BKE - Earnings call transcript Q2 2018

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Operator

Ladies and gentlemen, thank you for your patience and standing by. And welcome to The Buckle’s Second Quarter Earnings Release. At this time, all of your participant phone lines are in a listen-only mode. And later, there will be an opportunity here for your questions [Operator Instructions]. And just a brief reminder, today's conference is being recorded. Molczyk, management CEO; call President Senior Tom Treasurer CFO; Buckle’s Nelson, are of Vice the Women’s and and of Merchandising. President Heacock, Kelli President of of on Bob today the Dennis Finance, Merchandising; Men’s Members and President Carlberg, Vice Senior Vice

following for Exchange financial expressed from and the future and filings Harbor their which the policy Safe forward-looking not second giving differ Company’s with statements, ended not have like August As they publicly but Commission. the would such it reiterate review X, or to guidance, earnings any any sales The in Securities the operating future results Safe Company quarter, or XXXX, they revise projected or statement. in of Such to, Harbor and all the beyond uncertainties be based Private material the of statement, change Securities under changes not may results those and Litigation forward-looking realized. Company��s factors the Act statements. Company’s results if include, Company’s Reform implied the limited clear or even are that performance any materially risks may described make by that implied to be those which the XXXX, are control. subject statements Accordingly, expressed made to future factors, or update will experience therein does not undertake forward-looking involve

not over transcripts point, as like or recordings be conference of Heacock. or consent. this turn reproduction I'd Additionally, call unauthorized go calls written Tom ahead. the upon expressed the Please inaccurate. or the recordings to the the its Any of of relied may Company not does conference now Company’s At should without to dissemination audio information the quarterly authorize be reproduction

Tom Heacock

this us Good joining morning. thanks for morning, and

million, share ended of to XXXX XX, a ended or XX, net July income quarter, second Net million XX, $XX.X of for compared period period. fiscal increased year-to-date the X, ended sales XX-week to X.X% X, July and was comparable prior ended the year comparison on the year for sales which year XX-week for basis Year-to-date quarter July XXXX ended X.X% share million XX diluted August on net press XXXX net ended for million the $XXX.X or store $X.XX year prior store to for period. million fiscal a XX, Comparable period period XXXX. $XX.X XX-week $X.XX per ended prior income period on X.X% for XX-week million XX-week XX.X XX-week August second XXXX. quarter, for of $XXX.X net to the X, fiscal million was of $XX.X net income prior diluted August million which income XX-week sales period August XXXX. period fiscal the sales a in XX-week year basis a million prior prior per for increased period for the year sales share increased store $X.XX per diluted the release or $XX.X XXXX. XX-week compares which our the the Online sales million sales the same year ended the year the XX-week in online decreased million of to to basis August share reported XXXX, or per XXXX for which the which net compared Our $XX.X compares second sales to August compared for to $XX.X for X.X% prior second period $XXX.X the million on XX-week sales of a X, from compares diluted the basis prior on X, net quarter. $X.XX Comparable for to $XXX decreased net sales down XX-week sales X.X% Year-to-date to for to XX-week fiscal net were X.X% fiscal XX-week

the sales buying basis from For retail basis increased quarter point was distribution basis quarter. improvement points X% approximately the point value costs and the X%. of approximately percentage XXX approximately and a transaction about average and merchandise margin reduction Year-to-date, XX.X%, average the The net X.X%. year-over-year second average XXX as value UPTs decreased the retail the up quarter, transaction decreased approximately increased result in for X%, and XX.X% occupancy, average prior X.X%, increased was unit unit Gross UPTs the increase X% approximately a XX decreased in for margin. year of

in as terms attributable current fiscal net period, year-to-date XX.X% year-to-date office last increased was expenses the reduction of quarter year. up of Selling sales period The for X.X% gross the increase costs investments, margin. of basis merchandise the period both approximately of basis to X.X% and XXXX. G&A basis of to from initiatives. strategic administrative sales the XXXX. for same of fiscal the as second XX.X% home XX.X%, fiscal quarter distribution the was to and XX for compared expenses of sales for of compared net sales result in XX were XXXX. second net compared margin improvement XX.X% increase year and And in year-to-date of sales XX Year-to-date, were expenses X.X% buying to primarily of is fiscal General For were compared point sales were payroll, XXXX. other in XX.X% for occupancy, point G&A well for increased points selling the spending XX.X% quarter quarter expenses to X.X% of The for IT the

expense And million compared XX.X% compared second XXXX. income $XX.X for for to income compared million for $XX.X the margin $X.X pretax the XX% the versus same compared million for the quarter prior tax was second margin XXXX to And XX.X% fiscal XXXX for million Other in to of for as income quarter of for compared for to Year-to-date, tax pretax second for XXXX. year-to-date of the the fiscal million the last to of also compared fiscal fiscal quarter was was million XXXX. fiscal for was to X.X% income X.X XX.X% XXXX, quarter the $X period, year-to-date $XX.X period net for operating bringing quarter quarter for a quarter income million fiscal to the percentage income net XX.X% Our $XX the our expense $X.X for year-to-date bringing compared year. million XXXX, was fiscal operating XX.X% XXXX. year. second was Income XX.X% income net net to other of fiscal for to

of $XXX.X accumulated and with release as compares of inventory X.X% million net included July XXXX million the was X, XX, XXXX. fiscal store the which At on the of of assets as fixed down sheet to Our X% was included inventory and $XXX.X markdown XXXX, end also balance compared up ended million and of July to approximately inventory million, XXXX; approximately press XX, which total quarter of million, from depreciation. at million and $XXX.X inventory $XXX.X end, comparable total August prior up of quarter as the in We basis a year. which investments cash $XXX.X the $XXX.X was of following;

expense were $X.X the Our million. capital $X depreciation million for and expenditures quarter was

remodels year-to-date was $X.X as down expense at spending store store capital the $XX.X is follows; distribution center. million. million broken million Year-to-date, capital headquarters technology for the capital For period, depreciation for upgrades expenditures $X.X spending corporate million $X.X and and were and and

planned. For new any we do stores XXXX, fiscal not currently have

still completing which and we additional During of the plans, anticipate we planned full $XX projects one three completed IT to Based projects range remodel year, store expenditures the to store remodeling both quarter, be and our $XX holiday. expect million includes the capital for prior to on investments. current million in full

one compared XX retail in the period store the quarter, ending closed at states also XXXX. of end with in the second with quarter We the fiscal states XXX during XX of stores XXX stores

Additionally, over And was square to same our quarter with of as million at X.XXX ago. total VP compared a of Molczyk, feet square feet end Women's year our Merchandising. now, million the I'll footage Kelli time X.XXX the turn it of the square

Kelli Molczyk

women's ago, in the the $XX.XX quarter merchandise Good decreased fiscal sales morning. period to sales second prior quarter. to fiscal for X.X% the Compared against merchandise start highlighting down women's merchandize of same were for fiscal like approximately to a year $XX.XX quarter. of the approximately our performance from quarter second down the XXXX price points fiscal categories Women's were quarter XX-week of the year denim I'd the X.X%. by Average in XXXX.

$XX.XX quarter, our last year, and women's sales X.X% XX.X% women's For about decreased business approximately to the points of compared $XX.XX. net average XX.X% price to from was

allowing quarter, manage increase For markdowns. business both women's successfully reduce the able we the margins were to to and us during

breath about we wear and select see to note denim in inventory saw to alternative where purchases by comfortable happy styles price denim Important bottom review our of find detailing, evaluate Continuing the well to opening. quarter our and XX% fashion July available savvy as with week received denim and buy of are categories, inseams or added denim, now denim For and sales, us of receipt driven of we multiples programs in with the paint wovens month now being a gained product point business. online has in or for a unit later shorts, as and building fashion fashion in our performance very XX% they the was of in guests the the and the for last business that full-length of denim about quarter the quarter. nice with Outside on stores season position. the categories. turns shorts more incentive buy delivered in-season ending consistently very Outside of month momentum the as our

and consistent increase online, seen products presentation and our certain made addition newness total side, a well on to for In as online individual the more business. of women’s skew our list, stores as have adjustments online to in we've

Buckle. products looks. to for addition to as mini-me retails this in side. in and our for the a to quarter total by sales, build build position our sharper as added inventory to products, and styling and resourcing received with We shopping QX and well Buckle, new bare the of long they as all and short-sleeve reads strength, positive introducing as continues lengths brands new brands brands business and and type our to the women's saw within unit continue end as seeing guests. long-sleeve We've new stores nice the to a products. team bottoms past and are seem be comfortable category keep business business. we business worked as we by and has to as as somewhat as seasonless nice increases The in women's a drive youth loyalty those find where refocus to products well relevant the relevant to our on We pattern were Newness very

to leave to Bob Vice continue categories. the changing President opportunities We in over of men's Senior us merchandising And men's fashion which maneuverability discuss that, I'll allows ever turn with with women's merchandize business, to room for our of trends. performance the it Carlberg,

Bob Carlberg

Thanks, the in the fiscal Kelly. X.X% Compared men's quarter. were second quarter Men's sales fiscal of selling fiscal second year were prior sales XXXX in year period up merchandise XX-week quarter X%. XX.XX to prices merchandise a of quarter against decreased ago, the approximately Average up fiscal for XXXX. XX.XX the approximately the to same from

small expect footwear, bottom save for all For tees, business compared growing of were growth and XX.XX. short-sleeve X% buy was approximately year, with sales points more the last hats casual all of programs, the our fragrance, well is more balanced a standouts men's men's average and QX. XX.X% departments to net XX.X% price from Men's approximately our graphic XX.XX quarter, from which decreased business; bottoms, pants, was to part denim,

inventory added graphic deliver start, to products from our August the deliver years, at inventory heard other as sweaters end of to control been season is earlier having we been nice heavier you long has good, the to we tees. encouraging nets. response amount weight products and colors as has The the are with comfortable the of fall growing and The is As quarter. end until and wait been into Tom, summer footwear a markdown and September double-digits. quality light and and we and excellent also response Boots discussed at spring for it has the are two our well which our sleeve last our early, of our already and

against turning the basis. combined Accessory were period fiscal a sales X.X% down the for Now results to XX-week a approximately on quarter same year-ago.

Average in about were accessory fiscal combined accounted respectively of approximately price X.X%. While XX% each average the tops a footwear and for accounted net sales These which second footwear approximately quarter and XXXX. XXXX. second for in price and points for and down for compares two each approximately of about quarter, categories up This X.X% fiscal accounted X.X% of to were points XX.X%. the the sales second-quarter and for compares X% On XX.X% sales, XX.X% X.X% approximately to for denim basis XX% up X.X%. were quarter

Our Thank the XX.X% mix during you. steady quarter, of questions. private representing label that, sales. product And of remains net your we welcome with approximately

Operator

[Operator of Deutsche line Tiffany of Kanaga Bank. Instructions] First we to go

Your line is open.

Tiffany Kanaga

calendar Are able you margin? additionally, shift another margin or performance. seen on posted And leverage another a Or quantify you to basis, margin merchandise your would to way, delverage? the impact non-shifted put gross occupancy gross you've positive

decelerated us the key So quarter? you in Thanks. through help walk can as especially there, AUR the drivers

Bob Carlberg

but don’t we’ll about impact margin, the know The million. $X first on up was revenue the gross the question overall I of in to weeks, the give that impact shift

still buying but and of without shift seen And weeks, I have that. think so the occupancy we the not leverage quantified would distribution in have

on question that second is it margins, The merchandize Tiffany?

Tiffany Kanaga

Yes.

Bob Carlberg

build we've bigger driver which think business for And quarters, a product representation and I the nice second have private the and a is probably of that, nice in growth quarter Again, good for our consistent reduction obviously to markdowns. seen then label build margins. was in continue past

Tiffany Kanaga

I the think your on get thanks do continues from pieces versus Women's. how details between biggest one, there. color which performance women's, in missing comps for big the underperform. the another today And if all I’d Kelli the what's in timeline achieving to approaching to business, picture you’re some love and you positive could What are around to get additional sneak

that floor given the the of the quarter? view updated Additionally, what's for price side might timeline when in deepened on to expect compared your that we the stabilize first declines points to

Kelli Molczyk

assortment. through a would our shift, I in product working We're say,

far more time right and months, work locations finding right right to the We've takes that the find products. so through price will those the the I probably to our So respond pretty similar timeline, right of as continue have little bit to next the introduced we as be for a the within And what it’s quarter. past six that for spots, stores in the think locations the brands points brands.

seeing the that we of we're point ago. So over $XXX a in some denim that to in of that a denim price were lot versus $XX strength year that's $XX

good lot So things of we on. have a to build

Operator

& of we Next Associates. Marotta Instructions] to [Operator Steven C.L. King go line of

Your line open. is

Steven Marotta

decrease I lease just imply stores are general rent on been gross terms, understand I just margin in recently. directionally breaking perhaps Can have X.X% with another talk question. that’s store the basis a But some otherwise. treatments in bit and about reticence specifically occupancy costs have points out you a comp what XXX rent in favorable over does least that at in rent re-upping on recent renewals? that would little

Dennis Nelson

be been in leases evaluated the able the majority shorter the do renewals we've and forward those on close And to one situations last at improve going to to couple to situations. continued XXX us And of had years. term so. each give We've number favorable. we very of particular look opportunity in centers of with rents your we've that some Naturally, provide rents also because situations. able future cases, would co-tenancy of some you flexibility the strongest improve store but that the in of to department opportunity, less closings have might reduce And been and a with

Steven Marotta

would and rent year that to. words Would been lower has or have that relief year other it’s for last you year any you since say that rent the that. the this that In you decelerated reductions wouldn’t accelerated the for year? already before unless the or versus say higher that I current of year you've know say rents previous -- absolute you’d out give again like negotiated But or are what the received

Dennis Nelson

year from so There there. has year we've had been definitely continued improvement this from progress and last

Steven Marotta

into in it rent that of wrong deleverage shift? gross some that -- that some the margin occupancy quarter, was of relief mostly Did that I play that weak or am analysis in the

Tom Heacock

a that’s both. I down. stores think brought And we’ve was It rent of certain as closed number

the those that combination then historically factors we the shift also weeks. lower had brought reductions where has a as Dennis rent so point the and number, As of from been certainly mentioned, a to it both down leverage of

Steven Marotta

shift do is, benefit not know the weeks. a shift last about year. specifically in third I bit I fourth My bit? little third does a little for week’s you quarter. the question Can talk would you extra go the will quarter last the results what and give the asking that week guidance fourth clearly and from quarter? you can of in fourth not And the over don't guidance But for and to am obviously the dynamic

Tom Heacock

the of we'll know quarter. if fourth at And fewer it’s we’ll quarter, second million have that I half part of rest obviously the shift about the -- back $X quarter about that, give range. impact one looking and So third back give the somewhere then the the be week. will don’t of in in that then

Operator

have do We of from Tiffany line a follow-up Deutsche the of Bank. Kanaga

open. is line Your

Tiffany Kanaga

I category back-to-school seeing and fits what on athletics? and like on Would terms denim demand views in update us of the give as options leggings would a in other silhouettes Thanks. like versus get overall a and your and you’re style to you holiday.

Tom Heacock

Bob and on hit you also then take want the to part. that the could We if Kelli men’s. address first second can

Bob Carlberg

success We’re A guests that certainly the men’s the a with still with bottom along we’re store. embellished the smaller we the the of openings. the into product happened having get side, although, products silhouettes has additional seeing of up on good cleaning slimming

floor of guest selection that on of getting we have not think cleaner much have side we product well, have business. -- that probably we we’re new better the the on that probably and a So a --

Kelli Molczyk

strength within we’re kind board different mentioned the in the but bottom I of across opening past seeing bottom introduced We’ve lot the For quarter. more of a different openings. it, inseams, flair women’s,

denim, easy success in then is I we length We’re length said, strong just transition having crop our ankle as continue quarter shorts good which inventory. fall. on and our And have, to the into like

which the is board, across nice. it’s So

Operator

At this point, in queue we have further phone. no questions by

Dennis Nelson

are questions, of and I And If up the can weekend. great no day, everybody wrap a want their for the thank we for enjoy rest have there the to participation. it other day.

Operator

using event for that gentlemen, XXXX. XX:XX and We for do A very September the from will available be replay Ladies much today's service. you AM and conference through of does morning. Executive conclude this participation Teleconference your thank AT&T's X,

You can access XXX-XXX-XXXX participation. at using of we dialing alternatively by XXXXXX. Again, it you very access for or XXX-XXX-XXXX the all of thank code much your

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The Buckle, Inc. (BKE) 24 Aug 182018 Q2 Earnings call transcript