Buckle(BKE)2024-05-24 15:07Financial Data and Key Metrics Changes - Net income for the first quarter ended May 4, 2024, was $34.8 million or $0.69 per share, down from $42.9 million or $0.86 per share in the prior year [13] - Net sales decreased by 7.2% to $262.5 million compared to $282.8 million in the prior year [13] - Gross margin for the quarter was 46%, down 110 basis points from 47.1% in the first quarter of 2023 [27] - Operating margin for the quarter was 16.2%, compared to 19% for the first quarter of fiscal 2023 [28] Business Line Data and Key Metrics Changes - Men's merchandise sales were down about 5.5%, representing approximately 53% of total sales [17] - Women's merchandise sales decreased by about 8.5%, accounting for approximately 47% of sales [30] - Average denim price points for men's decreased slightly from $88.80 to $88.65, while women's increased from $79.80 to $80.85 [17][30] - Private label sales represented 46% of total sales, up from 44% in the first quarter of 2023 [8] Market Data and Key Metrics Changes - Comparable store sales for the 13-week fiscal quarter decreased by 9% compared to the same period last year [3] - Online sales decreased by 13.4% to $44.4 million, down from $51.3 million in the prior year [3] Company Strategy and Development Direction - The company plans to open seven new stores and complete 14 additional full remodeling projects for the remainder of the year [29] - The strategy includes relocating stores from mid-market malls to power centers or better locations [24] - The company continues to focus on developing private brands and introducing new labels to its assortment [8] Management's Comments on Operating Environment and Future Outlook - Management reiterated a policy of not providing future sales or earnings guidance, citing material risks and uncertainties [11] - The management expressed satisfaction with merchandise margin growth despite challenging top-line results [8] - The company is managing inventory levels effectively and is optimistic about the response to new product offerings [39] Other Important Information - Selling, general, and administrative expenses for the quarter were 29.8% of net sales, up from 28.1% in the prior year [14] - Inventory was reported at $130.7 million, down 5.1% from the same time a year ago [15] Q&A Session Summary Question: What is driving the expansion in merchandise margins? - Management noted that the BKE brand is strong, and newness in key brands is contributing positively to margins [21] Question: What is the outlook for the denim category? - Management highlighted a variety of styles and strong sell-through in private brands, indicating a positive response to new trends [38] Question: What is driving the increase in general and administrative expenses despite declining sales? - The increase was attributed to accruals for additional paid time off, which is more of a timing issue rather than a permanent increase in expenses [41] Question: Any updates on store plans for the rest of the year? - Management confirmed plans for 19 remodels and seven new stores, continuing to evaluate real estate opportunities [24]