Q3 2022 Zumiez Inc Earnings Call
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The conference will begin shortly. To raise your hand during Q&A, you can dial star 1-1. The conference will begin shortly.
[music].
Okay.
Good afternoon, ladies and gentlemen, and welcome to the Zumiez, Inc. Third quarter fiscal 2022 earnings conference call. At this time all participants are in a listen only mode. We will conduct a question and answer session towards the end of this conference.
Good afternoon ladies and gentlemen and welcome to the Zoomie's Inc. Third Quarter Fiscal 2022 Earnings Conference Call.
At this time, all participants are in a listen-only mode.
Before we begin I'd like to remind everyone of the company's safe Harbor language.
We will conduct a question and answer session towards the end of this conference.
Today's conference call includes comments concerning Zumiez, Inc. Business outlook and contains forward looking statements.
Before we begin, I'd like to remind everyone of the company's Safe Harbor language.
Today's conference call includes comments concerning Zoomies, Inc., Business Outlook, and contains forward-looking statements.
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.
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 risk and uncertainty.
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.
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 the ZUMI's filings with the SEC. At this time, I will turn the call over to Rick Brooks.
And the Zumiez filings with the SEC.
At this time I will turn the call over to Rick Brooks, Chief Executive Officer, Mr. Brooks.
Hello, and thank everyone for joining us on the call.
Chief Executive Officer. Mr. Brooks?
With me today is Chris work, our Chief Financial Officer.
Hello and thank you everyone for joining us on the call. With me today is Chris Work, our Chief Financial Officer. I'll begin today's call with a few remarks about the third quarter before handing the call to Chris, who will take you through our financial results and outlook in more detail. After that, we'll open the call to your questions. The economic headwinds we discussed at the end of the second quarter continue to impact our business in the third quarter.
I'll begin today's call with a few remarks about the third quarter before handing the call to Chris who will take you through our financial results and outlook in more detail.
After that well open the call to your questions.
The economic headwinds we discussed at the end of the second quarter continued to impact our business in the third quarter.
Compared to the year ago period, where consumers are flushed with record levels of savings to the U S stimulus and child tax child tax credit measures, we've seen a dramatic shift in consumer sentiment across the retail landscape.
Compared to the year-ago period when consumers were flush with record levels of savings through the U.S. stimulus and child tax credit measures, we've seen a dramatic shift in consumer sentiment across the retail landscape.
As inflation levels remain elevated we continue to see a pullback in our consumers' discretionary spending.
This industry wide softness has led to an increasingly promotional domestic environment, where consumers are paying to trade down to less expensive options.
As inflation levels remain elevated, we continue to see a pullback in our consumers' discretionary spending.
This industry-wide softness has led to an increasingly promotional domestic environment, with consumers appearing to trade down to less expensive options.
In addition to these challenges our international concepts are also faced with a major headwind this quarter as they saw their very solid currency neutral growth completely offset by unfavorable foreign currency movement.
In addition to these challenges, our international concepts are also faced with a major headwind this quarter as they saw their very solid currency-neutral growth completely offset by unfair both foreign currency movement.
These dramatic currency dynamics, along with inflation driven cost and expense pressures made for a very difficult operating environment compared to the year ago period.
These demand and currency dynamics, along with inflation-driven cost and expense pressures, are made for a very difficult operating environment compared to the year-ago period.
We spoke to you at the end of the second quarter, we assume that these difficult trends impacting the broader retail sector. We continued to intensify into the third quarter.
We spoke to you at the end of the second quarter. We assume that these difficult trends impacting the broader retail sector would continue to intensify into the third quarter.
We remain flexible and agile as the quarter progressed, focusing on the areas of the business that we can control to help offset some of the ongoing pressure.
Remain flexible and agile as a quarter progressed, focusing on the areas of the business that we can control to help offset some of the ongoing pressure.
Our results were down significantly year over year.
We were able to deliver sales and EPS results that were better than our most recent outlook provided in early September .
While our results were down significantly year over year, we were able to deliver sales and EPS results that were better than our most recent outlook provided in early September .
Some bright spots during the period included.
We exceeded our sales expectations this quarter as the back to school season played out slightly better than expected in the U S.
Some bright spots during the period included.
We exceeded our sales expectations this quarter as the back to school season played out slightly better than expected in the US.
We saw sales growth of 13, 8% year over year in our European and Australian markets on a currency neutral basis.
We saw sales growth of 13.8% year-over-year in our European and Australian markets on a currency neutral basis. And while negative currency fluctuations amassed this on a reported basis, we are pleased to see the continued efforts of our teams operating our international concepts.
It was negative negative currency fluctuations have asked this on a reported basis. We are pleased to see the continued efforts of our teams operating our international concepts.
Product margin decreased only 40 basis points compared to the year ago period, Despite an increasingly promotional retail environment and increased mix pressure as our international entities continue to grow in share.
Product margins decreased only 40 basis points compared to the year-ago period, despite an increasingly promotional retail environment and increased mix pressure as our international entities continue to grow and share.
Overall expense management was strong with majority of our loss to prior year driven by the topline sales decline.
Overall, expense management was strong with the majority of our loss to prior year driven by the top line sales decline.
Our model continues to be highly sensitive to sales fluctuation with sales increases showing a large flow through to the bottom line and a reverse impact during our sales downturn.
Our model continues to be highly sensitive to sales fluctuation with sales increases showing a large flow through to the bottom line and a reverse impact during a sales downturn.
Inventory was managed well with an overall foreign exchange adjusted increase of only six 3%.
Primarily by our international entities with larger store growth, while U S inventory was up only one 3%.
Inventory was managed well with an overall foreign exchange adjusted increase of only 6.3%, driven primarily by our international entities with larger store growth, while US inventory was up only 1.3%.
Earnings per share of <unk> 36 cents in the third quarter was higher than our guidance driven primarily by flow through on incremental sales.
Earnings per share of 36 cents in the third quarter was higher than our guidance driven primarily by flow-through on incremental sales.
And substantial work was completed our long term initiatives, including the opening of 35, new stores. Since the same time last year with nearly half of those stores Berthing and our international expansion.
And substantial work was completed on our long-term initiatives, including the opening of 35 new stores since this same time last year, with nearly half of those stores furthering our international expansion.
Looking ahead, we expect continued top and bottom line pressure because of the current economic environment.
Looking ahead, we expect continued top and bottom line pressure because of current economic environment and remain cautious in our near-term outlook that Chris will share shortly.
We were cautious in our near term outlook that Chris will share shortly.
We're a business trajectory is soft in the short term.
Main very confident in the long term outlook presumes.
Where our business trajectory is softened in the short term, we remain very confident in the long term outlook for Zumie's.
As a management team remain focused on building and positioning the business for long term sustainable growth.
As a management team, we remain focused on building and positioning the business for long-term, sustainable growth.
For 40 years Zumiez has endured multiple business in fashion cycles emerging each time, a stronger and more profitable company.
For over 40 years, Zumiez has endured multiple business and fashion cycles, emerging each time a stronger and more profitable company.
Example, in 2008 and 2009, we saw annual comparable sales down six 5% and 10% respectively or do we followed by comparable sales increases of 11, 9% eight 7% and 5% over 2010, 11 and 12, respectively.
For example, in 2008 and 2009, we saw annual comparable sales down 6.5% and 10% respectively, only to be followed by comparable sales increases of 11.9%, 8.7%, and 5% over 2010, 11, and 12 respectively.
This outcome through one of the most challenging economic periods in recent memory should inspire confidence in the resiliency of our flexible customer centric strategy and a strong brand and culture.
This outcome, to run the most challenging economic periods in recent memory, should inspire confidence in the resiliency of our flexible, customer-centric strategy and a strong brand and culture that will position Zoomies well for driving shoulder value once the economic environment becomes more favorable.
Physicians, Jimmy as well for driving shareholder value once the economic environment becomes more favorable.
As we like to say periods of significant change create opportunities.
These are the right people strategies and resources in place can take advantage of times like this to advance their brand and their business.
As we like to say, periods of significant change create opportunities.
and companies have the right people, strategies, and resources in place can take advantage of times like this to advance their brand and their business.
Actually the operating environment in 2022 is going to be one of the more difficult periods in our industry.
But the original philosophies goals and ideals on which we built this business remain the same and will serve us as well today.
Obviously, the operating environment in 2022 has proven to be one of the more difficult periods in our industry.
But the original philosophies, goals, and ideals on which we built this business remain the same and will serve us as well today as it did during the last major economic downturn.
Did during the last major economic downturn.
With that I'll turn the call to Chris who will discuss financials, Chris. Thanks.
Thanks, Rick and good afternoon, everyone I'm going to start with a review of our third quarter results. I'll, then provide an update on our fourth quarter to date sales trends before providing some perspective on how we're thinking about the remainder of the year.
With that, I'll turn the call to Chris who will discuss financials. Chris.
Thanks Rick and good afternoon everyone. I'm going to start with a review of our third quarter results. I'll then provide an update on our fourth quarter to date sales trends before providing some perspective on how we're thinking about the remainder of the year.
Third quarter net sales were $237 6 million down 17, 9% from <unk> $9 $5 million in the third quarter of 2021 the.
Third quarter net sales were $237.6 million, down 17.9% from $289.5 million in the third quarter of 2021.
The year over year decrease in sales was primarily driven by the benefits from domestic stimulus in the prior year as well as increased macroeconomic headwinds as inflation weighted on consumer discretionary spending during the current year quarter growth was also negatively impacted by 200 basis points related to unfavorable changes in foreign currency.
The year-over-year decrease in sales was primarily driven by the benefits from domestic stimulus in the prior year, as well as increased macroeconomic headwinds as inflation weighted on consumer discretionary spending during the current year quarter. Growth was also negatively impacted by 200 basis points related to unfavorable changes in foreign currency.
From a regional perspective, North America net sales were $206 3 million a decrease of 19, 9% from 2021 other international net sales, which consists of Europe , and Australia were $31 $3 million down two 3% from last year, excluding the impact of foreign currency translation North America net sales decreased 19, 6%.
From a regional perspective, North American net sales were $206.3 million, a decrease in 19.9% from 2021. Other international net sales, which consists of Europe and Australia, were $31.3 million, down 2.3% from last year. Excluding the impact of foreign currency translation, North American net sales decreased 19.6%, and other international net sales increased 13.8% compared with 2020.
And other international net sales increased 13, 8% compared with 2021.
From a category perspective, all categories were down in comparable sales during the prior year during the quarter with men's being our most negative followed by hard goods women's accessories and footwear.
Third quarter gross profit was $82 million compared to $114 7 million in the third quarter of last year gross margin as a percentage of sales was 34, 5% for the quarter compared to 39, 6% in the third quarter of 2021.
510 basis point decrease in gross margin was primarily due to lower sales in the quarter driving deleveraging of our fixed costs as well as rate increases in several areas.
percentage of sales with 34.5% for the quarter compared to 39.6% for the third quarter of 2021.
The 510 basis point decrease in gross margin was primarily due to lower sales in the quarter, driving deleverage in our fixed costs, as well as rate increases in several areas.
Our occupancy costs Deleveraged by 250 basis points on lower sales volumes, we have shipping costs increased by 100 basis points distribution center costs Deleveraged by 70 basis points.
Store occupancy costs deleveraged by 250 basis points on lower sales volumes. Web shipping costs increased by 100 basis points. Distribution center costs deleveraged by 70 basis points. Buying and private label costs deleveraged by 40 basis points. Product margins decreased by 40 basis points. Shrink increased by 30 basis points in the quarter.
And private label costs Deleveraged by 40 basis points product margins decreased by 40 basis points and shrink increased by 30 basis points in the quarter.
SG&A expense was $71 $5 million or 31% of net sales in the third quarter compared to $74 $8 million or 25, 8% of net sales a year ago.
SG&A expense was $71.5 million, or 30.1% of net sales in the third quarter compared to $74.8 million, or 25.8% of net sales a year ago. The 430 basis point increase in SG&A expenses as a percent of net sales resulted from the following...
130 basis point increase in SG&A expenses as a percent of net sales resulted from the following.
220 basis points in our store wages tied to both deleverage on lower sales as well as wage rate increases of 120 basis points related to other store operating costs, primarily impacted by lower sales levels.
220 basis points in our store wages tied to both deleverage on lower sales as well as wage rate increases, 120 basis points related to other store operating costs primarily impacted by lower sales levels, 90 basis points in non-store wages, and 30 basis points in corporate costs. These increases were partially offset by a 70 basis point decrease in annual incentive compensation.adorable salary charges were also offset by $5.50 balance the income
90 basis points, and non store wages and 30 basis points in corporate costs. These increases were partially offset by a 70 basis point decrease in annual incentive compensation.
Operating income in the third quarter of 2022 was $10 4 million or four 4% of net sales compared with $39 8 million or 13, 8% of net sales last year.
Operating income in the third quarter of 2022 was $10.4 million or 4.4% of net sales, compared with $39.8 million or 13.8% of net sales last year. Net income for the third quarter was $6.9 million or 36 cents per diluted share. This compares to net income of $30.7 million or $1.25 per diluted share for the third quarter of 2021.
Net income for the third quarter was $6 $9 million or <unk> 36 per diluted share. This compares to net income of $30 $7 million or $1 25 per diluted share for the third quarter of 2021.
Our effective tax rate for the third quarter of $2022 27, 9% compared with 25, 5% a year ago period, the tax rate in the quarter was inflated due primarily to the allocation of income across entities and the exclusion of net losses in certain jurisdictions.
Our effective tax rate for the third quarter of 2022 is 27.9%, compared with 25.5% in the year ago period. The tax rate in the quarter is inflated due primarily to the allocation of income across entities and the exclusion of net losses in certain jurisdictions.
Turning to the balance sheet the business ended the quarter in a strong financial position, we had cash and current marketable securities of $141 $1 million as of October 29, 2022, compared to $338 1 million as of October 32021.
Turning to the balance sheet, the business ended the quarter in a strong financial position. We had cash and current marketable securities of $141.1 million as of October 29, 2022, compared to $338.1 million as of October 30, 2021. The $197 million decrease in cash and current marketable securities over the trailing 12 months was driven primarily by share repurchases of $183.1 million.
$197 million decrease in cash and current marketable securities over the trailing 12 months was driven primarily by share repurchases of $183 $1 million, resulting in a reduction of our shares outstanding over the last year of 17, 5%. We also had capital expenditures of $24 $7 million, partially offset by cash generated through operation.
resulting in reduction of our shares outstanding over the last year of 17.5%. We also had capital expenditures of $24.7 million, partially offset by cash generated through operations of $26.6 million.
The $26 $6 million.
As of October 29, 2022, we had no debt on the balance sheet and continue to maintain our full unused credit facilities.
As of October 29, 2022, we had no debt on the balance sheet and continue to maintain our full, unused credit facilities.
We ended the quarter with $177 $2 million in inventory up one 2% compared with $175 $1 million last year on a constant currency basis, our inventory levels were up six 3% from last year.
We ended the quarter with $177.2 million in inventory, up 1.2% compared with $175.1 million last year. On a constant currency basis, our inventory levels were up 6.3% from last year. Overall, while slightly more aged, our North America inventory is healthy and continues to sell at a favorable margin. Internationally, our inventory is more current than the same time last year.
Overall, while slightly more aged our North America inventory is healthy and continues to sell at a favorable margin internationally, our inventories more current than the same time last year and we have seen margins improved during the quarter.
Total sales for the 31 day, sorry, now to our fourth quarter to date results total sales for the 31 day period ended November 29, 2022 decreased 23, 9% compared to the same 31 day period in the prior year ended November 32021 comparable sales for the 31 day period.
and we have seen margins improve during the quarter. Total sales for the 31 day, sorry, now to our fourth quarter to date results.
Total sales for the 31-day period ended November 29, 2022 decreased 23.9% compared to the same 31-day period in the prior year ended November 30, 2021. Comparable sales for the 31-day period ended November 29, 2022 were down 24.8% from the comparable period in the prior year.
Ended November 29, 2022 were down 24, 8% from the comparable period in the prior year.
From a regional perspective net sales for our North America business for the 31 day period ended November 29, 2022 decreased 27, 7% over the comparable period last year.
From a regional perspective, net sales for our North America business for the 31-day period into November 29, 2022 decreased 27.7% over the comparable period last year. Meanwhile, our international business decreased 4% versus last year. Excluding the impact of foreign currency translation, North American net sales decreased 27.4% and other international sales increased 7.7% compared with 2020.
While our international business decreased 4% versus last year.
Clearly the impact of foreign currency translation, North America net sales decreased 27, 4%.
Other international sales increased seven 7% compared with 2021.
From a category perspective, all categories were down in comparable sales for the fourth quarter to date men's was our largest negative category, followed by hardgoods accessories women's and footwear.
With respect to our outlook I want to remind everyone that formulating our guidance in Boston are inherent uncertainty and complexity in estimating sales product margin and earnings growth given the variety of internal and external factors that impact our performance.
With that in mind, we are currently expecting the total sales for the fourth quarter of fiscal 2022 will be between $258 million and $265 million consolidated.
of internal and external factors that impact our performance.
With that in mind, we are currently expecting the total sales for the fourth quarter of fiscal 2022 will be between $258 million and $265 million. Consolidated operating profit as a percent of sales for the fourth quarter is expected to be between 3.4% and 4.7%. We anticipate diluted earnings per share will be roughly $0.36 to $0.51.
Operating profit as a percent of sales for the fourth quarter is expected to be between three 4% and four 7% and we anticipate diluted earnings per share will be roughly 36 to 51.
Now I want to give you a few updated thoughts on how fourth quarter guidance rolls into our fiscal 'twenty two results with the first three quarters of 'twenty to 2022 behind US we remain cautious in how we're looking at the full year, given the operating environment and the current headwinds we are facing <unk>.
Now, I want to give you a few updated thoughts on how fourth quarter guidance rolls into our fiscal 2022 results.
With the first three quarters of 2022 behind us, we remain cautious in how we're looking at the full year, given the operating environment and the current headwinds we are facing. Inclusive of the fourth quarter guidance, we anticipate the total sales will be down in the 20% to 21% range in fiscal 2022 compared to 2021.
Inclusive of the fourth quarter guidance, we anticipate that total sales will be down in the 20% to 21% range in fiscal 'twenty two compared to 2021.
In fiscal 2021, we achieved peak product margins once again, representing our sixth year in a row of product margin expansion as we have moved through the first three quarters of the year. We have closely managed inventory and seen only a modest decline in product margin, despite inflationary pressures, a promotional environment and mixed pressures between categories and across.
In fiscal 2021, we achieved peak product margins once again, representing our 6th year in a row of product margin expansion. As we have moved through the first three quarters of the year, we have closely managed inventory and seen only a modest decline in product margin despite inflationary pressures, a promotional environment, and mixed pressures between categories and across countries.
Countries. We continue to believe we will see some product margin erosion in the fourth quarter and are planning the fourth quarter to be down approximately 50 basis points from the prior year and our current guidance.
We continue to believe we will see some product margin erosion in the fourth quarter and are planning the fourth quarter to be down approximately 50 basis points from the prior year in our current guidance.
We continue to manage costs across the business. However, with our current sales projections, we are anticipating deleverage across the fixed cost of the business.
We continue to manage costs across the business. However, with our current sales projections, we are anticipating deleverage across the fixed costs of the business.
We currently anticipate that fiscal 2022 operating margin will be between two 6% and 3% based upon the drop in sales inflationary cost pressures and the return to normal for items like mall hours travel and training and events.
We currently anticipate the fiscal 2022 operating margin will be between 2.6% and 3% based upon the drop in sales, inflationary cost pressures, and the return to normal for items like mall hours, travel, and training and events.
Diluted earnings per share for the full year is currently planned to decrease less than operating profit related to the share repurchase earlier in the year.
Deluded earnings per share for the full year is currently planned to decrease less than operating profit related to the share repurchase earlier in the year.
We currently anticipate 2022 diluted earnings per share to be between 85 and $1.
We currently anticipate 2022 diluted earnings per share to be between $0.85 and $1.00.
We are currently planning our business, assuming an annual effective tax rate of approximately 33%.
We are planning to open approximately 33, new stores during the year, including approximately 16 stores in North America 13 stores in Europe , and four stores in Australia.
We are currently planning our business assuming an annual effective tax rate of approximately 33%.
We are planning to open approximately 33 new stores during the year, including approximately 16 stores in North America, 13 stores in Europe , and 4 stores in Australia.
And we expect capital expenditures for the full 2022 fiscal year to be between $27 million and $29 million compared.
And we expect capital expenditures for the full 2022 fiscal year to be between $27 million and $29 million compared to $16 million in 2021, with most of the increase tied to the additional stores in 2022.
Compared to $16 million in 2021 with most of the increase tied to the additional stores in 2022.
We expect that depreciation and amortization, excluding noncash lease expense will be approximately $28 million down 3% from the prior year.
We expect that depreciation and amortization, excluding non-cash lease expense, would be approximately $20.8 million, down 3% from the prior year.
And we are currently projecting our share count for the full year to be approximately $19 4 million diluted shares.
And we are currently projecting our share count for the full year to be approximately 19.4 million diluted shares.
With that operator, we'd like to open the call up for questions.
Thank you to ask a question you will need to press star one one on your telephone please standby, while we compile the Q&A roster.
With that operator, we'd like to open the call up for questions.
To ask a question, you will need to press star 1-1 on your telephone. Please stand by while we compile the Q&A roster.
Yeah.
And today's first question will come from Sharon Zackfia with William Blair. Please go ahead.
Hey, good afternoon.
And today's first question will come from Sharon Zafla with William Blair. Please go ahead.
I guess two questions.
Obviously kind of kept the pedal.
Hey, good afternoon.
Pedal to the metal here on development and I know historically, it's definitely paid off to grow during.
I guess two questions. You've obviously kind of kept the pedal to the metal here on development. And I know historically it's definitely paid off to grow during times like now. But I wonder just given the severity of the slowdown that we're seeing, if you're kind of maybe rethinking what you might do in 23 with
During times like now, but I wonder just given the severity of the slowdown that we're seeing if you're kind of maybe rethinking what you might do in 'twenty three.
The potential for rent Stephen get more favorable.
The consumer continues to weaken on the retail environment stays shaky.
And then secondarily I just wanted to kind of ask about the fourth quarter outlook, because I think it does imply kind of a 23% to 26% year over year decline, but you do have eased.
Easier comparisons in December and January and then you had in November .
Your sales were like up double digits November last year, and then got weaker as the quarter went on as a lot did with omicron.
do have easier comparisons in December and January than you had in November . I think your sales were like up double digits November last year and then got weaker as the quarter went on as a lot did with Omicron.
Are you seeing something that makes you just even more nervous even against those easier comparisons as we go into December and January and again kind of counterbalancing that as well with the early holiday sales. We saw in October November last year, I know that was like a 300 part question and I apologize.
Are you seeing something that makes you just even more nervous even against those easier comparisons as we go into December and January and I kind of counterbalancing that as well with the early holiday sales we saw in October November last year. I know that was like a 300 part question and I apologize. All right, thank you Sharon for those questions. I'll take the first one and let Chris take the second one.
Yes.
Alright, Thank you Sharon for those questions I'll take the first one and I'll, let Chris take the second one so so.
So your first question are we rethinking around our growth initiatives for 2023 relative to where the business is that well of course, we are I think that's a natural aspect of what we're going to do.
So your first question, are we rethinking around our growth initiatives for 2023 relative to where the business is at? Well, of course we are. I think that's a natural aspect of what we're going to do. And of course 2023, we don't know where 2023 is going to end up. We're not prepared to talk about that today, but I think a natural expectation would be that yes, we'll have these conversations with our board about what our plan is, where the opportunities are, and where the most crucial investments are. We're going to come back tomorrow.
And of course 2023, we don't know where <unk> is going to end up we're not prepared to talk about that today, but I think a natural expectation would be that yes. We will have these conversations with our board about what our plan is where the opportunities are and where the most crucial investments are now I think the good news here from my perspective, Sharon as we've been through these cycles many times.
And we know how to manage through I think we're pretty good at managing through them. There is a I think we could talk about why they appear to be so severe for us.
I think the good news here from my perspective, Sharon, is we've been through these cycles many times.
And we know how to manage through them. I think we're pretty good at managing through them. There's a, I think we could talk about why they appear to be so severe for us, you know, particularly relative to sales. On the bottom line, we're all gonna be pretty comparable. We're just getting through the bottom line differently based because nature of our business, we don't have to discount as much on the top line because of the nature of our business relationship with our brand partners, so.
Relative to particularly relative to sales on a bottom line, we're all going to be pretty comparable.
Getting to the bottom line differently based because the nature of our business, we don't have to discount as much on the top line because of the nature of our of our business relationship with our brand partners. So yes. We are we will rethink those things, but I will tell you that.
There are we are committed to pushing forward our long term initiatives. Our long term strategies that are about meeting consumer expectations over the long term and where we really believe we have to adapt and evolve our business significantly and there are a number of critical areas, we're going to do that.
Yes, we are. We'll rethink those things, but I will tell you that we are committed to pushing forward our long-term initiatives, our long-term strategies that are about meeting consumer expectations over the long term and where we really believe we have to adapt and evolve our business significantly. There are a number of critical areas we're going to do that.
And a lot of BARDA actually very capital intensive from that perspective as to how we allocate our resources and deploy some capital relative to technology.
And a lot of them aren't actually very capital intensive from that perspective as to how we allocate our resources and deploy some capital relative to technology. But there are some critical things we've got to do, I think, in that respect to make sure that when we emerge from this, which we will emerge from this cycle as we always have from these tougher cycles, we're going to emerge stronger, better, and be able to gain more market share.
But there are some critical things we've got to do I think in that respect to make sure that when we emerge from this which we will emerge from this cycle as we always have from these tougher cycles.
We're going to emerge stronger better and be able to gain more market share.
So I think youll see us potentially moderate some growth again, we're not relative ready to talk about that today that is ongoing discussion with our board, but we're going to remain prudent and prudently disciplined about investing in the things. We really believe are going to drive the business forward in terms of again, what we have to do to meet future consumer expectations.
So I think you'll see us potentially moderate some growth. Again, we're not ready to talk about that today. That is an ongoing discussion with our board, but we're going to remain prudent and prudently disciplined about investing the things we really believe are going to drive the business forward in terms of again, what we have to do to meet future consumer expectations as we're defining them and as our long-term strategies and initiatives address those expectations.
As we have defined and is our long term strategies and initiatives address those expectations.
Sure and to your second question, just around Q4 and the outlook.
How we're thinking about the decline in sales.
Sure. And to your second question, just around Q4 and the outlook and how we're thinking about the decline in sales and then matching that up against the comparisons to what we saw last year. I think where we stand here is when we reported to you after back to school, we were a little more optimistic about where Q4 would come out and how the sales trends and
And then matching that up against the comparisons to what we saw last year I think where.
Where we stand here is when we reported to you after back to school, we were a little more optimistic about where Q4 will come out and how the sales trends and clearly we believe as a full price full margin retailer, we're seeing more pressure than others, especially as we've been able to.
And clearly we believe as a full price, full margin retailer, we're seeing more pressure than others, especially as we've been able to generally hold price. So I think when we look at our consumer and we look at savings rates declining and credit card spending increasing and a real move to value, not to mention the impact of inflation on our economy,
Generally hold price so I think when we look at our consumer and we look at kind of savings rates declining in credit card spending increasing in a real move to value.
Not to mention the impact of inflation on them in other areas of their life as well as retail and then just that pressure we've talked about throughout the year for that discretionary dollar whether it be restaurants travel or other areas.
Cost of living so I think we put all that together.
Our thought process, Sharon and coming up with the sales plan of $258 million $265 million was really to say, let's stay true to this run rate because.
This was a little below where we thought it would be for November . So we kind of took this run rate forward, especially.
million, $265 million was really to say let's stay true to this run rate because this was a little below where we thought it would be for November . So we kind of took this run rate forward, especially pretty much across all of our entities. We assumed a little bit better in Europe . As you may recall, in Europe last year, there were some closures in one of our important markets in Austria that happened right towards the end of November .
Pretty much across all of our entities.
We assumed a little bit better in Europe as you may recall in Europe last year, there were some closures and one of our important markets in Austria that happened right towards the end of November and into October right up to Christmas pretty much.
So we assumed a little bit of run rate there and then.
<unk> really tried to just kind of think that that's what our consumer might be feeling as we moved through the quarter. So.
How we planned the quarter on the sales side.
Okay. Thank you.
Thanks Sharon.
Thank you one moment for our next question.
And that will come from the line of Mitch <unk> with Seaport. Please go ahead.
question.
Yes, thanks for taking my questions.
And that will come from the line of Mitch Kumas with Seaport.
I'll just ask them one at a time.
I was curious on the Cogs.
Yes, thanks for taking my questions. I'll just ask them one at a time.
On a quarter to date comp.
Is there any way you can kind of talk about the period of Black Friday through cyber Monday, if that was any better than what the quarter to date is or if it's pretty much in line.
I was curious on the comp. So on the quarter to date comp, is there any way you can kind of talk about the period of Black Friday through Cyber Monday, if that was any better than what the quarter to date is or if it's pretty much in line?
Sure I'll take that question and the answer is it's pretty much in line I think when we looked at the quarter and we have obviously as you would expect.
Sure, I'll take that question and the answer is it's pretty much in line. I think when we looked at the quarter and we've obviously as you would expect. Sliced and dice this quite a few ways trying to kind of. Think through how this is coming together. I think what's different as we went through the quarter in this Black Friday weekend compared to the same Black Friday weekend last year.
Sliced and diced this quite a few ways trying to kind of think through how this is coming together I think what's different as we went through the quarter.
In this black Friday weekend compared to the same black Friday weekend last year is we did run product margin gains pretty meaningfully last year. At this time, we were trying to move through some inventory and it just had a bigger impact on margin. Some of the promotion we had last year, so but overall trend line was pretty consistent across the quarter.
is we did run product margin gains pretty meaningfully. Last year at this time, we were trying to move through some inventory and it just had a bigger impact on margin, some of the promotion we had last year. So, but overall trend line was pretty consistent across the quarter, week to week. And the main difference being how product margin performed over the holiday weekend.
Week to week.
The main difference being how product margin performed over the holiday weekend okay.
Okay, and then on the on the quarter to date you.
You guys gave us sales and comp for that period do you know what that is on a three year.
Okay, and then on the on the quarter today, you get you guys gave us sales and comp for that period. Do you know what that is on a three year?
I don't have it on a three year off top my head.
Okay do you know if the.
The full year or the full quarter guide assumes kind of a similar three year for the full quarter versus quarter day, you probably don't.
I don't have it on a three year off the top of my head.
Okay, do you know if the full quarter guide assumes?
Kind of a similar three year for the full quarter versus quarter day. You probably don't
Okay.
A couple a couple of last things, maybe Rick you talked about the trading down you experience. So can you just maybe elaborate a little bit more on how you're addressing that when you think about maybe your mix of product and brands and particularly if there is any sort of trying to elevate the exclusive brand side of your business.
No, no, I'll talk to you. Okay. A couple last things. Maybe Rick, you talked about the trading down that you're experiencing. Can you just maybe elaborate a little bit more on how you're addressing that when you think about maybe your mix of product and brands, and particularly if there's any sort of trying to elevate the exclusive brand side of your business?
Sure, Matt sure I'd be glad to.
We are.
What we're seeing in this situation as I feel.
Sure Mitch, I'd be glad to. You know, we are, what we're seeing in this situation, I feel, you know, on the whole pretty good about our core consumer. And even over the Black Friday weekend, we saw our, what I consider to be good signs about our core consumer. We saw much higher conversion rates and much larger basket sizes.
The whole pretty good about our corporate sumer and even over the Black Friday weekend, we saw.
Are what I consider to be good signs about our consumer we saw a much higher conversion rates at much larger basket sizes, which tells me our core consumers staying true to doing business with us.
And.
But what we are seeing it reflected if that is is the mix of penetration to our private label is significantly a pyrite levels significantly growing. So this clearly reflects the way that we can keep a value for that core consumer and it's resonating it's working because again the penetration of private label is up significantly year to date and even higher.
which tells me our core consumer is staying true to doing business with us.
But what we are seeing reflected in that is the mix of penetration to our private label is significantly, a private label is significantly growing. So this clearly reflects the way that we can give a value for that core consumer. And it's resonating, it's working because again the penetration of private label is up significantly year to date and even higher here.
Here.
In the fourth quarter to date period, it's been gaining throughout the year.
So to me Mitch that is the way through what we're doing in bundling and price points and tuned for deals and all the things we're doing how we use private label. It does two things first it delivers value for our customer and second it helps us on the margin side of the business again, because private label Aurora has higher margins than our branded partners now.
in the fourth quarter date period. It's been gaining throughout the year. So to me, Mitch, that is the way through what we're doing in bundling and price points and two for deals and all the things we're doing, how we use Private Label. It does two things. First, it delivers value for our customer. And second, it helps us on the margin side of the business again, because Private Label offers higher margins than our branded partners.
Now on the branded side, we are reluctant as you know Mitch we have brands that have equity and have real value that it can sell at full price.
Now, on the branded side, we are reluctant, as you know, Mitch, when we have brands that have equity and have real value that can sell at full price.
We're reluctant to do markdowns, because we think it's a disservice to our brand partners. So I would tell you our brand partners feel the same way.
we're reluctant to do markdowns because we think it's a disservice to our brand partners. And I tell you our brand partners feel the same way.
So there we're trying to be disciplined about how much we buy how we move through product for our brand partners. How we work with our brand partners in terms of flowing the product to.
So in there we're trying to be disciplined about how much we buy, how we move through product for our brand partners, how we work with our brand partners in terms of flowing the product to make sure that we're not getting an overstock situation with them.
To make sure that we're not getting overstock situation with them.
And we don't get me wrong, we will be aggressive if we own too much and we will take markdowns to move through the product, but the goal is to manage it and to basically drive markdowns to where we need to liquidate whether it be seasonal product or again, there's things that haven't worked out is kind of how we approach it but we don't want to destroy brand equity for our brand partners.
And don't get me wrong, we'll be aggressive if we own too much, and we'll take markdowns and move through the product. But the goal is to manage it and to basically drive markdowns to where we need to liquidate, whether it be seasonal product or, again, things that haven't worked out is kind of how we're approaching it. We don't want to destroy brand equity for our brand partners either.
Either.
That's helpful. Rick and then maybe one last question just on the state business.
I know thats been more difficult over the last probably six quarters or so.
It's helpful, Rick. And then maybe one last question. Just on the state business, I know that's been more difficult over the last probably six quarters or so. I mean, it kind of rebounded before COVID and then it accelerated with COVID. And you saw the kind of penetration levels go from I think it was like 11 percent in 2018 to up to 19 percent in maybe it was 2021. I'm curious if at this point maybe like on a trailing...
It kind of rebounded before Covid, and then add accelerated with Covid.
You saw the kind of penetration levels go from I think it was like a 11% in 2018 to up to 19%.
Maybe it was 2021 I am curious if at this point, maybe like on a trailing basis is the penetration of hard goods kind of back down to levels, where it was out before kind of the rebound in acceleration or is it still above where it was for that period.
Yes, it's a good question mentioned as you saw in Chris's comments, he commented that skate hardgoods.
<unk> largest declining department.
And remember that is relatively small percent of sales.
Still tells you about something about the scale of that.
Diminishing sales in that department on a relatively small mix of our sales.
is relatively small percent of sales. So that still tells you about something about the scale of the diminishing sales in that department on a relatively small mix of our sales in this position as second largest declining department. So we haven't hit bottom yet is my message for you is what we're seeing at this point where we're getting down to all-time lows at this point Mitch.
Its position as the second largest declining department. So we havent hit bottom yet is my message for you is what we're seeing at this point, where we're getting down to all time lows at this point Mitch.
But theres no doubt as you said that 2021, the penetration was significantly above our all time highs.
But there's no doubt, as you said, that 2021, the penetration was significantly above our all-time highs.
For penetration of the skate Hardgoods Department, So we're definitely giving that back up relative to as you said the recovery started to skate argues in 19 and they have what the pandemic did to accelerate significantly I think pull forward of demand.
for penetration of the Skate Hargids Department. So we're definitely giving that back up relative to, as you said, the recovery that started in Skate Hargids in 19, and to have what the pandemic did to accelerate significantly, I think, pull forward at the mat.
So now we're giving it back and that's just the way our business works right things trend up things trend down in particularly state.
That cycle many times I think what we're seeing this time, though is a massively accelerated cycle and now we're taking a bit of pain as we fall back to what.
So now we're giving it back and that's just the way our business works, right? Things trend up, things trend down and particularly we've seen that skate cycle many times. I think what we're seeing this time though is a massively accelerated cycle and now we're taking a bit of pain as we fall back to what we're going to bottom out and we may stay at a bottom for a period of time the losses will diminish and then we'll start the cycle back up at some point.
We are going to bottom out and we may stay at a bottom for a period of time to the losses will diminish and then we'll start to cycle back up at some point, okay, alright, thanks for that update.
Mitch just clarify on the growth curve.
2018 was 10% 2019 was 13%.
Thanks for that update. Go ahead. Mitch, just to clarify on the growth curve, 2018 was 10%, 2019 was 13%, and then 2020 was our peak. We got all the way to 19%. I think that's when we really saw outsized skate sales during the closures in the 2020 year. Then last year it was 15%. So still very, very healthy to where we've been.
And then 2020 was our peak, we got all the way to 19% I think that's when we really saw outsized.
<unk> sales during the closure and closures in 2020 year and then last year was 15% so still very very healthy to where we've been and the current run rate would be trending at our lowest that we've had for quite some time. So so we are expecting that to continue to decline as Rick said, okay. Thanks for that.
And the current run rate would be trending at our lowest that we've had for quite some time. So we are expecting that to continue to decline, as Rick said.
And good luck for holiday.
Thank you Mitch Thank you and as a reminder, if you would like to ask a question. Please press star one one and one moment for our next question.
Thanks for that and good luck for Holley.
Thank you, Mitch. Thank you. And as a reminder, if you would like to ask a question, please press star 1 1 and 1 moment for our next question.
That will come from the line of Cory <unk> with Jefferies. Please go ahead.
Hi, good afternoon, and thanks for taking my question. So maybe if you could just start could you talk about within margin.
That will come from the line of Corey Tarlo with Jeffries. Please go ahead.
Hi, good afternoon and thanks for taking the question. So maybe if you could just start, could you talk about within margin, obviously there's a bunch of puts and takes, but some of those puts and takes might.
There's a bunch of puts and takes but.
Some of those puts and takes.
Nick throughout from the third quarter into the fourth quarter and then perhaps into the next year and then some of those might go away right. So could you maybe talk about what you see sticking versus what you see going away as it relates to the margin headwinds that you faced this year.
stick throughout from the third quarter into the fourth quarter and then perhaps into the next year. And then some of those might go away, right? So could you maybe talk about what you see sticking versus what you see going away as it relates to the margin headwinds that you've faced this year?
That product just unclear Corey is that you talked about product margins or gross margins or where are we talking about here.
That product, just so I'm clear, Corey, is that you're talking about product margins or gross margins or where are we talking about here?
I think it would be probably most helpful. They get perspective on gross margin with things like freight.
Commodity cost pressures et cetera.
I think it would be probably most helpful to get perspective on gross margin with things like freight.
Sure well, let me take a crack at it and then I'll, let I'll, let Rick add anything that.
commodity cost pressures, et cetera.
Might want to.
Sure, well let me take a crack at it and then I'll let Rick add in anything that he might want to. I think if you're talking about gross margin, I think that the most important thing is obviously just to start with product margin and just think about where we're at. As we said in our prepared remarks, we've run six years of product margin gains through 2021. So we were at all times highs for us across all of our entities. So now as we kind of move forward, we're going to talk about the
I think if youre, if youre talking about gross margin I think the most important thing is obviously you just to start with product margin and just think about where we're at.
As we said in our prepared remarks, we run six years of product margin gains through 2021, So we were at.
At all time highs for us across all of our entities. So now as we kind of transition into.
2022, what's really interesting is we.
We have seen this sort of push to private label apparel right and actually over the last six years.
At least coming into 2021, we did see private label actually declining.
We saw branded cycle that really drove the last six years of product margin, which is kind of counterintuitive to what you would expect but it's really just what our customer.
I was looking for and how are buyers were able to work with the brands to build the product margin up so I think when I think about kind of what moves forward from here.
product margin, which is kind of counterintuitive to what you would expect, but it's really just what our customer was looking for and how our buyers were able to work with the brands to build the product margin up. So I think when I think about kind of what moves forward from here, we, you know, if we continue to see that private label push, we will have some stickiness in where product margin goes. The second piece with product margin, I think really.
We continue to see that private label.
Push we will have some stickiness in in.
<unk> product margin goes the second piece with product margin I think it's really important to notice all of our international entities, Canada, Europe , and Australia, all performed below the U S and.
In product margin and they are also the bigger growth areas of our business at this point so.
We're seeing margin expansion across those concepts I think they're doing a really good job working with brands in each region.
They gained scale being able to push higher levels of margin and also seeing things like private label increase as a percent of their businesses. So so as we see the internationally idt's growing and drive scale. We hope over time that will also drive product margin and drive it closer to our our U S margin.
region as they gain scale, being able to push higher levels of margin, and also seeing things like private label increase as a percent of their businesses. So as we see the international entities grow and drive scale, we hope over time that will also drive product margin and drive it closer to our US margin levels. Now, there will be some mixed shifts in the midterm as we...
Levels now.
We'll be some mix shifts in the midterm as we as we see the international sales grow as a percent at a slightly lower margin, but overall, we think that can be a benefit over the long term. So I think you kind of start there.
And then as we think down kind of through the other components of gross margin. The next biggest item is the occupancy.
This is really a story of deleverage as you know our sales are down.
Meaningfully to not only 2021, but even in 2019 levels.
And so.
As we think about that this is one of the bigger areas, though our deleverage. So our teams have worked extremely hard with our landlord partners and trying to manage this expense and I think done a really good job.
to not only 2021, but even 2019 levels.
As we think about that, this is one of the bigger areas of our deleverage. So our teams have worked extremely hard with our landlord partners in trying to manage this expense, and I think done a really good job. But with the sales declines we've had, it still becomes a deleverage item. So as we think longer-term gross margin, this is about growing sales, and therefore being able to leverage the fixed costs associated with occupancy.
With the sales declines we've had it still becomes a deleverage items. So as we think longer term gross margin. This is about growing sales and therefore being able to leverage the fixed costs associated with occupancy the other big cost as you pointed out in your question is you're shipping and we're shipping spin.
We have seen increased cost of shipping we are working very hard on different strategies to minimize that.
The other big cost, as you pointed out in your question, is just shipping and where shipping's been. We have seen increased cost of shipping. We are working very hard on different strategies to minimize that across both the inbound, but probably more importantly on the B to C that falls into gross margin. I think as we can continue to drive sales and work with our care...
Across both the inbound, but probably more importantly on the.
The B to C.
That falls into gross margin and I think as we can continue to drive sales and work with our carriers. This is something we can hopefully manage.
Get more leverage out of that line item as well as we move forward.
Great. That's very helpful. And then maybe you could just double click on inventory it seems like those are.
Relatively good spot versus kind of.
Maybe initially expected could you just talk a little bit about that.
Do you feel that is positioned as we head through the the key holiday periods for.
where maybe you initially expected. Could you just talk a little bit about that, how you feel that's positioned as we head through the key holiday period for.
So most of retail here.
Sure Yeah, I think on the inventory side.
We feel good about where our teams are with inventory. We can you know we've talked about in our prepared remarks were about $177 million of inventory. It's up one 2% Q3, it's pretty in line with where we actually ended Q2 as well we were up one 1% in Q2, obviously, we're getting a little bit of FX benefit there, but were down three 3% to 2009.
for most of retail here.
Sure, yeah, I think on the inventory side, we feel good about where our teams are with inventory. We can, you know, we've talked about in our prepared remarks, we're about $177 million in inventory. It's up 1.2% to Q3. It's pretty in line with where we actually ended Q2 as well. We were up 1.1% at Q2. Obviously, we're getting a little bit of FX benefit there, but we're down 3.3% to 2019 as well. So I think you kind of put all that in perspective.
<unk> as well so I just kind of put all that in perspective, the levels are managed pretty well in regards to what's happening across the retail landscape I think entity by entity.
North America is slightly more aged but continues to be at a very healthy margin our international inventories in a better spot than where we were a year ago much more current than.
And then last year and as we mentioned in our remarks, we're seeing margin.
<unk> there.
I think the important thing with inventory as we kind of think about that.
in our remarks, we're seeing margin gains there. I think the important thing with inventory as we think about how we're managing it and our business strategy here is really how we're thinking about the business overall. Because we're doing the work as you would expect to line ourselves up with a lot of the retail market. And our strategy is just a little different. We're really focused on full price.
So we're managing it and our business strategy here is really how we're thinking about the business overall, because we're doing the work as you would expect to kind of align ourselves up with a lot of the retail market and in our strategy is just a little different I mean, we're really focused on full price full margin that requires in a cycle like this that you have to be.
<unk> really nimble.
How you manage your inventory so that you can be opportunistic in your buys and really see what's working with the customer. So our teams are are really pushing that and then at the end of the day I think this is probably part of why our sales may look a little softer than others, because we're really holding.
Rice and Nics.
sales may look a little softer than others because we're really holding price. I think as you line that up, I'm not sure we're a whole lot different on the bottom line than other people, but we just have not seen the product margin declines that we've been reading about across the market. I think that's really the strategy of what we're doing. The last piece probably being...
As you kind of line that up I'm not sure. We're a whole lot different on the bottom line than other people, but we just have not seen the product margin.
Declines that we've been reading about across the market. So I think that's really the strategy of what were doing the last piece, probably being just remembering for us in particular, how important the screener bowls businesses to our business obviously.
It's a quicker term business, it's something we can we can move on.
just remembering for us in particular how important the screenable business is to our business. Obviously, it's a quicker term business. It's something we can move on in a big way as we see things work. We're focused on managing that piece as well. I think on the inventory side, going into Q4, we feel good about where we're at. I think our guidance implies, we did say margin would be down about 50 basis points, but those Chiefache analytics and the demand for these capital Middle DAikes for any business platform.
In a big way as we see things work and where we're focused on managing that piece as well so.
On the inventory side going into Q4, we feel good about where we're at I think our guidance sort of implies we did say margins will be down about 50 basis points, but in relation to what we're seeing in the market I think thats, a pretty strong and definitely strong in relation to kind of a multiyear look if you were to do a 345 year look at our product margin over time I think.
In relation to what we're seeing in the market, I think that's a pretty strong and definitely strong in relation to kind of a multi-year look. If you were to do a three, four, five-year look at our product margin over time, I think you'd feel really good with kind of where we're standing. And overall, I just commend our buyers across all of our companies across the world. They've done a great job managing inventory in a very difficult cycle.
You feel really good with kind of where we're standing.
And overall I, just commend our buyers across all of our all of our companies.
Across the world.
You've done a great job managing inventory in a very difficult cycle.
And I just want to add that Cory that again, we're talking about this long term we have to manage effectively through these short term challenges.
And I just want to add that Corey that again we're thinking about this long term We have to manage effectively through these short-term challenges and in doing that when I say effective part of that is managing our brand and That's how our brand as a zoomies brand ties in with our multi branded strategy emerging branding strategy Which is about price integrity for for brands that have real equity for consumers
In doing that when I say effective part of that is managing our brand.
And Thats, how our brand is the Zumiez brand ties in with our multi branded strategy emerging branding strategy, which is about price integrity for brands that have real equity for consumers.
So this is where again we might get to.
We might have better product margin in this environment it might be a little tougher on the sales side, sometimes but as Chris said, we get to about the same place there what else. We're just doing it differently and I'd like to thank the way that we're doing it is better it's a better long term strategy and approach for the benefit of both us and the discipline around pricing for our business, but the discipline around pricing for our brand partners.
So this is where again we might get to, we might have better product margins in this environment. It might mean a little tougher on the sales line sometimes, but as Chris said, we get to about the same place as everyone else. We're just doing it differently. And I like to think the way that we're doing it is better, is a better long-term strategy and approach for the benefit of both us and the discipline around pricing for our business, but the discipline around pricing for our brand partners too.
Two because we are not eroding their brand equity.
That's great. Thank you very much for all the color and best of luck.
because we're not eroding their brand equity. That's great. Thank you very much for all the color and best of luck.
Thank you.
Thank you I'm showing no further questions at this time I will now turn the call back over to Mr. Rick Brooks for any closing remarks.
Thank you. Thank you. I'm showing no further questions at this time. I will now turn the call back over to Mr. Rick Brooks for any closing remarks.
Alright. Thank you very much as always we appreciate your interest and as I said in the commentary I just want to reiterate how.
All right, thank you very much. As always, we appreciate your interest. And as I said in the commentary, I just want to reiterate how competent I am and how we're positioned in the marketplace.
Confident I am and how we're positioned in the marketplace.
<unk>.
Our understanding of our consumer what their behaviors that we're trying to solve for here as we look into the next few years next three to five years I want to tell you that we have the strategies and initiatives in place the right investments as commented on Sharon's question to move those initiatives and strategies forward. So when we get through this cycle, we're in come out stronger than we've ever been.
our understanding of our consumer, what their behaviors that we're trying to solve for here as we look into the next few years, the next three to five years. I want to tell you that we have the strategies, initiatives in place, the right investments, as common on Sharon's question, to move those initiatives and strategies forward so that when we get through this cycle, we're gonna come out stronger than we've ever been and we're gonna gain market share. So I remain really confident about our positioning.
And we're going to gain market share.
So I remain really Cogs really confident about our positioning.
<unk> managed through cycles like this before where experience doing it and we're going to come out this other side stronger and better and bigger so.
where we've managed to recycle like this before, we're experienced doing it, and we're going to come out this other side stronger, better, and bigger.
So thank you everyone. We look forward to talking to you in March.
Thank you for participating this concludes today's conference call you may now disconnect.
So thank you everyone, we look forward to talking to you in March.
Thank you for participating. This concludes today's conference call. You may now disconnect.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
The $197 million decrease in cash and current marketable securities over the trailing 12 months was driven primarily by share repurchases of $183.1 million, resulting in a reduction of our shares outstanding over the last year of 17.5%. We also had capital expenditures of $24.7 million, partially offset by cash generated through operations of $26.6 million. As of October 29, 2022, we had no debt on the balance sheet and continue to maintain our full unused credit facilities. We ended the quarter with $177.2 million in inventory, up 1.2% compared with $175.1 million last year. On a constant currency basis, our inventory levels were up 6.3% from last year. Overall, while slightly more aged, our North America inventory is healthy and continues to sell at a favorable margin. Internationally, our inventory is more current than the same time last year, and we have seen margins improve during the quarter. Total sales for the 31-day, no, sorry, now to our fourth quarter to date results. Total sales for the 31-day period ended November 29, 2022 decreased 23.9% compared to the same 31-day period in the prior year ended November 30, 2021. Comparable sales for the 31-day period ended November 29, 2022 were down 24.8% from the comparable period in the prior year. From a regional perspective, net sales for our North America business for the 31-day period into November 29, 2022 decreased 27.7% over the comparable period last year. Meanwhile, our international business decreased 4% versus last year. Excluding the impact of foreign currency translation, North American net sales decreased 27.4% and other international sales increased 7.7% compared with 2021. From a category perspective, all categories were down in comparable sales for the fourth quarter to date. Men's was our largest negative category followed by hard goods, accessories, women's, and footwear. With respect to our outlook, I want to remind everyone that formulating our guidance involves some inherent uncertainty and complexity in estimating sales, product margin, and earnings growth given the variety of internal and external factors that impact our performance. With that in mind, we are currently expecting the total sales for the fourth quarter of fiscal 2022 will be between $258 million and $265 million. Consolidated operating profit as a percent of sales for the fourth quarter is expected to be between 3.4% and 4.7%. We anticipate diluted earnings per share will be roughly 36 cents to 51 cents. Now I want to give you a few updated thoughts on how fourth quarter guidance rolls into our fiscal 2022 results. With the first three quarters of 2022 behind us, we remain cautious in how we are looking at the full year given the operating environment and the current headwinds we are facing.
Okay.