Q4 2024 The Buckle Inc Earnings Call

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Operator: Good morning. Thank you for standing by, and welcome to Buckle's fourth quarter fiscal 2023 earnings release webcast. As a reminder, all participants are currently in a listen-only mode.

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Speaker Change: As a reminder, all participants are currently in a listen only mode.

Operator: A question and answer session will be conducted following the company's prepared remarks with instructions given at that time. Members of Buckle's 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 operating results, 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.

Speaker Change: A question and answer session will be conducted following the company's prepared remarks with instructions given at that time.

Speaker Change: Members of the Buckles management on the call today are Dennis Nelson, President and CEO, Tom Heacock, Senior Vice President of Finance Treasurer and CFO.

Speaker Change: Automakers, and vice President of finance and corporate controller.

Speaker Change: And Brady Fritz Senior Vice President General Counsel and corporate Secretary.

Speaker Change: As they review operating results they would like to reiterate their policy of not giving future sales or earnings guidance and have the following safe Harbor statement.

Speaker Change: Safe Harbor statement under the private Securities Litigation Reform Act of 1995, all forward looking statements made by the company involved 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.

Operator: Accordingly, the company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statement. 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 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 express written consent. Any unauthorized reproductions or recordings of the calls should not be relied upon as the information may be inaccurate.

Speaker Change: Looking statements such factors include but are not limited to those described in the company's filings with the Securities and Exchange Commission.

<unk> 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 there will not be realized.

Speaker Change: 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 cause it should not be relied upon as the information may be inaccurate.

Thomas B. Heacock: As a reminder, today's webcast is being recorded, and now I'd like to turn the conference over to your host, Tom Heacock. Good morning, and thanks for joining us this morning. Our March 15, 2024 press release reported net income for the 14-week fourth quarter ended February 3, 2024, was $79.6 million, or $1.59 per share on a diluted basis, compared to net income of $87.8 million, or $1.76 per share on a diluted basis for the prior year 13-week fourth quarter ended January 28, 2023. Net income for the 53-week fiscal year ended February 3, 2024, was $219.9 million, or $4.40 per share on a diluted basis, compared to net income of $254.6 million, or $5.13 per share on a diluted basis, for the prior year 52-week fiscal year ended January 28, 2023.

Speaker Change: As a reminder, today's webcast is being recorded.

Speaker Change: And now I'd like to turn the conference over to your host Tom Heacock.

Thomas B. Heacock: Good morning, and thanks for joining us this morning.

Thomas B. Heacock: Our March 15th 2024 press release reported that net income for the 14 week fourth quarter ended February three 2024 was $79 6 million or $1 59 per share on a diluted basis compared to net income of $87 8 million or $1 76 per share on a diluted basis for the prior year of 13.

Thomas B. Heacock: Week fourth quarter ended January 28, 2023.

Thomas B. Heacock: Net income for the 53 week fiscal year ended February three 2024 was $219 9 million or $4 40 per share on a diluted basis compared to net income of $254 6 million or $5 13 per share on a diluted basis for the prior year of 52.

Thomas B. Heacock: [noise] week fiscal year ended January 28, 2023.

Thomas B. Heacock: Net sales for the 14-week fourth quarter decreased 4.8% to $382.4 million compared to net sales of $401.8 million for the prior year 13-week fourth quarter. Comparable store sales for the 14-week fiscal quarter decreased 9.6% in comparison to the same 14-week period in the prior year. And online sales decreased 12.4% to $65.5 million for the 14-week fiscal period, which compares to $74.8 million for the prior year's 13-week fiscal period. Compared to the same 14-week period a year ago, online sales were down 16.6%.

Thomas B. Heacock: Net sales for the 14 week fourth quarter decreased four 8% to $382 4 million compared to net sales of $401 8 million for the prior year 13 week fourth quarter.

Thomas B. Heacock: Comparable store sales for the 14 week fiscal quarter decreased nine 6% in comparison to the same 14 week period in the prior year and online sales decreased 12, 4% to $65 5 million for the 14th week fiscal period, which compares to $74 8 million for the prior year 13 week fiscal.

Thomas B. Heacock: Period compared.

Compared to the same 14 week period, a year ago online sales were down 16, 6%.

Thomas B. Heacock: Net sales for the 53 week fiscal year decreased six 3% to 126 1 billion compared to net sales of 134 5 billion for the prior year 52 week fiscal year.

Thomas B. Heacock: Net sales for the 53-week fiscal year decreased 6.3% to $1.261 billion, compared to net sales of $1.345 billion for the prior year 52-week fiscal year. Comparable store sales for the 53-week fiscal year ended February 3, 2024 decreased 8% from the prior year 53-week period and on February 4, 2023. Our online sales were down 10.3% to $206.5 million for the 53-week fiscal year, compared to $230.4 million for the prior year's 52-week fiscal year. And compared to the same 53-week period a year ago, online sales were down 11.8%. For the quarter, UPPs increased approximately a half percent, the average unit retail increased approximately one and a half percent, and the average transaction value increased about two percent. For the full year, UPTs were flat.

Comparable store sales for the 53 week fiscal year ended February three 2024 decreased 8% from the prior year a 53 week period ended February four 2023.

Thomas B. Heacock: Our online sales were down 10, 3% to $206 5 million for the 53 week fiscal year compared to $230 4 million for the prior year 52 week fiscal year and compared to the same 53 week period, a year ago online sales were down 11, 8%.

Thomas B. Heacock: For the quarter <unk> increased approximately 5% the average unit retail increased approximately one 5% and the average transaction value increased about 2%.

Thomas B. Heacock: For the full year <unk> were flat the average unit retail increased approximately 1% and the average transaction value increased approximately 1%.

Thomas B. Heacock: The average unit retail increased approximately 1%, and the average transaction value increased approximately 1%. Gross margin for the quarter was 52.3%, down 70 basis points from 53% in the fourth quarter of 2022. The current quarter decline is the result of deleveraged buying, distribution, and occupancy expenses, partially offset by a 20 basis point improvement in merchandise margins. For the full year, gross margin was 49.1%, which was down 120 basis points from 50.3% in the prior year, with the current quarter decline being due to leveraged buying, distribution, and occupancy expenses, along with a 20 basis point reduction in merchandise margin. Selling General Administrative Expenses for the quarter were 27.1% of net sales, compared to 25.6% for the fourth quarter of 2022. The fourth quarter increase was due to a 150-basis point increase in store labor-related expenses, a 35-basis point increase in marketing spend, a 30-basis point increase in G&A salaries, a 10-basis point increase in equity compensation expense, and a 25-basis point increase These increases were partially offset by a 60-basis point reduction in incentive compensation accruals and a 40-basis point decrease in e-commerce shipping expenses.

Thomas B. Heacock: Gross margin for the quarter was 52, 3% down 70 basis points from 53% in the fourth quarter of 2022.

Thomas B. Heacock: The current quarter decline is the result of deleverage buying distribution and occupancy expenses, partially offset by a 20 basis point improvement in merchandise margins.

Thomas B. Heacock: For the full year gross margin was 49, 1%, which was down 120 basis points from 53% in the prior year with the current Florida decline being due to deleverage buying distribution and occupancy expense along with a 20 basis point reduction in merchandise margins.

Thomas B. Heacock: Selling general and administrative expenses for the quarter were 27, 1% of net sales compared to 25, 6% for the fourth quarter of 2022.

Thomas B. Heacock: The fourth quarter increase was due to a 150 basis point increase in store labor related expenses of 35 basis point increase in marketing spend a 30 basis point increase in G&A salaries, a 10 basis point increase in equity compensation expense and a 25 basis point increase in other SG&A SG&A expense categories.

Thomas B. Heacock: And these increases were partially offset by a 60 basis point reduction in incentive compensation accruals and a 40 basis point decrease in E Commerce shipping expenses.

Thomas B. Heacock: For the full year, SG&A was 27.6% of sales compared to 25.9% for the same period last year. The full year increase was due to a 135 basis point increase in store labor-related expenses, a 30-basis point increase in G&A salaries, a 25-basis point increase in marketing spend, a 20-basis point increase in equity compensation expense, and a 20-basis point increase in other SG And these increases were, again, partially offset by a 60-basis point reduction in incentive compensation accruals.

Thomas B. Heacock: For the full year SG&A was 27, 6% of sales compared to 25, 9% for the same period last year.

Thomas B. Heacock: The full year increase was due to a 135 basis point increase in store labor related expenses.

Thomas B. Heacock: A 30 basis point increase in G&A salaries, a 25 basis point increase in marketing spend a 20 basis point increase in equity compensation expense and a 20 basis point increase in other SG&A expense categories and these increases were again, partially offset by a 60 basis point reduction in incentive compensation accruals.

Thomas B. Heacock: Our operating margin for the quarter was 25.2% compared to 27.4% for the fourth quarter of fiscal 2022, and for the full year, our operating margin was 21.5% compared to 24.4% for the same period last year. Income tax expense as a percentage of pre-tax net income for both the current and prior year fiscal quarters was 23%, bringing four-quarter net income to $79.6 million for fiscal 2023 compared to $87. Income tax expense as a percentage of pre-tax net income for both the current and prior year full-year periods was 24%, bringing net income to $219.9 million for fiscal 2023 compared to $254.6 million for fiscal 2022.

Our operating margin for the quarter was 25, 2% compared to 27, 4% for the fourth quarter of fiscal 2022 and for the full year. Our operating margin was 21, 5% compared to 24, 4% for the same period last year.

Thomas B. Heacock: Income tax expense as a percentage of pretax net income for both the current and prior year fiscal quarter was 23%, bringing fourth quarter net income to $79 6 million for fiscal 2023 compared to $87 8 million for fiscal 2022.

Income tax expense as a percentage of pretax net income for both the current and prior year full year periods was 24%, bringing net income to $219 9 million for fiscal 2023 compared to $254 6 million for fiscal 2022.

Thomas B. Heacock: Our press release also included a balance sheet as of February 3rd, 2024, which included the following: inventory of $126.3 million, which was up about 1% from the same time a year ago, and total cash and investments of $315.4 million, which was after payment of $196.7 million in dividends during the year. We ended the quarter with $128.8 million in fixed assets net of accumulated depreciation. Our capital expenditures for the quarter were $9.3 million, and depreciation expense was $5.9 million. For the full year, capital expenditures were $37.3 million, and depreciation expense was $20.8 million.

Thomas B. Heacock: Our press release also included a balance sheet as of February three 2024, which included the following inventory of $126 3 million, which was up about 1% from the same time, a year ago, and total cash and investments of $315 4 million, which was after payment of $196 7 million.

Thomas B. Heacock: And dividends during the year.

We ended the quarter with $128 8 million in fixed assets net of accumulated depreciation our capital expenditures for the quarter were $9 3 million and depreciation expense was $5 9 million.

Thomas B. Heacock: For the full year capital expenditures were $37 3 million and depreciation expense was $20 8 million.

Thomas B. Heacock: Fiscal 2023 capital spending was broken down as follows: $35.9 million for new store construction, store remodels, and technology upgrades, and $1.4 million for capital spending at the Corporate Headquarters and Distribution Center. During the quarter, we opened four new stores and completed four full store remodels, two of which were relocations to a new outdoor shopping center. We also closed three stores, bringing our full year count to nine new stores, 18 full store remodels, and six store closures. Of our 18 full remodels during the year, 11 were relocations to new outdoor shopping centers, reflecting our ongoing strategy of ensuring that we are located in the best shopping environment in each of our markets, chemo liberally over the last three years. Forty-two of our fifty-six full remodels have been relocations to new outdoor centers.

Thomas B. Heacock: Fiscal 2023 capital spending was broken down as follows $35 9 million for new store construction store, Remodels and technology upgrades and $1 4 million for capital spending at the corporate headquarters and distribution Center.

Thomas B. Heacock: During the quarter, we opened four new stores and completed four full store remodels, two of which were relocations and a new outdoor shopping centers. We also closed three stores, bringing our full year counts to nine new stores 18, full remodels and six store closures.

Thomas B. Heacock: Of our 18 full remodels during the year of 11 were relocations to new outdoor shopping centers, reflecting our ongoing strategy of ensuring that we are located in the best shopping environment in each of our markets.

Thomas B. Heacock: Cumulatively over the last three years.

42 of our 50 56 full remodels have been relocations to new outdoor centers.

Adam J. Akerson: Besides making better locations, these remodels also frequently enable us to take on more space with our new stores. For two of our recent projects, the extra square footage allowed us to close our standalone used store and move everything back under one roof. Current plans for fiscal 2024 include opening eight new stores and completing 15 to 19 full remodel projects, with at least half of the planned remodels being relocations to new outdoor centers. We have also closed two stores year-to-date, with two additional planned store closures in early April. Buckle ended the year with 444 retail stores in 42 states, compared with 441 stores in 42 states at the end of fiscal 2022.

Thomas B. Heacock: Besides making better locations. These remodels also frequently enable enable us to take on more space with our new stores for two of our recent projects the extra square footage allowed us to close our stand alone <unk> store and move everything back under one roof.

Thomas B. Heacock: Current plans for fiscal 2024 include opening eight new stores and completing 15% to 19 full remodel projects with at least half of the planned remodels being relocations to new outdoor centers.

Thomas B. Heacock: We also have closed two stores year to date with two additional planned store closures in early April buckle.

Thomas B. Heacock: Buckle ended the year with 444 retail stores in 42 states compared with 441 stores in 42 states at the end of fiscal 2022, and now I will turn it over to Adam <unk> Vice President of Finance.

Adam J. Akerson: And now I'll turn it over to Adam Akerson, Vice President of Finance. Women's merchandise sales for the quarter were down about 8% against the prior year fiscal quarter and represented approximately 41% of sales compared to 42.5% in the prior year. On a 14-week comparable basis, women's merchandise sales were down approximately 12.5%. Average denim price points increased from $79.75 in the fourth quarter of fiscal 2022 to $81.25 in the fourth quarter of fiscal 2023, while the overall average women's price point increased about 1.5 percent from $50.30 to $51.

Adam: Women's merchandise sales for the quarter were down about 8% against the prior year fiscal quarter and represented approximately 41% of sales compared to 42, 5% in the prior year on.

Adam: On a 14 week comparable basis women's merchandise sales were down approximately 12, 5%.

Adam: Average denim price points increased from $79 75 in the fourth quarter of fiscal 2022 to.

Adam: To $81 25 in the fourth quarter of fiscal 2023, while the average overall average women's price points increased about one 5% from $50 30 to $51.

Adam J. Akerson: On the men's side, merchandise sales for the quarter were down about 2% against the prior year fiscal quarter, representing approximately 59% of total sales, compared to 57.5% in the prior year. On a 14-week comparable basis, men's merchandise sales were down approximately 5.5%. Average denim price points increased from $86.25 in the 4th quarter of Fiscal 2022 to $87.15 in the 4th quarter of Fiscal 2023. For the quarter, overall average men's price points increased approximately 3% from $54.50 to $56.05. On a combined basis, accessory sales for the 14-week quarter were down approximately 7.5% against the prior year 14-week comparable period, while footwear sales were down about 41%. These two categories accounted for approximately 11% and 6%, respectively, of fourth quarter net sales, which compares to 10.5% and 9% for each in the fourth quarter of fiscal 2022. For the quarter, average accessory price points were up approximately one and a half percent, and average footwear price points were up ten and a half percent.

Adam: On the men's side merchandise sales for the quarter were down about 2% against the prior year fiscal quarter, representing approximately 59% of total sales compared to 57, 5% in the prior year.

Adam: On a 14 week comparable basis men's merchandise sales were down approximately five 5%.

Adam: Average denim price points increased from $86 25 in the fourth quarter of fiscal 2022 to $87 15 in the fourth quarter of fiscal 2023 for.

Adam: For the quarter overall average men's price points increased approximately 3% from $54 50 to $56 <unk>.

Adam: On a combined basis accessory sales for the 14 week quarter were down approximately seven 5% against the prior year 14 week comparable period, while footwear sales were down about 41%.

Adam: These two categories accounted for approximately 11% and 6% respectively of fourth quarter net sales, which compares to 10, 5% and 9% for each in the fourth quarter of fiscal 2022.

Adam: For the quarter average accessory price points were up approximately one 5% and average footwear price points were up 10, 5%.

Adam: Denim accounted for approximately 44% of sales and tops accounted for approximately 29, 5%, which compares to 41, 5% and 30% for each in the fourth quarter of fiscal 2022.

Adam: Our women's denim business for the quarter was down about six 5% compared to the same 14 week period a year ago.

Adam J. Akerson: Denham accounted for approximately 44% of sales, and Tufts accounted for approximately 29.5%, which compares to 41.5% and 30% for each in the fourth quarter of fiscal 2022. Our women's denim business for the quarter was down about 6.5% compared to the same 14-week period a year ago. While the overall women's denim business was down, we were excited about the continued growth and the performance of our premium fits and fabrics in our Buckle Black label, which grew about 18.5% during the quarter. Our core BKE line also performed better than average. For tops, our fashion tops continue to be challenging, with many of our women's guests focusing on essential styles and easy-to-wear pieces.

Adam: While the overall women's denim business was down we were excited about the continued growth in the performance of our premium fits in fabrics and our buckle Black label, which grew about 18, 5% during the quarter.

Adam: Our core BK any line also performed better than the average.

Adam: For tops, our fashion tops continued to be challenging with many of our women's guests focusing on our central styles and easy to wear pieces.

Adam: Also compared to the same 14 week period ago.

Adam: Our men's business, our men's denim business was down about 1%, which was primarily the result of reducing our inventory of street fashion brands.

Adam: In our core denim brands, we saw positive trends for the quarter with the business and BK and buckle black both improving year over year.

The men's business had a nice performance in short sleeved Tees shops soft shells invest in several of our accessory categories. We also saw strong sell throughs in our private branded woven knits and sweaters for the quarter.

Adam J. Akerson: Also, compared to the same 14-week period ago, our men's business, our men's denim business was down about 1%, which was primarily the result of reducing our inventory of street fashion brands. In our core denim brands, we saw positive trends for the quarter, with business in BKE and Buckle Black both improving year over year. The men's business had a nice performance in short-sleeved tees, soft shells, and vests, and several of our accessory categories. We also saw strong sell-throughs in our private-branded wovens, knits, and sweaters for the quarter.

Adam: Our Q4 comparisons also continues to be challenged with declines in our hey, Dude volume, particularly on the men's side.

Adam: Fourth quarter net sales for our men's business without hey, Dude compared to the same 14 week period, a year ago were down about one 5%.

Adam: During the quarter, we continued to see nice growth in our youth business with combined youth business growing approximately 4% over the prior year 14 week period.

Adam: Our overall private brand penetration continued to grow as our buying teams continue to develop and deliver a strong assortment across all categories. Private label represented approximately 50% of Q4 sales compared with 48% a year ago and 46% for fiscal 2023, compared with 44, 5% in fiscal 2022.

Adam J. Akerson: Our Q4 comparisons also continue to be challenged with declines in our Hey Dude volume, particularly on the men's side. Fourth quarter net sales for our men's business without Hey Dude, compared to the same 14-week period a year ago, we're down about one and a half. During the quarter, we continue to see nice growth in our youth business, with combined youth business growing approximately 4% over the prior year 14-week period Our overall private brand penetration continued to grow as our buying teams continued to develop and deliver a strong assortment across all categories. Private label represented approximately 50% of Q4 sales compared with 48% a year ago and 46% for fiscal 2023 compared with 44.5% in fiscal 2022.

Adam: <unk>.

And with that we welcome your questions. Thank you.

Adam: Okay.

Speaker Change: Thank you as a reminder for participants if you'd like to ask a question. Please raise your hand and the zoom App alright to ask your questions. Please state your name and affiliation.

Speaker Change: Our first question is from Mauricio Serna or issue I'm going to go ahead and allow you to talk so frito Unmeet yourself.

Mauricio Serna Vega: Great. Good morning, Thanks for taking my questions.

Mauricio Serna Vega: Just wanted to know.

Mauricio Serna Vega: Maybe you can talk about a little bit more.

Mauricio Serna Vega: But what happened in February.

Mauricio Serna Vega: The 11, 5% constant decline loss.

Mauricio Serna Vega: The main drivers behind that and how are you thinking about it the rest of the quarter and then maybe.

Operator: And with that, we welcome your questions. Thank you. Thank you. As a reminder for participants, if you would like to ask a question, please raise your hand in the Zoom app. Prior to asking your question, please state your name and firm affiliation. Our first question is from Mauricio Serna. Mauricio, I'm going to go ahead and allow you to talk. Feel free to unmute yourself. Good morning.

Mauricio Serna Vega: On the merchandise margin.

Speaker Change: Thank you Steve.

Speaker Change: The mild expansion in Q Q4, maybe you could talk about what was the driver behind that and how are you thinking about it more 24 and then just lastly, just wanted to check the numbers that you've talked about.

Speaker Change: Store openings I think you called out <unk>.

Speaker Change: <unk> stores and closing more stores, a net openings in 14.

Mauricio Serna Vega: Thanks for taking my questions. I just wanted to know, like, maybe you could talk a little bit about what happened in February, you know, with the 11.5% consulate decline. What were the main drivers behind that? And how are you thinking about it for the rest of the quarter? And then maybe on the merchandise margin, you know, trying to see the miles expansion in Q4, maybe you could talk about what was the driver behind that and how are you thinking about it for 24? And then, just lastly, just wanted to check the numbers that you said about the store openings. I think you called out 18 new stores and closed four stores. So in that opening 14, it just appears to be like a very nice acceleration compared to previous years. So I just was wondering, like, what is driving that? Thank you so much.

Speaker Change: Yes.

I would like to be like a very nice acceleration compared to previous year. So I was wondering what is driving that thank you so much.

Speaker Change: Okay. Thank you very <unk> for the questions.

Speaker Change: I can take a quick moment before answering to just thank our buckle teammates for a very successful 2023.

Speaker Change: I appreciate our team's great work in creating enjoyable shopping experience for our guests.

Speaker Change: I'm very much looking forward to working with our buckle talent in 2024.

Speaker Change: Now in regards to the questions.

Speaker Change: February business.

Speaker Change: I think we saw less.

Speaker Change: The excitement on the new spring product.

Speaker Change: Shorts, selling which was very strong a year ago was down.

Speaker Change: Probably some of our gals top selection for spring.

Dennis H. Nelson: Okay, thank you, Mauricio, for the questions. If I could take a quick moment before answering to just thank our Buckle teammates for a very successful 2023. I appreciate our team's great work in creating an enjoyable shopping experience for our guests. And I'm very much looking forward to working with our Buckle talent in 2024.

Speaker Change: We brought that in a little bit later, so we had an effect there.

Speaker Change: <unk>.

Speaker Change: Still saw a pretty good in denim selling.

Speaker Change: Uh huh.

Speaker Change: And a good reaction but.

Speaker Change: I think the traffic patterns were down some as well.

Dennis H. Nelson: Now, in regards to the questions, February business, I think we saw less excitement about the new spring product. Shorts selling, which was very strong a year ago, was down. We brought in probably some of our gals' top selection for spring.

Speaker Change: On the increase of new stores locations.

Speaker Change: A few years ago, we did not do outlet situations.

Speaker Change: And.

Speaker Change: In a year or two ago, we did a.

Dennis H. Nelson: We brought that in a little bit later, so we had an effect there, but we still saw pretty good denim sales and a good reaction. I think the traffic patterns were down some as well. On the increase of new stores and locations. A few years ago, we did not do outlet situations, and a year or two ago, we did a store in an outlet with Tanger that is our regular store, even though it's in an outlet. And that worked pretty well.

Speaker Change: Store in an outlet with Tanger.

As our regular store a militant in outlet.

Speaker Change: And that worked pretty well and so we have a good relationship with Tanger and Simon.

Speaker Change: Revealing the.

Speaker Change: What was used to be strictly outlet to do our stores.

Speaker Change: Typical store and Thats worked well so its given us more options.

Thomas B. Heacock: And so we have a good relationship with Tanger and Simon on reviewing what was used to be strictly an outlet to do our stores as a typical store. And that's worked well. So it's given us more options, as well as some changes in some smaller markets in the past couple of years that have given us opportunities as we look outside to locations and power centers and such, which we did not before. So, a popular bluff last year that we opened in Missouri was an example of that. And that has worked well, so it's given us new opportunities there. And did I miss a question? Mauricio, this is Tom.

Speaker Change: As well as we've seen some changes in some set some smaller markets in the.

Speaker Change: Past couple of years that.

Speaker Change: Has given us opportunities as we look outside to locations in power centers, and such which we did not before.

Speaker Change: So like our Poplar Bluff last year that we opened in Missouri. So as an example of that and that has worked well so thats given us new opportunities there.

Speaker Change: And did I Miss a question.

Thomas B. Heacock: I'll just clarify. I think you were asking about 2024 new store plans and remodel plans. What we said was eight new stores for 2024, so we have planned 15 to 19 full remodels, with half of the remodels being relocations to new outdoor centers. And then for now, we've already closed 2 stores so far this year, and 1 of those is a youth store moving back into the full line store. So it's all under 1 roof.

Speaker Change: So this is Tom I'll just clarify then you were asking about 2024, new store plans and remodel plans, what we said was eight new stores.

Thomas B. Heacock: For 2024 as always have planned 15 to 19 full remodels with half of the Remodels being relocations new outdoor centers then for now we've already closed two stores. So far this year and one of those is a <unk> store moving back into the full line stores with all under one roof and then we have two more planned early in April.

Thomas B. Heacock: And then we have 2 more plans early in April. And then, I think, the last question was on merchandise margin drivers for the 4th quarter. Merchandise margins for all of 2023 hung in really strong and improved as we went through the year. The team did a great job of managing inventory. I mean, managing markdowns.

Thomas B. Heacock: I think the last question was on merchandise margin drivers for the fourth quarter and merchandize margins for for all of 2023 hung in really strong and improved as we went through the year.

Thomas B. Heacock: Team did a great job of managing inventory managing managing markdowns and so part of that is mix shift.

Thomas B. Heacock: And so part of that is a mixed shift. Some of that, I mean, private label at 50%. I think that's an all-time high for private label.

Thomas B. Heacock: I mean private label at 50% I think that's an all time high of private label, that's been accretive to margins a little bit of benefit from from freight costs coming down.

Operator: That's been accretive to margins. A little bit of benefit from freight costs coming down, and then partially offset by a slight increase in shrink during the year. So those are the main drivers for Q4 margins, which are pretty consistent with Q3. There are no further questions in queue. As a reminder, if you would like to ask a question, please raise your hand in the Zoom app. Looks like we have another question from Mauricio, and go ahead and unmute him at this time.

Thomas B. Heacock: And then partially offset by a slight increase in shrink during the year. So those are the main drivers for Q4 margins, which are pretty consistent with Q3.

Speaker Change: There are no further questions in queue. As a reminder, if you would like to ask a question. Please raise your hand and the zoom app.

Speaker Change: It looks like we have another question from Mauricio and go ahead, and our new him at this time.

Mauricio Serna Vega: Thank you. Just a couple of follow-ups. You know, maybe you could elaborate a little bit more on what you're seeing in footwear. It seems, you know, the category seems, you know, challenged despite, you know, maybe like, you know, already having some impact last year from, you know, Hey Dude being soft. Maybe you could elaborate on that.

Mauricio Serna Vega: Thank you just a couple of follow ups.

Mauricio Serna Vega: Maybe you can elaborate.

On what Youre seeing in footwear.

Mauricio Serna Vega: Same thing on the category.

Mauricio Serna Vega: It used to be challenged despite lapping maybe line already that some impact last year from <unk>.

Mauricio Serna Vega: Maybe if you can.

Speaker Change: To elaborate on that and then.

Thomas B. Heacock: And then, you know, you talked about how you have been doing a lot of remodeling and repositioning of the stores, a lot of these to off-mall locations. Maybe could you remind us at this point, like roughly what your off mall versus mall exposure is? You have the mall explosion; I think we're I mean, again, we've had a large number of remodels and broken that out how many we've moved off malls. We're still primarily mall-based and a lot of lifestyle centers; I think we're still 70% mall-based. And so, you know, Brad and Dennis do a great job of reviewing that situation by situation to, again, make sure we're in the best shopping center.

Speaker Change: You've talked about how you have.

Speaker Change: <unk> been doing a lot of remodeling and acquisitions of the Sars.

Speaker Change: Allow me to off mall locations, maybe could you remind us at this point like roughly what is your off mall versus mall exposure.

Speaker Change: Yet the mall exposure I think we're I mean again, we've had a large number of remodels and broke that out how many we've moved off malls. We're still primarily mall based and there are a lot of lifestyle centers I think still 70% mall based and so Brett Dennis do a great job of reviewing that situation by situation to again make sure we're in the.

Speaker Change: Best shopping centers, so, there's probably still more opportunities to continue that trend.

Dennis H. Nelson: So there's probably still more opportunities to continue that trend. Yes, and on the Hey Dudes. Last year, 40 million of our business was down in Haydude footwear. It was close to half of our total loss for the year.

Speaker Change: Yes, and on the <unk> <unk>.

Speaker Change: Last year.

<unk> million dollars.

Speaker Change: As our business.

Speaker Change: That's close was down in Hagen footwear close to half of our total loss for the year.

Dennis H. Nelson: And I think the team did a good job of managing inventories to the right level. We still had some good sell-throughs there, but at much different inventory levels. As far as new footwear going forward, we're starting to see a little bit of excitement in the GALS product and stuff, but nothing that's going to replace the Hey Dude volume at the present time. Our next question is from Nancy Frona. Nancy, I'm going to go ahead and allow you to unmute yourself. Good morning. This is Nancy Frona with 1492 Capital Management.

Speaker Change: And I think the team did a good job of.

Speaker Change: Managing inventories.

Speaker Change: To the right level, we still have some good sell throughs, there, but at much different inventory levels as far as new footwear going forward, we're starting to see.

Speaker Change: A little bit.

Speaker Change: Excitement in the gals product and staff, but nothing thats going to replace the Hey, Dude volume at the present time.

Speaker Change: Our next question is from Nancy <unk>, Nancy I'm going to go ahead and allow you to meet yourself.

Speaker Change: Good morning. This is Nancy found out with 14 92 capital management.

Nancy: Just a quick question have you seen any meaningful change in the way your customers are poor for their purchases.

Nancy Frona: Just a quick question. Have you seen any meaningful change in the way your customers are paying for their purchases? Whether it's sort of the buy now, pay later mode or any meaningful differences over time. Good morning, Nancy.

Nancy: Whether it's sort of a buy now pay later mode or.

Nancy: Any meaningful differences over time.

Thomas B. Heacock: Thanks for the question. I don't I don't think we've seen real meaningful shifts. I think it's been pretty consistent. We do offer buy now pay later services, which we have for several years, and it's really small in store and obviously much bigger online, but I don't think that we've seen meaningful shifts in payment methods this year.

Nancy: Hey, good morning, Nancy Thanks for the question I don't I don't think we've seen real meaningful share. So I think it's been pretty consistent we do offer buy now pay later services, which we have for for several years, and it's really small and store and obviously much bigger online, but I don't think that we haven't seen meaningful shifts in payment methods. This year.

Alan Glenn: Our next question is from Alan Glenn. Alan, I'm going to go ahead and prompt you to unmute yourself. Good. Thank you. And congratulations on another excellent quarter. My question relates to the store refreshes that are ongoing. And can you share with us the kind of success that the refresh store generates in terms of maybe an average sales increase? Well, thank you, Alan, for that question. It's a little difficult to say because we've come off such record years.

Speaker Change: Our next question is from and then Glenn I think.

Glenn: I'm going to go ahead and promptly to Unmeet yourself.

Good thank you and congratulations on that.

Glenn: Excellent quarter.

Glenn: My question.

Glenn: It relates to the store refreshes that are ongoing.

Speaker Change: Can you share with us the kind of success that the refreshed store generates in terms of maybe average sales increase.

Speaker Change: Well, thank you Alan for the.

Speaker Change: Question.

Alan: It's a little difficult to say because we've come offsets record years.

Dennis H. Nelson: But we're finding that the outdoor centers we're going to are about 30% larger, and we're finding that guests are staying longer in the store, enjoying the ability to see more presentations and such there. And in cases where stores maybe have been in an older mall that has not kept up, when we move them, we're seeing some very nice gains on those locations. Other locations might be a very solid store, but we're improving the location and the future set up, and so you don't see as big a gain. But as I mentioned, we're coming off a couple record years and doing these changes, and we feel very good that this is the path to take. But I can't give you a clear growth number to put down.

Speaker Change: But we're finding that the outdoor centers, we're going to is about 30% larger and refining the guest.

Speaker Change: Is staying longer in the store enjoying the ability to see more presentations and such there.

Speaker Change: The sell in.

Speaker Change: And in cases, where.

Speaker Change: The stores maybe have been in.

Speaker Change: Older Mall that is has not kept up literally movement, we're seeing some very nice.

Speaker Change: Gains on those those locations.

Speaker Change: Other locations might be a very solid store, but we're improving the location and the future set.

Speaker Change: Set up and so you don't see as big a gain.

Speaker Change: But as I mentioned, we're coming off a couple of record years.

Speaker Change: And doing these changes we feel very good that this is.

Speaker Change: The path to take.

Speaker Change: But I can't give you a clear.

Speaker Change: Growth number two.

Speaker Change: To put down.

Operator: There are no further questions in queue. As a reminder, if you would like to ask a question, please raise your hand in the Zoom app. It looks like there are no further questions at this time. I will now turn the call back over to Buckle for any closing remarks. Thank you everybody for your participation and joining us today. We hope you have a wonderful day and enjoy your weekend. Thank you.

Speaker Change: There are no further questions in queue as a reminder, if you'd like to ask a question. Please raise your hand and zoom app.

Speaker Change: It looks like there's no further questions at this time I will now turn the call back over to buckle for any closing remarks.

Buckle: Yeah. Thank you everybody for your participation and joining US today, we hope you have a wonderful day and enjoy your weekend.