Zumiez Inc (ZUMZ) (Q2 2026) Earnings Call Highlights: US Footwear Weakness Drives Guidance Cut ...

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Release Date: September 10, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript .

Positive Points

• International entities (Canada, Europe, Australia) delivered positive comparable sales growth of 2.1% in Q2, providing diversification and offsetting US weakness.

• Accessories and men's categories were positive comping, with accessories being the largest positive contributor.

• Dollars per transaction increased due to higher units per transaction, indicating customers are buying more items per visit.

• Strong balance sheet with $97.3 million in cash and marketable securities, no debt, and a $25 million unused credit facility.

• Share repurchases reduced share count by approximately 6% year-over-year, which will benefit full-year EPS.

• Inventory levels are well-managed, down 0.6% on a constant currency basis, with no major inventory problem in footwear.

• International business is executing a premium pricing strategy to drive margin expansion and profitability optimization.

• Company is actively working on merchandise assortment changes and customer experience initiatives to improve US performance.

Negative Points

• Net sales decreased 2.5% in Q2, with comparable sales down 2.1%, missing expectations due to US softness.

• US comparable sales declined 2.9% in Q2 and are trending down 3.9% quarter-to-date through Labor Day.

• Footwear is a significant headwind, accounting for 70% of the total US sales decline, and has been challenged since Q2 2025.

• Gross margin decreased 20 basis points to 35.3% due to store occupancy deleverage, partially offset by tariff refunds.

• SG&A expense increased 50 basis points as a percentage of sales, driven by higher store operating costs and wage deleverage.

• Operating loss of $1.3 million in Q2 compared to prior year operating income of $0.1 million.

• Net loss widened to $2.7 million or $0.17 per share from $1 million or $0.06 per share last year.

• Q3 guidance is conservative, expecting sales decline of 5.5% to 7% and comparable sales down 5% to 6.5%, with EPS of $0 to $0.10 versus $0.55 last year.

• Full-year operating margin is now expected to be down slightly, compared to previous guidance of 50 to 100 basis points growth.

• Effective tax rate is expected to be roughly 55% for fiscal 2026, up from 44% in fiscal 2025.

• Plans to close approximately 16 stores in fiscal 2026, including 10 in North America, which will negatively impact sales by $12 million.

Q & A Highlights

Q: Rick, can you give your take on what is happening in footwear, including weakness in legacy silhouettes and a possible shift from athletic to non-athletic? How are you planning to pivot the assortment? A: CEO Richard Brooks said the footwear challenge has persisted for several quarters, with Zumiez selling lifestyle athletic footwear a niche that has struggled given its product mix. The company is trying different things and working with brand partners to drive uniqueness into footwear, and he expects to find the bottom of the cycle as it anniversaries big negative comps in Q4. Success will depend on unique product and finding the next trend brand.

Q: There has been talk of a particularly promotional back-to-school season in footwear. How are you addressing that, and to what extent is it pressuring margins? A: CEO Richard Brooks said Zumiez feels good about its footwear inventory position after working closely with partners over recent quarters to manage exposure, and he does not see major inventory risk. The company has not been as promotional on price point as some competitors, though it is clearing some footwear, which has pressured margins somewhat in recent quarters.

Q: Your Q3 comp outlook is worse than quarter-to-date trends. How much of the quarter is already booked, and how much of the expected deterioration is conservatism versus the pattern of the consumer disappearing between events? A: CFO Christopher Work said the company is just over 50% through the quarter from a sales perspective and expects the back half to be worse than back-to-school, consistent with the last several years when performance is much stronger during back-to-school and slower when there is less reason to shop. He also cited conservatism after Q2 came in below expectations and noted that trends have moved quickly, so the company is planning cautiously for the rest of the quarter.

Q: What drove the second-quarter sales decline, and how did regional performance differ? A: CFO Christopher Work said net sales fell 2.5% to $209 million from $214.3 million, with comparable sales down 2.1%. Canada, Europe, and Australia all posted positive comparable sales growth, while the negative consolidated comp was driven by US softness. North American net sales were $173.9 million, down 3.4%, and North American comparable sales fell 2.9%, while international comparable sales rose 2.1%.

Q: Which merchandise categories helped or hurt comparable sales in the second quarter? A: CFO Christopher Work said accessories was the largest positive comping category, followed by men's. Footwear was the largest negative comping category, followed by hard goods and women's. The consolidated comparable sales decrease was driven by lower transactions, partially offset by higher dollars per transaction, which rose on increased units per transaction offset by lower average unit retail.

Q: What drove the second-quarter gross margin change? A: CFO Christopher Work said gross profit decreased to $73.9 million from $76.1 million, and gross margin was 35.3% of sales versus 35.5% a year ago. The 20 basis point decline was primarily due to 60 basis points of deleverage in store occupancy costs on lower sales, partially offset by 50 basis points of benefit from tariff refunds.

Q: What caused the increase in SG&A expense as a percentage of sales in the second quarter? A: CFO Christopher Work said SG&A was $75.2 million, or 35.9% of net sales, versus $75.9 million, or 35.4%, a year ago. The 50 basis point increase was driven by higher non-wage store operating costs, deleverage in store wages and non-store wages on lower sales, and higher other corporate costs, partially offset by lower annual incentive compensation and a prior-year litigation settlement benefit.

Q: How did the company's balance sheet and cash position look at the end of the second quarter? A: CFO Christopher Work said the company ended the quarter with $97.3 million in cash and current marketable securities, down from $106.7 million a year ago, primarily due to $34.5 million in share repurchases and $10.6 million in capital expenditures, partially offset by $35.7 million in cash flow from operations. Zumiez has no debt and maintains its full $25 million unused credit facility.

Q: What is the third-quarter guidance? A: CFO Christopher Work said total sales are expected to be $222 million to $226 million, down 5.5% to 7% year over year, with comparable sales between negative 5% and negative 6.5%. Product margin is expected to be down 20 to 40 basis points on US weakness and higher international penetration at lower margins. Consolidated operating income is expected at 1% to 1.7% of sales, and EPS is expected between $0 and $0.10 versus $0.55 a year ago.

Q: What is the full-year fiscal 2026 outlook? A: CFO Christopher Work said the company will refrain from specific full-year earnings guidance given consumer pressures. Sales are now expected to be down low single digits, including a $12 million negative impact from closed stores. Consolidated product margin and gross margin are expected to be roughly flat, SG&A down slightly in total dollars, and operating margin down slightly versus prior expectations of 50 to 100 basis points of growth. The full-year effective tax rate is expected at roughly 55%.

Q: What are the store opening, closing, and capital expenditure plans for fiscal 2026? A: CFO Christopher Work said Zumiez plans to open five new stores in fiscal 2026, all in the US, and close approximately 16 stores, including 10 in North America and 6 internationally. Capital expenditures are expected between $13 million and $15 million, depreciation and amortization excluding non-cash lease expense at approximately $19.2 million, and diluted share count at approximately 15.8 million shares, reflecting full execution of the $40 million repurchase program completed in early September.

Q: What are the quarter-to-date sales trends through Labor Day? A: CFO Christopher Work said net sales for the 37-day period ended September 7, 2026 decreased 4.3% year over year, with comparable sales down 3.5% on top of a two-year stack of positive 21.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .