Good afternoon, ladies and gentlemen, and welcome to Zumiez Inc. First Quarter Fiscal 2025 Earnings Conference Call. [Operator Instructions] Before we begin, I'd 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 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 Zumiez filings with the SEC. At this time, I will turn the call over to Rick Brooks, Chief Executive Officer. Mr. Brooks?

Hello, and thank you, everyone, for joining us on today's call. With me today is Chris Work, our Chief Financial Officer. I'll begin with a few remarks about our first quarter performance and the evolving trade environment before touching on our strategic priorities for the remainder of 2025. 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. I'm pleased to report that our first quarter results demonstrate the continued momentum we built throughout 2024, with our North American business proving resilient despite an increasingly complex macroeconomic backdrop. Comparable sales for the company grew 5.5%, marking our fourth consecutive quarter of positive comparable sales growth. This performance reflects the successful execution of our strategic initiatives and our team's ability to adapt quickly to changing market conditions. What's particularly encouraging is that our results exceed the high end of our guidance ranges for both sales and profitability, excluding a onetime legal sentiment that Chris will touch on later. Our strong full price selling performance demonstrates that consumers continue to respond positively to our merchandise assortments and shopping experience, validating the investments we've made in product newness, private label expansion and customer engagement. The resilience of our North American business gives me confidence in our ability to manage through the global trade environment. In response to changes in the landscape, we've taken decisive action to further diversify our sourcing base and expect to have meaningfully reduced our exposure to China by the end of 2025. This diversification, coupled with continued partnership with our manufacturers and vendors, as well as selective price adjustments will help us offset the impact of tariffs on our business. While the ultimate impact on consumer sentiment from ongoing trade negotiations remains uncertain,…

Thanks, Rick, and good afternoon, everyone. I'm going to start with a review of our first quarter results. I'll then provide an update on our second quarter-to-date sales trends. First quarter net sales are $184.3 million, up 3.9% from $177.4 million in the first quarter of 2024. Comparable sales were up 5.5% for the quarter. As Rick mentioned, the primary driver was our North America business, which showed outsized strength even as macroeconomic uncertainty spurred by global trade policy intensified during the period. For the first quarter, North America net sales were $149.7 million, an increase of 4.9% from 2024. Other international net sales, which consists of Europe and Australia were $34.6 million, down 0.2% from last year. Excluding the impact of foreign currency translation, North America net sales increased 5.2% and other international net sales decreased 0.1% year-over-year. Comparable sales for North America were up 7.4%, marking the fifth consecutive quarter of comparable sales growth. After positive comparable sales in the important fourth quarter 2024, our other international comparable sales turned negative in the first quarter and were down 2.3%. From a category perspective, women's was our largest positive comping category, followed by men's, footwear and then accessories. Hardgoods was our only negative comping category. The consolidated increase in comparable sales was driven by an increase in dollars per transaction, partially offset by a decrease 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. First quarter gross profit was $55.3 million, up 6.6% compared to $51.9 million in the first quarter of last year. Gross profit as a percentage of sales was 30% for the quarter compared to 29.3% in the first quarter of 2024. The 70 basis point increase in gross margin…

[Operator Instructions] Our first question comes from the line of Mitch Kummetz with Seaport Research Partners.

Let me begin on tariffs. I was hoping you could just walk us through that a little bit more. I think when we last met, China was at a 20% tariff. There was no universal tariff. And then obviously, we know where that's gone. So can you remind us what's your China exposure is for the year? How are you seeing tariffs impact your COGS both in terms of what you're doing with private label and what you're seeing in terms of pricing on the third party you use? What are you guys doing to mitigate the cost increases? Just any more color on tariffs, I think, would be helpful.

Yes. Sure, Mitch. I'll take a crack at this here and let Rick chime in if I've missed anything. But as you would expect, I mean, we -- this is something we've spent a lot of time on. Our teams have been super diligent. I give them just a ton of credit with how hard they've worked to kind of navigate through this. I mean, we've -- we started to work on this really last November. As the landscape started to change, we got pretty proactive. As we talked about in our March call, we brought in $7 million at cost from inventory that was coming from China to really try to get ahead of what might have been coming at us. This was really a benefit in the first quarter and probably will be throughout 2025. I think as we -- as you think about tariffs in our business, it's important to note that 30% of the product is our own private label. So we control the sourcing all the way through bringing it into the country. The other 70% is branded. So it requires us to work with our brands. So to kind of break down your question, let me kind of tackle this from a sourcing perspective and a cost perspective. I think from a sourcing perspective, we've made a lot of progress in 2025. When we ended 2024 on our March call, we talked about having a fairly high concentration from China. We are roughly 50% of our product was coming out of China. That percentage has been pretty consistent in the first quarter. That said, we expect to see a meaningful decrease as we move through the year. In fact, our back-to-school, just kind of like-for-like time period will be down about 50% year-over-year, and holiday, we expect the same. So at this point, as we get towards the end of the year, we think we'll probably 30% or even potentially lower in product coming out of China. And long term, our goal in 2026 and beyond is to have no individual country represent more than 20% of our goods that we're sourcing. From a cost perspective, we've tried to be as proactive as possible. As we have experienced an uptick because of tariffs, we've worked with our brand partners and our manufacturers to really rethink the production process and obviously, where things are coming from to keep costs as low as possible. Where needed, we have looked at prices, while also kind of evaluating how we do bundling, markdowns, package deals to really try to adequately offset the cost that we are incurring for tariffs. So obviously, it's an evolving backdrop, but we're pretty encouraged by the work our teams have done to get us to this point, and we'll just keep monitoring where it goes from here.

And just as a follow-up to that, you're still anticipating product margin to be up year-over-year, although I think you said modestly so. Again, how does how does the tariffs on private label factor into that, especially given that you do still have pretty material exposure to China, even though you've been able to reduce that?

Yes. I mean, I think it comes back to kind of the different strategies we're putting into play, right? It's working with our brands, working with our manufacturers, trying to manage, first of all, mitigate any inbound cost we can get, whether it's just the way we work together, the way we're sourcing it from, things like that. Secondly, it comes to looking at how we move private label through our stores. And we have used it in a bundling and promotional aspect, and we've changed the way we thought through some of that. And then in certain circumstances, we have had to take some prices up. So it's a combination of all of the above. And I think, Jeff -- or Mitch, when we put all that together, we think we'll have the opportunity to still grow product margin is our strategy at this point. As you know, even pre-tariffs, we felt like we had some opportunity ahead of that to grow product margin. So it is modestly. I appreciate you saying that. We probably would have had a little bit more in our thought process if it wasn't for this environment, but we continue to think we can still grow product margin.

And I guess my last question, just on other international. I know you've kind of slowed the unit growth in Europe to focus on profitability, and correct me if I'm wrong, but I would think that the profitability there really hinges on comp. And I thought I heard you say that May comp for other international was down like, I think you said 14.8%.

That's correct.

Just help me understand what's going on in other international? And what can you guys do strategically to show better results there?

Sure. I'll take another crack in it and let Rick chime in. I mean -- and let me just kind of back up a little bit to talk about the overall landscape. I mean, we did talk in 2024 about changing our strategy with Europe. We're really slowing growth and focusing on the core business with a key thought process of driving profitability and cash flow. We ended 2024, the business was about EUR 135 million. We were losing money, but less than 2023. That being said, we didn't make the progress we were hoping to make in 2024, but we were seeing a little bit of improvement there. The best we've ever done is really right pre-pandemic. In 2019, we got very close to breakeven, but it's been a tough place to operate over the last 5 years. And so with just under 90 stores now in 9 countries, we definitely have a solid base. But we've got a -- we've really got to push to profitability. That's been our focus. The results of 2025 has started slow. And you're right about May, but Q1 was not where we wanted it to be either. As I think as we look at May and we look at what we've got planned in the second quarter guidance, we are planning other international down at this point, not nearly at the significance of what May was. I think when it's all said and done, we're going to see that there was some holiday shifts and some just timing changes that will moderate what the -- what May was. But to be clear, May was below our plan and where we thought we'd be. So we've started a little bit of a hole here for the 2025. I think the good news for…

[Operator Instructions] I'm showing no further questions in the queue. I would now like to turn the call back over to Rick for closing remarks.

All right. Thank you. And again, I just want to close up with a big thank you, everyone, for your interest in Zumiez and your continued interest in Zumiez. And we're going to look forward to talking with you next September when we get a chance to share Q2 and early back-to-school results. So thank you, everyone. Much appreciated.

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