The Buckle, Inc. (BKE) 21 Aug 202020 Q2 Earnings call transcript

Ladies and gentlemen, thank you for patience and holding. And welcome to the Second Quarter Earnings Release Call. 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, General Counsel and Corporate Secretary.

As they review the operating results for the second quarter, which ended August 1, 2020, they would like to reiterate their policy of not giving future sales or earnings guidance and having 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 risk 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 your the the relied not reproduction Please conference be turn transcripts company call to I company’s the written authorize Heacock. ahead. of consent. or calls recordings go now without its would to host, information be Any not unauthorized recordings like

us morning, morning. this for thanks Good and joining

sales million $XX.X quarter Net the ended on $X.XX to week basis August net August sales of or or sales the the diluted sales income ended of fiscal sales X, XX or X, million prior per increased to XXXX press XX% year August weeks quarter, $XX Year-to-date the quarter $X.XX for XXXX. period. XXXX. to compared million million XXXX the Our XX for a of XX net period compared XX the increased August the week per August year the year of of fiscal week sales million fiscal XX XXXX on $XX.X basis, XX.X% to to sales for for prior ended of a second was compared sales net for XX, to week share per for $XX.X year on million for for to for week quarter. for increased XX XX a decreased prior $X.XX which income $XXX.X second reported that XX compared X, net ended period million, $XXX share million, X, million weeks XX for second period XXXX. fiscal XX the which share year Year-to-date million $XXX.X $X.XX million compared $XX.X $XX.X $XX.X prior diluted period ended net to the prior August diluted million compares August Online net diluted income basis, the weeks weeks quarter or X, year-to-date period net $XXX.X net $XX.X ended per second income release period. on was the to to XX.X% Online a prior for X, share year XXXX X% net basis, week

For leveraged a UPTs throughout approximately increased performance strong X%, X% strong occupancy XX.X% X.X%, retail value approximately distribution in point period quarter. given year-over-year the approximately approximately from X.X%. increased increased Gross quarter X%, the approximately approximately increased value increased increased average transaction unit unit for average was X%. up and XX.X%, the Year-to-date, the the quarter average the and UPTs retail basis transaction margin average second of basis year merchandise open the that online result were for sales improvement margins, was of XXX buying quarter. the increase the prior The and in the stores topline points and XXX and costs,

in of deleveraged the quarter in expenses This costs, $XX.X were distribution $XX.X XX% quarter merchandise expenses costs store million The expenses for result ago. a reductions same year-over-year operating the for for XX.X% of offset fiscal expenses, XX.X% increased gross decrease million reductions along XXXX occupancy expenses, Again, the the a and for strong e-com partially a a related the year-to-date compensation declined SG&A to margins. with dollar fiscal and of down partially travel decline buying partially reductions a basis, resulting fiscal costs the XX.X% supplies. offset the other reduction expenses, $XX.X from a the fiscal $XX compared a sales. by period related compared our along second with XXXX. sales the million million second period for basis freight was the million of in same and result point certain basis, from the period benefit These last from $XXX of for including $XX.X to the was On the from $XX of On online reduction declined operating for increased XX.X%, net by year-to-date and quarter sales, $XX.X result resulting period For benefit million SG&A was net XXXX. million dollar from year in by XX.X% SG&A certain were period same XXXX improvement compensation to year-to-date ago. of was decline XX margin in million and SG&A other for in growth. in year. period was strong shipping was offset year to our

XX.X%, for the for the quarter quarter of X.X% margin was compared operating to XXXX. second Our fiscal

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

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

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

headquarters million. capital $X.X Year-to-date expenditures spending store follows: and $X.X distribution center. million for the For were year-to-date technology $X.X spending corporate and and broken for depreciation capital down capital was upgrades, is at expense period $XX million as million remodels and the

Buckle one quarter, new one new to opened full closures. locations, remodel we five Youth store also stores our new two stores, three we brings and store, line three and full count the which year-to-date and During closed

expenditures of still XXXX. remainder store year, capital Buckle of I’ll expect over IT the second current XXX stores XXX fiscal stores in store states, our which to the now the plan the with women's the investments. of plans, $X quarter states both Vice on Kelli be the quarter retail call in For million, range at on we XX completing President includes ended of the Based $XX XX and of million we projects additional in Molczyk, And end remodels. three turn store Merchandising. compared with to planned full to

to merchandise Women's XXXX, second approximately in categories Merchandise start year for performance of quarter quarter like for of would points price the Women's the I our highlighting were Average the increased against XXXX. fiscal fiscal Tom. the by sales quarter from quarter. of prior $XX.XX to quarter. X% the the second Thanks, fiscal up fiscal denim in $XX.XX

women's our point about sales, average $XX.XX approximately business quarter was XX% last from $XX.XX. to of net year, increased compared to the For women's XX.X% and price X%

to key business categories. quarter, nice saw the For several responses the women's

bottom waist in collection selection offering openings, guests denim to was evolve creating by category we the fits, building, continue in rises, inseams and Our biggest well-received sizes. our the as and finishes,

remains creating denim on focus for everybody. Our

private label exclusive our denim Our as larger continues product of business. to overall part a grow and

to had denim, that expanded to addition selection of quarter. a we nice shorts response we throughout our the In also

into and changes extremely e-silhouettes, tees that I of slip-on favorable quarter. comfort graphics to and and flexibility navigated With category, footwear drivers average healthy job inventory managing the response made up, in team delivered women with adjusted We our quarter points of to these did our around which business. proud of puts contributing the the what's shows our inventory, to sales. flow building ahead. we of key to of through as the markdown our styling, our effects position, the and our inventory design as ended be we well position COVID shifts As types our we the by hard evolve, products react the on-order down, amazing and margins. and in uncertainties act a comfortable throughout price the overall through retain several all a the saw fabric, the continue pandemic, and categories simplistic an were our dedication team to With as work

on Bob discuss Vice Men's to Our our to Carlberg, Men's the it on-trend, of Senior products. remains And of I'll livable functional turn over with and that, focus Merchandise Merchandising denim-friendly President performance categories.

in from $XX.XX Men's to to fiscal fiscal quarter points in the sales were denim XXXX Kelly. $XX.XX increased up year quarter of X% prior in the second Merchandise quarter. quarter comparison for second Average Thanks the price of the XXXX.

increased XX% last approximately was from X% average year, our $XX.XX approximately $XX.XX. compared quarter price XX.X% business and sales men's men's the points For net to to of

excellent strength been our to reflected Spring ever We strong provide quarter. allowed products As maintain risk, men's incredibly of of a us and was partnerships, to entire proud team summer standout styling. amount Buckle the and and quarter were never cadence position. approach more mitigated respectful to vendor our our This also was fashion that normal accessories in we the more still as reopened and color a we especially planning was in shorts managed the markdown of were to approach responded presentation good evident challenge allowed COVID a crisis situation. inventory including our fresh a Overall, well. I've there low throughout an our team. an of Footwear, results our large strong us categories changing took way the The end departments. and stores. in

CoolMax finishes We the Buckle Denim and guest. as stayed younger are true fabrics. light well guest tried more as destruction, of as care as strong and added we a lightweight taking attracting fashion as well

continue brands private to private a a business BKE guest. brands at of each with core, our the of share and different growing our attracting Our capture

street well newest the our quarter. denim throughout Additionally, performed category

Average accessory about combined combined quarter X.X% XX% and second basis, and fiscal quarter to of the for XXXX. fiscal points a and XX% X.X%. the footwear on price of X.X% Again These net two turning footwear prices were were X% year while quarter, for approximately compares XX% accounted of against approximately each categories XXXX. XX%. quarter XX.X%, up X.X% sales accounted prior and approximately for fiscal accounted XX% on for sales, about up the quarter second denim the to the X.X% second quarter fiscal which were of Now in up tops accessory results sales which up respectively, for approximately the approximately were compares average a sales, and for to basis in

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

Instructions]. from & from question ahead. Steve King [Operator our go And Please first Associates. comes C.L. Marotta

next to Good issues. Can And What on it make moment us investments this intend all infrastructure? to quarter, the there. pandemic update do terrific you online the morning, a start where please everybody. digital let's over is? Congratulations XX time, the months? At in on six given you

for morning, you. answer Tom Steve. the for question. I'll that one Thanks let Good

you, and e-com done. with lot we're Thank Steve. of a we've strong Yes. where Good really feel We about at morning. what

lot team a talented does really website. our IT a development have of We that for the

the internally a So of of doing lot we're projects, the things developed. lot a are

have expanded and big the been in and of in more expanded growth online it first In from that it sale, online ship-from-store, selection a are big our fill limited we a and February of to shipping had stores flagged really We've get fall it and a been driver things what the we've offering our SKUs allowing on directly And way. for be One part to on is guests has online guests. and like of The from talked the so working pick offer been for of fourth and able they be today, in-store local orders to excited inventory, demand even accelerated and before them the buy through starting have drivers up. it working a that COVID those really online of about. their expanded to shop pick has quarter, of to up were directly able also in-store and the inventory and online, categories of while, store, those year, buy or things, expansion iteration growth our our really for more next omni-channel, stores today, about. that's for next buy an for we're lot of the can

ship-from-store XXX% categories? The now that across that be? mentioned stores you you not, first, when And is if would expect it would in

stores. our in It's

we so started last nice categories. And fall saw stores a to basis had test terms a And limited -- on it and learn. again both and of those really it and in response to categories

So a driver online COVID growth in inventory selection that nice that. expanded which ship-from-store expanding, it was saw before started some and February, big of

again, post-COVID, it really As all important seems reopened inventory we've to have that available. stores

smart almost from we're about perspective, selling it we're makes There categories. some and that stores, the all right product mean margin I a sense sell and is in-store. requirements, So from SKUs. But it product most it sure and to most it product, is making are all

understand. I

give the structure, you don't were SG&A I quarter. I expense magnitude bit a think cut? would pandemic? an Your the terrifically that you but more what given you associated up little sales can sales with bit to was significantly standpoint a the all What from you've the expect in temporary That's year-over-year. forward know talk surprising, in with not be And obviously down be you to little was expect would guidance, vacillation about the permanent? What

we like mentioned, guidance. Yes. don't I forward give mean, we

of it was certainly quarter. to third We increase, and quarter say out we biggest think the that called was both the like for focus similar why a compensation And so or weighted of I the May. especially ahead labor and to Again, the continue, heavily we wouldn't going back saw SG&A, much benefits driver was driver COVID total million second-half was expect but the related, improvement a it's that second decrease for nice it last the of to looking store e-com. hard the in fourth down for was big of labor quarter. there lot year, So really was to $XX towards through

obviously were earlier the rate quarter. brought down of they're the at our to the were we we year year-over-year, and stores closed payrolls majority and we As -- back, furloughed end at where build still teammates, those then saw as July, but the not of they in

I malls are lot. The and reduced hours. learned with operating think stores a we've operating are

job, So taking guests, we're hard, And but for magnitude I stores with with to running stores. running continue of opening what the continue. And can't it be working operating leaner back-half teams but The up, fast, say. we in the on of our have done will care they're expect an incredible leaner year, that focus we'll the would really teams. of payroll, would the really

much. very Helpful. Thank you

from [Operator Richard Partners. Instructions] And Dearnley we Longport from that go have another comes Please ahead. question and

just back from have sales Walmart the as And helped August has were first slowed then catch-up Good down that morning. Target and quarter again any feeling you a said? the have quarter? Do second from

was demand We think from start. And Thanks for second question, we few preparation down, pent-up quarter. sales a and for other close we to give retailers. then had Richard. gave hard us credit little to advantage everybody's probably quarter a And prepared be maybe the really There that a to probably first but helped for opening. before the hard the the good our have some team opening work first they of I working to -- our got

great great was that in selection the team and our focusing sales in the categories. job, the beneficial. merchandisers product a on season, But with a our having for key think management right So I doing

from then office execute very And beneficial. the everything was We’re great. home help to support

not of So future the that's the Tom mentioned do kind give earlier, And issue sales. forecasts as then on second sales. for quarter we

seen Right. that you Back-to-school business to see that back-to-school other lots retailers. isn't important clearly you very and hadn't relative Did new, was any before?

think are that markets, hearing in to the schools scheduled. I answer little opening difficult some later and a more We're sound at moment. that's

So, next review hopefully, question to that call. we'll be earnings the at able

there. major a out it’s mess Yes, Okay.

Thank Okay. you.

you. Thank

questions Braatz Please question have we City And Instructions] have Kansas go from [Operator time. Capital. further no a Jon from this We ahead. at

Tom, question you deferrals defer? tax cash balances if of might have those for get able a of payroll how your maybe I'm much a sense how been some When be look much you cash you. Good at and morning. rent that? balances, -- you're doing there to trying deferrals to what

payables of at sheet deferrals. balance you mean, on the some driver if be I is the rent would biggest up there the Yes. look year-over-year,

but increase overly quantified of deferrals cash have Any dividends. both impact haven't the meaningful Probably much year-to-date been not to has meaningful, the significant payroll that more those. exactly increases much this. been on That’s in balance. than or to but not credits smaller bigger We year-over-year what deferrals tax rent and is, it's paying cash been than

So, yes, part. the part that's rent we credit that's of small have it, pretty and some tax tax But deferrals. payroll do for payroll deferrals,

Are by in you the of on you maybe Do horizon? the end that rents? any see next the renegotiation seeing -- the -- year, of

XX Jon, a we short-term leases. each averaging with before, continually have to as mentioned around lot our We've been somewhere we year. work all XXX we've And landlords. renewals of

the that location appropriately. and out So each opportunity evaluate figure it us to gives

we're continuing well. in best we're particular the think a I to location we working have handle stores that. good So that's community have that, we for review on and And our in been if

paid? one will follow-up. the Tom, deferrals When rent be Okay.

should landlord, on of be end most year. them the but the of the Depends repaid by

May and And have the we to essentially of June. most April, month for full repay. were started already rent them paid of a Some deferrals again, of and

some at year. points have will of various paid the through rest already the back Some and been be back paid

Tom. Thank Okay. you,

right now. the have no we queue further And questions in

everyone up. hope we day, rest wrap There's the it enjoys can and participating. for questions, no of thanks And the other

AT&T And Teleconference that for participation our and Thank for conference Service. does conclude you the your using for today. Executive

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