The Buckle, Inc. — Form 10-Q Summary
Period and business: The filing covers the 13 and 39 weeks ended October 30, 2021 (fiscal 2021 Q3), for a U.S. retailer of casual apparel, footwear, and accessories operating stores and an e-commerce platform. The request metadata says “2020 Q3,” but the filing itself is for 2021 Q3. Buckle operated 441 stores in 42 states at quarter-end.
Financial performance
| Metric | 13 weeks ended Oct. 30, 2021 | 13 weeks ended Oct. 31, 2020 | 39 weeks ended Oct. 30, 2021 | 39 weeks ended Oct. 31, 2020 |
|---|---|---|---|---|
| Net sales | $319.4 million | $251.0 million | $913.7 million | $582.4 million |
| Gross profit / margin | $161.1 million / 50.4% | $117.0 million / 46.6% | $450.6 million / 49.3% | $237.2 million / 40.7% |
| Operating income / margin | $82.2 million / 25.7% | $54.1 million / 21.6% | $225.9 million / 24.7% | $83.5 million / 14.3% |
| Net income | $62.2 million | $41.6 million | $170.9 million | $64.5 million |
| Diluted EPS | $1.26 | $0.85 | $3.46 | $1.32 |
- Quarterly sales rose 27.3%; comparable sales also increased 27.3%. Transactions grew 30.0%, average unit retail rose 1.2%, and units per transaction declined 3.5%.
- Year-to-date sales rose 56.9% and comparable sales rose 56.7%. The 2020 comparison was materially affected by pandemic-related store closures beginning March 18, 2020.
- Online sales increased 9.0% to $50.5 million in the quarter and 18.7% to $147.7 million year to date. Online represented 15.8% and 16.2% of sales, respectively, down from 18.5% and 21.4% in the comparable 2020 periods.
- Management attributed gross-margin expansion to sales leverage of occupancy, buying, and distribution costs and improved merchandise margins. Quarterly selling, general, and administrative expenses were 24.7% of sales versus 25.0% a year earlier; year-to-date they were 24.6% versus 26.4%.
Cash, liquidity, and obligations
- Operating cash flow for the 39 weeks was $221.1 million, compared with $126.3 million. Investing cash outflow was $21.8 million, including $12.2 million of property and equipment purchases; dividends paid were $49.3 million.
- At October 30, 2021, cash and cash equivalents were $468.7 million, short-term investments $11.3 million, and long-term investments $20.0 million. Working capital was $358.7 million; management reported total cash and investments of $500.1 million.
- No bank borrowings were outstanding. The company had a $25.0 million unsecured credit line, expiring July 31, 2023, and $5.1 million of outstanding letters of credit.
- Operating lease liabilities totaled $293.1 million, including current and non-current portions; undiscounted future lease payments were $318.5 million. These are material ongoing commitments, although the company reported no material restrictive lease covenants.
Outlook, risks, and notable items
- Management estimated fiscal 2021 capital expenditures of approximately $17–$20 million, primarily for store projects and technology, and anticipated eight additional store construction projects during the remainder of the year, all remodels or relocations. It expected existing cash, investments, and operating cash flow to fund anticipated needs for several years; no sales or earnings guidance was provided.
- The company cited demand, product mix, fashion trends, competition, general economic conditions, and retail-industry conditions as factors that could adversely affect results and cash flows. Results are seasonal, with holiday and back-to-school periods historically contributing about 35% of annual sales.
- The filing identifies uncertainty around the COVID-19 vaccine-or-testing emergency temporary standard for larger employers. Enforcement was stayed and suspended at the time of filing, while litigation remained pending. If such requirements took effect, Buckle anticipated possible operational, employee-retention, labor-cost, and supply-chain effects.
- Fiscal 2020 store closures also drove a $1.0 million store-asset impairment charge in the quarter ended May 2, 2020; no impairment was recorded in the other periods presented. No legal proceedings were reported, and management stated disclosure controls were effective.
Key facts for investors to verify
- Confirm the intended period: the supplied filing is for the 13 weeks ended October 30, 2021, not 2020 Q3.
- Assess the sustainability of sales and margin growth against the unusually disrupted 2020 comparison period and track comparable sales, transaction trends, and online-sales mix.
- Monitor inventory markdown exposure, returns and rewards liabilities, and whether improved merchandise margins persist.
- Review cash generation alongside dividends, planned capital spending, and lease commitments; cash balances are substantial, but lease obligations are significant.
- Track developments in vaccine-related requirements and other supply-chain, labor, consumer-demand, and competitive risks; management provided no quantitative forward earnings guidance.