Buckle's Q3 Earnings: A Mixed Bag of Sales and Margins
On November 22, 2024, Buckle, Inc. reported its third-quarter earnings, which brought both positive and negative surprises for investors. The company's net income for the 13-week period ended November 2, 2024, was $44.2 million or $0.88 per share on a diluted basis, compared to $51.8 million or $1.04 per share in the same period last year.
While Buckle's net sales decreased by 3.2% to $293.6 million from $303.5 million in the prior-year quarter, its online sales increased by 1.1% to $46.6 million. This growth in e-commerce was a highlight of the quarter, demonstrating the company's ability to adapt to changing consumer behavior.
However, the decline in net sales and comparable store sales (down 0.7%) may be concerning for investors. Year-to-date, net sales decreased by 4.6% to $838.5 million from $878.7 million in the prior year, with online sales down 9.2% to $128 million.
The company's gross margin for the quarter was 47.7%, a decline of 80 basis points from the same period last year. This decrease was mainly due to an increase in occupancy costs (up 100 basis points) and distribution and buying costs (up 35 basis points). However, Buckle managed to offset some of these losses with a 55-basis-point improvement in merchandise margins.
On the other hand, selling, general, and administrative expenses increased to 29.1% of net sales from 27.4% in the prior year's quarter. This increase was mainly due to higher store labor-related expenses (up 90 basis points), digital commerce investments (up 35 basis points), G&A salaries (up 30 basis points), and other SG&A expense categories (up 50 basis points).
Despite these challenges, Buckle's management remains optimistic about the company's future prospects. "We continue to execute on our strategy of driving growth through investing in digital commerce, improving our customer experience, and optimizing our operations," said Dennis Nelson, President and CEO.
