The Buckle May 4th Quarter

There’s never time to write about everything I want to write about, and The Buckle is one that has often slipped through the cracks. And while there’s nothing dramatic to report, I thought it might be time to take a short look at their results. 

At the end of the quarter, The Buckle operated 443 stores in 43 states. They sell “…medium to better priced casual apparel, footwear, and accessories for fashion conscious young men and women.” Denim is about 45% of their business. Tops are 28.3%, sportswear/fashion 10.8%, accessories 7.5% and footwear 6.3%. 31% of their revenues for the quarter were from proprietary labels.
 
Sales grew 2.3% from $264 to $ 270 million. Comparable store sales rose 1.2% compared to the same quarter last year. Online sales, which aren’t part of comparable store sales, were up 6% to $20.9 million. For all companies that report comparable store sales, there’s some thinking to be done about how to manage online sales. Should they be part of comparable store sales? Everybody believes that online and brick and mortar sales have an impact on each other. Now if we could just figure out what, exactly, that impact was.
 
Gross profit margin stayed approximately the same, rising from 43.3% to 43.4%. Selling expenses as a percentage of revenue were constant at 17.5%. General and administrative expenses were, well, pretty much the same rising from 3.8% to 3.9% of sales. Operating income was- yeah, you guessed it- constant at 22% of revenue. Obviously, those expenses rose in total dollars commensurate with the sales growth.
 
Income tax provision was, uh, almost unchanged at $22 million. Wait, here’s something! Other income fell from $1.81 million to $350,000. The decline was due to “…the reduction related primarily to certain state economic development incentives received during the first quarter of fiscal 2012.”
 
Well, that’s exciting! Isn’t it? Okay, maybe not so much.         
 
Net income was down (you guessed it!) very slightly, from $37.8 to $37.6 million. So I’m beginning to get a sense of why I don’t write about the Buckle that much, though I’ve been intrigued by the merchandising in their stores.
 
Maybe there’s something exciting happening over on the balance sheet. Well, not really exciting. Cash and short term investments fell from $220 million on April 28 a year ago to $144 million on May 4. That’s a decline of 35%, but it hardly leaves them destitute. That pulled the current ratio down from 3.69 to 2.71, but it’s still in great shape. They note that “Capital spending for the corporate headquarters and distribution center during the first quarter of fiscal 2013 includes $5.4 million for the purchase of a new corporate airplane as a replacement for a plane that was sold by the Company in the fourth quarter of fiscal 2012.” Those expenses explain some of the decline in cash.
 
“…inventory on a comparable-store basis was up approximately 7%, and total markdown inventory was up compared to the end of the first quarter last year,” we’re told in the conference call. We don’t get any details on that mark down inventory.
 
Total liabilities to equity rose from 0.38 to 0.51 with the decline in shareholder’s equity from $398 to $320 million. There is no bank debt.
 
Well, that’s kind of it. I guess The Buckle headline for the quarter is that there’s nothing that’s particularly thought provoking or dramatically good- or bad- to write about.