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Buckle (BKE) Posts In-Line Earnings in Q3, Sales Down Y/Y

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The Buckle, Inc. (BKE - Free Report) posted third-quarter fiscal 2018 results, wherein both top and bottom lines came in line with the Zacks Consensus Estimate. Although net sales declined year over year, earnings per share improved from the year-ago period, courtesy of a reduced tax rate coupled with lower cost of sales and a marginal fall in operating expenses.

We note that the company’s adjusted earnings per share of 42 cents met the consensus mark and rose 2.4% from the prior-year period.

Net sales of $215.1 million also met estimates but declined 4.1% from the year-ago period, owing to soft same-store sales. Consolidated same-store sales dipped 1.4% in the quarter. However, global e-commerce sales increased 8.8% to $25.5 million compared with that in the year-ago quarter.

During the quarter, Buckle’s merchandise sales in the women’s category declined 8.5% from the year-ago period. The business accounted for 49.5% of net sales in the reported quarter, down from 51% reported in theyear ago quarter.

Men’s merchandise sales, which accounted for 50.5% of net sales, increased 2% in the quarter.  Meanwhile, accessory sales slumped 7.5% but footwear sales rose 2.5%. These categories comprise 8% and 7% of net sales compared with 8.5% and 6.5%, respectively, in the year-ago quarter.

During the quarter, gross profit decreased 5.2% to $86.2 million, while gross margin contracted 50 basis points (bps) to 40%. Gross margin declined due to 95 bps of deleverage occupancy costs, and buying and distribution costs, partly negated by 45 bps expansion in merchandise margin. Selling, general & administrative expenses increased 0.2% to $59.9 million.

Operating income for the quarter came in at $26.3 million, down 15% from the year-ago quarter. Meanwhile, operating margin came in at 12.2% compared with 13.8% reported in the prior-year quarter.

During the quarter under review, the company shuttered two stores. Currently, it has 453 stores in 43 states. 

Other Financial Aspects

Buckle ended the quarter with cash and cash equivalents of $177.9 million and shareholders’ equity of $412.9 million. Management incurred capital expenditures of $1.8 million during the quarter. Moving forward, Buckle anticipates capital expenditure of $9-$12 million for fiscal 2018.

The company currently carries a Zacks Rank #2 (Buy), which might change following the company’s earnings outcome.

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

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