The Buckle, Inc. 2027 Q2 Earnings Call

Good morning, and thanks for joining us this morning. Our August 21, 2026, press release report that net income for the 13-week second quarter, which ended August 1, 2026, was $44.4 million, or $0.87 per share on a diluted basis, which compares to net income of $45 million or $0.89 per share on a diluted basis for the prior year 13-week second quarter, which ended August 2, 2025. Year-to-date net income for the 26-week period ended August 1, 2026, was $91.3 million, or $1.79 per share on a diluted basis, which compares to net income of $80.2 million or $1.59 per share on a diluted basis for the prior year 26-week period ended August 2, 2025. Net sales for the 13-week second quarter increased 4.6% to $319.8 million, compared to net sales of $305.7 million for the prior year 13-week second quarter.

Comparable store sales for the quarter increased 2.1% in comparison to the same 13-week period in the prior year, and our online sales increased 2.3% to $44.6 million. Year-to-date net sales increased 5.3% to $608.6 million, compared to net sales of $577.9 million for the prior year 26-week fiscal period. Comparable store sales for the year-to-date period increased 3.5% in comparison to the same 26-week period in the prior year, and our online sales increased 2.5% to $92.2 million. For both the quarter and year-to-date periods, UPTs decreased approximately 1%. The average unit retail increased approximately 4.5%, and the average transaction value increased about 3.5%. Gross margin for the quarter was 47.8%, a 40 basis point increase from 47.4% in the second quarter of 2025.

For the quarter, merchandise margins improved by 110 basis points, which includes 65 basis points of impact from tariff refunds received during the quarter and was partially offset by a 70 basis point increase in buying distribution and occupancy expenses related to continued growth in the number of both new and relocated store locations. Year to date, gross margin was 47.1%, consistent with the same period in the prior year. During the period, a 55 basis point increase in merchandise margins was offset by a 55 basis point increase in buying distribution and occupancy expenses. Selling general administrative expenses for the quarter were 30.4% of net sales, compared to 29.0% for the second quarter of 2025. Year to date, SG&A was 28.1% of sales, compared to 29.8% for the same period in the prior year.

The second quarter increase was due to a 45 basis point increase in marketing expenses as we increased investments in initiatives aimed at driving guest acquisition and strengthening long-term brand momentum, as well as a 35 basis point increase in store labor-related expenses, a 30 basis point increase in health insurance benefits, a 20 basis point increase in store supplies, and a 45 basis point increase in certain other SG&A categories. These increases were partially offset by a 35 basis point reduction in incentive and equity compensation accrual. Our operating margin for the quarter was 17.4%, compared to 18.4% for the second quarter of 2025. For the year-to-date period, our operating margin was 19%, compared to 17.3% for the same period last year. Income tax expense as a percentage of pre-tax net income for each of the current and prior year, quarter and year-to-date periods was 24.5%.

Our press release also included a balance sheet as of August 1st, 2026, which included the following: inventory of $161.4 million, up 13.3% from the same time a year ago, and $322.9 million of total cash and investments. We ended the quarter with $191.7 million in fixed assets net of accumulated depreciation. Our capital expenditures for the quarter were $29.8 million, and depreciation expense was $6.9 million. For the year-to-date period, capital expenditures were $44.5 million, and depreciation expense was $13.4 million. Year-to-date capital spending is broken down as follows: $24.4 million for new store construction, store remodels, and technology upgrades, and $20.1 million for capital spending at the corporate headquarters and distribution center, which includes the purchase of a new corporate aircraft as a replacement for the plane that was sold during fiscal 2025.

During the quarter, we opened five new stores, completed five full store remodels, four of which were relocations into new outdoor shopping centers, and closed one store. Following quarter end, we opened one additional new store, which brings our year-to-date count through today to nine new stores, 10 full remodels, and two store closures. For the remainder of the year, we anticipate opening five additional new stores and completing four more full remodel projects. The Buckle ended the quarter with 446 retail stores in 42 states, compared with 440 stores in 42 states at the end of the second quarter of 2025. I will turn the call over to Adam J. Akerson, our Vice President of Finance.

Thanks, Tom, and good morning. Our women's business continued its strong performance during the quarter, increasing 9.5% on top of an 18.5% increase in the second quarter of 2025. The women's business represented 50% of total sales for the quarter, up from 47.5% last year, reflecting broad-based strength across key categories. Women's denim remained a standout performer, growing 11% year-over-year, supported by strong denim trends across a variety of leg openings and rises. Guests responded particularly well to the depth and versatility of the assortment, driving both unit and dollar growth, with average denim price points increasing from $85.35 to $92.50 during the quarter. Beyond traditional denim, the alternative pants category continued to be the fastest-growing segment of the women's business, increasing almost 50% year-over-year. This growth was fueled by strong guest demand for prints and colors across a range of wider leg silhouettes.

Women's tops also delivered a strong performance, growing approximately 10.5% year-over-year, led by fashion and graphic styles that paired well with wider leg and patterned bottoms. Additionally, women's shorts experienced strong selling during the quarter, accelerating in July as customers shopped the summer season and began preparing for back to school. Our men's business delivered consistent performance during the quarter, with total sales remaining essentially flat to last year, representing 50% of the total company sales, compared to 52.5% in the prior year. While men's denim sales declined approximately 3.5% year-over-year, private label denim outperformed the category as the majority of the softness was concentrated in higher price point national brands. Despite the shift in brand mix, average denim price points remained consistent at $89.20 versus $89.30 last year.

Slight growth in our shorts category helped offset a portion of the denim decline, reflecting guests' positive response to our seasonal assortment. Tops continued to be a bright spot within the men's business, growing 3.5% year-over-year, showcasing the strength and breadth of our assortment. Graphic tees performed particularly well across a variety of lifestyles, fabric weights, and designs, while short-sleeved woven shirts delivered strong results in both print and solid styles. Our expanded polo assortment also resonated with guests, providing style options for a range of occasions. Strong selling in hoodies generated incremental sales growth during the quarter, reflecting consistent guest demand for casual and versatile apparel. On a combined basis, accessory sales for the quarter increased approximately 2.5% against the prior year, and footwear sales increased about 0.5%.

These two categories accounted for approximately 11.5% and 5%, respectively, of second quarter net sales for both fiscal 2025 and 2026. For the quarter, average accessory price points were up approximately 5%, and average footwear price points were up 10%. Our kids business delivered another outstanding quarter, increasing 11% on top of 23% increase in the second quarter of 2025. Growth was broad based across the category, led by strong performance in denim, shorts and casual bottoms, and tees. Many of the same trends driving success in our adult business resonated well with kids and parents alike, as mini-me styling remained a meaningful driver of demand. For the quarter, denim accounted for approximately 35.5% of sales, and tops accounted for approximately 30.5%, which compares with 36% and 29.5% for each in the second quarter of fiscal 2025.

Our private label business for the quarter represented 44.5% of sales versus 43.5% for the second quarter of 2025. With that, we welcome your questions.