Zumiez Earnings Call Insights: Blue Tomato and Black Friday Guidance

Zumiez (NASDAQ:ZUMZ) recently reported its third quarter earnings and discussed the following topics in its earnings conference call. Take a look.

Blue Tomato

Sharon Zackfia – William Blair & Company: So, first question on Blue Tomato. Just a clarification on the inventory step-up in the quarter, if you could actually give us what that dollar amount was. Then can you give us – obviously, if you’re expecting Blue Tomato to be dilutive in the fourth quarter, I think originally this was to be accretive, have you lowered your expectations for sales for Blue Tomato going into the holidays?

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Richard M. Brooks – CEO: I’ll start Sharon with the sales item that Chris commented on the step-up and basis in Q3. Yeah, we have as you would guess based upon the Q2 – our Q3 results for Blue Tomato, we have – as we always are in our own business as well I might add and here in the U.S. we’re constantly evaluating the forecast and our plan as we look ahead of quarter. So we have taken down their sales estimate somehow. I’ll be clear though that we’re still expecting that they are going to outperform where they were in their prior quarter a year ago. Chris?

Christopher C. Work – CFO: To get to the first part of your question, Sharon regarding to the inventory step up, we took the charge of about $1.4 million in the third quarter or about $0.03 per share and we’re projecting about $0.3 million of inventory step to hit in the fourth quarter.

Sharon Zackfia – William Blair & Company: Then my second question will be on the core Zumiez business. I guess taking that run rate excluding the first 10 days of October, where you were down 1% – obviously if you were projecting 3% to 4% for the full quarter, you’re expecting that to get worse again, going forward. So just what your thought process is there going into the heart of the holiday season?

Christopher C. Work – CFO: Sharon, as we talk about how we set those targets, you’re right, if we look at our run rate, you would see that that probably would yield a little bit higher result than the range we provided, but again there is a lot of knowns I would tell you as we go into the quarter. We want to be appropriately positioned relative to our forecast. So, we’re cautious, we had a tough winter season a year ago and if it’s tough again, we’re not quite sure what the reflection of that would be.