constrained in the fourth quarter and very much more of their profit is driven in the fourth quarter. So for the first three quarters of the year, there are projected to be losses in that business, which will flow through to the bottom line at 100%. And then as we get to the fourth quarter, any income earned would also flow through at 100% because of where we are from a tax position there and the associated GAAP accounting.

So that's why you're seeing kind of some interesting tax rates here. Obviously, in this quarter, it put us in a negative tax rate. And we're trying to guide people to kind of get to that 27% for the year. From an SG&A leverage perspective, we also are happy to see some leverage in that category.

As you know, over the last few years, we have had some investments in things like minimum wage and our new commerce platform. And also as we talked about last year, just the incentive accruals that had been not funded at 100% and were funded at over 100% based on our results for 2017. So now as we move to 2018 and we kind of have the incentive accrual baked into the model, so to say, or at least in the prior-year numbers, we are able to leverage on that better. And from an investment perspective, we will continue to have investments to serve the customer, but we don't have large projective investments here in the next few years.

We are -- they're probably more incremental and probably replacing some of the other historical investments that are falling off. So we feel good about our ability to try to leverage here over the near term, and we'll obviously update our investors if that was to change.

Richard M. Brooks -- Chief Executive Officer

And I'd just add to that, Sharon, I think we have -- if you look at our technology platforms, we basically touch almost everything in terms of how we interact at the consumer-facing side of what we're doing, and over the last few years, four to five years. So I agree with Chris. I think most of the major investments now are probably behind us for a number of years, and we'll be making more incremental -- the investment will be more incremental in nature as we move forward.

Sharon Zackfia -- William Blair & Company -- Analyst

Great. Thank you.

Operator

Thank you. And our last question comes from the line of Jonathan Komp from Baird. Your line is now open.

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

Yeah. Hi, thank you. I want to follow up first on the same-store sales. You've been positive for seven quarters, and I think 8.3% is the new high mark you've seen for a number of years.

But Chris, you're assuming low single digits for the year, which would imply pretty low second half assumptions, at least, baked into that. So just wanted to hear a little more color on your thinking there and the sustainability of what you're seeing currently.

Christopher C. Work -- Chief Financial Officer

Sure. Thanks, Jon. I mean, I think what I would tell you is this a business that has seen positive comparable sales for most of its 40 years, and we've been able to comp on comp. And we've done that through the points that Rick really pointed out to earlier, right? This is a collection of categories.

It's a collection of brands. We are trying to move and adjust with where the customer wants. And so that is our strategy. Now we have run pretty strong results here over the last seven quarters, and as we move into the back half of this year, we are running up against some of our bigger results from last year and multiyear results, as we were the stronger in the back half of '16 as well.

So we have planned results to moderate a little bit based on the experience that we've had, but you can bet that we're going to try to go out and beat those results as well, right? I mean that's our challenge to ourselves and to our team every quarter, every month, every day, every hour, at the associate level on the store, right? So -- and I think the bigger piece of our annual guidance is that on that low single-digit comp, we're planning high single-digit operating profit gains. And this is an important distinction for us because this is in our March call as well, pointing on operating profit because we think that's one of the better metrics to look at us right now. Because of tax reform and because of the valuation allowance that we have on certain European entities, we think this is really the true indicator of the performance of the business. And we're planning that up high single digit on a low single-digit comp, and we feel pretty good about that result.

And so that's what we're working toward. We're working to really grow the top line, service the customer, but also do it as profitably as we can. And so that's how we're thinking about the rest of the year.

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

OK. And just a follow-up there. I know the high single-digit operating profit target for -- in terms of the growth you didn't change versus the last quarter, even though you showed some nice upsides in Q1 and showing good momentum here in early second quarter. So any moving parts there, or just kind of -- any additional color on the assumptions would be helpful.

Christopher C. Work -- Chief Financial Officer

No, there's nothing new to call out other than, I would just point, as you know, the fourth quarter is where we make the majority of our earnings, the third quarter being the second-most earnings, and we're only 20% through the year here, with first quarter in the books. So obviously, as we move through the year, we'll try to give more color if we think that those assumptions are going to change. But having the smallest quarter behind us, we did not make any changes to that from our March release.

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

OK. And just last one from me. Longer term, I know you've talked about getting back to high single-digit operating margin for the business. Is there any way to frame up in terms of guidepost, in terms of how long you think it might take to make that type of progress?

Christopher C. Work -- Chief Financial Officer

Well, we certainly have it framed up internally, I'll tell you that. In this type of environment, we're not going to come out externally and put metrics around that at this point. What I would tell you is we're very focused on the type of growth that we've laid out for 2018. As you know, this is one of the first times we've given full-year color to the level that we have, and that's because this is really our initiative.

Again, as I said earlier, it's to serve every customer and to grow as profitably as we can and in that order. And so we're working very hard to that effect, and we're working hard to continue to build our models with a mature base here in North America and a growth base in our international subsidiaries to grow sales at a reasonable level and grow earnings ahead of sales. And so -- but it will take some time to get to that high single digits, but we're working very hard to kind of push those levers to drive more profitability of the business.

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

OK. And just to clarify, if you are not operating internationally today in a theoretical sense, would you already be toward that high single-digit operating margin level?

Christopher C. Work -- Chief Financial Officer

There's not quite that much of a pull. I mean, to be very transparent, Europe is not operating profitably, but it is -- at about 10% of the business, it's not that big of a pull. So we have some work to do internationally, but we feel good about our path there. We've got a great base and a strong structure to grow off of here.

Obviously, our task here over the next couple of years is going to be to scale the investment we've made there, to continue to grow the existing units and to add profitable new units as well as online sales to those businesses. And we think we've got a good path to do it. So it's not that much of a pull, to answer your question, but I think we can grow both as we continue to move forward.

Richard M. Brooks -- Chief Executive Officer

And I'd just add to Chris's comments there that we all always have known that building international markets takes time. It takes energy, and you have to reach those leverage points. So that's kind of how -- what we're looking for there, doing that. But the most important reason that we're growing internationally is because our customers are truly global consumers now.

It gives us insight into what's going on, on other parts of the world. And brands can emerge anywhere and become global brands quickly, they'd become drivers across our whole platform. So also I want to just keep in mind that, yes, we'll work through the profitability challenges. We'll drive better results as we build toward those leverage points, and like we have in Canada already at this point.

But the more important message of why we're pursuing international growth is because our customers in this world, a shrinking world being driven through the power of consumer technology, demands that we're there. We want to be there and leading on new brands, and we need to lead on new brands because brands become global so quickly around the world. We need to be there to see them, so we can serve those young brand partners and get their brands -- help them grow as they trigger those global growth points and more importantly, serve our mutual customers. So the long-term strategic point, Jonathan, that's really the key thing for me is we've invested now, starting in 2010 in Canada, over the last eight, nine years in doing this, it's always been about the customer and where we think this customer is going and our ability to serve them based on this, the power and what customers expect from us from being global citizens and global consumers.

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

Very helpful. Thank you.

Operator

And we have a follow-up question from the line of Sharon Zackfia from William Blair.

Sharon Zackfia -- William Blair & Company -- Analyst

Hi. Just, I guess, two questions. I'm just wondering if you think you have a shot at hitting the $1 billion mark in sales this year. And then secondarily, I don't think you've repurchased shares in a while.

I don't remember if you have an authorization out there, but if you could just give us an update on the thoughts of what you're doing with your free cash.

Christopher C. Work -- Chief Financial Officer

Sure. I'll take the cash item here first. We have maintained a very consistent position when it comes to cash. First and foremost, we look at cash and say, where do -- where can we invest in the business in service of the customer, to grow top line or to help control expenses? And we put a lot of money into that.

Obviously, you've seen our capital spend over the last few years driven at those levels, and there are some operating spend as well. And then secondly, we look -- we're outside the business, if there are good opportunities to grow the business through acquisition or other types of partnerships that we think could add value for our shareholders. And you've seen us do that with Blue Tomato and Fast Times here over the last five, six years. And then lastly, we return to shareholders.

So at this point in time, we do not have a buyback program in place. As you're aware, we bought back a fair amount of the company and spent over $176 million since 2012 and feel pretty good about where that investment stands in relation to our stock today. So this is something we continue to review with our board of directors and -- to get their input on how they want to drive. But we stayed pretty true to that philosophy and really go over that with our director group every quarter as we meet with them ahead of our earnings release here.

So from a billion-dollar mark, we're pushing. We would -- we're just as excited as you probably are, having been a follower of Zumiez for as long as you have. That will be a metric we will be excited to get to, and we're pushing, and we'll see what the rest of this year has in store for us if we're able to get there.

Richard M. Brooks -- Chief Executive Officer

Yes. And I'd just add to that -- sure, go ahead.

Sharon Zackfia -- William Blair & Company -- Analyst

I was going to ask if Rick has to get a tattoo if you hit $1 billion.

Richard M. Brooks -- Chief Executive Officer

No tattoos on Rick, ever. That's the rest of the stores -- the buyers, they'll cover that for me, Sharon. I just -- the billion number for me, I have to tell you, it's been a goal for a while and because when I give you sense when I -- the year before I started here at Zumiez, in 1992, they did $10 million. So for me, there's a symmetry around the $10 million to the $1 billion number, that it's a milestone for us, and it's an important milestone.

And again, I'll just say that other people have gotten there faster than we have, but they did it differently than we did. They did it by doubling and doubling units. As you know, we've been the one that wants to do it the right way, through growth and quality people, through building our teams. It's taken us a long time, but I think the quality of where we've gotten is worth it.

And so yes, I'm excited about trying to get there, too. I'm with Chris. I want to get there as soon as I can. Like I say, the $10 million to $1 billion, it will be an exciting day, I think, for me personally and for a lot of people here in the building.

Sharon Zackfia -- William Blair & Company -- Analyst

Well, I'll cross my fingers. All right. Thanks.

Richard M. Brooks -- Chief Executive Officer

Me too. Thanks, Sharon.

Operator

Thank you. And that concludes our question-and-answer session for today. I'd like to turn the call back over to Rick Brooks for closing remarks.

Richard M. Brooks -- Chief Executive Officer

Zumiez here and our Q1 results. And we're looking forward, I think hopefully, to a strong Q2 and a good year, as Chris kind of outlaid for us, for the full year of '18. Again, I think it's a very exciting time to be in retail, really interesting challenges but great opportunities. So thank you all, and we look forward to talking after the Q2 -- with the Q2 results.

Good day.

Operator

[Operator signoff]

Duration: 43 minutes

Call Participants:

Richard M. Brooks -- Chief Executive Officer

Christopher C. Work -- Chief Financial Officer

Janine Stichter -- Jefferies -- Analyst

Richard Magnusen -- B. Riley FBR -- Analyst

Sharon Zackfia -- William Blair & Company -- Analyst

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

More ZUMZ analysis

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