Zumiez Inc.

Good afternoon, ladies and gentlemen, and welcome to the Zoomies, Inc. third quarter fiscal 2024 earnings conference call. At this time, all participants are in listen-only mode. We will conduct a question and answer session towards the end of this conference. Before we begin, I'd like to remind everyone of the company's safe harbor language. Today's conference call includes comments concerning Zoomies, Inc. 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 cause actual results to differ materially from the information that will be discussed is available in Zoomies, Inc.' 's filings with the SEC. At this time, I'll turn the call over to Rick Brooks, Chief Executive Officer. Mr. Brooks?

Hello, and thank you, everyone, for joining us on the call today. With me is Chris Work, our Chief Financial Officer. I'll begin with a few remarks about our third quarter and the start of the holiday season before touching on our strategic initiatives. Chris will then take you through the financials and our outlook for the balance of the year. After that, we'll open the call to your questions. When we shared the outlook for 2024 during our Q4 earnings call back in March, we believed that we could build on the improving trends that we were experiencing at that time and deliver total sales growth for the full year. I'm pleased to report that our third quarter results demonstrate further progress towards our goal as comparable sales increased 7.5%. Our top line performance was fueled by the North American business as comparable sales in the region accelerated from mid single digits in the second quarter to low double digits in the third quarter. US and Canada sales results more than offset some expected and some unexpected softness in our international regions. Total sales of 222.5 million were in the middle of our guidance range as warm weather in Europe hampered demand for snow-related apparel and hard goods late in the quarter. However, thanks to our continued focus on profitability, we reached the high end of our guidance range for earnings at six cents per share. Much the same as the prior quarter, our third quarter comp performance was driven by contributions from multiple areas of our business. Our men's category continued its positive momentum, growing year over year for the fourth consecutive quarter at an accelerating pace. Our women's category, which turned positive in Q1, again accelerated meaningfully after posting strong double-digit growth year over year in Q2, while footwear also experienced a noticeable pickup in sequential demand, driving comps into the low double digits from the mid-single digits in the second quarter. The fourth quarter and holiday season are off to a good start and have us in a good position to deliver a meaningful improvement from our 2023 results. While we're pleased with the progress we've made returning to positive comparable sales growth, improving profitability, and driving cash flow, we believe that business is capable of much more. As you look ahead to 2025, we will continue to focus on the following strategies to grow sales and drive profitability. First, accelerating top line expansion through strategic investments to ensure we are winning with our customers. Our strategies continue to focus on three key areas. Injecting assortments with newness. We are on track to introduce well over 100 new brands in 2024, following the launch of 150 brands in 2023. These new brands constitute a larger portion of our sales this year compared to last year, demonstrating that they resonate with our customers. We recognize that our customers rely on Zoomies to discover new and unique products, and we remain committed to continuing to fulfill that expectation. Private label expansion. Private label represented approximately 12% of sales in 2021 compared to 18% in 2022, and 23% in 2023. We've continued to see our private label share grow in 2024, as year-to-date private label represented over 27% of total sales. The increase in penetration is a testament to our team's ability to capitalize on both trend and value-conscious consumers, providing another avenue for growth. Customer engagement. We continue investing in our people and technology to maintain best-in-class service both in stores and online, aimed at enhancing our relationship with customers and connecting with them in a more personalized and relevant way. Along with these top-line initiatives, we will continue to focus on profitability, both in Europe and in North America. In Europe, we have pivoted from our store expansion strategy to concentrate on enhancing the productivity of our nearly 90 stores across nine countries and our pan-European web business that currently serves the European market. While our work has yielded progress, it has been slowed by what continues to be a difficult cycle in Europe, which in the past couple of months has been impacted by unfavorable weather. Despite that setback, we are confident that by focusing on full price selling for our existing footprint, we can unlock the potential for the business and create value. There's no doubt that trends emerge locally and grow globally. and our current penetration of the relevant markets is a significant advantage to Zoomies over the long term. Overall, we believe we can achieve profitability in Europe with this new focus as we've done in other international markets like Canada and Australia. North America, we've taken actions to improve our cost structure. Along with our plan to close approximately 31 underperforming North American locations in 2024, we're implementing comprehensive operational efficiencies across our business. This includes optimizing store labor through targeted staffing model adjustments, particularly for lower volume stores. We've executed structural changes to reduce shipping and logistics costs company-wide, and have significantly reduced discount selling compared to previous elevated levels. These strategic cost management initiatives are part of our broader effort to streamline operations and improve margin performance. These carefully crafted initiatives have already demonstrated their value, helping us accelerate sales growth while simultaneously expanding margins, all while we continue to operate in a challenging retail environment. While we recognize a significant amount of work ahead, we remain optimistic that these strategic initiatives will continue to drive near-term results and ultimately help return Zoomies to its historical performance and beyond. Our path forward is clear. stay focused, be adaptable, and create value for our customers, our brand partners, and our shareholders. To that end, I want to thank the entire Zoomies team for their hard work and dedication to fostering a culture that has served as a cornerstone of the company's foundation for over 45 years. It will be the driving force behind our future success for many years to come. With that, I'll turn the call over to Chris.

Thanks, Rick, and good afternoon, everyone. I'm going to start with a review of our third quarter results. I'll then provide an update on our fourth quarter to date sales trends and some perspective on how we're thinking about the full year. Third quarter net sales were $222.5 million, up 2.9% from $216.3 million in the third quarter of 2023. Comparable sales increased 7.5% for the quarter. The shift in the retail calendar had a negative impact on our results, decreasing net sales growth by approximately 510 basis points during the third quarter. Comparable sales results, as reported, consider the calendar shift and represent a more accurate measure of operating results. Our third quarter performance was driven by our North America business, which was positive for the third consecutive quarter. This strength was partially offset by a decline in international sales as we put greater emphasis on full price selling in Europe, which benefited margins but pressured our top line. From a regional perspective, North American net sales were $186.8 million, an increase of 2.9% from 2023, Other international net sales, which consists of Europe and Australia, were $35.7 million, up 2.7% from last year. Excluding the impact of foreign currency translation, North America net sales increased 2.9%, and other international net sales decreased 0.3% year-over-year. Comparable sales for North America were up 10.4%, and comparable sales for other international were down 5.6% for the quarter. From a category perspective, men's was our largest positive comping category, followed by women's and then footwear. Hard goods was our largest negative comping category, followed by accessories. The consolidated increase in comparable sales was driven by an increase in dollars per transaction and an increase in transactions. Dollars per transaction were up for the quarter, driven by an increase in average unit retail and an increase in units per transaction. Third quarter gross profit was $78.3 million, compared to $73.2 million in the third quarter of last year. Gross profit as a percentage of sales was 35.2% for the quarter compared to 33.8% for the third quarter of 2023. The 140 basis point increase in gross margin was primarily driven by 70 basis points of improvement in product margin, 60 basis points of leverage in store occupancy costs, and 60 basis points of benefit in web shipping costs. These improvements were partially offset by a 30 basis point detriment related to inventory shrinkage and a 10 basis point detriment related to increased incentive compensations. SG&A expense was $75.9 million, or 34.1% of net sales in the third quarter, compared to $73.4 million, or 33.9% of net sales a year ago. The 20 basis point increase in SG&A expense as a percent of net sales resulted from the following. 50 basis points from increased incentive compensation, 20 basis points of deleverage in non-wage store operating costs, offset by a 40 basis point reduction related to employee training. Operating income in the third quarter of 2024 was $2.4 million or 1.1% of net sales compared with an operating loss of $0.2 million or 0.1% of net sales last year. Net income for the third quarter was $1.2 million or $0.06 per share. This compares to a net loss of $2.2 million or $0.12 per share for the third quarter of 2023. Our effective tax rate for the third quarter of 2024 was 63.4% compared with a modest tax expense in the prior year quarter despite a pre-tax operating loss. The change in our effective tax rate was primarily due to the allocation of losses across the jurisdictions in which we operate. Turning to the balance sheet, the business ended the quarter in a strong financial position. We had cash and current marketable securities of $99.3 million as of November 2, 2024, compared to $135.8 million as of October 28, 2023. The $36.5 million decrease in cash and current marketable securities over the trailing 12 months was driven primarily by share repurchases of $25.2 million and capital expenditures of $14.2 million, offset by $3.7 million in cash provided by operating activities. As of November 2, 2024, we have no debt on the balance sheet. We ended the quarter with $187.2 million in inventory, up 6.5% compared to the $175.9 million last year. On a constant currency basis, our inventory levels were up 5.6% from last year. Given our recent sales performance and current trend, we feel good about our ending inventory balance for the third quarter and expect to continue receiving newness as we move to the important holiday selling season. Now to our fourth quarter to date results. In discussing our fourth quarter results, it is important to recognize the significant calendar shift in holiday movements impacting sales in the quarter. These include One less week in the current year with the fiscal fourth quarter of 2024 being a 13-week quarter and fiscal 2023 being a 14-week quarter. Shifts in the retail calendar, which we expect to have a modest negative impact on the fourth quarter of roughly negative 50 basis points, but benefited the quarter-to-date sales we are reporting by approximately 790 basis points. And Christmas is falling on a Wednesday this year, which we expect will condense more December volume around the holiday and on a comparable basis drive more sales into December. With that said, comparable sales for the 31-day period in December 3, 2024 were up 2.9% from the comparable period in the prior year. Total sales for the 31-day period in December 3, 2024 increased 10% compared to the 31-day period in the prior year ended November 28, 2023 and benefited from the previously mentioned calendar shift. From a regional perspective, net sales for our North America business for the 31-day period into December 3, 2024 increased 10.8% compared to a 31-day period ended November 28, 2023, while international business increased 7.3%. Excluding the impact of foreign currency translation, North American net sales for the 31-day period ended December 31, 2024, increased 10.9% from the prior year, and other international net sales increased 8.3% compared to 2023. Comparable sales for North America increased 5.5% for the 31-day period ended December 3, 2024, compared to the same weeks in the prior year, while comparable sales for our other international business declined 5.9%. From a category perspective, women's was our largest positive comparable sales growth category, followed by men's. The hard goods category was our largest decline in comparable sales, followed by footwear and accessories. The comparable sales increase was driven by an increase in dollars per transaction, partially offset by a decrease in transactions. Dollars per transaction increased for the 31-day period due to an increase in average unit retail and an increase in units per transaction. With respect to our outlook for the fourth quarter of fiscal 2024, 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. We are anticipating that total sales for the fourth quarter will be between $284 million and $288 million. representing growth of approximately 0.7% to 2.2% from the prior year. Total sales growth for the fourth quarter will be negative impact by the additional 53rd week included in the prior year, as well as the retail calendar shift. The total impact of these items will be a detriment to sales growth of approximately 520 basis points in the quarter. Comparable sales growth for the 13 weeks ended February 1st, 2025 is expected to be between 6% and 7.5%. Comparable sales growth is not impacted by the 53rd week or calendar shift and represents a more accurate measure of our operating results. We expect that our fourth quarter 2024 product margins will increase between 180 basis points and 210 basis points from the prior year. Consolidated operating income as a percent of sales for the fourth quarter is expected to be between 7.3% and 8%, and we anticipate that earnings per share will be between $0.83 and $0.93 compared to a loss of $1.73 per share in the prior year, which is inclusive of the $41.1 million goodwill impairment in 2023. Lastly, with the upcoming change in U.S. government leadership and potential for change in international relations, we are anticipating that some of our imported goods may be subject to new significant tariffs in 2025. We are currently evaluating our product inflows from impacted regions, and making determinations as to whether we pull forward some inventory purchases from these areas in fiscal 2024. Depending on the amount of inventory that we take in early, we anticipate that our ending 2024 inventory could grow more than our current sales trends and that it will have an impact on the timing of operating cash flows. We are also evaluating other regions not impacted by these tariff actions for potential future production. Now, I want to give a few updated thoughts on our fourth quarter guidance rolls into our full fiscal 2024 results. Inclusive of our fourth quarter guidance, we anticipate that total sales will increase in the 2% to 2.5% range for fiscal 2024 compared to 2023, despite the anniversary of the 53rd week and store closures previously reported. The 53rd week will have a negative impact on annual sales growth of approximately 150 basis points. After two years of difficult performance and product margin, we believe that with a more stable sales environment and a full price strategy in Europe, we'll grow product margin for the full year in fiscal 2024. With sales growth in 2024, we anticipate we'll leverage SG&A costs year over year. Beyond the benefit, we will receive a moving past the $41.1 million goodwill impairment charge we recorded in the fourth quarter of 2023. With the previously mentioned assumptions, we believe we'll turn positive operating margins for the full year. While effective tax rates are likely to fluctuate significant by quarter, we anticipate that our full-year effective tax rate will be roughly 80% in fiscal 2024 using the high end of our guidance. We are planning to open seven new stores during the year, including three in North America, two in Europe, and two stores in Australia. This is down from 19 stores in 2023 and 32 stores in 2022 as we focus on optimizing our current footprint. We are planning to close approximately 33 stores in fiscal 2024 with 31 of those closures in North America. The number of closures could go up or down depending on our operating results in each location, as well as our ability to work with our landlord partners. We expect our capital expenditures for 2024 to be between $14 million and $16 million compared to $20.4 million in fiscal 2023 and $25.6 million in 2022. The reduction is primarily due to fewer planned store openings. We expect that depreciation and amortization, excluding non-cash lease expense, will be approximately $23 million and consistent with the prior year. We are currently projecting our diluted share count for the full year to be approximately 19.3 million shares. And with that, operator, we'd like to open the call up for questions.

Thank you. Ladies and gentlemen, to ask the question, please first start 1-1 on your telephone, then wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Mitch Kometz with Seaport. Your line is open.

Yes, thanks for taking my questions. Chris, let me start with the comp guide for the fourth quarter. If I heard you correctly, You're saying 6% to 7.5% quarter to date. I think you're running a 2.9%. Could you kind of help me bridge that gap? I assume you're expecting a big December. First of all, can you confirm that? And if so, what gives you the confidence that that's something you guys can achieve?

Yeah, thanks, Mitch, and you've got your numbers right. We do believe comp guide would be around 6 to 7.5, and we're trending around 2.9. As we thought about the fourth quarter and we went and looked at kind of how the quarter's falling and mentioned in some of our prepared remarks the impact of the calendar shift within the third quarter, What we do is what we normally do. We get pretty detailed in our planning, and we went back to kind of prior periods, prior quarters, where Christmas fell on a Wednesday, and we looked at the cadence of sales moving through that quarter. And as we looked at that makeup, what we found in our results is that we will see a higher concentration, our expectation is, we'll see a higher expectation of sales around that Christmas timing so as we looked across the quarter November from a comp perspective becomes a little less important December becomes a lot more important and January a little less important as well so just based on the timing of how the calendar moved we believe there'll be a bigger pickup in December this obviously from a guidance perspective creates a little bit of a challenge we have less sales in uh in at the time we're reporting today than we do in other quarters in the fourth quarter um so that's that's kind of the start of our baseline so we believe it will accelerate as you know we just finished a quarter with a seven and a half percent comp we're really actually quite happy with the trajectory of the business with the apparel brand really performing quite well um And our footwear business has turned positive through the third quarter. Now, that's not the case as we moved into November. But again, we sort of expected November to be a little softer coming into the quarter. And then, of course, as I said earlier, we expect some concentration around the peaks. If we talk about the peaks just in general, the Black Friday weekend was actually pretty good for us. Now, I want to caution in providing these numbers that Black Friday this year was a week closer to Christmas than it was a year ago. But if we just take that time period of Thanksgiving through, actually, we go through Tuesday, the day after Cyber Monday, we were up about 9.9 from a comp perspective. And maybe equally as important, we are up 310 basis points in product margin. Last year, we were very promotional in clearing some inventory, specifically in the footwear category, which is part of the reason that we believe that the footwear category went negative here quarter to date. We got a lot of volume ahead of us is the real kind of crux of providing guidance for Q4. But we're seeing some things within the data that gives us some confidence in the trend line we've seen through the third quarter. And we're generally on our plan in North America for with the time where we're talking today. And that's given us some confidence in how we're planning Q4.

All right, that's helpful. And Chris, you started to answer my follow-up question, which is around footwear because you went from a low double-digit positive comp in 3Q to negative 4Q to date. Is that just a category that is more where demand is just more concentrated around peak buying than like maybe apparel is? Would that explain it? Is that the category that you expect pretty meaningful inflection from November to December?

Yeah, we definitely think there's periods of time where footwear is going to be much stronger. In fact, obviously the third quarter being one of them, which we were very happy with how it performed in the third quarter. I do think there is some concentration around the peaks. I also think that footwear can sometimes be what the person or the individual wants to buy, and we see that pick up post-Christmas sometimes too. It's not always the gift. Maybe it's more of the gift card that comes back and invests in footwear. So we do think there's some different periods for footwear. I think what we're seeing in November after our Q3 is probably more associated with the discounting we were doing a year ago. And that speaks to really what we saw in margin as well. I mean, we have really seen margin accelerate. Footwear has been one of the biggest drivers of that. So if we look at, you know, we break down, we look at full price and sale footwear, our bigger problem in November is sale footwear. So we're just down from where we were a year ago. And I think that's okay as we really focus on full price and full margin. So we'll see how it plays out as we move into the heavier volume here in the quarter around Christmas and after.

And then maybe lastly, on occupancy, what are you expecting in the fourth quarter? Obviously, on a 6% to 7.5% comp, normally you would probably get some good leverage there, but then you're going 13 weeks versus 14. How does that kind of impact occupancy as well?

Yeah, you know, there's a few things going on in occupancy as well as the fact that as we disclosed in our call today, you know, we're going to have some closures. We're planning 33 closures this year, and we've closed 10 stores quarter to date, or through the third quarter, I should say. So we have the bulk of our closures here to happen in the fourth quarter. So we'll see a few different movements that will be tied to occupancy as you would expect. The occupancy on some of our closing stores can be higher as a percent of sales because We don't have a lot of sales in those stores we're closing. So we'll see a few movements on occupancy. I think overall we would expect to leverage occupancy. We've done a good job over the last couple years of trying to get some leverage out of occupancy on a lower comp. Obviously, we deleverage on a negative comp. But this is going to be a little bit fluid. On this type of comp, we would hope to get some leverage on occupancy. All right. Thank you.

Thank you. Will you stand by for our next question? Our next question comes from the line of Richard Magnuson with B. Rowley. Your line is open.

Hello. Thank you for taking my call. I was wondering, what more can you tell us about any promo strategy and ability to be agile in inventory, apart from the point forward of inventory you just discussed? As you progress through the post-Black Friday holiday season, And are there any particular trends that you believe have yet to deliver in this latter part beyond what you've mentioned so far?

I don't think so, Richard. I think we are, you know, we are, basically our promo strategy doesn't really change throughout the year. You know, as we talked about the importance of our private label in terms of delivering value to our customer, both, and again, value doesn't mean just from lower price. What value means is really cool stuff at a, at a value level. structure. So in our case, often that is like the bundling as an example of how we'll do it, where we're giving the consumer a group of products that had a really good value, but it's clearly really trending on an on-trend product. So our promo structuring, price structuring outside of, as Chris talked about a year ago with the significant footwear markdowns we took, when we have unusual situations like that is really pretty much year round. So we were definitely less promotional than our competitors in the marketplace. And that reflects, I think, positively, our results reflect very positively when you understand that, of how uniquely we're positioned in terms of the product assortment, how on trend our product assortment is with private label, and then how well our value proposition works for the customers in how we're presenting product form. So I love that position, right? To be a leader on trend and uniqueness of product because that drives margins and profitability. So we don't really change our pricing structure at all. Now, as we look through the rest of our promotional structure very much at all, as we look into the rest of the holiday season, I think we expect it to be very promotional. And what we focus on is uniqueness and how we deliver uniqueness. And yeah, when we do have markdown issues, we clearly address them. And and address them through that perspective. But again, I think what most people see in our store is just really cool stuff. And when we deliver value, it's through our promotional bundling.

And Richard, I just think the second part of your question on trends, you know, what we're really proud of is what we've seen here through the third quarter in our apparel categories. I think we've really seen some acceleration there, really tied to a few different things, you know, our private label, Brands that we talked about in our second quarter call have continued to do well, as have our newer brands that we've launched within the portfolio. They are representing a larger portion of our overall sales, and I think that's a really good thing for us long-term because it's that continued newness that Rick talked about in our prepared remarks that really drive sales. drive sales in the peak period. So I think we're feeling good about our offering heading into Christmas here over the next month, and we'll look forward to kind of seeing how that performs.

All right. Thank you. I'll get back in with you.

Thank you. As a reminder, ladies and gentlemen, that's star 11 to ask the question. Please stand by for our next question. Our next question comes from the line of Corey Tarlow with Jeffrey. Your line is open.

Great, thanks. I was wondering if you could parse out for us as you think about your endeavor to become more profitable in the U.S. and Europe, what the different moving parts would be, and then if you could maybe rank the opportunity by category or by segment as you think of a bridging margin from what it is today to where you think it could go over time. And then I just have a follow-up on hard goods as well.

Okay. Well, Corey, I'll try to take this sort of high level. As you can imagine, in a business like ours that has operations in so many different parts of the globe, this is a more complicated answer overall. But from a high-level perspective, I guess what I would say is this – Domestically, the business is about growing sales back. As you know, we reached our kind of peak sales there right around the pandemic in 2020 and 2021. Had a very strong run of sales going into the pandemic. And I think for us, our focus is really to get back to that level of sales within the business. That will drive everything from a profitability perspective. Beyond that, we do look up and down the P&L with a variety of opportunities in regards to how we drive this business back into profitability and well beyond where we want to be. It starts with product margin beyond sales, continuing to push product margin and drive product margin growth initiatives. We think it's really important to be a full price, full margin retailer. I think it differentiates you in the marketplace and allows you to really have I think, accelerate that profitable growth. And then we've been looking at things over the last couple of years of really tightly managing costs. And that comes down from everything, as we've talked about on the shipping line items, to areas like occupancy, working with our landlord partners to making sure we're kind of right-sizing to market rents, to how we manage payroll within our stores. And that includes looking at some of our lower volume stores and really challenging our Our staffing structure and the hours put into the model. And I think our teams have responded pretty well. We've been able to take some meaningful costs out of the business. And then, of course, I think the last thing is we've had to make some tough decisions domestically with the shrinking of the business. There has been some elimination of some roles, elimination of events, training, travel, things like that, that we've had to cut in the short term based on where we're at. Internationally, it's a similar and different story. It starts with sales. We've got to get higher producing units. We have to focus on this all the time and driving kind of where we want to be from an international perspective. What we know about both Canada and fast times in Australia is that as we grew those businesses, driving sales was the most important lever to getting them profitable. And so I think it starts there. Beyond that, what we know about our international entities across the board, but specifically in Europe and Australia, is that product margin is lower. So similar to our North America initiatives, we do have various plans in place to grow there. The last part with the international side is because they have historically been unit growers, we do expect to see some SG&A growth. But that growth has got to be moderated and managed within the sales profile so that we can get the right level of flow through. And so I think that's how we're really trying to manage those entities. And then, of course, you know, where we can, really trying to export techniques and things that have helped us here at Zoomies grow over time and scale our business to help them optimize what they're doing in the SG&A layers.

That's very helpful, Keller. Thank you. And then just on hard goods, it's been obviously a pressured category for some time, and it was the most negative category in Q3. How's that trending in Q4 if you talk about any green shoots you've seen in the category, when do you think they could turn, any color here would be really helpful. Thank you so much.

Sure, Corey. The answer to the question is similar here to what we talked about in Q3, which is it's still a tough department for us in terms of results, but the green shoot is really happening in Australia, which went into the downturn of the skate cycle a little earlier than the rest of our businesses. So And they've been positive. I think Chris for five consecutive months now. Yeah. And so, and, and running decent gains in the skate hard goods category. So we're still running down in the other parts of business to be clear. But we're hoping that that is an indicator for us that we're going to see it start to flatten out. Hopefully that will be the first, the first thing for us to both not run a loss, but let's flatten it out. So it's just not a drag on the business anymore and then start up again. And I think as we talked about it on the last call, again, this is a, Our situation at Kate Hargis is really unique in this cycle because usually the cycles are fairly long cycles from peak to peak or trough to trough, about eight-year cycles is what it's run for us. But obviously with the pandemic, a lot of Kate Hargis volume got all moved into 2020. And it achieved its all-time high as a mix of our sales in 2020. And we're now at, I think, a whole time low for the mix. So it would be another indicator for us, Corey, that we're approaching the bottom.

Great. Thank you very much.

Thank you. Ladies and gentlemen, at this time, I would like to turn the call back over to Rick for closing remarks.

All right. Again, I just want to offer my thanks to everyone for your continued interest in Zoomies. And of course, I wish everyone a happy holidays. Thanks, everybody.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.