BUCKLE INC Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Financials: Net income for the 13-week first quarter ended May 3, 2025, was $35.2 million ($0.70 per share) vs $34.8 million ($0.69) in prior year. Net sales increased 3.7% to $272.1 million. Comparable store sales up 3%, online sales up 4.5%.
• Gross Margin: Gross margin was 46.7%, a 70 basis point increase from 46% prior year, driven by 60 basis points in merchandise margins and 10 basis points in leverage from buying, distribution, and occupancy expenses.
• SG&A: Selling, general, and administrative expenses were 30.7% of net sales vs 29.8% prior year, driven by increased incentive compensation, health insurance, equity compensation, and other expenses, partially offset by decreases in e-commerce shipping and certain marketing expenses.
• Store Activity: Completed 5 full store remodels, closed 2 stores. Anticipate opening 7 new stores, 16 additional full remodel projects, and closing 1 youth store during remainder of year.

Segment Performance

• Women's: Merchandise sales increased about 10.5% year-over-year, representing approximately 50% of sales (compared to 47% last year). Average women's price points increased about 2% from $48 to $49.05.
• Men's: Merchandise sales were down about 2.5% year-over-year, representing approximately 50% of total sales (compared to 53% prior year). Overall average men's price points increased approximately 1.5% from $53.60 to $54.40.
• Accessories: Sales increased approximately 3.5% year-over-year; footwear sales were down about 7%. Accessories and footwear accounted for approximately 11% and 5.5% of net sales, respectively (compared to 11% and 6% prior year).
• Youth: Continued growth, increasing approximately 11.5% year-over-year. Denim accounted for approximately 43.5% of sales, and tops accounted for approximately 27% (compared to 43% and 27.5% prior year).
• Private Label: Represented 47.5% of sales versus 46% in the first quarter of 2024.

Guidance

• The company reiterates its policy of not providing future sales or earnings guidance. All forward-looking statements are subject to risks and uncertainties described in the company's SEC filings, and the company undertakes no obligation to update or revise statements except as required by law.

Risks

• Tariffs: Impact on gross margin, with some vendors having no cost increases and others having low to mid-single-digit increases; potential supply chain and cost pressures related to tariffs.

Question and Answer

Q: Elaborate on how are you thinking about the China tariffs and other tariffs impact on your gross margin as we head into second quarter, upcoming quarters? And driver behind the big increase in operating lease assets right of use.

A: Dennis Nelson said they are working with vendors, with some having no cost increases and others low to mid-single-digit; Tom Heacock stated the lease assets right of use are a function of new stores and remodels over the last 12 months.

Q: Driver of merchandise margin increase, occupancy leverage, and tariff on private label.

A: Dennis Nelson mentioned working closely with vendors sourcing other countries; Thomas Heacock said private label growth and strong regular price selling drove the 60 basis point merchandise margin increase; occupancy leverage from sales growth; no specific relocation of private label production mentioned.

Q: SG&A elevation and potential leverage.

A: Thomas Heacock said store payroll was flat as a percentage of sales but total payroll dollars were up, along with increases in incentive comp, health insurance, equity comp; store labor is variable based on top line results, with potential for SG&A leverage if comp sales continue to progress