Zumiez Inc.

First-quarter net sales increased 4.9% year over year to $193.3 million from $184.3 million. Comparable sales were up 4%; North America comparable sales rose 4.4% and other international comparable sales rose 2.2%. Gross profit increased to $61.3 million from $55.3 million, and gross margin expanded to 31.7% from 30.0%, helped by product margin, store occupancy leverage, web shipping, and lower shrink. SG&A was $76.5 million, or 39.6% of sales, versus $75.2 million, or 40.8%, last year; operating loss improved to $15.2 million from $19.9 million, and net loss was $13.3 million, or $0.82 per share, versus $14.3 million, or $0.79 per share, last year. For Q2, Zumiez expects total sales of $210 million to $215 million, comparable sales to track the same general trend, product margin to be down slightly to up slightly, operating income between negative 1.5% of sales and breakeven, and EPS of a loss of $0.23 to $0.08. For the full year, management did not give EPS guidance but said it still expects sales growth, modest gross margin expansion, and operating margin expansion of 50 to 100 basis points, assuming no major deterioration in the consumer environment.

Rick Brooks struck an optimistic but cautious tone, emphasizing that Zumiez is making progress toward sustained profitable growth even as consumer pressures increased late in the quarter. He highlighted the strength of the merchandise refresh, customer experience initiatives, and especially the improving European business, which he said is seeing meaningful bottom-line improvement as the company applies a full-price selling model there. He also pointed to a strong balance sheet and share repurchases as tools to manage volatility and support shareholder value.

Chris Work focused on the quarter’s financial improvement and the more conservative outlook. He said cash and current marketable securities were $124.2 million at quarter-end, up from $101 million a year ago, with no debt and a full $25 million unused credit facility; inventory was $153.2 million, up 2.2% year over year, and the company repurchased 0.3 million shares for $6.2 million in the quarter. He attributed gross margin expansion to product margin, occupancy leverage, web shipping, and lower shrink, and noted the share count is down about 11% over the past 12 months. On guidance, he said the company is assuming a softer back half, continued consumer pressure, and no full-year EPS guidance, while still expecting sales growth, modest gross margin expansion, and 50 to 100 basis points of operating margin expansion for fiscal 2026.

Analysts focused on the Q2 sales guide, regional comp assumptions, inventory positioning for back-to-school, private label penetration, and whether store closures will continue into 2027. Management said Q2 U.S. comps should improve from May and likely be roughly flat for the rest of the quarter, while Europe should still post a positive comp even if it decelerates slightly; they also said the last four weeks of the quarter are especially important because back-to-school is a major selling period. On inventory, management said it feels good about current inventory, has flexibility to adjust orders, and can manage both upside and downside into back-to-school and holiday. On private label, they said 34% penetration is strong but should be guided by consumer demand and category mix, while store closures in North America are expected to continue but at lower levels than recently, and international closures may continue if some markets do not improve.