Buckle(US:BKE)2023-08-18 14:58Financial Data and Key Metrics Changes - Net income for the second quarter ended July 29, 2023, was $45.6 million or $0.92 per share, down from $50.1 million or $1.01 per share in the prior year [2] - Year-to-date net income for the 26-week period was $88.6 million or $1.78 per share, compared to $105.4 million or $2.13 per share for the same period last year [2][4] - Gross margin for the quarter was 47.3%, down 90 basis points from 48.2% in the second quarter of 2022 [31] - Operating margin for the quarter was 19.4%, compared to 21.8% for the second quarter of fiscal 2022 [32] Business Line Data and Key Metrics Changes - Women's merchandise sales decreased by about 6%, representing approximately 43.5% of total sales [6] - Men's merchandise sales were down about 1%, accounting for approximately 56.5% of total sales [35] - Accessory sales increased approximately 3.5%, while footwear sales decreased by about 13.5% [36] - Private label brands in women's denim showed strength, while branded styles were off due to planned inventory decreases [34] Market Data and Key Metrics Changes - Net sales for the second quarter decreased 3.2% to $292.4 million compared to $302 million in the prior year [10] - Comparable store sales decreased 3.3% for the quarter [10] - Online sales decreased 5.6% to $43.6 million for the quarter [10] - Year-to-date net sales decreased 5.9% to $575.3 million [10] Company Strategy and Development Direction - The company plans to open five additional new stores and complete eight more full remodeling projects for the remainder of the year [5] - The focus is on driving growth in private brands, which represented 41% of sales compared to 40% in the prior year [7] - Management emphasized a cautious approach to inventory, feeling comfortable with the selection heading into the back-to-school season [16] Management's Comments on Operating Environment and Future Outlook - Management noted challenges in the women's side due to weather affecting early sell-throughs and sourcing new styles [14] - The company expressed confidence in its inventory positioning for the back-to-school and fall selling season [20] - Management did not provide future sales or earnings guidance, maintaining a cautious outlook [8] Other Important Information - Capital expenditures for the year-to-date period were $17.9 million, with $17.2 million allocated for new store construction and technology upgrades [5] - The company ended the quarter with inventory of $136.1 million, up 5.9% from the previous year [33] Q&A Session Summary Question: What were the drivers behind the merchandise margin contraction of 30 basis points? - Management indicated that the margin decrease was largely due to last year's footwear performance and challenges in the women's category due to weather [14] Question: How does the company feel about inventory composition heading into the second half of the year? - Management provided historical context on inventory levels and expressed confidence in the current selection and response from stores [16] Question: How relevant is newness to overall business growth? - Management acknowledged the importance of newness but faced challenges in sourcing enough new products for growth [22]