The Buckle, Inc. (BKE) Earnings

Management highlights

### Overall Financial Results - Net income for the 13-week first quarter (ended May 2, 2026) was $46.9 million ($0.92 diluted per share), up from $35.2 million ($0.70 diluted per share) in the prior year quarter. - Net sales increased 6.1% YoY to $289 million, from $272 million in Q1 2025. Comparable store sales rose 5.1% YoY, while online sales increased 2.8% YoY to $47.7 million. - Units per transaction (UPTs) decreased ~1% YoY, while average unit retail rose ~4.5% and average transaction value rose ~3.5% YoY. - Gross margin was 46.2%, a 50 basis point decrease from 46.7% in Q1 2025. 10 basis points of the decline came from lower merchandise margins, and 40 basis points came from increased buying, distribution, and occupancy expenses. - Selling, general and administrative (SG&A) expenses were 25.6% of net sales, down from 30.7% in Q1 2025. This decrease was driven by a $19.1 million interchange fee litigation settlement recognized in the quarter. Excluding the settlement, SG&A was up 150 basis points YoY, driven by higher incentive/equity compensation (100 bps), higher store compensation (30 bps), and higher other SG&A costs (20 bps). - Operating margin was 20.6%, up from 16% in the prior year quarter. Income tax expense as a percentage of pre-tax income was 24.5% for both the current and prior year quarter. ### Balance Sheet and Capital Expenditures - As of quarter end, inventory was $150 million, up 13.5% YoY; total cash and investments totaled $324 million; net fixed assets were $169 million. - Quarterly capital expenditures totaled $14.7 million: $13.5 million went to new store construction, store remodels, and technology upgrades, and $1.2 million went to corporate headquarters and distribution center improvements. Depreciation expense was $6.5 million for the quarter. ### Store Operations - During Q1 2026, the company opened 3 new stores, completed 5 full store remodels (4 of which were relocations to new outdoor shopping centers), and closed 1 store. - Subsequent to quarter end through May, the company opened an additional 3 new stores, completed 2 more full remodels, and closed 1 more store, bringing year-to-date totals to 6 new stores, 7 full remodels, and 2 closures. - As of quarter end, Buckle operated 442 retail stores across 42 states, up from 439 stores at the end of Q1 2025.

Guidance

- The company's formal policy is not to provide future sales or earnings guidance. - Management projected that for the remainder of fiscal 2026, the company will open an additional 9 new stores and complete an additional 7 full store remodeling projects. - Management noted that the 100 basis point increase in incentive compensation in Q1 2026 included a small pull-forward of full-year accruals driven by the strong quarterly profitability, so this margin pressure is expected to ease through the rest of the fiscal year.

Segment performance

1. Women's segment: Sales increased 11% year-over-year (following 10.5% growth in Q1 2025), and contributed 52% of total net sales, up from 50% in the prior year quarter. Women's denim led growth with 8% YoY sales increase, and average denim price rose from $84.85 to $92. Strong growth was also recorded in alternative pants, tops, and denim shorts. 2. Men's segment: Sales increased 2% YoY, and contributed 48% of total net sales, down from 50% in the prior year quarter. Men's denim sales decreased 1.5% YoY, with average denim price dipping from $89.70 to $89.10. Private brands grew 0.5% YoY and accounted for over 75% of men's denim sales. Tops and shorts were key growth contributors for the segment. 3. Accessories: Sales increased ~6% YoY, and contributed 11.5% of total net sales (same as the prior year quarter). Average accessory price points rose ~5% YoY. 4. Footwear: Sales increased ~0.5% YoY, and contributed 11.5% of total net sales (same as the prior year quarter). Average footwear price points rose ~9% YoY. 5. Kids segment: Sales increased ~16% YoY, noted as an ongoing growth opportunity for the company. Denim accounted for 42.5% of kids segment sales (down from 43.5% YoY), and tops accounted for 28% of sales (up from 27% YoY). Across the whole company, private label represented 48% of total sales, up slightly from 47.5% in Q1 2025.

Risks & headwinds

- Forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from expectations, as detailed in the company's SEC filings. - Tariff cost pressure contributed to the 10 basis point merchandise margin contraction in the quarter. - Unhedged fuel costs have led to increased fuel surcharges on both inbound LTL freight for new product and outbound e-commerce freight, though impacts have been manageable so far.

Analyst Q&A

• Q: What caused the merchandise margin contraction and increased buying, distribution, and occupancy costs that pressured gross margin this quarter? /

  A: The 10 basis point merchandise margin decline came after record high merchandise margins in the prior year quarter, so management remains satisfied with current margin levels. Minor cost pressure from tariffs and a small pullback in men's denim margins drove the decline. The 40 basis point increase in occupancy-related costs was driven by higher rent and depreciation from an accelerated schedule of store opening and remodeling projects in the first part of this year, compared to last year when projects were weighted to the final three quarters. (251 words)

• Q: How is Buckle addressing rising fuel costs driven by Middle East tensions, and what impact should be expected on freight costs? /

  A: Buckle does not hedge fuel costs and has no locked-in contracts for fixed fuel pricing. The company has seen increased fuel surcharges on both inbound product freight and outbound e-commerce delivery, but these increases have been manageable so far and did not have a material impact on gross margin or SG&A in the first quarter. (113 words)

• Q: With widespread macro pressures including higher fuel costs, are you seeing consumer weakness in Buckle's customer base so far this year? /

  A: Management noted that February and March were strong months (partly supported by spring break travel, which positively impacts Buckle's business), and April was slightly slower, but overall the first quarter came in strong. Sell-through rates and inventory levels are healthy, and management expects the company's product offerings and value proposition will continue to be well received by customers for the rest of the year. (118 words)

• Q: Will the elevated incentive compensation accrual seen in Q1 continue through the rest of the year, and what is the status of Buckle's tariff refund claims? /

  A: Incentive compensation is accrued ratably based on full-year projected profitability, so the Q1 increase included a small pull-forward of accruals from the full year due to the strong quarterly performance. Pressure from this line item is expected to ease for the remainder of the year. For tariff refunds, Buckle filed a refund claim in Q1, received a small immaterial amount after quarter end, and expects additional refunds later with no material financial impact recorded to date. (137 words)