Buckle (BKE) Q1 2026 Earnings Call Transcript

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Date

Friday, May 29, 2026 at 10 a.m. ET

Call participants

• Chief Financial Officer — Thomas Heacock
• Vice President of Finance — Adam J. Akerson
• Chief Executive Officer — Dennis H. Nelson

Takeaways

• Net Income -- $46.9 million, or $0.92 per diluted share, representing sequential improvement from $35.2 million, or $0.70 per diluted share, in the comparable quarter.
• Net Sales -- $289 million, increasing 6.1%, with comparable store sales up 5.1% and online sales up 2.8% to $47.7 million.
• Gross Margin -- 46.2%, down 50 basis points, with a 10 basis point decline attributed to merchandise margin pressure and a 40 basis point impact from higher occupancy and related expenses.
• SG&A Expenses -- 25.6% of net sales due to a $19.1 million litigation settlement; excluding this, underlying SG&A increased 150 basis points from incentive and equity compensation (up 100 basis points), store compensation (up 30 basis points), and other categories (up 20 basis points).
• Operating Margin -- 20.6%, up from 16% in the previous comparable quarter.
• Inventory -- $150 million, up 13.5% year over year.
• Total Cash and Investments -- $324 million as of quarter-end.
• Capital Expenditures -- $14.7 million, primarily directed to new store construction, remodels, and technology, with $13.5 million allocated to stores and $1.2 million for headquarters and distribution upgrades.
• Store Activity -- 3 new store openings, 5 store remodels (4 relocations), and 1 closure during the quarter; additional activity subsequent to quarter-end brought year-to-date totals to 6 new stores, 7 remodels, and 2 closures.
• Women's Merchandise Sales -- Increased 11%, building on a 10.5% rise in the prior period, now representing 52% of sales versus 50% previously; denim sales rose 8%, with average denim price points up from $84.85 to $92.
• Men's Merchandise Sales -- Rose 2%, now accounting for 48% of sales; men's denim declined 1.5%, while private brands grew 0.5% in denim, comprising over 75% of men's denim sales; average denim price point slightly decreased from $89.70 to $89.10.
• Accessories and Footwear -- Accessory sales up 6%, footwear sales up 0.5%; each contributed roughly 11.5% of net sales, consistent with the comparable quarter.
• Kids Sales -- Increased 16%, with management explicitly stating this remains a growth area.
• Private Label Penetration -- Accounted for 48% of overall sales, up from 47.5% in the comparable period.
• Gross Margin Drivers -- Occupancy expense increased 66.6%, driven by higher rent and depreciation from recent new store and remodel project timing.
• Fuel Costs -- Management noted higher surcharges on inbound and outbound freight, but stated the impact remained "manageable" in the quarter.
• Tariff Refunds -- The company filed for tariff refunds during the quarter, but had not received material funds as of quarter-end.

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Risks

• Gross margin declined by 50 basis points, driven by tariff-related cost pressure and a 66.6% rise in occupancy expense due to increased rent and depreciation from store projects.
• Management acknowledged higher fuel surcharges on freight, with Thomas Heacock saying, "so far, it is manageable and was not something that we called out during the quarter in terms of the script or impact on either. Gross margin or SG and A, but there are increases."
• SG&A expenses would have increased by 150 basis points absent litigation settlement proceeds, with incentive and equity compensation identified as key drivers.
• Men's denim sales declined 1.5%, creating a negative offset within the men's category.

Summary

The Buckle (NYSE:BKE) reported a notable increase in year over year net income and net sales growth, with sequential expansion in both physical and digital channels. Management highlighted strong performance in the women's and kids categories, while private label penetration edged higher, particularly in women's apparel. Store expansion and remodel activity accelerated, with planned new locations and investments outlined for the remainder of the year. The call made clear that most cost headwinds, such as occupancy and fuel surcharges, were acknowledged but described as contained in impact thus far.

• Management reiterated that the first quarter's reduction in SG&A ratio was mainly due to the litigation settlement, not an underlying improvement in operating expenses.
• Store project timing, with many openings and remodels occurring early in the year, contributed significantly to higher occupancy and depreciation costs.
• Leadership expressed continued optimism about inventory health and future growth opportunities in the kids and women's segments.
• Filing for tariff refunds was disclosed, but no material cash benefit had impacted reported quarterly results.

Industry glossary

• UPTs: Units per transaction; a measure describing the average number of items sold with each customer purchase.
• SG&A: Selling, general, and administrative expenses; operating expenses not directly attributable to cost of goods sold, such as payroll, store lease expenses, and corporate overhead.
• LTL: Less-than-truckload shipping; a freight transport method for small-sized cargo shipments.

Full Conference Call Transcript

Thomas Heacock: Good morning, and thanks for joining us this morning. Our 05/29/2026 press release reported that net income for the 13 week first quarter, which ended 05/02/2026, was $46.9 million or $0.92 per share on a diluted basis, which compares to net income of 35.2 million or $0.70 per share on a diluted basis for the prior year 13 week first quarter which ended 05/03/2025. Net sales for the quarter increased 6.1% to $289 million compared to net sales of $272 million for the prior year. Comparable store sales for the quarter increased 5.1% in comparison to the same 13 week period in the prior year, and our online sales increased 2.8% to 47.7 million.

For the quarter, UPTs decreased approximately 1% The average unit retail increased to approximately 4.5%, and the average transaction value increased about 3.5%. Gross margin for the quarter was 46.2%, a decrease of 50 basis points from 46.7% in the first quarter of 2025. With the decrease being the result of a 10 basis point reduction in merchandise margins, along with a 40 basis point impact from increased buying distribution and occupancy expense Selling, general and administrative expenses for the quarter were 25.6% of net sales compared to 30.7 for the first quarter of 2025.

The first quarter decrease was due to a 660 basis point impact from the recognition of a $19.1 million interchange fee litigation settlement during the first quarter of 2026 as disclosed in our 2025 Form 10-Ks. Absent the impact of this settlement, SG and A expenses were up 150 basis points for the quarter. Which was driven by a 100 basis point increase in incentive and equity compensation accruals, a 30 basis point increase in store related compensation expense, and a 20 basis point increase in other SG and A expense categories. As a result, our operating margin for the quarter was 20.6% compared to 16% for the first quarter of fiscal 2025.

Income tax expense as a percentage of pretax net income for both the current and prior year first quarter was 24.5%. Our press release also included a balance sheet as of 05/02/2026, which included the following. Inventory of 150 million which was up 13.5% from the same time a year ago and $324 million in total cash and investments. We ended the quarter with $169 million in fixed assets net of accumulated depreciation. Our capital expenditures for the quarter were 14.7 million and depreciation expense was 6.5 million Capital spending for the quarter included $13.5 million for new store construction, store remodels and technology upgrades and $1.2 million for capital spending at the corporate headquarters and distribution center.

During the quarter, we opened 3 new stores, completed 5 full store remodels, 4 of which were relocations in a new outdoor shopping centers, and closed 1 store. Following the end of the quarter, we have opened 3 additional new stores completed 2 more full store remodels and closed 1 store so far during fiscal May, bringing our year to date counts to 6 new stores 7 full store remodels and 2 store closures. For the remainder of the year, we anticipate opening an additional 9 new stores and completing an additional 7 full remodeling projects.

Buckle ended the quarter with 442 retail stores in 42 states, compared to 439 stores in 42 states as of the end of the first quarter of for fiscal 2025. And now I would like to turn the call over to Adam J. Akerson, Vice President of Finance.

Adam J. Akerson: Thanks, Tom, and good morning. Our women's business carried a strong momentum into the first quarter of 2026. Delivering another double digit increase against the prior year and building on the consistent growth we saw throughout 2025. For the quarter, women's merchandise sales were up 11%, was on top of a 10.5% increase in Q1 2025 and represented approximately 52% of sales compared to 50% last year. Women's denim category continued to be the leading contributor to revenue growth with denim sales up 8% year over year, An average denim price points increased from $84.85 in the first quarter of fiscal 25 to $92 in the first quarter of fiscal 26.

In addition to the strong denim performance, we saw great growth in our alternative pant collection with strong trend adoption expanded brand offerings. Our women's top business remains strong, highlighted by growing private label penetration, and a favorable response to newness and color selections. We also had a great early response to our denim shorts business as we moved into the spring and summer selling seasons. On the men's side, merchandise sales increased 2% against the prior year, representing approximately 48% of total sales compared to 50% last year. Our men's business was down about our men's denim business was down about 1.5% but we continue to be pleased to see growth across our private brands.

Private brands, which were up 0.5% and represented over 75% of the men's denim business. Average denim price points decreased from $89.70 in the first quarter of fiscal 25 to $89.1 in the first quarter of fiscal 2026. For the quarter, our men's tops business was a meaningful contributor to growth led by strong performance in tees and polos, along with solid momentum in our short sleeve button fronts. Across a range of styles in both solos and prints. Our shorts business also performed well with strength in both denim and athletic styles. On a combined basis, accessory sales for the quarter increased approximately 6% against the prior year footwear sales increased about 0.5%.

These 2 categories accounted for approximately 11.5% respectively, of first quarter net sales which compares to 11.5% for each in the first quarter of for fiscal 2025. For the quarter, average accessory price points were up approximately 5% and average footwear price points were up 9%. Kids business turned in another standout performance in the first quarter of 2026 with sales up approximately 16% versus the prior year. This category continues to represent a growth opportunity as we build the business and reach new guests earlier in their shopping journey. For the quarter, denim accounted for approximately 42 and a half percent of sales and tops accounted for approximately 28%.

This compares to 43.5%, 27% for each in the first quarter of for fiscal 2025. Our private label business for the quarter represented 48% of sales versus 47.5% in the first quarter of for fiscal 2025. With that, we welcome your questions.

Operator: Thank you. A reminder for participants, if you would like to ask a question, please raise your hand in the Zoom app. Prior to asking your questions, please state your name and firm affiliation. Our first question is from Mauricio Serna will go ahead and prompt you to unmute at this time. Please remember to say your full name and your firm. Yes. Good morning.

Analyst (Mauricio Serna): This is Mauricio Serna from UBS Research. Just wanted to ask on the margins. Could you unpack a little bit the on the gross margin side what caused the merchandise margin contraction, And then on the buying occupancy and distribution, it is the pressure from 40 basis points, where is that what is that attributed to within those 3 buckets Thank you.

Adam J. Akerson: On the merchandise margins, I will start with that, Mauricio. Good morning, and thank you for the question. I think we feel really strong about being down 10 basis points. Remember from a year ago, we saw a particular strength a year ago and really strong merchandise margins, and we are at record high levels. So, we still feel like we are maintaining a full strong regular price business and pleased with margins where they are.

In terms of what caused the decrease, probably a little bit of cost pressure from tariffs And then, you know, by category, men's denim was the category that was down. but on the whole, really pleased with where margins are again on top of record levels a year ago.

Thomas Heacock: On the gross margin side, the breakout between buying distribution and occupancy, Occupancy is really where the growth is. Total occupancy expense for the quarter was up 66.6% and really the driver of that is rent and depreciation related to the projects that we have been doing for the last several years. A year ago, you know, our projects were weighted toward the last 3 quarters of the year. that is a little bit different this year. We have a pretty heavy, schedule of projects for the first part of the year opening both in Q1 and then even so far in May.

So that is pushing that rent a little bit higher and also depreciation, and that is why that leverage point is higher.

Analyst (Mauricio Serna): I think I am on mute. Can you still hear me? I do not know if it is on mute anymore. Oh, yeah. We can hear you. Yeah. Oh, great. Yep. I know that is very helpful. Just a quick follow-up. Maybe could you on the on the margin side, just given all these headlines that we have been hearing about fuel costs with the Middle East situation. I just want to understand, like, what is your strategy in terms of fuel cost? Do you hedge that? Do you have, like, locked agreements with logistics providers? And how should we think about that? Fuel cost impact on your inbound, outbound freight? Thank you.

Thomas Heacock: We do not hedge fuel costs, so there is no contract there to do any hedging. I mean, really, where we are seeing the increase is fuel surcharges, both on you know, LTL and inbound freight for new product and then also with our carriers. Outbound on e-comm. So we have seen a little bit of increase in terms of fuel surcharges on both ends, but so far, it is manageable and was not something that we called out during the quarter in terms of the script or impact on either. Gross margin or SG and A, but there are increases. Okay.

Operator: Our next question is coming from John Bratz. John go ahead and unmute at this time. And remember to say your full name and firm affiliation.

Analyst (John Bratz): Tom, can you hear me? We can hear you, John. Good morning. You know, a lot of the big box retailers have been talking about pressures most recently because of fuel costs and so on and so forth. How do you how are you viewing your customer at this point? Are you seeing a little bit of weakness compared to what you might have seen earlier on this year? Because of higher fuel costs and pressures on incomes.

Dennis H. Nelson: Thank you, John. This is Dennis. On the pressures on the gas, we had a strong February, March, and part of that was due to and spring breaks. Spring breaks influence our business a fair amount. And then April was off a little, but we felt real good about the quarter. Our sell throughs have been good. We feel really good about the inventory. And our sales teams have been doing excellent job through the first quarter. So we are looking forward to the rest of the year, and think that our offerings and value that we present in the stores will be well received by our guests.

Analyst (John Bratz): Okay. And, Tom, 2 questions. The incentive comp 100 basis points in the in the quarter. Is that something that we might see continue going forward? And secondly, any comments on tariff refunds Right.

Thomas Heacock: I will take the first 1 first. So on and it is incentive comp, there was a little bit of a pull forward probably into the first quarter from the normal recognition pattern. We look at what we think the incentive comp will be for the full year and then accrue ratably through the year based on profitability. So with a really strong profitable quarter in the first quarter, we did pull forward a little bit. So some of that pressure should ease as we move through the rest of the year. And then on tariff refunds, we have filed for a refund claim in the first quarter No funds were received during the first quarter.

Actually, subsequent to the quarter, we received a small immaterial amount and are expecting more later. But so far, no impact to the financials, but we have filed a claim. Okay. Thank you.

Operator: There are no further questions in queue. As a reminder, if you would like to ask a question, please raise your hand in the Zoom app. Okay. It looks like there are no further questions. I will now turn the call back over to Buckle for any closing remarks.

Thomas Heacock: With no further questions, we will wrap up the call and thank everybody for participating. And enjoy the day, and have a wonderful weekend.

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