Buckle Inc (BKE) 2006 Q1 法說會逐字稿

Hi. This is [Tom Hickock] with The Buckle and this is a recording of The Buckle's commentary related to the Company's quarterly earnings press release for the 13-week period ended April 29, 2006. Our May 18, 2006 press release reported net income for the 13-week period ended April 29, 2006 was $9.4 million or $0.47 per share on a diluted basis compared with $8.6 million or $0.40 per share on a diluted basis for the corresponding 13-week period ended April 30, 2005. This was an increase in net income of 8.5% on a 3.8% net sales increase during the period.

For the quarter, net sales increased 3.8% to $109.6 million from net sales of $105.5 million for the first quarter of fiscal 2005. Comparable store sales for the first quarter for stores open at least one full year decreased 1.3%. Gross margin dollars increased 4.8% compared to the prior year's first quarter. This resulted in a gross margin percentage of approximately 35.6%, which was an improvement of approximately 30 basis points as a percentage of net sales from the first quarter of fiscal 2005.

Looking at the components of cost of goods sold, actual merchandise margins improved approximately 75 basis points. The Company also had reductions in first-quarter expense as a percentage of net sales relating to the incentive bonus accrual and certain distribution costs. These reductions were however partially offset by increases in occupancy and buying expense during the period.

Selling expense for the first quarter was 20% as a percentage of net sales, which was an increase of approximately 20 basis points from the first quarter of fiscal 2005. This increase was primarily attributable to increases in Internet fulfillment and marketing expenses, stock option compensation expense, store fixture expense, health insurance expense and bank card fees. These increases were however partially offset by reductions as a percentage of net sales in the incentive bonus accrual, advertising expense and certain other selling expenses.

General and administrative expenses for the first quarter were 3.5% as a percentage of net sales, which was a decrease of approximately 40 basis points compared to the first quarter of fiscal 2005. This decrease was attributable to a reduction in professional fees primarily related to the Company stock repurchase from its founder in the first quarter of fiscal 2005 and to reductions in the incentive bonus accrual and corporate aircraft expenses. These reductions were however partially offset by increases in equity compensation expense, home office payroll expense and certain other general and administrative expenses.

Income from operations was 12.1% as a percentage of net sales for the fiscal quarter ended April 29, 2006 versus 11.6% for the quarter ended April 30, 2005. Other income during the first quarter of fiscal 2006 was up compared to the first quarter of fiscal 2005 due primarily to an increase in income earned on the Company's cash and investments during the period resulting from higher interest rates.

The aforementioned changes resulted in an overall increase of approximately 8.3% in our first-quarter pretax net income compared to the first quarter of fiscal 2005. Income tax expense for the period increased approximately 7.9% compared to the same period a year ago bringing the first quarter net income to $9.4 million or approximately 8.5% as a percentage of net sales.

Our press release also included a balance sheet as of April 29, 2006, which included the following; inventory of $67.4 million, which was down approximately 7.7% from inventory of $73 million at the end of the first quarter of fiscal 2005 and total cash and investments of $201.1 million compared to $199.8 million at the end of fiscal 2005 and $156.6 million at the same time a year ago.

The Buckle ended the quarter with 341 retail stores in 38 states compared with 328 stores in 38 states at the end of the first quarter of fiscal 2005. With the opening of three new stores during fiscal May, The Buckle currently operates 344 retail stores in 38 states.

It is our Company policy to refrain from providing any guidance on current sales or projected 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, which may be beyond the Company's control.

Accordingly, the Company's future performance of financial results may differ materially from those expressed or implied in any such forward-looking statements. Such factors include but are not limited to and also 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.