The Buckle, Inc. — Form 10-K Summary
Reporting period: Fiscal 2021, the 52 weeks ended January 29, 2022. Although the request metadata says “2020 Q4,” this filing covers fiscal 2021, not a 2020 quarter.
Business context
Buckle is a U.S. specialty retailer of casual apparel, footwear, and accessories, operating 440 stores in 42 states under Buckle and Buckle Youth, alongside its e-commerce business. Denim and tops represented 39.6% and 30.2% of fiscal 2021 sales, respectively. The company opened one store and closed four during the year.
Financial performance and liquidity
| Metric | Fiscal 2021 | Fiscal 2020 |
|---|---|---|
| Net sales | $1.295 billion | $901.3 million |
| Gross profit / gross margin | $653.0 million / 50.4% | $400.7 million / 44.5% |
| Operating income / margin | $335.5 million / 25.9% | $168.0 million / 18.7% |
| Net income | $254.8 million | $130.1 million |
| Diluted earnings per share | $5.16 | $2.66 |
| Cash flow from operations | $311.8 million | $227.4 million |
- Comparable-store sales rose 43.8%; transactions increased 43.5%. E-commerce sales rose 15.9% to $220.8 million.
- Gross margin improved through stronger merchandise margins and leverage of occupancy, buying, and distribution costs. Selling and G&A expenses together declined to 24.5% of sales from 25.8%.
- At year-end, cash and cash equivalents were $254.0 million, short-term investments $12.9 million, and long-term investments $19.4 million. Working capital was $142.7 million.
- There were no bank borrowings. The company had a $25 million unsecured credit line, with $2.7 million of letters of credit outstanding. Operating lease liabilities totaled $288.3 million.
- Cash declined by $64.8 million during the year, primarily as financing outflows included $347.8 million of dividends. The company paid $6.99 per share in total dividends, including a $5.65 special dividend.
Changes, outlook, and risks
- Fiscal 2021 sales and earnings rebounded sharply from fiscal 2020, when COVID-19 closures materially affected first-half results. Comparisons therefore reflect a disrupted prior-year base.
- Management anticipated five store openings, approximately 15–20 remodels, and $22–$27 million of capital expenditures in fiscal 2022. One store had closed year-to-date through March 28, 2022; no further specific closures were then planned. No earnings or sales guidance was provided.
- Management said existing cash, investments, and operating cash flow should fund anticipated working capital and capital needs for several years.
- Key risks include fashion and merchandise-mix misjudgments, competition and changing shopping behavior, reliance on foreign sourcing and a single distribution center, labor and consumer-spending pressures, cyber and systems disruption, and COVID-19 or other pandemic impacts. Axis Denim accounted for 15.6% of sales; no other vendor exceeded 10%.
- The inventory markdown and obsolescence adjustment was $5.6 million, down from $10.8 million. Inventory valuation was identified as the audit’s critical audit matter. Deloitte issued unqualified opinions on the financial statements and internal controls. The company reported no litigation expected to have a material effect.
Important facts for investors to verify
- Whether post-pandemic sales, comparable-store growth, and margins are sustainable given the unusually strong year-over-year rebound.
- Inventory aging, markdown reserves, and merchandise-margin trends; the reserve depends on management estimates.
- The sustainability of large cash dividends and the effect of future distributions on liquidity and investment capacity.
- Execution and returns on planned openings, remodels, and technology spending, alongside lease commitments of $313.8 million in undiscounted payments.
- Exposure to the principal supplier, fashion-sensitive demand, foreign sourcing, and risks affecting the single Kearney distribution facility.