BKE - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to Buckle’s First Quarter Earnings Release. [Operator Instructions] And as a reminder, this conference is being recorded.

Members of Buckle’s management on the call today are Dennis Nelson, President and CEO; Tom Heacock, Senior Vice President of Finance, Treasurer and CFO; Kelli Molczyk, Vice President of Women’s Merchandising; Bob Carlberg Senior Vice President of Men’s Merchandising; and Brady Fritz, General Counsel and Corporate Secretary.

As they review the operating results for the first quarter, which ended May 2, 2020, they would like to reiterate their policy of not giving future sales or earnings guidance and have the following Safe Harbor statement; Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. All forward-looking statements made by the company involve material risk and uncertainties and are subject to change based on factors, which may be beyond the company’s control. performance or results forward-looking implied future from differ statements. company’s expressed those in the and may financial materially Accordingly, any such

not in implied forward-looking company it projected does realized. Such to, undertake changes to be the are make but or not therein if and the revise results experience update described future any Securities The factors any with even company’s expressed clear Commission. not Exchange will that publicly or filings statements include, those limited or

Additionally, recordings quarterly reproduction written or without be the be or authorize dissemination or not upon the expressed should reproductions relied company does may of inaccurate. not as recordings of transcripts calls information of consent. its conference audio Any unauthorized company’s the the calls the

like over I go to Nelson. Please conference turn Dennis the ahead. to would now

Dennis Nelson

and saying without X.X% same-store we strong Good trend the It for challenging that comp faced. positive this you as campaigns, The morning the us. quarter in posting and the a enhanced XX.X% expertise quarter These growth achieved largely started of by most continued ever joining goes thank we sales was of were with deliver for teams product continuing of our to our omnichannel in online experience. trends by fashion marketing the investment February. data-driven right sales and growth continued combined stores,

our challenges pandemic Then how a Through responded. overcome. to of all, which that the incredibly set struck, of teams COVID-XX new I’m proud introduced

reduce over work. for at reacted of teammates many Our as and the to we admirably salaries XX% decision made our workforce difficult furlough remaining

decisions, the capitalize for quarter second By reduce will ahead. emerge financial trying were we quarter. the on benefit-related sacrifice to time to maintain and million additional expenses it the making to security difficult to by with navigate the Our savings is opportunities necessary into $XX.X over continuing teammates recognize able these compensation and we shared able this that through and ready flexibility be

and and inventory, the branded quarter to to limited with for markdown cancel of worked This orders alter us inventory. buying with payment terms, of teams reduce closely private maximized and up timing future extend partners flow label potential amount selling our the inventory the as and open-to-buy’s Our slightly, just our periods. very finish allowed vendor well as

Our and able real greater estate achieve through with faith rent relationships was our team, deferrals to good substantial landlords.

marketing technology guests keeping relevant engaged and their and the as developed appropriate brand delivered our Our teams with shopping patterns content, change.

and worked our our both both teams continue In new-to-file these to through including to of and experience, the our addition, in-store solutions online omnichannel app addition functionality Through existing innovative to store. guest. these enhance curbside with pickup grow efforts, businesses develop online

e-commerce online Our social stay maintain staffing distancing. teams on despite distribution operating the reduced of demand fulfillment managed top proper and to have to increased with

guest tirelessly have research stores the and to teams and federal, to safely. corporate worked necessary and Our teammate prepare the health state local office inquiries, protocols with and reopen respond quickly to guidelines supplies and

our we’ve result, to been reopen locations of a through over XX% As successfully today. able

with guests stores our teams and working of health protect enjoyable experience to in everyone most the are adapting of new the our retail, the realities Finally, to our in shopping stores. providing while safety

meet we early experience We and expectations. store stores reopened of to our by evolve will are continue the results encouraged that to the guest’s

partners. to teammates take preparing positioning to be for express appreciation And this emerge for thousands thoughtfully the I pandemic. send to we sincere vendors our to as and my my their so, continuing the also to deepest and to from and like collective would gratitude I us opportunity landlords efforts want success this Buckle valued for of

this turn that, over I’d to with Tom. And to like

Tom Heacock

this for thanks and Good morning, with morning. us being

share the XXXX of basis a $X.XX year on a per first a for income quarter $X.XX Our basis, per on to or May ended diluted reported the for million loss XXXX. diluted release XX, X, net share prior compared million May XXXX first May of XX-week XX-week or net press X, ended $XX.X $XX.X quarter

decreased sales prior XX-week year million Net for quarter of to to compared first for sales $XX.X quarter. for to of the increased year XX-week net to million XX.X% $XX.X quarter $XXX.X XX-week sales prior sales $XXX.X Online period. XX.X% net the million for compared the the first million fiscal

was reserve a occupancy first Gross distribution prior decrease quarter. for quarter and result XX.X% a margin the down the the of point year obsolescence buying was in was and markdowns the largely merchandise decline inventory the as of result of The deleverage and store increase in margins, XXX from for our year-over-year in basis closures. XX.X% which result an expenses

with compared the period XXXX to for $XX of sales from and same the impairment compensation $XX.X The basis, travel ago. along certain fiscal expenses SG&A for $XX.X in a reducing online growth, partially other to million expenses shipping store of On store were strong first resulting benefit-related quarter were by our for a marketing and reductions from the of expenses by XX.X% reducing These $XX.X declined XX.X% charges. first achieved quarter increased million by increased suppliers. cost was quarter decline and including XXXX. million related dollar the offset year operating SG&A million expenses

net as compared quarter to income net bringing tax the benefit was of $X.X fiscal loss income for for first XXXX. Other of $X.X of for of of million $XX.X expense fiscal compared XX.X% for first income quarter to to first million for percentage quarter compared quarter XXXX. tax XXXX quarter a net million the XXXX for $XX.X pre-tax to was XX.X% fiscal loss The the the income the million

as of million $XXX.X of million release total Our slightly of of inventory which just compares million the a $XXX.X XXXX million, cash at was X, which $XXX.X fiscal and as $XXX.X X, May investments up of to also XXXX, end following; $XXX.X May million, inventory and balance sheet which from of included the XXXX. May X, press XXXX, included as of and

accumulated with quarter ended We fixed net of assets, the $XXX.X in depreciation. million

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

During two and the quarter, remodel. completed one full stores we closed

remainder and new remodels. use to million, the current on of plans, in store still two new and we the the $X capital we includes planned as both investments. which one of our For projects Based store opening as store million three $XX Buckle on full year, to well stores expenditures range plan be completing additional store expect IT

retail the fiscal to XXXX. the retail compared approximately for the quarter transaction transactional the and states stores and category Buckle With quarter XX increased ended information, XXX approximately XX decreased end stores first metrics XXX of respect the value average of increased X.X%. X.X%; quarter with in in the X%, states with average UPTs about unit at

XXXX first first Average men’s of in in XXXX. $XX.XX fiscal of decreased to denim $XX.XX the the quarter price fiscal quarter points from

price So from increased $XX.XX X.X% overall, men’s points approximately to $XX.XX.

$XX.XX $XX.XX $XX.XX quarter the increased Similarly, XXXX price Overall in of XXXX. quarter $XX. approximately X% in to the first points women’s from first denim from women’s to of decreased price points

for tops which accounted quarter, compares basis of to and each first On XX% for in and XXXX. sales the XX% for of for XX.X%, the quarter accounted approximately denim approximately a XX.X% combined

XX.X% continued to the label addition, for our sales represented grow private quarter. and In penetration of

And questions. with that, we welcome your

Operator

Please with with Deutsche line go ahead. Kanaga will of begin [Operator Instructions] the we Bank. And Tiffany

Tiffany Kanaga

Hi, about like inventory reserve you you one-time dig charge performance. inventory expect you quarter. margin your backdrop your out, impacts more would Additionally, nature? promotional thank for which taking your well? given as other COVID-related Are and quarter charges you the ahead, And questions. thinking to in in the inventory as are I’d position? cadence outlining view second the our in competitive into you how reserve gross for the call there Thank to

Tom Heacock

On then I’ll second and Dennis part part. of first the take the let the question,

seasonal at first and On the slightly the strong and the mean absent the that season merchandise additional carrying positive through we were a really, to lighter normally over to quarter, were markdown just of related than impact March to for margins continued selling, But would. then those continue was that down margins and markdowns, through April. categories are only again, the some I of adjustment overall, was where missed selling the reserve the which a February little product, few obsolescence quarter. for Merchandise in merchandise be actual positive and looking and or spring part, margins strong just were reserve, we

Dennis Nelson

very very good we nice margins and in for early, we then a gross We little morning. mentioned the with merchandise really team had We we’ve vendors feel our in went markdown had our the good we situation. the we’ve done And a Yes were as stores. team inventory good it’s as margins, fortunate and as nice into sitting script, start activity were very encouraged went March. the strong very adjustments well as February. with been or through And a that worked such and I but as with our job

So, about. a projecting time, write-downs, and product are excited we of think we’re delivering at lot we’re more the this that not guests fresh

point, have not planned. we this at so do markdowns And aggressive

Tiffany Kanaga

a the back a question, versus stores what mentioned or you trends encouraged more you the early have more open in getting and can a might know open? Thanks. And timeline fared your follow-up for on if I of fleet anticipate you basis. being could in little to expectations detail the by ask traffic discuss quantitative I results how rest

Dennis Nelson

stores. XXX about we’re Well, about we’re this – week,

XX this we test few the a did June stores, slightly of expect to May, and least or from XXX by April week it by or be to – do. June will that We X X in we’ve at added able week is get the stores were better. first We total to open last guess added we best week of my the XX% that XXX early

mentioned, it’s of so it’s specify of there’s to And lot going variations as on. – really encouraged, hard a I or but what’s we’re

a So bump driving store if open, another that. or we’ve isn’t from they’re but where of store, neighboring seen distance a – nice such in

can feel week. we as So, as we next as we start about be good this

Operator

we King Marotta of go to Associates. & line Steve Next, will C.L. with the

Steve Marotta

everybody. morning, Good

in for there the you of are other and your what I digitally curbside you store. pickup in you’re Can to a You to customers else service in order customer? trip about doing that’s digital Again, specific avoid capabilities. guess call, mentioned potentially all a talk stores providing the earlier that inside amenities on order if are

Dennis Nelson

of anything very you the else seeing able to of be to a demand to to that this and every still store at improve more the guest in we’re Yes. it’s some small that experience want would about such. where but Tom, beneficial but do is, part see our that? curbside, that’s have store, we if do on point, selection and business guests our forward projects but our of be going we can a product to add the lot have in be

Tom Heacock

that’s of mean be of of I be a offer – and that product, more continual or options important able last think in bunch house. first the it’s they whether the for I in-store product year, been so, of I options think the think flexible through while and to ship year, now and a to curbside, half online, to with focus what them selection then back don’t I want delivery a even part giving guest available their being whole expanding store of pick-up this

there. continual evolution So,

Steve Marotta

not a I answer, X know do this any or opened normalized? Do question that your What see mind target. are stores XX% next to of thoughts be you be might But December And have till X your targets understand. I there? you that or September or or very when June that’s on is by in mentioned believe the will you X your productivity And around difficult you year?

Dennis Nelson

tough that’s Well, a one.

going more there that be uncertainty. probably to certain We’re is

of guest are teams just out be every shopping now we’re are day out at be again. and to stores and so to make the coming back really our be in trying seeing excited their the guests And the to and excited right and best

So, people hope stronger maybe, to into and the get further continues come – season that we will just get out. we as get comfortable and in more

Steve Marotta

you. Thank Helpful.

Dennis Nelson

Steve. Thanks,

Operator

with to Please Kansas City ahead. of Braatz will the Capital. line go go Jon we Next,

Jon Braatz

morning Good Dennis, Tom.

Dennis Nelson

morning. Good

Jon Braatz

– from performer we than, we COVID-XX other basic a is better Do apparel. when let’s that when rather denim be a emerge you say, Denim would item. fully think,

Dennis Nelson

but Well, on very I or wear quality of we’re some so, and of that very denim. nice or have the uniqueness favorite hard casual product interest been We know last fabrics like the the on comfy still our lot their talk has results the have. brand the having seeing soft the work this A idea comfortable. fabric, and very the quality they’re the our of and we guests fit, exclusive month and

continuing. XX last been us. We see So, the for strong, the way denim years has all it for

Jon Braatz

that you that on and Dennis, you of up of only And negotiating payments full mentioned you doing still getting XX% of – good. landlords rent normal sales the some When relief. or maybe, Tom are stores Okay, entirety. open on or or land XX% – mentioned its Are with responsible you’re rent whatever. for that payment, the in rental the sort the you

Dennis Nelson

Yes.

I are status, now, think our in our that. working a right you can’t with really so landlords I on much color give confidential

Jon Braatz

you. thank right, all Okay.

Dennis Nelson

All thank right, you. Yes.

Operator

Instructions] Taylor with of [Operator line ahead. MAC Jenifer Please the go to We’ll Fund. go

Jenifer Taylor

and areas a sales, certain morning many I on utilization are based be it per count as good moving for vis-à-vis we across just a might question our here how to ago a I just know was the for around as down activities, be realize was reasons was do color get or is What Hi, and all for going base? that? all a store can are just you fingers in that spotty on all mean a think way like metric have store understand that holistically could So, and to comp numbers thank as wondering the – will. the the give be there we certainly. ago. of a out little move move – and people I chance forward where environment something if we we on year versus year just it’s a just if all there not forward taking guest normal you crossed, that we see kinds almost but reasonable rate, your and you to I’m improves store you a wondering

Tom Heacock

have traffic we don’t stores. Jennifer, counters our in

the the stores have metrics been of don’t say, share really majority I So, at have most. to any weeks And there. only two our to I open like three

of traditionally business. give will do, will May you sales our hopefully, that as release feel June we our We in and a

Jenifer Taylor

Thank that’s fine. Yes, you.

Tom Heacock

Yes. thank you.

Operator

no are There Instructions] [Operator questions. further

Dennis Nelson

for there today and weekend, participating holiday, you no for thank a If further the call wish like. are everyone looks great that questions, we’ll all conclude and whatever

you, So thank everybody.

Operator

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

You may disconnect. now

The Buckle, Inc. (BKE) 22 May 202020 Q1 Earnings call transcript