I think we’re well positioned to take advantage of it if it comes. But that has been part of our slower results here in November.
Mitch Kummetz: All right, thanks again and good luck for the holiday.
Chris Work: Thanks.
Operator: Thank you. One moment please. Our next question comes from the line of Jeff Sinderen of B. Riley. Your line is open.
Richard Magnusen: Hello. This is Richard Magnusen in for Jeff Van Sinderen. Thank you for taking our call. Can you speak more about how you are positioned with inventory versus holiday last year and also touch on planned promotional cadence this year versus last year? And then maybe what trends you are seeing in the digital business since Black Friday weekend?
Chris Work: Sure. Okay. Let me take a crack at it here. I mean, from an overall inventory perspective, as we said on the call, inventories were down 0.7%, down 2.3% on a constant currency basis. So – if we just step into that, I think we feel pretty good about where overall inventories are, Breaking that down a little bit further. You would find the North America inventory, which is really our toughest market has been down in like the high single-digit area. So we feel really good about how that’s lining up in relation to where sales are. So a lot of our inventory growth is international based, which, again, is more tied to units. And, to a lesser extent, some of the landing of products. So I think from an overall inventory perspective, we feel good about where we’re at.
From a promotional perspective, we did, obviously, foreshadowing our guidance that we were expecting to be more promotional than we were a year ago, which I think is a factor of a couple of things. One, the markets incredibly promotional, and we know that, that consumer, our consumer is squeezed, right, with the inflation and some of the things the more macro environmental things that are happening to them, and so we are trying to move and be in a spot to work with that customer. That does not mean to us 30% off the entire store, where we’re definitely very passionate about how – what our brands mean to us and how we work with our brands to really push through a full price full margin. What it means is we have to find areas of value and ways that we work with that value consumer in this type of market.
So we do have a promotional cadence, as you would expect, that we’ve planned coming into the holiday, which is a factor both of how do we reach the customer and how do we look at areas of old age because our goal, like it is for all of our quarters and holiday seasons, particularly is in the year in a pretty good inventory position. So we’re focused on that from a promotional cadence I think you see some of that in, I think Mitch mentioned in the earlier the footwear frenzy, but we’ve got some different promotions out there that we’re working through. And then lastly, from a digital perspective, what I would say is we are continuing to see a strong demand of our customer to be in stores. We’re seeing a good mix of our customer coming to stores, the digital business overall for the third quarter was basically just a little bit better than our overall result, but we continue to see really strong store results.
Our Black Friday was a really great day for us. It’s positive in stores. We know that our customer wants that physical experience. And our web has been a little bit softer than the trend line. So I think we’ll roll it all up and talk about that more on the quarter. I think the other piece that’s unique to us. And you see this, I believe, when you’re on our website, is we’re really trying to drive the customer to store. So you’ll see it even that digital customer, we’re showing them what’s available in our store. We’re encouraging them to come pick it up in store, driving them to that availability because we believe over the long term, it’s great to get them in front of our sales teams. It’s great to get them in our store environment where they can experience everything we have to have – everything we have and not just what they’re seeing on the pages.
Richard Magnusen: All right. Thank you. Can you update us to what extent you can on plans for store count in FY ’24? And maybe speak to what sort of terms you’re seeing on lease renewals in any new store locations?
Chris Work: Sure. I’m not going to give exact numbers for 2024. That’s normally part of our March call. What I would tell you is we’re trying to be really smart with our store growth. Last year, we opened 32 stores, which I think are – we feel really good about the locations and the economics of the deal. Obviously, our sales have been down over that time frame. So we continue to believe long term, these will be good locations for us. They have not opened as strong as we would have hoped. But I think that’s probably more of a macro thing. This year, we reduced that from 32 to 19 stores, I think we feel very similar. I think from a lease rate perspective, we are seeing a more optimal lease expense. We just have to be able to drive that top line.
I think we’ll take those learnings and factor them into 2024. The other piece of this type of environment, this type of market, like a lot of retailers. We’re looking at the overall store population for some potential closures. As we all know, there are certain malls and locations across the country that are more challenged than others. And so that’s something that we’re spending some time looking through. Again, I’m not going speak the exact numbers because we have some work to do. But what I can tell you is we’ve got a detailed process to look at store closures. We really focus on the 4-wall economics of the location its impact on trade area, it’s impact on digital and then what’s happening in that current environment? Is the mall long for the trade area?
Are there other malls that might – we might see the volume transitioning too? Or is this a permanent decline or a temporary decline. So we’re asking ourselves a lot of those questions right now within our plan, we have about 15 store closures within our current modeling. I will tell you that’s a number that could increase or decrease depending on how we move through the year and how we’re able to work through our teams and with our landlord partners. And so – we’re focused on really trying to bring the best Zumiez forward and being in the right locations. And I think as we factor in that into our 2024 store openings and potentially some closures, we’ll think about those factors.
