BUCKLE INC Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Dennis Nelson: Thanked teammates for strong year-end finish, highlighted relocating 51 of 74 remodels over 4 years into outdoor centers, focus on high-quality merchandise, and digital experience investment with Q4 e-commerce sales up 12%.
• Tom Heacock: Discussed financial results: Q4 net income $77.2M vs $79.6M prior year; Q4 net sales down 0.8% to $379.2M; comparable store sales up 3.9%; online sales up 6.4%; full year net sales down 3.4% to $1.218B; comparable store sales down 2.7%; online sales down 4.3%; Q4 gross margin 52.6% (up 30bps), full year gross margin 48.7% (down 40bps); Q4 SG&A 27.2% of sales vs 27.1% prior year; Q4 operating margin 25.4% vs 25.2% prior year; full year operating margin 19.8% vs 21.5% prior year.
• Adam Akerson: Talked about segment details including youth sales growth, private label penetration (51% in Q4, 47.5% full year), and category performance for women's, men's, accessories, and footwear.

Segment Performance

• Women's: Fourth quarter sales up ~4.5% vs prior year fourteen-week fiscal quarter, representing approximately 43% of sales. Thirteen-week comparable sales increased ~11%. Denim sales grew 15% with private label jeans up over 20%; average denim price point rose from $81.25 in Q4 2023 to $83.10; overall average women's price point up ~1%.
• Men's: Fourth quarter sales down ~4% vs prior year fourteen-week fiscal quarter, representing approximately 57% of total sales. Thirteen-week comparable sales increased to ~1%. Men's denim up ~1.5%, knits and tees strong; outerwear steady. Average denim price point decreased from $87.15 in Q4 2023 to $86.30; overall average men's price point up ~0.5%.
• Accessories: Fourth quarter sales up ~7.5% vs prior year thirteen-week comparable period, accounting for approximately 11% of net sales. Average price points down ~2.5%.
• Footwear: Fourth quarter sales down ~7% vs prior year thirteen-week comparable period, accounting for approximately 5% of net sales. Average price points up ~4%.
• Youth: Fourth quarter total sales up ~10% vs prior year comparable period. Denim accounted for ~45% of sales and tops ~29%; private label penetration increased to 51% in the quarter, 47.5% for the full year.

Guidance

• The company reiterates its policy of not giving future sales or earnings guidance. However, it expresses optimism about managing challenges from tariffs and the economy with the strength of its teams and vendor relationships.

Risks

• Tariffs: Uncertainties surrounding tariffs and their impact on costs, but the company feels confident in managing through them with vendor relationships.
• Economy: Unknowns in economic conditions that could affect sales and margins.
• Vendor Relocations: Potential costs and impacts from vendors relocating production to other countries, though the company focuses on quality, fashion, and fit rather than price.

Question and Answer

• Q: Elaborate on merchandise margin gains and tariffs mitigation. A: Merchandise margins up due to increased private label and better regular price selling; tariffs managed through strong vendor relationships with confidence in working through challenges without significant harm.
• Q: Store traffic and sweat jeans. A: No traffic counters, estimated flat traffic based on February sales down 1%; sweat jeans not a major part of the business, with some knit denim and jogging pants in limited styles.
• Q: Inventory sourcing and online initiatives. A: Predominantly sourced from China, with some from Vietnam and Bangladesh; online initiatives include website improvements, marketing focus, and free shipping for loyalty members to enhance guest experience and sales.