Buckle, Inc. (The)

Ladies and gentlemen, thank you for standing by. Members of Buckles Management on the call today are Dennis Nelson, President and CEO, Tom Heacock, Senior Vice President of Finance, Treasurer and CFO, Adam Ackerson, Vice President of Finance and Corporate Controller, and Brady Fritz, Senior Vice President, General Counsel and Corporate Secretary. As they review the opening results for the first quarter which ended April 30, 2022, 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, all forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on the factors which may be beyond 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 quarterly 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. That being said, welcome everyone to the Buckles first quarter earnings release. I would now like to turn the conference over to our host, Mr. Tom Heacock. Please go ahead.

Good morning and thanks for joining us this morning. Our May 26, 2022 press release report that net income for the 13 week first quarter ended April 30, 2022 was 55.3 million. or $1.12 per share on a diluted basis compared to net income of $57.3 million or $1.16 per share on a diluted basis for the prior year 13-week first quarter which ended May 1st, 2021. Net sales for the 13-week first quarter increased 3.3% to $309.1 million from net sales of $299.1 million for the prior year 13-week first quarter. Comparable store sales for the quarter increased 3.7%, and online sales were 54.3 million, an increase of 1.1% compared to 53.7 million in the first quarter of 2021. For the quarter, UPTs decreased approximately 2%. The average unit retail increased approximately 1.5%, and the average transaction value decreased about 0.5%. Gross margin for the quarter was 49.2% compared to 49.3% in the first quarter of 2021. But the current quarter decreased the result of a 20 basis point decline in merchandise margins and a 20 basis point increase in store distribution freight costs partially offset by a 30 basis points of leveraged occupancy costs. Selling general administrative expenses for the quarter were 25.6% of sales compared to 24% for the first quarter of 2021. The current quarter increase was the result of 140 basis point increase in store labor-related expenses, a 30 basis point increase in e-commerce freight costs, and a 25 basis point increase in marketing and certain other SG&A expense categories. These increases were partially offset by a 35 basis point decrease in incentive compensation accruals. Our operating margin for the quarter was 23.6% compared to 25.3% for the first quarter of fiscal 2021. Income tax expense as a percentage of pre-tax net income for both the current and prior year fiscal quarter was 24.5%, bringing first quarter net income to 55.3 million for fiscal 2022 versus 57.3 million for fiscal 2021. Our press release also included a balance sheet as of April 30, 2022, which included the following, inventory of 121.2 million in total cash and investment of 283.1 million. First quarter inventory comparisons for the last several years include 89 million at the end of Q1 2021, 121.7 million in 2020, and 120.8 million in 2019. We ended the quarter with 103.3 million in fixed assets net of accumulated depreciation. Our capital expenditures for the quarter were $7.1 million, and depreciation expense was $4.5 million. Here today, capital spending is broken down as follows. $7 million for new store construction, store remodels and technology upgrades, and $0.1 million for capital spending at the corporate headquarters and distribution center. During the quarter, we completed six full remodels, all of which were relocations into new outdoor shopping centers, and also closed one store. For the year, we plan on opening five new stores and completing 10 to 15 additional full remodeling projects. Based on current store plans, we still expect our capital expenditures for the year to be in the range of $22 to $27 million, which includes both planned store projects and IT investments. Buckle ended the quarter with 439 retail stores in 42 states compared to 442 stores in 42 states at the end of the first quarter of 2021. And with that, I'll now turn it over to Adam Ackerson, our Vice President of Finance.

Thanks, Tom. Throughout the first quarter, our buying team delivered a steady flow of newness that continued to be well-received by our guests. Women's merchandise sales for the fiscal quarter were up approximately 2.5% against the prior year fiscal quarter. For the quarter, our women's business was approximately 48.5% of sales compared to 49% in the prior year. average denim price points increased from $76.20 in the first quarter of fiscal 2021 to $76.60 in the first quarter of fiscal 2022, while overall average women's price points decreased slightly from $45.50 to $45.45. On the men's side, merchandise sales for the fiscal quarter were up 4% against the prior year fiscal quarter, representing approximately 51.5% of total sales compared to 51% in the prior year. Average denim price points decreased from $86.20 in the first quarter of fiscal 2021 to $86 in the first quarter of fiscal 2022. For the quarter, overall average men's price points increased approximately 1% from $50.20 to $50.75. On a combined basis, accessory sales for the fiscal quarter were up approximately 8% against the prior year fiscal quarter, and footwear sales were up about 12%. These two categories accounted for approximately 9% and 12%, respectively, of first quarter net sales, which compares to 8.5% and 11% for each in the first quarter of fiscal 2021. Average accessory price points were down approximately 2.5%, while average footwear price points were up about 3%. For the quarter, denim accounted for approximately 40% of sales, and tops accounted for approximately 27.5%, which compares to 42% and 26%, each in the first quarter of fiscal 2021. During the quarter, our private label business grew to 42.5% of total sales compared with 38% in the first quarter of 2021. As Tom alluded, we finished the quarter with inventory for both our men's and women's departments in a much more comparable pre-2021 levels as we move into summer and back to school. We continue to be encouraged by the health of our guest file. We began the year with over 33% more 12-month active guests in the previous year, and we continue to grow that file during the first quarter of 2022. Complementing this growth, we've also been able to maintain a high retention rate of over 50% of our guests. With that, we welcome your questions. Thank you.