The Buckle Q1 2026 Earnings Call - Women's Denim and Private Label Drive Double-Digit Growth Despite Margin Pressure
Summary
The Buckle reported a solid first quarter, with net income rising to $46.9 million and comparable store sales up 5.1%. The growth was heavily concentrated in women’s business, which surged 11% and now accounts for 52% of sales, led by a strong rebound in denim and private label penetration. Men’s sales grew a modest 2%, while the kids category delivered a standout 16% increase. The company is expanding its physical footprint with six new stores and seven remodels year-to-date, signaling confidence in its brick-and-mortar model.
Profitability metrics show a mixed picture. Operating margins expanded to 20.6% largely due to a $19.1 million one-time litigation settlement that artificially suppressed prior-year SG&A. Excluding that item, SG&A pressures from incentive compensation and higher occupancy costs from new store projects weighed on efficiency. Gross margins contracted slightly due to tariff-related cost pressures and higher freight, though management noted fuel surcharges remain manageable. The company declined to provide forward guidance, citing macro uncertainties, but highlighted strong sell-throughs and inventory health heading into the spring and summer seasons.
Key Takeaways
- Net income for Q1 2026 rose to $46.9 million, or $0.92 per diluted share, up from $35.2 million, or $0.70, in the prior year period.
- Comparable store sales increased 5.1%, while total net sales grew 6.1% to $288.7 million, driven by both traffic and average ticket growth.
- Women’s business remains the primary growth engine, with sales up 11% year-over-year and now representing 52% of total company revenue.
- Denim continues to be the standout category, with overall denim sales up 8% and women’s denim leading the charge with strong trend adoption and expanded brand offerings.
- Private label penetration is expanding, accounting for 48% of total sales versus 47.5% a year ago, and representing over 75% of the men’s denim business.
- The kids category delivered a standout 16% sales increase, highlighting successful efforts to capture younger shoppers earlier in their retail journey.
- Operating margin expanded to 20.6% from 16% in the prior year, primarily due to a $19.1 million litigation settlement that reduced prior-year SG&A by 660 basis points.
- Excluding the settlement, SG&A expenses were up 150 basis points, driven by a pull-forward of incentive compensation accruals and higher store-related costs.
- Gross margin contracted by 50 basis points to 46.2%, reflecting a 10 basis point drop in merchandise margins from tariff costs and a 40 basis point hit from higher occupancy, buying, and distribution expenses.
- Management confirmed that fuel surcharges are rising across inbound and outbound freight but remain manageable and have not yet materially impacted gross or operating margins.
- The company opened six new stores and completed seven full-store remodels year-to-date, with plans to open nine more and remodel seven additional locations for the remainder of the fiscal year.
- Inventory grew 13.5% year-over-year to $150.2 million, but management cited strong sell-throughs and confidence in inventory health heading into the spring and summer seasons.
- The company filed for tariff refund claims, receiving an immaterial amount post-quarter, with further refunds expected later in the year.
- No forward guidance was provided, as the company continues to cite macroeconomic uncertainties and tariff volatility as key risks for future performance.
Full Transcript
Conference Call Moderator, Webcast Host/Moderator, The Buckle, Inc.: Good morning. Thank you for standing by, and welcome to Buckle’s first quarter earnings release webcast. As a reminder, all participants are currently in a listen-only mode. A question and answer session will be conducted following the company’s prepared remarks, with instructions given at that time. Members of Buckle’s management on the call today are Dennis Nelson, President and CEO. Tom Heacock, Senior Vice President of Finance, Treasurer, and CFO. Adam Akerson, Vice President of Finance and Corporate Controller, and Brady Fritz, Senior Vice President, General Counsel, and Corporate Secretary. Before beginning, the company would like to reiterate its policy of not providing future sales or earnings guidance. All forward-looking statements made on the call are pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially due to risks and uncertainties described in the company’s SEC filings.
The company undertakes no obligation to publicly update or revise these statements except as required by law. Additionally, the company does not authorize the reproduction or dissemination of transcripts or audio recordings of the company’s quarterly conference calls without its express written consent. Any unauthorized reproductions or recordings of the calls should not be relied upon as the information may be inaccurate. As a reminder, today’s webcast is being recorded. I’d now like to turn the conference over to your host, Tom Heacock.
Tom Heacock, Senior Vice President of Finance, Treasurer, and Chief Financial Officer, The Buckle, Inc.: Good morning, and thanks for joining us this morning. Our May 29, 2026 press release reported that net income for the 13-week first quarter, which ended May 2, 2026, was $46.9 million, or $0.92 per share on a diluted basis. Which compares to net income of $35.2 million or $0.70 per share on a diluted basis for the prior year 13-week first quarter, which ended May 3, 2025. Net sales for the quarter increased 6.1% to $288.7 million, compared to net sales of $272.1 million for the prior year. Comparable store sales for the quarter increased 5.1% in comparison to the same 13-week period in the prior year, and our online sales increased 2.8% to $47.7 million. For the quarter, UPTs decreased approximately 1%. The average unit retail increased approximately 4.5%, and the average transaction value increased about 3.5%.
Gross margin for the quarter was 46.2%, a decrease of 50 basis points from 46.7% in the first quarter of 2025, with the decrease being the result of a 10 basis point reduction in merchandise margins, along with a 40 basis point impact from increased buying, distribution, and occupancy expenses. Selling general administrative expenses for the quarter were 25.6% of net sales, compared to 30.7% for the first quarter of 2025. The first quarter decrease was due to a 660 basis point impact from the recognition of a $19.1 million interchange fee litigation settlement during the first quarter of 2026, as disclosed in our 2025 Form 10-K.
Absent the impact of this settlement, SG&A expenses were up 150 basis points for the quarter, which was driven by a 100 basis point increase in incentive and equity compensation accruals, a 30 basis point increase in store-related compensation expense, and a 20 basis point increase in other SG&A expense categories. As a result, our operating margin for the quarter was 20.6%, compared to 16% for the first quarter of fiscal 2025. Income tax expense as a percentage of pre-tax net income for both the current and prior year first quarter was 24.5%. Our press release also included a balance sheet as of May 2nd, 2026, which included the following: inventory of $150.2 million, which was up 13.5% from the same time a year ago, and $323.8 million in total cash and investments. We ended the quarter with $169 million in fixed assets, net of accumulated depreciation.
Our capital expenditures for the quarter were $14.7 million, and depreciation expense was $6.5 million. Capital spending for the quarter included $13.5 million for new store construction, store remodels, and technology upgrades, and $1.2 million for capital spending at the corporate headquarters and distribution center. During the quarter, we opened three new stores, completed five full-store remodels, four of which were relocations into new outdoor shopping centers, and closed one store. Following the end of the quarter, we have opened three additional new stores, completed two more full-store remodels, and closed one store so far during fiscal May, bringing our year-to-date counts to six new stores, seven full-store remodels, and two store closures. For the remainder of the year, we anticipate opening an additional nine new stores and completing an additional seven full remodeling projects.
Buckle ended the quarter with 442 retail stores in 42 states, compared to 439 stores in 42 states as of the end of the first quarter of fiscal 2025. Now I’d like to turn the call over to Adam Akerson, Vice President of Finance.
Conference Call Moderator, Webcast Host/Moderator, The Buckle, Inc.: Thanks, Tom, and good morning. Our women’s business carried a strong momentum into the first quarter of 2026, delivering another double-digit increase against the prior year and building on the consistent growth we saw throughout 2025. For the quarter, women’s merchandise sales were up 11%, which was on top of a 10.5% increase in Q1 2025 and represented approximately 52% of sales, compared to 50% last year. Our women’s denim category continued to be the leading contributor to revenue growth, with denim sales up 8% year-over-year.
Adam Akerson, Vice President of Finance and Corporate Controller, The Buckle, Inc.: Average denim price points increased from $84.85 in the first quarter of fiscal 2025 to $92 in the first quarter of fiscal 2026. In addition to the strong denim performance, we saw great growth in our alternative pant collection, with strong trend adoption and expanded brand offerings. Our women’s top business remains strong, highlighted by growing private label penetration and a favorable response to newness in color selections. We also had a great early response to our denim shorts business as we moved into the spring and summer selling seasons. On the men’s side, merchandise sales increased 2% against the prior year, representing approximately 48% of total sales, compared to 50% last year. Our men’s denim business was down about 1.5%, but we continue to be pleased to see growth across our private brands, which were up 0.5% and represented over 75% of the men’s denim business.
Average denim price points decreased from $89.70 in the first quarter of fiscal 2025 to $89.10 in the first quarter of fiscal 2026. For the quarter, our men’s tops business was a meaningful contributor to growth, led by strong performance in tees and polos, along with solid momentum in our short sleeve button fronts across a range of styles in both solids and prints. Our shorts business also performed well, with strength in both denim and athletic styles. On a combined basis, accessory sales for the quarter increased approximately 6% against the prior year, and footwear sales increased about a half a percent. These two categories accounted for approximately 11% and 5%, respectively, of first quarter net sales, which compares to 11% and 5.5% for each in the first quarter of fiscal 2025.
For the quarter, average accessory price points were up approximately 5%, and average footwear price points were up 9%. Our kids business turned in another standout performance in the first quarter of 2026, with sales up approximately 16% versus the prior year. This category continues to represent a growth opportunity as we build the business and reach new guests earlier in their shopping journey. For the quarter, denim accounted for approximately 42.5% of sales, and tops accounted for approximately 28%, which compares to 43.5% and 27% for each in the first quarter of fiscal 2025. Our private label business for the quarter represented 48% of sales versus 47.5% in the first quarter of fiscal 2025. With that, we welcome your questions.
Conference Call Moderator, Webcast Host/Moderator, The Buckle, Inc.: Thank you. As a reminder for participants, if you would like to ask a question, please raise your hand in the Zoom app. Prior to asking your questions, please state your name and firm affiliation. Our first question is from Mauricio. Mauricio, I’ll go ahead and prompt you to unmute at this time. Please remember to say your full name and your firm.
Mauricio Serna, Analyst, UBS Research: Yes, good morning. This is Mauricio Serna from UBS Research. Just wanted to ask on the margins. Could you unpack a little bit on the gross margin side, what caused the merchandise margin contraction? Then on the buying occupancy and distribution, the pressure from 40 basis points. What is that attributed to within those three buckets? Thank you.
Adam Akerson, Vice President of Finance and Corporate Controller, The Buckle, Inc.: On the merchandise margin side, we’ll start with that, Mauricio, and good morning, and thank you for the question. I think we feel really strong about being down 10 basis points. Remember from a year ago, we saw particular strength a year ago and really strong merchandise margins, and we’re at record high levels. We still feel like we’re maintaining a full, strong regular price business and pleased with margins where they are. In terms of what caused the decrease, probably a little bit of cost pressure from tariffs. By category, men’s denim was the category that was down, but on the whole, really pleased with where margins are, again, on top of record levels a year ago. On the gross margin side breakdown between buying distribution and occupancy is really where the growth is.
Total occupancy expense for the quarter was up 6.6%, and really the driver of that is rent and depreciation related to the store projects that we’ve been doing for the last several years. A year ago, our projects were weighted towards the last three quarters of the year. That’s a little bit different this year. We have a pretty heavy schedule of projects for the first part of the year, opening both in Q1 and then even so far in May. That’s pushing that rent a little bit higher and also depreciation, and that’s why that leverage point is higher.
Mauricio Serna, Analyst, UBS Research: I think I’m on mute. Can you still hear me? I don’t know if I’m on mute anymore. Oh, yeah.
Adam Akerson, Vice President of Finance and Corporate Controller, The Buckle, Inc.: Yep, we can hear you. Yep.
Mauricio Serna, Analyst, UBS Research: Oh, great. Yeah, no. That’s very helpful. Just a quick follow-up, maybe could you, on the margin side, just given all these headlines that we’ve been hearing about fuel costs with the Middle East situation, just want to understand what’s your strategy in terms of fuel cost? Do you hedge that? Do you have locked agreements with logistics providers? How should we think about that fuel cost impact on your inbound, outbound freight? Thank you.
Adam Akerson, Vice President of Finance and Corporate Controller, The Buckle, Inc.: We do not hedge fuel costs, so there’s no contracts there to do any hedging. Really where we’re seeing the increase is fuel surcharges, both on LTL and inbound freight for new product and then also with our carriers outbound and e-com. We have seen a little bit of increase in terms of fuel surcharges on both ends, but so far it’s manageable and was not something that we called out during the quarter in terms of the script or impact on either gross margin or SG&A, but there are increases.
Conference Call Moderator, Webcast Host/Moderator, The Buckle, Inc.: Okay, our next question is coming from John Rotz. John, go ahead and unmute at this time and remember to say your full name and firm affiliation.
John Rotz, Analyst: Tom, can you hear me?
Tom Heacock, Senior Vice President of Finance, Treasurer, and Chief Financial Officer, The Buckle, Inc.: We can hear you, John. Good morning.
John Rotz, Analyst: A lot of the big box retailers have been talking about pressures, most recently because of fuel costs and so on and so forth. How are you viewing your customer at this point? Are you seeing a little bit of weakness compared to what you might have seen earlier on this year because of higher fuel costs and pressures on incomes?
Dennis Nelson, President and Chief Executive Officer, The Buckle, Inc.: Thank you, John. This is Dennis. On the pressures on the guest, we had a strong February, March, and part of that was due to Easter and spring breaks, with spring breaks influence our business a fair amount. April was off a little, but we felt real good about the quarter. Our sell-throughs have been good. We feel really good about the inventory, and our sales teams have been doing an excellent job through the first quarter. We’re looking forward to the rest of the year and think that our offerings and value that we present in the stores will be well-received by our guests.
John Rotz, Analyst: Okay. Tom, two questions. The incentive comp, 100 basis points in the quarter, is that something that we might see continue going forward? Secondly, any comments on tariff refunds?
Tom Heacock, Senior Vice President of Finance, Treasurer, and Chief Financial Officer, The Buckle, Inc.: On an incentive comp, there was a little bit of a pull forward probably into the first quarter from the normal recognition pattern. We look at what we think the incentive comp will be for the full year and then accrue ratably through the year based on profitability. With a really strong profitable quarter in the first quarter, we did pull forward a little bit. Some of that pressure should ease as we move through the rest of the year. On tariff refunds, we have filed for a refund claim in the first quarter. No funds were received during the first quarter. Actually, subsequent to the quarter, we received a small immaterial amount and are expecting more later. No impact to the financials, but we have filed a claim.
John Rotz, Analyst: Okay. Thank you.
Conference Call Moderator, Webcast Host/Moderator, The Buckle, Inc.: Okay, there are no further questions in queue. As a reminder, if you would like to ask a question, please raise your hand in the Zoom app. Okay, looks like there are no further questions. I will now turn the call back over to Buckle for any closing remarks.
Tom Heacock, Senior Vice President of Finance, Treasurer, and Chief Financial Officer, The Buckle, Inc.: If there are no further questions, we’ll wrap up the call and thank everybody for participating, and enjoy the day and have a wonderful weekend.
