Buckle Q3 2025 Earnings Report

Buckle EPS Results

• Actual EPS: $0.88
• Consensus EPS: $0.89
• Beat/Miss: Missed by -$0.01
• One Year Ago EPS: $1.04

Buckle Revenue Results

• Actual Revenue: $293.60 million
• Expected Revenue: $293.60 million
• Beat/Miss: Met Expectations
• YoY Revenue Growth: -3.30%

Buckle Announcement Details

• Quarter: Q3 2025
• Date: 11/22/2024
• Time: Before Market Opens
• Conference Call Date: Friday, November 22, 2024
• Conference Call Time: 10:00AM ET

Buckle (NYSE:BKE), Inc. is a specialty retailer of casual apparel, footwear and accessories for young men and women. The company is particularly known for its selection of denim, along with tops, bottoms, dresses, outerwear, shoes, jewelry and other fashion accessories. Buckle sells merchandise under a combination of national brands and proprietary labels.

The company operates retail stores across the United States and also sells products through its e-commerce platform. Its stores generally offer personalized customer service, including denim fitting and tailoring, and are designed to provide a lifestyle-oriented shopping experience. Buckle serves customers through both its physical store network and digital channels.

Buckle traces its origins to 1948, when it began as a clothing retailer known as Mills Clothing. The company later adopted the Buckle name as it expanded its focus on contemporary casual fashion. Buckle is headquartered in Kearney, Nebraska, and Dennis H. Eck serves as its chairman and chief executive officer.

Buckle Q3 2025 Earnings Call Transcript

Key Takeaways

• Net income declined to $44.2 M ($0.88/share) in Q3 from $51.8 M ($1.04/share) a year ago, with YTD net income down to $118.3 M ($2.35/share) from $140.3 M ($2.81/share).
• Comparable store sales fell 0.7% in Q3 and 5.4% YTD, driving a 3.2% drop in Q3 net sales to $293.6 M and a 4.6% decrease in year-to-date sales.
• Gross margin contracted by 80 basis points to 47.7% in Q3 due to higher occupancy and distribution costs, despite a 55 basis point improvement in merchandise margins.
• Private label penetration rose to 48.5%, led by mid-teens growth in women’s denim, and digital commerce investments supported a return to e-commerce growth for the quarter.
• Management plans to open 7–8 new stores in 2025 (netting 2–3 openings after closures) and complete another 12–15 full remodels as part of its expansion strategy.

Presentation

[Operator]

As a reminder, today's webcast is being recorded. Now I would like to turn the conference over to your host, Tom Heacock.

[Thomas Heacock, CFO at The Buckle]

Good morning, and thanks for joining us this morning. Our November 22nd, 2024 press release reported that net income for the 13-week third quarter, which ended November 2nd, 2024, was $44.2 million, or $0.88 per share on a diluted basis, compared to net income of $51.8 million, or $1.04 per share on a diluted basis, for the prior year 13-week third quarter that ended October 28th, 2023. Year-to-date net income for the 39-week period ended November 2nd, 2024, was $118.3 million, or $2.35 per share on a diluted basis, which compares to net income of $140.3 million, or $2.81 per share on a diluted basis, for the prior year 39-week period ended October 28th, 2023. Net sales for the 13-week third quarter decreased 3.2% to $293.6 million, compared to net sales of $303.5 million for the prior year 13-week third quarter.

[Thomas Heacock, CFO at The Buckle]

Comparable store sales for the 13-week fiscal quarter decreased 0.7% in comparison to the same 13-week period a year ago, and our online sales increased 1.1% to $46.6 million for the 13-week fiscal quarter, which compares to $46.1 million for the prior year 13-week fiscal quarter. Compared to the same 13 weeks a year ago, our online sales increased 1.7%. Year-to-date net sales decreased 4.6% to $838.5 million, compared to net sales of $878.7 million for the prior year 39-week fiscal period. Comparable store sales for the year-to-date period decreased 5.4% in comparison to the same 39-week period in the prior year, and our online sales decreased 9.2% to $128 million for the year-to-date period, which compares to $141 million for the prior year 39-week fiscal period. Compared to the same 39 weeks a year ago, our online sales decreased 8.9%.

[Thomas Heacock, CFO at The Buckle]

For the quarter, UPTs decreased approximately 1%, the average unit retail increased approximately 1.5%, and the average transaction value increased about 0.5%. Year-to-date, UPTs decreased approximately 2.5%, the average unit retail increased approximately 3.5%, and the average transaction value increased approximately 1%. Gross margin for the quarter was 47.7%, down 80 basis points from 48.5% in the third quarter of 2023, with the current quarter decline being the result of a 100 basis point decrease in or increase in occupancy costs, along with a 35 basis point increase in distribution and buying costs, which were partially offset by a 55 basis point improvement in merchandise margins. Year-to-date gross margin was 46.9%, also down 80 basis points from 47.7% in the prior year.

[Thomas Heacock, CFO at The Buckle]

The year-to-date decline was the result of a 110 basis point increase in occupancy costs, along with a 25 basis point increase in distribution and buying costs, which were partially offset by a 55 basis point improvement in merchandise margins. Selling, general, and administrative expenses for the quarter were 29.1% of net sales, compared to 27.4% for the third quarter last year. For the year-to-date, SG&A was 29.6% of net sales, compared to 27.8% for the same period last year. The third quarter increase was due to a 90 basis point increase in store labor-related expenses, a 35 basis point increase related to digital commerce investments, a 30 basis point increase in G&A salaries, and a 50 basis point increase in other SG&A expense categories. These increases were partially offset by a 35 basis point decrease in incentive compensation accruals.

[Thomas Heacock, CFO at The Buckle]

Our operating margin for the quarter was 18.6%, compared to 21.1% for the third quarter of fiscal 2023. For the year-to-date period, our operating margin was 17.3%, compared to 19.9% for the same period last year. Income tax expense as a percentage of pre-tax net income for both the current and prior year fiscal quarter was 24.5%, bringing third quarter net income to $44.2 million for fiscal 2024, compared to $51.8 million for fiscal 2023. Income tax expense as a percentage of pre-tax net income for both the current and prior year year-to-date periods was also 24.5%, bringing year-to-date net income to $118.3 million for fiscal 2024, compared to $140.3 million for fiscal 2023.

[Thomas Heacock, CFO at The Buckle]

Our press release also included a balance sheet as of November 2nd, 2024, which included the following: inventory of $149.4 million, which was down 1.9% from the same time a year ago, and $352.7 million of total cash and investments. We ended the quarter with $143 million in fixed assets net of accumulated depreciation. Our capital expenditures for the quarter were $10.2 million, and depreciation expense was $5.5 million. For the year-to-date period, capital expenditures were $32.5 million, and depreciation expense was $16.6 million. Year-to-date capital spending is broken down as follows: $31.7 million for new store construction, store remodels, and technology upgrades, and $0.8 million for capital spending at the corporate headquarters and distribution center. During the quarter, we opened five new stores and completed one full remodel, which brings our year-to-date counts to seven new stores, 13 full remodels, and six store closures.

[Thomas Heacock, CFO at The Buckle]

For the remainder of the year, we plan on opening one additional new store and completing seven additional full remodel projects, six of which will be relocations into new outdoor shopping centers. Buckle ended the quarter with 445 retail stores in 42 states, which compares to 443 stores in 42 states at the end of the third quarter of fiscal 2023. And now I'll turn it over to Adam Akerson, Vice President of Finance.

[Adam Akerson, VP of Finance at The Buckle]

Thanks, Tom, and good morning. Let me start by saying that we are pleased with the performance of the business during the quarter, especially considering the unseasonably warm start to the fall selling season across much of the country. Our women's merchandise sales for the quarter were down about 0.5% against the prior year fiscal quarter and represented approximately 47% of sales. On a 13-week comparable basis, women's merchandise sales increased approximately 3%. Highlighting the women's growth for the quarter was a 9% increase in denim. The strength in women's denim was most notable in our private brands, with private label denim growing mid-teens. Average denim price points increased from $79.50 in the third quarter of fiscal 2023 to $81.15 in the third quarter of fiscal 2024, while average overall price points increased about 1% from $49.35 to $49.95.

[Adam Akerson, VP of Finance at The Buckle]

During the quarter, our women's business also saw nice increases in our knit tops, accessories, and fashion bottoms. On the men's side, merchandise sales for the quarter were down about 5.5% against the prior year fiscal quarter, representing approximately 53% of total sales. On a 13-week comparable basis, men's merchandise sales were down approximately 2.5%. Our men's business for the quarter was more impacted by warmer temperatures, with a slower transition into cold weather categories. We continue to be pleased with the performance of short sleeve and graphic tees, along with our great assortment of hats, fragrance, and other accessories. While overall denim on the men's side was down about 1%, private label denim grew low single digits. Average denim price points increased from $87.95 in the third quarter of fiscal 2023 to $88.10 in the third quarter of fiscal 2024.

[Adam Akerson, VP of Finance at The Buckle]

For the quarter, overall average men's price points increased approximately 2.5% from $52.85 to $54.30. On a combined basis, accessory sales for the 13-week quarter were up approximately 3% against the prior year 13-week comparable period, while footwear sales were down about 17%. These two categories accounted for approximately 10% and 5%, respectively, of third quarter net sales, which compares to 10% and 6% for each in the third quarter of fiscal 2023. For the quarter, average accessory price points were down slightly, while average footwear price points were up about 7%. Also, on a combined basis, our youth business had a strong back-to-school selling season. Total youth sales increased approximately 2.5%, with strong performance in denim and graphics. For the quarter, denim accounted for approximately 46% of sales, and tops accounted for approximately 29.5%, which compares to 43.5% and 30.5% for each in the third quarter of fiscal 2023.

[Adam Akerson, VP of Finance at The Buckle]

Driven by the growth in private label denim, we continue to increase our private label penetration during the quarter, with private label representing 48.5% of sales versus 47% in the third quarter of 2023. As Tom mentioned in his remarks, we continue to make investments in our digital channels during the quarter. We are excited to see these investments starting to impact the guest experience, along with several key metrics across the e-commerce channel, with a return to growth for the quarter. And with that, we welcome your questions.

[Operator]

Thank you. As a reminder for participants, if you would like to ask a question, please raise your hand in the Zoom app. Prior to asking your question, please state your name and firm affiliation. Our first question is from Mauricio Serna. You are now able to unmute yourself.

[Mauricio Serna, Analyst at UBS]

Great. Good morning. It's Mauricio Serna from UBS Research. Thanks for taking my question. Sorry, I think I missed this part when you were talking about the gross margin drivers. I think I heard that you mentioned the merchandise margins were up 55 basis points year over year, and I think that's a bit of a deceleration compared to what you had seen in the second quarter. So maybe first, I wanted to make sure that was the number. Maybe you could elaborate a little bit more on what drove that slowdown in terms of the merchandise margin. And also, I guess that, thinking it implies, the buying, occupancy, and distribution costs to leverage was a little bit higher than the prior quarter. So yeah, a little bit of detail behind that will be very helpful. Thank you.

[Adam Akerson, VP of Finance at The Buckle]

Yeah, thank you, Mauricio. Good morning. Just walking through the numbers for gross margin for the quarter, it was 100 basis points of increase in occupancy costs, 35 basis points of increase in distribution and buying, and then that was offset by 55 basis points of improvement in merchandise margins. And on the merchandise margin side, I mean, really that number is consistent both quarter and year-to-date, so similar to the trend that we've seen through the first part of the year. Comparisons are a little bit different for each of the quarters last year, so I think that's a big driver if it did decelerate from Q2. And really the drivers of the growth there are similar to what it's been year-to-date as well. That growth in private label, I mean, really strong trends with our private label denim brands.

[Adam Akerson, VP of Finance at The Buckle]

Again, that private label up to 48.5% has been a big driver of margin improvements. And then also a mix shift footwear is a little bit lower margin category. So as we've, that's a smaller part of our business that's been accretive to margins. And I don't know if Dennis has more to add, but those are the primary drivers.

[Dennis Nelson, CEO at The Buckle]

Nothing to add.

[Operator]

Thank you. As a reminder, please use the raise hand feature at the bottom of your Zoom app if you would like to ask a question. Currently, there are no further questions in the queue. Mauricio, I see you raised your hand.

[Mauricio Serna, Analyst at UBS]

Yes, thank you. Just had a follow-up question on the store count. I think you just want to make sure I got this right. I think you end the quarter with 445 stores, and you plan to open one. So I think that's from a net store opening for the year, that would take you to two openings. I just was wondering, how are you thinking about expansion in terms of net store additions over the next couple of years, just given where the retail landscape is right now? Thank you.

[Dennis Nelson, CEO at The Buckle]

Good morning. We are estimating seven or eight new stores next year. And we have some situations where there'll be some store closings. So best guess at the moment would be net two or three added over 2025. And we plan to relocate and remodel probably another dozen stores this next year. And also we'll continue to have smaller updates and remodels in probably another 12-15 stores next year as well.

[Mauricio Serna, Analyst at UBS]

Understood. Thank you so much.

[Dennis Nelson, CEO at The Buckle]

Thank you.

[Operator]

As a reminder, please use the raise your hand function at the bottom of your Zoom window if you would like to ask a question to our panelists. And now we have a question from Nancy. You're now able to unmute yourself.

[Operator]

Good morning. Quick question on the remodels. What kind of lift are you seeing, or what kind of benefit are you seeing that you can discuss post-remodel and sort of how the pace at which you're seeing any kind of change in sales?

[Dennis Nelson, CEO at The Buckle]

Thank you, Nancy. It's a little difficult just to give a set number. We have several stores that are performing very well and just need an update to continue their performance on the, what we call, open store remodels to change out counter and freshen the store. So kind of based on previous experience, it could be low double digits, give or take. When we move from an existing mall to an outdoor power center, we could see anywhere from low double digits or better. And here again, it kind of depends. We have a lot of these stores that we're putting in better positions for the future, although they are performing well presently. So there's no real set number that I could give you across the board.

[Dennis Nelson, CEO at The Buckle]

Okay. Thank you.

[Dennis Nelson, CEO at The Buckle]

Thank you.

[Operator]

There are no further questions in the queue. As a reminder, if you would like to ask a question, please use the raise hand function at the bottom of your Zoom app. I see another question from Nancy. You are now able to unmute.

[Operator]

I think that might be a mistake. I don't think I raised my hand, but.

[Operator]

Okay. Sorry about that. I'll lower your hand for you. Sorry about that.

[Operator]

No worries. Appreciate it.

Participants

Executives

• Dennis Nelson, CEO
• Adam Akerson, VP of Finance
• Thomas Heacock, CFO

Analysts

• Analyst
• Mauricio Serna, Analyst at UBS