US retail group Zumiez, which operates 86 Blue Tomato doors across the EU, narrowed its Q1 operating loss and realized improving sales and merchandise margin trends.
“Our Q1 results are a further indication that we are progressing towards positive comparable sales and improved profitability,” Zumiez CEO Rick Brooks said.
The operating loss contracted to $20.2 million from a loss of $21.4 million as total revenues slipped by 3 percent to $177.4 million from $182.9 million for the period ended April 29. Comparable sales fell by 2.4 percent. North American sales fell slightly by 0.9 percent to $142.7 million, and international net sales, consisting of Europe and Australia, tumbled by 10.8 percent to $34.7 million. The net loss was $16.8 million. Gross margin grew by 230 basis points year-over-year to 29.3 percent, aided by a 70-basis improvement in product margin and lower shipping and distribution center costs.
Zumiez has a multipronged strategy for its European business, which spans nine countries. It includes a pan-European web business and has been operating in a difficult cycle. The company is aiming to increase growth on the continent through an accelerated focus on profitability via more full-price selling and fewer new door openings. Only three new Blue Tomato locations will open across the EU this year.
Meanwhile, the group thinks it has more growth opportunities worldwide by expanding its private brand portfolio. Private label as a percentage of Zumiez’s overall business has increased from 13 percent in 2021 to 23 percent in 2023 as the group has aimed to capitalize on both trend and value-conscious consumers.
