Zumiez Inc (ZUMZ) 2007 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Zumiez 2007 first quarter earnings conference call. My name is Cami, and it will be my pleasure to be your coordinator today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session toward the end of this conference. (OPERATOR INSTRUCTIONS) As a reminder this, conference is being recorded for replay purposes. I would now like to turn the presentation over to Mr. David Griffith of ICR. Please proceed, sir.

Thank you. Good afternoon. Today's conference call includes comments concerning Zumiez Inc.'s 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 will be discussed is available in Zumiez' filings with the SEC. Now I would like to turn the call over to Rick Brooks, Zumiez' president and CEO.

Thank you, David. Good afternoon, and thanks for joining us to discuss the Zumiez' first quarter fiscal 2007 results. The first quarter was another record quarter for Zumiez. We again posted strong comp store sales results and increased earnings per share by 50% 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 a record 19 new stores in the first quarter and ended the quarter with 254 total stores, of which 179 were in the comparable store base. As for the results, net sales increased 44% in the first quarter, with comparable store sales up 11.3% versus the prior-year comp of 19.7%. By month, comp store sales were up 12.4% in February, 17% in March and 3% in April. As we previously mentioned, the Easter shift from April last year to March this year was a factor in the large swing between the comps in the last two months of the quarter. However, on a combined basis, the comp for the last nine weeks of the quarter rose 10.8%.

Net income in the first quarter increased nearly 46% to $1.6 million, up from $1.1 million in the prior year, while earnings per share came in at $0.06, up 50% from the $0.04 cents in the first quarter of 2006. A lot of you have asked me about the impact of what was less-than-ideal weather on our business in the first quarter. While weather is always a factor on our stores' performance, the strong results we posted are a validation of our strategy, of the diversification among brands and categories. With our unmatched array of leading active sports brands and the flexibility we have to tailor our merchandising in each store, we were again able to drive solid top and bottom line increases. We continue to target 20% square footage growth and mid single-digits comp store sales increases in order to maintain our long-term earnings growth rate of 30%.

I'll now discuss the financial results in a little greater detail. For the first quarter, net sales totaled $68.8 million, an increase of 44% compared to $47.8 million in last year's first quarter. The increase in net sales reflected the opening and acquisition of 75 new stores from quarter two, 2006 through quarter one, 2007, with comparable store sales increase of 11.3% for the quarter. 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 $0.06 in the first quarter, up from $0.04 in the prior year. Gross profit for the first quarter increased by $6.5 million to $21.8 million, or 31.7% of net sales, compared to gross profit of $15.3 million, or 32% of net sales in the first quarter last year. The slight decrease in gross profit margin was due to higher occupancy costs on new stores and an increase in stock-based compensation expenses, largely offset by an improvement in our merchandising margins.

Moving to expenses, in total SG&A expenses increased to $19.6 million compared to $13.8 million last year, but decreased as a percentage of net sales to 28.5% from 28.9% of net sales in the first quarter last year. The improvement was primarily the result of leverage on the sales increase more than offsetting the increase in stock-based compensation. Operating income was $2.2 million, or 3.2% of net sales, compared to $1.5 million, or 3.1% of net sales in last year's first quarter. Net income for the first quarter was $1.6 million, or $0.06 cents per diluted share, compared to $1.1 million, or $0.04 per diluted share in last year's first quarter. Our effective tax rate for the quarter was 38%. Going forward, we continue to anticipate a tax rate of approximately 38% to 39%.

Turning to key balance sheet highlights, at May 5, 2007, cash and marketable securities was flat as compared to the prior year, at $38 million due to the strong cash flows from operations, which offset working capital requirements and capital expenditures for new store openings. Inventory was on plan and current at $50.3 million versus $38.1 million at the end of April 2006. For the quarter, average inventory on a comp store basis decreased 1.8% while driving an 11.3% comp store sales gains in the quarter. We remain comfortable with our inventory position. Also at May 5, 2007, the Company had no long-term debt, including no outstanding balances on its revolving credit facility.

Now let me outline our guidance. For fiscal 2007, we are reaffirming our guidance for diluted earnings per share of $0.94 to $0.96, which represents an increase of about 30% compared to fiscal 2006. And we continue to anticipate that this growth rate can be applied fairly uniformly across the quarters in 2007. Weighted average fully-diluted shares for the year are expected to be approximately 29.5 million shares. We are on plan to open 50 new stores in 2007, expanding the Zumiez specific square footage in line with our target of 20% square footage growth.

So to sum up, we're pleased with our results for the first quarter and we remain cautiously optimistic for the balance of the year. We just completed our annual manager retreat last month and I'm absolutely thrilled with the talent and enthusiasm of our people throughout our organization. Finally, a number of you asked about our progress in our search for a new CFO. We're nearing the end of the process and I'm reasonably confident that we'll have a new CFO in place before the end of the second quarter.

Now, I would like to open the call to your questions. Operator?

(OPERATOR INSTRUCTIONS) And your first question comes from the line of Jeff Klinefelter with Piper Jaffray. Please proceed.

Yes, Rick, congratulations on a strong start to the year.

Thanks, Jeff.

Couple questions. One would be in the -- kind of the performance of the southern stores. We've come back to this the last couple of quarters, but I'm curious, as you have further populated states like Texas and a little bit further into Florida and even for that matter some into Southern California, one, any -- seeing any patterns that are different than the patterns in terms of the maturity curve that you've seen in the Northern markets or your more mature markets? And number two, are there any changes that you've made or are making in terms of the assortment planning process for some of those southern climates? And then as an add-on to that, I recall from the third quarter of last year there was a deleveraging effect from the significant new store openings. Could you just recap again what that was and should that be a benefit to Q3 this year?

Okay, great. Thanks -- thanks, Jeff. We'll take your first ques -- first part of the question first related to the new stores, particularly in the southern marketplaces, Texas and Florida. Jeff, what we do is we actually -- as you would guess, we monitor the performance of these stores daily and look at them, of course, on a week and period basis relative to what our planned targets were for those stores. And in aggregate, of course, -- and again, Jeff, with that we factor in, just as you suggested, the maturation curve for those stores. So there are always outliers, both on the positive side and on the negative side, as we look at the portfolio of new stores in the mix. But in aggregate, we continue to feel very confident with where the stores' performing and that we're hitting the sales objectives for those stores relative to the maturation cycle that we would anticipate and expect to see for those stores on an aggregate basis.

As it relates to patterns related to products and changes of merchandise assortment. there are definitely -- as you would suspect, there are things that work better in the southern markets than there are some of our other markets, particularly from a seasonal perspective. So we're adjusting to some of those things. And what we're doing, we're experimenting with some new ideas and things we haven't carried in other parts of the Company and we're going to be evaluating how those work. And I would say the same thing though, Jeff, about our entire portfolio of stores, which is that we're constantly trying to do that on a regional basis; find the things that are working and adjust the things that aren't working as well. So the approach isn't any different, I would say, in those markets than it is in the rest of the regional groupings of stores that we have in place. We're always trying to find what's next, what's working and can we expand a certain particular category to take -- that would be advantageous for a particular regional market and that likewise could go to brand preference also in those marketplaces. Does that get you the answers for you, Jeff, in the first part?

Yes, on the first part, yes.

Okay. In terms of the deleveraging that I mentioned in my comments related to the occupancy costs on the gross margin line, it is related to what we talked about last -- in the third quarter, last year, Jeff. And it -- what you're really seeing is the mix. Relative to our historical pattern, we have a much higher percentage of new stores in the mix as a percent of our total store base than we traditionally had, and those stores, again, are maturing stores. The sales are maturing and you find that the operating costs, and particularly rent, tend to run a little bit higher and that was true -- I think we discussed it in the fourth quarter, too, and I commented that that was true at that point, too, but it's easier to have an impact when the volumes are so large like they are in our fourth quarter to [mass] that impact. Now, again, on an overall basis it ended up pretty darn close from a gross margin perspective because of the quality work done by our buyers and getting some improvement in the product, in the merchandise margin.

Okay. So I guess the point being in terms of gross margin improvements as we move to the quarter is we might see a little bit more of a bou -- a little bit stronger increase in Q3 on a year-over-year basis just to normalize through that opening cycle last year?

That would be my expectation, Jeff, subject, of course, to driving the top line.

Right, okay. Then just one follow up. I know that you're not -- you don't like to talk about brands, but in terms of categories, this whole shift back and forth between the surf skate in terms of the influence in the youth culture, any updated thoughts there on where we are in the cycles and how this has compared to some of the past cycles?

There are a lot of things going on, Jeff, relative to the trends and I think that's one of the consistent themes you've heard from me over the last -- over the last few quarters, which is -- and I think that the fact there's a lot of different interesting things happening is a very good thing for us, because we tend to thrive in an environment where there's change taking place in the marketplace. The [nex] is taking place of the skate, street cross-over business, combining with what's going on in the music world, I think we're continuing to see that have an impact. And we're continuing to see lots of interesting young brands starting to emerge and, again, not having a necessarily Company-wide impact, but again, we're always trying to foster that pipeline of new brands. So there is multiple things taking place and I guess that from my perspective, I just think that's a great thing for us.

Okay. Great. Thank you.

Thanks, Jeff.

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

Yes, thanks. Rick, a few questions, and let me start by asking a follow up to Jeff's question about the gross margins. Could you quantify the impact of -- the negative impact of the occupancy on the gross margin in the quarter and then also, quantify the improvement on the merchandise margins? And then with regard to the merchandise margins, how much of the improvement there might have been related to Fast Forward with a private label product now in those stores for spring and also your spring [bry] for Fast Forward now having been consolidated with the rest of the business?

Well, what I guess I'd say there from a comparative comp basis, obviously the Fast Forward stores were in our numbers last year, Jeff -- or Mitch, so the -- I don't think there's any significance, plus it's just the 20 stores. I don't think that's the significant movement on the overall margin number. As it relates to the private label component of that question, I think, as I said previously, we aren't going to have our full private label component into those Texas stores really until we get into back to school and we get our full denim assortment in place. Obviously we're not bringing in a lot of new denim through the spring quarter -- or through the spring season, so you're not going to see the full assortment until we get into the back-to-school cycle.

Okay.

So you're not seeing significant -- I wouldn't say you're seeing significant impacts related to those 19 stores that's moving the top-- the overall number in a significant way. In terms of quantifying the margin versus occupancy cost shifts, I'm not going to get too much into the detail there because it's going to change. I hate to do that relative to how -- how you and others would model this, Mitch, because it's going to be -- it's really a function of volume as much as it is anything else. And as you have seen from the previous -- from quarter three last year, Quarter four and quarter one now, the impact is changes as a function of the top-line volume levels and it's obviously more significant in, in terms of the occupancy costs, more significant in lower volume quarters than it will be in higher volume quarters. So suffice it to say that our objectives are that we're going to see those, as we discussed with Jeff, start to -- I believe we'll start to see those in the third quarter start to minimize as we anniversary those numbers and get to where we have more of a -- more of those stores in a maturing phase.

Okay, and then a question on your outlook. In terms of your guidance, you ran through some of the assumptions on the guidance in terms of stores and square footage and all of that. Is it fair to assume you're still expecting a mid single-digit comp over the balance of this year?

Yes.

Okay. And then can you talk about your category performance in the quarter? I know that in terms of the monthly calls you've always mentioned that the men's business has been the strongest. so I assume that was the strongest for the quarter. What about the others? How did they fall in line relative to the men's business?

Sure. Men's was -- as we have said, was the strongest performer in the -- in terms of our departments, Mitch, but all the departments for the quarter comped positively for the quarter, so -- and then, again, I'm reluctant to get into specifically how -- giving a ranking of them because when we think about that, we think of it not only in terms of a gain in terms of sales, but in terms of the relative significance just in terms of magnitude of the dollars involved in each department, so it's kind of hard to do a ranking for you. So I'm going to leave it at the point that men's was the leader, but all of the departments comped positive.

Okay.

For the quarter.

All right, thanks. I guess one last question just in terms of housekeeping, what sort of tax rate are you looking for for this year?

I think as Brenda has said in previous quarters, we're continuing to say it's in the range of 38% to 39%.

Okay, great. Good luck.

Thanks, Mitch.

Your next question comes from the line of Jody Love with CIBC World Markets. Please proceed.

Thank you. Hi, Rick.

Hi, Jody.

Typically we know that you guys like to grow your team from within, so we're wondering currently as it relates to new stores that you're opening in new markets how you've gone about recruiting some of your new managers and new staff in these regions?

That's a really good question, Jody. It's one that we -- as you might suspect, based on our discussions, we do spend a tremendous amount of time working on looking at ways we can improve what we're doing in the process. Let me give you -- I'll try to give you a quick overview in terms of what our strategies are in that and I'll maybe even talk briefly about what we're trying to do to -- we think we may be able to improve the process. As you -- as you intimated there, we would as much as possible love to produce all of our new managers internally. But even at the 20% square footage growth that we have been doing for -- well, since I've been here for -- in my 14 years, we've never been able to do that. We've always had to hire from the outside. So when we -- whenever we can, we always do want to make that effort and we're certainly driving at that to see how we can increase the percentage of managers we generate internally.

Now, for those that we have to go out and hire outside the Company, our strategy is simple. We first want to get them into the Company, and typically we'll bring them in -- in many cases, we'll bring in other managers, other companies managers, into our Company as assistants. And the goal would be that we get them in our system for three to six months and that they get through some of our store-level training -- district-level training and that we get them to one of our national events so they get exposed to the Zumiez culture from that perspective. And the other thing we're doing in new markets, as you might guess, is we're also seeding those markets with Zumiez managers, so we're moving people into the marketplaces and they always have one of our -- one of our leaders from the district manager perspective, is always there leading the cause. And we try to basically staff ahead of the curve so they've got a district manager in place as we're just adding one, two, three, four stores, and then we'll build up to full districts for those districts, which allow us to give greater oversight and, again, greater training for those new people that come up in the system.

Now, we're also looking at ways we can try to improve the process that we're doing and we're -- this is one of those things that, as I've said many times, great quality young retailers is the number one resource constraint that we've always had since I've been here at Zumiez. So we're in the process of working with our store team to experiment with some new ideas on how we can do a better job of identifying the initial talent and qualities that we think make people great in our system and getting them recruited into the system more quickly and then of how we can even accelerate the training process and the cultural introduction that we need to do in the process. I'm not going to share a lot of that because we're still experimenting with a few different ideas, but it's definitely a key part, that is part of driving our success. And a limiting factor in terms of our ability to grow and that's why we've maintained this 20% square footage growth rate.

Okay, thanks. That's very, very helpful. Two housekeeping questions, do you have the total square footage number for the end of the quarter that you could provide us with?

I don't have it here in front of me, but I'd be glad to get that for you and that get back to you.

Okay. Then I was just wondering if you could explain the difference between the monthly reported sales numbers? If you took each month as it was reported, February, March, April, it came to about $69.2 million and today it was the $68.8 million. I'm wondering, was that just rounding or was there something else going on there?

There are always, as you would guess, quarter-end adjustments relative to accruals with returns, as well as I know we were fine tuning our approach as it relates the gift card breakage rules.

Okay.

And that, I know, had some impact on the quarter, too.

Okay. And then last question, I know you probably won't want to talk about it, but could you give us any indication of how business has trended through March so far?

Or through May? I'd give you -- no problem giving you March.

(LAUGHTER) Sorry, through May.

I'm glad to do that.

I'm back looking at my March numbers. Through May so far, thank you.

As it relates to May, no, we're not going to do that.

All right. Thanks, Rick.

Thank you.

Your next question comes from the line of Brad Stephens with Morgan Keegan. Please go ahead.

Hi, good afternoon. Congratulations.

Thanks, Brad.

A question for you here on stock options. I'm flipping through your cash flow and I want to make sure I'm looking at the correct way, so could you just clarify for me what your year-over-year impact from that is?

It -- in terms of the increase in the option expensing?

Yes, in Q1.

Yes, it's approximately -- I believe it's about 0.06, 0.07 of 1%.

Okay, 0.06 or 0.07 of 1%?

That's right, combined increase the impact as it relates to a percentage of sales increasing the expense in Q1.

Okay. Moving on, then, your private label business, I guess when I flipped through your K, I was a little shocked to see that it increased about 140 BIPS last year, which is a little shocking, given the inclusion of the Fast Forward. Where do you see that going this year and is there any categories, maybe in the junior skate or other areas, that you're looking to make new introductions?

Good question. Yes, you're right, private label, we increased penetration last year in private label from just under 13 to the (inaudible). And as I've said, Brad, one of our goals over a long period of time, I believe, is that we're going to continue to see that climb. Now, I don't think you're going to see us grow it anywhere near what some of our competitors might be at in terms of their private label penetration. We're going to continue the focus on brands. That's -- that's what we're about in terms of working with our great brand partners we have out there, and helping the small brands as they come up and want to get broader exposure. That's our primary focus.

Where we have opportunity, though, in private label and where it makes sense for us, we're going to look at those opportunities to take -- to do it in private label. Some cases it can be a look-driven item. It can be a look-driven strategy. In some case it can be item driven in terms of what we're doing. So I would put everything as it relates to private label, Brad, in context to supplementing and complimenting what we're doing to the brands. On a longer-term perspective, I would anticipate you're going to see us over a long-term period increase private label on a moderate basis and get greater penetration with our private label brands.

All right. Then one last question, as you enter new markets going forward, have you rethought your stance on not advertising in your initial rollout?

You know, again, we haven't changed our stance on that and to be clear with that is we have tried a number of different things in new markets, including targeted specific advertisement in those markets and haven't found them to have a significant impact. Now, that doesn't mean that we aren't going come back at some point in the future, Brad, and say let's experiment that, let's change that. But over my many years here, we've tried a number of approaches and we've found that there is just cycles to mall traffic that you have to get through to get the full maturation of stores to take place and we haven't seen this impact from various things that we've tried.

All right. Well, congratulations. Good luck.

Thank you very much.

Your next question, sir, comes from the line of Sara Hasan with McAdams Wright and Ragens. Please proceed.

Hi, Rick.

Hi, Sara.

I just have a question, could you kind of break out the mix between growth of average unit retail and growth of transactions during the quarter?

Sure. I can give you a --

Is it evenly split?

It is, actually, pretty evenly split, yes.

Okay.

It's just about 50/50.

Okay. Then also, on the timing of the new store openings, since you've opened about 40% of the expected stores for the year, is there any chance that you might be able to open more than 31 over the balance of the year?

More tha n-- excuse me, more than?

The remaining 31 stores?

You know, we -- our plan is we're going to stick with the 50 number.

Okay.

And you know how it is with -- in that market. It's not always easy. It depends upon the landlord's ability to deliver the spaces to you on time, but I'm -- again, I remain relatively confident that we're going to be within -- that we're going to hit probably right on the 50 number. I might also -- again, this is allowing -- nice you brought that up that we're a bit ahead. I just want to make sure I really call it a big thanks to our many people out there. You know the amount of work it takes to get the stores open and the construction team and all the hard work they've done. They did a terrific job in getting the stores open, and for everyone's benefit, having them open means -- the more stores we get open prior to back to school, the more peak season we get in and the faster that maturation process can take place, so it's a positive thing.

Great. And then you should -- unless you have some kind of acquisition up your sleeves again this year -- have a pretty sizable cash balance by the end of the year. Do you have any plans for that cash besides rolling in it?

Besides rolling in it. You know that the room full of money we have here, we roll around, yes, Sara.

Yes.

Yes, exactly. First off, thanks for the confidence that we're going to generate all that cash. I greatly appreciate the confidence you have. I'm -- I likewise -- as I just said, I'm cautiously optimistic about where we're going for this year. We believe that in this specialty retail world we're in, with where we're going over the next few years with the demographic cycle in teens --as we all know, it gets flattened out a bit over the next few years -- that having a healthy balance sheet is a very important part of our strategy and allows us to be able to weather that and hopefully do it in a way that will allow us to foster and improve the business all at the same time. So we're -- we're going to use that cash for, first and primarily to grow new stores and we're always going to look at the opportunity for acquisitions that make sense. So now -- so we're going to always keep our eyes open for that and we'll always be listening, but I also think it's just a good strategy relative to the cycles that we're going to be in over the next few years.

Thank you.

Thanks, Sara.

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

Hi, guys. This is actually Christian. Jim's travelling. Congrats on the nice quarter.

Thanks.

Wondering if you can give an update on the Fast Forward stores and how things are looking there?

Sure. I covered some of this, Christian, relative to, I think, the earlier questions.

Yes.

They are still, as we said, from a total merchandise set, we still don't have our full private label program in there, and that won't really happen until the back-to-school set. So we'll -- the upshot of that is that we aren't going to see the full impact of our product assortment until we get through -- into this back-to-school season.

Yes.

From a sales perspective, we are -- we are, again, measuring those stores' performance and we are getting the kinds of results that we would have expected to get from them, in aggregate as a group of stores.

Okay. When would the back-to-school set be going in initially, the first round?

Again, we kind of -- as usual at Zumiez, we kind of do things differently, Christian, so you're going to see it phased in and transitioned slowly throughout the month of July. Certain regions will happen faster than other regions and we want to make sure that while we're doing that, we have enough product to meet the needs of the consumer for the cycle and the season they're in right now. So you're going to see a transition throughout the month of July and it will be different by different areas in the Company -- by different geographic regions based upon their own back-to-school timing.

Okay. Thanks a lot. One quick question, too, is can you give the percentage of new stores open less than 12 months? I think I may have missed that.

Well, again, I think we said we had 75 stores that were new in since -- between in the last 12 months. so it's 75 on current balance of 254.

All right. Thanks.

Thank you.

Your next question comes from the line of John Morris with Wachovia. Please proceed.

Hey, Rick, congratulations on a good quarter.

Thanks, John.

Most of my questions have been asked. Let me check with you on this. In terms of -- obviously you're in a pretty good inventory level position. Did you say that's where you want to be right now, or are you even leaner than, I guess, you might like to be? And in terms of what you do have on hand, if you could give us a feel for the level of markdown goods this year versus last year at this time? I'm just curious about the mix and the freshness of what you have on hand right now.

All right. I'll try to get at that for you, John. Again, you're referring to is that for the quarter comp store inventories were down 1.8% versus the 11.3% gain in sales.

Yes.

And so your question's driving at are perhaps we light out there?

Yes.

I don't think that's the case. Maybe in a select handful of stores we might be a little lighter than I like, but that's very few stores and we definitely have plenty -- we still have plenty of product out there to make the sales and I think that you see that in the quarter. So I don't -- again, I don't perceive that we have any major issues here. As you know, we've been driving pretty healthy comps with -- without driving the same levels of increase in our comp store inventories for quite a number of years now. And it's all part of, again, that broader strategy we have about what we're doing with product flow and the impact of how we're planning here differently over time, and we've been successful over the last few years of doing this kind of pattern that you're seeing there. I don't view it -- I think we have plenty of inventory out there on a per store and per square foot basis, and I don't see any significant difference, John, in our markdown cadence relative to a year ago at this point in time. I think we're very similar.

Okay, great. Thanks, Rick.

Thank you.

(OPERATOR INSTRUCTIONS) Your next question comes from the line of Jennifer Black with Jennifer Black and Associates. Please proceed.

Hi, Rick. Let me add my congratulations.

Thanks, Jennifer.

I wondered if you could talk about -- are you happy with the Empire brand in both -- well, in young men's and also in juniors ? And then I wondered if you could talk about if you -- what kind of opportunity you see in accessories and

Okay. First as it relates to Empire, Jennifer, yes, we are -- we're very pleased with the performance of Empire brand in both men's and women's. We've been -- again, our team here I think has just done a great job with putting together compelling product that's right for the trend cycle and yet complimentary to what we're doing with our brands, in terms of supplementing and complimenting what the brands are doing. So I feel very positive about what the team's achieved and [Lynn] and her team just have done a terrific job here on that front of -- and then, again, it's not just this last year. It's the multi-year effort that we've been putting in that and we've invested a lot in resources within that team and I think we're seeing the benefits of that in what we're doing and the quality of the product and the quality of sell throughs on the product. So it's been a very positive couple years for us in terms of what we've been working on with the private label, or private -- not just Empire, but all of our private label brands.

In terms of accessories, we are constantly playing and experimenting with things, different things in the accessory marketplace. And as you know, it can be a very volatile, very volatile market in terms of what works, what doesn't work, how fast things move in that categories I'm not going to talk specifically about a lot of detail there, Jennifer, but we are always looking to find new things, always looking to partner with our brands in new ways within accessories. We're going to try to be creative in what we're doing in that areas where it might make sense for us to combine and work closely with our brands and other partners to get some excitement within the accessories department. Likewise as it relates to footwear, I kind of characterize it the same way, which is we're working very closely with our brands in terms of what's happening in footwear, where we're going. And again, to be clear, we comped positively in our footwear department for the quarter. So we're continuing to make good progress there and,again, we're going to try to reflect what we're doing in terms of the creativity and strategies with brands within what we do in the assortment itself. So that's about as detailed as I'm going to get for you.

That's what I thought. Anyway, thanks a lot, Rick, and good luck.

Thanks.

Your next question is a follow-up question from the line of Brad Stephens with Morgan Keegan. Please proceed.

Hey, Rick. One last question, getting back to the stock options. As we look at the remainder of the year, how should we think about the impact of that?

It will be -- I mean if you've comped -- if you figure the dollar side of that, Brad, obviously as sales grow, the percentage impact is going to lessen, right, as we get to the volume quarters, so -- relative to the sales dollars in a quarter. So if you look at the dollar component of that, I think it'd probably be relatively stable over that -- over the remaining portion of the year in terms of the rate of increase.

All right, great. Thanks.

Thank you.

And at this time, we no more questions in queue. I would like to turn the call back over to Mr. Brooks for closing remarks.

All right. Thank you, Cami, I appreciate that. Again, I just want to say thanks to everybody for all your support and your efforts in understanding what we are doing here at Zumiez and understanding what makes our business special and unique. And we'll look forward to speaking to you again when we report second quarter results in August. Thanks, everybody.

Thank you for attending today's conference. This concludes the presentation. You may now disconnect, and have a great day.