Q4 2021 Buckle Inc Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the Buckles fourth quarter earnings release at this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time.
If you should require assistance during the call. Please press Star then zero.
Members of Buckles management on the call today are Dennis Nelson, President and CEO , Tom Heacock, Senior Vice President of Finance Treasurer and CFO .
Adam Akerson, Vice President of Finance, and corporate controller, and Brady Fritz Senior Vice President General Counsel and corporate Secretary.
As they review the operating results for the fourth quarter, which ended January 29, 2022, they would like to reiterate their policy of not giving future sales or earnings guidance and have the following safe Harbor statement.
Safe Harbor statement under the private Securities Litigation Reform Act of 1995, all forward looking statements made by the company involve material risks and uncertainties and are subject to change based on factors, which may be beyond the company's control.
Accordingly, the company's future performance and financial results may differ materially from those expressed or implied in any such forward looking statements.
Such factors include but are not limited to those described in the company's filings with the Securities and Exchange Commission.
The company does not undertake to publicly update or revise any forward looking statements, even if experience or future changes make it clear that they that any projected results expressed or implied therein will not be realized at.
Additionally, the company does not authorize the reproduction or does some nation of transcripts or audio recordings of the company's quarterly conference calls without its expressed written consent.
Any unauthorized reproductions or recordings of the calls should not be relied upon as the information may not or may be inaccurate.
With that I'll turn the conference over to our host Dennis Nelson. Please go ahead Sir.
Good morning, and thank you all for joining us before turning it over to Tom I would like to start by thanking our nearly 8000 teammates for their tireless tireless efforts over the past year and congratulating them on such a truly incredible year.
The grit and determination you displayed despite the ongoing disruptions as the bedrock of buckle and I'm confident we are positioned for continued success in the years to come.
This outstanding year also could not have been possible without the support of our branded and private label vendors.
We are grateful for our continued partnerships.
As we deliver a high quality product despite numerous challenges.
And your guess thank.
Thank you for your continued trust and loyalty.
I also want to sincerely. Thank all of the new guest we welcomed over the past year.
We cherish every opportunity to serve our guests and provide the most enjoyable shopping experience possible.
I will now turn it over to our CFO Tom Heacock.
Good morning, and thanks for being with US this morning.
Our March 11, 2022 press release reported that net income for the 13 week fourth quarter, which ended January 29 2022 with.
It was $83 9 million or $1 69 per share on a diluted basis, which compares to net income of $65 6 million or $1 33 per share on a diluted basis for the prior year 13 week fourth quarter, which ended January 32000 22021.
Net income for the 52 week fiscal year ended January 29, 2022 was $254 8 million or $5 16 per share on a diluted basis compared to net income of $130 1 million or $2 66 per share on a diluted basis for the prior year 52 week fiscal year.
<unk> ended January 30th 2021.
Net sales for the 13 week fourth quarter increased 19, 5% to $380 9 million compared to net sales of $318 8 million for the prior year 13 week fourth quarter.
Comparable store sales for the quarter increased 20% in comparison to the same 13 week period in the prior year and our online sales increased 10, 5% to $73 1 million.
Net sales for the 52 week fiscal year increased 43.6% to one point to 95 billion compared to net sales of $901 3 million for the prior year 52 week fiscal year.
Comparable store sales for the year were up 43, 8% in comparison to the same 52 week period in the prior year.
And online sales for the year increased 15, 9% to $228 million.
For the quarter U P. T has decreased approximately 2% the average unit retail increased approximately two 5% and the average transaction value increased approximately a half percent.
For the full year <unk> decreased approximately 2%.
The average unit retail increased approximately 2%.
And the average transaction value increased just slightly.
Gross margin for the quarter was 53, 1% up 180 basis points from 51, 3% in the fourth quarter of 2020.
The fourth quarter increase in gross margin was the result of a 45 basis point improvement in merchandise margins, coupled with a 135 basis points of leverage occupancy buying and distribution costs. As a result of the strong sales performance for the quarter.
Full year gross margin was 54% compared to 44, 5% for fiscal 2020.
Full year gross margin increase was the result of 85 basis point improvement in merchandise margin.
And 505 basis points of leverage occupancy buying and distribution costs.
Selling general administrative expenses for the quarter.
Were 24, 3% of net sales compared to 24, 8% for the fourth quarter of 2020 with leverage across several SG&A expense categories, partially offset by increases in online freight costs.
And marketing investments.
Full year SG&A was 24, 5% of sales compared to 25, 8% for fiscal 2020.
Our operating margin for the quarter was 28, 8% compared to 26, 5% for the fourth quarter of fiscal 2020 and for the full year. Our operating margin was 25, 9% compared to 18, 7% in 2020.
Income tax expense as a percentage of pretax net income for the fourth quarter was 24, 7% compared to 23, 2% for the fourth quarter last year, bringing fourth quarter net income to $83 9 million for 2021 compared to $65 6 million for 2020.
For the full fiscal year income tax expense was 24, 6% of pre tax net income compared to 23, 9% in 2020, bringing net income to $254 8 million for fiscal 2021 compared to $130 1 million for fiscal 2020.
Our press release also included a balance sheet as of January 29, 2022, which included the following.
Inventory of $102 1 million, which was up approximately 1% from inventory of $101 1 million as of January 30th 2021, and total cash and investments of $286 2 million, which was after payment of $347 8 million in dividends during the year.
We ended the year with $105 million in fixed assets.
Net of accumulated depreciation.
Our capital expenditures for the quarter were $6 9 million and depreciation expense was $4 7 million for.
For the year to date period capital expenditures were 19.11 million and depreciation expense was $18 7 million full.
Full year capital spending is broken down as follows.
$18 3 million for new store construction store, Remodels and technology upgrades and point 8 million for capital spending at the corporate headquarters and distribution Center.
During the quarter, we completed five full remodels four of which were relocations and a new outdoor shopping centers and closed one store.
This brings our year to date totals to one new store.
15, full remodels and four store closures. Additionally, we closed one store following the first full day of fiscal 2022.
For 2022, we currently plan on opening five new full line stores and completing 15 to 20 full remodel projects.
Based on current store plans, we expect our capital expenditures to be in the range of $22 million to $27 million.
Buckle ended the quarter with 440 retail stores in 42 states.
Paired with 443 stores in 42 states at the end of the fourth quarter of fiscal 2020.
And now I'll turn it over to Adam Akerson, our Vice President of Finance it's.
Thanks, Tom.
Women's merchandise sales for the fiscal quarter were up approximately 19, 5% against the prior year fiscal quarter.
For the quarter, our women's business was approximately 44, 5% of sales we stayed consistent with the prior year.
Average denim price points decreased from $75 20 in the fourth quarter of fiscal 2020 to $74 45 in the fourth quarter of fiscal 2021, while overall average women's price points increased about 5% from $45 65 to $47 97.
On the men's side merchandise sales for the fiscal quarter were up 19% against the prior year fiscal quarter, representing approximately 55, 5% of total sales for both years.
Average denim price points decreased from $83 15 in the fourth quarter of fiscal 2020 to $78 <unk> in the fourth quarter of fiscal 2021.
For the quarter overall average men men's price points increased slightly from $8 90 550 105.
During the quarter denim price points with our men's and women's businesses were negatively impacted by significantly limited inventory and our higher price point brands as a result of myths receipts due to nationwide shutdowns in Vietnam.
On a combined basis accessory sales for the fiscal quarter were up approximately 27, 5% in the prior year fiscal quarter and average footwear sales were up about 6%.
These two categories accounted for approximately nine 5% and 10% respectively.
Fourth quarter, net sales, which compares to 9% and 11, 5% for each in the fourth quarter of fiscal 2020.
Average accessory price points were up approximately 13% and average footwear price points were up about three 5%.
For the quarter denim accounted for approximately 45% of sales and tops accounted for approximately 31, 5%, which compares to 42% and 29, 5% for each in the fourth quarter of fiscal two point.
During the quarter, our private label business grew to 48% of total sales compared to 43% in the fourth quarter of 2020 for the full year, our private label business accounted for approximately 42, 5% of total sales.
<unk> 39, 5% in fiscal 2020.
Overall, we continue to see some lag in our product deliveries due to COVID-19 delays or congestion and limited trucking availability. Despite these challenges we still felt good about the amount of newness, we were able to deliver for our guests.
<unk> and our outstanding performance for the for the quarter.
Our buying teams continued to work diligently both internally and with our vendor partners to adjust timelines and delivery dates provided strong in store and online presentation.
Our channel agnostic approach to inventory again proved successful as we are.
Continued to allocate inventory based on its greatest propensity to sell.
This strategy resulted in double digit gains in nearly every category enabled us to finish the year with record low levels of markdowns.
In addition to strong product trends. We're also encouraged by the growth of our guests filing for the year, we were able to grow our 12 month active guests by over 33%.
Our omnichannel guests, who will prove to be our most loyal and highest performing guests represented the fastest growing segment during the quarter.
All of which resulted in total transactions, increasing by approximately 19% for the quarter and approximately 43, 5% for the year.
And with that we welcome your questions.
And ladies and gentlemen, if you'd like to ask a question. Please press. One then zero on your telephone keypad you may withdraw your question at any time by repeating the command of one that then zero.
So once again, if you have questions or comments. Please first one zero.
Okay.
My first question comes from the line of Peter <unk> with <unk> capital. Please go ahead.
Good morning, and congratulations on a great quarter and year.
Dennis on previous calls I had asked whether or not you thought buckles recent growth rates might be related to the stimulus payments and spending and you didn't think there was really a high correlation there in your recent February sales release, certainly seems to build on that premise.
I know you don't give guidance, but I'm just wondering if you could add some color on the.
The sustainability of recent growth rates for instance, I'm curious how much of February is 33% growth rate was related to.
It gives me a gift card redemptions.
Good morning, Peter Thank you.
Well there is certainly would be some gift card redemptions.
We benefited some in February from the store closures.
Especially in Texas and throughout the South last year February .
When they had a very.
Challenging winter and power was shut off and such so.
So we did benefit from that but also from some of our relocations as we continue to find opportunities to improve our store situations.
And just a total great effort from our merchandise and sales teams.
Building, our denim business as well as other categories. So here again, a combination of things but it.
I was very pleased with February .
Great.
And then many of your peers you spent heavily on airfreight in Q4 to mitigate supply chain issues and you seem to have been able to create some operating leverage. Despite those issues can you give us any color on whether or not you think the supply chain problems are easing here post holiday or what are you what are your thoughts on the coming year in that regard.
Well theres still delays and.
Such right now it <unk> seem to be going better on on the shipping and stuff.
We did very little in airfreight.
We continue to try to plan far enough out in advance to.
Avoid that challenge and.
So.
You know, we think it's improving but every day is a new day. So we're just hoping for the best.
Okay, Great and then just to circle back on my first question.
Yeah.
I think you just said or on the calls or the guest the guest profile was up 33% and.
So.
In terms of the sustainability those are new gas, but in terms of their frequency.
To visits to the store and repeat visits.
Can you add any color. There do you think that those are our long term gas that are going to continue to frequent our stores.
Well, we think our.
Sales team and our service in our stores are just is just terrific and so we think we will capture a lot of those as long term guests. The Adam do you have any more details on that question.
I mean as far as we look to the guest file the <unk> guests are performing.
As good as we would expect or what some of our loyal guests are more long term guests performing so there's not a there's not a significant fall off in terms of.
Recency and frequency for those guests.
<unk>.
Alright, Thanks, a bunch guys yes.
Thank you.
Our next question comes from Jon Braatz from Kansas City Capital. Please go ahead.
Morning, everyone.
Hum.
Dennis.
I think I heard if I heard correctly you plan on opening five new stores and Ah in 2022 this would be the first.
You know additional stores are added new stores since 2015 first increase.
What are you seeing in the marketplace.
Have you seen some changes what changes are you seeing that support this new new store growth.
So we found a.
Certain markets that.
Have developed and are growing that are.
We think that would be ideal stores for ourselves as.
As well as there's some drilling markets and some of our established market.
Cities that we think there's additional.
Space for us, especially.
As we have had success in outdoor shopping centers and power centers and on some of our relocation. So we're taking advantage of that.
And out of those five there might be a couple that eventually we close a store that is somewhat close to two the new ones.
That'll be we'll just have to wait and see how that all plays out.
Do you think that that this increase has had some legs do you do you see that continuing into the out years.
Well, we're always looking for opportunities and as our business grows and and.
There are certain markets that we haven't been as aggressive that that we might take another look at it as as other stores in certain regions continue to do better so there's that possibility, but we're not forecasting anything there okay I assume maybe.
Maybe I shouldn't assume but lease rates are pretty favorable on the new stores.
Yes.
We're pretty comfortable with them or we wouldn't be doing them yeah, yeah. Okay alright. Thank you.
Yes.
Our next question comes from John desire from Pinnacle. Please go ahead.
Good morning, everyone and congratulations on a solid year.
Thank you just curious on the Vietnam supply issue that impacted your ability to imports higher priced product has that been resolved at this point or what's the status of that.
Yeah that since November that's.
Production has become more consistent in shipping.
Still trying to catch up on certain product and and to deliver some of the our denim.
There could be some delay on some shorts from that production as.
As.
They try to get the full length denim out first but.
We're expecting that to be pretty steady as we go forward and and excited to have that product back online.
Okay.
Overall has the.
During the pandemic has the.
Base of vendors change.
Changed dramatically in other words are you.
Have you left certain vendors behind and picked up new ones or kind of broadly speaking how is that all shaken out over the last couple of years.
But I'd say most of our vendors our long term vendors that we have great relationships with and are very successful at developing quality product at a good price and.
You know Theres always changes there has been some new vendors are our.
Branded that had been nice for our business and also and.
Especially in the girls top business, there's always changes going on there, but the majority are consistent from years before okay.
Got it that's it thanks very much thank you.
And again, ladies and gentlemen, if you have any questions or comments. Please press one then zero.
And our next question comes from the line of Jennifer Taylor Mcfun's. Please go ahead.
Hi, good morning, and thank you and nice quarter and year.
Most of my questions have been answered, but I did want to just talk about some of the management and operational changes and some.
Some nice promotions that looks like and I'm just wondering if you could elaborate a little bit on that.
Sort of.
Expansion natural.
Pressing in terms of individuals.
Anyway, I'd like to talk about that.
Okay, well, thank you Jennifer.
On our men's.
Men's buying team are co vice president carry crafter and Jennifer Moro. Both then with the buckle at least 15 years, if not more and have been actively and.
Involved in the development of product and working with Bob.
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Thank you I apologize our phone line here in Kearney dropped so we apologize for the disruption.
We're happy to answer more questions that there already are I don't I'm, not sure where it cut out but.
Jennifer we're happy to follow up with an answer your question.
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Thank you and Jennifer's line is now open.
[laughter], Hi, Al you, Jay drop out, but but we can I E. If you I think you were just talking about the language.
And commitment of some of the the promotion so it sounds like a natural E. L F.
Evolution of those of those careers.
Yeah.
I just the only other tag on I had to that.
Just getting back to sort of the occupancy costs. If you. If you don't mind. It. It seems it would seem to me that you actually should continue to get a little bit of leverage on that side I don't know if there's.
Any more color you can give on that just sort of as a trend line.
And now an absolute cost basis.
So on the rent side, we've done a nice job venison, Brett working with landlords and abroad, I mean base rents down we've seen reductions in rental that's where the most of the leverage has been over the last couple of years and that's been an ongoing effort for several years now some of that's offset this year by obviously in it and a lot of situations, we're paying percentage of.
And so we've seen seen some increases there with a strong business, but otherwise the rest of those rents outside of percentage rent would continue into the future.
Okay.
Okay and is there is there is the trend of percentage rent sort of up or down generally or does it really depend on your markets.
Each situation is different though it's really based on that store sales and above some benchmark and once once they get above that benchmark, we're paying a percentage of sales as additional random those markets, though so it's entirely driven by topline in those stores.
Okay, and not necessarily the the outdoor space.
Kind of.
Environment versus the more traditional mall theres, not theres, not any sort of alignment in terms of of locations and.
The majority.
He already of the outdoor centers.
In most cases do not have a percentage rent.
Part of it.
Lease.
Okay, Okay great.
Well that's it for me, thank you very much and again nice quarter and year.
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