Business context and reporting period
The Buckle, Inc. is a U.S. specialty retailer of casual apparel, footwear, and accessories, operating 444 stores in 42 states plus buckle.com. This 10-K reports fiscal 2023, the 53-week year ended February 3, 2024, compared with fiscal 2022, the 52-week year ended January 28, 2023. The request metadata says “2022 Q4,” but the filing is an annual report for fiscal 2023, not a quarter-only filing.
Financial performance and condition
| Metric | Fiscal 2023 | Fiscal 2022 |
|---|---|---|
| Net sales | $1,261.1 million | $1,345.2 million |
| Comparable sales | Down 8.0% | Not stated here on a comparable basis |
| Gross profit / margin | $619.1 million / 49.1% | $676.0 million / 50.3% |
| Operating income / margin | $271.1 million / 21.5% | $328.1 million / 24.4% |
| Net income / net margin | $219.9 million / 17.4% | $254.6 million / 18.9% |
| Diluted EPS | $4.40 | $5.13 |
| Operating cash flow | $254.6 million | $242.4 million |
Online sales fell 10.3% to $206.5 million. Sales declined as transactions fell 7.3%; average unit retail rose 1.0% and units per transaction rose 0.2%. Gross margin pressure reflected higher occupancy, buying, and distribution costs relative to sales, lower merchandise margins, and shrinkage increasing to 0.5% of sales from 0.4%. Selling and G&A expenses together rose to 27.6% of sales from 25.9%.
At year-end, cash and cash equivalents were $268.2 million, short-term investments $22.2 million, and long-term investments $25.0 million. Working capital was $222.8 million. The company reported no bank borrowings and had a $25 million unsecured credit line, expiring July 31, 2025. Operating lease liabilities totaled $315.4 million; these are lease obligations, not bank debt. Operating cash flow was $254.6 million, capital expenditures were $37.3 million, and dividends paid were $196.7 million.
Material changes versus the prior period
Sales decreased 6.3% despite fiscal 2023 including an extra week. Net income declined 13.6%, diluted EPS decreased from $5.13 to $4.40, and operating margin contracted 2.9 percentage points. Other income rose to $18.2 million from $6.9 million, primarily reflecting investment income. Cash and cash equivalents increased $16.1 million during the year. The company opened 9 stores, closed 6, and substantially remodeled 18; it ended the year with 444 stores.
Outlook, risks, and unusual items
Management planned 8 store openings and approximately 15–19 remodels or relocations in fiscal 2024, with expected capital spending of $32–$38 million. Through April 1, 2024, three stores had closed, with one additional closure planned. Management believes cash, investments, and operating cash flow can fund anticipated needs for several years.
Key risks include fashion and demand shifts, competition and changing shopping patterns, consumer spending and economic conditions, foreign sourcing and tariffs, staffing costs, reliance on a single distribution center, and information-system or cybersecurity disruptions. The company reported no material litigation and no cybersecurity incidents that had materially affected operations or financial condition. The auditor issued unqualified opinions on the financial statements and internal controls; inventory markdown and obsolescence estimates were identified as a critical audit matter. The inventory valuation adjustment was $9.1 million, up from $6.3 million.
Fiscal 2023 included 53 weeks versus 52 weeks in fiscal 2022, complicating year-over-year sales comparison. The company paid a regular dividend of $0.35 per share in each quarter and a $2.50-per-share special dividend in the fourth quarter; it repurchased no shares.
Important facts for investors to verify
- Assess the underlying sales trend and the effect of the extra fiscal week, including comparable-store and online sales.
- Track whether gross margin and expense leverage recover as sales trends, markdowns, and shrinkage develop.
- Review inventory aging and the assumptions behind the $9.1 million markdown and obsolescence adjustment.
- Evaluate planned store openings, remodel spending, and store closures against cash generation and dividend payments.
- Distinguish lease obligations from funded debt, and monitor liquidity, investment income, and the unused credit facility.
- Consider exposure to fashion demand, sourcing concentration, consumer spending, cybersecurity, and the single Kearney distribution center.