All Buckle stores closed beginning March 18 but the denim, apparel and accessories retailer has since reopened more than 75 percent of its locations, giving it a chance to improve on the “most challenging” quarter in company history.
In a Nutshell: Throughout May, Buckle reopened 331 stores after temporarily closing down, furloughing more than 90 percent of staff and reducing salaries in March.
Those decisions saved $13.5 million, Buckle president and CEO Dennis Nelson said, with more to come in the second quarter.
“It goes without saying that this was the most challenging quarter we ever faced,” Nelson said. “The quarter started strong as we continued the positive trend of same-store sales growth by posting a 6.3 percent comp and online sales growth of 33.2 percent for February.”
In order to lower other expenses, Buckle’s real estate team negotiated with landlords to acquire “substantial rent deferrals.”
As shopping patterns have changed, Nelson said the retailer has also catered its marketing content to the new consumer reality and increased its commitment to omnichannel technologies like curbside pickup, which is now available in nearly every Buckle store.
“Our distribution and online fulfillment teams have managed to stay on top of the increased e-commerce demand, despite operating with reduced staffing to maintain proper social distancing,” Nelson said. “Our corporate office teams have worked tirelessly to respond to teammate and guest inquiries, research federal, state and local health guidelines and prepare the stores with the necessary supplies and protocols to reopen quickly and safely.”
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Inventory was up to $121.7 million in Q1 from $120.8 million in the comparable quarter.
Sales: For the quarter ending May 2, sales decreased by 42.7 percent to $115.4 million compared to $201.3 million in the prior-year period. Wall Street expected $143.23 million.
E-commerce sales climbed 31.5 percent to $31.1 million during the quarter compared to $24.4 million in last year’s first quarter.
As a result of inventory markdowns and obsolescence, along with deleveraged occupancy buying and distribution expenses, Buckle’s margin dropped to 23.2 percent from 38.1 percent during the same period last year.
Average men’s denim price points dipped to $84.85 in the first quarter, down from $86.70, according to Buckle. Women’s denim prices decreased to $75.85 from $76.70.
Overall, men’s apparel prices increased by 0.5 percent to $50.95 from $50.60 while women’s apparel price points grew by 3 percent to $44.00 from $42.65.
Denim accounted for roughly 46 percent of the retailer’s sales, up from 42.5 percent in the comparable period, and tops drove 27.5 percent—a slight dip from 30 percent in the comparable period.
Earnings: Net losses totaled $11.8 million and resulted in a loss of 24 cents per share, compared to a 31 cent gain in the comparable quarter. Wall Street expected positive earnings of 3 cents per share.
CEO’s Take: “Our buying teams worked very closely with our branded and private-label vendor partners to extend payment terms, cancel and reduce orders as well as alter the timing and flow of inventory,” Nelson said. “This allowed us to finish the quarter with inventory up just slightly, limited the amount of potential markdown inventory, and maximized our open-to-buys for future selling periods.”