Buckle Inc (BKE) 2005 Q4 法說會逐字稿

This is Tom Heacock with The Buckle, and this is a recording of The Buckle's commentary related to the Company's March 2, 2006 press release, which reported fourth-quarter 2005 earnings and February 2006 sales. Our March 2, 2006 press release reported a net income for the 13-week period ended January 28, 2006 was 19.1 million or $0.96 per share on a diluted basis compared with 17.1 million or $0.76 per share on a diluted basis for the corresponding 13-week period ended January 29, 2005. This was an increase in net income of 11.6% on a 5.3% net sales increase during the period.

For the quarter, gross margin dollars increased 10.2% compared to the prior year's fourth quarter. This resulted in a gross margin percentage of approximately 41.9%, which was an improvement of approximately 185 basis points as a percentage of net sales from the fourth quarter of fiscal 2004.

Looking at the components of cost of goods sold, actual merchandise margins improved approximately 160 basis points. The Company also had a reduction in fourth-quarter expense as a percentage of net sales related to the incentive bonus accrual. These reductions were however partially offset by increases in occupancy and distribution expense during the period.

Selling expense for the fourth quarter was 19.9% as a percentage of net sales, which was an increase of approximately 100 basis points from the fourth quarter of fiscal 2004. This increase was primarily attributable to increase in the Internet expenses, store salaries, health insurance expense, bankcard fees and payroll taxes. These increases were however partially offset by reductions as a percentage of net sales in the incentive bonus accrual and certain advertising expenses.

General administrative expenses for the fourth quarter were 3.6% as a percentage of net sales, which was a decrease of approximately 55 basis points compared to the fourth quarter of fiscal 2004. This decrease was attributable to a reduction in the incentive bonus accrual and the reductions in our restricted stock compensation expense and corporate aircraft expenses. These reductions were however partially offset by increases in compensation expense related to unrealized gains in the non-qualified deferred compensation plan and the vacation accrual as well as an increase in certain other general administrative expenses.

Income from operations was 18.5% as a percentage of net sales for the fiscal quarter ended January 28, 2006 versus 17% for the quarter ended January 29, 2005. Other income during the fourth quarter of fiscal 2005 was up compared to the fourth quarter of fiscal 2004, primarily due to an increase in income earned on the Company's cash and investments for the period, resulting from higher interest rates and from an increase in other miscellaneous income. The aforementioned changes resulted in an overall increase of approximately 14.9% in our fourth-quarter pretax net income compared to the fourth quarter of fiscal 2004.

Income tax expense for the period increased approximately 20.8% compared to the same period a year ago, bringing fourth-quarter net income to 19.1 million or approximately 12.5% as a percentage of net sales. Our press release also included certain selected balance sheet data, including total cash and investments of 199.8 million and inventory of 68.7 million, which was up less than 1% from inventory of 68.3 million as of the end of fiscal 2004.

We also reported in our press release that February net sales for the 4-week period ended February 25, 2006 increased 4.6% to 34.1 million from sales of 32.6 million in the corresponding 4-week period ended February 26, 2005.

Comparable store sales for stores open at least 1 full year for the 4-week period ended February 25, 2006 decreased 0.4% in comparison to the 4-week period ended February 26, 2005.

At this time, I would like to briefly highlight some of the results from our various merchandise categories that led to fiscal February's 4.6% net sales increase. On the guys' side of the business, total sales were down approximately 1.5% from the same 4 weeks in the prior year and represent approximately 43% of the total sales for the month versus approximately 46% in the prior fiscal February. Relative strength was however seen in guys' denim, outerwear and woven shirts during the period. For the fiscal month, overall price points on the guys' side of the business were up approximately 5%.

On the gals' side of the business, total sales were up approximately 10% from the same 4 weeks in the prior year and represent approximately 57% of the total sales for the month versus approximately 54% in the prior fiscal February. Strong categories in the gals' side included denim and casual bottoms, footwear and outerwear; each of which experienced double-digit sales growth in the same period in the prior year and knit tops, which experienced growth in the mid single digits. For the fiscal month, overall price points on the gals' side of the business were up approximately 7.5%.

Within the guys' and gals' categories combined, accessories sales declined approximately 6.5%, while footwear sales increased slightly during the period. These two categories account for approximately 9% and 7.5% respectively of the current fiscal February's net sales. This compares with approximately 10% and 7.5% for each of these categories for the same period in the prior fiscal year. Average accessory price points were down approximately 2.5%, and average footwear price points were up approximately 1% for fiscal February. UPTs were up approximately 2.5%, and average dollars per transaction were up approximately 8.5% for the 4-week period ended February 25, 2006.

For the fiscal month, merchandise margins were improved to comparison with the same period a year ago. As of the end of the period, inventory on a Company total basis was approximately flat and inventory on a comparable store basis was down approximately 4.5%. Total markdown inventory at the end of the period was up compared to the prior year, driven by increases in the 50%-off and 75%-off categories. By department, markdown increases were primarily in guys' and gals' denim and in gals' footwear.

The Buckle ended the fiscal year with 338 retail stores in 38 states and currently operates 340 retail stores in 38 states compared with 327 stores in 38 states at the same time a year ago.

It is our Company policy to refrain from providing guidance on current sales or to project results for the next quarter. Additionally, any forward-looking statements made during this commentary involve material risk and uncertainties and are subject to change based on factors that 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 SEC.

I hope this brief commentary has answered your questions. If however you have any further questions, please call Karen Rhoads at 308-236-4440 or myself at 308-238-2443. Thanks.