Buckle (NYSE:BKE) reported first-quarter financial results on Friday. The transcript from the company's first-quarter earnings call has been provided below.

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View the webcast at https://buckle.zoom.us/webinar/register/WN_1biv_wJXRU2zF4J96aDa4Q

Summary

Buckle Inc reported a net income of $46.9 million or $0.92 per share for the first quarter of 2026, compared to $35.2 million or $0.70 per share in the previous year.

Net sales increased by 6.1% to $288.7 million, with comparable store sales rising by 5.1% and online sales by 2.8%.

Gross margin decreased slightly to 46.2% due to reduced merchandise margins and increased buying, distribution, and occupancy expenses.

Operating margin improved to 20.6% from 16% in the previous year, aided by a $19.1 million litigation settlement.

Women's merchandise sales grew by 11%, driven by strong denim sales, while men's merchandise sales increased by 2%.

The company opened three new stores and completed five store remodels during the quarter, with plans for additional openings and remodels throughout the year.

Buckle ended the quarter with 442 retail stores across 42 states, up from 439 stores the previous year.

Management highlighted challenges related to fuel cost surcharges but noted they are manageable and have not significantly impacted margins.

Full Transcript

OPERATOR

Good morning. Thank you for standing by and welcome to Buckle Inc's first 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 Buckle Inc's management on the call today are Dennis Nelson, President and CEO Tom Hickok, Senior Vice President of Finance, Treasurer and CFO Adam Atkinson, 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 expressed written consent. Any unauthorized reproductions or recordings of the call 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, Senior Vice President of Finance, Treasurer and CFO.

Tom Hickok (Senior Vice President of Finance, Treasurer and CFO)

Good morning and thanks for joining us this morning. Our May 29, 2026 press release reported that net income for the 13 week first quarter which ended May 2, 2026 was 46.9 million or $0.92 per share on diluted basis, which compares the net income of 35.2 million or $0.70 per share on a diluted basis for the prior year 13 week first quarter which ended May 3, 2025. Net sales for the quarter increased 6.1% to 288.7 million compared to net sales of 272.1 million for the prior year. Comparable store sales for the quarter increased 5.1% in comparison to the same 13 week period in the prior year and our online sales increased 2.8% to 47.7 million for the quarter. UPTs decreased approximately 1%, the average unit retail increased approximately 4.5% and the average transaction value increased about 3.5%. Gross margin for the quarter was 46.2%, a decrease of 50 basis points from 46.7% in the first quarter of 2025, with the decrease being the result of a 10 basis point reduction in merchandise margins along with a 40 basis point impact from increased buying, distribution and occupancy expenses. Selling General administrative expenses for the quarter were 25.6% of net sales compared to 30.7% for the first quarter of 2025. The first quarter decrease was due to a 660 basis point impact from the recognition of a $19.1 million interchange fee litigation settlement during the first quarter of 2026, as disclosed in our 2025 Form 10K. Absent the impact of this settlement, SGA expenses were up 150 basis points for the quarter, which was driven by a 100 basis point increase in incentive and equity compensation accruals, a 30 basis point increase in store related compensation expenses, and a 20 basis point increase in other SG and A expense categories. As a result, our operating margin for the quarter was 20.6% compared to 16% for the first quarter of fiscal 2025. Income tax expense as a percentage of pre tax net income for both the current and prior year first quarter was 24.5%. Our press release also included a balance sheet as of May 2, 2026 which included the following inventory of 150.2 million, which was up 13.5% from the same time a year ago, and 323.8 million in total cash and investments. We ended the quarter with 169 million in fixed assets, net of accumulated depreciation. Our capital expenditures for the quarter were 14.7 million and depreciation expense was 6.5 million. Capital spending for the quarter included 13.5 million for new store construction, store remodels and technology upgrades, and 1.2 million for capital spending at the corporate headquarters and distribution center. During the quarter, we opened three new stores, completed five full store remodels, four of which were relocations into new outdoor shopping centers, and closed one store. Following the end of the quarter, we have opened three additional new stores, completed two more full store remodels, and closed one store so far during fiscal May, bringing our year to date counts to six new stores, seven full store remodels and two store closures. For the remainder of the year, we anticipate opening an additional nine new stores and completing an additional seven full remodeling projects. Buckle ended the quarter with 442 retail stores in 42 states, compared to 439 stores in 42 states as of the end of the first quarter of fiscal 2025. And now I'd like to turn the call over to Adam Atkinson, Vice President of Finance.

Adam Atkinson (Vice President of Finance and Corporate Controller)

Thanks Tom, and good morning. Our Women's Business carried its strong momentum into the first quarter of 2026, delivering another double digit increase against the prior year and building on the consistent growth we saw throughout 2025. For the quarter, women's merchandise sales were up 11%, which was on top of a 10.5% increase in Q1 2025 and represented approximately 52% of sales compared to 50% last year. Our women's denim category continued to be the leading contributor to revenue growth, with denim sales up 8% year over year and average denim price points increased from $84.85 in the first quarter of fiscal 2025 to $92 in the first quarter of fiscal 26. In addition to the strong denim performance, we saw great growth in our alternative pant collection with strong trend adoption, expanded brand offerings. Our women's top business remains strong, highlighted by growing private label penetration and a favorable response to newness and color selections. We also had a great early response to our denim shorts business as we moved into the spring and summer selling seasons. On the men's side, merchandise sales increased 2% against the prior year, representing approximately 48% of total sales compared to 50% last year. Our men's business was down about Our men's denim business was down about 1.5%, but we continue to be pleased to see growth across our private brands, which were up 0.5% and represented over 75% of the men's denim business. Average denim price points decreased from $89.7 in the first quarter of fiscal 25 to $89.1 in the first quarter of fiscal 26. For the quarter, our men's tops business was a meaningful contributor to growth, led by strong performance in tees and polos along with solid momentum in our short sleeve button fronts across a range of styles in both solids and prints. Our shorts business also performed well with strength in both denim and athletic styles. On a combined basis, accessory sales for the quarter increased approximately 6% against the prior year and footwear sales increased about a half a percent. These two categories accounted for approximately 11% and 5% respectively of first quarter net sales, which compared to 11% and 5.5% for each in the first quarter of fiscal 2025. For the quarter, average accessory price points were up approximately 5% and average footwear price points were up 9%. Our kids business turned in another standout performance in 1Q26, with sales up approximately 16% versus the prior year. This category continues to represent a growth opportunity as we build the business and reach new guests earlier in their shopping journey. For the quarter, denim accounted for approximately 42.5% of sales and tops accounted for approximately 28%, which compares to 43.5% and 27% for each in the first quarter of fiscal 25, our private label business for the quarter represented 48% of sales versus 47.5% in the first quarter of fiscal 25. And with that, we welcome your questions.

OPERATOR

Thank you. As a reminder for participants, if you would like to ask a question, please raise your hand in the Zoom app. Prior to asking your questions, please state your name and firm affiliation. Our first question is from Mauricio. Mauricio will go ahead and prompt you to unmute. At this time. Please remember to say your full name and your firm. Yes, good morning, this is Maurice Yocerma from UBS Research. Just wanted to ask the margins, you know, could you unpack a little bit? On the gross margin side, you know, what caused the merchandise margin contraction? And then on the buying, occupancy and distribution, you know, the pressure from 40 basis points, where is that? Like, what is that attributed to within those three buckets? Thank you.

Maurice Yocerma (Equity Analyst)

On the merchant side, merchandise margin side, we'll start with that. Mauricio, good morning and thank you for the question. I think we feel really strong about being down 10 basis points. Remember from a year ago, we saw a particular strength a year ago and really strong merchandise margins and we're at record high levels. So we still feel like we're maintaining a full, strong regular price business and pleased with margins where they are, where they are. In terms of what caused the decrease, probably a little bit of cost pressure from tariffs. And then by category, men's denim was the category that was down. But on the whole, really pleased with where margins are. Again, on top of record levels a year ago, on the gross margin side, bring down between buying, distribution and occupancy. Occupancy is really where the growth is. Total occupancy expense for the quarter was up 6.6%. And really the driver of that is rent and depreciation related to the store projects that we've been doing for the last several years. A year ago, our projects were weighted toward the last three quarters of the year. That's a little bit different. This year we have a pretty heavy schedule of projects for the first part of the year, opening both in Q1 and then even so far in May. So that's pushing that rent a little bit higher and also depreciation. And that's why that leverage point is higher. I think I'm on mute. Can you still hear me? I don't know if I'm on mute anymore. Yes, we can hear you. Yeah, that's very helpful. Just a quick follow up. Maybe could you. On the, on the margin side, just given all these headlines that we've been hearing about, you know, fuel cost, the Middle east situation, I just want to understand, like what's your strategy in terms of fuel costs? Do you hedge that? Do you have like locked agreements with logistics providers and how should we think about that fuel cost impact on your inbound, outbound freight? Thank you.

Dennis Nelson (President and CEO)

We do not hedge fuel costs. So there's no contracts there to do any hedging. I mean, really where we're seeing the increases is fuel surcharges both on, you know, LTL and inbound freight for new product and then also with our carriers outbound and E. Com. So we have seen a little bit of increase in terms of fuel surcharges on both ends, but so far it's manageable and was not something that we called out during the quarter in terms of the script or impact on either gross margin or sga. But there are increases.

OPERATOR

Okay, our next question is coming from John Botts. John, go ahead and unmute at this time and remember to say your full name and firm of division. Tom, can you hear me?

John Botts

We can't hear you, John. Good morning. You know, a lot of the big box retailers have been talking about pressures, most recently because of fuel costs and so on so forth. How are you viewing your customer at this point?

Dennis Nelson (President and CEO)

Are you seeing a little bit of weakness compared to what you might have seen earlier on this year because of higher fuel costs and pressures on incomes?

Tom Hickok (Senior Vice President of Finance, Treasurer and CFO)

Thank you, John. This is Dennis on the pressures on the guests. We had a strong February March and part of that was due to Easter and spring breaks. The spring breaks influenced our business a fair amount and then April was off a little. But we felt real good about the quarter. Our sell throughs have been good. We feel really good about the inventory and our sales teams have been doing an excellent job through the first quarter. So we're looking forward to the rest of the year and think that our offerings and value that we present in the stores will be well received by our guests.

John Botts

Okay, and Tom, two questions. The incentive compared basis points in the in the quarter, is that something that we might see continue going forward? And secondly, any comments on tariff refunds?

Tom Hickok (Senior Vice President of Finance, Treasurer and CFO)

Take the first one first. So on an incentive comp, there was a little bit of a pull forward probably into the first quarter from the normal recognition pattern, we look at what we think the incentive comp will be for the full year and then accrue ratably through the year based on profitability. So with a really strong profitable quarter in the first quarter, we did pull forward a little bit. So some of that pressure should ease as we move through the rest of the year. And then on tariff refunds, we have filed for a refund claim in the first quarter. No funds were received during the first quarter. Actually, subsequent to the quarter we received a small immaterial amount and are expecting more later, but so far no impact to the financials, but we have filed a claim.

OPERATOR

Okay, thank you. Okay, there are no further questions in queue. As a reminder, if you would like to ask a question, please raise your hand in the Zoom app. Okay, looks like there are no further questions. I will now turn the call back over to Buckle for any closing remarks.

Dennis Nelson (President and CEO)

There are no further questions. We'll wrap up the call and thank everybody for participating and enjoy the day and have a wonderful weekend.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.