BKE - Earnings call transcript Q2 2021

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the 2021 Second Quarter Earnings Release Call. [Operator Instructions] As a reminder, the 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, Vice President, General Counsel and Corporate Secretary.

As they review the operating results for the second quarter, which ended July 31, 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 risks 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 in Such to, the are but and the described Securities factors with company’s Commission. not Exchange filings include, those limited undertake future be company or or or revise if make implied results realized. expressed it clear therein publicly any The to update not statements forward-looking not even projected will does changes experience that any

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

Tom Heacock

us morning morning. this for thanks Good and joining

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

the second For quarter X.X% from approximately transaction X%. XXXX. X.X%. increased average unit value the UPTs up the margin decreased Gross in the average quarter, XX.X% approximately The and retail for about was decreased of quarter XX.X%,

year. compared XX.X% to for period Our XX.X% year-to-date gross last the same margin was

period leverage result costs basis and improvement occupancy from gross points quarter last XX.X% the XX.X% the year-to-date second of increase And the for coupled for result sales a XX.X% performance of distribution down SG&A point net margins, was expenses compared XX quarter The sales for for administrative of second with our of of year. quarter. margin buying the basis was of sales, merchandise in Selling, general as the were same in to the and a quarter XXX strong XXXX. XX.X%

basis incentive a in increase which quarter store to increase were SG&A XX point second shipping point by across in XX in several due points related a compensation basis partially accruals basis was other offset costs labor decrease The basis of expenses, XXX and point and increase categories. leverage XXX

for $XX.X margin quarter of X.X% for bringing operating to the of operating was Our percentage quarter and for XX.X% compared to was last period, was a XXXX for XX.X%, XXXX. current XX% XXXX $XX.X as second for year our expense to million same pretax compared income the fiscal period quarter income fiscal margin million and prior year-to-date XX.X% the quarter year. for to both the for tax Income compared second net net the

net expense and million for tax fiscal of pretax current XXXX $XXX.X XX.X%, year-to-date income bringing both net for prior income income $XX.X periods compared as a was to the percentage year-to-date for to million also year Our XXXX.

following: Our We also million, Inventory of net of accumulated XXXX, million of press assets, $XX.X which the depreciation. quarter of the investments a inventory of ended from down which total sheet as $XX.X of August release X, XX, fixed million. included $XXX.X in was and included with $XXX.X and July balance cash as million

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

and For were $X.X expense capital the was depreciation year-to-date million period, expenditures $X.X million.

construction, $X.X million corporate store headquarters the and capital as spending was for distribution follows: and for new $X.X broken remodels at spending technology upgrades capital year-to-date store and Our million down center.

X opened both new This remodels we brings were new new closures. outdoor store, remodels, and X quarter, year-to-date X store. of our closed X relocations X totals X full the During full into which and used store centers to shopping store, completed

IT XXXX. Buckle of XXX includes XX retail at states both store states XXX quarter the of now which with planned compared additional expenditures stores the store with of in in be projects. remodeling anticipate the projects of to and ended current stores investments. full X plans, quarter XX the $XX in year, the expect second on end Based we For $XX to range capital completing million, our fiscal remainder million we the

of to over President it Vice turn Women’s will Molczyk, Merchandising. Kelli I Now,

Kelli Molczyk

would sales quarter fiscal Tom. to year by I were categories quarter. quarter. XX.X% of up performance start approximately our prior the highlighting merchandise the women’s for fiscal like Women’s against the for the Thanks, merchandise

For approximately in responses second XX.X% women’s second points exciting overall the XXXX. X.X% continued the $XX. new year. average our $XX.XX to in denim about business compared increased It prior from we the was And sales of $XX.XX price saw quarter quarter in was fiscal to price XX% of quarter fiscal every to points Average increased category. strong the in women’s quarter, of products an from $XX.XX to as XXXX

growth. all balance stretch the to rigid brand with across denim has We drove our our denim expanded significantly fits new and hard core fit Our and in worked fits fabrics and fashion our which selection. variety classifications fabrics,

represent offering a larger share was key guests fabrics, denim, in buy to mix contributor continues in we’re denim label strong Outside a including private their of of now, driving shorts it our in denim, quarter. now and patterns. purchasing continued the a our variety for our as denim Our and sales also of were

footwear into returns also from away shifts and simple quarter the second two-piece sets, tees, The fashion activities, items and brought graphic casual and reemerge and from fashion tops, accessories. normal dresses fashion and as their moved and guests homes

capturing our we now With offer loyal the new excited we’ve and brands sales in about of guests. are our life we expanded guests stores, number continue opportunities created the and engaging both to

the as also started school. to business sales a saw youth nice lift in quarter kids back throughout Our

presence our top-to-bottom focus Our amazing use with as minimize working the the in four the for stores. with Buckle very Carlberg, I the use for continue solutions added product. will of supply work map partners This teams partners are business. the XX impact assortment hard things vendors our to Vice and us We’ve evolve regular job Buckle coming putting stores quarter, team XXX challenges of an along want which chain keep ongoing takes categories. through on assortment us as brand merchandise of closely have our in men’s use done Despite Men’s in of thank another at to continues of forefront office of our with to an performance discuss to our turn to that, Merchandising, our of Buckle I’ll Buckle continuing stores that be Senior both the months. brand well used distribution stores, our locations, fashion. extremely And over on sincerely our the the to creative freestanding with President women’s in expanded teams to as here it the Bob our to center all and to to for the over an during

Bob Carlberg

were Thanks, for fiscal Kelli. sales the XX.X% the up merchandise fiscal year Men’s quarter quarter. prior against

quarter XXXX. Average decreased of in denim XX% the business the of net second from sales in the XXXX $XX.XX of our second prior men’s fiscal For $XX.XX compared the to approximately points quarter price year. in quarter, fiscal to XX.X% was

graphic overall quarter I’ve as $XX.XX BKE driven strong Revival men’s fresh men’s Denim and standout slightly on increased the colors incredible our with to we Rock continued by QX ever guests. our price trends brands, another with strength street for largest, in delivered shirts, brands, dollar average seen. showed Knit of still in being led lifestyles, new tees our along best our brand. Our graphics points increase private our product from especially growth was $XX.XX. balance

hats, have our growth both as our accessory not serve West year a the the you but any without led and categories all Street and teammates front teammates and American successful. smaller our by as our been It’s our to as almost enough they I say We’ve Used as teams expansion good Shorts sales flat guests challenging support all looks only much well Coast, a of growth back our very and for done is has and fragrance four country sourcing performed made to waist curating fun from front all but were to Shorts our thank our next longtime full-line great losing expanded make overall to Oakley department. business this from our used very largest to see to excited Our job best been in say products, for happen. of to has and building can I’m to that our in the button also and dollars, can’t glasses. results. accessory lifestyle. doors, growing. store see age we do enabling strong business, only business elastic well, cargo

accessory up quarter. Now basis, turning a were combined year prior to approximately on sales fiscal the for XX% the against results fiscal quarter

XX.X%. respectively, sales. fiscal up for in second X%, While footwear the These sales XX% to XXXX. for quarter of two XX% approximately accounted net X.X% about categories of and each quarter compares second and were This

compares This footwear the sales, for quarter, a basis XX% were up XX.X% denim about X%. in accounted second approximately price for for of approximately combined tops Our price XX%. XX.X% the fiscal on points quarter were average average accounted XXXX. to accessory of points X.X%, up approximately and each for Again,

For of the quarter, we our you. XX% with private your sales. label And approximately questions. represented business Thank welcome that,

Operator

Peter first [ph] comes the Instructions] Broche Broche from Capital. [Operator Our line question of from

Your ahead. line go is open. Please

Unidentified Analyst

Yes. the on the growth Good that call. Thanks But guys of sustainability taking stimulus wonder the don’t seeing? recent and the that don’t related what growth is that you’ve give guidance I my upon based if think completely we’ve you morning. to realize for that payments recently seen. comment necessarily I you’re you experienced could

Dennis Nelson

good with online. Good is over our guests noticed and – XX% The going Well, new our over really we’ve feel the year. added on about morning, Peter. thing – have what with one we’ve this we we past stores

And a centers vendors stores mall our better merchandise response, and store target our an it’s see and line, with that stores excellent of take is great as down. we talent in for very lot of some been in supply and but shopping their to And product in not been a of is able the if for We experience for hear have some our we selling relocating with – a lifestyle quickly years. else, they that buying our private weeks always power There regular few understand work our to guests provide enjoyable. teams. centers, with. proud that’s fits had provide exclusive continually outdoor, good approach, that selection come which will are challenges specialty a we’ve and markdowns exclusive at going very guests the is especially anyone why brands, are them that addition, on price, available on plus we’ve in know we products what’s that’s our us to lot label and our our And continually our look of teams, and addition find favorite product. our guests see X.X for we’ve we a denim fashion than of In forward to definitely

Unidentified Analyst

very Great, much. Okay. thanks

cost addressing But how and you problem for so a to be as was So see elevated coming for then? don’t the next everybody, seems about big thanks you shipping question, holiday, my that supply that feel and chain that? into Or do that.

Dennis Nelson

Like said, like there I been. just has there is challenges

With to is beneficial the deliveries that reopened have – since shutdown now had for long we’ve some in success time. are we’re What’s going been Vietnam, a later. for things

– our been we’ve So vendors. our planning have with been teams

long-term great a relationship our working have with partners. We

go And more of help product. so always well with them to out way they as us their to we’re develop as working

some And think as well so we’ve figured out lot to there along. and have I expense things, of opportunities managed be that but are going gone we a pretty

but not that business are well. about what at doing others, the as manage can support office have for home So could we merchandise – our we good as very think company and the teams. very feel will very time some it And stores we strong our be our and of periods be our is we

Unidentified Analyst

very Great. congratulations thanks for taking Well, quarter. my an much outstanding questions on and

Dennis Nelson

good you, Peter. Have day. Thank a

Operator

Our next ahead. C.L. Marotta Associates. Steve Please go comes from King question & from

open. is line Your

Steve Marotta

but flow sort a you for this of backdrop, supply the words, – from significantly June a the if obviously taking which again, better specific again, that know I slowed the chatter a the bit other goods getting the in world is in is the this as I of any I bit Dennis, question bit has have channel probably tricky? be, reverse is the is a bit better. August of and Buckle, but order Would the to that it morning. And demand better Thank retail in that if is the little little quarter-to-date currently, moment and any guidance don’t know thing little you a thing not logic, question. two? those with a pace worst – bit in again worst at is demand and demand to guidance, In it a provide slows what supply is future Good not within little my to it in July. match world outstripping chain slows is but align a nor

Dennis Nelson

helps slowness catch Well, that but off don’t is is what we and that we – can win. then small to today, up there preceding like sell any guess the that put if us I a

Steve Marotta

Thank helpful. you. That’s

Dennis Nelson

Yes.

Operator

line We do Capital. of a have from Instructions] from Kyle Kavanaugh Palisade the [Operator question

line open. Please Your is go ahead.

Kyle Kavanaugh

are Hi Dennis, how you?

Dennis Nelson

morning. Good Kyle. Good

Kyle Kavanaugh

year-over-year you Good morning. I rent or was comment going online the just well? curious, I don’t know just if you also I occupancy, on am just sales did – have or on growth of anything the also And that sales as then rents could dynamic? side leverage the was

Dennis Nelson

XXX% Well, XX% business, and last around think online months had one I up another we or year, two XX%.

and think X% off the response good going stores our great particularly having guests seeing we being are was go our don’t to part them growth about leases I were that were there. the although And So, and going this we our how see feel back largest quarter, – shocking, of on very more to store back the where the in sales, renewals forward. occupancy, as I especially

Kyle Kavanaugh

Dennis. Great. Thanks

Dennis Nelson

Yes. Thank you.

Operator

next line of Ujjval comes Ujjval question Our the from Investments. from Dave

Your line ahead. is open. Please go

Ujjval Dave

outstanding been shares, at by especially many, I insider had If has prominent shares. you Thank the you. Ujjval nearly which stable confidence your great of the But more more in Buckle proxy was over insider XXXX a and you than Dennis, X.X business. been significant less Dave. have many years. stake you is Daniel of area X.X% of the total million ownership, Hi. I is One This over steady have the look aspect the Dennis. a ownership. This or with word question remain statement, founder,

of if out recent However, behind new is, And than X any this months if of management is ownership. I is your at news to if filings, there compared ownership months the selling, XX% basis. X.X% more I in near drawing April I a the we retirement X.X% shares – force the calculation right, you SEC amount expect future? a sold on very Form you changes particular or just total year, just as should for am regular to wondering do any have have back. around extensive now significant this XX been your Since XX Buckle of

Dennis Nelson

Well, Dave, estate I no on have some been we working announcements time. planning, at have this and

Ujjval Dave

Okay. Thank you.

Operator

One moment for your next question.

Berman question Capital. comes next Our Berman from of the line David from

ahead. is line go Your open. Please

David Berman

a the on I a I that’s think basis, this good is be one have all. things But like And ratio your Hi, at Dennis. inventory might years, to doing never actually little turning fast. I sales similar Thank up you quarter, before. XX%, of slowed is seen XX% down bit. you the last see X-year last any few that and inventories

the is you that are like whatever curious forward? level? going your this permanent want this sort So, we Just – to in business keep terms a inventories the of have want at improvement you at to of

Dennis Nelson

of a know not but we catch Well, inventories and some as level the sales disruptions percent We difficult in as to with in to and of missing that to sales level, inventory the complications. being first supply just XX% adds chains then the this quarter with it’s growth at are on also the planning, far maintain. up some higher it’s want we the our

level take we great to And we a than fall. planning planned So, now in. our might some to have bit coming inventory Vietnam, this a still little a of get longer, are with normal but part substantial now closer and we by it expected selection

up. are to So, that is best doing team just – their the level we get planning and

David Berman

along this is sort because – prefer, good despite it? strong, the like you what with of obviously low be so up why sales you what margin the wouldn’t with do so But inventory,

Dennis Nelson

and to of little guests we this need that turns. still happy disappoint don’t a are but be to on our we about level bit, I then some guess, we But hope want Well, that. close if improve to we high keeping to

David Berman

much. Thanks very

Dennis Nelson

Yes. Thank you.

Operator

we Kyle And a have of line question Kavanaugh. follow-up the from

go open. Your line is Please ahead.

Kyle Kavanaugh

the mall, wondering, not different whether competition. could you just it’s environment the if with landscape maybe competitive is go less there the now was within or now I – or comment is environment

sales you your cooped everybody if curious just some And on market or catch-up environment? share gains competitive being of from gains up, just so landscape comment the can or

Dennis Nelson

areas, number for shopping great are we malls substantial that good Well, have or malls us. and regarding different are very they traffic, a in good the of

found best also are for outdoor a have the no have we centers, We in We center that lifestyle very with guests malls power that. in and experience we longer have moved our happy such. the shopping still centers improved that where some our and we have been location

we and price, are we have have were favorite in their lost us guests $XX wide at and quality, community market used the are they used to too clothes, seeing in and were $XX, denims we fits. the or didn’t selling us that whether seeing is our best share, brands affordable, as seems to – So, though the average price to shop they and or now when we to have $XXX, of maybe we were a like points each even may high gaining old us more these set very the think great of for future extra it some we be prices look in XX didn’t that And experience they are and lot back shopping guests we I sizes opportunities. selection up our their are they shop be a it’s where that when the think range XX $XXX, or can too where then,

especially, different our we so sales are store also that we destination think for teams, experience that great in is a the now excellent. have so denim but just separated many lifestyles with selection like And the is and great store where people I our ourselves

we at over and will that. work that fans winning continue So, think we we way, are to

Kyle Kavanaugh

the there priorities is or of just your strategy? strategy, or little now changes emphasis follow-up online on online with a any And right kind current

Dennis Nelson

to with can pay make We our serve our hire guests to shopping other are we it such. methods. experience continuing And better staff marketing where it to on team try and continues better a

the we look to So, of just certainly the that continuing like how we are on improve company. rest do to

Kyle Kavanaugh

Thanks Alright. Dennis. great. Okay,

Dennis Nelson

Yes. Thank you.

Operator

the And no questions queue. there are further in

Tom Heacock

of up there for the the you participating the no If much. wrap Thank everyone questions, day. call and we very today thank are can and enjoy rest

Operator

conclude gentlemen, your for and for ladies Thank our conferencing And that today. participation using AT&T conference you and services. does for

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The Buckle, Inc. (BKE) 20 Aug 212021 Q2 Earnings call transcript