Buckle, Inc. (The)

Good morning. Thank you for standing by and welcome to Buckel's third 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 Ackerson, 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 calls 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 Hickok.

Good morning, and thanks for being with us this morning. Our November 21st, 2025 press release reported that net income for the 13-week third quarter ended November 1st, 2025 was $48.7 million or $0.96 per share on a diluted basis compared to net income of $44.2 million or $0.88 per share on a diluted basis for the prior year 13-week third quarter, which ended November 2nd, 2024. Year-to-date net income for the 39-week period ended November 1, 2025 was $128.9 million, or $2.55 per share on a diluted basis, compared to net income of $118.3 million, or $2.35 per share on a diluted basis for the prior year 39-week period ended November 2, 2024. Net sales for the 13-week third quarter increased 9.3% to 320.8 million compared to net sales of 293.6 million for the prior year 13-week third quarter. Comparable store sales for the quarter increased 8.3% in comparison to the same 13-week period in the prior year, and our online sales increased 13.6% to 53 million. Year-to-date net sales increased 7.2% to $898.7 million compared to net sales of $838.5 million for the prior year 39-week fiscal period. Comparable store sales for the year-to-date period increased 6.3% in comparison to the same 39-week period in the prior year, and our online sales increased 11.6% to $142.9 million. For the quarter, UPTs decreased approximately 1.5%, the average unit retail increased approximately 4%, and the average transaction value increased about 2.5%. Year-to-date, UPTs decreased approximately 1%, the average unit retail increased approximately 3%, and the average transaction value increased approximately 2%. Our gross margin for the quarter was 48%, a 30 basis point increase from 47.7% in the third quarter of 2024. The current quarter margin expansion was the result of 40 basis points of leverage buying distribution and occupancy expenses, partially offset by a 10 basis point reduction in merchandise margins. Our year-to-date gross margin was 47.4%, up 50 basis points from 46.9% for the same period last year. The year-to-date increase was the result of a 20 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 net sales compared to 29.1% for the third quarter last year. In year-to-date, SG&A was 29.5% of net sales compared to 29.6% for the same period in the prior year. The third quarter decrease was due to a 35 basis point reduction related to non-recurring digital commerce investments made a year ago, a 35 basis point decrease in store labor related expenses, and a five basis point decrease in certain other SG&A expense categories. These decreases were partially offset by a 50 basis point increase in incentive compensation accruals and a 15 basis point increase in G&A compensation related expenses. Our operating margin for the quarter was 19% compared to 18.6% for the third quarter of fiscal 2024. And for the year to date period, our operating margin was 17.9% compared to 17.3% 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 48.7 million for fiscal 2025, compared to 44.2 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 $128.9 million for fiscal 2025, compared to $118.3 million in fiscal 2024. Our press release also included a balance sheet as of November 1, 2025, which included the following. Inventory of 165.8 million, which was up 11% from the same time a year ago, and 371.3 million of total cash and investments. We ended the quarter with 162.3 million in fixed assets, net of accumulated depreciation. Our capital expenditures for the quarter were 11.1 million, and depreciation expense was 6.2 million. For the year-to-date period, capital expenditures were $34.5 million, and depreciation expense was $18.2 million. Year-to-date capital spending is broken down as follows. $30.4 million for new store construction, store remodels, and technology upgrades, and $4.1 million for capital spending at the corporate headquarters and distribution center. During the quarter, we opened two new stores and completed six full-store remodels, three of which were relocations in new outdoor shopping centers. Additionally, post-quarter end and during November, we have opened two new stores and completed two store relocation projects in advance of the holiday selling season, which brings our year-to-date count through today to six new stores, 17 full remodels, and three store closures. For the remainder of the year, we anticipate completing four additional full remodeling projects. Buckle ended the quarter with 442 retail stores in 42 states, compared to 445 stores in 42 states as of the end of the third quarter last year. And now I'll turn it over to Adam Ackerson, Vice President of Finance.

Thanks, Tom, and good morning. Our women's business continued its acceleration in year over year growth rate during the quarter, with merchandise sales increasing about 19%, which was on top of 3% same week growth a year ago. For the quarter, our women's business represented approximately 51% of sales, which compares to 47% last year. This growth continued to be led by the performance of our denim category, with women's denim increasing approximately 17.5%, and average denim price points increasing from $81.15 in the third quarter of fiscal 2024 to $86.95 in the third quarter of fiscal 2025. This AUR increase continues to be primarily 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. Complimenting our strong women's denim selection, our team continued delivering compelling trends and fashions for our guests. For the quarter, we achieved growth across all women's merchandise categories, with the most notable growth in knits and sweaters, casual and fashion bottoms and accessories. In total, average women's price points increased about 6%, from $49.95 to $53.05. On the men's side, we were pleased to see growth for the second consecutive quarter with men's merchandise sales up about 1% against the prior year, representing approximately 49% of total sales compared to 53% in the prior year. This growth was also led by our men's denim category, which was up about 1% for the quarter. Average denim price points increased from $88.10 in the third quarter of fiscal 24 to $88.15 in the third quarter of fiscal 25. In other categories, we saw nice performance in both our short and long sleeve tees business in a variety of lifestyles, as well as strong selling of our vests, jackets, and accessories. For the quarter, overall average men's price points increased approximately 2.5% from $54.30 to $55.70. On a combined basis, accessory sales for the quarter increased approximately 7.5% against the prior year, while footwear sales were essentially flat. These two categories accounted for approximately 10% and 4.5%, respectively, of third quarter net sales, which compares to 10% and 5% for each in the third quarter of fiscal 24. For the quarter, average accessory price points were up approximately 3.5%, and average footwear price points were up 4.5%. Also on a combined basis, our KISS business continued its strong growth trend, increasing approximately 22% year over year. This continues to be a category where our teams are excited to keep building the business into the selection for our guests. For the quarter, Denim accounted for approximately 46% of sales and Topps accounted for approximately 29%, which compares to 46% and 29.5% for each in the third quarter of fiscal 24th. As previously mentioned, with strong selling and trends in many of our brand styles, our private label business decreased as a percentage of our total mix for the quarter. For the quarter, private label represented 47.5% of sales versus 48.5% for the third quarter of fiscal 2024. And with that, we welcome your questions.