Good afternoon, ladies and gentlemen. And welcome to the Zumiez Incorporated Second Quarter Fiscal 2019 Earnings Conference Call. At this time, all participants are in listen-only mode. We will conduct the 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 Zumiez Incorporated 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. Additionally, 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 filing with the SEC. At this time, I will like to turn the call over to Rick Brooks, Chief Executive Officer. Please go ahead, sir.

Hello, and thank you everyone 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 brief remarks regarding our second quarter and back-to-school performance to-date. Then I'll share some thoughts about the future before handing the call over to Chris who will take you through the numbers. After that, we'll open up the call up to your questions. We continue to be very pleased with performance of the business as both top and bottom line results exceeded expectations. Comparable sales increased 3.6% in the second quarter versus our outlook of flat to 2%, marking our 12th consecutive quarter of positive comparable sales. On a two-year and three-year stack, basis second quarter comps are up 9.9% and 14.6% respectively. Our relentless attention to serving our customers continues to fuel strong full price selling, which combined with the powerful operating model we build around the single cost structure and a steadfast focus on long-term strategy, has translated into a significant improvement in profitability. Second quarter earnings per share more than doubled year-over-year to $0.36 from $0.17, which was $0.16 above the high-end of our guidance range. As we moved into the third quarter, our momentum has accelerated with 7.1% comparable sales growth in August. This is on top of 9.5% in the year ago period and represents our fourth consecutive back-to-school season with strong comparable sales in the business. Our performance is a testament to our team's ability to consistently execute our consumer centric growth strategy. It is the key elements of the strategy that we believe has separated out from the competition, and will continue to distinguish Zumiez as a clear winner in the future of retail. Before I hand the call over to Chris for the numbers,…

Thanks, Rick and good afternoon, everyone. I'm going to start with a review of our second quarter 2019 results. I'll then provide a brief update on August before discussing our third quarter guidance and our updated perspective on the full year. Second quarter net sales increased $9.4 million or 4.3% to $228.4 million from $219 million in the second quarter of 2018. Contributing to this increase were positive comparable sales growth of 3.6%, and the net addition of seven stores since the end of last year's second quarter, partially offset by a decrease of $1.2 million due to changes in foreign currency rates. During the 2019 second quarter, our comparable sales are driven by an increase in transaction volume, as well as an increase in dollars per transaction. The increase in dollars per transaction resulted from higher average unit retail and higher units per transaction. During the quarter, the hardgoods category was our largest positive comping category, followed by footwear and accessories. Men's was our largest negative comping category, followed by women. From a regional perspective, North America net sales increased $5.9 million, or 2.9% to $206.9 million. Other international net sales, which consists of Europe and Australia increased $3.5 million or 20.2% to $21.5 million. Excluding the impact the foreign currency translation, North America net sales grew 3% and other international net sales grew 25% to 28% for the quarter. Second quarter gross profit was $77.2 million, an increase of $4.7 million, or 6.4% compared to the second quarter of 2018. Gross margin was 33.8% in the quarter, an increase of 70 basis points compared to 33.1% a year ago. The increase is primarily driven by 40 basis points of leverage on our store occupancy costs, and 20 basis points decrease in distribution and shipping costs. SG&A expense was…

Thank you [Operator Instructions]. And our first question from Sharon Zackfia with William Blair, your line is now open.

Hi, good afternoon. Sorry for my voice today. But a couple of questions on the guidance for the third quarter, I guess, I'm curious, given the strong start in August. How you're looking at September and October? And why you would expect such a deceleration in the comp trend. And then on capital allocation, a little surprise, there wasn't more share purchase activity. So if you could kind of talk about your thoughts as it relates to the share repurchases?

Sure, Sharon. Yes. I'm happy to take those. Obviously, as it relates to our Q3 guidance and our annual guidance, we're super happy to show the growth that we've projected here now with our annual guide planned to be over 20%, and our Q3 guide of earnings growth well over 10%. So obviously, as it relates to the sales cadence, it's pretty interesting position as we think about where we were last year where we did a nine plus comp in August that was followed by comps that were much, much lower in September and October. So as we thought about even our guidance last year after coming out with a 9, we ended up at -- we guided to 4 to 6, and came in at 4.8 comp for Q3. So clearly, what we've seen for the consumer over the last couple years, or a couple of cycles of back-to-school, is that there tends to be some slowdown after back-to-school. Now obviously, our goal is not to fade into that. We're still pushing very hard here with right around 50% of the quarter in to continue to drive comp, but we took a little more conservative approach in that guide for Q3 based on the trends we've seen over the last couple years. As it relates to the capital side of the business and what we're thinking from a cash perspective, not a lot of change from where we've been historically. Obviously, we're super happy with where the cash balance stands around $188.5 million, so pretty good increase, up 42% since last year. That year-over-year increase is really driven by cash flow from operations offset by CapEx. So the business is doing a good job of generating cash. And as you know, we have $75 million buyback still outstanding, and we continue to review that capital plan with the board. Our strategy is very consistent with what you've heard from us in the past. We're going to, first and foremost, invest in the business. And I think we're doing that through our CapEx. We're going to find ways to look outside the business that we can return value to shareholders. And lastly, we'll return cash to shareholders. And I think if we look back historically, we've executed on all those things. We've invested in our store base, both domestically and globally. We've invested in our team. We've invested in our integrated approach to retail, really bringing the stores and web through one customer experience. We've gone through acquisitions. We've done both the Blue Tomato and Fast Times acquisition. And we bought back over 20% of the company since 2012. So as we look to the future, I think this is kind of what the winners in retail are going to be able to do. They'll be able to do all those things. We continue to review where we're at with the board, and we'll continue to try to execute on that strategy as we move into the future.

And our next question comes from Janine Stichter with Jefferies. Your line is now open.

Just want to get any updated thoughts you have on your long-term operating margin potential. I think in the past, you've talked to high-single-digits and you're going to end up pretty close to that this year even with some of the headwinds you talk about between hard goods mix shift, international being lower margin and just private label still being above historical norms. So give us some thoughts just about how you think about where you potentially push towards their chance to get pass back to double-digit margins that you've seen in the past? And then as a corollary to that, can you talk about how you're thinking about private label this year? You had a big decline in penetration last year. Are you assuming that you mix that a little bit into private label this year in your merchandise merchant guidance? Thank you.

Sure, I’ll jump into the first question on operating profit and then maybe share a couple of thoughts on private label, and let Rick add anything if he'd like. I think, overall, from an operating profit perspective, our goal is to drive this to the high single-digits. As we look at this year, I think we're kind of getting to the low end of that, which we're excited about. Our strategy here as we've laid out in the past is really kind of two-fold. As we look at Canada and the U.S. in North America, they're fairly built out from a store network perspective. We're looking at these long-term that we can grow sales in the low single-digit, be very opportunistic in how we think about on our investments and really try to push forward in these markets, and grow earnings ahead of sales. Internationally, as Rick even pointed out on the call today in his comments, we got a lot of growth ahead of us. We're super optimistic with how those businesses performed here in the first half of the year and especially in Q2. I think we're getting some good momentum with our global strategy here of really sort of incubating some process and ways to serve the customer here in our mature markets in North America, and exporting them as our international concepts already. And we feel like that's working. And I think if we can do that right, we can continue to drive profit in the international markets, which will help the overall operating profit and we can push to kind of that higher single-digit operating profit level. At this point, to get back the double-digits, I'm not going to say we're not going to try but we're looking at the model here at that high…

Thank you. And our next question comes from Jeff Van Sinderen with B. Riley FBR. Your line is now open.

Hi, everyone. And let me say congratulations on great work for back-to-school. I have one question and then a follow up. Can you speak a little bit more about how you're thinking about the overall apparel segment of your business? If it trended positive in men's for August, seems like we're still in the strong branded cycle for your niche. And I guess how would you expect the apparel category to evolve for holiday this year once we get through your kind of the interim post back-to-school period?

I'll start, Jeff, and then Chris add in his thoughts too. I mean, I don't want to go back to the strength of our model. Our model is about diversity of categories and with department and categories and then of course diversity of brands, both trending brands, as well as emerging and growth brands. So I'm going to say what I always say, and I know you guys love this, which is I just want to run a game. And I don't care how we get the game. I don't care whether it's a mix of apparel. Our teams are working super hard on all fronts to get gains in all departments all the time, frankly. And what we have to do is again listen to our customer, go where they tell us to go. And right now, they are telling us that stake hard goods and footwear is where they really want to see newness and freshness in what we're doing. And yes I'm encouraged by -- and I'll let Chris comment little bit on the difference in men's in August. That's great. I think our buyers have done a great job around again getting newness into the market in August. But really, Jeff, I just want a gain I think we can run gains, we can then drive product margin dollars, we drive gross margin dollars. And we're really good at controlling the cost side of business. And we'll drive up even in today's world where we don't have to run a big gain. We can drive a lot of operating margin dollar flow-through, profit dollars flow-through on these gains. And that's what I want, get the comps, deliver results, drive the bottom line. I don't care how we get them. So we will let our customer drive that. Chris, you want to share little bit more about the change between Q2 and August in terms of apparel?

Yes, absolutely. I mean, obviously, one of things we are looking at here is over the last two quarters, apparel has trended down and it's been really hard goods and footwear that's driven the business. And obviously, to see men's turn positive in August was a good sign for us as well. I think to add onto what Rick saying, this is just kind of another example of how our model works. And we look at obviously sales many different ways. One of the ways we tend to look at these things is, hey, our top 10 trending brand how did they compare in relation to the bottom 10 trending brands. And I think what's really unique about August is, again, it just sort of speaks to the model, is the top 10 new brands performed significantly better than the bottom trending brands. So that's a really exciting thing. And then you couple that with two of the top 10, including the number one, weren't even in our ecosystem a year ago. And I think that again speaks to just our buyers' ability to generate trends, our entire team's nimbleness to move and get that product in-house and out to stores and our sales teams to sell it. So I think this is a really good thing. As you would imagine, a lot of these brands play in the t-shirt in fleece area, which is a big part of our business in back-to-school. And so we saw some good trends there. And we will see how that plays out for holiday. Back-to-school has been a good indicator of us for holiday. We're obviously up against much stronger two-year and three-year stacks here as we move into the back half of the year. But we're continuing to believe we can grow through that. So I think it's to be determined on holiday but we're feeling good about where we're positioned here with our Q3 guidance.

Okay, that's helpful. And then if we can switch to international for a minute. Just wonder if you can elaborate a little more on the trends and drivers of international. Wondering if you are seeing footwear hard goods trends lead there similar to the U.S.? And then any thoughts on the outlook for international for holiday.

Yes. I'll start again and let Chris add-in, Jeff. But the headline to your question is yes and that we are seeing hard goods and footwear being strong, in fact strong all around the globe. And they've basically almost turned on all at the same time in really late January, early February and then have accelerated in through the spring months in terms of skate hard goods. So this is one of those areas from me that's we've always seen -- we've seen this. As you know, we have the evidence that's true that emerging brands can quickly become global buys, go from local to global and of course, be localized in every market around the world for us. We've seen that with trending brands where we've seen the fashion retro 90s brands go quickly. And when they go, they go everywhere in the developed world at the same time. This is the first time we've really seen it with a category driver like skate. Remember, we've been running down for four years in our skate hard goods business. And then literally it just turns on everywhere and we're not exactly sure we've asked our teams what was the catalyst, we're not exactly sure what the catalyst was. But this is why we stayed consistent and authentic with being positioned, never going away from skates, sticking with as a core part of who we are and how our customers express their individuality, the consistency is super important. Our brand partners understand that. And we're not going to chase it like other retailers might try to do. We're going to stay true and authentic. We're right those four years of tough results. And now we're in a multiyear cycle of positive results relative skate hard goods. So yes, those are benefiting…

Okay, I wasn't sure if Chris was going to weigh in there?

Yes, I mean, I think the only other thing that I would touch on, Jeff, is you asked about holiday and to add some more color to what Rick said, and Rick talked about Germany, I would tell you we’re super excited about our stores in Austria and Switzerland as well. We’re excited about where the web trends have gone, I think it's all working together. And we’re optimistic, we’re going to drive a much better result here for 2019 than where we were in 2018. And that’s built into our guidance and our annual thoughts here. Obviously, holiday is always dependent on weather and we do still have a big snow business, and while that’s diversified over the last couple of years, as we continue to grow into Northern Germany and Netherlands and other places. It’s still a big part of what we do over there, so that’s a big part of Q4, more of their business is in Q4 than any other part of the year, but obviously the signs are super positive here and how the class of the stores are performing and the business overall, and our ability to leverage here on the elevated comp.

Okay, thanks and continued success.

Thank you. And our next question comes from Mitch Kummetz with Pivotal Research. Your line is now open.

Yeah, thanks for taking my questions. Just hoping to drill down on Germany a little bit, I wasn’t surprised Rick for you to say that Germany was a big part of the -- kind of the nice comp that you’re seeing in Europe. And correct me if I'm wrong, if I recall correctly, when you guys opened up Germany that was a bit of a struggle. Some of the stores didn’t go so well. And I think that puts some pressure on the profitability of the Blue Tomato business. And help me understand, what’s changed? Did you figure something out? Is it systems, is it leadership, is it something else that has sort of sparked a turnaround in Germany? And I'm guessing the stores are still in terms of like productivity, probably still kind of lack the rest of the European business. So, I'm just trying to understand like how much opportunity is there as those stores are comping better they kind of get to sort of a maturity ramp, if that make sense so?

Yeah, it does Mitch, and again I want to make sure and clear my comments about Germany. Germany is the leader in terms of our comp, but we’re getting good results across our stores, platform in Europe and our web platform. Just want to be clear about that. Germany is just a stronger player within that platform. But we’re doing well in Austria as Chris said, we’re doing well in Switzerland. We’ve been healthy in a couple of new markets, so I think we feel good about how we’re performing in those new markets throughout the gauge. So, Germany is such a leader and I think it’s a factor of a couple of things. And we knew, from the work we did before we entered the German market, we had done a lot of work. We worked with some outside parties to help us understand the marketplace. And we knew from beginning that the German market was a tough market to crack, that it would take three to five years from opening of our stores, to really start to have the consumer trust and believe in us in that marketplace. So I think, some of it Mitch, is simply -- we’ve been there a while and we’ve started to build scale in the marketplace, which is important I think for customer recognition of what we're doing, and we're gaining customer trust through the fact that we're delivering a really good experience for our customers. And I think it Germans take a little bit more time to accept new retail ideas and what we're seeing is our dedication to that. The hard work of our team, I can tell are engagement in our stores is at the highest level it's ever been in terms of serving the customers and that’s a…

Great I appreciate that color. And then Chris, I think you mentioned in your gross margin discussion that shipping, distribution shipping improved by like 20 basis points, hopefully I heard that correctly. If that was the case could you -- was that just a function of just the scale that you're getting to your e-commerce business? I know that when you guys, well actually that’s not right. But let us move towards trade area optimization and shipping out of the stores, I think initially there were some issues with split orders. I'm wondering if you've gotten better at that or what's really driving the improvement from a distribution shipping standpoint?

Absolutely, and Mitch there is a variety of things that relate to this, obviously the comp levels are helping, we're getting a little bit of leverage out of some of the fixed cost structure within our distribution network. There are some things within the four walls of our DC that we are working on that has helped to provide some leverage as we go outside the DC, we had some initiatives around some of the shipping cost that we have around moving product around our store system, that have actually taken into fruition and create some value here in the first six months in the second quarter, specifically. And now in the B2C shipping perspective, you are absolutely right. This was something as we moved out to all stores. We've seen challenges with split orders. We saw challenges upfront with how we allocated product around the country and shipping times to customers, that's something we continue to work on, it's how do we optimize product within a trade area, how do we optimize those shipping algorithms .So where we do see increases in split at times, we're able to offset that through other types of shipping and overall it's come together to show some value really across all of those things. So we're super happy to be leveraging distributions shipping cost, it's an incredibly hard area to leverage from a rate perspective, whether you're working with, obviously the carriers and/or the minimum wage impact, specifically with our distribution center located in California. But like a lot of things at Zumiez we try to be really creative in where we can work to optimize or take cost out of the business. And I think we've been pretty effective at it through the first six months.

And the other thing I'd add to Chris' comments Mitch is this, we continue to work hard on the concepts of what trade area means for us, how we define it, what the roles of stores are within a trade area. And the roles of key people even within the trade areas for serving customers. We have -- we're now moving beyond the discussion and definitions of how do we execute against this at a higher level. We have new measures around how much of product is available every day to meet consumer demand, total consumer demand in a trade area, and our buyers are, as you would guess, with our competitive teams are responding really well to that, and we're getting better at it. And so all these factors get into play that will have a multiple benefits of being again, fast to consumer, showing the consumers, having more of what consumers want in every trade area. And then, of course, that more of it, means we’re faster in getting the shipment delivered to them, et cetera, et cetera, et cetera. And we gain share as we do that from delivering to the customer's higher expectations. So this is one of those areas for me that set us about us making progress in the execution, the concept of trade area. How we see it playing out, how we understand the role of stores, understand the role of key managers within that. And how our teams work to serve customers, cross functionally in the organization, we do split it, we do splits, right. More of the products, always available every single day to meet demand. This is a continuous effort to improve every single day as Chris mentioned, and this is something we’re working really hard on to improve a lot more and I think we have great potential to do it.

And our next question comes from Jonathan Komp with Baird. Your line is now open.

I want to ask you about some of the emerging brand trends that you called out, and especially [Whada] in particular, perhaps scaled quicker than we've ever seen over the last few months. And I just want to ask more specifically, maybe what's changed or what's different, that's allowing you to scale new trends so quickly? And then also, I know in the past, you've talked about hot individual brands maybe reaching mid to high-single-digit type sales penetration, when they're really hot. And I just want to ask, if that's the type of opportunity you see for some of the more recent brands that you've scaled?

I mean I would tell you Jon that I don't think we're seeing anything new here in our ability. It's our ability to react to customers. We constantly are buyers of the whole program for rolling out new brands for how many stores they show well up to. There's no one answer to be clear based on each brand. We continue to rollout a lot of new brands and I believe we're on track for our goals this year rolling out new brands. So it is then up to the customer adoption, it is up to the job of our brand partners execute on their end of their marketing and brand positioning in the market. And I would tell you that we still have a ton of room for improvement in our ability to respond to customer demand here. And that we need to get way better yet being able to respond to customer demand and that we actually have too many gaps yet and how quickly we’re able to respond. And our teams are looking at how can we improve that, it was to both serve our customers better, but to serve our brand partners better too, because the last thing any of us want to do is have to buy a ton of product and see it in stores all at once and then see it go to nothing. We'd rather have it flow consistently through those products through our system, all use with maybe just on the edge or running out of product, rather than having too much product. So I would tell you that we have a lot of work to do here yet in working with our brand partners rethinking the ecosystem for our consumer niche and reworking, who does what on behalf of those…

And I guess as a follow up, maybe your model hasn’t changed per se, but would you say the current attitude of the consumer and the speed of the trends you’re seeing, it seems well as the openness to try new brands. Do you think your model and the advantages that provides -- or more advantageous given the current consumer environment going forward relative to maybe what you’ve seen in the past?

I think our model is built to do exactly this, and our customers now know us as the place to come, to find what’s next. And that’s the trend cycles relative to trend brands like Retro 90’s. My expectation for our product team is, we have those trend cycles with a very front of the cycle not trending others but right there at the front of the cycle. And so, our job is to be there, to lead in those areas, I think we’re pretty good at doing it. I think our big challenge Jonathan is going to be over the next five years and 10 years as we look forward is that I really believe that trend cycles are going to speed up even more. And so if you have brand to kick off where you have global demand, again I think we all have to sit down and think about how we work together to meet that global demand, wherein in trend cycles that are going to be even faster. So those are the kinds of things that we’re working on here and actually trying some new things about how we might be executing with that. And as we test and try those things in the U.S. we’ll be able to export and as just Chris and I both talked about here to our international platforms, creating one really big fast retail platform to meet the demands of what we think are going to faster and higher expectations for our customers or customer will have in the future. So, always looking for continuous improvement in this area. But yes, I think this is right up our alley and I think as brand cycles get even faster, we’re going to be maybe the only retailer that can be respond in our lifestyle niche to the demands of the consumer for global trending product.

Okay, great. And one last follow up for Chris. It looks like the second half margin outlook, you’re not really embedding much expansion even though the first half has expanded pretty significantly. So just wanted to maybe understand the factors behind those assumptions, and also if you could include just comments on the product margin for the third and fourth quarter, what you’re seeing there?

Yes, let me start with product margin as that kind of leads into the overall operating margin and growth. Just a couple of things here, from a product margin perspective, we called out in my comments on the script, some of the challenges the model is having right now in relation to product margin and that’s specifically being that the most highest trending items of hard goods and footwear have a lower product margin than the apparel categories that were trending a year ago. So we have a mix issues there. And then also internationally, the top-line is growing at a faster pace than domestic entities. So internationally these also have a lower overall product margin based on where they're right in their life cycle. So if you take those two items together we are seeing some drag on product margin. We guided the year to down 10 to 20. That would be an acceleration to get there. We have an acceleration in the back half from where we’ve been in the first and second quarter. So the Q3 guidance for example has product margin down around 30 basis points at the top end. So really all mix related. In fact, we feel pretty good about the margin rate both within our international entities as well as how it’s trending. We see margin increases in some of our best performing categories and we’ve seen margin increase in our international entities. It's just a matter of how the mix plays together that’s creating some challenge there. In relation to the overall operating margins and how the growth is and obviously we’ve had pretty phenomenal growth here in the front half of the year. We’ve had great top-line as well. We are not planning our top-line to be as strong in the back half but again based on kind of that two and three year stack comp. We also saw some things like SG&A was actually down slightly as you prior noted in Q2, not how we're planning Q3 and Q4 up, we had a couple things in the quarter that were helpful as well as we’ve had some initiatives that really have some cost savings associated with them. We will have some smaller dollars not significant to call out but there are going to move from the front half to back half. So I think with all of that we’re planning the back half a little bit more conservatively and obviously our goal is always to meet or beat that high end and we're going to give our best shot to do that here as we roll through the back half.

[Operator instructions] Our next question comes from John Morris with D.A. Davidson. Your line is now open.

And congratulations everybody on the great results in terms of back-to-school. I guess Chris picking up on that last one, where you were talking about some of the shifts going on in the benefits that you saw, can you just -- they’re probably not so significant but any of the bigger pieces, just enumerate those for us just to pick up on what you were talking about there at the end of the last question?

Yes, I think the bigger items are just the timing of incentive and how that’s played out year-over-year. Through the second quarter of last year, we were really accelerating on our growth and therefore increasing our incentive accruals through the second quarter of this year. We're generally more on track around the target levels, I mean slightly above target level, so we have some benefits there. There is some marketing dollars that have moved out and few other from a store cost perspective that have moved out. So for example we still have some stores opened this year which will add to our SG&A growth in Q3 and Q4. So those types of things are what we're seeing move out that we didn’t experience as heavy in Q2 and the front half of the year and therefore will play a little softer. Obviously still happy to be growing earnings double-digits here in Q3 and over 20% earnings growth here for the full year is where we forecast at the high end.

And on, hate to be the one to ask the China tariff or trade tariff question, China, and whatnot. But -- and even though since we’ve talked last or since last quarter, have you seen anything really different? What are the kinds of initiatives you're working on with respect to diversifying this within your control? But I’ve got kind of a sub question here, which is also, I hadn't thought about it before, but hard goods work more any different in terms of sourcing geographically. So maybe just give us the update on that and then on park hard goods?

Sure. So from an overall tariff perspective, our update as of Q1, as we had indicated to you guys, we do have a few categories that were already subject to higher level of 25% tariff, those primarily were around the accessory categories. To-date, just kind of managing that since those went into effect, we have not felt any meaningful impact on tariffs, as we've been able to work with the brands to mitigate it and work with our overall sourcing strategy. Obviously, starting September 1st of this month, there are many new tranches of apparel and footwear that went into effect at 15% tariff. Apparel and footwear are large percentage of our business as you're aware. But we've been working with our brands to really actively mitigate this. This is a little more unique scenario for us, because we do have such a high brand position within our portfolio of sales. But we're currently seeing through the second quarter about 41% to 42% of our product come from China. This is down from 45% in the first quarter and down from about 60% for all of 2017, so about 18 months ago. So you can see that our brands and with our own private label we’ve started to position ourselves differently. I think the other piece that I caution with these numbers is, we don't have the exposure from China that maybe others do, because so much of our product is screen print. So a lot of what's coming out of China is the blanks and things like that or the raw good, where a lot of value is still being added here in the States, which obviously diminishes the impact of the imported value and the tariffs. So like all retailers, we're working to decrease this in our exposure…

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Rick Brooks, Chief Executive Officer for any closing remarks.

Thank you, Daniel. And again I just want to thank everyone, as always for their interest in Zumiez and what we’re doing and I think we view our path through the rest of the year as we’ve laid out in the guidance relatively conservatively but yet optimist about our ability to deliver really another strong record year of earnings. So, we look forward to getting back with you in early December and talk to about our third quarter results, and then hope we’re looking towards a great holiday season. Thank you, everybody. We appreciate your interest.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program, and you may all disconnect. Everyone, have a wonderful day.