Apparel retailer The Buckle (NYSE:BKE) released quarterly earnings last Thursday, and they were nothing to make investors fasten their seatbelts.
In its earnings release, The Buckle reported that net income for the first quarter rose 8.5%. Net income per diluted share was higher because of fewer shares outstanding quarter over quarter. That metric came in at $0.47, versus $0.40 for the year-ago quarter, for an increase of just under 18%. Sales increased 3.8% to $110 million, while same-store sales, or comparable sales at stores open for more than one year, decreased 1.3%. That was about it, aside from a quarterly net income statement and balance sheet after a company description. There's nothing wrong with a short, sweet report.
In addition, inventory was down slightly quarter over quarter. That's always a good sign for a retailer, since it demonstrates that clothing is not piling up on its shelves. The company also had about $160 million in cash on its balance sheet, or nearly $8 per share -- not bad for a stock that recently traded at $39.54.
Recent comps have been weak, but annual same-store sales numbers have been positive for the last three years, after being negative from 2001-2003. Overall sales growth has averaged about 6% over the past five years, while diluted earnings have grown closer to 13% over the same time frame.
The Buckle is a 344-store Nebraska-based retailer of moderately priced casual apparel, footwear, and accessories for young men and women. Denim makes up about 40% of sales, and brand-name merchandise accounts for nearly 70% of total sales. Those brand names typically carry lower margins than private-label goods. The company believes it differentiates itself with higher levels of customer service and a wider selection of merchandise.
The Buckle has no long-term debt and a roughly 15% average return on capital, meaning that management is doing a good job of turning over its inventory while growing sales and keeping profit margins high. Indeed, net profit margins have been increasing over the past three years. For the last 12 months, they exceeded 10%, compared to industry averages of 7%. The Buckle's current dividend yield of 1.7% and annual stock repurchases also benefit common shareholders.
The Buckle won't turn many heads, but it appears to represent a decent if unspectacular retailer. It's outperformed the S&P over the past five years, and overall since it went public in 1992. You may be able to find a faster-growing, more dynamic retailer, but consistency and lower risk visibility can be desirable qualities, too. Best of all, The Buckle's valuation is also very reasonable, at just under 14 times next year's projected earnings.
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Fool contributor Ryan Fuhrmann has no financial interest in any shares mentioned. Feel free to email him with feedback or to discuss the company further.
