Q3 2024 Zumiez Inc Earnings Call
Okay.
Good afternoon, ladies and gentlemen, welcome to the Zumiez, Inc. Third quarter fiscal 2023 earnings conference call. At this time all participants are in a listen only mode. We will conduct a question and answer session towards the end of this conference before we begin I'd like to remind everyone in the Companys 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'll be discussed today is available at Zumiez borrowing and the FCC.
At this time I'd like to turn the call over to Rick Brooks, Chief Executive Officer, Mr. Brooks.
Hello, everyone and thanks 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 and the start to the holiday season.
Before handing the call over to Chris who will take you through the financials and some thoughts on the rest of the year.
After that we'll open the call to your questions.
Our performance in the third quarter came in slightly ahead of our expectations as the year over year sales trends continued to improve compared with the first and second quarters.
Given that the operating environment remains challenging, particularly in the U S, causing our customer to be more selective about when and where they spend their money. We were encouraged by our results during the key weeks of the back to school selling season.
At the same time, we are not surprised that our sales trends pulled back somewhat during the second half of Q3.
As we move beyond the peak back to school season.
The industry has been volatile all year marked by muted peaks and deeper valleys as inflationary impacts continue to weigh on discretionary spending combined with increased competition for wallet share from spending on services and experiences.
High promotional activity to clear elevated inventory levels across our retail sector has added to the headwinds pressuring our full price selling model.
In response to this backdrop, we've continued to adjust our merchandize mix and brand assortments to bring newness to our offering as well as more value through private label brands to support our diverse customer base.
These adjustments speak to the strength of our model and our ability to adjust both across departments and from branded to private label products to meet customer demand all while ensuring we are providing our customer with the world class service and differentiated shopping experience they expect when visiting Zumiez.
To recap our improving trend line sales were down 70% in Q1 down 12% in Q2 down 9% in Q3.
In a recovery has picked up pace, thus far in Q4.
Through this past Tuesday fourth quarter to date sales are down four 6% to the prior year the.
Sales of the Black Friday, cyber Monday period down one 4% against the same period last year.
We are encouraged by the sequential improvement we continue to see in the business. While we are not where we want to be from a results perspective, our current momentum gives us confidence in delivering continued improvement in the fourth quarter and positioning ourselves for growth in 2024.
We're consistent expense discipline, and our lean integrated operating structure.
Business can generate leverage and meaningful operating margin expansion, even on modest topline growth.
This will allow us to drive enhanced profitability and continue investing in strategic priorities that we believe will create significant long term benefit for our customers our business and our shareholders.
We've discussed some of these key strategic priorities on our previous calls including continued investment in our people through best in class training and mentoring.
Optimize our performance by trade area.
Working with our brands to increase speed flexibility and margins.
As well as continuing our international expansion drought driving sales and earnings growth, while better serving our brands and customers as trends emerge locally and grow globally.
We also understand that in difficult times like pieces is important to balance investments with the tactical adjustments necessary to drive our recovery.
<unk> identified at amplify and emerging brands and trends to build sales.
Driving promotions where necessary.
Long inventory management, and maintaining our strong balance sheet position.
It is in these times that really heavily into the strong brand and culture that are critical to <unk> success from the beginning.
We lived that culture everyday through the outstanding people that are part of our company and I'd like to thank everyone in our organization for their continued hard work and dedication, especially during the busy holiday season.
Foundation of our culture, and your efforts and commitment to our customers is what sets <unk> apart from the competition for over 45 years.
That I will turn the call to Chris discuss the financials.
Thanks, Greg 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 full year.
Third quarter net sales were $216 $3 million down eight 9% from $237 $6 million in the third quarter of 2022 comparable sales were down nine 2% for the quarter. The decrease in sales was primarily driven by North America, and Australia business.
Set by more favorable results in Europe.
During the quarter, we continued to see softer sales, primarily driven by ongoing inflationary pressures on the consumer a shift in spending to travel and experiences and softer demand for full price key styles and trends in North America.
From a regional perspective, North America net sales were $181 $6 million a decrease of 12% from 2022 other international net sales, which consists of Europe, and Australia were $34 8 million up 11, 1% from last year, excluding the impact of foreign currency translation North America net sales decreased 11, 9% and other international.
Net sales increased five 2% compared with 2022 comparable sales for North America were down 10, 7% comparable sales rather than national were down <unk>, 3% for the quarter.
From a category perspective, all categories were down in comparable sales from the prior year during the quarter with footwear being our most negative followed by women's accessories, Hardgoods and our best performing category mens the men's category was down only low single digits in comparable sales during the quarter, reflecting the continued positive brand and fashion trends we talked about.
On our Q2 call as we were heading into the back to school season, we're excited to see some of the newer brands resonating with customers and we will look to build on these trends in the holiday season.
Net sales included a decrease in transactions and an increase in dollars per transaction dollars per transaction were up for the quarter driven by an increase in average unit retail and an increase in units per transaction.
Third quarter gross profit was $73 2 million compared to $82 million in the third quarter of last year gross profit as a percentage of sales of 33, 8% for the quarter compared with 34, 5% in the third quarter of 2022.
The 70 basis point decrease in gross margin was primarily driven by lower sales in the quarter, causing deleverage on our fixed costs. The key areas driving the change were as follows store occupancy costs Deleveraged by 120 basis points on lower sales volumes product margins decreased by 50 basis points.
20 basis points decrease related to web fulfillment costs, and a 10 basis point decrease related deleverage in our buying group.
These negative impacts to gross margin were partially offset by a benefit of 70 basis points in way of shipping costs.
50 basis points improvement in distribution center cost and a 20 basis point reduction in inventory shrinkage.
SG&A expense was $73 4 million or 33, 9% net sales in the third quarter compared to $71 5 million or 31% of net sales a year ago. The 380 basis point increase in SG&A expenses as a percent of net sales was driven by the following.
160 basis point increase due to both deleverage if store wages on lower sales as well as increases in wage rates that could not be offset by hours reductions 110 basis points of deleverage in non store wages 80 basis points of deleverage in non wage to our operating costs and 30 basis points of deleverage in our other corporate costs.
Operating loss in the third quarter of 2023, with zero point $2 million or 1% of net sales compared to the operating profit of $10 4 million or four 4% of net sales last year.
Net loss in the third quarter was $2 2 million or 12 cents per diluted share. This compares to net income of $6 9 million or <unk> 36 per diluted share for the third quarter of 2022.
We will have a modest tax expense in the quarter. Despite our pre tax operating loss due to the distribution of pretax income across our different tax jurisdictions. This compares to a more normalized effective tax rate of 27, 9% in the third quarter last year.
Turning to the balance sheet the business ended the quarter in a strong financial position, we had cash and current marketable securities of $135 $8 million as of October 28, 2023, compared to $141 $1 million as of October 29, 2022 to $5 $3 million decrease in cash and current marketable securities over the trailing 12 months was.
Driven primarily by capital expenditures, partially offset by cash flow from operations as of October 28, 2023, we have no debt on the balance sheet.
We ended the quarter with $175 $9 million in inventory down <unk>, 7% compared with $177 $2 million last year on a constant currency basis, our inventory levels were down two 3% from last year. This includes high single digit inventory declines in the North America business are most challenged.
<unk>.
Now to our fourth quarter to date results total sales for the 31 day period ended November 28, 2023 decreased four 6% compared to the same 31 day period in the prior year ended November 29, 2022 <unk>.
Comparable sales for the 31 day period in November 28, 2023 were down 6% 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 28, 2023 decreased seven 3% over the same period last year with comparable sales over the prior over the period down six 8%.
Meanwhile, our other international business increased six 2% versus last year with comparable sales over the same period decreasing three 2% excluding the.
The impact of foreign currency translation, North America, net sales decreased seven 2% and other international net sales increased one 5% compared with 2022 from.
From a category perspective, the men's category had positive comparable sales fourth quarter to date, while all other categories were down in comparable sales from the prior year.
Hard goods with our most negative category, followed by women's accessories and footwear. We are excited about the trends that are emerging in both the men's and footwear categories men's is positive low single digits quarter to date, while footwear was down low single digits after being our most negative category during the third quarter.
The quarter to date comparable sales decline was driven by a decrease in transactions, partially offset by an increase in dollars per transaction dollars per transaction were up driven by an increase in units per transaction, partially offset by a modest decrease in average unit retail.
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.
Our fourth quarter to date results have continued to show incremental progress through the trends experienced in the first three quarters of the year, but are still trending below prior year levels as consumer demand remains under pressure from the continued impact of high inflation ended on discretionary spending.
With that in mind, we are planning total sales for the fourth quarter to be between $275 million and $281 million, including the 50 <unk> week.
We expect that our fourth quarter 2023 product margins will be down roughly 110 basis points from the fourth quarter of fiscal 2022 due to both geographic sales mix across our businesses as well as promotional cadence to move through inventory consolidated operating profit as a percent of sales for the fourth quarter is expected to be between one 5%.
And two 5% resulted in diluted earnings per share.
Roughly 24 to 34 for the quarter.
As a reminder, our guidance is inclusive of the 50, <unk> week, which is a benefit to sales and earnings in the fourth quarter of fiscal 2023 and <unk>.
Detriment to sales and earnings growth rates in fiscal 2024.
Now I want to give you a few updated thoughts on how fourth quarter guidance rolls into our full year fiscal 2023 results.
Inclusive of our fourth quarter guidance, we anticipate that total sales will be down in the eight 7% to nine 3% range in fiscal 2023 compared to 2022.
Product margins were down 50 basis points in fiscal 2022 after six consecutive years of growth through the first nine months of 2023 product margins were down 60 basis points from the prior year.
Portion of this year to date decrease has been driven by our international businesses, which have lower product margins margins, increasing as a percentage of total sales inclusive of our fourth quarter guidance. We now expect annual product margins to be down approximately 85 basis points due to both the geographic sales mix across our businesses as well as <unk>.
<unk> cadence to move through inventory.
Our model is sensitive to sales fluctuations, we've seen deleveraging sales declines across fiscal 2000, 22022 and into 2023, while the opposite was true in 2021, when we experienced record sales in operating margin driven by meaningful leverage.
We can tell it tenure to diligently manage expenses as we navigate the current environment and are positioned to take advantage when conditions improve for.
For fiscal 2023, we currently anticipate that operating margin will be between negative two 9% and negative three 2% and our loss per share will be roughly $1 16 to $1 26.
We currently expect that our pre tax earnings for the year will be negative and then we will have modest tax expense due to the distribution of earnings across our different tax jurisdictions. It is important to note that the income levels.
With income levels down in our current guidance levels changes in the jurisdictional income mix can cause our effective tax rate to fluctuate significantly.
We are planning to open 19, new stores during the year, including five stores in North America 10 stores in Europe, and four stores in Australia, We expect capital expenditures for the fall, 2023% fiscal year to be between 20 million and.
And $21 million compared to $26 million in 2022.
We expect depreciation and amortization, excluding noncash lease expense will be approximately $22 million. We are currently projecting our share count for the full year to be approximately $19 3 million shares and with that operator wed like to open the call for your questions.
Thank you, ladies and gentlemen, if you'd like to ask a question. Please press star one on your telephone again to ask a question. Please press star one one.
One moment for your first question.
Our first question comes from the line of Mitch <unk>.
At Seaport your line is open.
Yes, thanks for taking my question.
Chris You mentioned.
Footwear.
Positive inflection there in terms of the trend worse category.
And that's gotten a lot better in early <unk> can you elaborate on that.
I noticed online.
Got some promos going called footwear, frankly, with some pretty big markdowns, So I'm kind of curious.
The sequential comp improvement is that markdown driven or is it better trend in footwear better inventory availability and footwear, what can you say about kind of the positive inflection there.
Sure Matt.
Take the question and then let Rick add anything he'd like to add from.
From a footwear perspective.
We are happy with the trend line that we've seen in the fourth quarter.
We've talked about but we're a lot as we move through the year in fact, even in our first and second quarter calls highlighting that it was one of the more challenged areas from an inventory perspective, we have.
With the downturn in our sales trends, we've taken the management of inventory pretty seriously and really tried to manage inventory carefully.
Especially so we don't have future markdowns.
Footwear has been one of the areas that's been most challenging and probably one of the areas that we've carried a little more inventory than we'd like with the sales downturn throughout 2023 what.
I'm happy to report with the fourth quarter is that a lot.
Large part of that improvement in the trend line is actually driven by new product in full price product that we're pretty excited about right. We've been testing a lot of things in footwear and we've seen some things work as we transitioned into November and we're able to receive some of our new receipts that being said there is a portion of that trend line that is.
Tied to.
The continued movement to try to move old age and so it's a combination of both but.
But a fair amount driven by full price selling which again is really our strategy. When we look at how to navigate through the cycle. We're in is that we want to be not just in footwear, but across all our categories and departments full price low margin and Thats what were really trying to push.
And I would just add Mitch to Chris's comments that.
We hope that we're finding bottom and some of what had been a multi year trend on some of our brands being negative.
Footwear brands and as Chris said to I think we're also hoping that on our markdown cadence over the next few weeks, we can find the bottom in that cycle two.
And then it is really exciting I think they're both a brand and some trends that are driving footwear up and the last thing I would.
Chris at new and full margin kind of business and the last thing I would say that I think we can get encouraged about as footwear cycles in general our experience is they tend to be longer cycle since up.
So if.
If we can get moving into the right direction to find the bottom with the brands that have been holding us back a bit.
We have some good trends and brand is going the other direction that I think we may have a longer you have a good run with the with <unk>.
We're cycling in front of US Alright, I appreciate that color and then I guess my follow up question on Europe can you speak a little bit to what youre seeing from a macro standpoint, there and remind us.
What your exposure is to snow and blue tomato and how you see that sort of shaping up early in the season and I know it was too difficult too pretty bad seasons. The last couple of years. So I don't know what an easy comparison means for that business.
Yeah, I'll start with kind of the macro then let Chris address the snow.
<unk> mentioned.
And Europe from a from an inflation perspective still has been a bit more challenged than the U S. We've seen more progress with declining rates sure Aldo.
They just announced today we are seeing.
Some inflation deceleration in Europe.
But there are still some challenges there.
We also know that there is some lagging as to way statutory pay rates take place in Europe. So we have to work our way through that.
But we're hoping that with the statutory rates that get mostly update the beginning of the year with declining rates, we will see more disposable income in consumers' pockets within this last year, we're kind of work in the opposite direction.
So.
But it is a very competitive market I guess, that's the other thing I'd say is we're seeing just as much price driven promotion over there as we do here in the U S. So it's a very competitive marketplace and I think our performance on a relative basis shows that were actually gaining share in the market.
So and then lastly from a macro perspective of course, we still there's still the uncertainty of the war in Ukraine, which is may have faded just how people's background, but I will tell you. It's definitely more in the front of the Europeans thinking that it probably is in other parts of the world at this point. So I think we are hopeful that we will find some benefit on the macro perspective I think it.
May be unique to us there is a lot of the bigger players that are struggling.
Running losses in Europe. So.
So I am hopeful that we will.
We move into next year with the <unk>.
Combination of statutory rates and declining inflation may be a net positive for us Chris Yes, and just from a numbers perspective on.
No and maybe more important on the business overall.
Europe's.
Been one of the stronger parts of our business here moving across the first nine months of the year. They were up 12% with a strong mid single digit comp here.
In that 12%. So it's not just new units is seeing strong comp we have transitioned obviously into the fourth quarter and year.
In our November results to date, we did talk about Europe being much softer than what that nine months trend line is in a lot of it comes to your question.
We have not seen a strong start to snow and so that at this point in the year doesn't mean that the whole season shot. We certainly have a lot of the pie. The peak weeks of buying still ahead of us across December and into January.
And I would also mention a while im not going to release, our snow numbers or snow plan to date will who will recap more of that here in March.
This is an area of the business that we're excited about because were core and it's key to what we're doing the other piece of it is how much we've diversified diversified across.
Europe, So as we have moved into areas like northern Germany and other markets.
We have less of a dependency on snow. So that's a big push of ours and and something we worked through as far as Europe.
With the snow mix.
It over indexes in October it over indexes in January because of that dependency on snow, but the rest of the rest of the month generally is sort of in line because of our peaks here we have around holidays. So so we're we're obviously hopeful for cold weather I think we are well positioned to take advantage of it if it comes.
But that has been part of our slower results here in November.
Alright, Thanks, again and good luck for holiday.
Yes.
Thank you one moment please.
Our next question comes from the line of Jeff Vanessa <unk>.
B Riley your line is open.
Hello. This is Richard Magnuson for Jeff <unk>, Thank you for taking our call.
Can you speak more about how you're positioned with inventory versus holiday last year and also touch on planned promotional cadence this year versus last year.
And then maybe what trends youre seeing in the digital business since Black Friday weekend.
Sure.
<unk>.
Okay. Let me, let me take a crack at it here I mean from an overall inventory perspective, as we said on the call inventories were down <unk>, 7% down.
Down two 3% on a constant currency basis. So if we just step into that I think we feel pretty good about where overall inventories are breaking that down a little bit farther you would find that the North America inventory, which is really our toughest market has been down in like the high single digit area. So we feel real.
Good about how that's lining up in relation to where sales are so a lot of our inventory royalties international based which again, it's more tied to units.
And.
And to a lesser extent some of the landing of products. So I think from an overall inventory perspective, we feel good about where we're at from a promotional perspective, we did obviously foreshadow in our guidance that we were expecting to be more promotional than we were a year ago, which I think is a factor of a couple of things one the market.
Incredibly promotional and we know that that consumer our consumer.
Is squeezed right with the inflation in some of the things the more macro environmental things that are happening to them and so we are trying to move and be in a spot.
To work with that customer that does not mean to us.
30% off the entire store, where we're definitely.
Very passionate about how what our brands mean to us and how we work with our brands to really push through a full price low margin. What it means is we had to find areas of value in ways that we work with that value consumer in this type of market. So we do have a promotional cadence as you would expect that we planned coming into the holiday, which is a factor both of hey, how do we reach the <unk>.
Customer and how and how do we look at areas of old age because our our goal like it is for all of our quarters and holiday seasons, particularly is in the year in a pretty good inventory position. So we're focused on that from a promotional cadence I think you see some of that in I think.
Mitch mentioned in the earlier the footwear frenzy.
But we've got some different promotions out there that we're working through and then lastly from a digital perspective, what I would say is we are continuing to see a strong demand of our customer to be in stores.
We're seeing a good mix.
Of our customer coming to stores the digital business overall for the third quarter.
Basically just a little bit.
Better than our overall results, but we continue to see really strong store results. Our black Friday was was a really great day for us is positive in stores.
We know that our customer wants that physical experience and our in our web has been a little bit softer than the trend line. So.
We'll roll it all up and talk about that more on the quarter I think the other piece that's unique to us and you see this I believe when you're alone on our website.
Trying to drive the customer to store, so youll see it even though digital customer we're showing on what's available in our store, we're encouraging them to come pick it up in store driving them to that availability because we believe over the long term, it's great to get them in front of our sales teams, it's great to get them in our store environment, where they can experience.
Everything we have to add everything we have and not just what they are seeing on the pages.
Alright. Thank you can you update us.
You cannot plan for store count in FY, 'twenty, four and maybe speak to what sort of terms, you're seeing on lease renewals in any new store locations.
Sure.
Im not going to give exact numbers for 2024, that's normally part of our March call. What I would tell you is we're trying to be really smart with our with our store growth last year. We opened 32 stores, which I think are we feel really good about the locations and the economics of the deal obviously, our sales have been.
Down over that timeframe. So we continue to believe long term. These will be good locations for us have not opened as strong as we would've hoped but I think that's probably more of a macro thing. This year, we reduced that from 32% to 19 stores I think we feel very similar I think from a lease rate perspective, we are seeing a more optimal.
Lease expense.
We just have to be able to drive that top line I think we'll take those learnings and factor them into 2024.
The other piece of this type of environment in this type of market like a lot of retailers. We're looking at the overall store population.
For some potential closures as we all know there are certain malls in locations across the country that are more challenged than others and so that's something that we're spending some time looking through.
Again, I'm not going to speak to the exact numbers because we have some work to do but what I can tell you is.
<unk> got a detailed process to look at store closures, we really focus on the four wall economics of the location, it's impact on trade area its impact on digital.
And then what's happening in that current environment.
Is the mall long for the trade area are there other malls that might we might see the volume transitioning to or is this a permanent decline or a temporary decline. So we're asking ourselves a lot of those questions.
Right now within our plan, we have about 15 store closures within our current modeling I will tell you. That's a number that could increase or decrease depending on how we move through the year and how we're able to work through our teams and with our landlord partners and so we're focused on really trying to bring the best Zumiez forward and being in there.
Right locations and I think as we factor in that into our 2024 store openings and potentially some closures, we'll think about those factors.
Alright, Thank you very much that helps.
I'll get back in the queue.
Okay. Thank.
Thank you again, ladies and gentlemen, if you'd like to ask a question. Please press star one wondering your telephone again to ask a question. Please press star one one.
One moment please for our next question.
Our next question comes from the line of Montero Marino cheek from Jefferies. Your line is open.
Hello, Thanks for taking my call today.
I just wanted to know if you could provide more color about what trends are working for mens.
And how are they different.
How are they different internationally versus the U S. And then just any early reads on holiday trends that were very strong during the black Friday Stephen Thank you.
Alright, let me let me start.
Again, we're not going to typically talked about brands in particular or.
Specific transfer a lot of reason competitive things I think we have some things that are clearly to our advantage but.
I think what I'd like to just comment a bit on us.
Why and particularly your question why men just so much better.
What you're really seeing as it reflects the strength of our core consumer.
And we are disproportionately a men's retailer.
I think through these challenging times when people are stressed with high inflation have less discretionary income or wallet share shifting towards our towards services and experiences. It makes our business really tough.
One of the things I think that we think a lot about is our core consumer intact.
And I have to tell you I think we are.
A lot of our sales loss over the last two years is tied to trend consumers enter declining brands that reach broadly into the trend market and outside of our core market.
So when we look at our core consumer which is predominantly male this is why the men's business is better.
And we can see this in a number of different ways in the business.
One is the strength of our business in the emerging brands launched in 22% and 23 we're.
We're seeing really good.
We're seeing those brands worked well resonate with these consumers on the men's side.
And it's encouraging for us I think to see that and they are running ahead of pace for where we think they would be in a normal brand maturation cycle for this these classes of emerging brands. So that also reflects what our core consumer months that uniqueness new newness in the marketplace that you can.
Only get at Zumiez.
The other thing I would tell you that shows again being a predominant male consumer that our core consumer is intact and why our men's business doing better.
As again, our dollars per trans are at all time highs and it's not just because AUR is higher is because <unk> are driving it too.
So for me. This is another sign that the core consumer that young male is really engaged with us in our business and Theyre looking for those again looking for the unique brands are also looking for the us leading on trends and I think we are definitely doing this in a lot in the men's area. Both on the and this is where our private label brands are really doing well are performing well I might ask Chris to comment.
On that in a moment.
And again, we are not massively discounted <unk>.
These trends.
Categories in men's we are higher priced but a lot of competitors on these trend categories. So it reflects the strength of our core consumer value, what we do for them valuing the spin we bring to these trends and be willing to pay the value that we're offering in these areas. So all of these things for me drive at Wise, Our management is better is because that's where.
The majority of our core consumers are and what we're doing is really starting to resonate with them. Chris you want to talk a little bit about private label, Yes, I'll talk a little about private label and then just catch on the holiday trends prior to your question I mean from an overall private label perspective, as Rick mentioned that value message has been extremely positive we have seen private label increased about 500 basis.
<unk> as a percent of sales.
Looking at this year year to date through nine months as compared to nine months last year or so.
Really seen that business do well and I think.
Resonate with what the consumer wants and it's one of the interesting pieces as Rick mentioned, just between how brands and private label have moved across the years here I mean, we've seen private label reach into the 20% before in the middle part of the last decade, we saw it drop as low as about 11 or 12% at the end of the decade and we're back.
In that 20% range. So it's really interesting to see how it has moved but been pretty popular with our with our consumer thus far from an overall holiday trends perspective, what's interesting about November and why and what we could.
Continue to see in the business is it's very similar to always stay on back to school, where we saw the real strength of the business around the peaks and.
We were not alone I think other retailers, we're talking about how it got a little slower after back to school. So we saw that as we move past and out of the back to school season, and then as we moved into this quarter weeks, one and two November where our tougher weeks, we definitely saw softer volume, they're getting a little bit better moving into the Thanksgiving.
Weekend, then that week four of November was our strongest we're roughly flat and total sales. So I think thats a good sign in regards to what we should expect over the next few weeks is as you would imagine as we lay this out by week and maybe more importantly by day.
Those days in the week that week ahead of Christmas will be very strong with Christmas hitting on a Monday so.
So our forecast our guidance.
Obviously.
Pretty in line with what our trend late rate is if you exclude the 50 <unk> week, and we would expect that week before Christmas and even though week after Christmas to be the strongest weeks of the remaining weeks left for us.
Thank you and best of luck with the holiday season.
Got it thanks.
Thank you one moment please.
We have a follow up question from Mitch comments.
Your line is open.
Yes, thanks for taking a follow up Rick I just wanted to ask you about skate hardgoods, maybe kind of a.
Philosophical question I don't know, but when I reflect on that business over the last 10 plus years.
Most recently, we had cobra that kind of drove a lot of demand before that it was maybe penny boards before that at with wallboard.
At this point.
It looks like that business is probably going to be at its lowest level of penetration in a long time, if not glass 20 years.
Have we gotten down to kind of just.
Core to that.
That are buying components and is that a pretty consistent business like is that where you think state is right now.
That's the case does that mean like we could be getting close to a bottom there.
I appreciate the question Mitch and it's a good question escaped us.
While it's not our anywhere closest to our big the biggest department. It's an important department for kind of the essence of what we're about and it's also I think the young skate kit continues to kind of lead you.
Young person both.
Male and female who like the lead on track.
And so thats, particularly I think that customer is so important to us.
So.
Yes.
I guess I'll add a little bit more color to your to what you said because as you know well right. We had a huge run up in the first part of 2010.
We're running all the way up there we had a big long board trend that got boomed up there and then it all collapsed in 15 and 16 and then we had some fallow years and then literally in February 19 to skate cycle took off everywhere for us around the globe.
We couldn't even actually pin down what it was we had a huge year in skate hardgoods in 2019 were up about close to 50% over 2018 and 2019.
And then with the pandemic much like with bike.
I think we moved demand for skate hardgoods forward.
And I think this did accelerate the women's participation in skateboarding, but I think a lot of them have got move forward and we ran up close to another 50% gain in 2020.
Then even with the stimulus spending in 2021, which as we all know is gigantic for our business and we ran up 20 plus percent in 2021 skate hardgoods declined.
And that reflects the nature of I think what you are talking about <unk> the impact of the pandemic on skate hardgoods and you layer all of that over the fact that I think we mode, we own more sure than ever in the skate hardgoods world in the specialty retail world of state Hardgoods, I think we own the biggest share that there is out there today and we peaked at our highest <unk>.
Sure I think it was in 2020, Chris.
19% and 19% of sales that we never got close to that but that speaks again to the demand pull forward that happened during the pandemic now today I think we're going to forecast this year and we'll give you the exact percentage, but I do think that as we forecast the decline with a decline in 'twenty one despite stimulus decline in 'twenty two.
<unk> and 'twenty, three which have been significant and I think even outside for our sales declines.
I think we're very close to the <unk>.
You're suggesting Mitch the lowest penetration maybe an all time low in skate hardgoods with penetration of our mix now that.
Said, finding the bottom will be really good here, because we won't have to drag right of <unk>.
Big declines we've taken over the last three years.
So finally, as Bob just flat a benefit in that but.
But our experiences that will probably bounce along the bottom for a couple of years before we see a next for.
For 12, 18 24 months before we see the next up cycle would be what our experience in skate hardgoods would tell us.
Yes.
Alright, Thanks again.
Yes.
Thank you I'm showing no further questions at this time I'd like to turn the call back over to Rick Brooks for any closing remarks.
Alright as always we always appreciate your interest in what's happening here in our business. So we thank you all and we wish you the best for a great holiday season, and we'll talk to you in March Thank you everybody.
Thank you ladies and gentlemen, this does conclude today's conference. Thank you all participating and have a great day you may now disconnect.
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