Zumiez Q2 Earnings Call Highlights

Net sales for the second quarter of fiscal 2026 declined 2.5% to $209 million from $214.3 million a year earlier. Comparable sales fell 2.1%, driven by a 2.9% decline in North American comparable sales, while comparable sales in Europe and Australia increased 2.1%.

Chief Executive Officer Rick Brooks said the company was disappointed that results fell short of expectations, but noted that its international entities produced positive sales growth during the quarter. He said current trends through Labor Day remained broadly similar to the second quarter, with the U.S. business declining and international markets generating low-single-digit positive comparable sales.

Brooks identified footwear as the primary pressure on the domestic business. Through Labor Day, footwear accounted for 70% of Zumiez's total U.S. sales decline from the prior year, he said. The category has been challenged since the second quarter of fiscal 2025, though comparisons are expected to become easier in the fourth quarter.

In the second quarter, accessories was the company's largest positive comparable-sales category, followed by men's. Footwear was the largest negative category, followed by hard goods and women's. Brooks said Zumiez primarily sells lifestyle athletic footwear, an area that has been under pressure. The company is working with brand partners to add more distinctive merchandise and identify emerging trend brands that could support future growth.

“Our goal looking forward as we look into the back half of this year into next year is to continue to try and work with our partners, continue to drive uniqueness into our footwear business,” Brooks said in response to an analyst question. The company said it has managed footwear inventory closely with its partners and does not believe it has a major inventory issue. While Zumiez has not been as promotional as some competitors, Brooks said the company is clearing some footwear inventory and that this has affected margins to some extent.

Second-quarter gross profit declined to $73.9 million from $76.1 million in the prior-year period. Gross margin was 35.3% of sales, down 20 basis points from 35.5% a year earlier. The decline reflected 60 basis points of deleverage in store occupancy costs due to lower sales, partially offset by a 50-basis-point benefit from tariff refunds. Selling, general and administrative expense was $75.2 million, or 35.9% of sales, compared with $75.9 million, or 35.4% of sales, a year earlier.