Buckle, Inc. (The)

Ladies and gentlemen, thank you for standing by, and welcome to Buckel's third quarter earnings release. At this point, all the participant lines are in a listen-only mode. However, there will be an opportunity for your questions. Instructions will be given at that time. As a reminder, this call has been recorded. Members of Buckel's management on the call today are Dennis Nelson, President and CEO, Tom Heacock, Senior Vice President of Finance, Treasurer, and CFO, Kelly Mulzik, Vice President of Women's Merchandising, Bob Karlberg, Senior Vice President of Men's Merchandising, and Brady Fritz, Vice President, General Counsel, and Corporate Secretary. As they review the operating results for the third quarter, which ended October 30th, they would like to reiterate their policy of not giving future sales or earnings guidance and have the following Safe Harbor Statement. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 states, All forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on factors which may be on the company's control. Accordingly, the company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Such factors include, but are not limited to, those described in the company's filings with the Securities and Exchange Commission, The company does not undertake to publicly update or revise any forward-looking statements, even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. Additionally, the company does not authorize the reproduction or dissemination of transcripts or audio recordings of the company's cordial conference calls without its express written consent. Any unauthorized reproductions or recordings of the calls should not be relied upon, as the information may be inaccurate. With that, I'll turn it over to Mr. Tom Heacock. Please go ahead, sir.

Good morning, and thanks for being with us this morning. Our November 19, 2021 press release reported that net income for the 13-week third quarter ended October 30, 2021 with $62.2 million. or $1.26 per share on a diluted basis, compared with net income of $41.6 million, or $85 per share on a diluted basis for the prior year 13-week third quarter, which ended October 31, 2020. Year-to-date net income for the 39-week period ended October 30, 2021, was $170.9 million, or $3.46 per share on a diluted basis, compared to net income of $64.5 million, for $1.32 per share on a diluted basis for the prior year 39-week period ended October 31, 2020. Net sales for the 13-week third quarter increased 27.3% to $319.4 million compared to net sales of $251 million for the prior year 13-week third quarter. Comparable source sales for the quarter increased 27.3% in comparison to the same 13-week period in the prior year and online sales increased 9% to $50.5 million. Year-to-date net sales increased 56.9% to $913.7 million for the 39-week fiscal period ended October 30, 2021, compared with net sales of $582.4 million for the prior year 39-week fiscal period ended October 31, 2020. Comparable store sales for the year-to-date period were up 56.7%, in comparison to the same 39-week period in the prior year, and online sales year-to-date increased 18.7% to $147.7 million. For the quarter, UPTs decreased approximately 3.5%, the average unit retail increased approximately 1%, and the average transaction value decreased about 2.5%. Year-to-date, UPTs decreased approximately 3%, The average unit retail increased approximately 2.5%, and the average transaction value decreased approximately 0.5%. The gross margin for the quarter was 50.4%, up from 36.6% in the third quarter of 2020. Our year-to-date gross margin was 49.3% compared to 40.7% for the same period last year. The third quarter increase in gross margin was the result of a 65 basis point improvement in merchandise margins, coupled with 315 basis points of leverage occupancy buying and distribution costs as a result of the strong sales performance for the quarter. Selling general administrative expenses for the quarter were 24.7% of net sales compared to 25% for the third quarter of 2020. In year to date, SG&A was 24.6% of net sales down from 26.4% for the same period last year. The third quarter decrease was due to a 90 basis point decrease in store labor-related expenses and 85 basis points of leverage across several other SG&A expenses, which were partially offset by a 145 basis point increase in incentive and equity compensation accruals. Our operating margin for the quarter was 25.7%, compared to 21.6% for the third quarter of fiscal 2020. For the year-to-date period, our operating margin was 24.7% compared to 14.3% for the same period last year. Income tax expense as a percentage of pre-tax net income for both the current and prior year fiscal quarter was 24.5%, bringing third quarter net income to $62.2 million for fiscal 2021, versus $41.6 million for fiscal 2020. Income tax expense as a percentage of pre-tax net income for both the current and prior year year-to-date periods was also 24.5%, bringing year-to-date net income to $170.9 million for 2021, compared to $64.5 million for fiscal 2020. Our press release also included a balance sheet as of October 30th, 2021, which included the following. Inventory of $100.6 million, which was down from inventory of $118.7 million as of October 31, 2020, and total cash and investments of $500.1 million. We ended the quarter with $99.3 million in fixed assets, net of accumulated depreciation. Our capital expenditures for the quarter were $3 million, and depreciation expense was $4.3 million. For the year-to-date period, capital expenditures were $12.2 million, and depreciation expense was $14 million. Year-to-date capital spending is broken down as follows, $11.5 million for new store construction, store remodels and technology upgrades, and $0.7 million for capital spending at the corporate headquarters and distribution center. During the quarter, we completed three full remodels, each of which were relocations into new outdoor shopping centers and closed one store. This brings our year-to-date totals to one new store, ten full remodels, and three store closures. For the remainder of the year, we anticipate completing eight additional full remodeling projects. Based on current store plans, we now expect our capital expenditures to be in the range of $17 to $20 million, which includes both planned store projects and IT investments. Buckle ended the quarter with 441 retail stores in 42 states, compared with 446 stores in 42 states, at the end of the third quarter last year. And now I'll turn it over to Kelly Molzik, Vice President of Women's Merchandising.

Thanks, Tom. I'd like to start by highlighting the performance of our women's merchandise categories for the quarter. Women's merchandise sales for the fiscal quarter were up approximately 26% against the prior year fiscal quarter. For the quarter, our women's business was approximately 48% of sales compared to 48.5% in the prior year. average denim price points decreased from $75.15 in the third quarter of fiscal 2020 to $74.25 in the third quarter of fiscal 21. And overall, average women's price points increased about 3.5% from $44.10 to $45.65. We are excited to report another strong quarter of women's business. We continue to see a nice response to our denim selection as we expanded into more fits, provided an expanded range of bottom openings, and continued to build upon our private label assortment. As with many other categories, new arrivals for denim were heavily impacted by supply chain disruptions. In particular, deliveries from our higher price point denim brands like Rock Revival and Miss Me were impacted the most due to broad closures in Vietnam. Some of our other denim brands also saw slight delays in shipping during the quarter. For other categories, products with the fashion flair performed best. Plaid, third layers, dressy tops, graphic tees, boots, and fashion accessories were key drivers. We remained focused on building our private label selection across all categories while also continuing to introduce new brands in strategic markets. Our youth business continues to build with denim and knit driving sales. For youth, offering that same unique mix that we do in our women's product has been well received. With ongoing supply chain challenges, we continue to work very closely with all of our manufacturers and brand partners to minimize the potential impacts. Our unique assortment sourced from a variety of brands and vendor partners enables us to be agile in our planning and buying. As a result, despite disruption to our plans, we were able to react quickly to the changing environment and still deliver newness across the whole women's business. Additionally, our strong sell-through performance created opportunities for us to add in existing in-season products. Footwear is a category where being diversified in our brands and looks has greatly benefited our ability to continue to drive sales in spite of some challenges and getting new receipts as planned from brands like Hey Dude and Surreal. It's important to again thank our vendors and brands for their partnership as we all are challenged to work a little bit differently. And to the women's buying team, I honestly cannot give them enough credit for all of their hard work and hustle to stay on top of an ever-changing time in retail. And with that, I will turn it over to Bob Carlberg, Senior Vice President of Men's Merchandising, to discuss the performance of our men's merchandise categories.