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Zumiez Inc (ZUMZ)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered improving profitability on modest top-line growth: revenue rose to $222.5M (+2.9% YoY) and diluted EPS reached $0.06, up from a $(0.12) loss a year ago, aided by a 140 bps gross margin expansion to 35.2% .
  • North America drove the quarter: comps +10.4% with strength in apparel and footwear; Europe/Australia were soft on full-price strategy and warm weather, dragging other international comps to −5.6% .
  • Q4 guidance implies a sharp earnings inflection: net sales $284–$288M, comps +6.0%–7.5%, product margins +180–210 bps YoY, operating margin guided to 7.3%–8.0% (updated from 6.0%–7.5%), EPS $0.83–$0.93; management flagged potential 2025 tariff risks and possible inventory pull-forward .
  • Estimates context: S&P Global consensus EPS and revenue for Q3 2025 were unavailable at time of analysis due to access limits; beat/miss cannot be determined.

What Went Well and What Went Wrong

What Went Well

  • North America momentum: “comparable sales in the region accelerated from mid-single digits in the second quarter to low double digits in the third quarter,” with men’s, women’s, and footwear categories performing well .
  • Margin execution: Gross margin +140 bps YoY to 35.2%, driven by product margin improvement (+70 bps), occupancy leverage (+60 bps), and web shipping cost benefits (+60 bps) .
  • Holiday start: Q4-to-date total sales +10.0% and comps +2.9% for the 31 days ended Dec 3; Black Friday-to-Cyber Tuesday comps +9.9% with product margin +310 bps, reflecting lower discounting versus last year .

What Went Wrong

  • International softness: Other international comps −5.6% in Q3 as Europe pivoted to full-price selling; warm weather in Europe hampered snow-related categories late in the quarter .
  • Hardgoods pressure: Skate hardgoods remained the most negative comp category across regions (with green shoots in Australia), continuing to drag mix and growth .
  • Elevated tax rate: Q3 effective tax rate was 63.4%, materially impacting net income despite positive pretax profit .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$216.3 $210.2 $222.5
Diluted EPS ($USD)$(0.12) $(0.04) $0.06
Gross Margin %33.8% 34.2% 35.2%
SG&A % of Sales33.9% 34.4% 34.1%
Operating Income ($USD Millions)$(0.157) $(0.393) $2.368
Operating Margin %−0.1% −0.2% 1.1%
Net Income ($USD Millions)$(2.231) $(0.847) $1.159

Gross Margin Bridge (Q3 2025 vs. Q3 2024):

DriverChange (bps)
Product Margin+70
Store Occupancy Leverage+60
Web Shipping Cost Benefit+60
Inventory Shrinkage−30
Incentive Compensation−10

Segment & Regional KPIs:

MetricQ2 2025Q3 2025
North America Net Sales ($USD Millions)$176.3 $186.8
Other International Net Sales ($USD Millions)$33.9 $35.7
North America Comps (%)+5.9% +10.4%
Other International Comps (%)−7.6% −5.6%
NA Net Sales ex-FX YoY+10.6% +2.9%
Other Int’l Net Sales ex-FX YoY−1.7% −0.3%

Additional KPIs:

MetricQ2 2025Q3 2025
Inventories ($USD Millions)$158.8 $187.2
Cash + Current Marketable Securities ($USD Millions)$127.0 $99.3
Store Count (Total)752 (as of Aug 31, 2024) 752 (as of Nov 30, 2024)
Private Label Share (% of Sales, YTD)—>27%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD Millions)Q4 FY2024N/A$284–$288 Introduced
Comparable Sales (%)Q4 FY2024 (13 weeks)N/A+6.0%–+7.5% Introduced
Product Margin (YoY bps)Q4 FY2024N/A+180–+210 Introduced
Operating Margin (%)Q4 FY20246.0%–7.5% 7.3%–8.0% Raised
EPS ($USD)Q4 FY2024N/A$0.83–$0.93 Introduced
Full-Year Sales Growth (%)FY2024“Low single-digit” view ~+2% to +2.5% Clarified/Higher precision
Full-Year Effective Tax Rate (%)FY2024~60% ~80% (high end case) Raised
Store Openings (#)FY2024~9 ~7 Lowered
Store Closures (#)FY2024~25 ~33 (31 in NA) Raised
Capex ($USD Millions)FY2024$14–$16 $14–$16 (unchanged) Maintained
Tariffs (narrative)2025N/AAnticipating significant tariffs; evaluating pull-forward inventory and alt. sourcing New risk disclosure

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025 and Q1 2025)Current Period (Q3 2025)Trend
Product performance (Men’s/Women’s/Footwear)Men’s positive for consecutive quarters; Women’s turned positive; Footwear turned positive in Q2 Men’s largest positive, Women’s strong, Footwear low double-digit comps (Q3) then softer in November due to reduced discounting Improving mix; footwear normalization post-promo
Private label penetration23% in 2023; expanding in 2024 YTD >27% of sales; a key margin/value lever Rising penetration supports margin
Europe strategy & macroPivot to full-price, slow expansion; macro tougher; margins prioritized over volume Full-price strategy continues; warm weather hurt snow categories; comps −5.6% Margin-first; sales softness persists
Supply chain/logistics costsStructural changes reducing shipping/logistics costs Web shipping cost benefits +60 bps in GM; broader operational efficiencies Cost tailwinds support GM
Hardgoods cycle (skate)At/near cycle low; some positives in Australia/Canada emerging Australia positive for ~5 months; still weak in US/EU; potential bottoming Early green shoots; gradual repair
Tariffs/macro policyNot highlighted previouslyAnticipates significant 2025 tariffs; may pull-forward inventory, review sourcing New headwind risk disclosure

Management Commentary

  • “Fueled by growing strength in our North American business, consolidated comparable sales sequentially accelerated 390 basis points to high-single digits in the third quarter.” — CEO Rick Brooks .
  • “Our women’s category…accelerated meaningfully after posting strong double-digit growth year-over-year in Q2, while footwear also experienced a noticeable pickup in sequential demand, driving comps into the low double digits.” — CEO Rick Brooks .
  • “The 140 basis point increase in gross margin was primarily driven by 70 basis points of improvement in product margin, 60 basis points of leverage in store occupancy costs and 60 basis points of benefit in web shipping costs.” — CFO Chris Work .
  • “We are planning to close approximately 33 stores in fiscal 2024 with 31 of those closures in North America.” — CFO Chris Work ; press release reiteration .
  • “We are anticipating that some of our imported goods may be subject to new significant tariffs in 2025…we anticipate that our ending 2024 inventory could grow more than our current sales trends.” — CFO Chris Work .

Q&A Highlights

  • Bridging Q4 comp guide vs. quarter-to-date: Expect sales concentration around Christmas (Wednesday calendar) with stronger December, supported by strong Black Friday/Cyber trends and margin expansion; footwear demand often follows gift card redemption post-holiday .
  • Footwear dynamics: November softness tied to much lower promotional activity versus last year; focus on full-price strategy (margin-first), with anticipated holiday peak recovery .
  • Occupancy leverage amid closures: Expect leverage on a +6%–7.5% comp despite 33 closures; closing stores typically have higher occupancy as % of sales .
  • Promotional stance: Less promotional than peers; rely on bundled value and private label to deliver perceived value while maintaining full-price margins .
  • Profitability roadmap: Domestic focus on rebuilding sales to pre-pandemic levels, push product margins, reduce shipping/occupancy/store labor costs; international aims to improve unit productivity and margins, moderated SG&A growth .

Estimates Context

  • S&P Global consensus EPS and revenue estimates for Q3 2025 were unavailable at time of analysis due to access limits; we cannot determine beat/miss or quantify surprises relative to Street expectations.
  • We will anchor future estimate comparisons to S&P Global once accessible and flag any notable revisions.

Key Takeaways for Investors

  • North America-led inflection: Broad-based category strength (men’s, women’s, footwear) and continued margin progress suggest the domestic recovery is intact heading into holiday .
  • Margin durability: GM drivers (product margin, occupancy, shipping) appear structural; lower promotionality is improving quality of sales and should support Q4 OM 7.3%–8.0% and EPS $0.83–$0.93 .
  • International remains a swing factor: Europe’s full-price pivot strengthens margins but weighs on comps; warm weather is an added near-term headwind .
  • Hardgoods bottoming watch: Australia’s positive trajectory could foreshadow stabilization; a hardgoods upturn historically provides a halo across categories .
  • Fleet optimization: Elevated closures (33 in FY2024) and smaller new-store pipeline (7) reflect sharpened ROI focus; expect occupancy leverage with comps growth .
  • Tariff risk: Potential 2025 import tariffs may drive Q4 inventory pull-forward and timing effects on cash flow; monitor sourcing shifts and inventory levels .
  • Calendar effects: Back-to-school shift benefited Q2 but hurt Q3 sales growth; Q4 comps guidance adjusts for the calendar and 53rd-week anniversary (−520 bps sales impact) .

Sources: Q3 2025 8-K and Exhibit 99.1 press release ; Q3 2025 press release ; Q3 2025 earnings call transcript ; Q2 2025 press release and call ; Q1 2025 press release and call .