The Buckle Tightens Up

• Email
• Share
• Print

Jeepers, it's been a while since we've taken a close look at Kearney, Neb.-based teen apparel retailer The Buckle (NYSE: BKE), but that hasn't stopped investors from helping the shares turn in results well ahead of the S&P 500 over the last 12 months. And those shares added to their results yesterday, moving up nearly 2% following the announcement that the company would boost its dividend payout by a couple of pennies per share.

It's easy to see why investors have been paying attention to this company lately: Through the six months ended July 31, the company turned in solid sales, same-store sales, and net income growth. Margins improved as the company saw its cost and expense structure improve across the board, and those same-store sales boosts provided leverage on the top line. (More details are in The Buckle's six-month filing with the SEC.)

Competitively speaking, The Buckle's in a tight spot. It's up against such companies as Gap (NYSE: GPS), Aeropostale (NYSE: ARO), Abercrombie & Fitch (NYSE: ANF), Pacific Sunwear (Nasdaq: PSUN), Dillard's (NYSE: DDS), and others -- and yet with fewer than 320 stores, it's an uphill battle for branding. The strategy, according to management, is to differentiate with selection and service.

That puts The Buckle in an interesting position. It doesn't have the financial power of a company that sells mostly private-label apparel; bringing in outside brands costs money. Making service a differentiating factor in the teen market, meanwhile, can also cost money -- particularly given the high turnover traditionally associated with that market segment.

And so the fact that The Buckle is reporting lower sales salaries this year than last, combined with higher "comps," is very encouraging. When combined with a scaled-back and, probably, more sensible expansion strategy than in some years past, it looks like The Buckle is operating an increasingly tight -- groan -- operation these days.

Fool contributor Dave Marino-Nachison doesn't own any of the companies in this article.