Buckle(BKE) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net income for Q3 2022 was $61.4 million or$ 1.24 per share, a slight decrease from $62.2 million or$ 1.26 per share in Q3 2021 [6] - Year-to-date net income for the 39-week period was $166.8 million or$ 3.37 per share, down from $170.9 million or$ 3.46 per share in the prior year [7] - Net sales for Q3 2022 increased by 4% to $332.3 million compared to$ 319.4 million in Q3 2021 [8] - Year-to-date net sales increased by 3.3% to $943.4 million compared to$ 913.7 million in the prior year [9] - Gross margin for Q3 2022 was 49.8%, down 60 basis points from 50.4% in Q3 2021 [11] - Operating margin for Q3 2022 was 23.9%, compared to 25.7% in Q3 2021 [13] Business Line Data and Key Metrics Changes - Women's merchandise sales were up slightly, accounting for approximately 46.5% of sales compared to 48% in the prior year [20] - Men's merchandise sales increased by 6%, representing approximately 53.5% of total sales compared to 52% in the prior year [22] - Accessory sales were up approximately 15.5%, while footwear sales were down about 17% [23] - Denim accounted for approximately 42.5% of sales, while tops accounted for approximately 30.5% [24] - Private label sales represented 46% of total sales for the quarter, up from 44% in Q3 2021 [27] Market Data and Key Metrics Changes - Online sales increased by 8.8% to $55 million in Q3 2022 [8] - Comparable store sales for Q3 2022 increased by 3% compared to the same period in the prior year [8] Company Strategy and Development Direction - The company plans to complete eight additional full remodel projects and open one new store by the end of the year [18] - Capital expenditures for the year are expected to be in the range of$ 26 million to $30 million, including store projects and IT investments [18] - The company is focusing on expanding its private label business and improving inventory positioning [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in inventory levels, noting that inventory is up 10% over 2019 but sales were nearly 50% higher than in 2019 [29] - The company is comfortable with its inventory strategy, having brought in products early to avoid potential supply chain disruptions [32] Other Important Information - The company ended the quarter with 441 retail stores in 42 states, consistent with the store count from the previous year [18] - Capital expenditures for Q3 2022 were$ 7.5 million, with year-to-date capital expenditures totaling $22.4 million [16] Q&A Session Summary Question: Can you define what you mean by "clean" inventory? - Management indicated that inventory is up 10% over 2019, with a portion attributed to cost increases and inventory in transit, but they are comfortable with the levels given the sales performance [29][30] Question: Will a potential rail strike affect your supply chain? - Management confirmed that they do not use rail for freight, so a rail strike would not impact their supply chain [34]