The Buckle Inc. stock plunged more than 10 percent following the company’s second-quarter earnings miss in early trading, only to reverse course and was lately rising by 3 percent to $27.86.
Investors decided to look past the dismal performance and focus on the 7 percent dividend yield and the bet that as overall apparel sales rise, Buckle will benefit.
Net income for the quarter was $15.5 million, or 32 cents a diluted share, up from $23.5 million, or 49 cents, a year ago. This was 2 cents below the 34 cents analysts projected.
Sales for the three months ended July 31 decreased 10.1 percent to $212.2 million from $236.1 million a year earlier. Comparable store net sales fell 10.8 percent.
Chief executive officer Karen Rhoads said, “Absent the impact of the new loyalty program, total net sales for the second quarter were down 8.7 percent and comparable store sales were down 9.3 percent.”
Online sales increased 1.4 percent, which slowed, but the company pointed out that it changed its web platform in May and they had some bugs to work through.
“Men’s merchandise sales for the quarter were down approximately 5 percent. Average denim price points decreased from $94.40 in the second quarter of fiscal 2015 to $92.80 in the second quarter of fiscal 2016,” said Thomas Heacock, vice president of finance. He also pointed out that the average men’s price points decreased approximately 1 percent from $50.75 to $50.25.
He went on to add that women’s merchandise sales for the quarter were down approximately 13 percent, with average denim price points decreased from $95.45 in the second quarter of fiscal 2015 to $87 in the second quarter of fiscal 2016. The average women’s price points decreased approximately 6.5 percent from $46.50 to $43.40. Overall denim sales dropped and tops remained flat.
Accessory sales fell by 5.5 percent and footwear sales dropped 9.5 percent. Average accessory prices rose, while footwear prices fell.
Buckle also said it brought down inventory levels 5 percent and that the new inventory is coming in at a lower price point. During the quarter the average unit retail decreased 3 percent and the average transaction value dropped 2 percent.
For the full year, Buckle expects to open five new stores and remodel 19 stores. The company does not give any sales or earnings guidance.