Buckle (BKE) Q1 Earnings Beat Estimates, Online Sales Robust

The Buckle (NYSE:BKE), Inc. BKE delivered a stellar performance in first-quarter fiscal 2021 wherein both the top and the bottom line significantly improved year over year. Also, the bottom line surpassed the Zacks Consensus Estimate. Further, margins were impressive in the quarter.

This Kearney, NE-based company delivered earnings of $1.16 a share, which surpassed the Zacks Consensus Estimate of 53 cents. Also, the bottom line came against the year-ago quarter’s loss of 24 cents per share. Higher sales and margins fueled the bottom-line performance.

Buckle generated net sales of $299.1 million, which came in line with the Zacks Consensus Estimate but more than doubled from $115.4 million generated in the year-ago period. Additionally, online sales surged 67.3% to $53.7 million in the reported quarter.

Let’s Delve Deeper

We note that the company’s women’s and men’s merchandise categories are doing well. Management stated that owing to the pandemic-led economic disruptions in the prior year, sales comparisons will be made with the first quarter of 2019.

Apparently, women's merchandise sales improved 46.5% from the first-quarter fiscal 2019-level and that of men's rose 48.5%. While the women's business contributed about 49% to the company’s overall quarterly sales, the men’s unit accounted for nearly 51%.

On combining the men’s and women’s categories, accessory sales for the quarter increased about 50% while footwear sales climbed up 118.5% from the comparable quarter’s reported levels in 2019. Both accessory and footwear categories represented 8.5% and 11%, respectively, of overall sales in the fiscal first quarter.

On a combined basis, denim represented nearly 42% of the quarterly sales while tops accounted for about 26%. Moreover, the company’s private label business represented roughly 38% of its quarterly sales.

Gross profit increased significantly to $147.6 million from $26.8 million delivered in the year-earlier quarter. Also, gross margin expanded to 49.3% from the year-ago quarter’s tally of 23.2% owing to higher sales as well as a 315-basis point (bps) rise in merchandise margins, and leveraged occupancy buying and distribution costs.

Further, selling, general and administrative (SG&A) expenses as a rate of sales fell considerably to 24% from 37.2% witnessed in the year-ago quarter. This decline was owing to improved store labor-related expenses, leveraged other SG&A costs and lower travel spend. These savings were somewhat offset by elevated shipping costs on strong e-commerce performance as well as higher incentive compensation accruals and marketing-related expenses.

The company reported an operating income of $75.8 million against an operating loss of $16.2 million recorded in the year-ago quarter.

Shares of this currently Zacks Rank #2 (Buy) company have gained 41.3% in the past six months, outperforming the industry’s 31% rally.

Financial Details

Buckle ended the quarter with cash and cash equivalents of $393.2 million and a total stockholders’ equity of $440.1 million. Further, inventory decreased 26.9% to $89 million.

Meanwhile, capital expenditures for the quarter were $4.6 million. Given the current store plans, management continues to anticipate capital expenditures in the band of $10-$15 million including the expected store projects and IT investments.

We note that Buckle completed five full remodels and shuttered one store in the reported quarter. Hence, the company ended the quarter with 442 retail outlets across 42 states compared with 446 stores in 42 states at the end of the year-earlier quarter.

In fiscal 2021, management plans to open a youth store completing six additional full remodel projects and simultaneously expects to close one planned store later this month.

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