00:05 Good afternoon, ladies and gentlemen, and welcome to the Zumiez Inc. Fourth Quarter Fiscal 2021 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. 00:18 Before we begin, I'd like to remind everyone of the company's safe harbor language. Today's conference call includes comments concerning Zumiez, Inc. business outlook and contains forward-looking statements. These forward-looking statements and all other statements that may be made on this call that are not based on historical facts are subject to risks and uncertainties. Actual results may differ materially. Additional information concerning a number of factors that could cause actual results to differ materially from the information that will be discussed is available in Zumiez's filings with the SEC. 00:53 At this time, I will turn the call over to Rick Brooks, Chief Executive Officer. Mr. Brooks.

01:00 Hello and thank you everyone for joining us on the call. With me today is Chris Work, our Chief Financial Officer. I'll begin today's call with a few remarks about the fourth quarter, then I'll share some thoughts on the past year and what it means for Zumiez going forward, before handing the call over to Chris, who will take you through the financials and some thoughts on the coming year. After that, we'll open up the call to your questions. 01:22 When we announced in early January that total sales for the combined November and December period increased 9%, fueled by another strong holiday season. We indicated that we expected trends to slow over the remaining month of the fourth quarter. This is due to several factors including a tough comparison for the stimulus fueled spending in January of 2021, store traffic likely being impacted this year by the fast spreading Omicron COVID variant, and the fact that we started to see some sales patterns that resembled pre-pandemic seasons with volume focused around peak periods. We're also cognizant of other potential issues such as inventory shortages from global supply chain disruptions and added pressure on the consumer spending from rising inflation. 02:06 As you saw from our earnings release issued earlier today, our full fourth quarter results fell short of our expectations, as these headwinds combined to create a more challenging finish to what was overall a pretty phenomenal fiscal year. Overall, net sales increased 4.6% year-over-year for the fourth quarter to a record $346.7 million and diluted earnings per share reached a $1.70, which was also a quarterly record. While the prior-year stimulus payments and current market conditions made it difficult to lap last year's January, our performance to close out the fourth quarter does not diminish the incredible year we delivered and the tremendous shareholder value created through record growth and earnings, coupled with the repurchase of 4.6 million shares or 18% of our common stock from the start of fiscal 2021. 03:01 For 2021, total sales were up 19.5% and 14.5% compared to 2020 and 2019, respectively and we achieved record diluted earnings per share of $4.85 compared to $3 last year and $2.62 two years ago. In fact, this brings the last five years compound annual growth in diluted earnings per share to over 36%. This result has a direct correlation to the tremendous work of our teams and the strong culture and brand foundation we have built over the past 40 plus years. 03:39 Looking back on the year, there were a number of positive catalysts. We start the year with a historic stimulus fueled first and second quarter and were then able to capitalize on an outsized back to school season as majority of school districts around the country resumed in person learning this year, and finally, experienced a growth in the fourth quarter. I spoke to. 03:59 Throughout the year, we saw a strong full price selling, reflecting pent-up demand and our ability to serve the customer with distinct merchandise through our integrated model, however they choose to interact with us. Overall, 2021 was an incredible year for Zumiez. one, where our success was directly attributable to the execution of our long-term consumer centric growth strategy that the company has been building and evolving since our inception. This strategy requires significant agility in navigating the trend cycles and speed desired by our customer. 04:35 Despite numerous challenges, including global supply chain disruption and labor shortages inflation and closures tied to COVID, we again proved our ability to adapt and capitalize on strong consumer demand and expand our market share this year. Looking ahead, we remain confident in our ability to execute over the long term to serve our customer and drive total shareholder return. 04:58 As we enter 2022, we anticipate our results to be challenged domestically in the first half, as we anniversary the impact of domestic stimulus that allowed us to have record results in the first and second quarter of 2021, when our business model again proved a very efficient at grabbing extra discretionary spending. Internationally, we expect 2022 will have some benefit as the businesses we built in Canada, Europe and Australia, capitalize on the market opportunities that emerge those economies reopen more fully. 05:30 Although, more recently, we are concerned about the potential impact of the ongoing conflict in Ukraine. Remember, we built our strategy and manage our company not toward quarter-to-quarter results, but the long-term financial results and overall shareholder value. Our overarching consumer-centric approach rooted in strong brand and culture will remain constant. We built our business in which we partner with great brands to bring diversity and uniqueness to our customers that allows them to individuate. 06:03 We build an infrastructure in which the customers can shop with us get what they want, when they want, how they want and as fast as they want. We've worked our business into a channelless organization with inventory visibility from all touch points and back-end capabilities that allow us to effectively leverage expenses regardless of the channel in which sales originate. 06:26 We're internationally diversified allowing us to capture global as well as domestic growth and work with brands that emerge locally and help them grow globally. While much remains uncertain in the macro environment, with the continued supply chain challenges inflation, the ongoing pandemic and the conflict in Ukraine, we remain confident in this strategy that has been the key to our success. 06:50 Before I close, I would like to thank all of our teams and our brand partners for their dedication and commitment to Zumiez over the last year and throughout the pandemic. We've come so far since the period of widespread closures in early 2020 and emerged in the last two years a much stronger company. We're proud of our achievements to date and excited for the future as we continue to execute on our winning strategy. 07:15 With that, I'll turn the call over to Chris to discuss the financials.

07:20 Thanks, Rick and good afternoon, everyone. I'm going to start with a review of our fourth quarter and full year 2021 results. I'll then provide an update on our first quarter-to-date sales trends, before providing some perspective on how we're thinking about the full year. 07:31 Fourth quarter net sales were $346.7 million, up 4.6% from $331.5 million in the fourth quarter of 2020 and up 5.5% from $328.8 million in the fourth quarter of 2019. The year-over-year increase in sales was primarily driven by our ability to capitalize on current trends, the reopening of stores compared to the short-term store closures related to COVID 19 pandemic in the prior year, and a more normalized holiday season in our U.S. business. 08:00 Our stores were open for approximately 99% of the potential operating days during the fourth quarter of 2021 compared to approximately 94% in the fourth quarter of 2020 and a 100% in the fourth quarter of 2019. From a regional perspective, North America net sales were $287 million, an increase of 0.6% over 2020 and up 2.2% compared with the same period in 2019. Other international net sales, which consist of Europe and Australia were $59.6 million, up 28.8% from last year and up 24.6% from two years ago. Excluding the impact of foreign currency translation, North America net sales increased 0.6% and other international net sales increased 36.9% compared with 2020. 08:44 We continue to experience temporary COVID related closures in Europe which was open for approximately 94% of the potential operating days during the fourth quarter of this year. During the quarter, the men's category was our largest growth category, followed by footwear, accessories and women's. Hardgoods was our only negative category for the quarter. 09:01 Fourth quarter gross profit was $133.9 million compared to $129.6 million in the fourth quarter last year and gross margin was 38.6% compared to 39.1% a year ago. The 50 basis point decrease in gross margin was primarily driven by 40 basis points of increased costs related to inventory shrinkage and obsolescence, 30 basis points of deleverage in our occupancy costs, and 20 basis points of deleverage in our distribution fulfillment costs that were all partially offset by a 40 basis point increase in product margins. 09:33 SG&A expense was $82.2 million or 23.7% of net sales in the fourth quarter compared to $75.8 million or 22.9% of net sales a year ago, and $79.5 million or 24.1% of net sales two years ago. Compared to 2020, the increase in SG&A expense as a percent of net sales was primarily driven by 90 basis points increase in store wages, as we saw continued expansion of mall hours in 2021 and also a higher rate tied to wage inflation. 10:01 Operating income in the fourth quarter of 2021 was $51.7 million or 14.9% of net sales compared to $53.8 million or 16.2% of net sales last year. In the fourth quarter of 2019, we had an operating profit of $48.9 million or 14.9% of net sales. Net income in the fourth quarter was $38.2 million or $1.70 per diluted share compared to net income of $42.8 million or $1.68 per diluted share in the fourth quarter of 2020. And net income of $37.9 million or $1.48 per diluted share in the fourth quarter of 2019. Our effective tax rate for the fourth quarter of 2021 was 25.1% compared to 23.7% in the year ago period and 24.8% two years ago. 10:47 Looking at our full year results, net sales for 2021 were $1.18 billion, an increase of $193.2 million or 19.5% from $990.7 million for 2020 and up 14.5% from $1.03 billion in 2019. The year-over-year increase in sales was primary driven by the reopening of our stores compared to the widespread short-term store closures related to COVID-19 pandemic in the prior year. Our ability to capitalize on current trends and the impact of domestic economic stimulus on the business during the year. 11:23 For the year, our stores will open approximately 97% of the possible days compared to approximately 78% of the possible days during fiscal 2020. From a regional perspective, North America net sales were $1.03 billion, an increase of 19.1% over 2020 and up 12.7% compared to the same period in 2019. Other international net sales, which consists of Europe and Australia were $153.2 million, up 22.5% from last year and up 27.8% from two years ago. Excluding the impact of foreign currency translation, North America, net sales increased 18.7% and other international net sales increased 21.4% compared with 2020. 12:08 While not as significant as in fiscal 2020, we continued to experience temporary COVID-19 related store closures outside the United States in fiscal 2021. For the year, our Canadian, European and Australian stores were opened for approximately 86%, 81% and 79% respectively of the potential operating days in fiscal 2021. 2021 gross margin was 38.6% compared with 35.3% in 2020 and 35.4% in 2019. The 330 basis point increase versus 2020 was driven by a meaningful leverage in our fixed cost structure compared to the period of COVID 19 related closures in the prior year. The increase was primarily driven by 140 basis points of leverage in our store occupancy costs when compared to the prior year, which included the continuation of rent charges without associated sales during COVID 19 related closures in fiscal 2020. 13:02 In addition, there was a 110 basis point increase in product margin and a 100 basis point decrease in web fulfillment web shipping cost as the volume shifted back to physical stores with fewer store closures in the current year. 13:17 Annual SG&A expense was $298.9 million or 25.3% of net sales compared with $253.1 million or 25.5% of net sales in 2020 and $280.8 million, or 27.1% of net sales in 2019. The 20 basis point year-over-year decrease was primarily driven by 90 basis points of leverage of non-wage store operating costs, partially offset by 50 basis point unfavorable impact related to fewer government subsidies received in fiscal 2021. 13:47 Operating income in 2021 was $157.8 million or 13.3% of net sales compared with $96.9 million or 9.8% of net sales last year. In 2019, we had operating profit at $85.8 million or 8.3% of net sales. Full year, net income was $119.3 million or $4.85 per diluted share, up from $76.2 million or $0.03 per diluted share in 2020 and $66.9 million or $2.62 per diluted share in 2019. Our effective income tax rate for 2021 was 25.7% compared to 25.6% for 2020 and 26.5% for 2019. 14:34 Turning to the balance sheet. The business ended fiscal 2021 in a very strong financial position, even as we accelerated our share repurchase activity late in the year. Cash and current marketable securities as of January 29, 2022 were $294.5 million compared to $375.5 million as of January 30, 2021. The change in cash and current marketable securities was driven primarily by share repurchases of $193.8 million and capital expenditures of $15.8 million, partially offset by cash generated through operations of $135 million. 15:11 During 2021, the company repurchased 4.6 million shares at an average cost of $43.30 per share and a total cost of $198.4 million. We had $83.3 million remaining on the current share repurchase authorization as of the end of the fiscal year. First quarter-to-date as of March 5, 2022, the company had repurchased an additional 1.2 million shares of stock at an average price of $44.47 and a total cost of $54.3 million. 15:42 As of that date, we had $29 million remaining on the current share repurchase authorization. As of January 29, 2022 we had no debt on the balance sheet and continue to maintain our full unused credit facilities. We ended the year with $128.7 million in inventory, compared with $134.4 million last year, a decrease of $5.6 million or 4.2%. On a constant currency basis, our inventory levels were down 2.1%. Overall, the inventory on hand is healthy and selling at a favorable margin. Given supply chain issues and lower than expected inventory at fiscal year-end 2021, we anticipate that inventory will grow in excess of sales in fiscal 2022. 16:28 Now to our fiscal first quarter-to-date sales results. Total first quarter-to-date sales for the 35 days ended March 5, 2022 decreased 1.9% compared to the 35-day period ended March 6, 2021. Our stores were open for 100% of the available days during the period in 2022 compared to approximately 93% in the same period last year. 16:50 From a regional perspective, total sales for our North America business for the 35-day period ended March 5, 2022 decreased 5.3% over the comparable period last year. Meanwhile, other international business, total sales increased 17.9% versus last year. From a category perspective, footwear was our most positive category followed by women's and accessories. Hardgoods was our largest negative category followed by men’s. 17:20 With respect to our outlook, while we refrain from giving specific guidance for most of 2020 and all of 2021 due to limited visibility, we have decided to provide specific guidance for the first quarter of 2022 and some annual thoughts. We have made this decision based on the slow start to the quarter, tough comparisons to prior year and the many moving parts affecting near-term sales and margin. 17:39 I want to remind everyone that formulating our guidance involves some inherent uncertainty and complexity in estimated sales, product margin, and earnings growth given the variety of internal and external factors that impact our performance. Furthermore, while our guidance does include the negative impact in 2022 as we anniversary the 2021 domestic stimulus, it does not include any new closures tied to the pandemic over the last two years or a larger impact of the conflicts in the Ukraine and Eastern Europe. 18:08 With that in mind, we are currently expecting total sales for the first quarter will be between $215 million and $221 million and that we will see continued pressure on sales during the second quarter, as we anniversary the impact of domestic stimulus from 2021. Consolidated operating profit as a percent of sales for the first quarter is expected to be between breakeven to positive 1.5% and we anticipate diluted earnings per share will be roughly breakeven to $0.10. Included in our guidance is the addition of costs -- is the addition of costs as we continue to reinstitute store hours for normal operations and bring back travel in our events. Including our 2021 100K event that normally occurs in January, but was moved out to Q1 for our employee safety. 18:57 Now I want to give you a few updated thoughts on how we're looking at 2022. And looking at the annual picture, we had mixed thoughts as we exited 2021 just one month ago assuming modest 2022 sales increases and double-digit growth in earnings per share tied to the buyback. Now with the first five weeks of 2022 behind us, we are more cautious in how we are looking at the full year and the potential impact to the current operating environment. After the lapping the impact of the January 2021 stimulus payments, we are now expecting the first half of the year to be much tougher as we anniversary the larger March 2021 economic stimulus. 19:35 In addition, since the start of Russia's invasion of Ukraine 14 days ago, we have experienced a noticeable change in consumer spending and expect the complex impact on global inflation will be an added headwind in the near term. For the back half of the year, we are more optimistic that trends will improve as our customer shops during the important back-to-school and holiday seasons. As always, we intend to remain flexible and agile in adjusting inventory, expense, and capital allocation plans based on any changes in these events. 20:07 For sales, we anticipate that total sales will be down in the low-single digit levels in 2022 as compared to 2021. This is inclusive of our Q1 guidance and anticipate our domestic business remains challenged heading into the second quarter before we return to normal during the peak selling seasons. Internationally, we are planning strong growth across Canada, Europe and Australia, as we continue to capitalize on more normalized operations, albeit, we are anticipating some near term softness in Europe due to the ongoing situation in Ukraine. 20:38 In fiscal 2021, we achieved peak product margins once again representing our sixth year in a row of product margin expansion. We are currently working on initiatives to continue driving product margins domestically and internationally. However, we recognize the external challenges of driving margins with continued inflation and economic uncertainty entering 2022. With that, we are planning consolidated product margin to be roughly flat. 21:05 We continue to manage costs across the business. However, with our current sales projections and returning to more normalized operations, we are projecting some deleverage domestically, while our international entities show leverage as they capitalize on continued market share gains, and more normalized operations. We currently anticipate year-over-year operating profit dollars will be down in the mid-teens for fiscal 2022. 21:27 Diluted earnings per share for the full year is currently planned to increase in the mid-single digits as we were able to capitalize on our buyback program executed over the last year. We are currently planning our business assuming an annual effective tax rate of approximately 25%. We are planning to open approximately 34 new stores during the year, including approximately 15 stores in North America, 14 stores in Europe and five stores in Australia. We expect capital expenditures for the full 2022 fiscal year to be between $30 million and $32 million compared to $16 million in 2021 with the majority of the increase tied to addition of stores in 2022. 22:07 We expect the depreciation and amortization, excluding non-cash lease expense will be approximately $22 million down slightly to the prior year and we are currently projecting our share count for the full year to be approximately $19.6 million diluted shares. Any share repurchases beyond our current repurchase plan will reduce our share count from this estimate. 22:26 And with that operator, we would like to open the call up for questions.

22:32 Thank you. [Operator Instructions] Our first question comes from Sharon Zackfia with William Blair. You may proceed with your question.

22:48 Hi. Good afternoon. I'm guessing, you'll get a lot of questions on the current environment. So, I'll avoid that and leave that to everyone else, but I did want to ask about the outlook for store growth. I think if I'm not mistaken, this will be your fastest store growth since 2015. So, and I think that also holds for North America as well as obviously the consolidated global growth. Can you talk about what you're seeing there that gives you the confidence to grow and reaccelerate at that pace? And is this kind of a new pace for Zumiez for the foreseeable future, kind of moving into what I would call more mid-single digit expansion versus what had been kind of more modest growth over the past several years?

23:32 Thank you, Sharon. I'll start and let Chris follow. So, the store growth really -- let's start with the U.S. and I think we'll touch on -- let’s start with North America, and then touch on Europe and Australia separately because they're a bit different than what we're seeing in the U.S. So, you’ve really seen in the U.S., Sharon, is a lot of our trade area work or analysis of markets across the country how we're applying our knowledge of what's happening in those markets relative to our sales data and our STASH data, our loyalty program for our customers. And what we're seeing is market opportunity in a number of markets across the country where we believe we have an opportunity to add units to better serve customers, we believe, not only in the physical world, but also that we think that's a positive for our digital business too. That's first. 24:25 The second item in North America is really also about opportunity. We have seen substantial savings in lease costs, in rent occupancy costs over the last few years. We are now -- we've always had a list of I think roughly 40 locations that we wanted to be in, but we either couldn't -- we didn't believe we could afford the deals that the landlords had for us, or that we couldn't find a good location that we would want in those centers. I think those things become a little easier to navigate now. So, we've been adding some locations in what I think are some of the better centers across the U.S. And because now we can find opportunity that works for our landlords and works for us and also meets our criteria for the quality of location as well as economics. So, in the US and North America, Sharon, I think it's is really those two things that I’d focus on. 25:21 Our deeper understanding based upon our trade area analysis of what we're learning about how our consumer shops, where they shop, where the holes in our market are, and then it's opportunistic about our ability to go out and really work with our landlords as partners to do deals. I think that benefit both of us. So again, I think you might see, I think this is a good pace for us. And I will tell you, if there are more deals, we would do that we felt we could do we probably would do, them in this cycle although that is not our plan at this point. 25:54 So then let me flip to International. On the International side, what you're seeing us execute internationally is more of our traditional plan. We are really investing heavily in people and so this will be our largest growth we've done in Europe at this point. Our last few years of classes of stores, we’re very pleased with the outcome of the performance of those stores. We've also seen rates in terms of occupancy rates, rent rates fall in Europe to make, so it makes it more opportunities available to us again across the market and you're going to see us grow more towards that 15% to 20% unit growth year-over-year, because we have the opportunity in those markets to grow the business. 26:41 And so as you might guess, we're also investing heavily in our teams to make sure that we are building the quality of people that we want to manage and run those stores. And that's been an ongoing effort for the last few years preparing for this. So, we're ready to go. And I think that's what you're seeing in Europe and in Australia. And that those are going to play out for a number of years as we continue to grow at that level across those geographies. 27:07 In the U.S., I would say again, we're going to -- we're doing this trade area work share and we're looking hard at it. I can't tell you exactly what we're feeling about it, but I think we've got a bit broader runway over the next three years and we might have previously thought in terms of opportunities. I don’t know, if you have anything to add Chris?

27:23 No, I think the only thing I would add is just as we reflected back to going backwards. Some of the stores we opened in ‘08, ‘09 were some of the best stores we've opened. And so, we thought when Rick talks about opportunities, I just kind of reinforce, we continue to work with our landlords. I think this is a really good time for us to be adding stores that we think can really propel us over the next decade.

27:47 And then just a question, Chris on your outlook for the year. I mean, it does kind of sounds like you're expecting a tale of two halves. I guess, it's hard to have confidence on anything, given the dynamic environment that we're in, but I mean what, what gives you all the belief that much of what you're seeing right now is related to year ago stimulus and/or Ukraine versus something maybe more long lasting with the consumer pulling back?

28:22 Yeah. I think it's a really good question, Sharon and obviously, one we’ve spent a lot of time talking about internally and I think to really think through this you have to kind of look at how we performed last year and when we’ve see the stimulus and it's not just Q1 of 2021 albeit that was our -- the largest stimulus we saw, I think we are in multiple times in 2020 when the stimulus was put out there that we feel like we performed outsized to our peer group. And I think that speaks to the model on what we have. I mean we are a full price, full margin retailer. I think we believe there is a discretionary nature to us that when our customer has additional cash to spend, I think we will benefit outsized that and so I think if we look back to last year's Q1, as you're well aware, we were up over 100% compared to 2020. But maybe more importantly we were up 31% compared to 2019 which looking at normal growth curves. Those was pretty outsized growth. So, as we got through these first five weeks and we looked at kind of where we've laid out, which we said on the call was down 1.9%. I think what we saw is, we saw some softness to start February which kind of mirrored what we saw in January as we anniversaried last year's stimulus and then it started to get actually a little bit stronger as we’ve moved through the back half of February with week four starting really strong and then it got really tough, right. 30:02 When we started to see some of the global events that have emerged in Ukraine and that's continued through the first week of March. So, I think for us, that's how we started to tie some of that in. We could actually see those impacts across the business. Obviously, Europe being -- our Europe stores which are close neighbors to the conflict saw it, but we also saw it here domestically. So, I think those items made us really think through, okay. We knew we were already planning the back half of March. We are planning April to be softer and the start of the second quarter. 30:30 Then as we thought about the full year and that confidence in the back part of the year, our belief is based solely on the fact that our customer has reasons to shop and obviously, you know very well, the parent controls, a lot of the dollar here and so we know that and we expect our parent to be out shopping for back-to-school, we expect them to be shopping for holiday and I think we continue to believe we've done a good job kind of planning for those seasons that would allow us to some confidence that we should see some normalization in the back half. Now -- obviously there will be some -- I think some trailing impacts of these complex of inflationary impacts both here and in Europe, but we are planning the business right now that hopefully most of this is resolved in the front half of the year and we can be more normalized in the back.

31:26 And again I think that kind of mirrors in my mind Sharon, what we experienced in 2021 which we definitely got the large stimulus-fueled spending in Q1 and a little bit in Q2. And then we saw normalized holidays -- our back-to-school and on holiday season and again I'm -- I guess I would just add to Chris's commentary that I still believe strongly that our brand has never been stronger than it is today. I think we're really doing a great job of meeting the needs of our consumer and I'd say, likewise, about our culture, I think our people are amazing and that we're aligned and focused on the things we're doing so ultimately those always the most important things in my mind that gives me the confidence that if outside of radically changed environment I think will more than get our fair share in those peak windows.

32:18 Okay. Great. Thank you.

32:22 Thank you. Our next question comes from Mitch Kummetz with Seaport. You may proceed with your question.

32:27 Yeah. Thanks for taking my questions. I've got a few of them. So, I want to start housekeeping, I know the K is coming out shortly. And you'll give the hardgoods penetration in the K, I was hoping you might be able to provide that on the call today?

32:44 Sure. Happy to do that. Just as a mix of all of our categories, I'll just lay them all out, Men's apparel was 43%, accessories was 17%, footwear was 13%, our women's apparel was 11% and the hardgoods was 15%.

33:03 Okay. That's helpful. Thank you. And then also, Chris, can you maybe speak to the Blue Tomato profitability. I mean, it would be great if you can give us like an EBIT number or a margin percentage, but I assume it was unprofitable for the year. Could you maybe elaborate on that and it sounds like, I know, Ukraine is an issue? Obviously, for that business, but it sounds like you're pretty positive on Europe in general for ‘22. So how do you think that of that business sort of progressing through the year versus either ‘21 or ‘19 or however you want to talk about it?

33:40 Sure. Yeah. And I guess I'd just start Mitch with, we're super proud of our Europe team, not only for their 2021 results but for their results over the last few years under a really challenging backdrop. And Rick mentioned earlier Sharon real estate question around our confidence and expansion for Europe and I think that's directly tied to what we're seeing in the stores that we're opening today and I think our thought process that's gone into where we open and how our classes of stores are planned has just gotten better and better over the last 10 years and our teams have been able to go out and execute, which I think is great. 34:20 As it relates to 2021 specifically, I think we continue to have pretty meaningful closures in 2021. I mean, we were closed to 60% of the days in Q1, 12$% in Q2. We got opened in Q3 and we're thinking we are in a good spot heading into holiday and then had 6% of our days closed in Q4. So, this compared to 25% in 2020. So, as we looked at the year overall, we were down, we were open more in 2021 than 2020, but still a massive amount unplanned. And I think despite that we saw sales in Europe up over 21%. Now we were down 6% to our budget but the closures for the year were almost 20%. So, I think when I look at that mix, what that tells me is that as we did close, we were able to capture more of the volume online. We were able to capture when we were open. And I think it continues to show our brand strength across Europe is, I think we've got a really good customer there and what's super unique to us, and you've been following us for a long time so, you understand this, but we have these different market dynamics in Europe and we're starting to see more and more markets and countries turn positive as we get scale and recognition within those markets. So, I think that's a real win. 35:43 Obviously, as we started 2022, we are now faced with some new challenges with this conflict in Ukraine, I think historically, we've not done a lot of digital business in Ukraine. It's a very, very small, but our current expectation is, there will be some challenge in the region due to the proximity of the conflict and obviously the connected dependence of the economies in the region. I think we'll see that with a higher level of inflation across the region, as well as some disruption and costs of helping this refugee crisis that will impact most of Europe here. So, I think as we think long-term, we continue to believe that we're doing the right thing here. We mentioned on the call. We're going to open 14 stores. On top of the 12 we've opened this year. This is included our first store this year in Norway, we expect to add two additional markets while also filling in markets in 2022. This is aligned with kind of our strategy and how we’ve grown and I think it's put us in a spot to really capitalize as the environment normalizes this year in Europe. 36:49 Now as we play that all out, I think we’re -- we believe we are one of the largest lifestyle retailers in our niche in Europe and I think that's a real benefit to the consumer because we can work with brands in a different way and bring newness to them and all of that is a pretty positive. So, I'd tell you this, on the profitability side because I know that's something that is super interesting to everyone, we were more profitable in 2021 than we were in 2020, albeit not quite where we want to be. We are still losing millions of dollars. As we've looked at 2022 and we looked at and said, okay, we're going to have all of our stores open. We're not going to have the challenges there. I think we saw a path that would get us to breakeven this year and maybe even a little bit of profit, which is sort of aligned with what we've been talking about for the last two years where we've said, hey, this is an 18 to 24 month turnaround. I would tell you coming into this year, we were pretty confident this was the year. Unfortunately, now with the war in Ukraine, we're not quite as optimistic but we think we'll do better than where we were in 2021. And we're definitely right on the cusp of turning that level to profitability. And I think when we get to a more normalized year, we have a lot of confidence here and our teams in Europe probably have even more confidence in their ability to drive a profit here with more normalized environment.

38:14 Okay, I appreciate that color. And then lastly, I think you said for the year, I know you're not giving official guidance but you did provide some color. I think you said sales down low singles. I think you said EBIT down double-digits. I feel like maybe there was a low double, but anyhow, I think when I do the math around that, I come up with like an operating margin of around 12% for the year, which is obviously down year-over-year, but still way up from 2019, I think, up nearly 400 basis points or so, maybe a little less than that from 2019. Is there any way you can kind of walk us through the margin bridge from '19 to '22? I mean, I imagine a lot of that is product margins, some of that's occupancy leverage. Is there any way to maybe kind of talk about some of those bigger puts and takes and maybe the stickiness of them?

39:05 Sure. I'll try to do my best and I might speak to a little different time period because the way we are thinking about it, obviously, 2021 was up about 350 basis points to 2020, and the guidance we gave today is probably a little softer than what you put out there or what you just quoted, but let's say we go backwards 200 basis points. And I think if you kind of look at that, that has actually got us in the -- not quite in the teens but in the solid double-digits operating profit as a percent of sales. Again, if we go back to where we were in 2016 when we were sitting at 4.6% of operating profit as a percent of sales and talking to you about getting back to high-single digits and then moving into double digits, I think we've been able to kind of accomplish what we've been looking -- what we were looking for. And obviously, this year was pretty outsized with the stimulus, but still being in the double-digits, we feel really good about the trajectory we're on and I appreciate you calling out just the growth over '19 because I think that's really real. 40:17 Now when I think about the puts and takes, I think what's been sticky and -- as we have been able to grow product margin not only here domestically but internationally as well. And as we look at '21 to '22 as a comparison, we are expecting to hold product margin. And what that means is actually, there probably will be some growth because we're expecting to have some mix challenge. And by that, I mean, our international entities are growing at a little faster clip than our North America entity and they are at a little lower product margin. So, we should see some mix challenge but we're expecting to hold. And I think the six years of product margin gains we've had have been a pretty big benefit to us. 41:01 Looking at '21 to '22, we'll probably deleverage a little bit on occupancy on a negative top line. But if we look at that over a period of years, we've had pretty meaningful gains in occupancy as we've been able to continue to grow sales, to leverage the expense and work with our landlord partners to manage those costs. I think there's areas of inflation that have impacted supply chain and labor, obviously, within gross margin. I think we've been able to grow sales to try to offset those the best possible. We've been trying to institute different initiatives to manage expenses and hours and things like that, that I think have helped offset that. But there is no mistake, that's been a little more challenging on the gross margin side. 41:46 And within SG&A, I think as we look at SG&A, this is probably the area when you compare 2021 to 2022, where we'll have a little more challenge. There is definitely deleverage on the sales going backwards, but we also are anticipating that store labor is going to go back to pre-pandemic levels. We'll see more travel as we get back out in stores and get our teams out in stores, we're going to do all -- we're planning our full slate of our events, including, as we mentioned on the call, we'll have two 100-K events planned within this year as we moved our event out of January into Q1 for the safety of our employees. So, I think we'll see some challenges year-over-year. 42:28 Now to your question on SG&A over the long term, why are we seeing -- what's the stickiness we're seeing? And I'd really point back to just the operating model. I think what's happened over the last five years is we have been able to unify one cost structure behind both of our in-store and digital experience on sales. And I just can't reiterate how important that's been not only from an inventory management perspective but just from a cost perspective, because as we've seen these swings, which have, quite frankly, been massive in this period of closure and reopen where we've gone online and then still been able to fulfill from store and then we've gone back to store and seen this huge influx back into store, I think that's led to some operating profit expansion as we've been able to really hone in and have that one cost structure serve what we're doing. 43:23 So I know there's a lot there and a lot of information. But I think those are the types of things that have driven the product -- operating profit margin up over the last few years and things that we're pretty proud that we're executing.

43:36 Yeah. Mitch, I'd just add to Chris' thoughts, too, about the part of what we've been able to do, I think, over that longer time period, again, is build this one channel model. But the most important part of that is it's so much better for our customers because we are faster in every sense, in every way, how they can see product, they can see local availability through our local assortments, right? And we can also Zumiez deliveries come into play because we can deliver it quick when they need it and with a great brand experience. So, this goes back a lot to culture and brand, what we're doing for our customers and how we're empowering our people to do it by localizing the experience for our customers, connecting our customers, our people even more together. 44:17 And I think those things, also for the long term, are really built not only a more optimized business model but a better experience for our customers.

44:26 All right, guys. Thanks, and good luck.

44:28 Thanks, Mitch.

44:31 Thank you. Our next question comes from Corey Tarlowe with Jefferies. You may proceed with your question.

44:38 Good afternoon and thank you for taking my questions. My first question has to do with trends that you're witnessing from a product perspective. What have you observed in terms of trends by product category that resonated with your customers in the fourth quarter and into the first quarter?

44:58 All right. I'll start, Corey, and let Chris add in. I would tell you, again, we shared with you the top fourth quarter performing departments. And shoes, I think, was the first one. And that may seem surprising in today's constrained inventory position for shoes, but our shoe business has been quite good. And I really appreciate the support of our shoe partners in helping us work through the challenges that we've had in supply chain on the shoe business and that's continued. And I think as Chris gave some color there on sales so far here through this quarter. But -- and I think there's a potential opportunity for us based on better inventory as we look forward. 45:39 The flip side of that has been the difficulty around skate hardgoods. And again, that is not a -- this is not anything new for our business. It's a portfolio approach of how we manage departments across the business. So, we ran gains last year with substantial loss of skate hard goods throughout the year. I think the good news for us on that front is we expect that those skate hard good losses are going to minimize here as we go forward this year because we're simply going to lap them. And we're looking at kind of targeting where skate hardgoods will get back to historical levels relative to mix of sales. So, we expect that we'll see some relief of the pressure from the negative skate hardgoods. 46:16 And then from that, I think we have a number of good trends that are working in our favor. Men's and women's and apparel, long bottoms, shorts, the entire business, I think, is very strong. And of course, our graphic tee business. We constantly are working on that, bringing new brands in, playing with that area. And that will be a function of, again, new brand launches, which I believe we still launched 100 new brands last year despite the challenges of working through the difficult environment that we're in. So, I think our teams did a really great job there of continuing to cover new and interesting brands, local brands to serve our customers. 46:55 So I think, as always, it's about the business model again, Corey, about our diversity of brands, our diversity of departments and categories, covering the entire lifestyle. And then we'll have to manage our way through the -- to continued supply chain challenges, right? And that's a factor working closely with our partners. Now Chris, do you have anything else you want to add there?

47:17 No, I think you covered it.

47:18 All right.

47:20 That's great. And just to follow up on that last part about the supply chain challenges that you are witnessing. What's embedded in the first quarter earnings guide in terms of freight headwinds? And then how should we be thinking about this headwind throughout the upcoming fiscal year? And what mitigation strategies do you have in place?

47:42 I'll go ahead and take a crack and then let Rick add anything. And I think when I think about supply chain, obviously, it also correlates so closely with inventory management. And I think when I -- we're really happy with how we've ended the year from an inventory perspective. We were down about 4%, which I don't think it's common across all of our peer set, but we felt like it was really important as we were just cautious in what's out there. And we have a good business in which a large portion of what we're doing is screenables and we can chase that. So, I think our buying teams, I give them a lot of credit. I think they planned out pretty well how to think about the business and where we need to invest, where we need to bring things in early, where we can maybe be a little more cautious and see what the sales results are telling us. 48:30 And so I think our teams have just done a really great job managing through the supply chain. And I like to remind investors, we've been doing -- we've had supply chain challenges really now for 18 months to 24 months. I mean, this has really started even when we closed in the Q1 of 2020. So, our teams have done a really good job managing through this, knowing when to bring product in. And as we think through the first quarter, this is really no different. I mean, clearly, there's areas of the business where they've made a little more impacted but I think our teams have managed through that really well. 49:04 In regards to the different pushes and pulls that we can do, on the inbound side, it all starts with working with our brands and just having really solid relationships. And we have -- we've got really great brands and our teams have good relationships so I think we've been able to navigate that. On the business-to-consumer side, it's also been challenged. Obviously, there's a lot written about cost and that. But I think we've got good business partners there and we just continue to try to innovate as well. As you know, we are even delivering some of our product ourselves. 49:39 And again, it kind of ties into Rick's comment just a second ago about how we've managed the one cost structure. I mean, this is really about a better customer experience. And so, we've been able to increase the speed of delivery and do it with a Zumiez employee smiling face. And so, I think from a supply chain perspective, we continue to work through a lot of different things to enhance what we're doing. And there's obviously some inflation packed into the plan that we put out there today, but we're trying to manage that to the greatest extent possible.

50:14 Yes. The only thing I'd add, Corey, is just, again, as I think Chris said in an earlier comment is, this is our fifth or sixth year of product margin -- peak product margin results. So that doesn't happen by accident, right? And a lot of those years, we were having private label declines in our private label and still driving peak product margins. So, I think what this looks at is the dedication and the focus we have on the organization to always be driving inventory turns better and making sure that we're managing inventory as best as we can in this. And of course, in many respects, the better you manage inventory, the fewer markdowns you have, the less you have to move inventory around. Gets back to localizing assortments, this concept of trade area. 50:54 I hope you start seeing that over a period of years, these are the consistent things that has been driving our ability to improve product margins across our entire business. And by the way, we're seeing those product margin gains in our international entities, too. Chris, right there, at a lower starting point than we are here in the U.S. We're driving gains across all these entities. So again, I think of it, too, as our commitment to just working on this and getting better. And it also effectively derisks our business to a large extent as we manage and improve turns.

51:26 That's great. And then if I could just squeeze one final question in. What's your outlook for the promotional environment? It sounds like you're expecting product margins to stay flat, I believe. But most other retailers, it seems, are embedding a little bit more of a cautious outlook as it relates to promotions, at least throughout the remainder of this year. I would be curious to hear your thoughts there. Thanks.

51:57 Yeah. I mean, I'll take a crack at starting here. I think from an overall outlook perspective, we are trying to -- our outlook is to plan to maintain product margins. And I think that comes into the planning that Rick just talked about and how we think about our brands. I mean, we do believe we sell brands that are full-priced brands. And our game has never been discounting or marking off the entire store. Our strategy has been, let's bring in really cool, unique brands that can sell at full price and let's support them in what they're doing so their brand equity stays high. And so that's why I think you see us manage inventory pretty tightly and why we're able to plan the business the way we are. 52:40 The other piece, I'd say with that is it's not an accident that we've had product margin gains for the last six years. I think our teams have been really smart in about how we source and build product and how we work with brands to be able to do that over the long term. And so again, I think it's a testament to our buying teams and our sales teams overall and just being able to build that plan to continue to drive growth over the last six years.

53:06 And I don't have a lot to add to Chris' comments. I mean, we never really want to mark down product, period. And that doesn't mean we don't provide value for our customers, and that's where our private label comes into play, how we assemble packages, what's in those packages of offerings as we run promotions. But those are about value for our customers but at full margin for us to effectively and using our products to drive a high-margin sales still. 53:32 And the last thing I'll add to this comment is, again as Chris said, the -- our success isn't by accident. We have a number of initiatives that we have in play looking forward. And so, we're going to continue to drive at this hard because we think it's fundamentally doing a great business. We have to be faster in all respects of meeting consumer demand. And so, we're looking at ways to improve speed throughout our supply chain. And there's a number of initiatives, I think, that we have in play over the next few years that's going to address that even more.

54:01 Great. Thank you very much and best of luck.

54:05 Thanks.

54:07 Thank you. [Operator Instructions] Our next question comes from Jeff Van Sinderen with B. Riley. You may proceed with your question.

54:19 Hi, there. This is actually Katherine Knop for Jeff today. I just have a couple of questions for you guys. First, can you speak a little bit more about how you're managing labor cost pressures and what are you doing to mitigate those pressures?

54:37 Sure. I'll speak to the labor side. I mean, this is obviously -- I'll start with store labor specifically. This has been a really crazy cycle because of the closure period and the influx of our customers when they feel safe and maybe less traffic when they don't feel safe. And then you have domestically here, the minimum wage expansion across the country and what that means from what we refer to as compression or meaning, how does the minimum wage change move up the ladder of your different positions as pay rates increase? So, all of those things have created quite a bit of challenge over the last few years. I think it's driven us to really think more about how our scheduling works and how we staff stores and trying to do that delicate balance of serving the customer and being there for the traffic while also trying to manage costs and it hasn't been easy. And like a lot of retailers, we have seen an increase in rate over that time period because of the cost of labor. 55:44 So I think the best way you can manage it is to really be -- have a strong plan around your staffing strategy. But also, that's part of why we're seeing cost increases too and across the business. So, we're definitely seeing that. We're seeing it on the corporate side of our business as well. And so, we've had to kind of manage through that. And I think what it comes down to is just really looking at the entire model and trying to figure out what are your puts and takes. And we know that labor is an area of growth, and it has been for a period of years and is probably expected to be at least in the near term. And then we have to manage our other areas of costs. So, I think our teams are really good at trying to find those offsets while still investing in our people and trying to keep that value over the long term because we've said for quite some time, this business is about brand and culture and the backbone of it is our people. And so, it's definitely a pressure and a challenge, but I think our teams are really engaged in trying to navigate through it.

56:51 Great. Thanks. And then one final question from me. What are your plans to pass through price increases to customers? I mean, how do you guys see that impacting overall sales?

57:04 Sure. I'll take a crack here and let Rick jump in. I think price to customers is really what the market will support. And I think what we try to do is to really think about where are we seeing price increases? Where is it fair to pass prices through? And we just have a diligent process to let that happen where we think it can. And I think in this environment, as a consumer and as a CFO of a company, I think we're kind of getting used to it, right, because the costs are going up. 57:43 And I think our brand is supporting it because you can tell we were able to grow product margin. And I think that growth is inclusive of taking prices up to be able to navigate this. It's really hard to talk about the overall percent we've increased because this is a category by category, department by department analysis. Some areas, we are taking prices up. Some areas are probably staying a little more stagnant. It just really depends on what the cost structure is behind it that supports it. But we have seen overall price increases across the business, and our strategy will be to continue to manage that based on what our inbound supply chain and brand costs are.

58:24 Yeah. And I'd just add to that, Katherine, that again, as Chris said, there's always puts and takes, right? As other areas, we can get better and more efficient in what we're doing. And then again, I'll tell you, I think of it a bit differently. We have to, of course, look at what our cost inputs are on product and all of the cost increases and how those puts and takes are playing out. But I also think about this in terms of wallet share of our customer because we expect no matter what the mix of business is, we should maintain and always try to grow the wallet share of our customer base. 58:56 So even in an environment where the average unit price may be going up, we may see unit declines in that world and -- but we'll still drive dollar [indiscernible] increases and overall sales gains. And I think that's what you've seen us do this last year. So, when you think about this concept of again, you still have to have great product. You still have to have that unique product that people can't get anywhere else. And if we do that and do that well, that's what our brand is about, provide that with great people, we'll maintain and grow wallet share over time. And that's been our track record. Of course, we've been through other experiences like this in the cycle of our business back to the dot-com bubble and that major unit growth phase in the late '90s, early 2000s. We've been through these cycles, right, the run-up in spending into '07 and '08. 59:47 So we know what this feels like. We know how to manage our way through it. And throughout all those cycles, we really did a great job, I think, driving that wallet share of our customer no matter what the mix of units, dollars and average unit retail look like.

60:01 Great, thanks for your time.

60:09 Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Rick Brooks for any further remarks.

60:16 All right. Well, again, I would just like to say again, thank you to everyone. Thank you to all our brand partners. Thank you to all our employees, and thank you to our investors out there who follow us so closely and pay attention to what we do. We greatly appreciate it. And we'll look forward to talking to you all in early June. Thank you.

60:34 Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.