Q4 2025 The Buckle Inc Earnings Call
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Speaker Change: Good morning, and thank you for standing by. Welcome to Buckle's fourth quarter earnings release webcast. As a reminder, all participants are currently in a listen only mode. A question and answer session will be conducted following the company's prepared remarks with instructions given at that time.
Speaker Change: Members of Buckle's management on the call today are Dennis Nelson, President and CEO .
Tom Heacock, Senior Vice President of Finance .
Speaker Change: Joshua N. C. F. O. Adam Akerson, Vice President of Finance and Corporate Controller, and Brady Fritz, Senior Vice President General Counsel and Corporate Secretary.
Speaker Change: As they review opening 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: Dave Harbor statement under the private security litigation reform act of 1995.
Speaker Change: Off-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.
Speaker Change: Accordingly, the company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements.
Speaker Change: Such factors include but are not limited to those described in the company's findings with the Securities and Exchange Commission.
Speaker Change: 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 variant will not be realized.
Speaker Change: The company does not authorize the reproduction or dissemination of transcripts or audio recordings or the company's quarterly conference calls without its express wear in consent. Any unauthorized reproductions or recordings of the cause should not be relied upon as the information may be inaccurate.
Speaker Change: As a reminder, these web tests is being recorded. And now, and I have now like to turn the carpet over to your host, Dennis Nelson.
Dennis Nelson: Good morning and thank you for joining in today's call. Before turning the call over to Tom to go through results for the quarter, I want to take the opportunity to thank our dedicated teammates for delivering such a strong finish to the year.
Dennis Nelson: I'm proud of our team's efforts and steadfast commitment to our specialty store approach of providing great product and outstanding service for every guest.
Dennis Nelson: We did this by first ensuring each of our locations a position to provide the best possible experience in its market.
Dennis Nelson: This is evidence by our ongoing and successful program locating stores out of certain malls and into higher traffic outdoor centers.
Dennis Nelson: Over the last four years, 51 of our 74 remodels have been relocations in the new outdoor centers.
Dennis Nelson: We also focused on delivery and a continuous flow of high quality and on-trend merchandise.
Dennis Nelson: Allowing us to grow merchandise margins and end the year with inventory down over 4% and well-balanced across categories.
Dennis Nelson: During the year we also made intentional investments in our digital experience, allowing for strong economic performance in the back half of the year. For the fourth quarter, total e-commerce sales grew 12% against the same period a year ago.
Dennis Nelson: As we move into 2025 with unknowns surrounding terrorists in the economy, we are optimistic that with the strength of our teams and vendor relationships, we will be able to successfully manage through the challenges of the year. And with that, I will turn the call over to Tom.
Good morning.
Tom: March 14, 2025, Fresh Released, Report of the Net Income for the 13-week fourth quarter ended February 1, 2025
was $77.2 million.
Tom: $1.53 per share on a diluted basis, which compares to net income of 79.6 million.
Tom: Or $1.59 per share on a diluted basis for the prior year, 14-week 4-quarter, which ended February 3rd, 2024.
Tom: Net income for the 52-week fiscal year which ended February 1st, 2025 .
Tom: was $195.5 million or $3.89 per share on a diluted basis compared to net income of $219.9 million or $4.40 per share on a diluted basis for the prior year, 53 week fiscal year.
Tom: and in February 3rd, 2024. Net sales for the 13th and 4th quarter decreased 0.8% to 379.2 million compared to net sales of 382.4 million for the prior year of 14th and 4th quarter.
Tom: Comparable source sales for the 13-week fiscal quarter increased 3.9% in comparison to the same 13-week period a year ago, and our online sales increased 6.4%.
Tom: To $69.7 million for the 13-week fiscal quarter compared to $65.5 million for the prior year 14-week fiscal quarter.
Tom: Compared to the same 13-week period a year ago, online sales increased 12%.
Tom: Net Sales for the 52-week fiscal year decreased 3.4% to 1.218 billion compared to net sales of 1.261 billion for the prior year 53-week fiscal year.
Tom: Comparable source sales for the 52-week year, decreased 2.7% in comparison of the prior year, or the same 52-week period in the prior year, and our online sales decreased 4.3%.
Tom: 297.7 million for the 52-week fiscal year compared to 206.5 million for the prior year 53-week fiscal year. Compared to the same 52-week period ago, our online sales decreased 2.5%.
Tom: For the quarter, UPTs decreased slightly, the average retail increased approximately 1% and the average transaction value increased about 1%.
Tom: For the year, UPT's decreased approximately 2%, the average retail increased approximately 3%, and the average transaction value increased approximately 1%.
Tom: Gross margin for the quarter was 52.6% of 30 basis points from 52.3% in the fourth quarter of 2023 with the current quarter increase being the result of a 40 basis point increase in merchandise margins along with a 20 basis point reduction in distribution buying costs.
Tom: which were partially out of that by a 30 basis point increase in occupancy cause.
Tom: For the full-year gross margin was 48.7%, down 40 basis points from 49.1% in the prior year. And the current quarter decline was the result of an 85 basis point increase in occupancy costs, and a 10 basis point increase in distribution of buying costs.
Tom: which were partially offset by a 55 basis point improvement in merchandise margins.
Tom: Selling General Administrative Expenses for the Quarter were 27.2% of sales, compared to 27.1% for the fourth quarter of 2023, and for the full year SGNA was 28.9% of net sales, compared to 27.6% for the same period last year.
Tom: The fourth quarter increase was due to a 50 basis point increase in incentive compensation of rules. A 15 basis point increase related to e-commerce shipping expenses and a 10 basis point increase in GNA salaries.
Tom: These increases were partially offset by a 25 basis point decrease in accrued PTO.
Tom: A 15-buck basis point decrease in marketing spend, and a 10 basis point increase in store labor-related expenses, along with a 15 basis point decrease in other SGNA expense categories.
Tom: Our operating margin for the quarter was 25.4% compared to 25.2% for the fourth quarter of fiscal 2023 and for the full year operating margin was 19.8% compared to 21.5% for the same period last year.
Tom: Income Tax Expense of the percentage of pre-tax net income for the quarter was 23.7%.
Tom: Compared to 23% for the fourth quarter of fiscal 2023, bringing fourth quarter net income to 77.2 million for fiscal 2024, compared to 79.6 million for fiscal 2023.
Tom: For the full-year income tax expense was 24.2% of pre-tax net income compared to 24% of fiscal 2023, bringing net income to 195.5 million in fiscal 2024 compared to 219.9 million in last year.
Tom: Our press release also included a balance sheet as of February 1, 2025, which included the following [inaudible]
Tom: Inventory of 120.8 million, which was down 4.4% from the same time a year ago, and 318.8 million of total cash and investments which was after payment of 198 million in dividends during the year.
Tom: We ended the year with a 145.8 million and fixed assets net of accumulated depreciation.
Tom: Our capital expenditures for the quarter were 9.8 million and depreciation expense was 6.4 million. For the full year capital expenditures were 42.3 million and depreciation expense was 23 million.
Tom: Full-year capital spending is broken down as follows, 40.3 million for new store constructions, store remodels and technology upgrades, and 2 million for capital spending at the corporate headquarters and distribution center.
Tom: During the quarter we open one new store, completed five full remodels and closed five stores which brings our full year account to eight new stores, 18 full remodels, half of which were relocations into new outdoor centers and 11 store closures.
Tom: Current plans for fiscal 2025 include opening seven new stores and completing 18 to 22 full remodel projects, with at least half of the planned remodels being relocation to new outdoor centers.
Tom: We've also closed one store so far a year to date with no additional store closures currently planned.
Speaker Change: Buckle ended the year with 441 retail stores in 42 states, compared with 444 stores in 42 states at the end of fiscal 2023. And now we'll turn it over to Adam Akerson, Vice President of Finance.
Adam Akerson: Thanks, Thomas. Good morning. Women's merchandise sales for the quarter were up about 4.5% against the prior year 14-week fiscal quarter and represented approximately 43% of sales. On a 13-week comparable basis, women's merchandise sales increased approximately 11%.
Adam Akerson: The women's business continues to be led by strong performance in our denim category with denim sales increasing 15 percent driven by continued out performance in our private branded jeans with private label growing over 20 percent.
Adam Akerson: Average denim price points increased from $81.25 in the 4th quarter of fiscal 2023 to $83.10 in the 4th quarter of fiscal 24, while the overall average women's price point increased about 1% from $51.51 in 55 cents.
Adam Akerson: Confirmating the favorable denim trend during the year, we also saw strong acceleration in several other women's categories, most notably in myths, sweaters and accessories.
Adam Akerson: On the men's side, merchandise sales for the quarter were down about 4 percent against the prior year 14-week fiscal quarter representing approximately 57 percent of total sales. On a 13-week comparable basis, men's merchandise sales increased approximately 1 percent.
Adam Akerson: We're pleased to see nice increases in our men's denim business, which was up about one and a half percent for the comparable period, as well as continued strength in our knit and to your business.
Adam Akerson: We also thought sitting growth in our out-of-wear category as we continued to identify areas for investment in a variety of styles.
Adam Akerson: Average denim price points decreased from $87.15 in the fourth quarter of fiscal 23 to $86.30 in the fourth quarter of fiscal 24.
Adam Akerson: For the quarter, overall average men's price points increased approximately 0.5% from $56.05 to $56.30.
Adam Akerson: On a combined basis, accessory sales for the 13-week order were approximately 7.5% against the prior 13-week comparable period.
Adam Akerson: While footwear sales were down about 7%. These two categories accounted for approximately 11% and 5% respectively of fourth quarter net sales, which compares to 11% and 6% for each in the fourth quarter of fiscal 23.
Adam Akerson: For the quarter, average accessory price points were down about two and a half percent, while average footwear price points were up about 4 percent.
Adam Akerson: I also want to combine basis our youth business continued building momentum from back to school through the holiday selling season with total youth sales for the quarter increasing approximately 10% against the comparable period a year ago.
Adam Akerson: For the quarter, denim accounted for approximately 45% of sales and tops accounted for approximately 29% which compares to 44% in 29.5% for each and the fourth quarter of fiscal 2023.
Adam Akerson: Fueled by sustained growth in our private labelled denim and a strong presentation across our other categories, we continue to see increases in our private labelled penetration during the quarter.
Adam Akerson: For the quarter, Private Label represented 51% of sales versus 50% in the fourth quarter of 2023. And this growth brings our full year private label mix to 47.5% versus 46% in the prior year.
And with that, we will open your questions.
Thank you.
Speaker Change: 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 questions, please stay your name and from affiliation.
Speaker Change: Our first question is from Mauricio Serna. Mauricio, I'm going to go ahead and meet you at this time.
Mauricio Serna: Great. Good morning. Thanks for taking my question. I'm from UBS, by the way, sorry. Yeah, could you just elaborate a little bit more what you saw on the merchandise margin? I think you called out for 40 basis points.
Gaines, what is that attributed to? And then, uh,
Speaker Change: Could you just also like remind us like the other drivers in gross margin and your cue for performance and then the second point on you know of course there's been a lot of talk about Paris you know like could you just like remind us [inaudible]
Speaker Change: Like in the prior administration, what was your mitigation plan back then? And you know, what did you see in your merge margins as a result of, you know, the tariffs? Thank you so much.
Good morning. On the merchandise margins.
Speaker Change: Their increase of our private label percentage through the holidays definitely had a positive effect on that, but also just better regular price selling.
Speaker Change: through a lot of the categories to keep the margins and less markdowns at the end of the season.
Speaker Change: Managed cost there. We feel confident that with that at this time we will be able to work through that without much harm. So, Tom, do you want to hit the gross margins?
Tom: Yeah, I mean, Dennis mentioned merchandise margins were a big driver. I mean, we're up 40 for the quarter and up 55 for the year today so some more trends there of increased private label and better merchandise margins that are better regular price on like Dennis called out and then the other driver is just [inaudible]
Tom: You know, leverage or lack of leverage on buying distribution and occupancy. So down about 10 basis points with the strong comps in the fourth quarter and down 95 for the year today.
Great, thank you.
Speaker Change: Okay, our next question is from John Bratz. John , if you are able to unmute, you can do so at this time.
Dennis? Yes, John . Are you?
John Bratz: Good. Thank you. Just sort of a trend question. You know, we're hearing a lot about a recession and so on. And how, how you see that
John Bratz: Maybe in your store trap I get this point and then secondly our resident apparel or fashion expert was talking about
John Bratz: Sweat Jeans, the other day, and I've been reading a little bit about it.
Speaker Change: Is that a product that's something that you will add to your portfolio? How do you think about that as an offering?
Speaker Change: Well, regarding the sweat jeans, I mean, we do have some knit denim in a very small way that a lot of young guys like. So that's a small part of our business. We have
Summer.
Speaker Change: Jogging type ants and different looks in the ladies that have been successful but is really not in a denim category.
Speaker Change: So, you know, I don't see that being any big player.
And I forgot the first part of your question, John .
Speaker Change: Traffic. Oh, store traffic. We don't have traffic counters in our stores.
Speaker Change: So with what's going on, the weather and everything that I mean, it just be a estimate of what's happening out there, you know, our February sales were down 1%. So by that I would, I would guess we're pretty flat traffic.
Speaker Change: Okay, our next question is from Alan Glenn, Alan, I'll go ahead and copy to a mute at this time.
There we go. Good morning. Good morning.
Speaker Change: Can you give us a rough analysis of your inventory sourcing from overseas?
Speaker Change: Well, it's still predominantly China. We do Vietnam, some Bangladesh. You know, we have, you know, we have over 200 vendors. So there's a lot of sourcing from many countries. There's, uh,
Our biggest ones would still be out of China.
Speaker Change: Are any of them planning to change their production to switch like to another country? Do you know?
Yes, and visiting with him that
Speaker Change: Their top personnel would relocate to different countries if it made sense. You know, there are some increased costs in some of the other countries that offset some of the
Speaker Change: China cost if there's terrorists, but the, you know, we've never been our product has never been a
Speaker Change: How low a price we can go. We're more concerned about quality fashion, the fit and then we get the our guests want the the newness and the quality product and that's what our focus is on.
Speaker Change: I just have one more. You've been making steady progress in increasing your online sales. Are you planning anything any new initiatives in that area?
Speaker Change: Thanks for the question. I mean, online was was a very strong performer in the second half of the year and especially in the fourth quarter like we called out and I think that was a point of emphasis as we came into last year that we talked about all year [inaudible]
Speaker Change: We engaged with an external third party to really do a complete review of our website, and we've talked about it on past calls but made a pretty comprehensive list of improvements to the site that improved. [inaudible]
Speaker Change: The guest shopping experience on the site, their ability to find product that increased on-site metrics as far as AOV and conversion until we're really pleased with the progress we made there.
Speaker Change: As we head into the fourth quarter of the back half of the year, we really focus externally on marketing activities and getting the right mix of
Speaker Change: of content and the content strategy, and also the right balance of focus on acquisition and retention and so continuing to build there in terms of marketing capabilities and spend there will be the primary focus but feel good about the site and where the site is.
Speaker Change: We also did free shipping, so we added an in October that also had a nice boost for the fourth quarter free shipping offer for all of our loyalty members if they opted into our loyalty program. And so that had a nice response as well.
Great. Thanks very much. Thank you.
Speaker Change: As there are many different participants, if you would like to ask a question, please raise your hand in the Zoom app.
Speaker Change: Okay, it looks like there are no further questions in queue.
Speaker Change: I will not turn the call back over to Buckle for any closing remarks.
Buckle: No questions will conclude the call today, so thank you everyone for your participation and enjoy the rest of the day.