Earnings call transcript: Buckle beats Q1 2025 earnings, stock dips

Buckle Inc. (BKE) reported its first-quarter earnings for 2025, surpassing Wall Street expectations with an EPS of $0.70, compared to the forecasted $0.66. The company maintains impressive gross profit margins of 58.93% and offers a substantial 9.42% dividend yield. Despite this positive financial performance, the company’s stock fell by 3.85% in pre-market trading, reflecting investor caution. According to InvestingPro analysis, BKE currently trades below its Fair Value, suggesting potential upside opportunity.

Key Takeaways

• Buckle’s EPS beat expectations by 6.06%, with net income rising to $35.2 million.
• Revenue grew by 3.7% year-over-year, reaching $272.1 million.
• The women’s business segment showed strong momentum, while men’s sales slightly declined.
• The stock price dropped 3.85% despite positive earnings results.
• Investors remain cautious due to tariff concerns and operational margin pressures.

Company Performance

Buckle Inc. demonstrated a solid performance in Q1 2025, with net sales increasing by 3.7% to $272.1 million. The company benefited from a strong showing in its women’s business, which now represents 50% of total sales. However, the men’s segment saw a slight decline of 2.5%, indicating potential areas for improvement. Overall, the company’s diversified product mix and strategic brand positioning contributed to its financial success.

Financial Highlights

• Revenue: $272.1 million, up 3.7% from $262.5 million in the previous year.
• Earnings per share: $0.70, up from $0.69 last year.
• Gross margin: 46.7%, a 70 basis point increase.
• Operating margin: 16%, slightly down from 16.2%.

Earnings vs. Forecast

Buckle’s actual EPS of $0.70 exceeded the forecast of $0.66 by approximately 6.06%, while revenue also surpassed expectations, reaching $272.1 million against a forecast of $265.54 million. This performance highlights the company’s ability to manage costs and drive sales growth, particularly in its expanding women’s and private label segments.

Market Reaction

Despite the earnings beat, Buckle’s stock fell by 3.85%, closing at $41.40. This decline suggests that investors may be concerned about the company’s slight decrease in operating margin and potential tariff impacts. The stock’s movement contrasts with its 52-week range, indicating a cautious market sentiment.

Outlook & Guidance

Looking ahead, Buckle plans to continue expanding its private label offerings and manage potential tariff impacts through strategic vendor relationships. The company is also focusing on opening new stores and remodeling existing ones to enhance its retail presence.

Executive Commentary

"We’re very excited about our ladies business. The trends have been very good," an executive noted during the earnings call, highlighting the strong performance in women’s categories. Another executive emphasized, "Increase in private label is a big driver, and we saw an increase there again in the first quarter," underscoring the importance of this segment in Buckle’s growth strategy.

Risks and Challenges

• Tariff impacts could affect cost structures and pricing strategies.
• A slight decline in men’s sales may require strategic adjustments.
• Increased SG&A expenses could pressure operating margins.
• Macroeconomic factors and consumer spending trends may influence future performance.

Q&A

During the Q&A session, executives addressed questions about tariff management strategies, merchandise margin improvements, and SG&A expense components. They also clarified the reasons for the increase in lease liabilities, providing insights into the company’s operational and financial strategies.

Full transcript - The Buckle Inc (BKE) Q1 2026:

Moderator/Operator: Good morning. Thank you for standing by, and welcome to Buckle’s First Quarter Earnings Release Webcast. As a reminder, all participants are currently in a listen only mode. A question and answer session will be conducted following the company’s prepared remarks with instructions given at that time. Members of Buckle’s management on the call today are Dennis Nelson, president and CEO Tom Hecock, senior vice president of finance, treasurer, and CFO Adam Ackerson, Vice President of Finance and Corporate Controller and Brady Fritz, Senior Vice President, General Counsel and Corporate Secretary.

Before beginning, the company would like to reiterate its policy of not providing future sales or earnings guidance. All forward looking statements made on the call are pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially due to risks and uncertainties described in the company’s SEC filings. The company undertakes no obligation to publicly update or revise these statements except as required by law. Additionally, the company does not authorize the reproduction or dissemination of transcripts or audio recordings of the company’s quarterly conference calls without its expressed written consent.

Any unauthorized reproductions or recordings of the calls should not be relied upon as the information may be inaccurate. As a reminder, today’s webcast is being recorded. And now I’d like to turn the conference over to your host, Tom Heacock.

Tom Heacock, Senior Vice President of Finance, Treasurer, and CFO, Buckle: Good morning, and thanks for joining us this morning. Our 05/23/2025 press release reported that net income for the thirteen week first quarter ended 05/03/2025, was 35,200,000.0 or $0.70 per share on a diluted basis compared to net income of $34,800,000 or $0.69 per share on a diluted basis for the prior year thirteen week first quarter, which ended 05/04/2024. Net sales for the thirteen week first quarter increased 3.7% to $272,100,000 compared to net sales of $262,500,000 for the prior year thirteen week first quarter. Comparable store sales for the quarter increased 3% in comparison to the same thirteen week period in the prior year, and our online sales increased 4.5% to 46,400,000 For the quarter, UPTs increased slightly, the average unit retail increased approximately 1%, and the average transaction value increased approximately 1.5%. Gross margin for the quarter was 46.7%, a 70 basis point increase from 46% in the first quarter of last year, with the current quarter margin improvement being the result of a 60 basis point increase in merchandise margins, along with a 10 basis points of leverage buying distribution and occupancy expenses.

Selling, general and administrative expenses for the quarter were 30.7% of net sales compared to 29.8% for the first quarter of last year. And the first quarter increase was due to a 45 basis point increase in incentive compensation accruals, a 25 basis point increase in health insurance related costs, a 20 basis point increase in equity compensation expense and a 40 basis point increase in other SG and A expense categories. These increases were partially offset by a 25 basis point decrease in e commerce shipping expenses and a 15 basis point reduction in certain marketing expenses. Our operating margin for the quarter was 16% compared to 16.2% for the first quarter of fiscal twenty twenty four. Income tax expense as a percentage of pretax net income for both the current and prior year fiscal quarter was 24.5%, bringing first quarter net income to $35,200,000 for fiscal twenty twenty five compared to $34,800,000 for fiscal twenty twenty four.

Our press release also included a balance sheet as of 05/03/2025, which included the following: inventory of 132,400,000 up 1.3% from the same time a year ago and $320,000,000 of total cash and investments. We ended the quarter with $152,100,000 in fixed assets net of accumulated depreciation. Our capital expenditures for the quarter were $11,400,000 and depreciation expense was 5,900,000.0 First quarter capital spending is broken down as follows: $10,000,000 for new store construction, store remodels and technology upgrades and $1,400,000 for capital spending at the corporate headquarters and distribution center. During the quarter, we completed five full store remodels, three of which were relocations into new outdoor shopping centers and closed two stores. For the remainder of the year, we anticipate opening seven new stores, completing 16 additional full remodel projects and closing one youth store as it combines with our full line location as a part of a remodel.

Buckle ended the quarter with four thirty nine retail stores in 42 states compared with four forty stores in 42 states at the end of the first quarter of last year. And now I’ll turn the call over to Adam Ackerson, Vice President of Finance. Thanks, Tom, and

Adam Ackerson, Vice President of Finance and Corporate Controller, Buckle: good morning. Our women’s business continued its strong momentum from the back half of twenty twenty four through the first quarter of twenty twenty five, with merchandise sales increasing about 10.5% against the prior year and representing approximately 50% of sales, which compares to 47% last year. The strong results continue to be headlined by the performance of our denim category. For the quarter, women’s denim increased approximately 11% with average denim price points increasing from $80.85 in the first quarter of fiscal twenty twenty four to $84.85 in the first quarter of fiscal twenty twenty five. This AUR increase is primarily the result of continued growth in our private in our buckle black label, increasing its percentage of our total denim mix, along with strong performance of higher price point national brands.

Complementing our strong denim selection, our merchandising team did a great job delivering a balanced assortment of tops, shorts, dresses, outerwear, footwear and accessories, which all delivered growth for the quarter. For the quarter, average women’s price points increased about 2% from $48 to $49.05 On the men’s size, we were pleased with the to see sequential improvement throughout the quarter, resulting in positive year over year sales in fiscal April. For the quarter, men’s merchandise sales were down about 2.5% against the prior year, representing approximately 50% of total sales compared to 53% in the prior year. For the quarter, our men’s denim category was down about 05% with private branded denim increasing about 1%. Average denim price points increased from $88.65 in the first quarter of fiscal twenty twenty four to $89.7 in the first quarter of twenty twenty five.

In other categories, we saw stronger performance in our tees, polos, denim shorts and fragrance selections. For the quarter, overall average men’s price points increased approximately 1.5% from $53.6 to $54.4 On a combined basis, accessory sales for the quarter increased approximately 3.5% against the prior year, while footwear sales were down about 7%. These two categories accounted for approximately 115.5%, respectively, of the first quarter net sales, which compares to 116% for each in the first quarter of fiscal twenty twenty four. For the quarter, average accessory price points were up approximately 1% and average footwear price points were up about 2.5%. Also on a combined basis, our youth business continued its growth during the quarter, increasing approximately 11.5% year over year.

For the quarter, denim accounted for approximately 43.5 percent of sales and tops accounted for approximately 27%, which compares with 4327.5% for each in the first quarter of twenty twenty four. As previously mentioned, we continue to see nice growth in our private brands across nearly every category. For the quarter, private label represented 47.5% of sales versus 46% in the first quarter of twenty twenty four. With that, we welcome your questions.

Moderator/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 questions, please state your name and firm affiliation. Our first question is from Mauricio. Mauricio, I’m gonna go ahead and prompt you to unmute at this time.

Mauricio Sarma, Analyst, UBS Research: Great. Good morning. This is Mauricio Sarma from UBS Research. Just a couple of questions. Maybe could you elaborate a little bit more on, you know, how are you thinking about the China, tariffs and, you know, other tariffs impact on your gross margin as we head into second quarter, you know, upcoming quarters?

Like, yeah, how are you thinking about that? And then on on the report, you know, just one thing that, sticked out just on the balance sheet, we see a big uptick, I think, like, 10% increase or so in the upper operating lease, you know, assets, right of use. Just wanted to understand what was, like, the driver we had that be behind behind that big increase. Thank you.

Unidentified Executive, Buckle: Good morning, Mauricio. Thank you for the question. We have vendors and brands where we have had no increases in our costs as we look, even forward to the second quarter. As well, we’ve had others that have low to mid single digit increases. So we think we’re working with our vendors, managing the tariffs and our product, has worked out well.

Ed, do you wanna comment on

Moderator/Operator: the other?

Tom Heacock, Senior Vice President of Finance, Treasurer, and CFO, Buckle: And then, Mauricio, was your second question just on the the lease liability on the balance sheet? Is that what the question was? I’m sorry. It looks like we lost Maricio. But, yeah, Maricio, that’s really just a function of of new stores and remodels over the last twelve months.

So every one of those at at the inception of the lease would have both assets and liabilities that are recognized on the balance sheet.

Moderator/Operator: Okay. There are no further questions in queue. As a reminder, if you would like to ask a question oh, I believe Mauricio is raising his hand again. Let me go ahead and prompt him to unmute.

Mauricio Sarma, Analyst, UBS Research: Great. Yeah. Thanks thanks for taking a follow-up. Maybe could you talk about, you know, in the gross margin result, you know, this quarter, saw a nice uptick on the merch like, contribution from merchandise margin and, like, what what is driving that? And then and then on the on the part that is actually, like, the occupancy, it seems that you got a little bit of leverage.

I was just curious on that too because I I think I do have recall that maybe, like, in the first quarter, you kinda require a a higher, you know, comp sales growth to kinda, like, leverage expense. And then just lastly, again, just following up on on the tariff commentary, like, anything that you’re doing on on your side in terms of, like, you know, relocating the production or or for your private labels, how are you dealing with the tariff for the private labels, I guess? That’s, like, the part that was just, concerned because I I recall that there’s that that particular business had a huge exposure to China. Thank you.

Unidentified Executive, Buckle: Correct. Yes. On the as I mentioned, we’re working closely with our vendors. They are sourcing other countries as well as well as, you know, wanting to maintain our business and long history of working with key vendors and helping us out on holding price and working ahead. As well as the first quarter, we’re very excited about our ladies business.

The trends have been very good. Strong denim, but also all categories are having good sell sell throughs at regular price. And the men’s business is still 50% of our business, and we’re having, good sell throughs, in all our key categories there, and we’re feeling really good about the inventory. Do you want to comment on the other?

Tom Heacock, Senior Vice President of Finance, Treasurer, and CFO, Buckle: And then, Marcio, I think your your second questions were about merchandise margin drivers during the quarter, and and really, that’s a function. I mean, we’ve seen continued growth there, but increase in private label is a big driver, and we saw an increase there again in the first quarter and then also strong regular price selling during the quarter. So both of those were contributing factors to the 60 basis point increase. And then on the the leverage that we saw, which was about 10 basis points for q one, you know, looking at total occupancy cost for for q one, we’re up about 3.5%. So with total sales better than that, we we did get a little bit of leverage.

Mauricio Sarma, Analyst, UBS Research: Got it. And then sorry. Can you hear me? I don’t know if I’m still, like, on on on on mute or not.

Tom Heacock, Senior Vice President of Finance, Treasurer, and CFO, Buckle: We can hear you.

Mauricio Sarma, Analyst, UBS Research: Oh, perfect. So I guess just the other one on SG and A was, you know, seems like was elevated. Anything there that’s like you know, like, you you you called out you know, you do a very good job. It’s, like, breaking down the components. But, like, anything on how should we how should we thinking about maybe, like, the ability opportunity to actually see some leverage on s g and a if if we continue to see actually, like, the the good progress in in the comp sale?

Tom Heacock, Senior Vice President of Finance, Treasurer, and CFO, Buckle: They’re kinda logging through the drivers, and we called them out in the script. But but total s g and a dollars were up just a little bit over $5,000,000. And so, you know, for the quarter, looking at store payroll was was flat as a percentage of sales, which which was the first quarter. That’s been the case for for several quarters. But even with that, total payroll dollars were during the quarter were up just over $2,000,000, so that was the biggest biggest driver of s g and a expense.

And a lot of that is is, again, store labor, sales labor that’s variable based on on top line results. The other components that we called out were incentive comp, and, again, the the strong performance during the quarter with with pre bonus net income being up year over year. And then, you know, again, looking for our expectation for the rest of the year for for that, and the accrual was up year over year. And then equity comp and and health insurance, which health insurance were self funded, so a little bit. I just reacted to claims that come in, and we had better better performance a year ago during q one.

And then equity comp is is largely a function of stock price on the date of grant for for new shares.

Mauricio Sarma, Analyst, UBS Research: Understood. Thank you so much.

Moderator/Operator: There are no further questions in queue. As a reminder, if you would like to ask a question, please raise your hand in the Zoom app. Okay. Looks like there’s no further questions. I will now turn the call back over to Buckle for any closing remarks.

Tom Heacock, Senior Vice President of Finance, Treasurer, and CFO, Buckle: Thank you everybody for participating in the call, and and we hope enjoy the rest of day, and have a wonderful holiday weekend.

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