Small-cap jean and apparel retailer The Buckle
The Buckle continues to be the little company that can, and it posted a total quarterly sales rise of 21.3% on impressive same-store sales growth of 10.1%. Management cited solid store presentation and savvy store management, and commended the sales team for driving higher sales. It also mentioned a successful July promotion in which it gave free bottles of Jones Soda
Denim accounted for 37.5% of total sales and includes an array of price points, fits, as well as private-label brands and outside offerings from the likes of Guess?
The Buckle caters about evenly to men and women, with sales to men accounting for 45.5% of quarterly sales, up 21.5% versus last year's quarter. Women's merchandise sales grew 21%. Management doesn't offer forward sales or earnings guidance, but based on the fact that nearly every product category is growing robustly, it could easily continue its track record of leveraging solid top-line growth into even higher earnings gains.
Speaking of the bottom line, earnings grew almost 73% for the quarter as the gross margin expanded 410 basis points and management kept a tight lid on expenses. During the earnings conference call, it mentioned leverage on buying, occupancy, and distribution costs, meaning a higher level of sales are falling down to earnings.
I've been trying to put a finger on why exactly The Buckle is riding out weaker trends experienced by archrivals such as Gap
In particular, denim is hot, and firms like Gap have completely missed the boat on the fact that price is of little concern when it comes to fashionable jeans these days. Additionally, The Buckle offers a convenient way to buy well-known brands, as opposed to having to trudge through a large department store to buy a shirt or blouse. A free soda isn't a bad consolation either, proving that management knows just what brands are on consumers' minds these days.
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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned. The Fool has an ironclad disclosure policy.