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Buckle (BKE) Q4 Earnings Beat, Revenues Meet Estimates

Zacks Equity Research

The Buckle, Inc. BKE reported impressive earnings in the fourth quarter of fiscal 2015 after posting negative surprise in the previous quarter. Earnings per share of $1.13 surpassed the Zacks Consensus Estimate of $1.07 but declined 9.3% year over year. Following the quarterly results, shares of the company gained 4.5%.

The company’s net sales of $332 million were in line with the Zacks Consensus Estimate but declined 6.2% year over year. Notably, this was the fifth straight quarter of in-line revenues for the company.

Women’s merchandise sales declined nearly 11% in the quarter, whereas Men’s merchandise sales dropped 1.5%. Women’s merchandise contributed 51% to total sales while the Men’s business input was pegged at 49%.

Combined accessory sales fell nearly 1% whereas footwear sales were down 3%. These two categories contributed nearly 9.5% and 5.5% to fourth-quarter net sales, respectively.

Comparable-store sales dipped 7.2% from the prior-year quarter. However, online sales (not included in comparable-store sales) grew 7.1% year over year to $35.3 million.

Buckle’s gross profit fell 6.9% to $155.9 million while gross margin contracted 40 basis points (bps) to 47%. The contraction was mostly due to de-leveraged occupancy, buying, as well as distribution expenditures cropping from the decline in comparable store sales. The drop in sales impacted margin by 70 bps and also eclipsed the 30 bps of expansion in merchandise margins. On the other hand, operating margin stood at 25.1% in comparison with 26.7% in the prior-year quarter.

Other Financial Aspects

Buckle ended the quarter with cash and cash equivalents of $161.2 million, receivables of $9.7 million and shareholders’ equity of $412.6 million. Further, the company had accounts payable of $33.1 million.

In the quarter under review, the company incurred capital expenditures of $3.7 million, reaching the total to $34.6 million for the full fiscal. For fiscal 2016, the company expects capex at around $31–$35 million, to be deployed toward outlet construction/remodel and technology upgrade.

In fourth-quarter fiscal 2015, the company repurchased more than 83,596 of its shares at an average price of $30.29. In fiscal 2015, the company had repurchased 103,693 shares at an average of $31.1 after which it is left with 440,207 shares under its current authorization.

As of Jan 30, 2016, Buckle operated 468 retail stores in 44 states.

Zacks Rank & Stocks to Consider

Buckle currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the retail space include Destination XL Group, Inc. DXLG, Express Inc. EXPR and American Eagle Outfitters, Inc. AEO. All of these stocks sport a Zacks Rank #1 (Strong Buy).

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