footwear, and accessory retailer Buckle (BKE 19.46, -1.42)
touched five-week lows this morning. This was due, in part, to last night’s
third quarter miss and worse than expected comps.
Buckle reported worse than expected third quarter earnings per share (EPS) of $0.42 on revenue declines of 4.1% to $215.1 mln as soft sales in Women’s merchandise were partially offset by modestly higher sales in Men’s. Gross margins were down 50 basis points to 40%, primarily as a result of a 95 basis point of deleverage occupancy, buying, and distribution costs, and partially offset by 45 basis point improvement in merchandise margin.
What’s more, comparable store new sales for the third quarter were -1.4% as inventories increased about 13% to $145.5 mln. Online sales increased 8.8% to $25.5 mln for the third quarter, compared to net sales of $23.4 mln a year ago.
By category, Women's merchandise sales were down about 8.5% against the prior year. Average denim price points were down from $81.35 last year to $74.90 this year. For the quarter, Buckle’s women's business was around 49.5% of net sales compared to 51% last year while average women’s price points declined about 4% from $44.45 to $42.75. For fashion wear, fashion sweaters and soft and cozy simple knits were drivers for sales through the quarter. Similar themes carried over in eyewear and footwear.
Buckle’s Men’s merchandise sales for the quarter were up about 2% against last year. Average selling price points decreased from $85.30 last year to $82.90 this year. For the quarter, Buckle’s men’s business was about 50.5% of net sales compared to 49% last year while the average men’s price point decreased approximately 2% from $51.50 to $50.40. During the quarter, Buckle saw growth in all categories except long bottom sweaters and accessories. Management remains comfortable with the quality and level of its fall/winter product inventories. Overall, markdowns are down giving the company room for adjustments after Thanksgiving, if needed.
The stock pares 10.2% opening losses, down only 6.8% at this point, as investors bid up both the broader market and the broader retail space (XRT) into the latter half of the morning. BKE still trades firmly below both its 50-day (21.23) and 200-day (23.30) simple moving averages.
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