Zumiez's CEO Discusses Q2 2012 Results - Earnings Call Transcript

As you know, we closed our acquisition of Blue Tomato on July 4, 2012 for a total purchase price of EUR59.5 million. We're thrilled with this new addition and it's complementary to Zumiez geographic footprint and a logical and consistent extension to our operating philosophies. We're in early days of our combined business together, but Blue Tomato is continuing to show year-over-year growth and is well-positioned heading into the important winter and holiday season. I should point out that Blue Tomato has a higher concentration of sales in the fourth quarter than Zumiez operations, which is consistent with predominantly e-commerce business.

The addition of Blue Tomato added a compelling mix of e-commerce expertise and an expanded geographic footprint to our North American business. Although the business represents a small portion of our overall sales and earnings currently, the potential for this business both online and through growth in bricks-and-mortar have us excited about the future. We're now working together to build upon their existing business plans to form a joint view on growth, including the many ways we can leverage our independent strengths to improve not only Blue Tomato results, but all facets of the company. Having a foundation of shared values and culture positions us well for many years of future success together.

Now let me speak to the second quarter. We delivered solid organic results again in the second quarter with sales up 20% over the second quarter of last year with strong comparable store sales gains and productive new stores. At the same time, excluding the one-time expenses related to the relocation of our web fulfillment and home office and costs related to the acquisition of Blue Tomato, operating margins continued to improve, driving better-than-expected bottom line results. This quarter results are reflective once again of the strong execution by all of our teams.

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