Buckle, Inc. (The)

Good morning. Thank you for standing by and welcome to Bucco's second quarter earnings release webcast. As a reminder, all participants are currently in a listen only mode. A question and answer session will be conducted following the company's prepared remarks with instructions given at that time. Members of Bucco's management on the call today are Dennis Nelson, president and CEO, Tom Heacock, Senior Vice President of Finance, Treasurer and CFO. Adam Akerson, Vice President of Finance and Corporate Controller. And Brady Fritz, Senior Vice President, General Counsel and Corporate Secretary. Before beginning, the company would like to reiterate its policy of not providing future sales or earnings guidance. All forward-looking statements made on the call are pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially due to risks and uncertainties described in the company's SEC filings. The company undertakes no obligation to publicly update or revise these statements except as required by law. 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 cause should not be relied upon as the information may be inaccurate. As a reminder, today's webcast is being recorded, and I'd now like to turn the conference over to your host, Tom Heacock.

Good morning, and thanks for joining us this morning. Our August 22nd, 2025 press release reported that net income for the 13-week second quarter ended August 2nd, 2025 was 45 million or 89 cents per share on a diluted basis, which compares to net income of 39.3 million or 78 cents per share on a diluted basis for the prior year 13-week second quarter, which ended August 3rd, 2024. Year-to-date net income for the 26-week period ended August 2, 2025 was $80.2 million or $1.59 per share on a diluted basis, which compares to net income of $74.1 million or $1.48 per share on a diluted basis for the prior year 26-week period ended August 3, 2024. Net sales for the 13-week second quarter increased 8.3% to 305.7 million, compared to net sales of 282.4 million for the prior year 13-week second quarter. Comparable store sales for the quarter increased 7.3% in comparison to the same 13-week period in the prior year, and online sales increased 17.7% to 43.6 million. Year-to-date net sales increased 6.1% to $577.9 million compared to net sales of $544.9 million for the prior year 26-week fiscal period. Comparable source sales for the year-to-date period increased 5.2% in comparison to the same 26-week period in the prior year, and our online sales increased 10.5% to $90 million. For the quarter, UPTs decreased approximately 1.5%. The average unit retail increased approximately 3%. And the average transaction value increased about 1.5%. Year-to-date, UPTs decreased approximately 1%. The average unit retail increased approximately 2%. And the average transaction value increased approximately 1.5%. Gross margin for the quarter was 47.4%. A 50 basis point increase from 46.9% in the second quarter of 2024. The current quarter margin expansion was the result of a 10 basis point increase in merchandise margin, along with 40 basis points of leverage buying distribution and occupancy expenses. Year-to-date gross margin was 47.1%, up 60 basis points from 46.5% for the same period in the prior year. And the year-to-date increase was the result of a 30 basis point increase in merchandise margin, along with 30 basis points of leverage buying distribution and occupancy expenses. Selling general administrative expenses for the quarter were 29% of sales, compared to 29.8% for the second quarter of 2024. and year-to-date SG&A was 29.8% of sales compared to 29.9% for the same period in the prior year. The second quarter decrease was due to a 65 basis point reduction related to non-recurring digital commerce investments made a year ago, a 45 basis point decrease in store labor-related expenses, and a 55 basis point decrease in other SG&A expense categories. And these increases were partially offset by an 85 basis point increase in incentive compensation accruals. Our operating margin for the quarter was 18.4% compared to 17.1% for the second quarter of fiscal 2024. And for the year-to-date period, our operating margin was 17.3% compared to 16.6% 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 second quarter net income to 45 million for fiscal 2025, compared to 39.3 million for fiscal 2024. 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 80.2 million for fiscal 2025, compared to 74.1 million for fiscal 2024. Our press release also included a balance sheet as of August 2nd, 2025, which included the following, inventory of 142.5 million, which was up 8.4% from the same time a year ago, and 349.6 million of total cash and investments. We ended the quarter with 158.8 million in fixed assets, net of accumulated depreciation, Our capital expenditures for the quarter were $12 million, and depreciation expense was $6.1 million. For the year-to-date period, capital expenditures were $23.4 million, and depreciation expense was $12 million. Year-to-date capital spending is broken down as follows. $20.2 million for new store construction, store remodels, and technology upgrades, and $3.2 million for capital spending at the corporate headquarters and distribution center. During the quarter, we opened two new stores, completed four full store remodels, one of which was a relocation into a new outdoor shopping center, and closed one store, which brings our year-to-date counts to two new stores, nine full remodels, and three store closures. For the remainder of the year, we now anticipate opening four additional new stores and completing 12 more full remodeling projects. Buckle ended the quarter with 440 retail stores in 42 states, which is consistent with the store count as of a year ago. And now I'll turn it over to Adam Ackerson, Vice President of Finance.

Thanks, Tom. Good morning. Our women's business growth accelerated from the prior quarter, with merchandise sales increasing about 18.5% against the prior year, representing approximately 47.5% of sales, which compares to 43.5% last year. Growth in the women's business continues to be anchored in the performance of our denim category. For the quarter, women's denim increased approximately 20.5%, with average denim price points increasing from $80.60 in the second quarter of fiscal 2024 to $85.35 in the second quarter of fiscal 2025. This AUR increase continues to be the result of strong growth in our buckle black label, which has outperformed the total denim business, along with strong growth of other higher price point national brands. Through the second quarter, there have been minimal AUR impacts as a result of tariffs. Complementing our strong women's denim selection, our merchandising team continued to evolve our strategy of customer-centric buying, sharpening their focus on key styles, brands, and trends, which has resulted in strong guest response. This strategy delivered double-digit growth in every category, with the exception of shorts, which still saw nice growth for the quarter. In total, average women's price points increased about 5% from $43.15 to $45.35. On the men's side, we were pleased to see the business return to growth for the quarter, with merchandise sales up about 1.5% against the prior year, representing approximately 52.5% of total sales, which compares to 56.5% in the prior year. This growth was led by our men's denim category, which was up about 4.5% for the quarter. Average denim price points increased from $89.20 in the second quarter of fiscal 2024 to $89.30 in the second quarter of fiscal 2025. In other categories, we saw strong performance in our short-sleeve wovens, polos, denim shorts, hats, and fragrance selections. For the quarter, overall average men's price points increased approximately 2% from $50.20 to $51.20. On a combined basis, accessory sales for the quarter increased approximately 9.5% against the prior year, while footwear sales were down about 0.5%. These two categories accounted for approximately 11.5% and 5%, respectively, of the second quarter net sales, which compares to 11.5% and 5.5% for each in the second quarter of fiscal 2024. For the quarter, average accessory price points were up approximately 3%, and average footwear price points were up about 8%. Also on a combined basis, our kids' business had an outstanding summer and start to the back to the school season, increasing approximately 23% year over year. We are excited to see the increased awareness and continued growth for our kids' selection, which grew to approximately 4.5% of our total business for the quarter. For the quarter, Denim accounted for approximately 36% of sales and Topps accounted for approximately 29.5%, which compares to 35.5% and 30% for each in the second quarter of fiscal 2024. And for the 10th consecutive quarter, private label continued to grow as an overall percentage of our mix. For the quarter, private label represented 43.5% of sales versus 43% in the second quarter of 2024. And with that, we welcome your questions.