BKE
#Good morning, and thanks for being with us this morning.
Our March 16, 2018, press release reported a net income for the 14-week fourth quarter, which ended February 3, 2018, was $42 million or $0.87 per share on a diluted basis compared to net income of $36 million or $0.74 per share on a diluted basis for the prior year 13-week fourth quarter, which ended January 28, 2017.
Net income for the 53-week fiscal year ended February 3, 2018, was $89.7 million or $1.85 per share on a diluted basis, which compares to net income of $98 million or $2.03 per share on a diluted basis for the prior year 52-week fiscal year, which ended January 28, 2017.
Net sales for the 14-week fourth quarter increased 0.4% to $281.2 million compared to net sales of $280 million for the prior year 13-week fourth quarter.
Comparable store sales for the 14-week fiscal period ended February 3, 2018, decreased 3.2% from comparable store sales for the prior year 14-week period ended February 4, 2017.
Online sales increased 4% to $33.5 million for the 14-week fiscal period compared to net sales of $32.2 million for the prior year 13-week fiscal period.
Compared to the prior year 14-week period ended February 4, 2017, however, online sales for the quarter increased just over 1%.
Net sales for the 53-week fiscal year decreased 6.3% to $913.4 million compared to net sales of $974.9 million for the prior year 52-week fiscal year.
Comparable store sales for the 53-week fiscal period ended February 3, 2018, decreased 7.2% from comparable store sales for the prior year 53-week period ended February 4, 2017.
Our online sales decreased 1.6% to $98.2 million for the 53-week fiscal year compared to net sales of $99.8 million for the prior year 52-week fiscal year.
For the quarter, UPTs increased approximately 0.5%, the average unit retail decreased 0.5% and the average transaction value decreased just slightly.
For the full year, UPTs increased approximately 1.5%, the average unit retail decreased approximately 4.5% and the average transaction value decreased approximately 3%.
Our gross margin for the quarter was 47.4%, up 250 basis points from 44.9% in the prior year fourth quarter.
The year-over-year increase is the result of a 225 basis point improvement in merchandise margin and a 35 basis point benefit as the result of the fiscal 2016 sunset of our old Primo Card loyalty program, which were partially offset by slightly de-leveraged occupancy, buying and distribution expenses.
For the full year, gross margin was 41.6%, up 90 basis points from of 40.7% in the prior year.
The current year increase is due to 120 basis point improvement in merchandising margin and 100 basis point benefit from the Primo Card sunset, which, again, were offset by de-leveraged occupancy, buying and distribution expenses, resulting from the comparable store sales decline.
Selling expenses for the quarter were 22% of net sales, consistent with the fourth quarter of last year.
For the year, selling expenses were 22.5% of sales compared to 21.1% in the prior year.
For the year, the increase in selling expense as a percentage of net sales was the result of increases in store compensation, online marketing and fulfillment and certain other selling expenses.
General administrative expenses for the quarter were 3.8% of net sales compared to 3.1% of net sales for the fourth quarter of fiscal 2016.
For the full year, general administrative expenses were 4.4% of sales compared to 3.9% in the prior year.
For both the quarter and year-to-date period, the G&A increase is due to increased professional and consulting fees, home office compensation and benefits and certain other expenses.
Our operating margin for the quarter was 21.6% compared to 19.8% for the fourth quarter of fiscal 2016.
For the year, our operating margin was 14.7% compared to 15.7% in the prior year.
Other income for the quarter was $2.8 million compared to $2 million for the fourth quarter of fiscal 2016, and other income for the full year was $5.4 million compared to $3.5 million the prior year.
Income tax expense as a percentage of pretax net income for the quarter was 33.8% compared to 37.3% for the fourth quarter of fiscal 2016, bringing fourth quarter net income to $42 million for fiscal 2017 compared to $36 million for fiscal 2016.
For the full fiscal year, income tax expense was 35.7% of pretax income compared to 37.3% in fiscal 2016, bringing net income to $89.7 million for fiscal 2017 compared to $98 million for fiscal 2016.
Our press release also included a balance sheet as of February 3, 2018, which included the following: inventory of $118 million, which was down approximately 6% from inventory of $125.7 million at the end of fiscal 2016; and total cash and investment of $237.4 million, which was after payment of $133.9 million in dividends during the year and compares to $264.6 million at the end of 2016 after payments of $84.8 million dividends during that year.
Our year-end inventory in a comparable store basis was down approximately 6.5%, and total markdown inventory was also down compared to the prior year.
We ended the year with $149.5 million fixed assets net of accumulated depreciation.
Our capital expenditures for the quarter were $2.5 million, and depreciation expense was $7.6 million.
For the full year, capital expenditures were $13.5 million, and depreciation expense was $30.7 million.
For the full year, capital expanding was broken down as follows: $12.5 million for new store constructions, store remodels and store technology upgrades, and $1 million for capital spending at the corporate headquarters and distribution center.
During the quarter, we opened one new store and closed 5 stores and completed one full remodel in January, bringing our full year count to 2 new stores, 8 for remodels and 12 store closures.
We also closed one additional store in February after the end of the fiscal year.
For fiscal 2018, we currently do not have any new stores planned and anticipate completing 4 full remodeling projects, which includes 2 for spring and 2 for back-to-school.
Based on current store plans, we expect our capital expenditures to be in the range of $10 million to $15 million, which includes both planned store projects and IT investments.
Buckle ended the year with 457 retail stores in 44 states compared with 467 stores in 44 states at the end of fiscal 2016.
As of the end of the year, 391 of our 457 stores were in our newest format.
Additionally, our total square footage was 2.367 million square feet as of the end of the year compared to the 3 ---+ 2.392 million square feet at the same time a year ago.
And now I will turn it over to <UNK> <UNK>, our Vice President of Women's Merchandising.
Good morning.
I\
Thanks, <UNK>.
Good morning, everybody, and happy Friday to you.
Men\
On the second part of the question, we don't give guidance, so we can't talk about that or discuss that.
But in terms of looking at the gains in gross margin, most of that was merchandise margin-related and Primo-related.
For 220, it was merchandise margins.
We saw the benefit there from reduced markdowns, as <UNK> called out.
Big category was women's denim, where we saw reduced denim markdowns.
We also saw the benefit of increases in private label and reduced shrinkage in the fourth quarter.
This is our annual inventory process, so those things all benefited merchandise margins.
Deleverage was about 10 basis points for the quarter.
And some of that ---+ I mean, there was some benefit from the extra week.
But really, we can compare to the whole year, it probably benefit from a little bit stronger comps in the fourth quarter than the year and then that extra week, but I don't know that we can quantify how much that had.
I'll let <UNK>, answer the second part of that question.
As far as an expectation for next year, we got a little benefit this year with having 1 month in a lower rate.
But I think 26% would be the rate that we expect for next year going forward having the full year benefit.
In regards to investing those savings, we have, actually, forever, had a strong cash basis and has always looked at what we can do to invest in our business to be a better special specialty store.
And our focus is to continually improve our online, keep our stores up to date, invest in our people.
But that is all consistent with what our strategies from almost day 1.
Just as a benchmark.
What was the private label as a percent of sales in the fourth quarter of '16.
In other words, it was 14.5% in the most recently reported quarter, and that compares to what last year, please.
That was up about 1% as a percent of sales for both the quarter and the year.
So it's 39% a year ago.
Okay.
Do you expect that to ---+ you can't give guidance.
As it pertains to the February comp number, I was a little confused about the release.
It was ---+ February comp was down 5%, but net sales increased 2% for the quarter without material store growth.
I don't understand.
Could you explain the differential.
A lot of it has to do with the extra week in the year for fiscal 2017.
So when we're comparing total sales, total sales is fiscal period to fiscal period, which is not necessarily the same 4 weeks a year ago on a calendar basis.
So that's the bulk of the disparity between those 2 numbers.
If there are no further questions, we can wrap up the call and wish everyone a good rest of the day and an enjoyable weekend.
So thank you very much for joining us.
