Zumiez (ZUMZ) Q3 2023 Earnings Call Transcript

Zumiez (ZUMZ -0.68%)
Q3 2023 Earnings Call
Nov 30, 2023, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen. Welcome to the Zumiez Inc. third-quarter fiscal 2023 earnings conference call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session toward the end of this conference. Before we begin, I’d admire to remind everyone of the company’s safe harbor language.

Today’s conference includes comments concerning Zumiez Inc.’s business outlook and contains forward-looking statements. These forward-looking statements and all other statements that may be made on this call that are not based on historical facts are subject to risks and uncertainties. Actual results may differ materially. Additional information concerning a number of factors that could bring about actual results to differ materially from the information that will be discussed is available in Zumiez’s filings with the SEC. At this time, I will turn the call over to Rick Brooks, chief executive officer.

Mr. Brooks.

Rick Brooks — Chief Executive Officer

Hello, everyone, and thank you for joining us on the call. With me today is Chris Work, our chief financial officer. I’ll begin today’s call with a few remarks about the third quarter and the start to the holiday season before handing the call over to Chris, who will take you through the financials and some thoughts on the rest of the year. After that, we’ll open the call to your questions. Our performance in the third quarter came in slightly ahead of our expectations as year-over-year sales trends continued to better compared with the first and second quarters.

Given that the operating environment remained challenging, particularly in the U.S., causing our customers to be more selective about when and where they spend their money, we were encouraged by our results during the key weeks of the back-to-school selling season. At the same time, we are not surprised that our sales trends pulled back somewhat during the second half of Q3 as we proceed beyond the peak back-to-school season. The industry has been volatile all year marked by muted peaks and deeper valleys as inflationary impacts continue to weigh on discretionary spending combined with increased competition for wallet share from spending on services and experiences. High promotional activity to clear elevated inventory levels across our retail sector has added to the headwinds pressuring our full-priced selling model. In response to this backdrop, we’ve continued to adjust our merchandise mix and brand assortments to bring newness to our offering, as well as more value through private label brands to uphold our diverse customer base. These adjustments speak to the strength of our model and our ability to adjust both across departments and from branded to private-label products to confront customer demand, all while ensuring we are providing our customer with the world-class service and differentiated shopping go through they expect when visiting Zumiez. To recap our improving trend line, sales were down 17% in Q1, down 12% in Q2, down 9% in Q3, and our recovery has picked up pace thus far in Q4. Through this past Tuesday, fourth-quarter-to-date sales are down 4.6% to the prior year.

The sales of the Black Friday-Cyber Monday period down 1.4% against the same period last year. We’re encouraged by the sequential improvement we continue to see in the business. While we are not where we want to be from a results perspective, our current momentum gives us confidence in delivering continued improvement in the fourth quarter and positioning ourselves for growth in 2024. With consistent expense discipline and our lean integrated operating structure, the business can create leverage and meaningful operating margin expansion even on modest top-line growth. This will allow us to drive enhanced profitability and continue investing in the strategic priorities that we believe will create significant long-term benefit for our customers, our business, and our shareholders. We’ve discussed some of these key strategic priorities on our previous calls, including continued investment in our people through best-in-class training and mentoring, optimizing our performance by trade area, working with our brands to enhance speed, flexibility, and margins, as well as continuing our international expansion, driving sales and earnings growth while better serving our brands and customers as trends emerge locally and grow globally. We also comprehend that in difficult times admire these, it’s important to balance investments with the tactical adjustments necessary to drive our recovery, including identifying and amplifying emerging brands and trends to build sales, driving promotions where necessary, strong inventory management, and maintaining our strong balance sheet position. It is in these times that we’ll lean heavily into the strong brand and culture that have been critical to Zumiez’s success from the beginning.

We live that culture every day through the outstanding people that are part of our company. And I’d admire to thank everyone in our organization for their continued hard work and dedication, especially during the busy holiday season. The foundation of our unique culture and your efforts and commitment to our customers is what set Zumiez apart from the competition for over 45 years. With that, I’ll turn the call to Chris to converse the financials.

Chris Work — Chief Financial Officer

Thanks, Rick, and good afternoon, everyone. I’m going to start with a review of our third-quarter results. I’ll then furnish an update on our fourth-quarter-to-date sales trends before providing some perspective on how we’re thinking about the full year. Third-quarter net sales were $216.3 million, down 8.9% from $237.6 million in the third quarter of 2022.

Comparable sales were down 9.2% for the quarter. The decrease in sales was primarily driven by North America and Australia business, offset by more favorable results in Europe. During the quarter, we continue to see softer sales primarily driven by ongoing inflationary pressures on the consumer, a shift in spending to travel and experiences, and softer demand for full-priced key styles and trends in North America. From a regional perspective, North America net sales were $181.6 million, a decrease of 12% from 2022. Other international net sales, which consist of Europe and Australia, were $34.8 million, up 11.1% from last year. Excluding the impact of foreign currency translation in North America, net sales decreased 11.9% and other international net sales increased 5.2% compared to 2022.

Comparable sales for North America were down 10.7%, and comparable sales for other international were down 0.3% for the quarter. From a category perspective, all categories were down in comparable sales from the prior year during the quarter with footwear being our most negative, followed by women’s, accessories, hard goods, and our best-performing category, men’s. The men’s category was down only low single digits in comparable sales during the quarter, reflecting the continued positive brand and fashion trends we talked about on our Q2 call as we were heading into the back-to-school season. We are excited to see some of the newer brands resonating with customers, and we’ll look to build on these trends in the holiday season. Net sales include a decrease in transactions and an enhance in dollars per transaction.

Dollars per transaction were up for the quarter driven by an enhance in average unit retail and an enhance in units per transaction. Third-quarter gross profit was $73.2 million, compared to $82 million in the third quarter of last year. Gross profit as a percentage of sales with 33.8% for the quarter, compared with 34.5% in the third quarter of 2022. The 70-basis-point decrease in gross margin was primarily driven by lower sales in the quarter, causing deleverage in our fixed costs. The key areas driving the change were as follows: store occupancy costs deleveraged by 120 basis points on lower sales volumes, product margins decreased by 50 basis points; 20 basis points decrease related to web fulfillment costs; and a 10-basis-point decrease related to deleverage in our buying group. These negative impacts to gross margin were partially offset by a benefit of 70 basis points in web shipping costs, 50 basis points improvement in distribution center costs, and a 20-basis-point reduction in inventory shrinkage.

SG&A expense was $73.4 million, or 33.9% of net sales in the third quarter, compared to $71.5 million, or 30.1% of net sales a year ago. The 380-basis-point enhance in SG&A expenses as a percent of net sales was driven by the following:160-basis-point enhance due to both deleverage of store wages on lower sales, as well as increases in wage rates that could not be offset by hours reductions; 110 basis points of deleverage in non-store wages; 80 basis points of deleverage in non-wage store operating costs; and 30 basis points of deleverage in our other corporate costs. Operating loss in the third quarter of 2023 was $0.2 million, or 0.1% of net sales, compared with operating profit of $10.4 million, or 4.4% of net sales last year. Net loss in the third quarter was $2.2 million, or $0.12 per diluted share. This compares to net income of $6.9 million, or $0.36 per diluted share, for the third quarter of 2022.

We will have a modest tax expense in the quarter despite our pre-tax operating loss due to the distribution of pre-tax income across our different tax jurisdictions. This compares to a more normalized effective tax rate of 27.9% in the third quarter last year. Turning to the balance sheet. The business ended the quarter in a strong financial position. We had cash and current marketable securities of $135.8 million as of October 28th, 2023, compared to $141.1 million as of October 29th, 2022.

The 5.3 million decrease in cash and current marketable securities over the trailing 12 months was driven primarily by capital expenditures, partially offset by cash flow from operations. As of October 28th, 2023, we have no debt on the balance sheet. We ended the quarter with $175.9 million in inventory, down 0.7%, compared with $177.2 million last year. On a constant-currency basis, our inventory levels were down 2.3% from last year. This includes high single-digit inventory declines in the North America business, our most challenged market. Now, to our fourth-quarter-to-date results.

Total sales for the 31-day period ended November 28th, 2023 decreased 4.6% compared to the same 31-day period in the prior year ended November 29th, 2022. Comparable sales for the 31-day period end in November 28th, 2023 were down 6% from the comparable period in the prior year. From a regional perspective, net sales for our North America business for the 31-day period ended November 28th, 2023 decreased 7.3% over the same period last year with comparable sales over the prior — over the period down 6.8%. Meanwhile, our other international business increased 6.2% versus last year with comparable sales over the same period decreasing 3.2%. Excluding the impact of foreign currency translation, North America net sales decreased 7.2% and other international net sales increased 1.5% compared with 2022.

From a category perspective, the men’s category had positive comparable sales fourth quarter to date, while all other categories were down in comparable sales from the prior year. Hard goods was our most negative category followed by women’s, accessories, and footwear. We are excited about the trends that are emerging in both the men’s and footwear categories. Men’s was positive low single digits quarter to date, while footwear was down low single digits after being our most negative category during the third quarter. The quarter-to-date comparable sales refuse was driven by a decrease in transactions, partially offset by an enhance in dollars per transaction. Dollars per transaction were up driven by an enhance in units per transaction, partially offset by a modest decrease in average unit retail.

With respect to our outlook, I want to remind everyone that formulating our guidance involves some inherent uncertainty and complexity in estimating sales, product margin, and earnings growth given the variety of internal and external factors that impact our performance. Our fourth-quarter-to-date results have continued to show incremental progress to the trends experienced in the first three quarters of the year but are still trending below prior-year levels as consumer demand remains under pressure from the continued impact of high inflation on discretionary spending. With that in mind, we are planning total sales for the fourth quarter to be between $275 million and $281 million, including the 53rd week. We expect that our fourth-quarter 2023 product margins will be down roughly 110 basis points from the fourth quarter of fiscal 2022 due to both geographic sales mix across our businesses, as well as promotional cadence to proceed through inventory. Consolidated operating profit as a percentage of sales for the fourth quarter is expected to be between 1.5% and 2.5% resulted in diluted earnings per share of roughly $0.24 to $0.34 for the quarter. As a reminder, our guidance is inclusive of the 53rd week, which is a benefit to sales and earnings in the fourth quarter of fiscal 2023 and a detriment to sales and earnings growth rates in fiscal 2024.

Now, I want to give you a few updated thoughts on how fourth-quarter guidance rolls into our full-year fiscal 2023 results. Inclusive of our fourth-quarter guidance, we expect that total sales will be down in the 8.7% to 9.3% range in fiscal 2023 compared to 2022. Product margins were down 50 basis points in fiscal 2022 after six consecutive years of growth. Through the first nine months of 2023, product margins were down 60 basis points from the prior year. A portion of this year-to-date decrease has been driven by our international businesses, which have lower product margins increasing as a percentage of total sales.

Inclusive of our fourth-quarter guidance, we now expect annual product margins to be down approximately 85 basis points due to both the geographic sales mix across our businesses as well as promotional cadence to proceed through inventory. Our model is sensitive to sales fluctuations. We have seen deleverage and sales declines across fiscal 2020 — 2022 and into 2023, while the opposite was true in 2021 when we experienced record sales and operating margin driven by meaningful leverage. We continue to diligently handle expenses as we pilot the current environment and are positioned to take advantage when conditions better. For fiscal 2023, we currently expect that operating margin will be between negative 2.9% and negative 3.2% and our loss per share will be roughly $1.16 to $1.26. We currently expect that our pre-tax earnings for the year will be negative and that we will have modest tax expense due to the distribution of earnings across our different tax jurisdictions. It is important to note that the income levels — with income levels down at our current guidance levels, changes in the jurisdictional income mix can bring about our effective tax rate to fluctuate significantly.

We are planning to open 19 new stores during the year, including five stores in North America, 10 stores in Europe, and four stores in Australia. We expect capital expenditures for the full 2023 fiscal year to be between $20 million and $21 million, compared to $26 million in 2022. We expect that depreciation and amortization excluding noncash lease expense will be approximately $22 million. We are currently projecting our share count for the full year to be approximately 19.3 million shares. And with that, operator, we’d admire to open the call for your questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from the line of Mitch Kummetz of Seaport. Your line is open.

Mitch Kummetz — Seaport Global Securities — Analyst

Yeah, thanks for taking my questions. Chris, you mentioned footwear, some positive inflection there in terms of the trend, worse category in 3Q, and it’s gotten a lot better in early 4Q. Can you elaborate on that? And, you know, I noticed online you’ve got some promos going called Footwear Frenzy with some pretty big markdowns. So, I’m kind of curious, is — the sequential comp improvement, is that markdown driven, or is it better trend in footwear, better inventory availability in footwear? What can you say about kind of the positive inflection there?

Chris Work — Chief Financial Officer

Sure, Mitch, I’ll take the question, then let Rick add anything he’d admire to add. You know, from a footwear perspective, we are — we are happy with the trend line that we’ve seen in the fourth quarter. You know, we’ve talked about footwear a lot as we proceed through the year, in fact, even in our first and second-quarter calls, highlighting that it was one of the more challenged areas from an inventory perspective. You know, we have — with the downturn in our sales trends, we’ve taken the management of inventory pretty seriously and really tried to handle inventory carefully, especially so we don’t have future markdowns. Footwear has been one of the areas that — that’s been most challenging and probably one of the areas that we’ve carried a little more inventory than we’d admire with the sales downturn throughout 2023.

What I’m happy to report with the fourth quarter is that a large part of that improvement in the trend line is actually driven by — by new product and full-priced product that we’re pretty excited about, right? We’ve been testing a lot of things in footwear. And we’ve seen some things work as we transitioned into November, and we’re able to procure some of our new receipts. That being said, there is a portion two of that trend line that is tied to the continued movement to try to proceed old age. And so, it’s a combination of both but — but — but a fair amount driven by full-price selling, which again is really our strategy.

When we look at how to pilot through the cycle, we’re in is that we want to be not just in footwear but across all our categories and departments, full priced, full margin, and that’s what we’re really trying to push.

Rick Brooks — Chief Executive Officer

And I would just add, Mitch, to Chris’s comments that we hope that we are finding bottom on some of what have been a multiyear trend on some of our brands being negative and our footwear brands. And as Chris said, too, I think we’re also hoping that, on our markdown cadence over the next few weeks, we can find the bottom in that cycle too. And then, it is really exciting. I think there are both brand and some trends that are driving footwear up. And the last thing I would that I — as Chris said, new and full-margin kind of business.

And the last thing I’d say that I think we’re getting crushed about is footwear cycles, in general, our go through is that tend to be longer cycles than some. So, if we can get moving in the right direction, find the bottom with the brands that have been holding us back a bit, have some good trends and brands going the other direction that I think we may have a longer — have a good run with the — with the footwear cycle in front of us.

Mitch Kummetz — Seaport Global Securities — Analyst

All right, appreciate that color. And then, I guess my follow-up question, on Europe, can you speak a little bit to what you’re seeing from a macro standpoint there and remind us what your exposure is to snow in Blue Tomato and how you see that sort of shaping up early in the season. And I know it was too difficult — or too — pretty bad snow season the last couple of years, so I don’t know what an easy comparison means for that business.

Rick Brooks — Chief Executive Officer

Yeah, I’ll start with kind of macro then let Chris address the snow question, Mitch. And — and Europe, from a — from an inflation perspective, still has been a bit more challenged than the U.S. We’ve seen more progress with declining rates here. Although just — I think they just announced today, we’re seeing some inflation deceleration in Europe, but there are still some challenges there, undoubtedly.

We also know that there’s some lagging at the way statutory pay rates take place in Europe, so we have to work our way through that. But we’re hoping that with the statutory rates that get mostly updated beginning of the year with declining rates, we’ll see more disposable income in consumers’ pockets than this last year. We’re kind of working in the opposite direction. So — but it is a very competitive market. I guess that’s the other thing I’d say is we’re — we’re seeing just as much price-driven promotion over there as we do here in the U.S.

So, it’s a very competitive marketplace. And I think our performance, on a relative basis, shows that we’re actually gaining share in the market. So — and then lastly, from a macro perspective, of course, we still — there’s still the uncertainty of the war in Ukraine, which is may have faded to some people’s background. But I’ll tell you, it’s definitely more on the front of the Europeans’ thinking than it probably is in other parts of the world at this point. So, I think we are hopeful that we’ll find some benefit on the macro perspective.

I think it may be unique to us. There’s a lot of the bigger players that are struggling, running losses in Europe. So — so, I’m hopeful that we’ll — as we proceed into next year, we — the combination of statutory rates and declining inflation may be a net positive for us.

Chris Work — Chief Financial Officer

Chris, yeah, and just from a numbers perspective on — on snow and maybe more important on the business overall, you know, Europe’s been one of the stronger parts of our business here. Moving across the first nine months of the year, they were up 12% with a strong, you know, mid-single digit comp here within that 12%. So, it’s not just new units; it’s seeing strong comp. We have transitioned obviously into the fourth quarter.

And, you know, our — in our November results to date, we did talk about Europe being much softer than what that nine-month trend line is. And a lot of it comes to your question: We have not seen a strong start to snow. And so, that — at this point in the year doesn’t mean that the whole season shot. We certainly have a lot of the — probably the peak weeks of buying still ahead of us across December and into January. And — and I would also cite, while I’m not going to release our snow numbers or snow strategize to date, we’ll — we’ll recap more of that here in March.

You know, this is an area the business that we’re excited about because we’re core and it’s key to what we’re doing. The other piece of it is how much we’ve diversified — diversified across Europe. So, as we have moved into areas admire northern Germany and other markets, we have less of a dependency on snow. So, that’s a big push of ours and — and something we work through. As far as Europe, you know, with the snow mix it over-indexes in October, it over-indexes in January because of that dependency on snow. But the rest of the — the rest of the month generally is sort of in line because of our peaks here we have around holiday.

So — so, we’re obviously hopeful for cold weather. I think we’re well positioned to take advantage of it if it comes, but that has been part of our slower results here in November.

Mitch Kummetz — Seaport Global Securities — Analyst

All right. Thanks again and good luck for holiday.

Chris Work — Chief Financial Officer

Thanks.

Operator

Thank you. One moment, please. Our next question comes from the line of Jeff Van Sinderen of B. Riley.

Your line is open.

Richard Magnusen — B. Riley Financial — Analyst

Hello, this is Richard Magnusen in for Jeff Van Sinderen. Thank you for taking our call. Can you speak more about how you are positioned with inventory versus holiday last year and also touch on planned promotional cadence this year versus last year? And then, maybe what trends you are seeing in the digital business since Black Friday weekend?

Chris Work — Chief Financial Officer

Sure. OK, let me — let me take a crack at it here. I mean from an overall inventory perspective, as we said on the call, inventories were down 0.7%, down 2.3% on a constant-currency basis. So, if we just step into that, I think we feel pretty good about where overall inventories are.

Breaking that down a little bit farther, you would find, you know, that the North America inventory, which is really our toughest market, has been down in, admire, the high single-digit area. So, we feel really good about how that’s lining up in relation to where sales are. So, a lot of our inventory growth is international based, which again it’s more tied to units, and — and, to a lesser extent, some of the landing of products. So, I think from an overall inventory perspective, we feel good about where we’re at. From a promotional perspective, we did obviously foreshadow in our guidance that we were expecting to be more promotional than we were a year ago, which I think is a factor of a couple of things. One, the market’s incredibly promotional, and we know that that consumer, our consumer, is squeezed, right, with the inflation and some of the things that — the more macro-environmental things that are happening to them.

And so, we are trying to proceed and be in a spot to work with that customer. That does not mean to us, you know, a 30% off the entire store. We’re definitely, you know, very passionate about how — what our brands mean to us and how we work with our brands to really push through a full price, full margin. What it means is we have to find areas of value and ways that we work with that value consumer in this type of market. So, we do have a promotional cadence, as you would expect, that we’ve planned coming into the holiday, which is a factor both of how do we achieve the customer and how — and how do we look at areas of old age. Because our — our goal, admire it is for all of our, you know, quarters and holiday seasons, particularly is in the year in a pretty good inventory position.

So, we’re focused on that from a promotional cadence. I think you see some of that in — I think as Mitch mentioned in there earlier the Footwear Frenzy, but we’ve got some different promotions out there that we’re working through. And then, lastly from a digital perspective, what I would say is, you know, we are continuing to see a strong demand of our customer to be in stores, where we’re seeing a good mix of — of our customer coming to stores. The digital business overall for the third quarter was basically just a little bit better than our overall result, but we continue to see really strong store results. Our Black Friday was — was a really great day for us. It was positive in stores.

We know that our customer wants that physical go through. And our — and our web’s been a little bit softer than the trend line. So, I think, you know, we’ll roll it all up and talk about that more on the quarter. I think the other piece that’s unique to us, and you see this, I believe, when you’re on our website, is we’re really trying to drive the customer to store. So, you’ll see even that digital customer, we’re showing them what’s available in our store.

We’re encouraging them to come pick it up in store, driving them to that availability because we believe, over the long term, it’s great to get them in front of our sales teams. It’s great to get them in our store environment where they can go through everything we have to have — everything we have and not just what they’re seeing on the pages.

Richard Magnusen — B. Riley Financial — Analyst

All right. Thank you. And can you update us, to what extent you can, on plans for store count in FY ’24 and maybe speak to what sort of terms you’re seeing on lease renewals and any new store locations?

Chris Work — Chief Financial Officer

Sure. I’m not going to give exact numbers for 2024. That’s normally part of our March call. What I would tell you is we’re trying to be really smart with our — with our store growth.

You know, last year, we opened 32 stores, which I think are — we feel really good about the locations and the economics of the deal. Obviously, our sales have been down over that time frame. So, we continue to believe, long term, these will be good locations for us. They have not opened as strong as we would have hoped, but I think that’s probably more of a macro thing. This year, we reduced that from 32 to 19 stores, I think we feel very similar. I think from a lease rate perspective, we are seeing a more optimal lease expense.

We just have to be able to drive that — that top line. I think we’ll take those learnings and factor them into 2024. The other piece of this type of environment, this type of market, admire a lot of retailers, we’re looking at the overall store population for some potential closures. As we all know, there are certain malls and locations across the country that are more challenged than others. And so, that’s something that we’re spending some time looking through.

You know, again, I’m not going to speak to exact numbers because we have some work to do, but what I can tell you is, you know, we’ve got a detailed process to look at store closures. You know, we really focus on, you know, the four-wall economics of the location, its impact on trade area, its impact on digital, and — and then what’s happening in that current environment; is — is the mall along for the trade area, are there other malls that might — we might see the volume transitioning to, or you know, is — is this a permanent refuse or a temporary refuse? So, we’re asking ourselves a lot of those questions. Right now, within our strategize, we have about 15 store closures within our current modeling. I will tell you that’s a number that could enhance or decrease depending on how we proceed through the year and how we’re able to, you know, work through our teams and with our landlord partners. And so, we’re focused on, you know, really trying to bring the best Zumiez forward and being in the right locations. And I think as we factor in that into our 2024 store openings and potentially some closures, we’ll think about those factors.

Richard Magnusen — B. Riley Financial — Analyst

All right. Thank you very much. That helps. I’ll get back in the queue.

Chris Work — Chief Financial Officer

OK.

Operator

Thank you. [Operator instructions] One moment, please, for our next question. Our next question comes from the line of Mantero Moreno-Cheek from Jefferies. Your line is open.

Mantero Moreno-Cheek — Jefferies — Analyst

Hello, thanks for taking my call today. I just wanted to know if you could furnish more color about what trends are working for men’s and how are they differ — how are they differing internationally versus the U.S. And any early reads on holiday trends that were very strong during the Black Friday season? Thank you.

Rick Brooks — Chief Executive Officer

All right, let me — let me start. And we — again, we’re not going to typically talk about brands in particular or specific trends for a lot of reasons, competitive things. I think we have some things that are clearly to our advantage. But I think what I admire to just comment a bit on is the — and why in particular your question why men’s is so much better, I think what you’re really seeing is it contemplate the strength of our core consumer.

And we are, disproportionately, a men’s retailer. And I think through these challenging times when people are stressed with high inflation, have less discretionary income, or wallet share shifting toward — or toward services and experiences, it makes our business really tough. And one of the things I think that we think a lot about is, is our core consumer intact. And — and I have to tell you, I think we’ve — a lot of our sales loss over the last two years is tied to trend consumers and to declining brands that achieve broadly into the trend market and outside of our core market. So, when we look at our core consumer, which is predominantly male, this is why the men’s business is better. And we can see this in a number of different ways in the business.

One is the strength of our business in emerging brands launched in ’22 and ’23. We’re seeing really good — within those brands work well, resonate with these consumers on the men’s side. And it’s encouraging for us, I think, to see that, and they’re running ahead of pace for where we think they would be in a normal brand maturation cycle for this — these classes of emerging brands. So, that also reflects what our core consumer wants: that uniqueness, new — newness in the marketplace that you can only get at Zumiez. The other thing I would tell you that shows, again being a predominantly male consumer, that our core consumer is intact.

And why our men’s business is doing better is, again, our dollars per trans are at all-time highs. And it’s not just because AUR is higher, it’s because UPTs are driving it too. So, for me, this is another sign that the core consumer, that young male, is really engaged with us in our business. And they’re looking for those — again, looking for the unique brands. They’re also looking for the — us leading on trends. And I think we are definitely doing this in a lot in the men’s area, both — and this is where our private label brands are really doing well and performing well.

I might ask Chris to comment on that in a moment. And again, we are not massively discounting. We are much of these — these trend-driven categories in men’s, we’re higher priced than a lot of competitors on — on these trend categories. So, reflects the strength of our core consumer, valuing what we do for them, and valuing the spin we bring to these trends, and be willing to pay the value that we’re offering in these areas.

So, all these things, for me, really drive out why is our men’s is better, it’s because that’s where the majority of our core consumers are, and what we’re doing is really starting to resonate with them. Chris, you want to talk a little bit about private label?

Chris Work — Chief Financial Officer

Yeah, I’ll talk a little bit about private label and then just catch on the holiday trends part of your question. I mean from an overall private label perspective, as Rick mentioned, you know, that value message is — has been extremely positive. We have seen private label enhance about 500 basis points as a percent of sales, looking at this year — year to date through nine months as compared to nine months last year. So, really seeing that business do well.

And I think it resonate with what the consumer wants. And it’s one of the interesting pieces, as Rick mentioned, just between how brands and private label have moved across the years here. I mean, we’ve seen private label achieve into the 20% before, in the middle part of the last decade. We saw a drop as low as about 11% or 12% at the end of the decade, and we’re back in that 20% range. So, it’s really — it’s interesting to see how it’s moved but been pretty popular with our — with our consumer thus far. From an overall holiday trends perspective, what’s interesting about November and — and what we continue to see in the business is it’s very similar to what we saw in back to school, where we saw the real strength of the business around the peaks.

And, you know, we were not alone. I think other retailers were talking about how it got a little slower after back to school. So, we saw that as we proceed past and out of the back-to-school season. And then, as we moved into this quarter, you know, weeks one and two of November were our tougher weeks. We definitely saw softer volumes there, getting a little bit better moving into the Thanksgiving week.

And then, that week four of November was our strongest week. We were roughly flat in total sales. So, I think that’s a good sign. In regards to what we should expect over the next few weeks is, as you would visualize, as we lay this out by week and maybe more importantly by day, those days and week, that week ahead of Christmas will be very strong with Christmas hitting on a Monday. So — so, our forecast, our guidance is obviously, you know, pretty in line with what our trend rate is if you exclude the 53rd week.

And we would expect that week before Christmas and even that week after Christmas to be the strongest weeks of the remaining weeks left for us.

Mantero Moreno-Cheek — Jefferies — Analyst

Thank you and best of luck with the holiday season.

Chris Work — Chief Financial Officer

Appreciate it. Thanks.

Operator

Thank you. One moment, please. OK, we have a follow-up question from Mitch Kummetz. Your line is open.

Mitch Kummetz — Seaport Global Securities — Analyst

Yeah, thanks for taking a follow-up. Rick, I just wanted to ask you about skate hard goods. Maybe kind of a philosophical question, I don’t know, but when I contemplate on that business over the last 10-plus years, you know, most recently, we had COVID that kind of drove a lot of demand. Before that, it was maybe penny boards. Before that, it was longboards.

You know, at this point, it looks admire that business is probably going to be at its lowest level of penetration in a long time, if not, you know, the last 20 years. Have we gotten down to kind of just the core kids that skate that are buying components? And is that a pretty consistent business, admire, is that where you think skate is right now? And if that’s the case, does that mean, admire, we could be getting close to a bottom there?

Rick Brooks — Chief Executive Officer

Appreciate the question, Mitch, and it’s a good question. You know, skate is — is — while it’s not anywhere closest to our big — biggest department, it’s an important department for kind of the essence of what we’re about. And it’s also — I think the young skate kid continues to kind of guide, be that — that young person, both male and female, who admire to guide on trend. And so, that’s particularly why I think that customer is so important to us. And so, I get what — I’ll add a little bit more color to your — to what you said because, as you know well, right, we had a huge skate run-up in the first part of the 2010s, running all the way up there.

We had the big long-board trend that got boomed up there, and then it all collapsed in ’15 and ’16, and then, we had some fallow years. And then, literally in February of ’19, the skate cycle took off everywhere for us around the globe. And we couldn’t even actually pin down what it was. We had a huge year in skate hard goods in 2019. We’re up about close to 50% over 2018 and 2019.

And then, with the pandemic, much admire with bikes, I think we moved demand for skate hard goods forward. And I think this did speed up the women’s participation in skateboarding. But I think a lot of demand got moved forward and we ran up close to another 50% gain in 2020. Then even with the stimulus spending in 2021, which as we all know, was gigantic for our business and we ran up 20-plus percent in 2021, skate hard goods declined. And that reflects the nature of, I think what you’re talking about, Mitch, the impact of the pandemic on skate hard goods.

And you layer all of that over the fact that, I think, we — we own more share than ever in the skate hard goods world in the specialty retail world of skate hard goods. I think we own the biggest share that there is out there today, and we peaked at our highest share, I think it was in 2020, Chris.

Chris Work — Chief Financial Officer

Yeah, at 19%.

Rick Brooks — Chief Executive Officer

At 19% of sales, that we never got close to that, but that speaks again to the demand pull-forward that happened during the pandemic. Now, today, and I think we are going to forecast this year, I won’t give you the exact percentage, but I do think that as we forecast the refuse with — a refuse in ’21 despite stimulus refuse in ’22 and ’23, which have been significant and I think even outsized for our sales declines, I think we’re very close to the — as you’re suggesting, Mitch, the lowest penetration, maybe an all-time low in skate hard goods as a penetration of our mix. Now, that said, finding the bottom will be really good here because we won’t have to drag, right, of — of the big declines we’ve taken over the last three years. So, finally, the bottom, they’re just flat of benefit in that, but our go through is that we’ll probably bounce along the bottom for a couple of years before we see a next — you know, for 12, 18, 24 months before we see the next upside would be what our go through in skate hard goods would tell us.

Mitch Kummetz — Seaport Global Securities — Analyst

All right. Thanks again.

Rick Brooks — Chief Executive Officer

Thank you.

Operator

Thank you. I’m showing no encourage questions at this time. I’d admire to turn the call back over to Rick Brooks for any closing remarks.

Rick Brooks — Chief Executive Officer

All right. As always, we always appreciate your interest in what’s happening here in our business. So, we thank you all, and we wish you the best for a great holiday season. We’ll talk to you in March.

Thank you, everybody.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Rick Brooks — Chief Executive Officer

Chris Work — Chief Financial Officer

Mitch Kummetz — Seaport Global Securities — Analyst

Richard Magnusen — B. Riley Financial — Analyst

Mantero Moreno-Cheek — Jefferies — Analyst

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