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Buckle (BKE) Q4 Earnings Beat & Rise Y/Y, Online Sales Robust

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The Buckle, Inc. (BKE - Free Report) delivered stellar performance in fourth-quarter fiscal 2020, wherein the bottom line not only surpassed the Zacks Consensus Estimate but also improved year over year. Further, margins were impressive in the quarter.

The Kearney, NE-based company delivered earnings of $1.33 a share, which surpassed the Zacks Consensus Estimate of $1.26. Moreover, the reported figure increased 38.5% from 96 cents reported in the year-ago period. Higher sales and margins fueled the bottom-line performance.

Buckle generated net sales of $318.8 million, which improved 17.7% from the year-ago period. We note that the Zacks Consensus Estimate for quarterly sales is pegged at $319 million. Sales benefited from comparable store net sales growth of 18% year over year. Meanwhile, online sales surged 81.5% to $66.2 million in the reported quarter.

Buckle, Inc. The Price, Consensus and EPS Surprise Buckle, Inc. The Price, Consensus and EPS Surprise

Buckle, Inc. The price-consensus-eps-surprise-chart | Buckle, Inc. The Quote

Let’s Delve Deeper

We note that the company’s women’s and men’s merchandise categories are doing well. Apparently, women's merchandise sales improved nearly 20% year over year and that of men's rose 14.5%. While the women's business contributed about 44.5% to the company’s overall quarterly sales, the men’s unit accounted for nearly 55.5%.

On combining the men’s and women’s categories, accessory sales for the quarter increased about 14% and footwear sales climbed 58% from the year-ago period. Both the accessory and footwear categories accounted for roughly 9% and 11.5%, respectively, of overall fourth-quarter sales.

On a combined basis, denim represented nearly 42% of the quarterly sales while tops accounted for about 29.5%. Moreover, the company’s private label business represented roughly 43% of the quarterly sales.

Gross profit increased 27.1% to $163.5 million. Also, gross margin expanded 390 basis points (bps) to 51.3% owing to higher sales as well as a 120-bp rise in merchandise margins, and 270 bps of leveraged occupancy buying and distribution costs.

Further, selling, general and administrative (SG&A) expenses as a rate of sales declined 50 bps to 24.8% on improved store, labor-related expenses; lower other SG&A costs, including health insurance and other benefit-related costs; and travel spend. These savings were somewhat offset by elevated shipping costs on strong e-commerce performance and higher incentive compensation accruals.

Meanwhile, operating income jumped 41.1% from the year-ago quarter to $84.5 million. Also, operating margin increased 440 bps to 26.5% due to higher gross margin and lower SG&A.

Shares of this Zacks Rank #2 (Buy) company have gained 34% in the past three months versus the industry’s 29.3% rally.

Financial Details

Buckle ended the quarter with cash and cash equivalents of $318.8 million and total stockholders’ equity of $396.6 million. Further, inventory decreased nearly 16.7% to $101.1 million. Overall, cash and investments at the end of the quarter were $340.5 million after the payment of $128.5 million in dividends in the fiscal year.

Meanwhile, capital expenditures for the fiscal year were $7.7 million. Given the current store plans, management anticipates capital expenditures in the band of $10-$15 million, including the expected store projects and IT investments for fiscal 2021.

We note that Buckle has completed one full remodel and shuttered three stores in the reported quarter. During fiscal 2020, it introduced three stores while remodeled four and shut eight outlets. It also shuttered one additional store after the end of the fiscal year. The company ended fiscal 2020 with 443 retail outlets across 42 states.

In fiscal 2021, management plans opening one used store and completing eight-12 full remodeling projects.

3 More Hot Stocks in Retail

Abercrombie & Fitch (ANF - Free Report) has a long-term earnings-growth rate of 18% and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

L Brands (LB - Free Report) also a Zacks Rank #1 stock, has a long-term earnings-growth rate of 13%.

Tapestry (TPR - Free Report) boasts a long-term earnings growth rate of 10% and currently flaunts a Zacks Rank #2.

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