Q3 2013 Earnings Call
November 15, 2012 10:00 am ET
Karen B. Rhoads - Director and Member of Executive Committee
Thomas B. Heacock - Treasurer and Corporate Controller
Dennis H. Nelson - Chief Executive Officer, President, Director and Member of Executive Committee
Robert M. Carlberg - Vice President of Men's Merchandising
Patricia K. Whisler - Vice President of Women's Merchandising
Simeon A. Siegel - JP Morgan Chase & Co, Research Division
Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division
Dana Lauren Telsey - Telsey Advisory Group LLC
Gabriella Carbone - Janney Montgomery Scott LLC, Research Division
Lee J. Giordano - Imperial Capital, LLC, Research Division
John D. Kernan - Cowen and Company, LLC, Research Division
Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division
Paul Alexander - BofA Merrill Lynch, Research Division
Previous Statements by BKE
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As they review the operating results for the third quarter, which ended October 27, 2012, they would like to reiterate their policy of not giving future sales or earnings guidance and have the following Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. All forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on factors, which 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 in the Securities and Exchange Commission. The company does not undertake to publicly update or revise any forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
Additionally, the company does not authorize the reproduction or dissemination of transcripts or audio recordings of the company's quarterly conference calls without its expressed written consent. Any unauthorized reproductions or recordings of the call should not be relied on as the information may be inaccurate.
I would now like to turn the call over to Karen Rhoads, Vice President of Finance and CFO. Go ahead, ma'am.
Karen B. Rhoads
Thank you. Good morning, everyone. Thank you for joining the call. We appreciate you being on the call today. And just before we get started, I would just like to note that Dennis, Pat and Bob are each calling in remotely today. So when we get to the Q&A session, we'll try and direct the call or the questions accordingly because we're not all together here.
Our November 15, 2012 press release reported that net income for the third quarter ended October 27, 2012, was $41.9 million or $0.88 per share on a diluted basis. That was up 9.3% from net income of $38.3 million or $0.81 per share on a diluted basis for the prior year third quarter that ended October 29, 2011. Year-to-date, our net income for the 39-week period ended October 27, 2012, was $102.9 million or $2.16 per share on a diluted basis. That number is up 7.9% from net income of $95.4 million or $2.02 per share on a diluted basis for the 39-week period that ended October 29, 2011.
Net sales for the 13-week third quarter increased 3.9% to $284.1 million compared to net sales of $273.4 million for the prior year third quarter. Comparable store sales for the quarter increased 2.4%, and our online sales, which are not included in comparable store sales, increased 3.8% to $19.6 million.
Net sales for the 39-week year-to-date period increased 5.2% to $763.4 million compared to net sales of $725.9 million for the same period in the prior year. Comparable store sales for the year-to-date period increased 3.2% and our online sales, which again are not included in comparable store sales, increased 10% to $55.4 million.
Gross margin for the quarter was 44.1%, up approximately 70 basis points from 43.4% for the third quarter last year. The improvement in gross margin was driven by a 90 basis point increase in merchandise margin, partially offset by an increase in occupancy, distribution and buying cost. For the year-to-date period, gross margin was 42.7%, up 20 basis points from 42.5% for the same period last year. A 25 basis point improvement in merchandise margin was partially offset by an increase in occupancy, distribution and buying cost.
Selling expense for the quarter was 17.3% of net sales, which was a reduction of approximately 100 basis points from the third quarter of fiscal 2011. The reduction was driven by decreases as a percentage of net sales and expense related to store payroll, the incentive bonus accrual, bank card fees and Internet order fulfillment. For the year-to-date period, selling expense was 18.0% of net sales, which was a reduction of approximately 60 basis points from the same time last year. The reduction was driven by decreases as a percentage of net sales and expense related to store payroll, the incentive bonus accrual, bank card fees and again, Internet order fulfillment.