Q4 2023 Zumiez Inc Earnings Call
Participants
Rick Brooks; Chief Executive Officer; Zumiez Inc
Chris Work; Chief Financial Officer; Zumiez Inc
Corey Tarlowe; Analyst; Jefferies Group LLC
Matt McCall; Analyst; Seaport Global Holdings LLC
Presentation
Operator
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 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 are subject to risks and uncertainties. Actual results may differ materially. Additional information concerning the number of factors that could cause actual results to differ materially from the information that will be discussed is available in Zumiez's filings with the SEC.
At this time, I will turn the call over to Rick Brooks, Chief Executive Officer, Mr. Bruce?
Rick 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 was the case throughout fiscal 2023, we faced headwinds in the fourth quarter, including highly promotional activity across the soft lines retail sector, and an increase in selective consumer pressured by the multi-year inflationary impact on discretionary income.
That said, our men's business turned positive in November and growth accelerated in both December and January. Overall, momentum built throughout the quarter with total sales trends improving month to month, culminating 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 ways, the 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 7% 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 trends for 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 seasonal snow sales in Europe that turned negative in February after being significantly positive in January due to the timing of promotions for October through February, Europe snow sales were down low single digits, despite significant variability across periods that pushed our 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 two years of meaningful negative comparable sales trends. The business has delevered 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 inflect 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 of the consumer and instability in the region in there since have resulted in earnings declines for our European business since 2020 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, nearly 90 stores across nine 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 create value as we work through what has been a difficult cycle by focusing on increasing the productivity of our current business in Europe will improve our near term profitability and cash flow, while 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 emerge locally and grow globally. We marry Remy relevant in these markets is a significant advantage to Zumiez over the long term and serving both our customers and our brand partners. This heightened emphasis on profitability extends beyond Europe. In 2023, we closed 20 underperforming 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 field and corporate staffing levels to align with reduced store count. We also further optimizing store labor through several initiatives, including adjustments to staffing models at lower volume stores. We have made structural changes, reducing shipping and logistic costs company-wide and continued to implement other cost savings opportunities in many areas throughout the organization. While we heighten our focus on profitability company-wide, we're also making investments to ensure we continue to win with customers, including injecting assortments with newness. 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 2323% of sales in 2023 compared to 18% in 2022 and 13% in 2021, which is a testament to our teams in capturing 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 enhancing our relationship with customers and connecting with them in a more personalized and relevant way. After two challenging years, we're ending 2024 with a strong balance sheet and over 170 million in cash to allow that will allow us to weather the current environment before I called out 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 as we've navigated regional 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 that I'll turn the call to Chris to discuss the financials.
Chris Work
Thanks, Greg, and good afternoon, everyone. Administered with a review of the fourth quarter and full year 2023 results. I'll then provide an update on our first quarter to date sales trends before providing some 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 280.1 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 discretionary dollars and tougher trends in certain categories of our business. From a regional perspective, comparing the 40 week period in the current year to the 13-week period in the prior year, North American net sales were 200, 12.4 million, a decrease of 3.4% from 2020 to Other international net sales, which consist of Europe and Australia were $69.4 million of 15.2% from last year. Excluding the impact of foreign currency translation, North America net sales decreased 3.4% and other international net sales increased 12.3% compared with 2022. Comparable sales for North America were down 5.4% and comparable sales for other national were up 0.9% for the 14 weeks ended February third, 2020. For 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, hard goods and footwear. The decrease in comparable sales was driven by a decrease in transactions, partially offset by an increase in dollars per transaction. Dollars per transaction were up for the quarter, driven by an increase in units per transaction 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 34.3% 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 from 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 110 basis point reduction in product margin due to discounted selling to manage aged inventory, which was generally in line with our expectations and a 20 basis points of deleverage in fixed 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 to 80.1 million or 28.6% net sales in 2022. This includes a 41.1 million non-cash goodwill impairment charge that resulted from our 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, 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, 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 non-wage store operating costs, 50 basis point increase in other corporate costs and 30 basis point increase in non-store 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 33.5 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 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 four full year were down 10.6% 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. While the international net sales were 177.9 million, up 14% from last year. Excluding the impact of foreign currency translation, North American 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 third, 2024. From a category perspective, all categories were down from the prior year and comparable sales. Footwear was our most negative category, followed by women's accessories, hard goods and men's. The decrease in net sales included a decrease in transactions, partially offset by an increase in dollars per transaction. Fee 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. 180 basis point decrease was driven by deleverage in our fixed costs as well as rate increases in several areas. 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 a 20 basis points of efficiencies in distribution costs.
Sg&a expense was 245.7 million or 39.5% of net sales for fiscal 2023 compared with 293.6 million or 30.7% of sales in 2022. This includes the 41.1 million of goodwill impairment mentioned in our quarterly update. They are an 80 basis point increase as a percentage of net sales was driven by 470 basis points due to the non-cash goodwill impairment, 180 basis points increase related to store wages deleveraging on the decrease in comparable sales as well as wage rate increases, 110 basis point increase in non-wage related store operating costs and 80 basis points in non-wage related corporate costs and 60 basis points in non store wage costs, which includes the benefit in the prior year of 40 basis points related to a $3.6 million European government stimulus payments. These increases were 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 of 62.6 million or $3.25 per share, including the non-cash 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 $1.8 per diluted share. And in 2022.
Turning to the balance sheet, the business ended the year in a strong financial position with cash and current marketable securities of 171.6 million as of February third, 2024 compared to 173.5 million as of January 28th, 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 third, 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 2023 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 impact total sales 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 four week fiscal period ended March second, 2024 ended three days decreased 3.1% compared to the four-week fiscal period ended February 25th, 2023. Our comparable sales decreased 6.2% during the four week period ended March second, 2024 from the comparable weeks in the prior year from a regional perspective, North America net sales for the four week period ended March second, 2024 increased 2% over the four week period ended February 25th, 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 four-week period ended March second, 2024 compared to the same weeks in the prior year, while comparable sales for our other national business declined 17.8%.
From a category perspective, the men's category was our largest positive comparable sales growth category followed by footwear. The hard goods 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 four week period due to an increase in units per 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 total sales for the first quarter between 167,000,172 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 2020 for 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 $1.9 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 refrain from giving specific annual financial guidance, but do want to add some context around how we currently believe the business will trend throughout the year. We had experienced several negative sales trends over the past two years, driven up 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 the 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 two years of difficult performance and 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 will 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 will turn returned 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 three in North America, three in Europe and four 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 14,000,016 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.
Question and Answer Session
Operator
(Operator Instructions) Corey Tarlowe, Jefferies.
Corey Tarlowe
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 we look ahead and assess the viability of certain regions or areas in which you're currently present?
As you think about the go forward outlay for that region for your business?
Rick Brooks
Right. I'll start, Corey, and then Chris can add on to add on his comments, too. I think there really is what's important in this conversation to a pivot in Europe away from store growth because obviously we were growing sales in Europe over the last few years, but I've just been challenged relative to our expectations for the sales growth that we expect to see in Europe and opening new markets at an expensive proposition.
So what you're really seeing us do here is say we need to cut, 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 as we as we commented in the script, we've seen some good results in particularly in Germany last year, which is our I think our biggest market in terms of unit count in Europe, we've got a double-digit gain in the year. We made significant progress relative to profitability in that market, but we have more progress to make it, Corey. And I guess that's what you're seeing to say here is where I put a pause on growth, build a profitable base and then reconsider where we go from there. So this is more about basics is about the fundamentals and tactics. And we have markets that are profitable in Europe to be clear, but this is about getting them all moving in the right direction, getting back to what our teams look like, every location, driving better product margins across the business of controlling and managing expenses more effectively by not begin reducing the cost of entering new markets and example. And so we're back to basics and I would tell you much the same thing about here in our in our North American business too. So I think it's more about a perspective of we have opportunity there. We have opportunity to grow the profitability on a four-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 basics and putting all of our efforts into that.
Great. Thanks.
Corey Tarlowe
And then I have two more, if I can. On North America, the men's business, it seems to have made a turn. How do you think about the prospects for that too, potentially and drive maybe perhaps some 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, 10 openings that you're anticipating out, what would be the net number for the full year?
Rick Brooks
All right. Great. I'll take the first part and again that Chris add on as you'd like. I'm so North American business I had the good news is I have good news for you on 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 are multiple trends are working for us in private label and private label is growing in absolute dollars on despite the overall sales decline. We're not declining in private label on a relative basis, not against your butter of on a relative basis, again in absolute dollars in our business and 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 the trends that we've been leading the transactions that we're seeing out there in the market. So that is a huge driver for private label. It also has, I think, a positive benefit of women's. It will 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 we can 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 private label to do bundling and things like that for customers provide more value for them beyond just cheap prices that's never been our strategy.
Second thing on men's, that's really I think, again, directly correlated to the results we're seeing and we comment on this in the script, too, is that emerging brands in 22 and 23. And I will tell you, particularly in 23, the brands we launched in 23 and in some cases that brands we launch in the back half of 2023 are gaining significant share in our business and have been doing so month over month and quarter 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, Cory, Cory, what we'll look to do there in terms of program in the categories is we'll look to do exactly that, which is how can we take a screen or brand and get them into accessories into different accessories categories. How can we partner with collage of that with these brands to help drive more sales for them? How can we expand into new categories of business? These were the things we'll be working with, again, not all of them, but Select brand partners 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 have just continued to gain share. And again, we intend to launch of a lot more new brands throughout 2024. That's always our goal every year. And so I just want to be clear, there's a direct correlation between what we're seeing an improving trend results in the new brands and the efforts we put into private label. So they're directly correlated and they're driving the better results. And I think we can expand it to other categories.
Absolutely. And potentially, we'll be able to lever some of that benefit for other departments within the business, too.
Chris Work
Yes.
And I'd just add a couple of clarification points demands before I answer your question around store count that men's men's as a percentage of our total sales grew from 43% to 47%, which I think 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 six week period and then again turned positive in November and December during 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 in the last one being 15 and 16, men's really was and specifically men's T-shirts was really was the the driver for us coming out in growth of 1718 19. So again, I give our buying teams a lot of credit here. This is about finding newness and brands that will stick in.
And men's really is the driving category. So I think it's a good call out for me 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 I'll step back because we also noted that we closed 21 stores in 2023. So if you think about that on a two year combined closure it is a pretty significant closure cycle for us and really not a territory we've been in before.
So I want to be careful in getting closure numbers because of the 2024 closures in 2024.
I mean, this could increase or decrease as we move through the year, depending on how our results go in and our ability to work both with our landlord partners as well as internally on some of the things that we have and that we control and when it comes to closures is not a process. We really take lightly there. I mean, we have a pretty detailed process to look at closures. We tried to factor in things. Obviously, the sales and profitability levels of this specific location and question, but we also look at what does that store be into 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 landlord's plans for the center are playing into 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 declines 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 you know 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 the store to close, it probably means 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 and 2024.
We anticipate that will hold true, although we do expect some closures in Europe as well, and 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.
Corey Tarlowe
Very helpful. Thank you so much and best of luck.
Rick Brooks
Thank you.
Operator
Matt, Seaport.
Matt McCall
Yes.
Thanks for taking my questions. I've got maybe a few housekeeping and then maybe a couple of a little more strategic because I think you maybe partly answered my first question, just on the 53rd week, what was the sales and earnings impact in 23? Was that the 10 million in sales that you just referenced?
Chris Work
I believe I didn't hear that correctly now that the 10 million in sales is referencing the closures, the amount that the 41 stores we closed, our, whereas in and in sales, the 53rd week is going to be worth about 12 million.
Matt McCall
And what about on the earnings?
Chris Work
It's about 1.8 million of operating profit.
Matt McCall
That's helpful. Thank you. And then on the on the one Q. guide, you gave us a sales range or is there sort of a comp assumption that's embedded in that range?
Chris Work
Yes, the comp assumption in this year, we'll have a little bit of a negative spread, obviously because of how the closures impacted. So but it won't be that significantly different than the range we gave.
Matt McCall
Okay.
And then on the full year, you again, you expect sales growth. And I wanted to say that that's inclusive of the 53rd week and 23 on. So maybe just to confirm that. But then also given 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?
Chris Work
Yes.
When we talked about the we didn't give specific guidance for the year numbers, 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 that is the if there's comp growth in 24 do you anticipate some of that coming from just like now that you've slowed the growth, we're shut down the growth of stores in Europe.
Matt McCall
Is there an opportunity for comp growth in Europe just kind of from from from the standpoint of like a much ramp? Or do you see that as an opportunity right now?
Chris Work
I think I would look at this. I mean I take your steer 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 of 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 there and we've got good locations. We've got buyers that are really honed 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 as we tie that 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 categories 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 and it has been just as much if not more than Europe and so on. 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 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 not there. We just have to we'll 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 up in Europe so I feel 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. And despite the fact that we've got the 53rd week had some closures that we've got overcome.
Matt McCall
Okay. And then maybe two 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 Ricky mentioned the opportunity to do more in women's with private label, but there is also an opportunity you add brands to help the women's business. So that would be my first question.
And then secondly, and one month doesn't make a trend, but where it looks like it was positive in February. I'm just wondering to what is that really a function of that you're just starting that lap easier compares or have you also kind of worked on sort of pivoting the footwear assortment to trying to drive better results there.
Rick Brooks
All right.
Thanks for the question, Mitch, for first. I guess I 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 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 in their 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 benefit demands. We know there's also a unisex aspect to how our customer buys product. So because it's harder for me to quantify that for you the how it how it's impacting women. But that's that we see that throughout our business we did with women buying boy's shoes as an example, would be another example where we know is happening based upon the size mix we see playing out there where we see it in T-shirts, where we're selling the small size of the men's disproportionately to our typical business. So so it's a little bit hard to answer that question. I mean, it's just because we know there's a unisex aspect to our business and particularly with women in the business. But yes, we do have some brands 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 brands across wide ranges that we think really be relevant for all of our customers.
Matt McCall
I would guess would be the message at halfway there on footwear in February?
Rick Brooks
Yes, it was positive and but it was a promotionally driven positive number. So what I will tell you about footwear, Mitch, is we have just been clearing footwear aggressively, 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 just, you know, it's been an issue and a challenge department for a while now. And so what you're seeing us do is get inventory and positions so they can really go after newness in footwear and so I think Chris inventory in footwear was down 30%, 30% at the end of the year.
Mitch, to 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 for our brand partners and 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 on our footwear wall. And so now it's about the right levels of inventory. 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, are going to drive. I think some of that will drive improved business in footwear and then what our teams have done is we have a basic view, if you were to just 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 tried to build and adjust as we move towards back-to-school and holiday with what works in the assortment and how we reposition our footwear wall for the time to really hit those peak periods as best we can. So I think the key takeaway of it was yes, it was, but it was promotionally driven liquidation mode, I would say. But as we look forward, we now have inventory position where we can really go out and make investments really tried. As you know, it's footwear is tough because of the size, the sizing you do have to make larger investments in each style of footwear you tried. So we're going to do now is just go out there and pass. And finally, going to play. Our brand partners again are being incredibly supportive here and we have a lot of newness coming every period in footwear.
Matt McCall
Hi, thanks. I look forward to seeing some size fourteens in your stores on. Appreciate you taking on quite well, that's not that much.
Rick Brooks
Okay. Yes.
Operator
(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.
Rick Brooks
All right. Thank you, everyone. Again, we always appreciate your support of CME's greatly and again, to our employees and all of our brand partners. We really, again, as I said in the commentary earlier, really appreciate the challenging year. We've all worked through, and we're looking forward to, hopefully a better, an improved 2024.
So thank you, everyone, and we'll look forward to talking to you after first quarter results.
Operator
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
