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ZUMZ
Earnings call · Jul 2026 (Q2 FY26)

Zumiez Q2 FY26 earnings call ZUMZ

Sep 10, 2026 Source

Executive summary

Zumiez Inc. Q2 FY26 — U.S. Softness Offsets International Growth, Footwear Headwinds Persist

Zumiez reported a challenging Q2 FY26, with overall sales and profitability impacted by significant softness in the U.S. market, particularly in footwear, despite positive comparable sales from international segments. Management is actively refining merchandise assortments and investing in customer experience to navigate this transitional period, while maintaining a strong financial foundation and share repurchase program. The company expects continued headwinds in Q3, leading to a cautious outlook for the remainder of the fiscal year.

Highlights

5

  • International entities provided positive sales growth for the quarter, with Canada, Europe, and Australia all having positive comparable sales growth.

  • Accessories was the largest positive comping category for Q2 FY26 and Q3 YTD.

  • The company ended the quarter in a strong financial position with $97.3 million in cash and current marketable securities and no debt.

  • Inventory levels were well-managed, down 0.6% on a constant currency basis, with good quality.

  • Share count is down approximately 6% year-over-year due to repurchase activity, positively benefiting full-year EPS.

Concerns

5

  • Q2 FY26 net sales decreased 2.5% to $209 million, and comparable sales were down 2.1%.

  • U.S. sales deceleration was the primary driver of negative comps, with North American net sales decreasing 3.4%.

  • Footwear was the largest negative comping category, accounting for 70% of the total U.S. sales decline through Labor Day.

  • Q2 FY26 net loss was $2.7 million, or $0.17 per share, compared to a net loss of $1 million, or $0.06 per share, in the prior year.

  • Q3 FY26 guidance anticipates total sales between $222 million and $226 million (down 5.5% to 7% YoY) and EPS between $0 and $0.10 (vs. $0.55 prior year).

Guidance & targets

CategoryTargetConfidence
Q3 FY26 Total Sales
$222 million to $226 million
high materiality
Medium
Q3 FY26 Comparable Sales
negative 5% and negative 6.5%
high materiality
Medium
Q3 FY26 Product Margin
down 20 basis points to 40 basis points
medium materiality
Medium
Q3 FY26 Consolidated Operating Income
between 1% and 1.7% of sales
high materiality
Medium
Q3 FY26 Earnings Per Share
$0 and $0.10
high materiality
Medium
FY26 Total Sales
down low single digits
high materiality
Medium
FY26 Consolidated Product Margin
roughly flat
medium materiality
Medium
FY26 Gross Margin
roughly flat as a percent of sales
medium materiality
Medium
FY26 SG&A
down slightly in total dollars
medium materiality
Medium
FY26 Operating Margin
down slightly
high materiality
Medium
FY26 Effective Tax Rate
roughly 55%
low materiality
Medium
FY26 New Store Openings
5
low materiality
High
FY26 Store Closures
approximately 16
low materiality
High
FY26 Capital Expenditures
$13 million and $15 million
medium materiality
High
FY26 Diluted Share Count
approximately 15.8 million shares
low materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
North America
Decreased 3.4% from fiscal 2025. Comparable sales were down 2.9%. Excluding FX, net sales decreased 3.3%.
Comparable sales: -2.9%
$173.9 million-3.4%——
Other International (Europe and Australia)
Increased 2.5% from last year. Comparable sales increased 2.1%. Excluding FX, net sales were up 0.8%.
Comparable sales: +2.1%
$35.1 million+2.5%——

Risks & headwinds

U.S. sales deceleration and softness in footwear Q2 FY26, Q3 FY26 quarter-to-date, ongoing

Q2 FY26 U.S. sales down; footwear accounts for 70% of U.S. sales decline through Labor Day; Q3 YTD North America net sales decreased 4.7%.

Mitigation:Refining merchandise assortments, bringing newness, investing in customer experience initiatives, working with brand partners, leveraging data initiatives.

Evolution in apparel trends Ongoing, impacting business for over 2 years

Changes created a sense of urgency to work with brand partners and private label brands.

Mitigation:Working with brand partners and private label brands to bring newness and changes to assortment.

Decrease in transactions Q2 FY26, Q3 FY26 quarter-to-date

Consolidated decrease in comparable sales driven by a decrease in transactions in Q2 FY26 and Q3 YTD.

Mitigation:Investing in people with training focused on capturing every sale, enhancing marketing effectiveness through data.

Promotional environment in footwear Q2 FY26, back-to-school season

Impacted margin some in Q2 FY26.

Mitigation:Managed inventory closely with partners, not as promotional as competitors, but some clearance activity.

Increased consumer pressures and rapid trend cycles Remainder of FY26

Led to cautious outlook for Q3 and full year; operating margin expected to be down slightly.

Mitigation:Maintaining strong financial foundation and flexibility to navigate volatility and invest in strategic objectives.

What to watch in Q3 FY26

Footwear sales trajectory in the U.S.

Q4 FY26 and into FY27
Current Largest negative comping category, 70% of U.S. sales decline
Target Improved trajectory, easier year-over-year comparisons

Why it matters

Footwear is a significant headwind for U.S. sales; improvement is crucial for overall performance.

Footwear has been challenged since the second quarter of 2025, and the year-over-year comparisons get easier as we head into the fourth quarter of this year.

Q&A highlights

What is happening in footwear, specifically regarding weakness in legacy silhouettes and a potential shift from athletic to non-athletic, and how Zumiez plans to pivot its assortment to align with current trends?

Rick Brooks confirmed seeing the trends, noting that lifestyle athletic footwear has been struggling. Zumiez is trying different things and working with partners to drive uniqueness into the footwear business. He expects easier year-over-year comparisons in Q4 as the negative comps anniversary, and believes finding the next trend brand will be key.

“It has been a challenge for us for quite a number of quarters now, as we have said, and it is, I think, we are aligned around the idea that we are selling lifestyle athletic footwear. So it has been, I think, we are in kind of sweet spots. It has really been struggling in terms of just, again, what our mix of products has always said.”

asked by Mitchel Kummetz · answered by Richard Brooks

2 min read 5 chapters

Detailed narrative

U.S. Market Softness and Footwear Headwinds

The U.S. business experienced significant deceleration, with Q2 FY26 sales down and Q3 quarter-to-date trends showing similar results. Footwear was identified as the primary driver of this decline, accounting for 70% of the total U.S. sales decline through Labor Day, and has been challenged since Q2 FY25. Management is actively working to refine merchandise assortments and bring newness to address evolving apparel trends, expecting easier year-over-year comparisons in Q4.

International Resilience and Strategic Focus

In contrast to the U.S., international entities including Canada, Europe, and Australia delivered positive comparable sales growth in Q2 FY26 and Q3 quarter-to-date. The company remains focused on strategic priorities such as refreshing product mix with innovative offerings, continued growth of private label brands, enhancing margin profile through premium pricing, and optimizing profitability in each market to drive revenue.

Inventory Management and Promotional Environment

Zumiez reported a strong inventory position, with levels down 0.6% on a constant currency basis year-over-year as of August 1, 2026. Despite a promotional back-to-school season in footwear among some competitors, Zumiez has managed its inventory closely with partners and has not been as promotional. However, some clearance activity has impacted margins within the quarter, but management does not foresee a major inventory problem.

Capital Allocation and Financial Strength

The company maintains a solid financial foundation, ending Q2 FY26 with $97.3 million in cash and current marketable securities and no debt, complemented by a full $25 million unused credit facility. This financial flexibility supports continued investment in strategic objectives and shareholder returns. The $40 million share repurchase program, approved in March 2026, was fully executed by early September, contributing to a 6% reduction in share count year-over-year.

Cautious Outlook and Strategic Adjustments

Given the Q2 FY26 softness and Q3 quarter-to-date trends, management has adopted a conservative outlook for Q3 and the full fiscal year, refraining from specific full-year EPS guidance. They anticipate full-year sales to be down low single digits and operating margin to be down slightly, indicating a focus on navigating current consumer pressures and rapidly changing trend cycles through strategic initiatives and operational adjustments.

AI-generated summary of the company's earnings call. Not investment advice.