Image: The Buckle.

The retail business has grown more competitive than ever, and winners and losers have emerged in the industry as different brands have varying levels of success in wooing customers through their doors. For The Buckle (BKE 1.56%), the past few quarters have been full of uncertainty, and coming into Thursday morning's fiscal first-quarter financial report, shareholders hoped the retailer would restore growth in sales and net income at a faster pace than previous quarters. Instead, the clothing retailer announced declines in both of its key metrics, pointing to even greater weakness than many had anticipated. Let's look more closely at Buckle's latest results and what the future might hold.

Buckle comes undone
Buckle's results looked fairly ugly for the quarter. Overall revenue fell 0.1% to $271.3 million, with comparable-store sales slipping an even greater 2.2%. That was consistent with sales figures Buckle provided a couple weeks ago, but investors had still hoped for a slight increase. Net income of $33.6 million was down 10% from the year-ago quarter, equating to earnings of $0.70 per share, missing expectations that Buckle would break even for the quarter.

Once again, Buckle showed some of the same troubling trends seen in recent quarters. Even though sales declined slightly, costs of sales, including buying, distribution, and occupancy expenses, rose by more than 2%, costing the company about 1.25 percentage points in gross margin. Further down the income statement, overhead costs soared 14% while selling expenses also rose modestly, which resulted in operating margin falling by 2.3 percentage points.

As with previous quarters, Buckle's online business was one of the sole highlights for the company. E-commerce sales grew by 12.9%, accelerating slightly from the previous quarter. Yet even with that growth, Buckle's isn't even getting $0.09 on every dollar of its overall sales from its online channel, so its gains there aren't having much impact on the retailer's total results.

Image: The Buckle.

Why can't Buckle get into growth mode?
This quarter's results continue a long trend to which investors have unfortunately grown accustom. Last quarter, CEO Dennis Nelson addressed the relatively flat results in 2014, arguing that the company's performance stemmed from "a combination of things. The denim cycle in the ladies [area] was a little more challenging after all our years of growth, so that was a little bit of it. I think the challenging environment was part of it." Nelson also said the company has been happy with its kids' business, with the desire to expand to take advantage of seasonal times such as back-to-school.

Buckle has also noted that expanding its e-commerce channel is an important part of its long-term strategy. Last quarter, CFO Karen Rhoads pointed out that in addition to improving the visual element of Buckle's website, the retailer also intends to review its programs for getting better results on paid search. By being smart about managing its email lists and how it spends marketing dollars, Buckle hopes to appeal to as broad an audience as possible.

One thing that's clear, though, is that Buckle investors aren't pricing in much growth for the company. The stock currently trades at an earnings multiple of just 13, and investors expect only about 2% of annual growth over the next five years, limiting Buckle's ability to boost its share price without multiple expansion.

As economic crosscurrents start to draw questions about the sustainability of the economic recovery, retailers will feel the pressure, and Buckle appears to be at the center of changing trends among shoppers. Only with a smart strategic vision designed to retain customers can Buckle pull out of its downturn and appeal to its core audience once again.