Release Date: May 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net income for the first quarter was $34.8 million, or $0.69 per share on a diluted basis.
- Average unit retail increased by approximately 6.5%.
- Merchandise margins improved by 50 basis points.
- Inventory levels were effectively managed, with a 5.1% decrease from the same time a year ago.
- Private label sales represented 46% of total sales, up from 44% in the first quarter of 2023.
Negative Points
- Net sales for the first quarter decreased by 7.2% to $262.5 million.
- Comparable store sales decreased by 9% compared to the same period last year.
- Online sales decreased by 13.4% to $44.4 million.
- Gross margin for the quarter was down 110 basis points to 46%.
- Selling, general, and administrative expenses increased to 29.8% of net sales from 28.1% in the prior year.
Q & A Highlights
Q: Can you provide more details on the denim category and the factors driving merchandise margin expansion?
A: Dennis Nelson, President and CEO: On the women's side, we are seeing a variety of styles, including Cropped Straights and Wide Bottom styles, which are creating interest. Our private brands like Buckle Black and BKE are performing well. On the men's side, BKE remains strong, and we are developing Buckle Black for men. Margins are up due to good product selection and effective inventory management.
Q: What is driving the increase in general and administrative expenses despite lower sales?
A: Thomas Heacock, CFO: The increase is primarily due to changes in paid time-off accruals, which were accelerated to give teammates the ability to use it earlier in the year. This is more of a timing issue rather than a continuous increase in expenses.
Q: Can you update us on your store plans for the rest of the year?
A: Dennis Nelson, President and CEO: We plan to complete 19 remodels and open seven new stores. We are relocating stores from mid-market malls to better locations like power centers. Two stores were closed for over 60 days during the first quarter due to site readiness issues, but we are pleased with the overall real estate selection.
Q: What are the trends in men's and women's merchandise sales?
A: Adam Akerson, Vice President of Finance: Women's merchandise sales were down 8.5%, representing 47% of sales. Men's merchandise sales were down 5.5%, representing 53% of sales. Average price points for women's denim increased, while men's denim price points slightly decreased.
Q: How are accessory and footwear sales performing?
A: Adam Akerson, Vice President of Finance: Accessory sales were down 8.5%, and footwear sales were down 34%. These categories accounted for 11% and 6% of total sales, respectively. Average price points for accessories and footwear increased by 2% and 6.5%, respectively.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
