Zumiez Inc
NASDAQ:ZUMZ
Earnings Call Analysis
Q4-2024 Analysis
Zumiez Inc
The company's balance sheet reflects financial resilience, with cash and marketable securities totaling $171.6 million. This cash position, a slight drop from the previous year's $173.5 million, maintains the firm's ability to navigate short-term obligations despite minor reductions from capital expenditures. Notably, the company has zero debt and a fully untouched credit line, demonstrating prudent financial management and a readiness for future opportunities. Inventory levels are also well-managed at $128.8 million, down by 4.4% from the prior year, signifying an adaptation to the challenging sales environment while still poised to introduce fresh offerings.
The company wrestled with declining sales, reporting an 8.6% drop to $875.5 million for fiscal 2023. Challenges such as inflation, competition, and category trends contributed to a 10.6% decline in comparable sales. North America bore the brunt with a 13.1% fall in net sales, while other international markets saw a 14% rise. Gross margin also took a hit, declining 180 basis points due to cost deleverage and rate increases. Operating loss reached $64.8 million, including a significant goodwill impairment charge, highlighting the impact of strategic refocusing, especially in Europe.
The business anticipates further challenges, projecting Q1 2024 net sales between $167-$172 million with a potential loss per share of $1.09 to $1.19. Despite a moderate start to the year, there's cautious optimism that product margin will grow along with a reduction in SG&A expenses. With plans to open 10 new stores and capitalize on fewer store openings from the previous year, the company expects reduced capital expenditures and depreciation costs as part of its stabilization strategy. A projected diluted share count of 19.8 million shares points to a leaner, more efficient corporate structure moving forward.
As the company recalibrates, it expects to reduce its store count further by 20 to 25 closures in 2024, aiming to optimize the profitability and impact of remaining stores. Interestingly, the men’s category has shown growth potential, increasing its contribution to total sales from 43% to 47%, and is viewed as a catalyst for recovery. This leaner yet more focused retail footprint is part of a larger strategic plan to rebuild sales, which also includes taking advantage of new brand partnerships and product offerings that resonate with consumers.
Looking beyond immediate financial headwinds, the company remains cautious due to prevalent macroeconomic instability but also sees signs that negative trends are beginning to ease. There's acknowledged potential for comparable sales growth across the business, offering a glimmer of hope for recovery. With the knowledge of past recoveries and a current upswing in certain categories, management remains resolute in its belief that there's a path forward to rejuvenation and eventual sales growth.
You don't have any saved screeners yet
Good afternoon, ladies and gentlemen, and welcome to the Zumiez Inc. Fourth Quarter Fiscal 2023 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, everyone, and thank you 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 fourth quarter and full year performance before discussing some of our strategic priorities for 2024. Chris will then take you through the financials and our outlook for the coming year. After that, we'll open the call to your questions.
The fourth quarter represented an encouraging finish to what was a challenging year. As a case throughout fiscal 2023, we faced headwinds in the fourth quarter, including highly promotional activity across the softlines retail sector and an increasingly selective consumer pressured by the multiyear inflationary impact on discretionary income. That said, our men's business turned a great number and growth accelerated in both December and January. Overall, momentum built throughout the quarter with total sales trends improving month-to-month, [ commending ] in January turning to positive comparable sales. Fueling fourth quarter sales and adjusted EPS that were both above the high end of our guidance ranges.
Many fourth quarter monthly sales trends were a microcosm of the trend we've seen throughout the year. To recap our improving trend line, year-over-year total sales were down 70% in first quarter, down 12% in the second quarter, down 9% in the third quarter and down less than 4% in the fourth quarter excluding the benefit of the 53rd week, which drove sales slightly positive for the quarter.
As we enter 2024, we have continued to see some areas of strength in our business. While total sales transfer in February were not yet positive, we did see sequential strength as we move through the month and noted that the primary headwind was tied to see those snow sales in Europe that turned negative in February after being significantly positive in January due to the timing of promotions.
For October to February, Europe snow sales were down low single digits despite significant variability across periods that pushes seasonal snow comparable sales positive in January and negative in February. To be clear, 2023 was a disappointing year overall, and we're not satisfied with our results.
With 2 years of meaningful negative comparable sales trends, the business has deleveraged significantly and we experienced the first annual net loss in our history this last year. As we look to 2024, we expect the macro climate to remain a headwind in the near term, as Chris will detail in our outlook However, we are optimistic that the work we're doing will reflect our trend line positive. Overall, we will focus on items within our control to grow sales and drive the business back to profitability. To that end, we plan to take specific actions to adjust portions of our strategy in the new year.
I'll quickly take you through the most significant changes starting with a shift in focus for the European business. The last few years have been particularly challenging for profitability in the European market. The business is close to achieving breakeven in 2019 before the onset of the pandemic. However, the longer and stricter pandemic area closures in Europe, combined with the inflationary impact to the consumer and instability in the region in the year since have resulted in earnings declines for our European business since '20.
To correct this negative trend, we're pivoting our focus away from store expansion to enhancing the productivity of the existing European business. The solid foundation of nearly 90 stores across 9 countries and a pan-European web business, we believe we have adequate penetration today in the relevant European markets to unlock the potential for the concept and to create value as we work through what has been a difficult cycle. By focusing on increasing the productivity of our current business in Europe, we'll improve our near-term profitability and cash flow. We're also creating a profitable platform for long-term growth in the future.
We have seen positive signs such as double-digit comparable sales growth in Germany, the Netherlands, Norway and Sweden during the year, which gives us confidence that we can achieve profitability in Europe as we've done in other international markets like Canada and Australia. There's no doubt that trends in [ America ] and grow globally. [ When we ] relevant in these markets is a significant advantage to Zumiez over the long term in serving both our customers and our brand partners.
This heightened emphasis on profitability extends beyond Europe. In 2023, we closed 20 [ underpin ] North American stores and expect to close an additional 20 to 25 locations in 2024 should results continue to be challenged. As a result, we have reduced the corporate staffing levels to align reduced store count, also further optimizing store labor through several initiatives, including adjustments to staffing models at lower volume stores. We have made structural changes to shipping and logistic costs company-wide and continue to implement their cost savings opportunities in many areas throughout the organization.
While we heightened our focus on profitability company-wide, we're also making investments center we continue to win with customers, including injecting assortments with [ Zumiez ]. In 2023, we launched nearly 200 new brands, almost double a typical year and we expect this [ newness ] with relevant and desired brands to continue to attract a broader customer set into 2024 and beyond. We're already seeing our new brands launched in the last couple of years represent a larger portion of our sales than we've historically seen, which we believe is an indication that they are resonating with our customers.
We're also growing our private label brands. Private label represented approximately 23% of sales in 2023 compared to 18% in 2022 and 13% in 2021 which is a testament to our teams and both the trend and value customer and provides another significant runway for growth. And we're maintaining our best-in-class service in stores and on the web, with continued investment in training and technology that combined are aimed at enhance the relationship with customers and connecting with them in a more personalized and relevant way.
After 2 challenging years, we're ending 2024 with a strong balance sheet and over $170 million in cash that will allow us to weather the current environment.
Before I close the call and turn the call over to Chris, I'd like to thank our teams and our brand partners for their efforts and partnerships in 2023. Our talented and dedicated people have been a bright spot, have we navigated recent challenges and will be the driving force behind the company's return to sustainable growth in the quarters and years ahead. I remain confident in our ability to serve our customers and drive back to profitability and positive cash flow and look forward to updating you on our progress in the quarters ahead.
With that, I'll turn the call over to Chris to discuss the financials.
Thanks, Rick, and good afternoon, everyone. I'm going to start with a review of the fourth quarter and full year 2023 results. I'll then provide an update on our first quarter's [ day ] sales trends before looking into a perspective on the full year.
Net sales for the fourth quarter of 2023, which was a 14-week period, increased 0.6% to $281.8 million, compared to [ $280.8 ] million in the fourth quarter of 2022, which was a 13-week period. Comparable sales were down 3.9%. The decrease in comparable sales was driven by continued inflationary pressure on the consumer continued challenges and competition for the discretionary dollar and tougher trends in certain categories of our business.
From a regional perspective, comparing the 14-week period in the current 13-week period in the prior year, North American has $212.4 million, increased to 3.4% from 2022. Other international net sales, which consist of Europe and Australia, were $69.4 million, up 15.2% from last year. Excluding the impact of foreign currency translation, North America net sales decreased 3.4% and other international net sales grew 2.3% compared with 2022. Comparable sales for North America were down 5.4% and comparable sales for Other International were up 0.9% for the 14 weeks ended February 3, 2024.
From a category perspective, men's was the only category with positive comparable sales for the quarter, while all other categories were down from the prior year. Women's was our most negative category, followed by accessories, hardgoods and footwear. The decrease in comparable sales was driven by a decrease in transactions are offset by an increase in dollars per transaction. Dollars per transaction were up for the quarter, driven by an increase in units per traction and an increase in average unit retail.
Fourth quarter gross profit was $96.7 million compared to $95.3 million in the fourth quarter of last year. Gross profit was 33.3% of sales for the quarter compared with 34% in the fourth quarter of 2022. The 30 basis point increase in gross margin was primarily driven by 70 basis points of benefit in shipping costs related to better outbound shipping rates. 60 basis points positive impact related to a mix shift away service and related shipping revenue in the prior year results, which carried a negative margin during the prior year quarter and 30 basis points of leverage in store occupancy costs related to a reduction in total expense year-over-year combined with the modest increase in sales related to the 53rd week.
These benefits were offset by a 110 basis point reduction in product margin due to discounted selling to manage [ age ] inventory, which was in line with our expectations and 20 basis points of deleverage in freight and other costs included in gross margin.
SG&A expense for the fourth quarter of 2023 was $129.4 million or 45.9% of net sales for fiscal 2023 compared with $80.1 million or 28.6% of net sales in 2022. This includes a $41.1 million noncash goodwill impairment charge that resulted from a decision to slow growth in Europe and focus on profitability. This change in our modeling had a direct impact on the future cash flow projections of our Blue Tomato business that have been tied to increased store growth and improved performance as we grow the business.
The 1,730 basis point increase in SG&A expenses as a percent of net sales was driven by the following: 1,440 basis point increase driven by the impairment of goodwill in Europe. The 140 basis point increase related to store wages deleveraging on the decrease in comparable sales as well as wage rate increases, 70 basis point increase in nonwage store operating costs, 50 basis point increase in other corporate costs and 30 basis point increase in nonstore wages.
Operating loss in the fourth quarter inclusive of the $41.1 million goodwill impairment charge was $32.8 million or 11.6% of net sales compared with operating profit of $15.2 million or 5.4% of net sales last year. Net loss for the fourth quarter was [ $33.1 ] million or $1.73 per share. This includes a goodwill impairment charge, which on an after-tax basis was $41.1 million or $2.13 per share. In the year ago period, we reported net income of $11.4 million or $0.59 per diluted share.
We had tax expense in the current quarter despite our pretax operating loss due to the distribution of pretax income across our different tax jurisdictions. This compares to an effective tax rate of 29.2% in the fourth quarter last year. Looking at our full year results, net sales for the 53 weeks of fiscal 2023 were $875.5 million, a decrease of 8.6% from $958.4 million in 2022. Comparable sales for the full year were down 10.6%. The decrease in comparable sales was related to continued inflationary pressures on the consumer, continued challenges of competition for the discretionary dollar and tougher trends in certain categories of our business.
From a regional perspective, North America net sales were [ $697.6 ] million, a decrease of 13.1% from 2022. Other international net sales were $177.9 million, up 14% from last year. Excluding the impact of foreign currency translation, North America net sales decreased 12.9% and other international net sales increased 11.8% compared with 2022. Comparable sales for North America were down 13.5% and comparable sales for other international were up 3.4% for the 53-week year ended February 3, 2024. From a category perspective, all categories were down from the prior year in comparable sales. Footwear was our most negative category followed by women's, accessories, hardgoods and men's. The decrease in net sales included a decrease in transactions, partially offset by an increase in dollars per transaction. The increase in dollars per transaction was driven by an increase in average unit retail, partially offset by a decrease in units per transaction.
2023 gross margin was 32.1% compared with 33.9% in 2022. The 180 basis point decrease was driven by deleverage on our fixed costs as well as rate increases in several areas. The key areas driving the decline were 130 basis points of deleverage in store occupancy costs, and a 70 basis point decline in product margin. These decreases were partially offset by 20 basis points of efficiencies in addition costs. SG&A expense was $45.7 million or 39.5% of net sales for fiscal 2023 compared with $293.6 million or 30.7% of net sales in 2022. This includes the $41.1 million of goodwill impairment mentioned in our quarterly update. The 880 basis point increase as a percentage of net sales, driven by 470 basis points due to the noncash goodwill impairment. 180 basis points increase related to store wages delaying on the decrease in comparable sales as well as wage rate increases. 110 basis point increase in nonwage-related store operating costs, and 80 basis points in nonwage-related corporate costs and 60 basis points in nonstore wage costs, which include the benefit in the prior year of 40 basis points related to a $3.6 million European government stimulus payment. These increases partially offset by a 20 basis point decrease in training and events.
Operating loss in 2023 was $64.8 million or 7.4% of net sales, inclusive of the $41.1 million goodwill impairment charge compared with operating income of $31.1 million or 3.2% of net sales last year. Full year net loss was $62.6 million or $3.25 per share, including the noncash goodwill impairment charge booked in the fourth quarter of 2023 were $41.1 million or $2.13 per share. This is compared to net income of $21 million or $1.08 per diluted share in 2022.
Turning to the balance sheet. The business ended the year in a strong financial position. We had cash and current marketable securities of $171.6 million as of February 3, 2021, compared to $173.5 million as of January 28, 2023. The slight decrease in cash and current marketable securities over the last year was driven primarily by capital expenditures of $20.4 million, partially offset by cash flow from operations of $14.8 million. As of February 3, 2024, we have no debt on the balance sheet and continue to maintain our full unused credit facility.
We ended the year with $128.8 million in inventory, down 4.4% compared with $134.8 million last year. On a constant currency basis, our inventory levels were down 4.1% from the last year, with decreases in both our North America and European businesses. Given the sales backdrop, we are happy with our ending inventory balance for '23 and expect to continue to bring newness in as we move through 2024.
Looking forward to 2024, it is important to remind everyone that 2023 was a 53-week year, while 2024 is a 52-week year. With the calendar shift, we expect sales and profit movement between quarters across 2024, creating comparability challenges year-over-year in our commentary. As such, we will provide actual comparable sales to like periods as we move through the year, which will represent a better measure of current performance. Additionally, with the closures in 2023 and anticipated closures in 2024, we expect our store count will be down year-over-year on a quarter-to-quarter basis, which will negatively impacts growth while having more muted impact on earnings due to the performance of those closures.
Now to our first quarter-to-date results. Total net sales for the 4-week fiscal period ended March 2, ended decreased 3.1% compared to the 4-week fiscal period ended February 25, 2023. Our comparable sales decreased 6.2% during the 4-week period in 2024 from the comparable weeks in the prior year. From a regional perspective, North America net sales for the 4-week period ended March 2024, increased 2% over the 4-week period ended February 25, 2023, while our other international business decreased 18.6%. Excluding the impact of foreign currency translation, North America net sales increased 2.1% and other international sales decreased 18.5% compared with 2023.
Comparable sales for North America decreased 2.6% for the 4-week period ended March 2, 2024, compared to the same weeks in the prior year, while comparable sales for our other international business declined 17.8%. From a category perspective, the men's category was our largest positive comparable sales growth category followed by footwear. The hardgoods category was our largest decline in comparable sales, followed by accessories and women's. The comparable sales decrease was driven by a decrease in transactions, partially offset by an increase in dollars per transaction.
Dollars per transaction increased for the 4-week period due to an increase in unit transaction partially offset by a decrease in average unit retail. With respect to our outlook for the first quarter of fiscal 2024, I want to remind everyone that formulating our guidance involves some inherent uncertainty and complexity in estimating sales, product margin and earnings growth given the variety of internal and external factors that impact our performance.
With our sales results in early fiscal 2024 showing a small step back from our Q4 trends, we entered 2024 with some caution. While we are optimistic that we could see continued improvement in the business as fiscal March to date, sales have trended better with new spring receipts. We are planning more conservatively anticipating [ net ] sales for the first quarter between $167 million and $172 million. We expect that our first quarter 2024 product margins will be down year-over-year against the current backdrop but an improvement from our Q4 run rate. We believe that the first quarter of 2024 will see a continued negative impact on product margin related to a mix shift away from service and related shipping revenue in the prior year results. While the product margin impact of this mix shift is negative, the overall impact to gross profit is negligible.
We do not anticipate this mix shift will have a material impact beyond our first quarter of 2024. Consolidated operating loss as a percentage of sales for the first quarter is expected to be between negative 15% and negative 17%, and we anticipate our loss per share will be between $1.09 and $1.19 compared to a loss of $0.96 in the prior year. As we consider the outlook for the full year 2024, there remains uncertainty and volatility in the macro environment. Given this, we will refrain from giving specific annual financial guidance, but I do want to add some context around how we currently believe the business will trend throughout the year.
We have experienced several negative sales trends over the past 2 years, driven by the pandemic, inflation, competition for the discretionary dollar, negative brand trends and general global instability. Given the magnitude of the multiyear decline, we believe that we are beginning to see the impact of those negative business trends moderate, and our current results are showing that new trends are taking hold. This includes our men's category being positive across Q4 and into February. At this time, we believe we can build upon these trends throughout 2024 and see total sales growth for the full year.
After 2 years of difficult performance in product margin, we believe that with a more stable sales environment, we will grow product margin in 2024. With sales growth in 2024, we anticipate that we'll leverage SG&A costs year-over-year beyond the benefit we will receive of moving past the $41.1 million goodwill impairment charge we recorded in the fourth quarter of 2023. With the previously mentioned assumptions, we believe it will return to positive operating margins for the full year. While effective tax rates are likely to fluctuate significantly by quarter, we anticipate that our full year effective tax rate will be roughly 40% in fiscal 2024. We are planning to open 10 new stores during the year, including 3 in North America, 3 in Europe and 4 stores in Australia. This is down from 19 stores in 2023 and 32 stores in 2022 as we focus on optimizing our current footprint.
We expect our capital expenditures for 2024 to be between $14 million and $16 million compared to $20.4 million in fiscal 2023 and $25.6 million in fiscal 2022. The reduction is primarily due to fewer planned store reopenings or store openings. We expect that depreciation and amortization, excluding noncash lease expense, will be approximately $23 million and consistent with the prior year. We are currently projecting our diluted share count for the full year to be approximately 19.8 million shares.
And with that, operator, we'd like to open the call up for questions.
[Operator Instructions]. Our first question comes from Corey Tarlowe with Jefferies.
Great. Thanks, and good afternoon. As it relates to Europe, where are you seeing green shoots? And then where are you seeing opportunities to improve as a [ head ] and you assess the viability in certain regions or areas in which you're currently present as you think about the go-forward outlay for that region for your business?
All right. I'll start, Corey, and then Chris can add on to -- add on his comments, too. I think there really -- what's important in this conversation is the pivot in Europe or we can store growth because obviously, we are growing sales in Europe over the last few years, but sales have been challenged relative to our expectations for the sales growth that we expect to see in Europe and helping new markets is an expensive proposition.
So what you're really seeing us do here is say we need to really refocus our team's efforts on going back and giving them the time and the bandwidth to go back and really focus on building out profitability in our existing markets. And that's our focus. And as we commented in the script, we've seen some good results, particularly in Germany last year, which is our -- I think, our biggest market in terms of unit count in Europe. We had a double-digit gain in the year. We made significant progress relative to profitability in that market, have more progress to make, Corey.
And I guess that's what you're seeing us say here is we're going to put a positive growth, build a profitable base and then reconsider where we go from there. So this is more about basis. It's about the fundamentals and tactics. And we [ arcade ] are profitable in Europe, to be clear. but this is about getting all, I mean, in the right direction, getting back that what our teams look like in every location, driving better product margins across business, controlling and managing expenses more effectively by not again, reducing the cost of entering new markets as an example.
And so we're back to basics. And I would tell you much the same thing about here in our North American business, too. So I think it was more about perspective of -- we have opportunity there, and we have opportunity to grow the profitability on a 4-wall basis across those markets and we know our [ web ] business in Europe. So it's really about the pivot, slowing growth focusing on building a profitable base, doing and executing the base and putting all of our efforts into that.
Great. And then I have -- 2 more, if I can, on North America, the men's business seems to have made a turn. How do you think about the prospects for that to potentially drive maybe perhaps a more widespread momentum across the other categories of the business now that you've seen the turn there. And then just briefly on store count on the -- I believe it's 10 openings that you're anticipating, what would be the net number for the full year?
All right. Great. I'll take the first part. And again, I'll let Chris add honestly like. So North American business, the good news -- this is -- I have good news for you in North America is the improvement in our North American business is directly related to the comments we made in the script earlier. Our private label business is dead on, I think, the trends we're doing really fun, creative things there. Multiple trends are working for us in private label. And private label is growing in absolute dollars. Despite the overall sales decline, we're not declining in private relative basis, not a gain share on a relative basis and in absolute dollars in our business in private label.
So we have a lot of momentum there. And I think we're on the early edge, I think we've been not just on those trends, but we've been leading the trend cycles that we're seeing out in the market. So that is a huge driver for private label. It also has, I think, a positive benefit of women's that we'll see play out over time in terms of what we're doing on the women's side with our private label brands. And again, it's both about the freshness and offer the consumer and being on those trends, building those trends for our customer as well as the value proposition we have by the move -- the ability we have with -- probably do bundling and things like that for customers to provide more value for them beyond just cheap prices. That's never our strategy.
The second thing on men's really, I think, again, directly correlated to the results we're seeing, and we commented on this in the script, too, is that merging brands in '22 and '23, and I will tell you, particularly in '23, the brands we launched in '23. And in some cases, our brands launched in the back half of 2023 are gaining significant share in our business that have been doing so month over month and better, deeper penetration in Q4 than Q3. And so this is the newness when we talk about injecting newness into the business, this is what we're talking about. And we're seeing it resonate and that these trends that we're seeing are the exact things that are driving our positive trend in the men's business.
So as we think about that, with new brands, Corey, what we'll look to do there in terms of broadening of the categories is we'll look to do exactly that, which is how can we take a [ screen oil ] brand and get them into accessories and different accessories categories. How can we partner with [ a got ] with these brands to help drive more sales for them? How can we expand them to new categories of business. These are the things we'll be working with, again, not all of them, but select brand partners to try to drive even more sales results.
And I just think these are, again, we're new in a lot of these. We're going to -- these are just -- these are brands that are just to continue to gain share. And again, we intend to launch a lot more new brands throughout 2024. That's always our goal every year. So I just want to be clear, there's a direct correlation between what we're seeing in the improving trend results and new brands and we put into private label. So they're directly correlated and they're driving the better [ some ]. And I think we can expand it to other categories, absolutely, and potentially we were be able to lever some of that benefit for other departments within the business, too.
Yes. And I'd just add a couple of quantification points to men's before I answer your question around store count that. Men's as a percentage of our total sales grew from 43% to 47%, which I think is a is a strong metric for our business, and it ties into some of the thoughts we gave annually as far as the belief that we think we can grow sales for the year. What I think is really good about the men's business is it turned positive in back to school. While it wasn't positive for all of Q3, it was positive during that 6-week period. And then again, turned positive in November and December in the peak and now has remained positive in January and February.
I bring that up because as we look back on the business and we look at other periods that have been a little more challenging from a financial perspective for us, the last one being 15 and 16, men's really was and specifically, men's T-shirts, was really was the driver for us coming out in growth of 17, 18, 19. So again, I give our buying teams a lot of credit here. This is about finding newness and brands that will stick and men's really is the driving category. So I think it's a good call out from you to ask.
From a store count perspective, I guess, what we plan to do right now, what we said in the script is that we would probably open 10 stores and close 20 to 25 stores. But in answering that question, I do want to step back because we also noted that we closed 21 stores in 2023. As you think about that on a 2-year combined closure, a pretty significant closure cycle for us and really not a territory we've been in before. So I want to be careful in giving closure numbers because of the 20 to 24 closures in 2024. I mean this could increase or decrease as we move through the year depending on how our results go and our ability to work both with our landlord partners as well as internally on some of the things that we control.
And when it comes to closures, it's not a process we really take lightly either. I mean we have a pretty detailed process to look at closures, we try to factor in thing, obviously, the sales and profitability levels of the specific location in question. But we also look at what does that store mean to its trade area. And as we think about serving that customer, what other opportunities do we have around that store to impact that customer. We look at the condition of the center and how the landlords plans for the center are playing into the location in regards to vacancies and the ability to bring newness to a location and then we look at peak performance and working through some of the decline we see in our business right now are permanent or temporary based on the current state of the market. I think that's a really important thing that we do and then what else we can do about the store economics.
So we go through a pretty diligent process, I think, after factoring in all of those things, if we make the determination at a store to close, it probably means that it's in a location or a mall that is one of the declining centers that we have in our country and something that will close. So for 2023, the majority of our closures were in North America. In 2024, we anticipate that will hold true, although we do expect some closures in Europe as well. This will be -- it does have an impact on overall sales, although, again, I mean, despite this, which we estimate to be about $10 million and the 53rd week, we still think we can grow sales in excess of those amounts.
Our next question comes from Mitch Kummetz with Seaport.
I've got maybe a few housekeeping and then maybe a couple of little more strategic. Because I think you maybe partly answer my first question. Just on 53rd week, what was the sales and earnings impact in '23? Was that the $10 million in sales that you just referenced? Maybe I didn't hear that correctly.
No. The $10 million in sales is referencing the closures. The amount that the 20 stores we closed are worth in sales. The 53rd week is going to be worth about $12 million. SP50206382 And what about the earnings?
What about the earnings?
It's about $1.8 million of operating profit.
Okay. That's helpful. And then on 1Q guide, you gave us a sales range. Is there sort of a comp assumption that's embedded in that range?
Yes. The comp assumption in this year will have a little bit of a negative spread, obviously, because of how the closures impact it. So -- but it won't be that significantly different than the range we gave.
Okay. And then on the full year, again, you expect sales growth and I want to say that that's inclusive of the 53rd week in '23. So maybe just to confirm that. But then also given the net store closures that you're anticipating, I assume that you're expecting comp growth for the year. Can you just confirm that?
Correct. Yes. When we talked about -- we didn't give specific guidance for the year number, obviously, just given kind of the uncertainty and what's ahead. But we are planning the business with sales growth factoring in both the 53rd week challenge that we'll have as well as the $10 million in store closures.
Is the -- so if there's comp growth in '24 do you anticipate some of that coming from just like now that you slowed the growth or shut down the growth of stores in Europe, is there an opportunity for comp growth in Europe, just kind of from the standpoint of like a mature ramp? Or do you see that as an opportunity?
Yes. I think I would look at this -- I'm going to take your question a little bit higher level, and then I'll come into Europe. I think when we're looking at this business, we think we have opportunity for comp growth really across the business. Specifically because what we know this business has been able to do and where we have landed here these last couple of years, which is pretty disappointing to us, to be quite frank.
But we're looking at many of these locations, knowing -- we've got good locations. We've got buyers that are really homed in on finding the right product for what's next. We've got good sales teams that are out there to serve the customers. And so as we tie this together and we think about 2024, we think we have a good opportunity. Now earlier in this call, we talked about men's as being an opportunity. And I think that's a really good place for our business to start. I think each of our other [ charities ] have had some challenges as well. So as we look at those and we look at some of these new brands that Rick spoke to and the fact that we've continued to bring a lot of newness into the business. We think we have opportunity in our other categories as well.
Geographically, we know that North America has been challenged. It has been just as much, if not more, than Europe. So we know that in the U.S., we've got opportunity. We believe we have opportunity in Canada. And as it comes to Europe, I think you're absolutely right. We've got a lot of new units. We've been very focused on new markets and growth. And as Rick said, we're sort of pausing that with the idea that we need to grow comp and we need to focus on the customer and get back to basics to drive the profitability and cash flow, right, within that region. And then I think once we get to that level, we have the opportunity to rethink about growth because there still is a lot of growth in Europe. I don't want to give the impression that the growth is not there. We just have to be able to do it in a profitable way with cash flow.
And as we think about Europe individually, I mean despite the pullback we saw in overall sales, I mean, Europe did comp in 2023. It just did not comp to a level that we needed it to, especially in [ light ] of what you've seen with wage inflation and some of the other costs that have gone in Europe. So I believe there's comp opportunity across the business, and I think that's why you're hearing us be pretty confident about the ability to grow sales despite the fact that we've got the 53rd week in closures that we've got to overcome.
Okay. And then maybe 2 last ones are a bit more strategic. One on the new brands, it sounds like the benefit that you're seeing there is mostly on the men's side. Is there also, I think, Rick, you mentioned the opportunity to do more women's with private label, but there is also an opportunity to add brands to the women's business? So that would be my first question.
And secondly, 1 month doesn't make a trend, but footwear, it looks like it was positive in February. I'm just wondering to what -- is that really a funding that you're just starting to lap easier compares? Or have you also kind of worked on sort of pivoting the footwear assortment to try to drive better results there?
All right. Thanks for the question, Mitch. First, I guess just for clarity purposes around new brands. We have some brands that are new brands we've launched that are working well in Women's. So I'll be clear about that. And where it's really made a difference in the business, just not enough to tip it to the positive at this stage of the game. And the private label, we have a lot of good stuff there, too.
So we're -- and then other brands that we're launching that are predominantly have benefited the men's. We know there's also unisex aspect to how our customer buys products. So it becomes a little harder for me to quantify that for you to how [ acting ] women. We see that throughout our business with women buying boy shoes as an example, would be another example where we know it's happening based upon the seismic we see playing out there, or we see it in T-shirts, where we're selling small size of the men's disproportionately to our typical business.
So it's a little bit hard to answer that question, Mitch, just because we know there's a unisex aspect to our business beginning with women in the business. But yes, we do have some brands that are specifically new in the women's business, and we're seeing some success just not enough to tip it to the positive at this point. So we're always looking for brand across wide ranges that we think will really be relevant for all of our customers. I would guess would be the message you have for you there.
On footwear, in February, yes, it was positive. And -- but it was a promote driven positive number. So what I will tell you about footwear, Mitch is, we have just been clearing footwear recently and we've had a lot of footwear. We've had some good help from our brand partners here in doing this. But it's -- as you know, it's been an issue in a challenged department for a while now. And so what you're seeing us do is get inventory in position so they can really go after newness in footwear. So I think, Chris, inventory in footwear was down.
30%.
30% at the end of the year, Mitch, should give you a sense of where we're at on the footwear inventory we have aggressively been aggressive about clearing it out. And again, great support from our brand partners in helping us do that. And we've done it also through liquidation. So what you're really seeing over the last month is aggressive liquidation in the footwear market.
Now as we look forward, we definitely have some trends that are working, and I'm sure you're identifying them on our footwear wall. And so now it's about the right levels of it. it's about we're going to ride the trends that we know are working that really actually go together with the trends that are in our private label business, particularly in long bottoms, they're going to drive, I think, some -- that will drive improved business footwear.
And then what our teams have done is we have basically -- if you were to see our plan for footwear throughout 2024, I think we have a really solid plan for injecting newness throughout the year on a regular pretty -- pretty regular basis, period by period, we're going to see us launch newness and build as we move -- really try to build and adjust a move towards back-to-school and holiday with what works in the assortment and how we reposition our footwear wall for the -- to really hit those peak periods as best we can.
So I think the key takeway off it is yes, it was, but it was promotionally-driven liquidation mode, I would say. But as we look forward to now have inventory in a position where we can really go out and make investments [ realtors ] you were as the sizing you do have to be larger investments in each style of footwear you try. So what we're going to do now is just go out there and pass some fun. We're going to play our brand partners, again, are being incredibly supportive here, and we have a lot of newness coming every period in footwear.
I look for being so size 14 in your stores. I appreciate you taking all my questions.
Well, not that much new, Mitch.
[Operator Instructions]. That concludes the question-and-answer session. At this time, I would like to turn the call back to Rick Brooks for closing remarks.
All right. Thank you, everyone, again. We always appreciate your support of Zumiez greatly and again to our employees and all of our brand partners. We really, again, as I said in the commentary earlier, we really appreciate the challenging area we worked through and we're looking forward to, hopefully, a better and improve 2024. So thank you, everyone, and we look forward to talking to you after first quarter results.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.