Buckle (BKE) Q2 Earnings Surpass Estimates, Sales in Line

The Buckle, Inc . BKE delivered sixth straight quarter of positive earnings surprise, when it reported second-quarter fiscal 2018 results. The company posted adjusted earnings per share of 32 cents, which beat the Zacks Consensus Estimate by a penny. Moreover, the figure was up 33.3% from the year-ago quarter buoyed by increased top line.

Buckle generated net sales of $201.1 million, up 2.8% from the year-ago period, which came almost in line with the Zacks Consensus Estimate of $201 million.

We note that this Zacks Rank #2 (Buy) stock rallied 10.4%, significantly outperforming the industry 's growth of 6.1% in the past month.

Consolidated same-store sales grew 1.4% in the fiscal second quarter. Additionally, global e-commerce sales increased 8.6% to $21.2 million compared with the year-ago quarter. During the quarter, Buckle's merchandise sales in the women's category declined 1.5% from the year ago period. The business accounts for 46.5% of net sales in the reported quarter, up from 49.5% last year.

On the other hand, men's merchandise sales which accounts for 53.5% of net sales, increased 9.5% in the quarter. Meanwhile, accessory sales slumped 4.5% and footwear sales inched up 8.5% in the quarter. These categories comprise 9.5% and 6.5% of net sales compared to 10.5% and 6.5% respectively in the said quarter.

During the quarter, gross profit increased 6.5% to $78.9 million, while gross margin expanded 140 basis points (bps) to 39.3%. Gross margin improved due to 100 bps reduction as a percentage of net sales in occupancy, buying and distribution costs, and 30 bps expansion in merchandise margin. Selling, general & administrative (SG&A) expenses increased 3.6% to $58.8 million.

Operating income for the quarter came at $20.2 million, up 15.8% from the year-ago quarter. Meanwhile, operating margin improved to 10% compared with 8.9% reported in the prior-year quarter.

During the quarter under review, the company shuttered one store. Currently, it has 455 stores in 43 states, down from 463 stores in 44 states. For fiscal 2018, the company doesn't intend to open any store.

Other Financial Aspects

Buckle ended the reported quarter with cash and cash equivalents of $168.9 million and shareholders' deficit of $404.1 million. Management incurred capital expenditures of $2.6 million during the quarter. Moving forward, Buckle anticipates capital expenditure to be in the range of $10-$15 million for fiscal 2018.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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