BKE - Earnings call transcript Q4 2018

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to The Buckle, Inc. Fourth Quarter Earnings Release. At this point, all the participant lines are in a listen-only mode. There will be an opportunity for your questions and instructions will be given at that time. reminder, is a recorded. As Instructions] today’s being call [Operator Treasurer today on Nelson, Senior Members Carlberg, Molczyk, Senior Finance, Merchandising. and management of Women’s call President Vice CFO; are of Vice of Vice Heacock, of Buckle’s Bob Tom the Dennis Merchandising; Kelli CEO; President President Men’s President and and

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

express information inaccurate. the quarterly relied Please not conference should turn of Mr. reproductions recording Nelson. or upon conference does the unauthorized being sir. I'll be call without reproduction With transcripts go its as or audio consent. Any the said, dissemination the authorize or be to the ahead, the written now recordings Company Dennis may that Company’s of not calls of Additionally,

Dennis Nelson

for Good you. us. morning. Thank joining And thank you

I quarter, for hard and this to through work to outstanding want thank our contributions opportunity financial our past Before all their the it walk the Tom over for turn of year. to during we results take mates team

environment critical success retail continues and remain the As evolve, of the our components product. our our to people two

Our nice all talented done focus the denim our model ability experience our of broadening of trend most a mix for enjoyable both and differentiated to product in our our on successfully our are selection, to adapt at create service our the of brands points lower a perspective, From our as forefront and have continually merchandisers evolving while the exclusive teams as shopping product maintaining growing profitability. branded private countering and price categories, other well job certain the guests.

we want evolve they also have how to however the guests, take continued We and shop. service to to wherever our

deepen with I’ll and both new existing to Looking offerings. both omni-channel to strategic are our that, enhance investments in our turn our focused the Tom. marketing a on to and present brand guests, it And understanding unified IT and guests, relationship with we future, over message to and

Tom Heacock

Good morning.

XX-week compared X.X% the X, XX-week XXXX. period sales $XXX.X prior-year net decreased fourth net from on prior-year or per period, the year. for income was XX-week XXXX, X, fiscal basis, net XXXX $XX.X $XXX.X a the on XXXX. period for million year. XXXX February increased ended million to basis ended the year to fiscal or was the Online comparable X, the prior-year reported XX-week for year fiscal sales million which for increased XX-week of to $XX.X period. the XX-week XX-week X.X% on quarter, $XX.X for X, basis X, year the February a diluted compared the for diluted XXXX.Online February sales XX-week Our Compared store per the income Net fiscal X, prior-year or million per which sales fourth February a XXXX sales for comparable million decreased ended million $XX.X per net of that February prior-year X.X% to sales XX-week the $XX.X net prior-year XX-week ended store fiscal ended ended fourth for sales online ended XX-week sales $XXX.X XX-week for or the to sales to period of for XXXX compared diluted sales the decreased quarter, of net February however, store compared for share X% period And diluted ended X, store increased XXXX the prior-year to Net to March $X.XX $XXX.X the to XX-week up February basis, income share of net quarter $XX.X decreased Comparable the X, Comparable year quarter year the XX, the X.X% again, XXXX, X, for were fourth February then X.X%. sales X.X% million fiscal February $X.XX X, a ended XX-week release prior-year's fiscal for on which to net XX-week XX-week for income February XX-week of sales million $X.XX to the for for million, year fiscal million XX-week share for Net $XX online compares sales million from to for prior-year, share million fiscal $X.XX press XXXX. X.X%. compares the period sales ended $XXX.X quarter. compared

approximately increased the value For X%, approximately X.X%, just the increased the quarter, decreased average and slightly. transaction average retail unit UPTs

The down value basis the decreased basis-point occupancy approximately the For the XX.X% of and is decline fourth expenses. UPTs quarter average the was from approximately in increased XX margin full-year, XXX deleveraged the distribution year-over-year margin unit X%, X.X%. in points average merchandise and and basis buying result XX.X%, of XXX for the transaction decrease Gross quarter. decreased approximately retail prior-year points X.X%,

due With of deleveraged net the merchandise in buying occupancy net even margins the to year the expenses. distribution were for prior-year. XX% and gross For quarter the prior the the quarter. Selling decrease sales basis XX.X%, from XX was in XX.X% of points year, margin sales year, down with fourth expenses to prior-year is compared XX.X% current

the full-year, XX.X% prior-year. XX.X% selling compared the net to For sales, were of in sales expenses of

quarter selling by X.X% periods, fiscal in increases store both of General net For sales and administrative offset to of expenses. were of other and fourth certain the for reductions quarter the were expense year-to-date X.X% in in compensation XXXX. expenses quarter compared net sales the

X.X% the For compared were of X.X% to prior-year. in administrative and general sales, the year, expenses

home the spending periods, IT increased payroll as both investments, of in to increase for as G&A For terms due strategic initiatives. increased office well is both other

compared XX.X% XXXX. for to for was year And margin to quarter income fourth million our fourth was XXXX $X.X to XX.X% fourth year. the income fiscal tax for for income XX.X% and operating quarter quarter the of the net operating full-year, XX.X% percentage million million XX.X% was was of to XXXX, $X.X XXXX. for the a the other for million of to XX.X% last to quarter quarter fiscal as net $XX to $X.X fiscal fiscal quarter compared expense fiscal prior-year. for pretax bringing compared for compared the the for $XX.X compared million income income quarter compared of was $X.X XXXX, Our million the Other in for the fourth margin

for to bringing of fiscal income, million pretax For compared net in fiscal the $XX.X XXXX, for million to full was compared our to expense XXXX. XXXX, fiscal income year, XX.X% income XX.X% $XX.X tax

fixed $XXX also Our at $XXX.X from of of the up in press and $XX.X included and the up year, X% end of which following: $XXX.X At as fiscal approximately after compared total depreciation. X, cash $XXX.X during million, of the with investments million net the which accumulated assets release million of year. was million included $XXX.X ended compares of inventory the the Inventory of the sheet February end markdown XXXX, inventory year of million the to balance dividends of XXXX, prior XXXX. to end year We was and payment fiscal at million, was the which total in

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

capital and $X.X was for spending capital distribution down is million new headquarters technology $XX.X For million. store and expenditures Full-year at store $X.X the and million million and follows: depreciation for were capital construction, center. store broken corporate $XX the remodels expense upgrades; spending full-year, as

quarter, count to full-year and November completed early stores two in full bring store three and full to closed and the remodel remodels our one January six seven we full During remodels in closures.

Buckle for For By for remodels our back-to-school. expenditures planned remodeling plans, fiscal on XXXX, store investments. to year, and fiscal to one compared planned store states be to will of also with one million both remodel fiscal completed the new in stores XXX spring in IT anticipate we of being million have and XX capital one XXXX. XXX the we XX expect the and of the in new full $XX retail store currently range stores be $X end season, three includes, year current completing with projects which for two ended at the the Based projects. states

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

Kelli Molczyk

were down of against the to for to for Tom. Average categories start a $XX.XX approximately the period quarter Compared were our the quarter quarter. I’d fourth sales XX-week same XXXX the in Thanks, ago, sales quarter. $XX.XX denim points performance X.X%. from Merchandise fourth fiscal like fiscal Women’s highlighting of fiscal XXXX. X.X% Merchandise decreased fiscal approximately by to the Merchandise of in Women’s year the price the Women’s prior-year down quarter

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

our well sales were with private our Ankle and brands. fits, Denim the outside the label selections $XX point quarter, lengths, brands drivers for curvy all the price results were as in saw and quarter. in knit we as denim, outerwear increases shoes. point unit business price For sweaters, under in of of pleased top, our

represent selection our denim inventory and a total point sales. of to price higher Our percentage both lower continues

label buy and well our in fourth soft to as to guest the in purchases. knit, easy wear that our more important product program For factors more, private hands as save was were brands quarter

a biggest buy bit long-sleeved program. program success, sales sweater which along That Our more successfully the category’s fashion more, we category the pulled to in our introduced categories. with in and assortment the keys from were save growth was where fashion woven sweaters

offering and over $XXX, footwear for ASP looks with points For footwear, boots quarter. price our the drive key our were casual branded helping at

the we a we're buy As shop where into now, women as for move new the to on with many continue QX building new of following products focus. into months looks now in translate translations a year, wear our successes

spring true our majority has product to responses denim. assortment, pushed of tops been spring delayed new continue nice products to weather work our markets. to influx seen intentionally sweater as fashion ankle us spring We for have the to our of across which back beneficial mid-late-February, through sleeved We been bigger has and longer

work room in key testing with nimble to react in in season categories opportunities our the in We reason us our with and in continue and with Being our to all inventory provides upcoming selections give trends inventory the us future to season business. market. to new that of Women's

our teams with refining online of able partner descriptions, elevating better details our products. our so shopping search enhance are styling to marketing and product continue improving unique visualize experience the tools, by product to adjusting the shots, and to guests online We

well. with have brand we represent influencers social utilizing working to on renewed focus several Additionally, our our individuals

nice its President category. response Carlberg, And to in a to social early Bob of our seen discuss Men’s Vice that, it's Merchandise Merchandising with Senior it the Men’s of phases, performance Although over in turn we've I'll engagement.

Bob Carlberg

against fourth sales Merchandise up X.X%. fiscal the Men's to in Compared X.X% quarter. Average fiscal XXXX price XX-week fiscal quarter of sales decreased of to points fourth the quarter year in quarter were $XX.XX were prior fiscal for approximately period Kelli. Men’s XXXX. down Merchandise a the the from Thanks, same denim $XX.XX ago, year approximately

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

BKE with grow During way. the denim the quarter, to leading continued

fit fabrics, marketplace. lead details the finish, Our to selection brands of continues and

categories knit both by shorter highlighted for and fall-winter and True For wovens while a we tops, with and with inventories early pushed had but maintained by due plaids, had successful prints and double saw solids numbers, season we planned a to nice balance the high growth selling along of our digits. We by our markdowns down sweaters substantial outwears, sale competitors. that, program.

spring was to quarter, as forecast with our in growth category wear selling. strongest The casual it difficult For the unusual footwear. a February boots made footwear percent and cold leading

during waist well the winter We continue and fall products highlighted month by elastic to in saw spring categories sell-through prints and shorts. and nice certain many see in sell a categories,

Now, quarter points were XXXX. quarter Again, were price combined net on year down XX.X% two for Accessory and footwear and the XX% fiscal ago, for points the to sales account were up X% in for each accessory of basis each price fourth which just fiscal approximately against approximately approximately for the average XX% X% basis. the Average fourth tops X.X% approximately turning while footwear results XX%. accounted a X.X% to slightly. of XX% These of XXXX. a denim for the and XX-week quarter, a for compares accounted fourth X% fiscal down were sales to sales approximately about quarter on of and combined down compares X%, which for period categories and in same quarter respectively sales

business grow week, spring our approximately -- for the and stores and continues represented with guests. brand XX.X% our the feedback from of event received and quarter Our annual kicked XX.X% off GWPs. both private year. teams Last We XX% the positive to in versus new for and label our sales we fresh

XX invited program staged on mall momentum welcome as in we in in in-store guests drive that, provide to an for experience build in influencers the We brands XXXX. to XXXX traffic. and and questions. the our where look stores with the in Additionally, expand to store the And we event we your as well events

Operator

of is go Bank. with Tiffany from Instructions] Deutsche Please [Operator And line ahead. first the Kanaga

Tiffany Kanaga

your potential questions. growth by your in as the that impressed on there line, We especially drove as quarter marketing ante labor and competitors the despite selling our by But, your into were remarks, digital takes as down. provide you're investing the some some pressure could mentioned puts XXXX, seeing sales reduced in well? Hi. around perhaps and leverage You taking strategic more being Thanks. selling from color in dig Thanks you opening expenses for you in upping wages initiatives? and investments, additional you expense could and

Tom Heacock

less our it with we our question mentioned, the in the drivers invest are to of think business, store continue start investments that. to to were I the going Dennis payroll in there. for fourth remainder of with fourth around pleased like especially was have I'm the strategically obviously, themes. in-store quarter think, expenses. we continued in key I our selling make We selling And quarter But, so was people increase year. than the the And

shift. also pleased to for bit look So, this as together. for reclassification internal a our at and better to There was sense we're little reporting. then expenses there. to also year, selling and There degree, of was makes a little we match G&A next year, of at a it And bit it of look some

like mean I So, down. more that's -- why it's G&A fourth quarter, at selling and looking the looks that's up

it. of part that's So,

ability we we same to unique try and XXXX, and and our sure in so, have obviously our as to as guests, is the to take payroll but ahead that, can, of we people Looking manage smart make biggest mean, be I differentiated piece invest our selling experience hard store say, the at guests of time, and and and care so. our to that talent provide win the and

Dennis Nelson

at as touch lease such be our in just also driver projects guests however we be now expense, well selling also and we see as investing big so we go we're improvements, in as We're our through And beneficial trying our to to year, marketing progress team loyalty some with On plans look with IT and we data reservation so the improvement our the well year travel us, be stay And in we the looking our that And store going we then, want guests our the for have earlier, the and smarter as and investments, in shop our us can, go sales for also, I with can worked in has apps, as CRM, costs mobile so. product that marketing marketing should and handle in a especially. forward. go as very as Yes. should to able what will traffic -- improve guests. better mentioned able to support serve as we and well the we're people on. this The shop as stores. help card forward. the our to ship also as with long for is our CRM just they wherever to Buckle And as

Tiffany Kanaga

Thanks. you as could materially that XXXX. considering Thanks. stabilization? price come that for one but from accelerated do to denim in what points private since stand I need where more, level XX% about see your went mix Where do timeline or Women's today? if decline And XXXX, down a And to will penetration terms that through Additionally, a now your your we brand you there change think have are ask we we of do be? label get still

Dennis Nelson

And we've working brands with it's the our as selling from know, like been Rock there Yes. $XXX and similar that's it’s small a we’re business and still that Revival challenge been that $XXX successful. to you that

down However, that. the is volume from substantially

But, have jeans selling done and majority those, I well as and our were that's building think from working when $XX, the a some anywhere the from to our to majority from brands, we're compared those to well job our they adding as $XXX. on $XX are own fashion $XXX good brands. of selling of establishing teams we

and been at with still unit And see it's a near the the we So, to and guest we that months, we to as do, continue well fits. as probably a really pressure different can point. think for that's would selection guest teams which years. on our up but our some favorite now styles future, momentum prices we sales and been our and on fashions have for their fits to the provide -- build build working listen have enjoying And off slightly few but our that over the price to challenge and our getting new we

Operator

Next, we’ll C.L. go King. Steve ahead. to Marotta go with Please

Steve Marotta

Good morning, everybody.

As given X% inventory a and you being heavier as against slightly sales? potential to talk little comp, inventory markdowns the bit little bit negative accelerate, far versus looks about a up what can for mix

Dennis Nelson

were last where markdowns. about some inventory good I shipments markdowns down think, we is. our tough brought so, start we're Bob, comfortable early -- in that we're especially comparison. a we want mention We that feeling But, on do in a our with had good level to to spring? get had you you of year, the

Bob Carlberg

of elastic more -- brought would spring. guest that with last the quite waist prints and There in in in to some we a opposite in came kind we on than off brought that started new we start We Yes. side, bit early, categories a bit. the quite were year, have to shorts work normally

Dennis Nelson

on we’ve got believe -- we’ve the denim sides of I at inventories year And start last also the on pretty both year. our low

we investments And there. so, some made

that’s So, and part we that. sales, another not of missing were

Steve Marotta

Women's missed last price me? And Could the points for review denim I you this that please year and year.

Dennis Nelson

year. average the have we fourth from The $XX.XX to this quarter decreased in denim that? $XX.XX Do point price

Steve Marotta

this the Lastly, rate year? what do you expect tax

Tom Heacock

would XX.X%, pretty I be for the think, our XXXX. what close to expectation was it for around full-year XXXX

Operator

go John to next, Deysher will ahead. Please of with And Pinnacle. go we Instructions] line [Operator

John Deysher

you insights there would any spinoff a big if category. how public a they curious picture for as I a primarily Lee. raise I Obviously, side. business, as to of is profile And kind if might coming you on of was But, is and Levi’s manufacturing curious any have it all. But, the this to Wrangler insights I and is know, it impact there as question. on know, are might just the your This transactions. just these might be you have But, coming

Dennis Nelson

and with just have we developing take going My working Levi with do the would ladies in them that. Levi product team, with is because little as especially spring have far public. that are And our business relationship there shorts. impact as be a with the We a nice they

and a that the to couple just side well in are we as we goes. see Wrangler styles, the a So, testing that plus see where as ladies just

So, because They good very we but going like for don’t a are just we working they are public, negative see as brands us. that with them.

John Deysher

imply didn’t it your was negative. Okay. curious as I was just a I thoughts. to

Dennis Nelson

Yes.

John Deysher

thank So, you. That’s it.

Dennis Nelson

welcome. You’re

Operator

no further are coming there questions Nelson, Mr. in. And

Dennis Nelson

for good this our Okay. call part a day. no thank you being morning. questions, If other of Have

Operator

and participation. Ladies conference. that gentlemen, does your Thank you for conclude your

may You now disconnect.

The Buckle, Inc. (BKE) 15 Mar 192018 Q4 Earnings call transcript