Zumiez, the operator of Blue Tomato stores in Europe, is moving forward with a new strategy for the continent that will focus more on “enhancing the productivity of its existing business” across the region and less on aggressive store expansion, given the associated costs of opening new doors.
“With a solid foundation of nearly 90 stores across nine countries and a pan-European web business, we believe we have adequate penetration today in the relevant European markets to unlock the potential for the concept and to create value as we work through what has been a difficult cycle,” Zumiez CEO Rick Brooks told analysts last week as the specialty retail group reported a Q4 operating loss of nearly $32.8 million against a profit of $15.2 million for the period ended Feb. 3. Revenues were essentially flat at $281.8 million as gross margin expanded by 30 basis points to 34.3 percent.
The annual operating loss in FY23 was nearly $64.8 million compared to a profit of $31.1 million on an 8.6 percent decline in total sales to $875.5 million from $958.4 million. The net loss was $62.6 million against a profit of $21.0 million. FY23 gross margin declined by 180 basis points to 32.1 percent from 33.9 percent. Year-over-year inventories were down by 4.4 percent to $128.8 million.
Moving forward, Zumiez believes “remaining relevant” is a key advantage for the business over the long term. In FY23, the retailer realized double-digit comparable sales growth in Germany, the Netherlands, Norway, and Sweden. From October through February, the retailer’s European snow sales fell by low single-digits, but season snow comparable sales were positive in January and negative during the following month. Total Q4 sales for Europe and Australia rose 15 percent year-over-year to $69.4 million.
In FY24, the company intends to open ten stores worldwide, compared to 19 in 2023 and 32 in 2022, which includes only three new locations in Europe.
