Buckle Inc (BKE) 2006 Q3 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 quarterly earnings press release for the 13-week period ended October 28, 2006.

Our November 16, 2006, press release reported a net income for the 13-week period ended October 28, 2006, was $17.7 million or $0.89 per share on a diluted basis compared with $16.6 million or $0.82 per share on a diluted basis for the corresponding 13-week period ended October 29, 2005.

This was an increase in net income of 6.5% on a 3.6% net sales increase during the period. For the quarter, net sales increased 3.6% to $143.1 million from net sales of $138.1 million for the third quarter of fiscal 2005.

Comparable store sales for the third quarter for stores opened at least one full year declined 0.1%. Gross margin dollars increased 4.3% compared to the prior year's third quarter. This resulted in a gross margin percentage of approximately 41%, which was an increase of approximately 30 basis points as a percentage of net sales from the third quarter of fiscal 2005.

Looking at the components of cost of goods sold, actual merchandise margins improved approximately 80 basis points. The Company also had a reduction in third-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 third quarter was 19.6% as a percentage of net sales, approximately even with the third quarter of fiscal 2005. Increases in store salaries, stock option compensation expense and certain other selling expenses were offset by a reduction as a percentage of net sales in the incentive bonus accrual.

General and administrative expenses for the third quarter were 3.3% as a percentage of net sales, which was an increase of approximately 30 basis points compared to the third quarter of fiscal 2005. This increase was attributable to increases in equity compensation expense, compensation expense related to unrealized gains in the Company's non-qualified deferred compensation plan, home office payroll expense, professional fees and certain other general and administrative expenses. These increases were, however, partially offset by reductions as a percentage of net sales in the incentive bonus accrual and corporate aircraft expenses.

Income from operations was 18.1% as a percentage of net sales for the third quarter ended October 28, 2006, versus 18.2% for the quarter ended October 29, 2005. Other income during the third quarter of fiscal 2006 was up compared to the third quarter of fiscal 2005 due to an increase in income earned on the Company's cash and investments during the period resulting from higher interest rates and higher balances of cash and investments and an increase in income related to unrealized gains in the Company's non-qualified deferred compensation plan.

The aforementioned changes resulted in an overall increase of approximately 7% in our third-quarter pretax net income compared to the third quarter of fiscal 2005.

Income tax expense for the period increased approximately 7.8% compared to the same period a year ago, bringing third-quarter net income to $17.7 million or approximately 12.3% as a percentage of net sales compared with 12% for the same period in the prior year.

Our press release also included a balance sheet as of October 28, 2006, which included the following -- inventory of $100 million, which was down approximately 1.3% from inventory of $101.3 million at the end of the third quarter of fiscal 2005, and total cash and investments of $179.3 million compared to $199.8 million at the end of fiscal 2005 and $155.2 million at the same time a year ago.

The Buckle ended the quarter with 352 retail stores in 38 states compared with 337 stores in 38 states at the end of the third quarter of fiscal 2005.

It is our Company policy not to provide any guidance on current sales or to project results for the next quarter. Additionally, any forward-looking statements made during this commentary involve material risks 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.