• Net Income (Q3): $44.2 million or $0.88 per share, down from $51.8 million or $1.04 per share in the prior year.
• Net Income (Year-to-Date): $118.3 million or $2.35 per share, down from $140.3 million or $2.81 per share in the prior year.
• Net Sales (Q3): Decreased 3.2% to $293.6 million from $303.5 million in the prior year.
• Comparable Store Sales (Q3): Decreased 0.7% compared to the same period a year ago.
• Online Sales (Q3): Increased 1.1% to $46.6 million from $46.1 million in the prior year.
• Gross Margin (Q3): 47.7%, down 80 basis points from 48.5% in the prior year.
• SG&A Expenses (Q3): 29.1% of net sales, up from 27.4% in the prior year.
• Operating Margin (Q3): 18.6%, down from 21.1% in the prior year.
• Inventory: $149.4 million, down 1.9% from the same time a year ago.
• Total Cash and Investments: $352.7 million.
• Capital Expenditures (Q3): $10.2 million.
• Store Count: 445 retail stores in 42 states, up from 443 stores in the prior year.
• Women's Merchandise Sales (Q3): Down 0.5%, representing 47% of sales.
• Men's Merchandise Sales (Q3): Down 5.5%, representing 53% of sales.
• Accessory Sales (Q3): Up approximately 3%.
• Footwear Sales (Q3): Down about 17%.

• Warning! GuruFocus has detected 6 Warning Sign with BKE.

Release Date: November 22, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Buckle Inc (NYSE:BKE) reported a net income of $44.2 million for the third quarter, reflecting a solid financial performance.
• Online sales increased by 1.1% for the quarter, indicating growth in the digital commerce segment.
• Women's merchandise sales saw a 3% increase on a 13-week comparable basis, with a notable 9% growth in denim.
• The company opened five new stores and completed one full remodel during the quarter, showing expansion efforts.
• Private label denim showed strong growth, contributing to a 55 basis point improvement in merchandise margins.

Negative Points

• Net sales for the third quarter decreased by 3.2% compared to the prior year, indicating a decline in overall sales.
• Comparable store sales decreased by 0.7% for the quarter, reflecting challenges in maintaining in-store sales.
• Year-to-date net sales decreased by 4.6%, showing a downward trend in sales performance.
• Gross margin for the quarter decreased by 80 basis points due to increased occupancy and distribution costs.
• Footwear sales were down approximately 17% for the quarter, impacting overall sales performance.

Q & A Highlights

Q: Could you elaborate on the gross margin drivers and the apparent slowdown in merchandise margin growth compared to the second quarter? A: Thomas Heacock, CFO, explained that the gross margin for the quarter was impacted by a 100 basis point increase in occupancy costs and a 35 basis point increase in distribution and buying costs, offset by a 55 basis point improvement in merchandise margins. The merchandise margin growth is consistent with year-to-date trends, driven by strong private label denim sales and a favorable mix shift away from lower-margin categories like footwear.

Q: Can you clarify the store count and your expansion plans for the next few years? A: Dennis Nelson, CEO, confirmed that Buckle ended the quarter with 445 stores and plans to open one more, resulting in a net addition of two stores for the year. For 2025, they estimate opening seven or eight new stores, with some closures, leading to a net addition of two or three stores. They also plan to relocate and remodel about a dozen stores next year.

Q: What kind of sales lift are you seeing from store remodels? A: Dennis Nelson noted that the impact of remodels varies. Open store remodels can result in low double-digit sales increases, while relocations to outdoor power centers might see similar or better improvements. The exact lift depends on the store's current performance and location.

Q: How are your digital channel investments impacting the business? A: Adam Akerson, VP of Finance, stated that investments in digital channels are positively affecting the guest experience and key e-commerce metrics, contributing to a return to growth in the online segment for the quarter.

Q: Can you provide more details on the performance of women's and men's merchandise sales? A: Adam Akerson reported that women's merchandise sales were down 0.5% but saw a 3% increase on a comparable basis, with strong growth in denim. Men's merchandise sales were down 5.5%, impacted by warmer weather, but private label denim grew in low single digits. Overall, women's denim and men's private label denim showed notable strength.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.