June was a terrible month for the economy by most accounts. Unemployment crept up, hiring was as stagnant as the swamps around the nation's capital, and retailers were smashing expectations, with clothing retailer The Buckle (NYSE: BKE ) leading its category with same-store sales -- or SSS -- growth of 10.8%. Whoa, wait, back up. Was that some good news? Maybe the month wasn't a total wash.
Many retailers quickly shrugged off the recession, but few have done as well as Buckle, which outperforms its industry peers in several important ways. The teen segment is notoriously fickle, and apparel sales margins are highly subject to fluctuations in cotton prices, which have risen to historic highs this year. Add in the cyclical nature of the apparel industry, and the company at the head of the pack today might find itself in the doghouse tomorrow. Despite these barriers, Buckle has shown both consistent SSS growth and one of the highest net margins in the industry.
The same old sales song
SSS growth is a vital indicator of any retailer's success, since a company can boast excellent revenues by expanding rapidly even though it may be serving fewer customers per store than its competition. Those companies that can keep drawing business -- not to mention drawing more out of each customer's pocket -- are the ones most poised for long-term success.
|
Company
|
6-Month Average Monthly SSS Growth
|
2-Year Average Monthly SSS Growth
|
Past 8 Quarters Average Net Income Margin
|
| The Buckle |
8.8% |
3.0% |
14.2% |
| The Gap (NYSE: GPS ) |
(1.6%) |
(1.1%)* |
8.0% |
| American Eagle Outfitters (NYSE: AEO ) |
(6.3%)** |
(2.0%) |
5.0% |
| Abercrombie & Fitch (NYSE: ANF ) |
6.5%** |
(0.8%) |
3.0% |
| Urban Outfitters (Nasdaq: URBN ) |
(2.5%)** |
0.5%* |
11.5% |
Sources: Corporate press releases and SEC filings.
* Includes all of 2009.
** Only available up to end of first quarter (ended April 30).
While most companies have struggled to boost SSS in the post-crash years, Buckle has grown and done so more consistently than its peers. With 420 stores open at the start of 2011, and with plans to open 12 more by the end of the year, Buckle's modest expansion plans are actually outpacing industry leader The Gap, which has seen its store count remain essentially flat over the past four years. As a plucky upstart, Buckle has a way to go to match The Gap's 3,246 branded stores, but the company's respectable war chest and absence of debt give it an enviable position as it seeks to increase its market share.
But wait, there's more!
Ron Popeil would have lots of good things to say about this stock that does it all. Dividend investors should be pleased with The Buckle's 1.8% yield, an unexpected bonus from an expanding company with such growth potential. While it's not as high as those at American Eagle (3.20%) or The Gap (2.40%), both companies' stocks have seen losses this year to Buckle's healthy gain, more than making up the difference.
When you add all these factors up, it makes for a great fit. See if it's the right size for your portfolio by adding it to your watchlist!
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