Zumiez Inc (ZUMZ) 2006 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the third quarter 2006 Zumiez Incorporated earnings conference call.

[OPERATOR INSTRUCTIONS]

I would now like to turn the call over to Mr. David Griffith with ICR. Please proceed, sir.

Good afternoon. Today's conference call includes comments concerning Zumiez business outlook and contains forward-looking statements. These particular 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 and actual results may differ materially.

Additional information concerning a number of factors that could cause actual results to differ materially from the information that we've discussed is available in Zumiez's filings with the SEC. At this point I'd like to turn the call over to Rick Brooks, Zumiez's President and CEO.

Thank you, David. Good afternoon and thanks for joining us today to discuss the Zumiez's third quarter fiscal 2006 results.

Joining me today is Brenda Morris our Chief Financial Officer, and following my opening remarks, Brenda will review our financial and operating highlights and then I'll provide closing comments before we turn the call over to the operator to conduct the question and answer portion of the call.

The third quarter was another record quarter for Zumiez. We once again posted strong comp store sales results and increased earnings per share by 33% from the year ago quarter. As always, I want to recognize the contributions of everyone on our team from the store level, to the home office, and our vendor partners, as well.

We opened 12 new stores in the third quarter and ended the quarter with 233 total stores including the Fast Forward stores acquired in June. We are pleased to report that our new stores continue to perform in aggregate above our expectations and we remain on track to open 42 new stores this fiscal year in addition to the Fast Forward stores. The integration of Fast Forward is essentially completed we're optimistic going into the fourth quarter as we coordinate our merchandising efforts in the acquired stores.

As for the results, net sales increased 43% in the third quarter with comparable store sales up 10.7%. Reported strong comps, especially towards the end of the quarter with August, September, and October comps up 4.7%, 4.9%, and 15.9% respectively. Net income in Q3 increased 29% to $6.8 million up from $5.3 million in Q3 last year while earnings per share came in at $0.24 in the third quarter, up solidly from the $0.18 in the prior year quarter.

As we've consistently said, we view the back to school season as that 6 to 7 week period that stretches into the Fall. And we had another outstanding season at Zumiez. A theme of Buy Now, Wear Now continues to be an important factor in retail and our store and merchandising teams did a terrific job to capitalize on the trends in the quarter as our comp performance indicates.

You may notice that our gross margins and operating margins were down in the quarter. As Brenda will discuss momentarily, this was largely a timing factor in our store opening schedule and the addition of the Fast Forward stores, both of which increased the relative mix of less mature new stores as compared to last year, and it was also due to stock compensation expenses that were not recorded in the prior year quarter.

We're pleased to report that our merchandising margins improved year-over-year. Absent the stock compensation expense would have seen leverage on our SG&A expenses. We continue to be excited about the direction of hour business and we are reiterating our guidance for 2006.

And with that, I would like to turn it over to Brenda to discuss the financial results in greater detail.

Thanks, Rick.

As Rick mentioned we had another good quarter. For the third quarter, net sales totalled $82.3 million, an increase of 43% compared to $57.4 million in last year's third quarter. The increase in net sales reflected the opening and acquisition of 70 new stores from quarter four 2005 through quarter three 2006.

With a comparable store sales increase of 10.7% for the quarter and as Rick said 4.7%, 14.9%, and 15.9% for August, September, and October respectively. Our sales growth again benefited from an increase in average unit retail and an increase in the number of sales transactions. Earnings per share came in at $0.24 in the third quarter, up from $0.18 in the prior year.

Gross profit for the third quarter increased by $8.9 million to $30.3 million, or 36.8% of net sales compared to gross profit of $21.4 million or 37.3% of net sales in the third quarter last year. The decrease in gross profit margin was due to increased occupancy costs, given that at the end of the third quarter we had 70 stores that had been open less than a year, versus 32 stores at the end of the third quarter last year.

Therefore, rents related to new stores, which need time to ramp up sales volumes were significantly higher on an absolute basis. There were also stock-based compensation expenses and cost of sales this quarter that we did not have in the prior year quarter. These costs were offset by solid improvement in our merchandising margin.

Moving to expenses, in total, SG&A expenses increased to $19.3 million, compared to $13.2 million and increased as a percent of net sales to 23.5% from 23% of net sales in the third quarter last year. The increase was a result of the expensing of stock-based compensation, which as I just mentioned were not included in the prior year quarter.

As with cost of sales, store operating expenses were also impacted by the significantly higher number of new stores as compared to last year. We also had incremental public company expenses, including Sarbanes Oxley cost. Nevertheless, absent the stock compensation expense, we would have experienced leverage on SG&A in the quarter.

Operating income was $10.9 million or 13.3% of net sales compared to $8.2 million or 14.3% of net sales in last year's third quarter. Net income for the third quarter was $6.8 million or $0.24 per diluted share compared to $5.3 million or $0.18 per diluted share in last year's third quarter. Our effective tax rate for the quarter was 38.8%. Going forward, we continue to anticipate a tax rate of approximately 38 to 39%. Turning to key balance sheet highlights.

At October 28, 2006, cash and marketable securities decreased to $19.9 million from $30.1 million at the end of October 2005. Due to the second quarter acquisition of Fast Forward, which was partially offset by strong cash flows from operation. Inventory was on plan and current at $56.7 million versus $43.6 million at the end of October 2005.

For the quarter, average inventory on a comp store basis increased 3.7% while driving a 10.7% comp store sales gain in the quarter. We remain comfortable with our inventory position. Also at October 28, 2006, the Company had no long-term debt, including no outstanding balances on its revolving credit facility.

Turning to our first 9 months 2006 financial results. For the 9 months ended October 28, 2006, the Company reported net sales of $185.8 million, an increase of 43% over the $130.2 million in sales for the first 9 months of 2005. Comp store sales for the first 9 months of 2006 increased 13.6% on top of a 10.8% increase in the first 9 months of fiscal 2005. Gross profit increased $20.3 million to $64.3 million or 34.6% of net sales from $44 million or 33.8% of net sales in the first 9 months of fiscal 2005.

Operating income totalled $14.4 million or 7.7% of sales compared to $9.5 million in the first 9 months of fiscal 2005 or 7.3% of sales, and net income improved to $9.6 million or $0.33 per diluted share from $6.1 million and $0.23 per diluted share in the first 9 months of fiscal 2005.

Now, let me outline our guidance. For fiscal 2006, we are maintaining our guidance for diluted earnings per share of $0.66 to $0.67, which represents an increase of more than 40% compared to fiscal 2005. Weighted average fully diluted shares for the year are expected to be approximately 28.9 million shares.

For the full year, we continue to expect to open 42 new stores and at year-end, we plan to operate 236 stores, expanding the Zumiez specific square footage more than our target of 20% square footage growth. In fiscal 2007, we plan to open 50 new stores, which is consistent with our long-term goals of increasing square footage by at least 20% annually and delivering earnings growth of at least 30% per year.

And now I'll turn the call back to Rick.

All right. Thank you, Brenda.

Again we're very pleased with our results for the third quarter and we're quite optimistic as we look forward to the fourth quarter and beyond. Our stores are performing well and our team is motivated to deliver strong results. One of the things our associates really look forward to is our annual 100K event, to be held again this January.

Last year we recognize a contribution of more than 600 of our top salespeople and our regional and district managers. And this year we're on track for more than 1,000 of our associates to qualify for the event. The positive feedback and healthy interaction amongst our managers sets the stage for the continued growth we expect at Zumiez.

And now I'd like to open the call to your questions. Operator?

[OPERATOR INSTRUCTIONS]

Your first question comes from the line of Jeff Klinefelter from Piper Jaffray. Please proceed.

Yes, just a couple questions for you as follow-up. One, could you talk a little bit about your juniors business trends? I know those had been improving over the last few months, maybe putting a little more context around where it's continuing to trend, where you see it going, anything driving that business? And then in terms of the new stores, maybe just an update on the southern markets.

I know those have been relatively new for you this year---relatively small in terms of total stores, but anything else that, Rick, you've been learning about those markets and how they're trending versus the average?

Great, Jeff, glad to do that. I'll start with your question on the Junior side of the business. And as you know, we said in the sales release, mens was the leader in terms of comp performance in the third quarter, but all the other departments including juniors comped positive, and I know there's a lot of buzz around that related to the August results, which was a negative comp on the juniors business.

But what you're seeing there, Jeff, again I think is resiliency of our buying team. And as I think I said in our second quarter call, I'm just incredibly proud of how they've adjusted and the juniors business is a tough business to manage, but I'm incredibly proud of how they adjusted and managed inventory positions, able to try different things, swap out new products, and what you're really seeing with our junior's business and the reasons for its improvements is that our fall product has been much more--much more readily accepted by our customer than our summer product was. So you've really seen our fall and winter products check in our juniors side of our business.

Okay. In terms of the southern markets. It's still to early to look at them on a broad base, Jeff and reach any broad conclusions. We have been working on what we call a warm store package of merchandising strategies for a while now. We're continuing to enhance that and refine that.

Our Florida stores, for example, we have the 5 stores in Florida. We're, again we haven't seen the--we need to get more through another peak season to see if we're comfortable with what we're doing in Florida at this point. We're continuing to change the mix up. We're learning from the product mix in the Fast Forward stores, what worked in that Texas marketplace tends to be a warmer market than our northern tier markets.

While it's too early to tell you exactly how it's all going to shake out in Florida, there's definitely some differences we're seeing between the stores as you would expect relative to the geography, and we're just continuing to work those out.

Okay. Thank you. One final question.

In terms of the timing of the stores in Q3 that kind of impacted your margins, could you put a little bit--expand on that a little bit more? Were they slower to open for any particular reason in the quarter? And then in terms of the Fast Forward integration, what impact, if any, did that have on the quarter? Can you kind of quantify the weighting that those fast forward stores had on your, I guess to an extent, sort of the deleveraging effect on the third quarter?

And we don't need to--I can tell you Jeff, based on the announcements, we don't have to break out Fast Forward, we just need to talk about new stores which includes the Fast Forward because the impact is relatively the same.

Okay.

And again, as Brenda said here, what we're seeing is a mix shift in the stores. Particularly it's not that they're delayed, Jeff, it's actually we've accelerated relative to last year.

Okay.

For example, I think last year in Q4 we opened 10 stores, this year we're going to open 3 new stores in Q4. So, I think as we said throughout this year, we have been trying to be much more diligent about moving stores earlier into the year, and then when you magnify the addition of the Fast Forward stores which are performing very consistently with our new stores in terms of--particularly if you look at [off mead] cost numbers that we're talking about, it's very consistent between the Fast Forward stores and our new stores. It's that mix change is what you're seeing in terms of the impact on the overall business. Does that clear it up, Jeff?

No, I guess what I meant--in past quarters, I know there have been movement back and forth during the quarter that sometimes can affect the impact--the revenue impact that these stores can have in your quarters, I just wondered if that played any role in Q3?

No.

Okay. Thank you very much.

Thank you, Jeff.

Your next question comes from the line of Sharon Zackfia from William Blair. Please proceed.

Hi, good afternoon. Maybe Brenda or Rick, can you remind us what is the differential in occupancy for a year one versus a more mature store?

There isn't one response for that, Sharon. It's dependent on the markets, A, B, and C stores, the size of the store. So in aggregate, obviously, we target our occupancy costs to be somewhere around 11% sales revenue, but that's an immature store. So it's different for each store dependent on those variables.

That's fair. I'm just trying to figure out what the growth penalty was in the quarter. Are we talking several hundred basis points of differential for the new stores open in the past 12 months or--?

No.

No.

Okay. Okay. And then, subsequently to your point you've opened a lot more today through the third quarter. Are we in a position where gross margin should again begin to expand in the fourth quarter if you hit the 3 to 5% comp that you target?

Again, we're not going to talk about gross margin. We're going to focus everyone on, Sharon, here is the overall guidance we've given, which is that $0.66 to $0.67, which is equivalent, what we're telling people is that we believe that we're going to generate 40%-plus earnings growth for the year.

It will continue to come from multiple places in there in terms of gross margin, SG&A, the corporate costs etc., and to give you a little bit more flavor for it, we actually did leverage corporate costs in this last period breaking it out of the SG&A component. And like wise, if you look at our comp stores, we leveraged comp stores occupancy also, it's just this mix differential that is just changing up the overall nature of the business.

Yes. Your guidance implies more flattish operating margins in the fourth quarter year-over-year. So you--I mean the growth penalty must be lessening by the fourth quarter if I'm doing my math correct.

You also have to remember, though, that the fourth quarter is the largest volume quarter of the period, so that has to be factored into your math also.

Okay.

Relative to the leverage impact it has on the business.

Okay. And then maybe a separate question looking out into '07 and I know you really haven't commented on your '07 outlook, but I'm just thinking about the--do you see expansion that you're doing in '07? Is there any inefficiencies we should expect from that as we get into '07 or do you expect that to be relatively neutral or accretive?

As Brenda said, we're--again, we said that the target that we've now established for '07 is 50 new stores, which is consistent with our historical 20%-plus square footage growth, Sharon. So I think you're going to see more typical type of pattern here.

This is the outsized year because of the--not only do you have the typical 20 plus square footage growth, but then you have the layered on new stores from the Fast Forward chain. So you're going to go see us backdrop back to more of a typical 20% square footage growth format.

And in regards to the distribution center, Sharon, that will be factored into our guidance for 2007 when we give that for the fourth quarter, but I don't expect it to be an issue.

Okay. Thank you.

Thanks.

Thanks, Sharon.

Your next question comes from the line of Mitch Cummins from Robert Baird. Please proceed.

Yes, thank you. A few questions. Let me start with your fourth quarter comp assumption. I know in the past, Rick, you said that you planned the business for a low to mid-single digit comp. Should I assume that's also the case for the fourth quarter?

In the guidance that we have given, Mitch, yes. That is our assumptions.

And what would you say are some of the key variables that could have an impact on that fourth quarter comp? I know that, Q4 tends to be, the snow business has probably more of an impact on the fourth quarter than any other quarter, I don't know if that's correct, I would think so. And it seems as if the perception was--is that last year was a good snow year. I'm curious to know, how do you think about that? And is it not enough to move the needle? Just your thoughts on that.

Well, last year was a good snow year, Mitch. But as we like to remind people, if you look at the mix of comps amongst our departments last year, the--as you all know we have tough comps in the fourth quarter, I think we're up against 20 plus comps in this fourth quarter, but if you look at the mix between the departments, it wasn't like the snow hard goods category or department was up dramatically above that, it was right in line with the comp we ran last year. It wasn't outsized relative to the performance of the other departments.

Okay. And then, I don't want to beat a dead horse on the occupancy issue, but as I look at the model for fourth quarter, looks like you're going to end the fourth quarter this year with, 62 more stores versus--versus a year ago. And last year at the end of the fourth quarter was up about 34 stores from the end of the prior year. So it would seem as if occupancy could be somewhat of an issue in the fourth quarter, as well.

If it's not, is that because a lot of the stores that you would have opened over the last 12 months ending Q4 were stores that were maybe open 3-6 months ago, so by the time we get to the fourth quarter, they've already started to ramp up their productivity and so that there is some leverage on that occupancy?

It's multiple factors, Mitch. It's the new stores that we open that are going to be anniversarying for the first time. This year, as I said, there were 10 stores we opened in the fourth quarter last year in November, so they're all going to be kicking in on their comp numbers for the first time.

It's the fact that this quarter is the largest volume quarter, so you get more leverage on your comp basis stores. And so it's--and it's partly what you're discussing too as stores get through more peak seasons, obviously, this is the second peak season, they are going to perform better than stores that are going into their first peak season.

Okay. And then lastly, I know we've got an extra week in the fourth quarter this year. Can you quantify what the impact--that might have on your earnings? Is it $0.01, is it less, is it more?

Yes, it's less than $0.01, and we'll be giving, Mitch, the results for four week period, a five week period, a 13, 14, and a 52 and a 53 so that you'll have the comparable numbers for each of those periods, but it's relatively small. Obviously the impact will be on the following year when there's that weak shift throughout the entire period.

Thank you, good luck.

Thank you, Mitch.

Your next question comes from the line of [Phil Defleece] from Wachovia Securities. Please proceed.

Hello, and thanks for taking my question.

Hi, Phil.

Hey. You may have answered this in your response to Jeff's question. I know you said that the Fast Forward stores are running consistent with your Zumiez stores, but I was wondering if this is what you had expected when you said you had $0.01 to $0.02 dilutive impact in the back half and the $0.08 to $0.09 accretion in '07. Has anything changed?

Well, I'll let Brenda the per share impact. But let me address your first part of your question, Phil. And we, we expected from the beginning with the Fast Forward stores that these would be--these would function very much like new stores, and let me tell you why we expected that.

They don't have our product mix and they're just now here, October is the first month,they're really starting to receive mix that we bought for our typical Zumiez stores. So they didn't have our mix of product and I think that's going to be an advantage as we are able to roll in our buyers product selections into the Fast Forward stores.

Likewise from the very beginning, the people--I have to tell you the people down there at Fast Forward, the managers their sales teams are tremendously talented people, and, but they're clambering to get our sales--to their credit they're clambering to get our sales programs introduced into their systems, and we've been taking that a little bit slow to make sure that we're doing it culturally correct as we roll those in. But it's going to take some time for us to fully roll in all of sales tools and programs into the Fast Forward stores.

So that's the reason from the very beginning that we have--we have expected these to perform like new stores. The lack of the full Zumiez product assortment and then our ramp-up time to roll in our sales programs. So, I hope that helps on the first part of if question. I'll let Brenda attack the back part.

To your point is the accretive in '07, we actually had it slated as a neutral transaction on EPS this year, but not really reaching that neutral point until the full-year. And so in our full-year guidance, we essentially have it being a neutral transaction, and since we don't actually give quarterly guidance, we hadn't actually addressed specifically how it would impact the third quarter. But it is as we planned it to be.

Okay. Great. Thank you. Good luck.

Your next question comes from the line of Jim Duffy from Thomas Weisel Partners. Please proceed.

Thank you, hello?

Hi, Jim.

Brenda, was there anything unique from an accounting standpoint related to the Fast Forward stores in Q3?

No, nothing at all. In fact, they're fully integrated into our environment and all the purchase accounting and so on was really taken care of. We had some final adjustments to that in the third quarter, but nothing that impacted the P&L.

Okay. And, Rick, you mentioned October is really the first quarter where Zumiez buyers have had influence on the merchandising in the Fast Forward stores. Where are you in terms of remerchandising those? If you were to look at the SKU representation of those stores, what percentage is consistent with what we might find in the Zumiez store?

It depends, again, Jim by category product. In the case of skate hard goods, it's fully converted because that's a quick turn category in terms of the inventory.

Okay.

There it's been fully converted for a while. You have to look at it area by area, department by department, category by category of product. Now, we still have a long ways to go. In the case of skates, we're fully converted, but most every other area, we're still working through the buys that they've made as well as getting our product fully installed. And I think I said previously on one of the calls, it's going to take us until spring to get them our full assortment as it relates to the private label component of our business.

Sure.

The transaction didn't allow us to really impact them much here in the winter season.

So that private label flowing is something that should have a positive influence on the margins in those stores?

When we get the spring assortment in and of course in the back to school next year.

Sure. Okay. And you mentioned positive merchandise margin in the quarter. Was--in the new stores, did you in fact see positive improvement year to year in the merchandise margins?

New, stores, Jim, they perform very consistently with the store base, our overall average merchandise margin. So--

Is it safe to assume that the merchandise margin was in the Fast Forward stores was below that of a Zumiez new store?

Yes.

Okay.

And that's just working through the buys that the product they owned at the point in time of the--of the acquisition.

Okay. And then --

So, again, I just want to make that clear, Jim. Our margin, we gained in pure product margin. In spite of working through those issues with the Fast Forward inventory.

Sure. Okay. Makes sense.

And then Brenda, a question for you related to the full-year guidance. Do you need to comp positively in Q4 to hit that earnings guidance? Or are there some--does the expense structure allow you to deliver that should you not comp positively?

Okay. So first of all, I actually haven't considered not comping positively to tell you the truth. It's just not part of our nature.

So the guidance that we've given is based on that 3 to 5 comp, which is essentially the minimum that we drive to all of the time. I can tell you, Jim, that if for some reason that changed, we would be able to adjust, and adjust expenses both variable and semi-variable to reflect that, but it's not something I expect we'll have to do.

And I have to echo that too, Jim. We simply do not think about comping negative here on an overall basis. So we expect, and I think we have a good track record of it that we're going to be able to drive comps to what we do with the product side of our business.

And again combined with the quality of the salespeople in our stores, which I think continue to be industry leading. And I--we're not going to obviously talk about the comps here in the fourth quarter, but as Brenda said, we're very comfortable with our inventory position as we sit today in going into this fourth quarter.

So while I say that, again we're not going to comment on the comps itself. And I of course want to make sure obviously we're barely through anything this period because this period's back loaded let alone this whole quarter, but we're very comfortable with how we're positioned from an inventory perspective.

And I think just to, obviously reiterate, we're really comfortable with the guidance that we've given.

Very good, thanks very much.

Thanks, Jim.

Your next question comes from the line of Sara Hasan from McAdams Wright Ragen. Please proceed.

Hi, guys.

Hi, Sarah.

I was just wondering if you could talk about some of the dynamics driving the wonderful growth in average unit retail during the quarter. It seems to have accelerated a little bit. And I'm just wondering what you can sustain going forward?

Let's -- I'll start off and Brenda can join in if I miss anything, and I think, this will be no surprise to you, Sarah, it's multi-faceted. You're seeing improvement, and I'll stop first again by saying that it's, A, UR gain has been very solid. I wanted to remind everyone that we are getting transaction gains too, which is also very, very important to us as we look at our overall performance.

Now as it relates to the AUR gain, it is coming, again, it's multi-faceted. We're getting it in initial markups in terms of the quality of product, we're getting it in fewer markdowns in the process.

We're getting it from product mix again as we're on trend and our buyers are making sure that we're in stock on what we've got so you see the sales mix changes relative to the current trends. So--and a lot--and then again our whole product flow initiative that you've heard us talk about over the years is driving out the right level of inventories is, I think as Brenda said in her comment, less comp store inventories to drive bigger gains which minimizes our markdown risk, our need to transfer product around things like that.

Again, it's very multifaceted in where we're getting it from. There's no one single area, we're getting that AUR gain from lots of areas.

Okay. And then do you think that's going to continue going forward?

You know --

At some point.

Yes, you know how it works, Sara, it's a matter of fashion trends and macro trends that are out there. Again the multiple variables going forward. I'd like to tell you that I think it's going to continue forever, as we all know it won't.

But it's--as we look at this next quarter, this next quarter and then the early part of next year, I think we're very comfortable with how we're positioned from a product perspective. So beyond that, I don't think we're smart enough to be able to tell you how it's all going to shake out because it's just too many variables and too many things moving.

All right, and then at your Investor Day, you talked about the launch of your new website but it doesn't seem to look all that different, and I'm wondering what kind of changes you made and maybe you could talk about are there things on the back end that I'm not seeing?

No, you haven't seen it yet, Sarah.

Oh, okay. It looks the same.

It is the same. We're in final user acceptance testing as we speak.

Okay.

So you're going to see a new website here within a number of days.

Okay. And then on new markets for 2007, are you going to enter new markets? And what might those be?

Great question, Sara, and on the answer on a broad basis is no, we have so much opportunity in the markets we went into this year. In Florida we have opportunities to expand in Texas. We still consider Southern California a new marketplace for us.

So and I can tell you that the vast majority of the 50 deals that we're going to do next year are complete. So we're going to see those new markets--those, you're going to see us spill-- well we're still considering new markets in Florida, Texas, Southern California, and the Northeast. No from that sense--no brand new sort of market entrance in this next year.

Great. Thank you so much.

Thanks, Sarah.

Your next question comes from the line of Julie Bryan from Jennifer Black Associates. Please proceed.

Good afternoon, y'all.

Hi, Julie.

Could you just give us maybe a little bit of color as we're heading into winter here the snowboard sales and the packages and any increased year sales you're getting because of better pricing? Could you just give us a little bit more color on all of that right now?

No, not really.

No?

I'm not going to comment at that level of a category performance. And again, like much of our business that is so dynamic, Julie, that it functions differently based upon where it's snowing and where it's not snowing and we're moving products around to where it is snowing versus not.

It's a very complicated--very complicated process. And just as a matter of policy, we don't want to talk about individual category performances because of the strength of our business and the multi-brands, how deep we are in categories relative to our peer group, if one thing isn't working, something else is. From our perspective getting down to that level doesn't actually--makes it tougher to explain the business rather than understanding how it's about the multiple brands and about the depth and breadth of the categories we're carrying.

Well, that was my own question, thanks.

Thanks, Julie.

Ladies and gentlemen, at this time we have exhausted the time set aside for question and answer. I would now like to turn the call over to Mr. Rick Brooks for closing remarks. Please proceed.

Thank you for all of you and our interest in Zumiez. We greatly appreciate your time and talking to us today, and we'll look forward to talking with you when we report our fourth quarter results in March. Thanks, everybody.

Thank you for your participation in today's conference, this concludes the presentation, you may now disconnect. Have a good day.