Retailer Buckle (NYSE:BKE) fell by about 2% on Thursday after the company announced lower revenue and earnings per share compared to the year-ago quarter. The company's lower results reflect an overall contraction among apparel retailers for the third calendar quarter of 2015.

After a Thursday's 2% decline, shares are down a total of 41% during the past 12 months.

Buckle Bke

Image source: Buckle.

The results

 

Q3 2015 Actuals

Q3 2014 Actuals

Growth (YOY)

Revenue

$280.2 million

$292.2 million

(4.1%)

Operating Income

$56.3 million

$64.6 million

(12.8%)

GAAP EPS

$0.74

$0.84

(11.9%)

Key details

  • The worse decline for Buckle's operating income compared to its decline in revenue was driven by a year-over-year decline of 180 basis points in its gross profit margin.
  • Buckle's gross profit margin was negatively affected primarily by a reduction of 100 basis points in merchandise margins.
  • Inventory leaped 19.5% compared to the year-ago quarter, or 14% on a comparable-store basis. To be fair, the comparison was tough, as during the year-ago quarter inventory levels were down 1.5% compared to the same time in the prior year.
  • Online sales were up 14% compared to the year-ago quarter.
  • Comparable-store sales for the quarter were down 5.2% from the year-ago quarter.

What management had to say
Management addressed concerns about the company's 100 basis-point reduction in its merchandise margins during the earnings call, noting that the lower prices were an attempt to be opportunistic.

"We took some targeted markdowns kind of based on the traffic of the third quarter and trying to be responsive and do our best to maximize our inventory," said Buckle CEO Dennis Nelson. "So, we feel reasonably good about where we are at going into fourth quarter and would expect that to -- inventories to continue to improve as we close into the fourth quarter."

Management provided a detailed update on the company's ongoing share repurchase program: "During the latter part of the quarter, we also spent approximately $684,000 to repurchase just over 20,000 shares of Buckle common stock at an average cost of $34.02," said Buckle CFO Karen Rhoads. "This leaves 523,803 shares remaining on our current authorization."

Looking ahead
While management doesn't provide guidance, the company made a few forward-looking comments worth mulling over.

First and foremost, it was encouraging to hear that inventory levels are improving as Buckle goes into the fourth quarter.

Second, Nelson noted the company is considering allowing guests to order online and pick up in-store for free. Currently, the company only allows free in-store pickups if online orders are made in the store. This could serve as a small catalyst for sales.

Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends The Buckle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.