Q3 2022 Buckle Inc Earnings Call
Scripts 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 and as a reminder, today's webcast is being recorded and now I'd like to turn the conference over to your host Tom Heacock, Tom over to you.
And thanks for joining us today.
Our November 18th 2022 press release reported that net income for the 13 week third quarter ended October 29, 2022 was $61 4 million or $1 24 per share on a diluted basis compared to net income of $62 2 million or $1 26 per share on a diluted basis for the prior year.
The weak third quarter, which ended October 32021.
Year to date net income for the 39 week period ended October 29, 2022 was $166 8 million or $3 37 per share on a diluted basis.
This compares to net income of $170 9 million or $3 46 per share on a diluted basis for the prior year 39 week period ended October 32021.
Net sales for the 13 week third quarter increased 4% to $332 3 million compared to net sales of $319 4 million for the prior year 13 week third quarter.
Comparable store sales for the quarter increased 3% in comparison to the same 13 week period in the prior year and our.
Online sales increased eight 8% to $55 million.
Year to date net sales increased three 3%.
$943 4 million for the 39 week fiscal period ended October 29, 2022, compared to net sales of $913 7 million for the prior year 39 week period ended October 32021.
Comparable store sales for the year to date period were up two 8% in comparison to the same 39 week period in the prior year and our online sales increased five 3% to $155 6 million.
For the quarter <unk> decreased approximately 5% the average unit retail increased approximately 6% and the average transaction value increased approximately five 5%.
Year to date <unk> decreased approximately 5% the average unit retail increased approximately three 5% and the average transaction value increased approximately 3%.
Gross margin for the quarter was 49, 8% down 60 basis points from 54% in the third quarter of 2021.
Year to date gross margin was 49, 1% down 20 basis points from 49, 3% for the same period last year.
Merchandise margins were down about 75 basis points for the quarter and down 35 basis points for the year to date period.
Selling general and administrative expenses for the quarter were 25, 9% of sales compared to 24, 7% for the third quarter of 2021.
Year to date SG&A was 26% of net sales compared to 24, 6% for the same period last year.
The third quarter increase was due to a 90 basis point increase in store labor related expenses. In addition to increases across several other SG&A expense categories, which had a 90 basis point impact and were partially offset by a 60 basis point reduction in incentive compensation accruals.
Our operating margin for the quarter was 23, 9% compared to 25, 7% for the third quarter of fiscal 2021 and for the year to date period. Our operating margin was 23, 1% compared to 24, 7% for the same period last year.
Income tax expense as a percentage of pretax net income for both the current and prior year fiscal quarter was 24, 5%, bringing third quarter net income to $61 4 million for fiscal 2022 compared to $62 2 million for fiscal 2021.
Income tax expense as a percentage of pretax net income for both the current and prior year year to date periods was also 24, 5%, bringing year to date net income to a $166 8 million for fiscal 2022 compared to a $170 9 million for fiscal 2021.
Our press release also included a balance sheet as of October 29, 2022, which included the following inventory of $152 3 million and total cash and investments of $344 7 million.
Third quarter inventory comparisons for the last several years included $100 6 million at the end of Q3 2021, $118 7 million in Q3, 2020, and $138 9 million in Q3 2019.
We ended the quarter with $109 6 million in fixed assets net of accumulated depreciation our capital expenditures for the quarter were $7 5 million and depreciation expense was $4 4 million.
For the year to date period capital expenditures were $22 4 million and depreciation expense was $13 6 million.
Year to date capital spending is broken down as follows $22 million for new store construction store Remodels and technology upgrades and <unk> 4 million for capital spending at the corporate headquarters and distribution Center.
During the quarter, we opened one new store completed three full remodels two of which are relocations into new outdoor shopping centers and closed one store.
This brings our year to date totals to three new stores 16, full remodels and two store closures for the remainder of the year, we anticipate completing eight additional full remodel projects and opening one additional new store.
Based on current store plans, we expect our capital expenditures to be in the range of 26% to $30 million for the year, which includes both planned store projects and it investments buckle.
Buckle ended the quarter with 441 retail stores in 42 states consistent with the store count as of the end of the third quarter of last year now I will turn it over to Al <unk> Vice President of finance, Thanks, Tom let.
Women's merchandise sales for the fiscal quarter were up slightly against the prior year prior year fiscal quarter for.
For the quarter, our women's business was approximately 46, 5% of sales compared to 48% in the prior year.
Average denim price points increased from 74 in a quarter in the third quarter of fiscal 2021 to $78 55 in the third quarter of fiscal 2022.
Overall average women's price points increased about 7% from 45, 65% to 48 8 million.
On the men's side merchandise sales for the fiscal quarter were up 6% against the prior year fiscal quarter, representing approximately 53, 5% of total sales compared to 52% in the prior year.
Average denim price points increased from $81 55, the third quarter of fiscal 2021% to 87% in a quarter in the third quarter of fiscal 2020 team for.
For the quarter overall average men's price points increased approximately five 5% from $49 15 51 <unk>.
On a combined basis accessory sales for the fiscal quarter were up approximately 15, 5% against the prior year fiscal quarter.
<unk> sales were down about 17%.
These two categories accounted for approximately nine 5% and seven 5% respectively of <unk>.
Third quarter, net sales, which compares to eight 5% and 95% for each in the third quarter of fiscal 'twenty one.
For the quarter average accessory price points were up approximately 10, 5% average footwear price points were up about two 5%.
For the quarter denim accounted for approximately 42, 5% of sales and tops accounted for approximately 35%, which compares to $41 five and 32%.
For each of the third quarter of fiscal 2021.
We continue to be encouraged by the guest response to our youth business for the second consecutive quarter use with our fastest growing category with approximately 26, 5% year over year growth representing about 4% of total sales.
Overall, we continue to be pleased with the performance of both our men's and women's business with broad based strength across most categories on top of record sales a year ago.
Categories of particular strength include denim woven outerwear and accessories, all of which greatly benefited from better inventory positioning compared to a year ago.
Both teams have done a great job developing additional looks and lifestyles to expand the number of guests we can serve in our stores.
During the quarter, we continued to see strength in our expanded assortment of western inspired styles.
Our buying teams also continue building, our private label business with private label, representing 46% of total sales for the quarter compared to 44% in the third quarter of 2021.
Our inventory continues to be clean and we are excited about our selection moving into the holiday season.
And with that we welcome your questions.
Thank you and as a reminder for their participants if you would like to ask a question. Please click raise hand located in the menu at the bottom of your screen and we do ask you. Please state your name and firm affiliation prior to asking your question and once you've indicated that you want to ask a question you will be given permission to speak and meet you.
At that time.
There are no questions currently in but I'll remind the audience again to please locate the raise hand feature located at the bottom of your screen to indicate you'd like to ask a question.
And we will hear from Steve Marotta with C L King and associates.
Steve go ahead not mute.
Thank you if I didn't that Cvs, both Newport and thank you for pointing that out can you you talked about inventory being clean can you.
Tried to define that a little bit and from inventory competition standpoint.
Are you, where you want to be with inventory do you wish you had a little bit less I know it compares.
A little bit higher than 19% is that what the goal was can you just unpack that a little bit for us. Thank you.
Sure, Steve and let me take a moment before we start and just thank all of the buckle leadership team made sure an excellent third quarter. We appreciate their hard work.
Yes, our inventory.
Is that maybe 10% over 19.
Four 6% of that is.
And cost.
Of units.
And we also had.
In a like an increase of four 4 million plus an on the water in transit.
Inventory.
And we are comfortable with the.
In the last year.
We had.
All our key denim vendors from Vietnam was not shipping product, we didn't have any new receipts.
So we had the benefit of them back in our inventory.
As well as we've grown.
As Adam reported are private label has grown nicely and we've expanded both of our mens and womens.
Brands.
Inventory and their sales have been.
Very good and we expanded fits and styles and.
The expanded size scales.
To meet that demand.
That's been kind of a change in vendors somewhat but.
On our private label, we have to plan and bring that in.
Where we can.
Expect that to understand and be able to ship at once.
So we feel good about the product and.
The <unk>.
<unk> 19 inventory even at that step.
Our inventory over 19 is up 10%, but over 19, our sales this last quarter, where in the almost 50% up from 19, So I think that that sat in perspective, a little debt and.
And over last year.
<unk>.
The 50.
50% of the GNL inventory being up half of that was in denim.
And also 15% of that was in the average cost.
As I mentioned.
The denim, we would really be missing business. If we had not made those changes cell.
We also brought in products one to two months early because we had so much.
Last year that came January February that we wanted for holiday and did not have.
And this year with the threat of the corn strikes in just the unknown when you plan it out six seven months.
We're more comfortable bringing that in early and providing a great selection and have in all our stores have a nice selection of product instead of risk.
Chasing goods hopefully that answers that.
Very helpful. Thank you.
Yes.
And as a reminder to the audience. Please locate the raise hand feature at the bottom of your screen to indicate that you would like to ask a question.
And we will now hear from Alan Glen Allen, If you wouldn't mind letting us know whether an affiliation with please.
I'm with Concord and main limited thank you.
My question is with the potential for a crippling rail strike.
Over the next 30 days is that would that affect your supply chain and inventory deliveries.
Good morning, Alan Thanks for the question no we do not do any of our freight on rail.
Thank you.
And as a final reminder to the audience. Please locate the raise your hand feature located at the bottom of your screen to indicate that you have a question, we'll pause just to give everyone a final opportunity.
Alright, well there are no further questions. So I'll turn it back to over to the buckle team for any closing or additional remarks.
But there are no further further questions. We thank everyone for participating and hope everyone has a wonderful rest of the day. So thank you very much.
Yeah, and again that does conclude today's webinar. We thank you all for your participation and your holiday season, we'll see you next quarter.
Yes.