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Category: Buckle (BKE)
Last updated: 25 June 2020 Stock price of Buckle Inc: $14.96 On this page we will look to provide more information and interesting details not often covered by mainstream financial websites of Buckle (BKE), a on-trend apparel and accessories company with 448 stores across the US and whose net sales topping $900 million in their 2019 fiscal year.
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- The Company changed its corporate name to The Buckle, Inc. on April 23, 1991 and has experienced significant growth since that time, operating 448 stores in 42 states at the end of fiscal 2019 "
About Buckle (BKE)
The Buckle, Inc. (the "Company") is a retailer of medium to better-priced casual apparel, footwear, and accessories for fashion conscious young men and women. As of February 1, 2020, the Company operated 448 retail stores in 42 states throughout the United States under the names "Buckle" and "The Buckle." The Company markets a wide selection of mostly brand name casual apparel including denims, other casual bottoms, tops, sportswear, outerwear, accessories, and footwear. The Company emphasizes personalized attention to its customers and provides customer services such as free hemming, free gift-packaging, easy layaways, the Buckle private label credit card, and a guest loyalty program. Most stores are located in regional shopping malls and lifestyle centers, and this is the Company's strategy for future expansion. The majority of the Company's central office functions, including purchasing, pricing, accounting, advertising, and distribution, are controlled from its headquarters and distribution center in Kearney, Nebraska.
The Company’s men’s buying team is located in Overland Park, Kansas. Incorporated in Nebraska in 1948, the Company commenced business under the name Mills Clothing, Inc., a conventional men's clothing store with only one location. In 1967, a second store, under the trade name Brass Buckle, was purchased. In the early 1970s, the store image changed to that of a jeans store with a wide selection of denims and shirts. The first branch store was opened in Columbus, Nebraska, in 1976. In 1977, the Company began selling young women's apparel and opened its first mall store. The Company changed its corporate name to The Buckle, Inc. on April 23, 1991 and has experienced significant growth since that time, operating 448 stores in 42 states at the end of fiscal 2019
The Company’s men’s buying team is located in Overland Park, Kansas. Incorporated in Nebraska in 1948, the Company commenced business under the name Mills Clothing, Inc., a conventional men's clothing store with only one location. In 1967, a second store, under the trade name Brass Buckle, was purchased. In the early 1970s, the store image changed to that of a jeans store with a wide selection of denims and shirts. The first branch store was opened in Columbus, Nebraska, in 1976. In 1977, the Company began selling young women's apparel and opened its first mall store. The Company changed its corporate name to The Buckle, Inc. on April 23, 1991 and has experienced significant growth since that time, operating 448 stores in 42 states at the end of fiscal 2019
Quick facts about Buckle (BKE)
- Buckle is listed on the NYSE under share code ticker: BKE
- Buckle's market capital: $740 million (as at 25 June 2020)
- Number of employees of Buckle employees: 7 000
- Net sales in 2019: $900.2 million
- Earnings per share in 2019: $2.14
- PE ratio of Buckle: 6.9
- Shares in issue: 48.79
- Cash on balance sheet: $220.969 million
- Stockholders equity in Buckle: $389.148 million
- Stockholders equity per share: $7.97
- Price/Stockholders equity ratio: 1.87
- Number of Buckle Stores: 448
- Average sales per square foot: $341
- Average sales per store: $ 1 763 000
Merchandising and Marketing of Buckle (BKE)
The Company's marketing and merchandising strategy is designed to create customer loyalty by offering a wide selection of key brand name and private label merchandise and providing a broad range of value-added services. The Company believes it provides a unique specialty apparel store experience with merchandise designed to appeal to the fashion-conscious 15 to 30-year old. The merchandise mix includes denims, casual bottoms, tops, sportswear, outerwear, accessories, and footwear. Denim is a significant contributor to total sales (40.7% of fiscal 2019 net sales) and is a key to the Company's merchandising strategy. The Company believes it attracts customers with its wide selection of branded and private label denim and a wide variety of fits, finishes, and styles. Tops are also significant contributors to total sales (32.2% of fiscal 2019 net sales). The Company strives to provide a continually changing selection of the latest casual fashions.
Store operations of Buckle (BKE)
The Company has an Executive Vice President of Stores, a Vice President of Sales, an Associate Vice President of Sales, 2 Directors of Sales, 4 Regional Managers, 21 District Managers, and 88 Area Managers. Certain district managers and all area managers also serve as manager of their home base store. In general, each store has 1 manager, 1 or 2 assistant managers, 1 to 3 additional fulltime salespeople, and up to 20 part-time salespeople. Most stores have peak levels of staff during the back-to-school and Christmas seasons. Almost every location also employs an alterations person. 6 The Company places great importance on educating quality personnel.
In addition to sharing career opportunities with current Buckle employees, the Company also recruits interns and management trainees from college campuses. A majority of the Company’s store managers, all of its area and district managers, and most of its executive management team are former salespeople, including President and CEO, Dennis H. Nelson, and Chairman, Daniel J. Hirschfeld. Recognizing talent and promoting managers from within allows the Company to build a strong foundation for management. Store managers receive compensation in the form of a base salary and incentive bonuses. District and area managers also receive added incentives based upon the performance of stores in their district/area. Store managers perform sales training for new employees at the store level.
The Company has established a comprehensive program stressing the prevention and control of shrinkage losses. Steps taken to reduce shrinkage include monitoring returns, cash refunds, voids, inappropriate discounts, and employee sales. The Company also has electronic article surveillance systems in all of the Company’s stores as well as surveillance camera systems in approximately 99% of the stores. As a result, the Company achieved a merchandise shrinkage rate of 0.6% of net sales in fiscal year 2019, 0.5% of net sales in fiscal year 2018, and 0.6% in fiscal year 2017. The average store is approximately 5,150 square feet (of which the Company estimates an average of approximately 80% is selling space), and stores range in size from 1,937 square feet to 9,000 square feet
In addition to sharing career opportunities with current Buckle employees, the Company also recruits interns and management trainees from college campuses. A majority of the Company’s store managers, all of its area and district managers, and most of its executive management team are former salespeople, including President and CEO, Dennis H. Nelson, and Chairman, Daniel J. Hirschfeld. Recognizing talent and promoting managers from within allows the Company to build a strong foundation for management. Store managers receive compensation in the form of a base salary and incentive bonuses. District and area managers also receive added incentives based upon the performance of stores in their district/area. Store managers perform sales training for new employees at the store level.
The Company has established a comprehensive program stressing the prevention and control of shrinkage losses. Steps taken to reduce shrinkage include monitoring returns, cash refunds, voids, inappropriate discounts, and employee sales. The Company also has electronic article surveillance systems in all of the Company’s stores as well as surveillance camera systems in approximately 99% of the stores. As a result, the Company achieved a merchandise shrinkage rate of 0.6% of net sales in fiscal year 2019, 0.5% of net sales in fiscal year 2018, and 0.6% in fiscal year 2017. The average store is approximately 5,150 square feet (of which the Company estimates an average of approximately 80% is selling space), and stores range in size from 1,937 square feet to 9,000 square feet
Purchasing and Distribution of Buckle (BKE)
The Company has an experienced buying team. The buying team is led by the Vice President of Women’s Merchandising and Senior Vice President of Men’s Merchandising, who have over 55 years of combined experience with the Company. The experience and leadership within the buying team contributes significantly to the Company’s success by enabling the buying team to react quickly to changes in fashion and by providing extensive knowledge of sources for both branded and private label goods. The Company purchases products from manufacturers within the United States as well as from agents who source goods from foreign manufacturers. The Company's merchandising team shops and monitors fashion to stay abreast of the latest trends. The Company continually monitors styles, quality, and delivery schedules. The Company has not experienced any material difficulties with merchandise manufactured in foreign countries. The Company does not have long-term or exclusive contracts with any brand name manufacturer, private label manufacturer, or supplier.
The Company plans its private label production with private label vendors three to six months in advance of product delivery. The Company requires its vendors to sign and adhere to its Code of Conduct and Standards of Engagement, which addresses adherence to legal requirements regarding employment practices and health, safety, and environmental regulations. In fiscal 2019, Axis Denim (which produces private label denim for the Company) accounted for 16.2% of net sales and Miss Me/ Rock Revival accounted for 13.1% of the Company’s net sales. No other vendor accounted for more than 10% of the Company’s net sales. Other current significant vendors include KanCan, Bridge by GLY, Flying Monkey, Levi's, Wrangler, Hurley, Billabong, Affliction, American Fighter, Howitzer, Oakley, Fox, Obey, RVCA, Salvage, 7 Diamonds, Nixon, Free People, White Crow, Salt Life, Corral, Reef, Kustom, Timberland, SOREL, Hey Dude, Steve Madden, SAXX, Stance, Ray-Ban, Wanakome, Champion, Fossil, and G-Shock. The Company continually strives to offer brands that are currently popular with its customers and, therefore, the Company's suppliers and purchases from specific vendors may vary significantly from year to year. Buckle stores generally carry the same merchandise, with quantity and seasonal variations based upon historical sales data, climate, and perceived local customer demand.
The Company uses a centralized receiving and distribution center located in Kearney, Nebraska. Merchandise is received daily in Kearney where it is sorted, tagged with bar-coded tickets (unless the vendor UPC code is used or the merchandise is pre-ticketed), and packaged for distribution to individual stores primarily via FedEx. The Company's goal is to ship the majority of its merchandise out to the stores within one to two business days of receipt. This system allows stores to receive new merchandise almost daily, creating excitement within the store and providing customers with a reason to shop often. The Company has developed an effective system for tracking merchandise from the time it is checked in at the Company's distribution center until it arrives at the stores and is sold to a customer. The system's function is to ensure that store shipments are delivered accurately and promptly, to account for inventory, and to assist in allocating merchandise among stores. Management can track, on a daily basis, which merchandise is selling at specific locations and direct transfers of merchandise from one store to another as necessary. This allows stores to carry a reduced inventory while at the same time satisfying customer demand. 7 To reduce inter-store shipping costs and provide timely restocking of in-season merchandise, the Company warehouses a portion of initial shipments for later distribution. Sales reports are then used to replenish, on a basis of one to three times each week, those stores that are experiencing the greatest success selling specific styles, colors, and sizes of merchandise.
This system is also designed to prevent an over-crowded look in the stores at the beginning of a season. During fiscal 2010, the Company completed construction of a new 240,000 square foot distribution center in Kearney, Nebraska. The Company transitioned to the new distribution center in September 2010 and the new facility is currently the Company’s only operating store distribution center. The Company also owns two additional facilities as part of its home office campus in Kearney, Nebraska (one of which was was completed during the first quarter of fiscal 2015). These facilities serve as the Company's corporate headquarters and house its online fulfillment and customer service center.
The Company plans its private label production with private label vendors three to six months in advance of product delivery. The Company requires its vendors to sign and adhere to its Code of Conduct and Standards of Engagement, which addresses adherence to legal requirements regarding employment practices and health, safety, and environmental regulations. In fiscal 2019, Axis Denim (which produces private label denim for the Company) accounted for 16.2% of net sales and Miss Me/ Rock Revival accounted for 13.1% of the Company’s net sales. No other vendor accounted for more than 10% of the Company’s net sales. Other current significant vendors include KanCan, Bridge by GLY, Flying Monkey, Levi's, Wrangler, Hurley, Billabong, Affliction, American Fighter, Howitzer, Oakley, Fox, Obey, RVCA, Salvage, 7 Diamonds, Nixon, Free People, White Crow, Salt Life, Corral, Reef, Kustom, Timberland, SOREL, Hey Dude, Steve Madden, SAXX, Stance, Ray-Ban, Wanakome, Champion, Fossil, and G-Shock. The Company continually strives to offer brands that are currently popular with its customers and, therefore, the Company's suppliers and purchases from specific vendors may vary significantly from year to year. Buckle stores generally carry the same merchandise, with quantity and seasonal variations based upon historical sales data, climate, and perceived local customer demand.
The Company uses a centralized receiving and distribution center located in Kearney, Nebraska. Merchandise is received daily in Kearney where it is sorted, tagged with bar-coded tickets (unless the vendor UPC code is used or the merchandise is pre-ticketed), and packaged for distribution to individual stores primarily via FedEx. The Company's goal is to ship the majority of its merchandise out to the stores within one to two business days of receipt. This system allows stores to receive new merchandise almost daily, creating excitement within the store and providing customers with a reason to shop often. The Company has developed an effective system for tracking merchandise from the time it is checked in at the Company's distribution center until it arrives at the stores and is sold to a customer. The system's function is to ensure that store shipments are delivered accurately and promptly, to account for inventory, and to assist in allocating merchandise among stores. Management can track, on a daily basis, which merchandise is selling at specific locations and direct transfers of merchandise from one store to another as necessary. This allows stores to carry a reduced inventory while at the same time satisfying customer demand. 7 To reduce inter-store shipping costs and provide timely restocking of in-season merchandise, the Company warehouses a portion of initial shipments for later distribution. Sales reports are then used to replenish, on a basis of one to three times each week, those stores that are experiencing the greatest success selling specific styles, colors, and sizes of merchandise.
This system is also designed to prevent an over-crowded look in the stores at the beginning of a season. During fiscal 2010, the Company completed construction of a new 240,000 square foot distribution center in Kearney, Nebraska. The Company transitioned to the new distribution center in September 2010 and the new facility is currently the Company’s only operating store distribution center. The Company also owns two additional facilities as part of its home office campus in Kearney, Nebraska (one of which was was completed during the first quarter of fiscal 2015). These facilities serve as the Company's corporate headquarters and house its online fulfillment and customer service center.
Store locations and expansions Buckle (BKE)
As of March 27, 2020, the Company operated 446 stores in 42 states. The existing stores are in 3 downtown locations, 16 strip centers, 56 lifestyle centers, and 371 shopping malls. Below the number of stores per region (in alphabetical order):
- Alaska :1
- Arizona :12
- Arkansas :7
- California :15
- Colorado :14
- Florida :22
- Georgia :10
- Idaho :8
- Illinois :16
- Indiana :15
- Iowa :17
- Kansas :16
- Kentucky :6
- Louisiana :11
- Maryland :2
- Michigan :18
- Minnesota :12
- Mississippi :5
- Missouri :14
- Montana :6
- Nebraska :13
- Nevada :5
- New Jersey :1
- New Mexico :5
- New York :4
- North Carolina :12
- North Dakota :4
- Ohio :22
- Oklahoma :11
- Oregon :6
- Pennsylvania :9
- South Carolina :4
- South Dakota :3
- Tennessee :12
- Texas :53
- Utah :11
- Virginia :4
- Washington :14
- West Virginia :6
- Wisconsin :11
- Wyoming : 2
- Total: 446
Employees of Buckle (BKE)
As of February 1, 2020, the Company had approximately 7,000 employees - approximately 2,800 of whom were full-time. The Company has an experienced management team and most of the management team, from store managers through senior management, began work for the Company on the sales floor. The Company experiences high turnover of store and distribution center employees, primarily due to the number of part-time employees. However, the Company has not experienced significant difficulty in hiring qualified personnel. Of the total employees, approximately 840 are employed at the corporate headquarters and in the distribution center. None of the Company's employees are represented by a union. Management believes that employee relations are good.
Trademarks of Buckle
The Company owns trademarks for certain product designs. The Company believes the strength of its trademarks is of considerable value to its business, and its trademarks are important to its marketing efforts. The Company intends to protect and promote its trademarks as management deems appropriate.
Competition of Buckle
The men's and women's apparel industries are highly competitive with fashion, selection, quality, price, location, store environment, and service being the principal competitive factors. While the Company believes it is able to compete favorably with other merchandisers, including department stores and specialty retailers, with respect to each of these factors, the Company believes it competes mainly on the basis of customer service and merchandise selection. In the men's merchandise area, the Company competes primarily with specialty retailers such as Abercrombie & Fitch, American Eagle Outfitters, Dick's Sporting Goods, Gap, H&M, Hollister, Pacific Sunwear, Scheels, Tilly’s, Urban Outfitters, and Zumiez.
The men's market also competes with certain department stores, such as Dillards, Macy’s, Nordstrom, and certain local or regional department stores and small specialty stores, as well as with mail order and internet retailers. 10 In the women's merchandise area, the Company competes primarily with specialty retailers such as Abercrombie & Fitch, Altar'd State, American Eagle Outfitters, Express, Forever 21, Francesca's, Gap, H&M, Hollister, Maurices, Pacific Sunwear, Scheels, Tilly's, Urban Outfitters, and Zumiez. The women's market also competes with department stores, such as Dillards, Macy’s, Nordstrom, and certain local or regional department stores and small specialty stores, as well as with mail order and internet retailers. Many of the Company's competitors are considerably larger and have substantially greater financial, marketing, and other resources than the Company, and there is no assurance that the Company will be able to compete successfully with them in the future. Furthermore, while the Company believes it competes effectively for favorable site locations and lease terms, competition for prime locations within a mall is intense
The men's market also competes with certain department stores, such as Dillards, Macy’s, Nordstrom, and certain local or regional department stores and small specialty stores, as well as with mail order and internet retailers. 10 In the women's merchandise area, the Company competes primarily with specialty retailers such as Abercrombie & Fitch, Altar'd State, American Eagle Outfitters, Express, Forever 21, Francesca's, Gap, H&M, Hollister, Maurices, Pacific Sunwear, Scheels, Tilly's, Urban Outfitters, and Zumiez. The women's market also competes with department stores, such as Dillards, Macy’s, Nordstrom, and certain local or regional department stores and small specialty stores, as well as with mail order and internet retailers. Many of the Company's competitors are considerably larger and have substantially greater financial, marketing, and other resources than the Company, and there is no assurance that the Company will be able to compete successfully with them in the future. Furthermore, while the Company believes it competes effectively for favorable site locations and lease terms, competition for prime locations within a mall is intense
Seasonality of Buckle
The Company's business is seasonal, with the holiday season (from approximately November 15 to December 30) and the backto-school season (from approximately July 15 to September 1) historically contributing the greatest volume of net sales. For fiscal years 2019, 2018, and 2017, the holiday and back-to-school seasons accounted for approximately 35% of the Company's fiscal year net sales
Buckle (BKE) stock performance
The graph below compares the cumulative total return on common shares of the Company for the last five fiscal years with the cumulative total return on the Russell 2000 Stock Index and a peer group of Retail Trade Stocks
Our last Buckle stock valuation (11 June 2020)
So based on Buckle's latest earnings report what do we value the company's stock at? Based on Buckle's earnings report our valuation model we have a target (full value) price for Buckle's at $24.70 a stock (down slightly from our 4th quarter 2019 earnings report valuation of Buckle). We therefore believe the stock of Buckle is undervalued
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $24.70. A good entry point into the stock of Buckle would therefore be at $22.20 or below. Since the stock of Buckle's is trading at well below our suggested entry point we rate Buckle as a buy
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $24.70. A good entry point into the stock of Buckle would therefore be at $22.20 or below. Since the stock of Buckle's is trading at well below our suggested entry point we rate Buckle as a buy