In May, when I last looked at Buckle (NYSE:BKE), it appeared to be body-surfing among a raucous and crowded youth-clothing market. At the time, its comparable same-store sales were up 6.4%, driving top-line growth by 11.4%. Fast-forward to the third quarter, and it appears the company may be taking more elbows than it's giving out in this mosh pit of an industry.
But before we dive into its recent results, I want to first echo the sentiments of my Foolish colleague Nathan Parmelee, when he sounded his frustration about the lack of info in Buckle's press releases. A quarterly press release seems like a pretty good place to include a balance sheet and cash flow statement, as well as a thought or two about the company's achieved and anticipated performance. Not so with this company.
You'll find that its latest quarterly release is about as talkative as an uninterested date. Hey, Buckle, we're not asking for a commitment and the revelation of your "feelings," but a little more chat might go a long way toward putting your date -- your shareholders -- at ease.
Investors shouldn't take Buckle's lack of communication as a sign that the company is hiding something, though. As Nathan suggested, it does have the goods. You just have to dig a bit to find it.
So how has it fared lately? Let's take a look.
As mentioned, Buckle enjoyed strong top-line growth this summer, but the fall has not been as kind. In the third quarter, comps actually declined by 0.9% compared with the same period a year ago. This resulted in only 3.2% revenue growth in the most recent period. Now through the first nine months of fiscal 2005, net sales have increased 6.9%.
It's hard to get excited about this kind of growth, but the report was not without some cheerful news. Buckle's solid operating margins continue to improve -- they moved higher to 18.2% from 16.9% in the comparable period a year ago. The company also continues to buy back shares at a rapid pace. In the third quarter, it completed its 500,000-share buyback program and subsequently announced the start of another.
As its shares outstanding decrease, shareholders will benefit with improving earnings per share. It's happening already. Despite weak top-line growth, improving margins and fewer shares resulted in a 22.4% increase in EPS.
The company is obviously doing the right things to increase EPS, and that's a good thing for shareholders. And if Buckle can figure out a way to get top-line growth back in gear, look out.
More Foolishness on youth-oriented clothing retailers:
- Guess? (NYSE:GES) posts stellar third-quarter results.
- But Gap (NYSE:GPS), a Motley Fool Stock Advisor selection, has been in a sales funk lately.
- Abercrombie & Fitch (NYSE:ANF) is a nice treat for shareholders.
Fool contributor Jeremy MacNealy does not own shares of any companies mentioned.
