Good afternoon, ladies and gentlemen and welcome to Zumiez Inc. Third Quarter Fiscal 2014 Earnings 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 would like to remind everyone of the company's Safe Harbor language. Today's conference call includes comments concerning Zumiez Inc. business outlook and contains forward-looking statements. These particular 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 and actual results may differ materially. Additional information concerning a number of factors could cause actual results to differ materially from the information that will be discussed is available in Zumiez's filed with the SEC. I would now like to turn the call over to Mr. Rick Brooks, Zumiez's Chief Executive Officer. Please go ahead, sir.

Thank you and welcome, everyone. I am joined today by our Chief Financial Officer, Chris Work. I'll start the call today with some prepared remarks about the third quarter, and then Chris will take you through our key financial and operating metrics. Then, we'll open up the call to your questions. Our third quarter results came in ahead of expectations, bolstered by stronger than anticipated net sales. Net sales in the quarter increased 12% to $213 million, ahead of our guidance range of $207 million to $211 million, which combined with lower than planned expenses across the business resulted in favorable flow through to the bottom line. Earnings per share were $0.54 ahead of our guidance of $0.47 to $0.50. The better-than-expected sales in the third quarter were primarily result of a comparable sales increase of 3.7% driven by a solid back-to-school season in the U.S. and a good start to the fall and winter season. These trends strengthened into November, helped by cooler weather in the month, culminating in a strong Black Friday weekend which comped over 7% for the four days, Thanksgiving through Sunday. We believe the investments made in our omni-channel capabilities, domestic new stores and international growth enabling us to connect consumers with our unique product assortments on a greater scale and this is evident in our overall performance. Before I hand the call over to Chris for financial review of the quarter, I'll give you a brief strategic update. We continue to expand our brick-and-mortar location throughout North America and Europe. During the third quarter, we opened 16 stores in the U.S., two in Canada and one store in Europe. And as of today, we have opened 56 total planned stores for the year. As we plan for 2015, we remain focused on store optimization…

Thanks Rick. Good afternoon everyone. I will begin today with a brief review of our third quarter results, then our review of our November sales results, and finally our share of thoughts about the balance of this year. Third quarter net sales increased 11.6% to $213.3 million compared to the third quarter of 2013. By region, North America sales were up 9.7% and our European sales were $14.7 million, an increase of 45.7%. Our European business again contributed positively to the overall comps for the quarter and have comped positive in each quarter since the acquisition. Consolidated comparable sales inclusive of our e-commerce business increased 3.7% this quarter, driven both by increased transaction volume and dollars per transaction. Dollars per transaction in the quarter was driven by an increase in average unit retail, as well as units per transaction. In terms of category performance, hardgoods, juniors, men's and accessories posted positive comps while footwear and boys posted negative comps. We finished the quarter with the total store count of 602, up from 548 a year ago. Breaking that down by region, we had 551 stores in the U.S., 35 in Canada and 16 in Europe. Gross profit was $77.9 million in the third quarter of 2014, an increase of $7.1 million or 10% over the third quarter of last year. Gross margin was 36.5% in the quarter down from 37.0% in the third quarter of 2013 primarily driven by lower product margins. SG&A expenses for the third quarter of 2014 were $52.9 million or 24.8% of net sales compared to $50.1 million or 26.2% net sales in a year ago period. SG&A for the 2014 quarter includes $0.6 million or $0.02 per diluted share of the intangible asset amortization expense resulting from the Blue Tomato acquisition, while the year ago…

[Operator Instructions] Your next question comes from the line of Jeff Van Sinderen with B. Riley. Please proceed.

Good afternoon. Rick, maybe you can touch on your thoughts on marketing plans, any changes you think about making there. Just wondering if you've been planning to increase marketing spend as a percentage of sales or kind of keeping it flat and also maybe touch on kind of your latest assessment of the environment, do you think it’s improving? Do you think it's about the same? Do you think it’s getting worse? Thanks.

Thanks Jeff. I will take my shot here for you on both of these and in the current year I can tell you we are effectively going to be very close I think for the full year to being about flat relative to the function of sales on our marketing spend. And for us again, we do a lot of marketing partnership with our brands. So our own dollars have relatively extended reach towards combining our efforts with our brand partners. And I'll say that we do a variety of types of marketing spend both tactical marketing spends tied to seasons as well as longer term brand - significant portion of our spending is also around longer term brand impressions, Jeff. So, I think going forward you can probably expect us to be on a relatively the pace we're on, relative from marketing expenses we are looking to the future too. Relative to the assessment of the current environment, obviously we are pleased with the November results but these are all short term, I still think we're sensitive to volatility in the marketplace. There are a number of factors moving quickly in terms of commodity pricing that will probably hopefully going to be beneficial and hopefully that extends for a period of time. On a longer term view, I think our view is one of caution. I'm saying that the recovery has been slow and painful and I think from a planning perspective, we continue to think that's – we're going to continue to face kind of a slow bumpy volatile recovery for a period of years yet, Jeff. So that's kind of the longer term planning perspective that we put in place. And I guess the only other dynamic I would say relative to the assessment in environment is the impact of smart devices and technology in the consumer world, but I think its still in the process of a radical reshaping of what's going on in the retail consumer world. And I think those are the kind of things that create great opportunity for people that can plan ahead and play in that game. And I think that's one of the areas we've done a good job of trying to be a strong player in that arena. So, that's probably generally are assessment now and I think as we look into the future.

That's helpful. Thanks very much and best of luck for holiday.

Thank you.

The next question comes from the line of Paul Alexander with BB&T Capital Markets. Please proceed.

Hi guys, thanks for the question. Chris or Rick, could you guys delve a little bit more into the comp guidance and the sales guidance for fourth quarter? It implies a bit of a slowdown from November, is it that you’re concerned that all the promotions around Thanksgiving pulled forward demand or particularly good weather or gas prices or what not pulling forward demand or what else, what other considerations are in there? Thank you.

Thanks Paul. So in regards to guidance as Rick mentioned, we’re really happy with how November turned out. As we indicated in our prepared remarks, the important Black Friday holiday weekend was strong but we saw strength throughout the month and obviously we have benefited from the cold weather but I think we also saw good business week-to-week. As we've seen over the last few fourth quarters, we've definitely seen a drop-off in sales between the important Black Friday weekend cyber Monday and what we've seen the week leading up to Christmas. And we typically have seen that drop-off in our stores and seen the web be stronger in that period but has definitely led to those weeks being less significant on a year-over-year comparable basis. So, in planning our guidance we're expecting to see something similar in the fourth quarter of this year, and we would expect to perform in the peak as we have the last few years and therefore our guidance that we've laid out today. So, we do remain cautious but we're encouraged by what's happened here in our November period.

Thanks. Just to clarify. Were you saying that the drop-off post Black Friday is something that you’ve seen historically or I don't know if you would call it on what you’ve seen so far like in this week, is that what you were trying to say, is that now or is that historic?

It's historic. As we've looked at the last few years that period between cyber Monday and the week before Christmas has become less significant, and we have seen declines in those periods. So, as I made that comment I am speaking historically.

Great. Thank you very much.

The next question comes from the line of Mitch Kummetz with Robert Baird. Please proceed.

Thank you for taking my question. Rick, could you talk a little bit about the silhouette business, I mean it’s been a couple of challenging years there, I know you’ve talked about the basketball silhouette in the past and maybe some challenges kind of cycling through a downturn in the terms business, but where are we there, is both guys and girls trending negatively, is there any optimism on the category?

Be glad to try to help you out there Mitch, and by the way you just did my job for me, thanks a lot. You just analyzed last couple of years in trends and footwear. So before I start though with talking about footwear, I just want to hearken back to a common refrain for Zumiez which is the strength of our business model around diversity of brands, around diversity of categories and departments of our business. We have already said that we believe that we're going to go through cycles. We're going to have strong runs in brands or categories of business and we'll take advantage of those cycles. And then when things reverse there'll be other things that will come up as cycles change and shift. And I think, that’s what you're seeing us do this year, we're finding other ways to run games despite what is continues to be a difficult footwear business for us. So, now relative to lot other players in market, I would tell you footwear for us, we have a much more developed business I think as you’re aware I mentioned, as business a part of our business and still is a significant part of our business. But it continues to be tough. And I don’t think we’ve seen any change at this point in terms of performance athletic cycle, basketball been a key driver to that, those basketball silhouette still been - really what's working and I think you can clearly see that in our competitors, some of our competitors performance on the mall in terms of the athletic retailers. So at this point Mitch, we're still right in the cycle and I guess I'm really pleased to see we’re right in the cycles with - as Chris pointed out relatively strong comp sales performance, again relatively strong comp sales performance for the year. So, at this point I don't have any great insight for you Mitch on the cycle. I think, other than this, I do think that our buyers have done a terrific job of getting inventory in a much better position than we were a year ago at this point in time. So I feel much better about that positioning. But it continues to be a cycle that doesn't favor what we do.

As a quick follow up to that, is it fair to say that both men's and women's are negative in footwear? And can you remind us when the women's - when the comp turned negative on women's? Since I know it was originally the guys business that became challenging, it took a little while for the women to then fall off as well.

And I think you generally got about the timing right in your opening comments of question, I'll let Chris confirm that for all for us here, but yes, it is both men’s and women’s as negative. Chris, you want to -

Yeah Mitch, first I’ll talk about footwear in Q4 2012, which is when we really saw the men's business drop-off. At that point in time we still had a trend on our women's business that was positive and that trend was helpful for us through the second quarter and into the very beginning of the third quarter of 2013. So we've been right in five quarters here in a row now that both parts of the business have been down but that trend - the women's trend slowed for us in the summer of 2013.

Okay. Thanks for the color. Good luck guys.

Thanks.

The next question comes from the line of Dave King with ROTH Capital. Please proceed.

Thanks. Good afternoon guys, thanks for taking my questions. I guess first of - mainly my question is on product margins, can you - I guess remind us again or talk a little bit about what drove the product margin pressure in the quarter and then similarly it sounds like that should not necessarily rebound where you're guiding kind of flat on a year-over-year basis, can you talk about then why that didn’t improve? And then with that in mind, Rick, maybe you can just talk about overall levels of promotion both for you understanding obviously that you guys don’t really promote but just for you and then just thoughts on the environment in terms of what you think your peers are doing or your sense coming out of the Black Friday weekend in terms of how it feels out there in terms of levels of promotion? Thanks.

Great. I'll start with product margin and I’ll let Rick talk about the promotional environment. From a product margin perspective, what we said in our prepared remarks is operating profit for the - I am sorry - gross margin for the third quarter was down 50 basis points, which primarily tied to product margin. And as you - and I think about where we've been this year, we've seen – we saw pretty significant decline to product margin in the first quarter as we were clearing out inventory for 2013, that got sequentially better in the second quarter and now it's better in the third quarter as well. And as you indicated in your question, we’re looking at the fourth quarter being flat to prior year. I’ll remind you, our product margin was at its peak in 2013, the highest product margins we've had. So, within the third quarter we did see some mix across our business both within categories and across categories, as well as mix internationally from our international margins to our U.S. margins, as our international business continues to grow the percentage of the company. So there was quite a few things in there and being down 50 basis points, we feel pretty comfortable with where we are from a inventory position and as we indicated in the guidance, we’re looking at the fourth quarter being on track with where we were last year.

Then I'll take a shot Dave at just the overall promotional stands - and you’re right, we are not very promotional and we weren’t across. We were no more promotional this Black Friday weekend than we were a year ago. We did not run any special promotions than we typically run and offer our customers. And nor - I will add that we run promotions that were different across channels either. We're very big believers in that price neutrality across our channels - a very important aspect of being an omni-channel retailer. And so we're very disciplined around making sure that our promotional structure is working for all channels - for all customers however they interact with us in each channel of our business. So, I don't anticipate, and as we look forward into the quarter that you're going to see any significant changes or that we’re acquiring significant changes, and as Chris just indicated from the guidance relative we’re giving you for product margin, I think we feel good about our positioning and that we could offer value to our consumer, but we can do it at strong margins, we have good strategy in place to do that. So again I think that's reflected in the guidance that Chris has put forward here for Q4. Now, from a competitive point of view, I expect this can be brutal still. I guess that would be my senses. I expect that it's going to be a really challenging quarter for most especially retail. I think to be in our position - I will credit our position to two things in terms of not having to discount or oriented in the marketplace. The first is, I think we have just incredibly strong brand positioning developed over many years, an effort of interacting and building our relationship with our consumer. And of course, we have just an amazing group of sales people throughout the organization that know how to really work with customers well, and again as Chris shared with the sales stats, those are pretty positive sales stats you heard from - and in terms of how we’re driving the gains both in transactions, as well as in the - for example November as well as in all the per transaction data too. So, we like our position and we particularly like our position relative to others in the marketplace because I don’t think it’s going to be another pretty brutal holiday season.

Okay. That's helpful. And I guess just as a quick follow up to that, Rick, is it your sense out there that - so it sounds like your sense is that it’s looking pretty brutal out there. But it looks like you've had transactions be up fair bit now for I think several months give or take a few here and there, do you think - I mean can you talk about how you think that shakes out between higher traffic versus conversion? And just do you think there are more people coming back to the mall in terms of your customer at this point or is it still too early to say?

I don't think we’re immune from traffic trends. And we do not - to be clear Dave -we don’t have counters in our stores. So we don’t have specific traffic invasion relative to our operation. But I think it is - I do think it's clear that traffic as you see from various sources that traffic and malls is down. I think what you see from us, is that we are able to - the efforts we put in the place and again through the quality of our sales team, as we are able to convert at higher rates. And so, when we talk about transaction gains for us I think what you're seeing is a fact in this, of what we’re doing in terms of omni-channel efforts, in terms of the quality of our sales teams in our stores, it's a reflection. Again I think those things that make the Zumiez's experience and the Zumiez's brand experience a special kind of experience. And that positions us very uniquely in the marketplace.

Fantastic. I appreciate the color. Good luck with the rest of the year.

Thanks Dave.

The next question comes from the line of Dorothy Lakner with Topeka Capital Markets. Please proceed.

Thanks. And good afternoon everyone. I wondered if you could talk a little bit about the snow business and kind of the corollary to that, if you could just give us a little bit more color on Blue Tomato and sort of talk about, what you're seeing in store performance maybe versus online performance there? Thanks.

All right, Dorothy. I’ll sure take a shot - that is - as Chris said in the comments and let's talk specifically about November, but the comments to be true I think as we - let’s talk about snow biz, it's November. And so, overall our hardgoods business is good in November as Chris commented and we're able to - positive on our hardgoods business. But I'll tell you, it was not driven by our snow hardgoods business. It was driven by the quality of the effort on the skate side of what we're doing. So we’ve been challenged on the snow hardgoods business. The outer ware on apparel side for both men and women's in November, was very successful and again as we commented that it was really related to the cold weather I think that we experienced particularly in the first part of the month. So, now I will tell you the same thing in Europe is has been a relatively warm winter so far in Europe and our snow hardgoods business been tougher there but as Chris said, we continue to comp positive at Blue Tomato. So, again I think the advantages we have here in terms of the breath of our business again in terms of brands and in terms of diversity of categories, gives us the strength to find the things that consumers want whether the weather is one way or another, snowing or not snowing, we are pretty comfortable that we can capture the consumer dollars in our range of offerings. So, yes, it’s been a bit tougher at this point I’d say on the hardgoods side. But again, we’re finding other ways through other hardgood categories, with our apparel business and other departments that we feel like we’re still doing our job of going up and serving our customers with the dollars they have available. On Blue Tomato, we're not going to really - I don’t think breakdown between stores and web other than to say that both are comping positively. And again, we’re just very pleased that the pace of change that we’ve asked the Blue Tomato team to undertake, they’ve just done a really terrific job of going from where we were 2.5 years ago to where we are today. It's been a remarkable effort and I greatly appreciate the hard work of our colleagues there at Blue Tomato. They've just done a really great job.

The next question comes from the line of Liz Pierce with Brean Capital. Please proceed.

Thanks. Good afternoon. Rick, I have a question on - circling back on footwear related to Mitch's question, did you look back in the history that you've had with Zumiez, when you've been in a cycle like this before, what happened on silhouette changes that finally got the footwear to swing back or is it silhouette changes? I should ask it open ended that certainly - it swings it back into kind of your sweet spot? Thanks.

Great Liz, saw even back up on Mitch's question even earlier. I'd like to remind everyone that before we hit this downturn in footwear, we had a long run and we often talk about the hot brand, the hot fashion trend. And as we talked about before the downturn, we talked about the long run we had in the category driven side which is around footwear. So we had a number of very - I think as long as four or five years of really good results in footwear, Liz, so it did actually crept up in the mix of our business before this cycle now. Now again, I think you're pointing out has been around a long time which I have so stepping back in their experience, what do we see changes done in the cycle and again from our perspective, I don’t look at this as just a footwear issue. We’re going to look for whatever the cycle is, that whether it be a trend cycle or brand cycle, another category driven cycle that will push our product category forward. From our perspective, we don't care. So it's not just a footwear perspective is how we look at it. It’s going to be whatever the consumer is going to tell us to where they want to go and what’s important to them is what we’re going to do. And I think we’re pretty good at being there early on trends and cycles or that be brands or again fashion cycles. So it's not just a footwear issue Liz, and that’s why it’s a bit tough to answer your question specifically around footwear. So, we will continue to push forward. So I am clear, we're just not sitting on the sidelines, I know there's nothing we can do about footwear, we’ll continue to test all sorts of new things and try new things, and we're experimenting on many fronts on footwear. But again, I think you have to back up and look at the question or probably say, our job is to serve customers, and we’ll go whatever it is that they find interesting, we’re going to try to be there to serve them.

So, just if I can ask a follow up on that. Do you mean not exclusively within footwear, so kind of anything that might be related to the rest of the store and what you think they want in their lifestyle?

That's exactly right.

Okay. Perfect, great answer. Thank you. That's helpful, thanks a lot.

Thank you.

The next question comes from the line of Christian Buss with Credit Suisse. Please proceed.

Hi, this is Fawn on for Christian. Thanks for taking my question. Your men's and hardgoods and accessories categories have been really strong consistent outperformers, I guess I want to know how do you keep up the momentum within those categories. Can you talk about any new products or new brand introductions on the horizons and within those categories where do you see the greatest growth opportunities? And if you can quickly also touch upon the Stash Rewards Program, would be curious to know any learning’s you’re gleaning from that program? Thanks.

Sure. Our strength of our business as I've said a number of times now, it’s always about diversity, diversity of brands, diversity of categories in our business because we serve the entire lifestyle for this consumer. So I don't want to get down to talk about individual cycles or trends, that's just not what we like to do. But to say that we always find ways and because of diversity our business, just like you would in diversity of your - to find the winners and then go after the winners and we are very good and we have a very strong set of bars, pursuing those things that are working and investing in inventory and taking advantage of the opportunities that are in front of us. So, I don’t want to get in the details, again I think the cycles we have going and as we know skate hardgoods have been good for quite a while now, women’s have been good for quite a while now, men’s has been improving over this year. So we feel good about where we’re at, I think we’re in a good position. And over time right, we’ll see what happens with footwear. And I am sure there will be opportunities, I just can’t tell you when that’s going to be. So I am not going to give any specifics about what we believe is going to drive it, that’s probably our own magic internally as how we run the business. In regards to Stash, we are continuing the effort of collecting and driving forward our membership base there. I believe Chris we’re now at -

Just over 2.6 million members.

Just over 2.6 million members in our Stash program and we are - as I said before, the primary mission has been to sell members into the program. Again, our sales teams are very good at doing that. We have great sales teams and now we're taking the next steps about really how we work with our Stash consumers and become more relevant to them in terms of the messaging that we’re going to introduce for them as a result of knowing more about these consumers. So that's going to be our next step and that we're going to make our first initial steps at this holiday season and we’ll continuing progressing, continue to learn to find out how best we can serve these really important customers or these Stash consumers are our best customers.

The next question comes from the line of Neely Tamminga with Piper Jaffray. Please proceed.

Great. Good afternoon. Rick, we agree with you on this major shift in consumer behavior around mobile, certainly it's impacting time consumption. And you alluded to technology spend and projects for 2015. I was just wondering if you could be just a little bit more specific for our sake around what key functionalities or scenes are you going to be able to do in 2015 that you currently can't do or do well in 2014? Thank you.

Thank you, Neely. Again, as I said in for a long time now, I think we were early on to the idea of omni-channel going back probably five years now in terms of our thinking. We developed clear roadmaps that we began executing about three years ago in our omni-channel horizons. That road, we are continuing Neely to follow that exact roadmap, we're updating as you'd expect based upon what we learn as we roll out initiatives. We have more initiatives, we have more progress to make on that omni-channel roadmap into next year. I think we’re well positioned, we’re on-track and on-plan with the things that we said we’re going to do. I am not going to share with you specifics of the roadmap. Again, I think that’s a competitive advantage for us at this point of the game. And I’ll also tell you that omni-channel still greatly revolves around this idea of great people and stores, the vast majority of our sales still take place in our stores. So, a lot of what we've been doing is unleashing the power through technology of our customer and our sales teams. And we're going to continue to do that, I think we have a very clear roadmap on how we need to do that over the continually next few years. There’s a lot of work to do in this area. I still think we’re at the early stages of the process, not the latter stages of the process. So, in specific to mobile, again, I am not going to share a lot of details about our thinking about mobile. I’ll just say this, I have to tell you I think there is - mobile is just as nuanced, as any other aspect of our business. Now when we talk about…

We look for just seeing those initiatives unfold, and happy holidays to you all.

Thanks very much, Neely.

The next question comes from the line of John Morris of BMO Capital Markets. Please proceed.

Hi, it’s Janine Stichter on for John Morris. We were just wondering on the topics of omni-channel and e-commerce, if you continue to make investments there and see really strong trends, is there any new thinking in terms of your target for North American stores I think it’s 600 to 700 and kind of what metrics do you use to assess that opportunity? And then along those lines, can you just remind us where you might be underpenetrated in terms of bricks-and-mortar stores via in terms of region or multi?

Certainly, I’ll take the overall perspective, and then Chris will talk about maybe more targeted areas where we have yet to penetrate. You can also see yourself by this if you could look at all our mobile - all of our cases you would see the holes we have yet to cover within the U.S. So the quick answer to your question and Janine there is no change to the target at this point. We're still in that 600 to 700 range. Although like we said in our prepared comments, we continue to really think about this, not just as adding stores but just integrated view of the world, right. That is all one channel reinforces every other channel from no matter angle you look at it. So, we still have opportunity in the U.S. to add stores, we still think that is a general range but it is also about optimizing the portfolio. So as you heard us say, we’ve closed a few stores this last year and some of them are necessarily closure there I might – we characterize them as repositioning locations within to serve our market - a particular market, where we close one location, open in where we perceive as a better location for that marketplace. You're going to continue to see us do that. We're going to open - we’re going to continue to open stores in markets we are in, and we’re going to continue to optimize the portfolio of stores we have - or at the same time we’re going to manage risk at the low end of our portfolio to make sure that we aren’t overexposed in our lower performing stores and that we can exit those stores if we need to in a reasonable amount of time. It's a very…

Sure. From a regional perspective, we were looking at a map together, what you’d see holes are basically from the Chicago to New York area. We got some good markets to fill in there and then as you move to south between Texas and Florida, that’s where the bulk of our growth is, but I will say we continue to fill in other markets that we’ve been doing in over the last few years. So, there's other opportunities across the country but those two areas are where I highlight the majority of our growth. From a metric perspective as we do look at new stores, we have pretty high metrics. I remember our new stores specifically our new stores and new markets are opening up at 70% to 80% of what we believe they’ll be doing at a mature level. And we would expect those to payback in 18 to 24 months. We have pretty big return rates as well in the invested capital. So we do put our stores through some high hooks to open them. We’ve been pretty good at opening productive new stores.

Thanks a lot.

The next question comes from the line of Ed Yruma with KeyBanc Capital Market. Please proceed.

Hi, good afternoon. And thanks for taking my question. Rick, how would you assess the overall profitability of Blue Tomato versus kind of maybe your targets that you laidout when you acquired the business - I know you've had some pretty decent sales numbers that are now - and you reverse some of the contingent consideration last year. So I guess how would assess the performance there? And I guess what you're interest in investing more capital against the European opportunity given the macro conditions there? Thanks.

All right, thanks Ed, for the question. I will let Chris talk more specifically about the kind of historical timeline. I know he will recap this where we thought we were at the level of performing at the time acquisition. I’ll let Chris talk about that. But let me talk more about the opportunity in Europe. We look at the opportunity in Europe and we think we have a very, very big opportunity in front of us. And let me combine that with the fact that we believe we’re partnered with the best operator in Europe. And that's based on their historical performance pre-acquisition. Now, post-acquisition, again as I said earlier, we’ve asked them to do a tremendous amount, we’re asking them to grow at a very rapid rate relative to what their base is. And we have made heavy investments there, Ed, because of that both in physical stores from where we were and Chris can recap this in a moment, but also in terms of talent we’ve made big investments. That being said, Blue Tomato has grown both it's web business and it’s store business in terms of new stores and comp store strength. So very, very encouraged by what we see there. I think, we are in that very unusual position is that we have, I think a great partner, people who really understand the market in a way I think would have been possible for us to do being here in this continent. And I think that difficult environment in Europe, Ed, is actually probably an opportunity for us because many, many other people are struggling this market while we have the opportunity to go out there and consolidate share in the marketplace. And as I said, I think we have much like we have in the U.S. I think we have the dominant platform in the U.S. Our opportunity in Europe over the next five and 10 years is to build the dominant platform in Europe for this lifestyle. I think we're well on our way, I think team there is really up for the challenge and is ready to tackle it and I think we've made huge progress in establishing a base in our Blue Tomato business at this point. And I am pretty excited about where I can go. I think the opportunity is very, very big in Europe and as we get further along this will be - I think we'll be able to quantify that here over the next couple of years will be willing to come out and actually put a number to what that is. But the opportunity is very, very big in terms of the European opportunity. And as we've done at this point, we’re just looking at the developed side of Western Europe. So, live opportunity there. Chris, you want to give any more historical context to that.

Yeah. I just kind of summarize where we’ve been from the acquisition. Because I think it is important, Blue Tomato is not a huge part of our overall business at this point but for them they've had massive growth. In 2012, when we acquired it, it was basically a website - an Austrian based website with three stores. We added additional three stores 2012, post-acquisition and then double their size again in 2013, finishing with 12 stores and then as we mentioned on our prepared remarks, finished with 18 stores today. So as you can imagine, the infrastructure needed to not only for that type of growth as well as to take them from a private Austrian company to a public international retailer was significant. So, as we think about Blue Tomato today and the opportunity that Rick laid out, the investment was needed. So at the time of acquisition, it was on par from a profitability perspective with our U.S. business, and today it’s probably more a breakeven business excluding charges. But like most investments that we make, we believe this investment will be on the leverage in the years to come, again we feel good just as Rick mentioned with the leadership team there an their ability to operate the business and as we will continue to make investments in Europe, but we expect it to contribute to the bottom line as we continue to grow the business.

Great. Thanks so much guys. Best of luck this holiday.

Thanks Ed.

The next question comes from the line of Lee Giordano with CRT Capital. Please proceed.

Thanks. Good evening everybody. Can you talk a little more about the accessories business and what’s driving that and any new initiatives this year in that part of the store versus a year ago to maybe drive traffic? Thanks.

Hi Lee, we always have initiatives to drive traffic. And we try to do that in every category, and every department is comping up. So, yeah, we always get them, and I can share with you what they are. I think our accessory business has been solid for quite a long of time. Just over a year - so we've had a good run with accessories, I can tell you there are number of things that are working here particularly over the last month in November. We have a number of categories that are working for us in the accessory department both men’s and women’s accessories. So, I don’t really have any - a lot more add to do that, I don’t know if you do Chris, but generally again, we’re not going to disclose the individual things that are driving the business but our job is to have things in each of the businesses that are either driving it or minimizing our exposure in a down trending category or experiment to find things for the upside. So, I think we feel pretty good about where we're at. Many again is multiple categories within accessories are contributing to where we’re going. So we feel pretty good about the business.

Great. Thank you.

Your next question comes from the line of Carla White with Jennifer Black & Associates. Please proceed.

Hi, Rick and Chris. Let me just add my congratulations on a great quarter and thank you for taking my call. Last quarter you guys talked about showing in markets where you’re underpenetrated and doing some testing in off-mall locations. I just wondered if you could provide some additional color as to what you're seeing from those stores versus your mall locations? Thank you.

Thanks Carla. And again, we continue to execute against that plan. We have opened a couple of suite stores and we continue to have a small portfolio of off-mall locations around different parts of the country. Our suite stores, we are only a year or two into this point, Carla. So I don’t think we’re ready - we’re prepared to have any great insight to that at this point other than to say that the stores that the first few we opened that are in their first year comp are doing well and so we’re encouraged by that. But it’s too early in the process to make any large conclusions about it. And I’d surely like to have bigger sample before I would talk to you more broadly about what that opportunity is and how big that opportunity is. So, but like everything else we do, just like we do in the product side, we’re pushing around the edges of what can we do in real estate, what does it make sense to do. We’re looking at how we’re testing some of our most mature markets, how we fill in what we view as holes in the marketplace relative to where we're not - we believe we’re not in a position to serve the customers that are in that market. Those are where we’ve seen - a few locations and perhaps script centers, in locations like that where we’re coming back and testing and say, can we make this work. Again, in an omni-channel world, I don’t want to neglect that point of view. It’s all about serving customers in multiple contact points. So, previously asking the question, it’s too early for what we’re going to do and it’s hard for me at this point to quantify what it might mean in the long run. But yes, we’re out there testing and I don’t have - I can tell you I don’t have any negative things to say at this point about what we’re doing there Carla, but the sample size is too small to drive any major conclusion at this point.

Thank you so much

There are no further questions in queue at this time.

All right, let me conclude by just thanking everyone for their time today and of course wishing everyone a happy holiday season here, as we get a chance. We retailers don't celebrate holidays that much because we're too busy but certainly wishing everyone a happy holiday season. And we look forward to talking to all of you when we talk about fourth quarter results in March. Thanks everybody.