Buckle (ticker: BKE), a leading fashion retailer, has reported a decrease in net income and sales for the third quarter of 2024. The company's net income fell to $44.2 million, or $0.88 per share, compared to $51.8 million, or $1.04 per share, during the same period last year. Net sales also saw a decline, dropping by 3.2% to $293.6 million. Despite a small increase in online sales and women's denim, the overall decline in men's merchandise and footwear sales impacted the company's financial performance.
Key Takeaways
- Buckle's Q3 net income decreased to $44.2 million from $51.8 million year-over-year.
- Net sales declined by 3.2% to $293.6 million, with comparable store sales down 0.7%.
- Online sales grew by 1.1%, showing positive results from digital investments.
- Women's denim sales increased by 9%, while men's sales declined by 5.5%.
- Gross margin decreased to 47.7%, affected by higher occupancy costs and distribution expenses.
Company Outlook
- Buckle plans to open one more new store and complete seven remodels by the end of the year.
- For 2025, the company anticipates opening 7-8 new stores with a net addition of 2-3 stores.
Bearish Highlights
- Footwear sales saw a significant decline of 17%.
- Selling, general, and administrative expenses rose to 29.1% of net sales.
Bullish Highlights
- Private label penetration increased to 48.5% of sales.
- Accessories sales grew by 3%.
Misses
- Comparable store sales decreased slightly by 0.7%.
Q&A Highlights
- Adam Ackerson expressed satisfaction with the quarter's performance despite challenges.
- Dennis highlighted the strategic positioning of stores for future success.
In summary, Buckle's third-quarter results reflect a challenging period with a mix of positive developments in women's merchandise and digital channels, and negative trends in men's sales and increased costs. The company remains focused on expansion and digital investments, aiming to position itself for future growth.
Full transcript - The Buckle Inc (NYSE:BKE) Q3 2025:
Webcast Moderator: As a reminder, today's webcast is being recorded. And now, I would like to turn the conference over to your host, Tom Heacock.
Tom Heacock, Financial Reporting/Executive, Buckle: Good morning, and thanks for joining us this morning. Our November 22, 2024, press release reported that net income for the 13 week Q3, which ended November 2, 2024, was $44,200,000 or $0.88 per share on a diluted basis compared to net income of $51,800,000 or $1.04 per share on a diluted basis for the prior year 13 week Q3 that ended October 28, 2023. Year to date net income for the 39 week period ended November 2, 2024 was $118,300,000 or $2.35 per share on a diluted basis, which compares to net income of $140,300,000 or $2.81 per share on a diluted basis for the prior year 39 week period ended October 28, 2023. Net sales for the 13 week Q3 decreased 3.2 percent to $293,600,000 compared to net sales of $303,500,000 for the prior year 13 week Q3. 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 $46,600,000 for the 13 week fiscal quarter, which compares to $46,100,000 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 percent to $838,500,000 compared to net sales of $878,700,000 for the prior year 39 week fiscal period. Comparable store sales for the year to date period decreased 5.4 percent in comparison to the same 39 week period in the prior year and our online sales decreased 9.2% to $128,000,000 for the year to date period, which compares to $141,000,000 for the prior year 39 week fiscal period. Compared to the same 39 weeks a year ago, our online sales decreased 8.9%. 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 percent in the Q3 of 2023, with the current quarter decline being the result of 100 basis point decrease in occupancy 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. The year to date decline was the result of 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 Q3 last year.
And for the year to date, SG and A was 29.6 percent of net sales compared to 27.8% for the same period last year. The 3rd 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 and A salaries and a 50 basis point increase in other SG and A expense categories. And these increases were partially offset by a 35 basis point decrease in incentive compensation accruals. Our operating margin for the quarter was 18.6% compared to 21.1% for the Q3 of fiscal 2023 and 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 3rd quarter net income to $44,200,000 for fiscal 2024 compared to $51,800,000 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 $118,300,000 for fiscal 2024 compared to $140,300,000 for fiscal 2023. Our press release also included a balance sheet as of November 2, 2024, which included the following: inventory of $149,400,000 which was down 1.9% from the same time a year ago and $352,700,000 of total cash and investments. We ended the quarter with $143,000,000 in fixed assets net of accumulated depreciation. Our capital expenditures for the quarter were $10,200,000 and depreciation expense was $5,500,000 For the year to date period, capital expenditures were $32,500,000 and depreciation expense was $16,600,000 Year to date capital spending is broken down as follows: $31,700,000 for new store construction, store remodels and technology upgrades and $800,000 for capital spending at the corporate headquarters and distribution center. During the quarter, we opened 5 new stores and completed 1 full remodel, which brings our year to date counts to 7 new stores, 13 full remodels and 6 store closures.
For the remainder of the year, we plan on opening 1 additional new store and completing 7 additional full remodel projects, 6 of which will be relocations into new outdoor shopping centers. Buckle ended the quarter with 4 45 retail stores in 42 states, which compares to 4 43 stores in 42 states at the end of the Q3 of fiscal 2023. And now I'll turn it over to Adam Ackerson, Vice President of Finance.
Adam Ackerson, Vice President of Finance, 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 Q3 of fiscal 2023 to $81.15 in the Q3 of fiscal 2024, while average overall price points increased about 1% from $49.35 to $49.95 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 Q3 of fiscal 'twenty 3 to $88.10 in the Q3 of fiscal 'twenty 4. 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 3rd quarter net sales, which compares to 10% and 6% for each in the Q3 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 (EPA:TTEF) 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% 30.5% for each in the Q3 of fiscal 2023. 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 percent of sales versus 47% in the Q3 of 2023.
And 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.
Webcast Moderator: Thank you. As a reminder for participants, if you would like to ask a question, please raise your hand in the Zoom (NASDAQ:ZM) app. Prior to asking your question, please state your name and firm affiliation.
Mauricio, Analyst: 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 Q2. So maybe first, I wanted to make sure that was a number and maybe you could elaborate a little bit more on what drove that slowdown in terms of the merchandise margin.
And also I guess that that thing it implies the buying occupancy and distribution costs, the leverage was a little bit higher than the prior quarter. So yes, a little bit of detail behind that will be very helpful. Thank you.
Tom Heacock, Financial Reporting/Executive, Buckle: Yes. 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 year to date.
So similar to the trend that we've seen through the 1st 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, given 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, Executive, Buckle: Nothing to add.
Mauricio, Analyst: Thank you.
Webcast Moderator: 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, Analyst: Yes. Thank you. I just have 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 1.
So I think that's from a net store opening for the year that would take you to 2 openings. I just was wondering, like, how are you thinking about expansion in terms of like net store additions over the next couple of years, just given where the retail landscape is right now? Thank you.
Dennis, Executive, Buckle: Good morning. We are estimating 7 or 8 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 2 or 3 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 to 15 stores next year as well.
Mauricio, Analyst: Understood. Thank you so much.
Dennis, Executive, Buckle: Thank you.
Webcast Moderator: As a reminder, please use the raise your hand function at the bottom of your zoom window if you would like to answer to ask a question to our panelists. And now we have a question from Nancy. You're now able to unmute yourself.
Nancy, Analyst: 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 that, the pace at which you're seeing any kind of change in sales?
Dennis, Executive, 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.
Nancy, Analyst: Okay. Thank you.
Dennis, Executive, Buckle: Thank you.
Webcast Moderator: 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.
Nancy, Analyst: I think that might be a mistake. I didn't I don't think I raised my hand. But
Webcast Moderator: Okay. Sorry about that. I'll lower your hand for you. Sorry about that.
Nancy, Analyst: No worries. Appreciate it.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.