The Buckle, Inc. Price & Performance (BKE)

Additionally, the company does not authorize the reproduction or dissemination of transcript or audio recordings of the company's quarterly conference call without its expressed written consent. Any unauthorized reproduction or recordings of the calls should not be relied upon the information may be inaccurate. As a reminder, today's webcast is being recorded. And I'd now like to turn the conference over to your host, Dennis Knowles.

Good morning, and thank you for joining today's call. Before turning the call over to Tom to go through results for the quarter, I want to take the opportunity to thank our dedicated teammates for delivering such a strong finish to the year. I am proud of our team's efforts and steadfast commitment to our specialty store approach of providing great product and outstanding service for every guest. We did this by first ensuring each of our locations is positioned to provide the best possible experience in its market. This is evidenced by our ongoing and successful program locating stores out of certain malls and into higher traffic outdoor centers. The the last four years, 51 of our 74 remodels have been relocations into new outdoor centers. We also focused on delivering a continuous flow of high quality and on trend merchandise allowing us to grow merchandise margins, and end the year with inventory down over 4% and well balanced across categories. During the year, we also made intentional investments in our digital allowing for strong economic performance in the back half of the year For the fourth quarter, total e commerce sales grew 12% against the same period a year ago.

As we move into 2025 with unknowns surrounding tariffs and the economy, we are optimistic that with the strength of our teams, and vendor relationships, we will be able to successfully manage through the challenges of the year. And with that, I will turn the call over to Tom. Good morning. Our 03/14/2025 press release reported that net income for the thirteen week fourth quarter ended 02/01/2025 was $77,200,000 dollars or $1.53 per share on a diluted basis which compares to net income of $79,600,000 dollars or $1.59 per share on a diluted basis for the prior year fourteen week fourth quarter ended 02/03/2024. Net income for the fifty two week fiscal year, which '25, was $195,500,000 dollars or $3.89 per share in diluted basis compared to net income of $219,900,000 or $4.4 per share on a diluted basis for the prior year fifty three week fiscal year ended 02/03/2024. Net sales for the thirteen week fourth quarter decreased 0.8% to $379,200,000 dollars compared to net sales of 382,400,000.0 for the prior year fourteen week fourth quarter. Comparable store sales for the thirteen week fiscal quarter increased 3.9% in comparison to the same thirteen week period a year ago and our online sales increased 6.4% to $69,700,000 for the thirteen week fiscal quarter compared to $65,500,000 for the prior year fourteen week fiscal quarter. [indiscernible] Compared to the same thirteen week period a year ago, online sales increased 12%.

Net sales for the fifty two week fiscal year decreased 3.4% to $1,218,000,000 dollars compared to net sales of $1,261,000,000 for the prior year fifty three week fiscal year. Comparable store sales for the fifty two week year decreased 2.7% in comparison to the prior year or the same fifty two week period in the prior year and our online sales decreased 4.3% to $197,700,000 for the fifty two week fiscal year compared to $206,500,000 The the prior year fifty three week fiscal year.

Compared to the same fifty two week period a year ago, our online sales decreased 2.5% For the quarter, UPTs decreased slightly The average unit retail increased approximately 1% and the average transaction value increased about 1%. For the year, UPTs decreased approximately 2% The average unit retail increased approximately 3% and the average transaction value increased approximately 1%. Gross margin for the quarter was 52.6% up 30 basis points from 52.3% in the fourth quarter of twenty twenty three, with the current quarter increase being the result of a 40 basis point increase in merchandise margins [indiscernible] along with a 20 basis point reduction in distribution and buying costs which were partially offset by a 30 basis point increase in occupancy costs. For the full year, gross margin was 48.7% down 40 basis points from 49.1% in the prior year, and the current quarter decline was the result of an 80 basis point increase in occupancy costs and a 10 basis point increase in distribution and buying costs, which were partially offset by a 55 basis point improvement in merchandise margins. [indiscernible] Selling, general and administrative expenses for the quarter were 27.2% of sales compared to 27.1% for the fourth quarter of twenty twenty three and for the full year SG and A was 28.9% of net sales compared to 27.6% for the same period last year.

The fourth quarter increase was due to a 50 basis point increase in incentive a 15 basis point increase related to e commerce shipping expenses and a 10 basis point increase in G and A salaries. These increases were partially offset by a 25 basis point decrease in accrued PTO a 15 basis point decrease in marketing spend, and a 10 basis point increase in store labor related expenses along with a 15 basis point decrease in other SG and A expense categories. Our operating margin for the quarter was 25.4% compared to 25.2% for the fourth quarter of fiscal twenty twenty three and for the full year our operating margin was 19.8% compared to 21.5% for the same period last year. 23.7% compared to 23% for the fourth quarter of fiscal twenty twenty three bringing fourth quarter net income to $77,200,000 for fiscal twenty twenty four compared to $79,600,000 for fiscal twenty twenty three, For the full year, income tax expense was 24.2% of pretax net income compared to 24% at fiscal twenty twenty three bringing net income to $195,500,000 in fiscal twenty twenty four, compared to $219,900,000 last year. [indiscernible] Our press release also included a balance sheet as of 02/01/2025, which included the following: inventory of $120,800,000 which was down 4.4% from the same time a year ago and $318,800,000 of total cash and investments, was after payment of $198,000,000 in dividends during the year.

We ended the year with $145,800,000 in fixed assets net of accumulated depreciation. Our capital expenditures for the quarter were 9,800,000.0 and depreciation expense was $6,400,000 For the full year, capital expenditures were $42,300,000 dollars and depreciation expense was $23,000,000 Full year capital spending is broken down as follows: dollars 40,300,000.0 for new store constructions, and $2,000,000 for capital spending at the corporate headquarters and distribution center. During the quarter, we opened one new store, completed five full remodels and closed five stores, which brings our full year count to eight new stores 18 full remodels, half of which were relocations into new outdoor centers, and 11 store closures. Current plans for fiscal twenty twenty five include opening seven new stores and completing 18 to 22 full remodel projects. With at least half of the planned remodels being relocations to new outdoor centers. We've also closed one store so far year to date with no additional store closures currently planned. Buckle ended the year with four forty one retail compared with four forty four stores in 42 states at the end of fiscal twenty twenty three. And now I'll turn it over to Adam Akerson, Vice President of Finance. Thanks, Tom, and good morning.

Women's merchandise sales for the quarter were up about 4.5% against the prior year fourteen week fiscal quarter and represented approximately 43% of sales. On a thirteen week comparable basis, women's merchandise sales increased approximately 11%. The women's business continues to be led by strong performance in our denim category, with denim sales increasing 15% driven by continued outperformance in our private branded jeans Average denim price points increased from $81.25 in the fourth quarter of fiscal twenty twenty three to $83.1 in the fourth quarter of fiscal twenty twenty four.

While the overall average women's price point increased about 1% from $51 to $51.55 Complementing the favorable denim trends during the year, we also saw a strong acceleration in several other women's categories most notably in knits, sweaters and accessories. On the men's side, merchandise sales for the quarter were down about 4% against the prior year fourteen week fiscal quarter, representing approximately 57% of total sales. On a thirteen week comparable basis, men's merchandise sales increased The approximately 1%. [indiscernible] We were pleased to see nice increases in our men's denim business which was up about 1.5% for the comparable period as well as continued strength in our knits and tees business, We also saw steady growth in our outerwear category we continue to identify areas for investment in a variety of styles. Average denim price points decreased from $87.15 in the first quarter of twenty nineteen to $87.15 in the first quarter of twenty eighteen to $87.15 in the first quarter of twenty nineteen. Average denim price points decreased from $87.15 in the fourth quarter of fiscal twenty twenty three to $86.3 in the fourth quarter of fiscal 'twenty four. [indiscernible] For the quarter, overall average men's price points increased approximately 0.5% from $56.05 to $56.3 On a combined basis, accessory sales for the thirteen week quarter were up approximately 7.5% against the prior year week comparable period [indiscernible] while footwear sales were down about 7%.

These two categories accounted for approximately 115% respectively, of fourth quarter net sales, which compares to 116% for each in the fourth quarter of fiscal twenty twenty three. For the quarter, average accessory price points were down about 2.5% while average footwear price points were up about 4%. Also on a combined basis, our youth business continued building momentum from back to school through the holiday selling season, [indiscernible] with total used sales for the quarter increasing approximately 10% against the comparable period a year ago. For the quarter, denim accounted for approximately 45% of sales and tops accounted for approximately 29% which compares to 4429.5% for each in the fourth quarter of fiscal twenty twenty three. Fueled by sustained growth in private label denim and a strong presentation across our other categories, we continue to see increases in our private label penetration during the The. For the quarter, private label represented 51% of sales versus 50% in the fourth quarter of of twenty twenty three. And this growth brings our full year private label mix to 47.5% versus 46% in the prior year. And with that, we welcome your questions.

Thank you. As a reminder for participants, Prior to asking your questions, please state your name and firm affiliation. Our first question is from Mauricio Serna. I'm going to go ahead and unmute you at this time.

Great. Good morning. Thanks for taking my question. I'm from UBS, by the way, sorry. Could you just elaborate a little bit more what you saw on The merchandise margin? I think you called out 40 basis points of gains What is that attributed to? And then could you just also like remind us like the other drivers in gross margin in your Q4 performance? And then second point on, of course, there's been a lot of talk about tariffs, like could you just like remind us like in the prior administration, what was your mitigation plan back The? And what did you see in your merch margins as a result of the The?

Good morning. On the merchandise margins, The are increase of our private label percentage through the holidays definitely had a positive effect on that. But also just better regular price selling through a lot of the categories to keep the margins and less markdowns at the end of the season. As far as the tariffs go, we feel [indiscernible] very good long term relationships with our vendors and working with them to do our best to manage costs there. We feel confident The with that at this time, we will be able to work through that without much harm. So Tom, do you want to hit the gross margins?

Yes. I mean, Dennis mentioned merchandise margins were a big driver I mean, we're up 40% for the quarter and up 55% for the year to date. So similar trends there of increased private label and better merchandise margins or better regular price selling like Dennis called out. And then the other driver is just leverage or lack of leverage on buying distribution and occupancy so down about 10 basis points with the strong comps in the fourth quarter. And down 95% for the year to date.

Great.

Okay. Our next question is from John Bratz. John, if you are available to unmute, you can do so at this time. [indiscernible] Yes, John. How are you?

Good. Thank you. Just sort of a a trend question. We're hearing a lot about a recession and so on. And how do you see that maybe in your store traffic at this point? And then secondly, our resident apparel or fashion expert was talking about sweat jeans the other day and I've been reading a little bit about it.

Is is that a product that's something that you will add to your portfolio? How do you think about The as as an offering?

Well, regarding the sweat jeans, I mean, we do have some knit denim in a very small way. That a lot of young guys like. So that's a small part of our business. We have some jogging type pants and different looks The the ladies that have been successful, but is really not in a denim category. So you know, I don't I don't see that being any big player And I forgot the first part of your question, John.

Store traffic, Oh, store traffic. We don't have traffic counters in our stores. So with what's going on, the weather and everything The I mean it just be estimate of what's happening out The. Our February sales were down 1%. So by The, I would would guess we're pretty flat traffic Okay. Our next question is from Alan Glenn. Alan, I'll go ahead and prompt you to unmute at this time.

There we go. Good morning.

Good morning. Well, it's still predominantly China. We do Vietnam, some Bangladesh, We have We have over 200 vendors. So there's a lot of sourcing from many countries, Our biggest ones though would still be out of China. Are any of them planning to change their production, to switch, like, to another country?

Do you know?

Yes. And visiting with them that their top personnel would relocate to different countries if it made sense. There are some increased costs in some of the other countries that offset some of the China cost if there is tariffs. But we've never been our product has never been a how low a price we can go. We're more concerned about quality fashion, The fit and then we get The our guests want The the newness and the quality product and that's what our focus is on.

And I just have one more. Been making steady progress increasing your online sales. Are you planning anything, any new Yes, Alan, thanks for the question. I mean, online was a very strong called out. And I think that was a point of emphasis as we came into last year that we talked about all year. We engaged with an external third party to really do a complete review of our website And we've talked about it on past calls, but made a pretty comprehensive [indiscernible] the guest shopping experience on the site, their ability to find product that increased on-site metrics as far as AOV and conversion. And so we're really pleased with the progress we made there. As we head into the fourth quarter, the back half of the year, we really focused externally on marketing activities and getting the right mix of of content and the content strategy and also the right balance of a focus on acquisition and retention. And so continuing to build there in terms of marketing capabilities and spend there will be the primary focus. But But feel good about the site and where the site is. We also did free shipping, so we added in October The also had a nice boost for the fourth quarter.

Free shipping offer for all of our loyalty members, if they opted into our loyalty program. So that had a nice response as well.

Great. Thanks very much.

Thank you.

Okay. It looks like there are no further questions in queue. I will now turn the call back over to Buckle any closing remarks.

No questions. We'll conclude the call today. So thank you everyone for your participation and enjoy the rest of the day.