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Buckle Posts Weak Q3 Earnings

Zacks Equity Research

The Buckle, Inc. (BKE) posted lower-than-expected third-quarter fiscal 2013 results due to sluggish consumer demand. Buckle’s quarterly earnings per share of 85 cents missed the Zacks Consensus Estimate of 90 cents and fell 3.4% year over year.

Buckle reported net sales of $286.8 million that rose marginally by 0.9% on a year-over-year basis but came below of the Zacks Consensus Estimate of $292 million.

Comparable store sales declined 0.5% from the prior year period. However, online sales (not included in comparable store sales) grew 11.9% year over year to $22.0 million.

Total operating expenses came in at $62.2 million, up 4.9% year over year. The rise was due increases in both selling, and general and administrative expenses.

Selling expenses rose 5.6% on a year-over-year basis while General and administrative expenses rose 1.8%.

On account of top-line improvement, the company’s gross profit rose 0.6% to $126.2 million, while gross margin contracted 10 basis points (bps) to 44.0%. The contraction was due to 40 bps increase as a percentage of net sales in occupancy, distribution and buying expenses, partly offset by 30 bps improvement in merchandise margin.

Operating profit came in at $64.1 million, falling 3.2% year over year, whereas operating margin contracted 100 bps to 22.3%.  

Other Financial Aspects

Buckle, which competes with DSW Inc. (DSW), ended the quarter with cash and cash equivalents of $130.8 million, receivables of $7.9 million and shareholders’ equity of $371.9 million. Further, the company has accounts payable of $ 49.1 million.

In the quarter, the company incurred capital expenditures of $6.3 million, bringing the year-to-date capital expenditures to $25.2 million. For fiscal 2013, the company expects capex to be around $30--$32 million.

At the end of the quarter, Buckle operated 452 retail stores in 43 states as against 440 stores in 43 states at the end of the prior year period. For fiscal 2013, the company intends to remodel 8 stores. So far in 2013, the company has opened 13 stores. For fiscal 2014, Buckle intends to open 16 new stores and 14 -16 full remodels.

Other Stocks to Consider

Currently, Buckle carries a Zacks Rank #4 (Sell). Apart from Buckle, other better ranked stocks in the retail sector worth considering include Finish Line Inc. (FINL) and Fossil Group, Inc. (FOSL). Both these carry a Zacks Rank #2 (Buy)

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Read the Full Research Report on FINL

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