The Buckle Inc. Q1 2024 Earnings Call

Speaker 1: Hi, yes, good morning. Can you hear me? Okay. Yes. Thank you. Continue.

Speaker 1: Great, great. Thanks for taking our questions. I guess I wanted to ask if you saw any differences in performance by regions, anything that you would call out. And then the merchandise margin, what is driving that contraction seeing that your...

Speaker 1: your merchant your private label penetration actually increased 150 basis points year over year.

Speaker 2: Okay, yes.

Speaker 3: On the margin.

Speaker 3: You know, our footwear margins before were very good and we've seen a little drop back there. For the most part, I think we're also selling some branded denim that has been very good but the margins not as good as private label.

Speaker 3: quarter has probably had a little effect as well.

Speaker 4: Okay.

Speaker 3: And about the regional performance. I'm sorry, which? Sorry, any call outs on the regional performance? Oh, sorry, yes. You know, the naturally the southern parts, especially in Texas, there's the

Speaker 3: Been good traffic, but I'd say in the majority of the others there's been enough. Seasonal weather that's been challenging that's had an effect on most most other stores.

Speaker 5: Thank you very much. Thank you.

Speaker 6: And again as a reminder to the audience, please use the raise hand feature if you would like to ask a question today. We'll move on to Carlton Goetz.

Speaker 7: Morning, how are you? Morning, good. Croping up with Winter Harbor Capital, I wanted to build on a question earlier concerning store growth just a little bit. One of the positive features of Buckle of the Years has been a very measured approach to store growth, although store counts have declined since about 2015 up until last year.

Speaker 7: Do you expect that this trajectory towards positive location growth to be a longer-term trend, or is it dependent on results of the new stores that you're opening this year?

Speaker 3: Well, in our meetings, what we're seeing is a lot of good opportunities to reposition stores, whether we move out of malls that are off the traffic. And as I mentioned with the opening of the

Speaker 3: power centers and other outlet opportunities for us.

Speaker 8: you know.

Speaker 3: I don't know if each year will be.

Speaker 3: similar amount of stores, but we're certainly open to new stores where the opportunity creates itself. So, we're kind of opportunity players and

Speaker 3: And the, you know, here again we're starting to look at

Speaker 7: 24 and and seeing some possibilities there but we're not ready to announce how many new ones there will be. Sure and then with respect to the new stores that are open air these primarily in adjacent geographic locations to where the company already has a significant number of stores or are these further afield.

Speaker 3: Most of them are in regions that we do very well in.

Speaker 7: And then finally, just expanding on that a little more, Buckles maintained a very high return on equity and capital investment for many years, even when sales took a hit.

Speaker 5: and has the lack of growth.

Speaker 7: left some value on the table with respect to that, and you're thinking, or how does the company approach that view and the store decline count, or the counter decline in the counter stores over the last several years until the recent upward trend?

Speaker 3: So as I mentioned, you know, we're.

Speaker 3: We've moved some of our stores out of malls and in a lot of cases we've been able to expand square footage, give the location an updated store, and people really enjoyed shopping those stores. But we're looking at, uh,

Speaker 3: opportunities to maximize our results. And I guess we feel real good about each situation we're looking at and changing and

Speaker 3: And with everything we see going on, there's going to be some good opportunities, but we're still looking at covering the downside and let the upside take care of itself, which has served us well over the years. Sure. And then if I may have one last question on e-commerce sales.

Speaker 7: Is the company's e-commerce sales experience concentrated in the areas where you have stores or have you seen e-commerce drive brand extension in areas where you don't have geographic locations?

Speaker 2: But our

Speaker 3: Our total sales probably are best in the stores where in the states where we are strongest.

Speaker 3: continue to do well. A lot of times we see guests go online to see the newness and then go to the store to buy, but still where we have strength is very good, but we do, you know, do a reasonable amount outside of our territories too.

Speaker 5: Thank you. Thank you.

Speaker 6: Thank you. And moving on to Alan Glenn.

Speaker 6: Alan, you should see the option to unmute in the lower left corner of your screen.

Speaker 7: And Alan, you now have permission to speak if you'd like to go ahead and ask your question. Great. Thank you. Sorry about that. Can you hear me now? Yes, we sure can. I apologize. Given your store footprint, which is tends to be in like smaller cities, close but not

Speaker 9: the retail climate.

Speaker 3: We don't have any specific ones. We look at a lot of different information. Usually we're you know if it's.

Speaker 3: Most most the centers have traffic indicators. We look at sales of others in the centers. We have certain retail stores that we look at depending on the market or for such.

Speaker 3: But in our areas where we are strong, we are pretty open to a lot of situations. We have some outstanding mall stores.

Speaker 3: you know, throughout the Midwest and the larger cities and feel very comfortable with those. You know, we are not in the...

Speaker 3: the Northeast cities or Southern Florida cities or the LA or San Francisco area.

Speaker 3: But outside of that, you know, we are open to review the majority of the markets.

Speaker 9: Okay, thanks. And then my other question is kind of micro-based. Last year there was a lot of disruption in freight forwarding and companies getting inventory. Have you guys experienced any of that or has that been pretty smooth for you so far?

Speaker 3: I'd say for the most part it's been pretty smooth at this point.

Speaker 5: Thanks. Thank you.

Speaker 6: And as a final reminder to the audience, please use the raise your hand tab located in the bottom menu of your Zoom app to ask a question today and we will now take a follow-up for Mauricio Cerna.

Speaker 1: Great, thanks for the follow up. I just wanted to ask about inventory. I see that the growth has moderated sequentially from the fourth quarter. I wanted to know if you see any, I guess, pockets of inventory where you feel it's still high, and do you have any views or expectations on when you think?

Speaker 1: the inventory growth will be more aligned with the sales growth. Thanks.

Speaker 7: Yes, thank you.

Speaker 3: The, here again for first quarter we did bring spring product in, more of it for the first quarter than the second quarter, and very comfortable with our inventory levels at this point and probably the start of the third quarter.

Speaker 3: will definitely be more in line with how sales are going.

Speaker 6: Thank you. Yep. And we have no further questions, so I will turn things back to Buckle for any closing remarks.

Speaker 9: No further questions. We'll conclude today's call and thank you all for your participation and hope everyone has a wonderful holiday weekend. So thank you very much. Thank you. And again, that does conclude today's earnings release. We thank you all for your participation. Enjoy your summer. We'll see you next quarter.