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Buckle (BKE) Stock Gains Despite Posting Soft Sales in May

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Shares of The Buckle, Inc. BKE have gained roughly 4% since the company released sales numbers for the month May on Jun 4. The upside can be attributed to deceleration in the rate of sales decline registered during the month under review and the gradual reopening of some of the stores as per the state and local guidelines.

Notably, this casual apparel, footwear, and accessories retailer initiated the process of reopening certain outlets during the week of Apr 26, 2020. As of May 30, Buckle reopened about 367 outlets, with 30 more stores reopening in the week of May 31. Meanwhile, the company’s online store has remained open throughout. However, this was not enough to make up for loss of revenues from brick-and-mortar.

Buckle’s total net sales for the four-week fiscal month ended May 30, 2020 declined 16.8% to $51.2 million from net sales of $61.5 million reported in the four-week fiscal month ended Jun 1, 2019. We note that rate of fall in sales for the month of May has decelerated sharply from the decrease of 80.8% and 50.2% witnessed in the months of April and March, respectively. The metric had improved 6% and 3.2% in February and January, respectively.

Further, net sales for the 17-week fiscal period ended May 30, 2020 plunged 36.6% to $166.6 million compared with net sales of $262.8 million recorded in the 17-week fiscal quarter ended Jun 1, 2019. The company has been bearing the brunt of dismal top-line performance, which primarily stemmed from the adverse effects of the COVID-19 outbreak that forced retailers to shut stores and witness consequent loss in sales.

Due to store closure, management has decided to report total net sales only every month. It will not issue any separate data on comparable store sales for now.

We note that share of this Zacks Rank #3 (Hold) company have tumbled 12.4% against the Zacks Retail - Apparel And Shoes industry’s rally of 4.5% in the past three months.

Prolonged store closures, supply-chain disruptions and lower traffic trends in the wake of this catastrophe have hurt revenues for quite a few players in the industry. Obviously, with no or minimum revenue generation, maintaining liquidity amid the crisis is a herculean task. Industry participants have been taking every step — from pay cut to furloughing and from inventory reductions to lowering capital expenditures — to preserve cash. It comes as no wonder that the news of gradual reopening of the economy in a phased manner did provide a confidence boost to companies.

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