Q1 2022 Buckle Inc Earnings Call
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Ladies and gentlemen, thank you for standing by.
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.
And Brady Fritz Senior Vice President General Counsel and corporate Secretary.
As they review the opening results for the first quarter, which ended April 30th 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 the factors, which may be beyond the company's control.
Accordingly, the company's future performance and financial results.
It 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 the publicity.
Pardon me does not undertake to publicly update or revise any forward looking statements, even if experience or future changes make it clear that any.
Projected results expressed or implied therein will not be realized.
Additionally, the company does not authorize the reproduction or dissemination 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 be inaccurate.
That being said welcome everyone to the buckles first quarter earnings release, I would now like to turn the conference over to our host Mr. Tom Heacock. Please go ahead.
Good morning, and thanks for joining us this morning.
Our may 26 2002 thousand.
22 press release reported that net income for the 13 week first quarter ended April 32022 was $55 3 million.
For $1 12 per share on a diluted basis compared to net income of $57 3 million.
Or $1 16 per share on a diluted basis for the prior year 13 week first quarter, which ended May one 2021.
Net sales for the 13 week first quarter increased three 3% to $309 1 million from net sales of $299 1 million for the prior year 13 week first quarter.
Comparable store sales for the quarter increased three 7%.
Online sales were $54 3 million, an increase of 1.1% compared to $53 7 million in the first quarter of 2021.
For the quarter <unk> decreased approximately 2% the average unit retail increased approximately one 5% and the average transaction value decreased about a half percent.
Gross margin for the quarter was 49, 2% compared to 49, 3% in the first quarter of 2021, but the current quarter decreased the result of a 2020 basis point decline in merchandise margins and a 20 basis point increase in store distribution freight costs, partially offset by a 30 basis.
Since of levers occupancy costs.
Selling general and administrative expenses for the quarter were 25, 6% of sales compared to 24% for the first quarter of 2021.
The current quarter increase was the result of 140 basis point increase in store labor related expenses, a 30 basis point increase in e-commerce freight costs, and a 25 basis point increase in marketing and certain other SG&A expense categories.
These increases were partially offset by a 35 basis point decrease in incentive compensation accruals.
Our operating margin for the quarter was 23, 6% compared to 25, 3% for the first quarter of fiscal 2021.
Income tax expense as a percentage of pretax net income for both the current and prior year fiscal quarter was 24, 5%, bringing first quarter net income to $55 3 million for fiscal 2022 versus $57 3 million for fiscal 2020 one.
Our press release also included a balance sheet as of April 30 of 2022, which included the following inventory of $121 2 million and total cash and investments of $283 1 million.
First quarter inventory comparisons for the last several years included $89 million at the end of Q1, 2021, $121 7 million in 2020 and $128 million in 2019.
We ended the quarter with $103 3 million in fixed assets net of accumulated depreciation our capital expenditures for the quarter were $7 1 million and depreciation expense was four and a half million year.
Year to date capital spending is broken down as follows 7 million for new store construction store Remodels and technology upgrades and <unk> 1 million for capital spending at the corporate headquarters and distribution Center.
During the quarter, we completed six full remodels all of which were relocations into new outdoor shopping centers and also closed one store.
For the year, we plan on opening five new stores and completing 10 to 15 additional full remodeling projects.
Based on current store plans, we still expect our capital expenditures for the year to be in the range of 22% to $27 million, which includes both planned store projects and it investments.
Buckle ended the quarter with 439 retail stores in 42 states compared to 442 stores in 42 states at the end of the first quarter of 2021.
And with that I'll now turn it over to Adam Akerson, our vice President of Finance.
Thanks, Tom.
Throughout the first quarter, our buying teams delivered a steady flow of newness that continued to be well received by our guests.
Women's merchandise sales for the fiscal quarter were up approximately two 5% against the prior year fiscal quarter.
For the quarter, our women's business was approximately 48, 5% of sales compared to 49% in the prior year.
Average denim price points increased from $76 20 in the first quarter of fiscal 2021.
The $76 60 in the first quarter of fiscal 2022.
The overall average women's price points decreased slightly from 40 to $45 50 to.
The $45 45.
On the men's side merchandise sales for the fiscal quarter were up 4% against the prior year fiscal quarter, representing approximately 51, 5% of total sales compared to 51% in the prior year.
Average denim price points decreased from $86 20 from the first quarter of fiscal 2021 to $86 in the first quarter of fiscal 2022.
For the quarter overall average men's price points increased approximately 1% from $50 20 at $50 <unk>.
On a combined basis accessory sales for the fiscal quarter were up approximately 8% against the prior year fiscal quarter footwear sales were up about 12%.
These two categories accounted for approximately 9% and 12% respectively. Our first quarter net sales, which compares to eight 5% and 11% for each in the first quarter of fiscal 2021.
Average accessory price points were down approximately two 5% while average footwear price points were up about 3%.
For the quarter denim accounted for approximately 40% of sales and tops accounted for approximately 27, 5%, which compares to 42% and 26% for each in the first quarter of fiscal 2021.
During the quarter, our private label business grew to 42, 5% of total sales.
Third with 38% in the first quarter of 2021.
As Tom alluded, we finished the quarter with inventory from both our men's and women's department and a much more comparable pre 2021 levels as we move into summer and back to school.
We continue to be encouraged by the health of our guests file we began the year with over 33% more 12 month active guests in the previous year and we continue to grow that filed during the first quarter of 2022.
Complementing this growth we've also been able to maintain a high retention rate of over 50% of our guests.
And with that we welcome your questions. Thank you.
Ladies and gentlemen, if you wish to ask a question. Please press one then zero on your telephone keypad.
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Once again for questions today. Please.
Please press one then zero at this time.
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Okay. Our first question is coming in from the line of Peter <unk> with <unk> Capital Management. Please go ahead.
Yes, good morning.
So.
General question on your core demographic my impression is that they skew a little younger and more likely to have more discretionary income and perhaps may be less affected than say a typical family of four by the current inflationary pressures.
And.
On a related note.
I think.
Your and correct me, if I'm wrong, but your denim price points may actually be lower than they were say 2014, our earlier.
And the turns and so I'm just wondering.
If you can add any color to your ability to pass through any cost pressures that you're seeing in terms of.
Coming from the manufacturers of the clothing itself in and shipping costs and then I guess are you still seeing elevated shipping costs in terms of pressure there.
Good morning, Peter.
The.
Your assumption on our gas is.
And the maybe the Ninety's early two thousands was a younger guests, we still sell very well and lets us adding use too.
Junior High High School College age, but we've also.
Drug kind of grown up with a lot of our guests from the early days, where we probably have.
As many or more 25, 30 year olds and older shopping us as well.
As far as the 2014 earlier days.
There was a time, where we were selling.
A large amount of branded denim that would sell anywhere from 120 to 160, plus it was a big part of our business and.
As that trend kind of the.
He logs.
Over the last.
Few years, we've done an excellent job of continuing to sell some of those are.
Yes favorite brands, but also developed our own private brands.
And that has become a very strong part of our business.
And offering great value.
A lot of them are around $70 than we have.
10 of our premium brands would be in the $85 range.
So we've grown that substantially.
Costs are up just slightly.
On those.
When there's maybe 3% to 5% increase in retails.
Some of that product.
But we think we offer a great value great quality.
<unk>.
Our team has done an excellent job of continuing to develop our denim business.
Thanks, very much for a great great color, so but you are.
Do you see any any pushback on that 3% to 5% increase in the and the price points. It wouldnt seem that way from from your report.
No I'd say to first quarter, we have not seen any question about that.
And actually as we build up our denim amendments Laurie we've added sizes.
Where people wanted either smaller sizes larger sizes, some longer and themes are shorter in same. So we're trying to cover more guests and satisfy them that way.
But yes the team. So we're very excited the first quarter was great.
Was off just slightly off.
Incredible record.
Performance last year, our teams are doing very well at.
We focus on being the best specialty store, we can be in everybody's doing a nice job of.
Continuing to build on that.
Yes, that's fantastic.
And just on the shipping costs are you still seeing elevated pressure there.
Okay.
Yes, we are and that was one of the areas we called out in the.
The narrative that we are seeing some pressure there in a couple of different ways. Some of it's inbound so in the product costs and that's part of the reason you know again coming off record merchandise margins, where merchandise margins were down 20 basis points some of that input costs, but a lot of that is freight and thats a part of the inventory. We also called out and saw some pressure on.
Distributions also packages coming from our distribution center go into stores that was it wasn't increase while as well, which is a function of increased rates. But then also increase received a lot of lot more packages a lot more newness and excitement go onto the source.
And then the last bucket is online orders.
And increases are kind of the same thing in increase in packages with our online growth and the way. We're shipping and then also increase right. So so we are seeing some pressure there but to date it's manageable.
Okay, well, thanks, very much and congrats on being able to build off the rack.
Record numbers from 21 in Q1 'twenty two here. Thanks again thank.
Thank you Peter.
Thank you. Our next question comes from Jon Braatz with Kansas City Capital. Please go ahead good.
Good morning, everyone.
Morning, John Dennis.
Dennis Tom can.
Can you speak to a little bit about the occupancy costs you are still beginning still leveraging those costs.
And that's been going on for a while and.
Is there a point, where we begin to see.
That leveling off and that's not.
Helping the margin as much as it has been.
Well, we're very excited about a lot of our.
Relocations into.
Outdoor power strips are different or a variety of locations.
And the smaller med markets, we've moved out of malls that have not kept up the draw for us.
For us for such a destination store that we've been able to relocate and still drive nice traffic.
And we're excited about that you know we have a lot of projects filling in.
And we will continue that through next year as well.
So how much leverage we will have in the future I don't want to predict that.
Sure.
I think we have a great real estate strategy and.
And our team there is doing an outstanding job of working with our.
Landlords and developers and.
You know we're building off our.
Uh huh.
The ability to drive business and be a draw where.
We're kind of a mini anchor and a lot of these situations okay. Okay Dennis.
How how choppy.
Has has the deliveries have been from from overseas are you getting things on a timely basis.
And and secondly.
Oh really is here in the Midwest to summer hasn't hasn't materialized, yet Oh are you seeing any impact Uh huh.
Sort of summer sales as a result of the the.
The mild temperatures still.
Uh huh.
The first quarter you know, we're we're planning out an extra four to eight weeks depending on the category.
And first quarter was pretty good to US you know, there's always exceptions and some delays on a few things but overall.
Wed great delivery on product and our vendors are doing a nice job working with us.
First quarter in certain parts of the.
Our company.
You know maybe had a little adverse effect on on some of the short selling.
But it was a very strong a year ago that first quarter.
But we feel real good about our selection of summer product and as we move in to.
Through the summer season.
Okay, Alright, thank you Dennis.
Thank you.
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With no further questions, we can wrap up the call for today. So thank you everybody for joining us and have a wonderful rest of the day.
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