Rick Brooks - CEO Chris Work - CFO

Mitch Kummetz - Robert W. Baird & Company Joe Bess - ROTH Capital Partners Jessica Schmidt - KeyBanc Capital Dorothy Lakner - Topeka Capital Markets Lee Giordano - CRT Capital Richard Jaffe - Stifel Nicolaus Randy Konik - Jefferies & Company Steph Wissink - Piper Jaffray & Co. Betty Chen - Mizuho Securities Carla White - Jennifer Black & Associates

Good day, ladies and gentlemen and welcome to the Zumiez Incorporated Second Quarter Fiscal 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. Before we begin, I would like to remind everyone of the company’s Safe Harbor language. Today’s conference call includes comments concerning Zumiez Inc.’s business outlook and contains forward-looking statements. These particular 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 and actual results may differ materially. Additional information concerning a number of factors could cause actual results to differ materially from the information that will be discussed is available in Zumiez’s filings with the SEC. I would now like to turn the call over to Mr. Rick Brooks, Zumiez’s Chief Executive Officer. Please proceed.

Thank you and welcome, everyone. I am joined today by our Chief Financial Officer, Chris Work. I’ll start the call today with some prepared remarks about the second quarter, then Chris will take you through our key financial and operating metrics. Then, we’ll open up the call to your questions. The second quarter ended up stronger than we initially anticipated. Compared to the prior year, net sales rose 12% to a $177 million and diluted earnings per share increased 63% to $0.26. Both figures compared favorably to our original guidance of net sales between $167 million to $171 million and diluted EPS of $0.12 to $0.16. For the quarter, comparable sales were up 3.4% driving better than expected leverage of our operating expense structure. While the start of third quarter moderated from our recent trend line, we are pleased that we got stronger as we move through August, culminating in a very strong Labor Day weekend. August comparable sales increased 2% on top of a 3% gain last year. We believe our recent performance is a direct result of the investments we’ve made in our people and developing a robust and seamless omni-channel presence to showcase the brands we sell. Our ability to better connect with consumers in a meaningful way is driving top line momentum. As a result, we are more efficient with our inventory management in the second quarter and moved into one of our busiest selling seasons with clean inventory levels. As we continue to expand our omni-channel capabilities and bring our highly differentiated and lifestyle relevant product and perspective to the marketplace, we believe that we can maintain strong merchandise margins through full price selling. I’d like to spend just a moment updating you on our physical store growth both domestically and abroad. Our approach to our physical expansion is straight forward. We do not want to open one more store than necessary to meet consumer demand. We strive towards optimizing our store base by entering markets where it is clear we are underpenetrated and either repositioning or closing underperforming stores as local markets change, as such, is a constant reevaluation process aimed at maximizing long-term productivity. During the second quarter, we open 26 new stores in North America including 22 in the U.S. and four in Canada. For the year, we are targeting 43 additional stores in the U.S., 7 in Canada and 6 in Europe. As we said before, building out our physical presence with productive new stores is an important part of the investments we are making to develop our omni-channel platform both domestically and abroad. In addition we have made and will continue to make incremental investments in our technology infrastructure including our strong e-commerce platform. Altogether these investments are key to executing our growth plans, for our ability to drive meaningful growth across all of our markets is highly dependent on the passion for the brand that we entrust with our great teams worldwide. Today our commitment to investing our people is stronger than ever. We are confident that our investments will continue to drive solid growth in the years ahead, as we further extend our global reach. We also strongly believe that the enhanced connection with our consumers that is enabled by heightened omni-channel presence will be a key point of differentiation in the rapidly evolving retail landscape. Our focus as a management team continues to be toward growing and fortifying our brand for the long term carefully and strategically investing in those things that will bring value to our consumers, our people and our shareholders for years to come. I will now hand the call to Chris for a view of the numbers. Chris?

Thanks, Rick. Good afternoon everyone. I will begin with the brief review of our second quarter results and our August sales, then I will share our thoughts about next quarter. Second quarter net sales increased 11.9% over the second quarter of 2013 to a 176.7% million. Breaking that down by region North American sales were up 10.1% and our European sales were $9.5 million, an increase of 57.6%. Our European business again contributed positively to the comp in the quarter and have comped positively in each quarter since the acquisition. Consolidated comparable sales inclusive of our e-commerce business increased 3.4% this quarter driven by an increase in comparable transactions and an increase in dollars per transactions. The increase in dollars per transaction for the quarter was due to an increase in units per transaction and an increase in average unit retail. In terms of category performance accessories, hardgoods, men’s and juniors posted positive comps while footwear and boys posted negative comps. We finish the quarter with the total store count of 582 up from 529 a year ago consisting of 535 stores in the U.S., 33 in Canada and 14 in Europe. Gross profit was $60.9 million in the second quarter of 2014, an increase of $5.8 million over the second quarter of 2013. Gross margin was 34.5% in the quarter down from 34.9% in the second quarter of 2013 primarily due to lower product margin. Second quarter 2014 SG&A expenses were $49.3 million or 27.9% of net sales compared to $47.3 million or 29.9% net sales in the year ago second quarter. SG&A for the 2014 quarter included $0.6 million or $0.01 per diluted share of intangible asset amortization expense resulting from the Blue Tomato acquisition, while the year ago period included $1.7 million or $0.04 per diluted share in acquisition related cost, which included the contingent earn out and amortization of intangibles. Operating profit was $11.6 million in the second quarter or 6.6% of net sales up from $7.8 million or 5% of net sales during the second quarter of last year. Net income for the second quarter was $7.5 million or $0.26 per diluted share. This compares with net income of $4.7 million or $0.16 per diluted share in the second quarter of 2013. Turning to key balance sheet highlights, we ended the quarter with cash and current marketable securities of $113.4 million up from $95.0 million on August 03, 2013. The year-over-year increase was driven primarily by cash generated by operations partially offset by capital expenditures related to new store growth and remodels and $32.8 million paid to repurchase our common shares. Inventory was $119.9 million at August 02, 2014 up 5.9% from a $113.2 million as of August 03, 2013, largely as a result of our increased store footprint compared to this time last year. Inventory per square foot was down slightly at quarter end compared to a year ago. Year-to-date we have repurchased approximately 0.8 million shares of our common stock for an average cost per share of $23.03 for a total of $17.4 million, as of August 02, 2014 we have $27.2 million remaining in our stock repurchase authorization. Now to our August results, our comparable sales increased 2% for the four week period ended August 30, 2014 compared to 3.0% increase for the four week period ended August 31, 2013. Total net sales for the four week period ended August 30, 2014 increased 9.4% to $94.0 million compared to $85.9 million for the four week period ended August 31, 2014. The increase in comparable sales in the period was driven by an increase in dollars per transaction slightly offset by a decrease in comparable transactions. Dollars per transaction were up for the four week period due to an increase in units per transaction and an increase in average unit retail. During the four week period, juniors, men’s, hardgoods and accessories posted positive comps while footwear and boys posted negative comps. Year-to-date 2014 comparable sales increased 2.5%. Turning to guidance, as always I’ll remind everyone that formulating our guidance involves some inherent uncertainty and complexity and estimating sales, product margin and earnings growth given the variety of internal and external factors that impact our performance. With that in mind, we are planning third quarter comparable sales results in the low single digit range and total sales to be in the range of $207 million to $211 million. We expect gross margin will be down approximately 50 to 100 basis points compared to the prior year third quarter primarily due to lower product margin and slight deleveraging of fixed cost. We project consolidated operating margins to be in the range of 10.5% to 11% with diluted earnings per share between $0.47 and $0.50. Our third quarter guidance includes an estimated $0.6 million or $0.02 per diluted share and intangible amortization cost associated with the acquisition of Blue Tomato. In addition to our quarterly guidance I once again share our general thoughts for the full year. With our sales results through August 30, 2014 we now project we will achieve low single digit comparable sales results for the year and continue to believe that our proven strategies around product and people coupled with the investments we have made to provide a great omni-channel experience will result in top-line performance ahead of the team sector in general. As a reminder we achieved record product margins in North America in 2013. And while we are a full price retailer, our product margins can be impacted by a variety of factors most notably shifts in product mix and overall trends. Due this we continue to project the product margins will be down moderately for the remainder of 2014. We are planning SG&A growth in 2014 to grow at a slow rate in 2013 excluding the impact of Blue Tomato earn out accrual reversal and the legal settlement in the prior year. However, we do expect SG&A expenses will grow at a faster rate on the back half of the year than we saw in the front half. One other comment on our cost structure for the year, in 2013 our results did not support a full incentive compensation payout. In 2014 to the extent sales and earnings grow rates that would support target payouts our expenses will increase. We are planning to open approximately 56 new stores in 2014 including six in Europe with a similar cadence to our historical openings of two-thirds prior to back-to-school. We expect capital expenditures for the year to be between $38 million and $40 million compared to $36 million in 2013 with the major capital projects being new store openings and planned remodels. We also expect depreciation and amortization to be approximately $30 million or an approximate 12% increase over fiscal 2013. We expect our annual effective tax rate to be approximately 38%. Lastly, our diluted outstanding share count for the full year is projected to be approximately 29.2 million shares, which includes the impact of share repurchases through August 2, 2014. Any additional share repurchases during the year from the 27.2 million remaining on our authorized repurchase program will further reduce our share count. Operator we are now ready to take questions.

(Operator Instructions) Your first question comes from the line of Mitch Kummetz from Robert Baird. Please proceed. Mitch Kummetz - Robert W. Baird & Company: Couple of questions on the margin Rick I heard you’re saying in your prepared remarks that you expect strong merchandise margins the full price selling and you get the guidance is for product margins to be down in the third quarter and for the back half as a whole I just hope you guys kind of reconcile those two comments maybe I didn’t I hear your comments correctly Rick.

I think you just missed maybe the new point Mitch all my comments are just about the long-term direction of what we’re doing, so there will be different challenges we move through different cycles but in the long-term the longer view we’ve been saying for a long time that we believe the last five years has been about winning share in the market place and we think the next five years will be about the same thing and as we do that Mitch we believe part of winning share is to demonstrate our ability to do that will be that consistency of our ability to be full price seller. So my comments are going to be more longer term looking Mitch than the short term guidance. Mitch Kummetz - Robert W. Baird & Company: So, -- yes, go ahead.

Well I’m just going to say, just want to make sure we’re clear why we’re saying that, our guidance still implies that relatively healthy level of earnings growth and I think that’s just an important thing to keep in mind is the overall structure what we’re doing here, even in it what would be a tougher cycle for us in some in particular category product, we’re still building pretty healthy earnings growth through the cycle.

: And Mitch I’ll add as I pointed out in my comments 2013 were record margins for us and our margins are not only impacted by the greater landscape but also just by shifts in product across our categories and within categories, the trends change and the movement across our categories can have an impact on margin as well. Mitch Kummetz - Robert W. Baird & Company: Got it. And the increase on SG&A I know your comment was you expect SG&A to grow to faster rate in the back half than the first half, you just remind me what’s going on to drive that?

: Yes and I think when we think about SG&A we have to really consider the spending we did in 2013 which was really an investment year and we brought up two new websites, we had some investments in both our web and IT talent as well as full year of our international operations which we continue to invest in for the long-term and as we turn in the 2014 we really remain focused on balancing leveraging those investments to grow the business adding the right additional investments but also maintaining profitability and while 2014 is not considered from our perspective in comparison to ‘13 a heavy investment year we have managed SG&A pretty well on the front half of the year and there is now significant item that’s driving it on the back half of the year but there is other smaller things, there are just tiny other expenses that are moving from the front half to the back half, we do have continued investments around new people still planned on the back half of the year and there is even things like our incentive compensation structure which in 2013 was accrued more heavily in the front half of the year and then as the result tailed off we had to reduce that over the back half of the year and we don’t have that planned in the model, in 2014 assuming we can achieve the targets we’ve set out.

Your next question comes from the line of Dave King from ROTH Capital Partners. Please proceed. Joe Bess - ROTH Capital Partners: This is Joe Bess on for Dave. I apologize if any of my questions have already been answered, but could you give us an update on back-to-school, and maybe how things are trending as kids have gone back to school across your various markets? Or maybe asked differently, just how things have trended in August, week by week?

: Joe what I’ll tell you is very similar what we said in our prepared remarks. August overall was a 2% comp, we started slower than what our trend line has been coming into the quarter but accelerated each week as we moved through August highlighted by a strong Labor Day weekend. So again we’ve seen this over peak periods in the past, really that the peak being more violent from a volume perspective than the whole period. And our performance over the peak period I think bodes well for our brand and our product offering that we have out there to offer to consumers. Joe Bess - ROTH Capital Partners: And then looking at your business and the recent gains particularly in August, how do you think or how much do you think is really due to continued market share gains versus maybe an improvement in the overall backdrop?

: It’s a hard question to answer Joe. I am not exactly sure how we would parse that and likewise I guess I would as Chris is suggesting giving you colors for how the week flowed, we’re not sure that we think back to school runs through this upcoming weekend. So we’re clearly not done with the back to school cycle at this point. So I am not sure I can fully tell the story, I am not sure that the August fully tells the story at this point, it’s just the data point we have now. So it’s a hard question for me to answer. I guess I would put it this way which is first we're up against the three year ago in August, so we’re comping on top of a year ago comp and on a relative basis in the marketplace I think it’s pretty clear that we’re a winner. So I can only look at that from that perspective Joe and then again I just cautioned to say that we’ll have to see how the full back to school cycle looks as it plays out through the remaining portion of this week in this weekend. Joe Bess - ROTH Capital Partners: And then I guess thinking about as we head into winter and think about the Blue Tomato business and I know in the past you’ve talked about maybe having a little bit less of a winter offering given the weaker snow seasons over the past few years. I guess how does that apply to Europe given that business is an arguably a little bit more winter oriented than the U.S?

: We don’t approach planning inventories Joe any differently in Europe then we would in the U.S. I mean we look at what the business requires, what it needs, we try to look at how efficiently we can manage through inventory levels. I think we feel that we came out of what was a weak year in Europe last year in terms of snow conditions with a pretty healthy clean inventory position in our snow hard goods business there. So I don’t think we’re -- so we’re not entering any bad position I guess on overall perspective and then we’ll just have to see, I mean we’re always cautious about any seasonal category in today’s world. But we’re thinking about what’s possible and we plan it and we look at what maximum sell through rates we can get on what levels of inventory we’re taking. So again I don’t think we approached the planning any differently we do as Europe or here in the U.S. And then we have some tools and techniques that we will use differently each year, different strategies and tactics that we hope will give us the opportunities to continue to get better sell-through rates with less inventory risk.

Your next question comes from Ed Yruma from KeyBanc Capital. Please proceed. Jessica Schmidt - KeyBanc Capital: Hi. This is Jessica Schmidt on for Ed. Thanks for taking my question. We've heard that trends in Europe have become difficult for some of the retailers, and particular in the teen space, just given some of the macro challenges that they are seeing over there. Can you talk about what you're seeing? And I guess how you're looking to manage the business there?

: Sure I’ll talk in some generality and Chris again follow up with, probably reiterate some of the comments you made in our prepared remarks. But let me just start by saying we continue to be optimistic about our business in Europe. And while its admittedly focused in what we think are two of the strongest economies in Europe at this point Austria and Germany, Austria being the home country for Blue Tomato. We are pleased with the results we’ve gotten and I’ll let Chris again remind you of what we said about the numbers here over the last -- well, since the acquisition here in a moment but I just want to call out again what a great partnership we have with our team at Blue Tomato. These are people from a culture perspective that are tightly aligned with the Zumiez team and we are asking them to do a lot. We are asking them grow what’s already a very strong e-commerce business I think one of the most successful e-commerce businesses in our niche Europe. To grow that piece of business, while we are also growing stores, I'll remind you that the point of acquisition, we really had three stores in Europe, in Austria and we are now going to finish this year with, I think it’s 18 stores this year in Europe. So in just about two and a half years, the team there has just done some remarkable work and so we are really pleased with where we are at. We have a lot of work to do. We continue to think that the opportunity in Europe is still very, very big and we think just like here in the U.S. and in Canada that we have partnered with the best operator in Europe, just like we are here, we believe we are in U.S. and Canadian market. So, we feel very good about where we are at. Chris if you want to just give little highlights on the numbers.

Yes, Jessica from a numbers perspective, I'll reiterate what we said on the call, Europe sales in the quarter were $9.5 million which is an increase of 57.6% from their second quarter result last year. And while Europe is still just over, you can tell by those results, just over 5% of our overall business that’s still relatively small to the overall picture. This is a business that’s comped positively in every quarter than we have owned that, so still driving very hard and as Rick mentioned building out what we believe will be the backbone of a strong omni-channel platform.

Your next question comes from the line of Dorothy Lakner from Topeka Capital Markets. Please proceed. Dorothy Lakner - Topeka Capital Markets: Just a question about the categories, category results. You've had some really strong results across the apparel businesses, both on the junior side and men's, and in accessories as well. I mean, these have been categories that have pretty steadily been positive. Footwear, you've had challenges both on the men's side and the junior's side. But looking into the back half of the year, and correct me if I'm wrong, it seems like those tough comparisons you have should ease. Is there anything that you feel you're beginning -- if you're beginning to see some light at the end of the tunnel? If you can just talk a little bit about what you're doing in footwear and how you see it in the back half of the year?

Let me just even back up just a moment, talk a little bit higher up than your comment but it’s an important thing I think for all of us to remember that the strength of our business model is the diversity of brands and the diversity of category, selling everything that our consumer wants to see us sell within the construct of the lifestyles we are presenting. So, as difficult as footwear has been and I will let Chris remind you here in a moment about the timeframe that we have been experiencing difficulty in our footwear business and you are correct men’s and women’s. It’s difficult as it’s been. We have found ways and we found trends in our men’s and women’s business to continue to drive comp store sales gains. So, I just want to make sure, I get a top opportunity for top-up footwear specifically to call out because that’s the strength of our business, something we continue to say across these calls for many years now that's the real strength of our business as we cycle brands, as we cycle trends. We can go where the consumer wants us to go and find ways that can drive gains, so I have to tell you for as it’s difficult as our footwear business is, Dorothy, I feel pretty good about where we are at year-to-date. So, now what can we do about footwear? At this point, I mean I have to tell you I think footwear is going to be a struggle yet. Now, yes we are going to hit some easier comparisons, we'll see whether or not that changes, when you are in a footwear cycle like we are where athletic footwear, performance athletic footwear, basketball footwear is really the driving trend cycle that’s just not what our consumers come to us to buy. So what you see I think will be a combination of how those trends are playing out, how we can watch and monitor that side of the business and relative to where we are at. Now we have been very aggressive about our cleaning up inventory positions in footwear. And as we said regarding our overall quality of inventory, we feel very good about where we are at and that comment would go to also be reflected in our position in footwear. So, we will see how we do. I can tell you that we are looking at everything we can possibly do in terms of all the leverage we can pull from micro-assortments, brand positioning to how we can specialize in unique product and collaborations with vendors. We are trying everything we can do. We are layering those things out there. But this is fundamentally a trend cycle in footwear that is just not one that plays to our strengths. That being said again I am pretty impressed by our product team and our sales teams that we can still find a way to drive positive comps. Chris, you want to give a little bit historical context?

Yes, just from a historical context, the footwear category has been down for the last four quarters that we have reported but really probably it’s even longer than that is really Q4 of 2012 that the first time we started to see the real shift to the athletics trend. We did have some offset in that as we finished out the ’12 in the first part of ’13 in the juniors business was still strong. But that really changed by the midpoint of 2013 and the last four quarters being top and then you saw it again in August and for our August sales we’re reporting today as well. Dorothy Lakner - Topeka Capital Markets: Just in terms of the inventory, I mean your inventories, you’re always very clean, but it seems like there was a wider gap in this quarter between how much inventory was up and sales. So just wondered what your thoughts are and where we should expect inventory at the end of the next quarter, kind of what your plans are in the back half of the year? Seems pretty clean.

: Dorothy I think part of what you’ve seen is you follow us closely so you’re aware that obviously as we ended 2013 we were heavy on inventory than we wanted to be and we had to be more promotional in getting through some inventory on the front half of this year, specifically the front half of the first quarter. So, overall sales up 12%, inventory up around 6%, is kind of in line with what our store growth is as we think about the back half of the year we’d expect the inventory to be up in line with our store growth. So it’s important to us to maintain real clean inventories.

Your next question comes from the line of Jeff Van Sinderen from B. Riley & Company. Please proceed. Austin Drake - B. Riley & Company: Hi. This is Austin Drake on for Jeff. Can you guys give us your latest thoughts on how you see your store fleet evolving as digital and omni-channel continues to grow? Just wondering if you had reached any new conclusions on how many brick-and-mortar units is the right number?

Sure, Austin I’ll be glad to add little bit color to our prepared comments. Again, the first thing as we said in the prepared comments is we don’t want to have one more store that we need to serve the market now. That seems pretty straight forward but that’s actually pretty hard to figure out so we are doing a number of things to try to make sure that we learn as we progress each year through executing our omni-channel plans. Now, first thing I would need to call up for everyone is that we have large parts of the country where we’re not well represented in the physical world. So, and again, as I think I said on my first comments on the -- during the Q&A phase here was that we believe it's a share consolidation game we’re playing, have been for the last five years, will be for the next five years. We want to own the share, we want to dominate our niche to a lifestyle that we represent. So we have significant portions of country where we’re really not represented in the physical space. So we’re playing this share consolidation game, we need to go get the share. And that is a significant number of the stores that we’re opening in the U.S. is to go and fill in or open new markets where we’re not represented very well today where we tend to be underpenetrated. As we then look at the rest of the portfolio and more mature markets, we’re constantly evaluating performance of our fleet, we’re looking at four wall contributions in about every manner you can think to slice and dice the data, and we’re looking at the contribution rates and we’re looking at by type of mall. You name it we’re looking at it. And because we want to make sure as we said in the comments that we’re taking the opportunities to reposition the fleet as best we can to capture share in each marketplace. So this is where we’re going to talk over the years about how we built out that omni-channel presence. Again, we need to build more stores here because there is simply not in certain parts of the country at all after that it’s about maximizing. So we’re going to try all sorts of things, we’re going to measure what happens when we close stores and markets, what happens to the integrated omni-channel business. Well we already know it’s a huge list when we open stores in markets. But so we’re going to continue us and to really experiment with these ideas and measure where we’re going to be. Today, we still think that say as the fleet is going to be between somewhere between 600 and 700 stores in the U.S. and that would still be 60 to 70 stores in Canada. In Europe, the opportunity yet is huge. We’re still predominating an e-commerce business in Europe. But as Chris said earlier with only 18 stores planned by the end of this year and the opportunity in Europe there is really to -- is to have a very large fleet of stores. And in each case we’re approaching looking at what makes sense for the marketplace as we understand it today and then building the flexibility into our models and into our business to adjust to the marketplace.

Your next question comes from the line of Lee Giordano from CRT Capital. Please proceed. Lee Giordano - CRT Capital: Thank you. Good afternoon, everyone. Rick, I may have missed it, but in your last comment there, what markets specifically do you still have holes for new store growth? And then within that, are there different types of locations you're looking at in terms of either A, B, or C malls or strip locations or outlets? Can you give us some color on that? Thank you.

: Sure Lee glad to do that. Geographically, our biggest holds tend to be the southeast at this point really excluding Florida. But generally the southeast from the mid-Atlantic down to the southeast across the Texas we have opened some stores there over the last year we’re doing well in those new stores we’re happy with the performance. So that southeast marketplace and then also connecting between Illinois, Indiana across to the east coast. Those would be the primary opportunities that we have in terms of markets where we're just significantly underpenetrated today. As we think about and again I’ll remind everyone that we have been very disciplined about our approach to how we manage the risk of new stores. We’ve always tried to be about 50% of our new store mix and new markets, 50% in existing markets. We always try to have roughly the same mix between A, B and C malls each year to try to manage the risk aspect and the consistency of the growth in our business. And then of course we're trying to balance geography as best we can as we grow the business too. So we’re trying to manage risk and mitigate some of the risk of the store growth by looking at again geographical mall mix type of exposures as we build the business that is nothing new, we’ve been doing that for a very long period of time. So that’s how we’re still thinking about it. Now we have been experimenting in a very small level with some strip locations mostly in mature marketplaces. I think of that as filling in holes, gaps in the marketplace as we look at a market. And we’ve been experimenting with some street stores over the last few years, very small numbers again I think what we cost by three street stores and for the same reason that we -- those are not -- and by the way those are not included in our mall numbers as we talk about where we think we can be in terms of presence in the U.S. These are again about filling in holes in the marketplace where we’re not currently serving our customers. So those are additional opportunities for us as we think about it but we’re going slow, we’re testing carefully how we do in those off mall kind of locations and we’ll be evaluating how those perform.

Your next question comes from the line of Richard Jaffe from Stifel. Please proceed. Richard Jaffe - Stifel Nicolaus: Thanks very much, guys. Two follow-on questions. The junior business has been so strong for you. I'm wondering if that's pushing up to the limit you guys have been maintained for yourselves as keeping juniors as sort of a 10%, 12% of revenues. Wondering where it is and how much further upside there is to that? And then we have seen in the markets some success in the brown shoe business, Timberland being a recent call-out. Wondering, does that play into your strength? That obviously the basketball-type sneaker doesn't work for you, but could you play the brown shoe business more effectively? Thanks.

: Thanks Richard. I am not going to comment really on where we’re at with juniors so far this year in terms of penetration because we need to see the full year, each cycle is so important so different and of course we’re just getting through, not quite through yet the back to school cycle at this point. I do just want to call out and -- about the success of our juniors business because it’s been great. It was strong in August again and so I really appreciate the hard work of our buyers and our store and sales teams across the Company. We made a lot of progress and what we are doing in junior and we’re really pleased with the effort and success and obviously the math as you’re indicating would tell you that the percentage of penetration must be going up that would be true, but again before we talk about specifics I’d like to see how the whole year plays because that's a much more valid comparison relatively speaking. Now how high can that comparison get? I think historically we’ve been high as 15 or 16 Chris and mid-teens in that range. We’re not there yet I don’t think, so now and we certainly won't cap it anywhere at that range, Richard I mean customers, we want to go where customers tells us, if customers want to buy a lot we want to sell a lot and in particularly in juniors we want to turn the inventory quickly. And I think these are areas our team has just done exceptional job of here this year and so I am not sure how high I can get. But we’re going to try to push it as high as we can get it as long as our customer is willing to invest in the product with us. So great job by our team this year thanks for calling that out and we’re going to push it and drive it as far as we can in our business. The Brown Shoe business is -- we have played with the Brown Shoe business over years, it's actually never -- we haven’t really had any significant cycles that have played well for us. My early days here we carried Dr. Martens. We’ve carried new names we’ve carried off and on. I am not saying we won’t be doing that again. Those are things we’ll try and we’ll push, women's will have a bit different approach than men's because again I think the juniors' consumer is just a different consumer. So we’ll see where it goes again we’re not ruling anything out, if there is an opportunity for us to sell product to our customer, we’re going to find a way to do it.

Your next question comes from the line of Randy Konik from Jefferies. Please proceed. Randy Konik - Jefferies & Company: All right, great. Thanks, guys. Can you just -- I guess Chris, can you just clarify the back-half margin, gross margin guidance? Is that a reflection of a mix, a product mix assumption, or a different promotional assumption in the back half of the year? And then as you gave some varied SG&A guidance for the back half versus the front half, any [initial] color on how we should be thinking about calendar 2015? Would it be a different run rate in the back half versus the front half, anything like that? Just give us any color you could give on the next year would be helpful. Thank you.

So just starting with the gross margin comments as we’ve talked about earlier, our margins last year were our peak margins in North America and specifically product margins were pick margins in North America. So as we look to the back half of the year and more Q3 which we provided guidance around today, we do think that there will be some moderate pressure on margins that we called out in our guidance range. Obviously our goal continues to be via full price itself in the marketplace and we think we’re doing a good job of that in delivering strong bottom line results. So from a mix perspective, we'll have challenges there to as we have mix not only across categories bit within categories that impact the margin. So we still believe we are going to operate at a very high margin price, margin point I should say as we move into the back half of the year, albeit just slightly lower than where we were a year ago. From an SG&A perspective, I am not going to talk too much about 2015. We've laid out where we feel 2014 will play out and I think what’s important that you should know about us is we’re going to continue to make the right investments for the business for the long-term. And that’s where, that’s the way we're looking at it and then we want to make investments that we can leverage as the business continues to grow and we'll be very mindful of producing a bottom line result and that’s kind of how we think about SG&A over the long term.

Your next question comes from the line of Steph Wissink from Piper Jaffray. Please proceed. Steph Wissink - Piper Jaffray & Co.: Thanks. Good afternoon everyone. Rick, I just want to follow up. I think Mitch had a good question on the pricing. Can you talk a little bit about your strategy to balance buying goods to sell at lower prices so that you have some value proposition on the mall relative to a discount strategy where you're actually discounting full-priced goods? Talk about the balance and how you partner with some of your vendors to really broaden your pricing continuum. And then if I could, just a question on the omni-channel because it's come up a few times on the call today. But could you give us an update on where you are in your kind of milestones and your progress milestones around the integration of the two channels, what initiatives you have planned for the back half and then what we should look forward to in 2015? Thank you.

Great, thank you Steph, happy to do so. And so let’s with your first question relative to pricing and value and a I’ll add a bit to it, it’s not just breaking with our branded partners where it’s appropriate for that brand but it is also our private label mix and we have a very good private label team here who knows how to deliver value in the categories where private levels were important to our business. So yes we do plan for that and that can as we can move mix and that can be and absolutely have a positive effect on margins overall and as Chris said, a lot of what you are seeing in margin is there is mix shift involved in that and then we have a tough category that tends to be a margin drive for us right now. So we are very I think very good about finding ways to deliver value to our consumer and both through how we partner with brands and I think everyone knows that as you look at our sale racks a good portion of what we do on those sales racks is purchase for those racks, and then using our private label as a lever to add value to consumer’s overall basket purchases. So we can really focus on the areas where brands are really important in a consumer’s life. So it’s a very important strategy what we do, it’s one of the ways we have been able to leverage margin over the years and I think it’s still an opportunity for us over the longer term for us to build the strength of our value business for this consumer while still selling most importantly the real -- our key brands at full price. The last thing that I want to do is be selling any brands at a discount, we certainly don’t want to do that if we don’t have to and we certainly don’t feel that for those brands the real equity would be a disservice to them to be having a discount their product. So we feel good about where we are at and we still think as we look forward we have some opportunity particularly around the private label and building that over the future stuff. Now the second part of your or the second question you asked relative to integration of our omni-channel strategy, yes we have called out a number of times because we have been doing things for the last really four years. We’ve talked about our five year planning process, we really identified the need for omni-channel in late ’08, spent ’09 developing the plans and can really beginning the launch of our omni-channel initiatives. So we have been watching over this cycle a series of initiatives to integrate channels, to integrate our businesses. And that as Chris said has required us to make a number of investments both in people and technology. The launch of our web platform here in North America last year was a very important aspect, a very important step not just for where we've been but for where we need to go and we have a number of initiatives scheduled for the next two years and three years are things that we think are going to be important drivers of our omni-channel business. So we've come a long ways where we are at today but we have a long ways to go when I would characterize our omni-channel integration this way stuff it’s kind of a like (assortment) [ph] planning. We're never ever done with [indiscernible] stores and doing it better and better and better and we view really what we are doing the integration of building a (channeless) [ph] retail experience for our customers as a never ending job because the customers are in charge, they are the ones that have the power in today’s world because of smart technology, we need to go where they want to go, however they want to do it, we’re going to be there to serve them and we don’t know exactly what that’s going to look like again. I tend to think with their early stages of this transition not the latter stages. So, we’ve got a great start I think. We again need to focus on the last five years. I’m not going to talk specifically about what we’re doing what we’ve done or what we’re going to do here over the next few years at our specifically identified initiatives, I'm not going to get in that for competitive reasons but we’ve got a clear roadmap at this point for the next two to three years of activities, will adjust it as we need to base upon what we see and how we’re going to interact with consumer but it’s a never ending process will be I guess my final comment for you there. We’re going to keep growing, changing and evolving as our consumer does.

Your next question comes from the line of Betty Chen from Mizuho Securities, please proceed. Betty Chen - Mizuho Securities: Thank you. Good afternoon. I was wondering if Rick or Chris, you can discuss sort of the margin profile differences between Europe, Canada, and the US on an operating margin level, and any distinct differences between gross margin or SG&A? And then as a follow-up to an earlier question, Rick, regarding how you can lever some of your private label merchandise as a value attraction, are you seeing -- what are you seeing in terms of product costing on that front, and how we may be able to see some of that impact or benefit from a timing perspective? Thanks.

I will try to take these and I’ll let Rick try (and see) [ph] if he's got anything to add. From a margin profile the way we think about the U.S. compared to both Canada and Europe is, Canada and Europe are not as over (malled) [ph] or as over retailed as our U.S. business. So when we look at both our Canadian models as well as European models what we would expect is we would expect that they’ll do more on the top line that probably have a little higher operating structure specifically around rent and -- possibly wages as well and that they will produce a lower operating margin than our U.S. stores albeit from a dollars perspective should be very comparable if not greater. So we expect that our European and Canadian stores will provide the same level of volume albeit at slightly lower margin. And thinking about the private label value perspective that and the cost associated with that, this is not an area where we’ve seen a lot of cost increase in our private label business and one of the things that buffered us in the past with large cost increases and caught in things like that have diverse our model is but it’s not just a comp based business we have the accessories and hardgoods and the footwear that go along with the model. So, we’ve not in a huge uptick here nor in our private label business and drives results today.

Your next question comes from the line of Jennifer Black from Jennifer Black & Associates, please proceed. Carla White - Jennifer Black & Associates: Hi, Rick and Chris. It's Carla White in for Jennifer Black. I just wanted to say congratulations on a good quarter, and thank you for taking my call. I just wanted to find out if you could give us an update on your Stash Reward Program and what you're learning? And can you tell us about how many active members you currently have in the Stash Reward Program? And also wanted to comment, your back-to-school catalog looks great. Can you maybe give us an update on what you're seeing so far as trends as a result of the mailings that you've done, and is it up from last year? Thank you.

: Okay, great Carla, I’ll try to do my best to address those questions for you. Stash continue to be primarily focused on acquisition of members where well over 2 million members now within this as a new stash so making good progress on that front and again I want to give our sales teams as that’s where still most of our volume is. So much credit for signing people up, we have great sales people, they can not only sell a product, they can sell the stash program too. So well over 2 million members at this stage we’re actively working now on how we’re going to increase an engagement levels with those consumers and we’re going to building out our CRM tools over the next year or two to try to be more highly relevant in our messaging to the consumer base which of course that was a whole strategy behind stash to start with was the need to understand our consumer in a more detailed level than ever before and the tradeoff right is we get reward them and they’re willing to share some more information with us. So now our job is now that they’re sharing some information with us to find ways to be more relevant in their lives and that will be our focus here over the next couple of years as we continue to build out all these omni-channel initiatives. So we feel good about where we’re at and we continue to try to drive engagement and then look at how we can build -- use what we’re learning about our consumers to be more relevant in their lives. So, we’ve got a ways to go there. Catalog is I would just tell you at this point we are still experimenting with the catalogs, it’s where we have had good results I would characterize it as on our first -- this is our third book that we did here at back to school and I think it looks pretty good too I think team has done a great job and but we’re still in a learning mode here for what we're going to do and we view catalog as another omni-channel initiative. So I guess I would ask everyone again to think about all of the consumer touch points you can use communicate to your customers. Catalog is one of those, it tends to be a long-lived item in people’s homes and our consumers’ homes. So for us it’s just another tool that we want to consider in the omni-channel world. And so I still characterize this as learning in the space of our business we’re certainly not disappointed with our results in catalog. To be clear we have not evaluated yet our back-to-school catalog both at this point that will have in next few weeks as we get the data back on relative lift for those consumers that receive the book, but it’s again, Carla, part of that broader omni-channel strategy how can we communicate, be relevant to our consumers, shown them what’s going to in the lifestyle in a highly relative way. So consider it just another one of those omni-channel strategies.

Ladies and gentlemen, this concludes our question-and-answer session. I will now turn the call back to Mr. Rick Brooks for closing remarks.

Again our thanks for your time today. We’re always appreciate after talk with analyst and investment community. Pleased with our second quarter results and we’ll be looking forward to discuss our third quarter results here in a few months. Thanks everybody.

Ladies and gentlemen that concludes today’s conference. Thank you for your participation. You may now disconnect and have a great day.