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ICRX Report: Zumiez leaders push authenticity at the mall

After the presentation, CEO
After the presentation, CEO Rich Brooks at the outdoor breakout with analysts.
By Andrew Horan
January 15, 2009 10:08 AM

Zumiez CEO Rich Brooks and CFO Trevor Lang hammered home their mantra this morning at the ICR Xchange conference: Zumiez is the leading action sports lifestyle retailer in the U.S.

Even though at 343 stores it is dwarfed by larger industry competitor PacSun and mall teen retailers like Hollister, Zumiez' says its niche is as a core shop in the mall.

"We're more diversified by brands and products than any other (teen) retailer," Brooks said. "We're the only place in the mall where you'll find Fallen or Supra shoes, for instance."

Zumiez carries 400 brands, and it offers an interesting balance: the Top 10 brands account for 33 percent of sales, the next 10 for 14 percent and the remaining 380 for 38 percent. Private label makes up the last 15 percent.

Zumiez carries boards, decks and other hardgoods and technical products to reinforce its core authenticity - another unusual feature for a mall-based teen retailer.

Other highlights:

  • Zumiez expects current economic conditions to continue, or deteriorate for at least the next six months, with operating margins in the mid-single-digit range.
  • It sees more opportunity coming in the second half of the year, when it typically generates 80 percent of its business. Operating margins could grow again, with a long term plan to get back to the low teens.
  • It will end the fiscal year in two weeks with $75 million in cash and equivalents, and no debt.
  • It plans to return to organic store growth in 2010, and sees a "runway to growth" as it opens more doors to match store counts of its teen mall retailers - all of whom have higher store counts, except Urban Outfitters.

Brooks and Lang made a point of repeatedly stressing Zumiez' authentic culture. Then the company video Brooks played halfway into his presentation sealed the deal. Backed with heavy metal, the video was full of kids skateboarding and snowboarding.

It opened with founder Tom Campion growling, "I opened the first store on August 30, 1978. I started a store because I couldn't stand working for anybody else. I've got a real problem with authority."

 

 

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