Zumiez Inc Q1 FY2021 Earnings Call

Good afternoon, ladies and gentlemen, and welcome to the Zumiez, Inc. First Quarter Fiscal 2021 Earnings Conference Call. Before we begin, I would like to remind everyone of the company's safe harbor language. Today's conference call includes comments regarding Zumiez, Inc.'s business outlook and contains forward-looking statements. These statements, along with any others made on this call that are not based on historical facts, are subject to risks and uncertainties. Actual results may differ materially. Additional information regarding factors that could lead to actual results differing from what will be discussed is available in Zumiez's filings with the SEC. At this time, I will turn the call over to Rick Brooks, Chief Executive Officer. Mr. Brooks.

Hello, everyone, and thank you for joining us on the call today. With me is Chris Work, our Chief Financial Officer. I'll begin today's call with a few remarks about the first quarter, then I'll share some thoughts on sales for the second quarter to date, before handing the call over to Chris, who will take you through the numbers. After that, we'll open up the call to your questions. As you saw from our earnings release issued earlier today, fiscal 2021 has gotten off to a historically strong start with sales of $279 million and EPS of $1.03, both of which by far exceeded our expectations. Given the impact that COVID had on our business a year ago when our stores were closed for approximately 50% of the days available during the quarter, we anticipate that results will be up meaningfully compared with 2020. Despite a slower start to this year's first quarter, we still expected that sales would exceed Q1 2019 as some of the headwinds we faced in February abated and the economy benefited from government stimulus. That being said, we were not anticipating that sales would increase more than 30% over the same period two years ago, particularly because a portion of our global store fleet remains closed. Our performance amidst very challenging conditions last year and, more recently, as the operating environment has improved, underscores our market leading position and the strength of our business model. The work that this organization has been doing to execute the long-term consumer-centric growth strategy that Zumiez has been building and evolving since its inception put the company in a position to successfully navigate the pandemic, and now capitalize on the uptick in demand we are seeing from an economic recovery being boosted by record stimulus. In addition to capturing a meaningful share of the increase in consumer spending, our record first quarter profitability reflects a shift back to a more historical mix between our store and digital channels as customers become increasingly comfortable returning to in-person shopping. This is a very positive development given the enriched brand experience that can be achieved human to human, and the importance of our stores to the one-channel cost structure we built as part of our differentiated approach to retail. Looking ahead, we feel good about our ability to continue to exceed both 2020 and 2019 sales levels over the course of the year. However, not by the same magnitude we did in the first quarter as we face tougher comparisons and the benefit from stimulus is likely to fade. The second quarter has started strongly with May total sales increasing 42% year-over-year and up 31% compared with May 2019. While the near term is difficult to predict as markets recover from the impact of the pandemic at different paces, the long-term outlook for Zumiez continues to brighten. As I said on our last call, what we expected to happen within the retail industry over several years in terms of the consolidation of winners and losers in retail has significantly accelerated. Our performance over the last 12 months clearly demonstrates the competitive advantages of our model and underscores the strength of our brand, culture, and best-in-class teams that are working to serve the customer in each of the markets in which we do business. Thanks to these cornerstones of our foundation, we move forward with confidence in our ability to continue to gain share and drive results. Key to our success has been and will be our dynamic teams, our one-channel mentality, and our advanced in-store fulfillment capabilities, including Zumiez's delivery, which takes our best-in-class sales teams directly to our customers' door. While elements of our model have and will continue to evolve in the years ahead, our overarching consumer-centric strategy rooted in strong brand and culture will remain constant. We built a business in which we partner with great brands to bring diversity and uniqueness to our customers that allows them to individuate. We've built an infrastructure in which a customer can shop with us to get what they want, when they want, how they want, and as fast as they want. We've morphed our business into a channel-less organization, with inventory visibility from all touchpoints and back-end capabilities allow us to effectively leverage expenses regardless of the channel in which sales originate. The work together has been significant and the path ahead will require further focus to move even faster to serve our customer. Therefore, we remain steadfast in our commitment to continuing to invest in our future. We know that times such as these create opportunities. With the right people, strategies, and resources in place, we are well positioned to emerge from this crisis a stronger brand than ever before. With that, I'll turn the call over to Chris to discuss the financials.

Thanks, Rick, and good afternoon, everyone. We have had a record start to fiscal 2021 with results that surpassed our expectations. Since our stores were closed for about half of the quarter last year because of the pandemic, I will compare our performance to both last year and the first quarter of fiscal 2019 as necessary. After I review our first quarter results, I’ll provide an update on our sales trends for the second quarter to date, followed by our outlook for the full year. First quarter net sales reached $279.1 million, an increase of 102.6% from $137.8 million in the first quarter of 2020 and up 31.1% from $212.9 million in the first quarter of 2019. The sales increase compared to the first quarter of 2019 was driven by the addition of 15 stores and a comparable store sales growth of 34.2%. Our stores operated for about 94% of possible days during the first quarter of 2021, compared to 50% in the first quarter of 2020 and 100% in the first quarter of 2019. Regionally, net sales in North America were $248.7 million, representing an increase of 113.4% over 2020 and up 32.3% compared to the same period in 2019. Other international sales, which include Europe and Australia, were $30.4 million, up 43.2% from last year and up 21.7% from two years ago. Excluding foreign currency translation impacts, North American net sales rose 112.6% and other international net sales increased by 29.1% compared to 2020. Our European and Canadian operations faced significant COVID-related store closures during this quarter, with availability of approximately 40% and 77% of operating days, respectively. All sales categories improved from the previous year, with men's showing the strongest growth, followed by accessories, hard goods, women's, and footwear. First quarter gross profit was $103.2 million, up from $23.7 million in the same quarter last year and $66.5 million in the first quarter of 2019. Gross margin as a percentage of sales was 37% for the quarter, compared to 17.2% in 2020 and 31.2% in 2019. The improvement of 1,980 basis points from 2020 was primarily due to 1,200 basis points of leverage in our occupancy costs, including the impact of ongoing rent charges during store closures in 2020. Additionally, product margin increased by 390 basis points due to the leverage of fixed costs in fulfillment and distribution with significantly higher sales levels. Gross margin improved by 580 basis points from 2019, mainly driven by product margin improvements, occupancy leverage, and a reduction in shrink as a percentage of sales. SG&A expenses totaled $68.9 million, or 24.7% of net sales in the first quarter, compared to $51.6 million or 37.4% of net sales a year ago and $65.5 million or 30.7% of net sales two years ago. The 1,270 basis point decline in SG&A expenses as a percentage of net sales compared to 2020 resulted from efficient leveraging of fixed costs on a higher revenue base in 2021, as opposed to the significant store closures we faced in 2020 due to COVID-19. The most considerable improvements included 620 basis points in store wages leverage, 520 basis points in other store costs, and 340 basis points in corporate costs, partially offset by 180 basis points linked to governmental subsidies from the previous year that did not recur and a 110 basis point rise in incentive compensation. Our first quarter operating income for 2021 was $34.3 million, or 12.3% of net sales, compared to an operating loss of $27.8 million or 20.2% of net sales a year ago. In the first quarter of 2019, we recorded an operating profit of $1 million, which was 0.5% of net sales. During this quarter, we recognized a 44% flow-through on incremental sales from the first quarter of 2020 and a 50% flow-through from the first quarter of 2019. Our net income for the first quarter was $26.4 million, or $1.03 per share, compared to a net loss of $21.1 million, or $0.84 per share in the first quarter of 2020, and net income of $0.8 million, or $0.03 per share in the first quarter of 2019. Our effective tax rate for the first quarter of 2021 was 25.7%, compared to 20.9% in the prior year. Looking at the balance sheet, we ended the quarter in a robust financial position. Cash and current marketable securities rose by 84.3% to $400.4 million as of May 1, 2021, compared to $217.2 million as of May 2, 2020. This increase was primarily due to cash generated from operations, slightly offset by capital expenditures. As of May 1, 2021, we had no debt on the balance sheet and maintained our full unused credit line of $35 million. We concluded the quarter with $136.5 million in inventory, which was nearly unchanged from the end of both Q1 2020 and Q1 2019. On a constant currency basis, our inventory levels decreased by 3.2% from last year. Overall, the available inventory is healthy and selling at favorable margins. Now, on to our sales results for the fiscal month of May. Net sales for the four-week period ending May 29, 2021, rose by 42.4% compared to the four-week period ending May 30, 2020, and increased by 30.5% compared to the four-week period ending June 1, 2019. In North America, sales for the four weeks ended May 29, 2021, grew by 45.9% from the corresponding period last year and were up 27.9% from the four weeks ended June 1, 2019. Meanwhile, our other international sales jumped by 19.9% compared to last year and increased by 54.9% against the same period in 2019. All sales categories saw total sales growth compared to the previous year, with the exception of hard goods. The men's category performed the best, followed by accessories, footwear, and women's. In terms of comparable sales for May, since only a portion of our stores were open long enough to be included in last year’s comp base, combined with the shift to online spending due to COVID-19, we will compare May 2021 results to May 2019. For the four weeks ended May 29, 2021, comparable sales increased by 32.9% compared with the four weeks ended June 1, 2019. Given the limited visibility, we will not provide specific guidance for the second quarter of 2021 or the fiscal year, but based on our first-quarter performance and May results, we would like to offer a directional update on our expectations for the year. Regarding revenue for the full year fiscal 2021, we previously projected that we would exceed 2019 revenue levels. Taking into account the significant growth in the first quarter from 2019 and our strong May results at the start of the second quarter, we believe fiscal 2021 net sales will grow by low to mid-teens compared to fiscal 2019. Year-over-year comparisons will be challenging in the second quarter of 2021 due to seasonal shifts caused by the pandemic. We will be comparing our results not only to 2020 but also to 2019, and we expect a return to more normalized seasonality. Looking at the high-level impact by quarter for 2021 versus 2020 and 2019, we expect the impacts of the stimulus to diminish in the second quarter of 2021, leading to slower growth rates compared to the first quarter of 2021. However, based on our May results and current business trends, we anticipate double-digit sales growth compared to fiscal 2019 in the second quarter, translating to high single-digit to low double-digit growth from our outstanding second quarter in fiscal 2020. In the latter half of the year, we achieved year-over-year sales growth in both the third and fourth quarters of fiscal 2020 compared to fiscal 2019, despite pandemic challenges. With the less favorable back-to-school season last year due to remote learning and ongoing restrictions during the 2020 holiday season, we are optimistic about the prospects for 2021. We currently foresee fiscal 2021 sales growth compared to 2020 to be in the low to mid-single digits for our third and fourth quarters. Regarding gross margin, we are aiming for year-over-year growth in gross margin for 2021, driven by reduced shipping costs as online revenue stabilizes with open stores and by leveraging occupancy costs on increased sales. The product margin improved by 70 basis points in 2020 versus 2019, reaching record levels for the fifth consecutive year, and we expect it to improve further in 2021. SG&A costs for fiscal 2021 are anticipated to rise slightly faster than our sales growth compared to 2020 due to several pandemic-related factors. These factors include restored store wages and benefits that were reduced in 2020 due to closures and cut mall hours, as well as governmental subsidies received in 2020 that will not reoccur. Moreover, spending for training and recognition events and marketing activities that were not feasible due to restrictions in 2020 will increase, as will travel costs in the latter half of 2021, which were minimal in fiscal 2020. Overall, while we expect gross margin expansion, SG&A expenses will rise in tandem with our sales. On a net basis, we predict that operating margins will improve year-over-year for fiscal 2021, reaching double digits as a percentage of sales. We’re planning for an annual effective tax rate of around 26% for fiscal 2021 compared with 25.6% in fiscal 2020. We expect earnings per share to increase significantly in fiscal 2021 compared to 2020, bolstered by the strong start to the year just reported. As the year progresses, we anticipate resuming more costs that had been curtailed, such as store payroll related to capacity, travel, and training, among others. With more moderate sales increases projected in future quarters, we expect most of the gains in our 2021 EPS growth to be generated in the first quarter of the year. For instance, we foresee our second quarter EPS to be lower than the previous year due to having achieved record-setting results in the prior year with a sales surge as stores reopened and having had minimized expenses thanks to cash conservation efforts. If our sales estimates exceed our current projections, we would expect to see strong flow-through on those additional sales. We plan to open 22 new stores in fiscal 2021, which includes about five stores in North America, 12 in Europe, and five in Australia, while we anticipate closing five to six stores during the year. Capital expenditures are expected to be between $20 million and $22 million in fiscal 2021 compared to $9.1 million in fiscal 2020, with most of our spending going towards new store openings and planned renovations. We forecast depreciation and amortization, excluding non-cash lease expenses, to be around $23 million in fiscal 2021 compared to $23.5 million in 2020, and we expect our total share count for the full year to be approximately 25.8 million shares. Any share repurchases during the year will lower our share count from this estimate. We take pride in our teams’ efforts and the financial results achieved at the start of 2021. Our ongoing strategies have allowed us to outperform the market during this challenging period and amidst the heightened economic stimulus. We are confident in the strength of our operating model and our prospects for future growth, both in revenue and earnings. Looking ahead to the first quarter of 2022, we understand it will be difficult to replicate the impressive results from the first quarter of 2021, but we remain committed to creating long-term value for our shareholders moving forward. With that, we would like to open the call for questions.

Our first question comes from Jeff Van Sinderen from B. Riley.

Congratulations on the strong start to the year. Can you give us your latest thoughts on supply chain? And just wondering how the challenges are shaking out there, what's improving and I guess, how you're managing inventory as you think about what would normally be a traditional back-to-school period? Just wondering in terms of perhaps some pull forward that you saw in Q1 or you might be seeing in Q2 for school, maybe not so much Q2, but schools are reopening in Q1. Just maybe you can help frame that for us.

From a supply chain perspective, we discussed the challenges we faced throughout 2020 regarding obtaining the products we desired, particularly in longer-term categories like footwear and hard goods, which take longer than the printables business. While that challenge still exists today, it has diminished significantly. It was quite strong during Q3 and Q4 and at the start of the first quarter, but our buying teams and vendors have done an excellent job trying to catch up. We are still experiencing some delays at ports and other issues within the supply chain. However, we are learning to navigate these challenges and plan accordingly, so we feel optimistic about our overall supply chain situation. On the inventory front, our levels are robust, and we are confident in their relevance and positioning across all our operations. Looking ahead to the back-to-school season, we face some typical challenges for a year like this. In Q1, we had to respond quickly, as our performance exceeded expectations. Our teams continue to collaborate with brands to adjust orders based on sales trends—chasing what's selling well and pushing out slower-moving items, which is standard for our ecosystem. In this context, we approach back-to-school strategically, and our teams have developed a comprehensive plan to serve these communities effectively. We are prepared to chase orders if necessary, and we can also push out items when needed.

And then maybe if you don't mind, if you could speak more about your international business, the progression you've seen there lately and then, I guess, the outlook for international for the remainder of the year. How you're thinking about that?

Yes, I'll take a quick shot and then let Rick add anything that he would like to. We talked in our March about the challenges of Q4 with our European business, specifically, as we saw closures across the important holiday season and maybe just as important, we saw a lot of the winter resorts shutdown and restrict travel. So it was a very challenging quarter for them to end 2020 after really quite good nine months to start the year. We're really encouraged by what the teams have done in Q1. Those challenges existed in Q4 did not subside. We were closed majority, about 60% of the possible days in Q1 with rolling closures across all of the geographies we're in, and some of the geographies actually just closed pretty much all of Q1. So it was a really, really challenging environment. The closure rate in Q1 was higher than what it was in Q4 and higher than what it was in all of 2020, just to put it in perspective. So I think the good news about our European business, going into the pandemic, we had about 50% of our sales online to begin with. So as you would expect that channel ramped up and it was no different in the first quarter. We're really proud of our European teams and how they've really had to fight through this. This is not an easy operating environment by any means. But I think that the online volumes have picked up for some of the closures that we've had in Q1. And while they're not quite where we were hoping they'd be in Q1, they're not far off. And so I really give them a lot of credit given the unexpected challenges we've had with closures. I think longer term, we're still very bullish on our beliefs around Europe. I think we've talked before to grow Europe to what it is today has taken a pretty meaningful investment, and we're starting to really see the payoff here. And we think that we can really capitalize on this investment as we move forward. I mean as difficult as the operating environment has been over there on us, we know it's probably more difficult on some of our peers have smaller scales and some of our competitors, I should say, have smaller scale. And I think we have a really good opportunity based on how our customers communicated with us and moved online and when we've been able to open stores, they've been back in stores. I think we have a really good opportunity as we get to a more normalized environment there. And so we still remain pretty optimistic about the Europe business. And I think what it means also to our global business as we think about really trying to globalize across each of the geographies. There's definitely synergies and opportunities that are coming out of the business platform we've put together. And then lastly, I'll just mention that our international business in Australia has done extremely well. We're very proud of what the teams have done there. 2020 was a phenomenal year for them, the best since we acquired them. And they're off to a great start in Q1 of 2021. Despite the fact that even in Australia, there are closures from time to time. It's just kind of part of the operations they're working through. But they've done a great job navigating it and building the teams and growing units. So we're happy with how that business is performing.

And I'd just add that, Chris did a great job, Jeff. I'd just add to on that again. To execute our strategy, our model, our integrated channel-less omni model, you have to build scale markets to do that. You have to have the physical presence as well as a digital presence. So that has really been a focus of our European business is exactly doing that on a country-by-country basis and then, of course, being able to roll our tools. But that's where the investment is so important in building the skills, we can execute and then really drive the profitability side of the business. And as Chris said, we were effectively closed during holiday, all our physical stores last year. So it's hard to imagine that holiday could be worse. I'm not going to say it can't be, but it's hard to imagine it possibly worse than it was a year ago. So I think, again, I'm appreciative of our team's hard work and effort over there and looking forward to a much, much stronger holiday season this year.

Our next question will come from Janine Stitcher with Jefferies.

Congrats on the results. A couple of questions. Want to ask first about stimulus, it sounds like you still think there is some stimulus benefit, especially at the start of 2Q. Curious if you could maybe give us a sense of how much you think the consumer has spent versus how much is still left in their wallet. And then also just wanted to ask about hard goods. I think you said down versus last year in May. Wondering if that was just anything with the comparison from last year, if there's anything you're seeing in the hard goods business to suggest slowing?

I'll go ahead and try to tackle these here. From a stimulus perspective, I wish I had the crystal ball to answer your question. As we said in our prepared remarks, we definitely think it had a positive impact on Q1. We think that that went into May as well. It's really interesting, actually, as we've looked at the business and we've looked at the last five years of our comparable store sales and we've run pretty good results over the last five years and are very happy with the performance of our business. Pretty much all of our highest comping periods have come when there's been economic stimulus in the environment. So May and June of 2020, January of 2021 and now March and April and into May of 2021 as well. So there's definitely a correlation on the business. As I said in my remarks, I think the important part is to have a business model that is mobile and is working for the customer, so that you have the ability to have inventory there in all channels and allow the customer to shop when they want to get those results. So I won't be able to really comment on how much of it's left. Although, I'm sure you've seen what we've seen around where savings rates are and where consumers are. We feel like we're in a good spot and we can capitalize on that with our really best-in-class sales teams in the model we've put together. On the second piece on hard goods, as you know, our business here is really around driving sales gains. And our whole focus is on that. We would love to tell you every quarter that all our departments are up, but that's just not the model. We see our customers sort of move around what's trending and what's hot. And with hard goods, it's been an incredible run. Starting really in 2019 and 2020, it was up in Q1. We did say it was down in May, although I would say it was just down ever so slightly. In fact, the impact is really felt in the markets where we had closures. So both in Canada and Europe where we had meaningful closures probably took it down just slightly. So we're not worried about it because if you think about the increase that hard goods has had throughout 2019 and 2020 as a percent of overall sales, these are still phenomenal results for the hard goods category. And I think we're anniversarying here a period of time during closure last year where this became a very popular buy for people that were sheltering at home and looking for things for their kids to do. So we saw a lot of skateboards during the closure period. We're anniversarying that now. And we're still optimistic about how the category will play out for the remainder of the year.

Our next question will come from Jonathan Komp with Baird.

A bit of a follow-up, but I want to ask a little bit more of a broader question coming off of such a strong quarter. How do you view the split between what’s sort of temporary as a result of the environment, maybe more what’s permanent or lasting as a result of execution and other tailwinds like fewer competitors? And how does that play into your decision to allow the upside to flow through versus reinvesting for the broader strategic outlook?

I appreciate the question. We've spent considerable time on this topic. Overall, I believe it's going to be challenging to match the results from the first quarter of 2022, as we have not experienced a quarter like that before at the start of the year. However, I am confident that we are gaining market share. With our operating model, product offerings, and sales teams, we are succeeding in this consolidated market, and we are seeing positive trends in every market we operate in. I believe there is a lasting element here, but each retailer will need to assess their Q1 experiences and analyze the results, which may vary between them. While I cannot speak specifically about what Q1 of 2022 will be, I can say that we are very pleased with our current results and the financial model's performance. We also see opportunities for strong earnings this year and moving forward, similar to what we've achieved in recent years. Regarding reinvestment in the business, I believe that it is an important consideration, and our investors should expect us to take advantage of this cycle. Our store count has slightly increased from historic levels, and we are identifying excellent deals and opportunities in the market. Reflecting on the challenges of 2008 and 2009, we opened many stores during that time, and those became some of our best locations over the last decade. We view this as a similar opportunity and will seek investments in 2021 that align with our strategy for long-term growth or cost reduction.

I would just add, John, that again, part of our investment is that continued investment in our team. So we've still, for safety reasons, not being able to get back to in-person events or in-person marketing events. So those costs are all going to come back into the model, because we believe it's what drives long-term value creation for our shareholders. And of course, it's our commitment to our people too about helping in their development as professionals in our business. And it's why partly so many people stay so many years here at Zumiez is because of our commitment to invest in their future. So those costs are going to come back in too as conditions from a safety perspective relative to the virus allow us to bring those back in.

And then on your cash balance, just given that I think it's over a third of your market cap now just looking at it on that basis. What should we think about your plans for the rising cash balance and potential uses there?

Well, it seems like maybe our market cap should go up, would be my first start. But I think as we think about cash, obviously, we do have a very healthy balance sheet. And that was a big benefit to us coming into the pandemic. Obviously, it helped us weather the storm of the pandemic and make some really great business decisions. It's not lost on us just over a year ago, we were trying to figure out if we can pay our people throughout the closure period and how important it would be to pay our people. And I think that was a huge investment for us that paid off in a big way. And we're going to see that here continue as we roll forward results. And we got open very quick last year and our teams hit the ground running, and we're super proud of what that meant to 2020. But I also think it pays into these results that we're seeing in 2021 of just the continuation of our teams together. So obviously, having a strong balance sheet is a big focus of ours. Our thoughts on cash long term are to be really smart about how to use it. And we sit down with our Board every quarter and work through a pretty defined hierarchy that we have, which very simply is we're going to first invest in the business and find ways within the business to really drive value for the long term, either through sales growth or reducing expenses or building out programs that are unique to what we're doing. And then secondly, we're going to look for ways to invest outside the business and to try to see if there's potential opportunities that would work for us, both from a culture and a value perspective that would be accretive for our shareholders over the long term. And then lastly, we'll return our cash to shareholders. And as you know, we have a $100 million buyback that's been authorized by our Board at this point. We're pretty smart in how we try to utilize those funds. And I think as we look at the cash balance and where it sits today and the economics of the model and how it generates cash, we believe we're in a spot where we can do all those things. We can invest in the business, we can look for opportunities outside the business, and we can return cash to shareholders. And our belief is that the winners kind of in each retail segment will have that opportunity and we feel like we're in a good spot to be able to do that.

Our next question comes from Mitch Kummetz with Pivotal Research.

Let me start on hard goods. And I guess I guess what I'm really trying to understand, I know that Chris, you mentioned that during lockdown last year, that was a hot item that people were buying. And I guess what I'm trying to understand, it was your best comping category throughout the year last year. I'm just wondering when was it strongest? Was it strongest in May last year because of lockdown or was it stronger later in the year? I'm just trying to understand how difficult the comparisons on hard goods are as we think about the year?

Just very simply, the answer is, yes. It was our largest comp that hard goods had last year would have been Q3, Q4 and even into Q5. So periods 3, 4 and 5 of the year were our strongest comping periods, which would correlate to April, May and June. And so it was super strong a year ago. I think what's probably even more impactful than that is when you look at the two-year comps, it was strong throughout 2019 as well. This is a part of our business increased 600 basis points as a percent of total sales. So yes, I think we've seen just phenomenal results here. I think, obviously, skate has been popular everywhere but we are one of the largest, if not the largest, distributor of skateboards out there. So we're a destination to come get that product and I think our results have shown that. So again, I think when I look at it and I look at those metrics and I look at the two-year stack, that's what gives me confidence that there's still a runway on this in 2021, but these levels are phenomenal for us regardless.

Mitch, I want to emphasize that these are our most challenging comparisons, yet we still achieved a 30 percent increase over 2019. This demonstrates the strength of our other departments and highlights the importance of capturing wallet share. It indicates that we have many initiatives in other areas that are effectively driving sales.

I'm not surprised by that comment, Rick. Very consistent with what I've heard for almost 20 years now. I appreciate that. On SG&A, Chris, I think a lot of the color that you gave was really kind of on the year-over-year. But what really struck me when I look at my model is that when I compare your SG&A dollars to two years ago, they're only up like a little over $3 million, even though the sales increases like over $60 million. I don't know how instructive Q1 is given that you had closed stores. But how should we be thinking about SG&A on a two-year basis?

I believe we will see growth in SG&A over a two-year period. However, this growth will be more in line with our historical planning for SG&A, which typically grows at a rate lower than sales. The teams have done an excellent job managing expenses during the pandemic. I understand your focus on 2019 as it represents a more normalized situation, free from the effects of store closures, reduced operating hours, and cuts to marketing and training events. Therefore, when considering a multiyear perspective, you can expect some leverage when comparing to 2019, but we anticipate that growth will be less than the sales growth from that year.

And then just last question. I know that you don't have a crystal ball on the stimulus. But what might be helpful, and I don't know if you can provide it. I'm just kind of curious. You mentioned that February was difficult and obviously, the quarter as a whole was great. Is there any way you could give us like the two-year comp for March, April, and May? I'm guessing that April was stronger than May on a two-year basis because there was more benefit from stimulus on April. Is that a fair conclusion?

It's hard to do; you’re referring to the comparison to 2019.

You're right, which normalizes most everything else. I would think that April was probably a stronger month than May because there was more stimulus in April than in May. Maybe that's…

I just have the quarter at my fingertips right now. I mean what I'd tell you is we gave you the comp for Q1 to 2019 and actually total sales increase in 2019 is very close to the comp, as you'd expect, given our store growth is at. And then I think we gave you what February was when we did the March call, which February was down. I mean, we were down, I think, 3% when we reported in March. And we had expected some of that because of the delayed tax refunds and just where we were within that cycle. Obviously, when we reported in March. We knew stimulus was an idea that was out there. It actually has not been approved. So that was something that came right after we reported. And once that stimulus hit, we started to see it really come on at the end of March and into April. I think what was hard for us to separate at first was what was tax refunds versus the stimulus, but both had a positive impact on the business as we moved through the quarter.

And speakers, I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Rick Brooks for any closing remarks.

All right. Thank you, everyone. As always, we greatly appreciate your interest in Zumiez, and all the things that we're tackling and the challenges of the modern consumer world. So we really appreciate it and we look forward to talking to you all on our Q2 call in September. Thank you, everybody.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.