(Former name, former address, and former fiscal year if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, $0.01 par value
BKE
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for a shorter period that the registrant was required to submit such files). Yesþ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o; Accelerated filerþ;
Non-accelerated filer o; Smaller reporting company o;
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ
The number of shares outstanding of the Registrant's Common Stock, $0.01 par value, as of September 3, 2021, was 49,783,381.
(Amounts in Thousands Except Share and Per Share Amounts)
(Unaudited)
ASSETS
July 31, 2021
January 30, 2021
CURRENT ASSETS:
Cash and cash equivalents
$
406,714
$
318,789
Short-term investments
8,592
3,359
Receivables
6,667
2,823
Inventory
95,276
101,063
Prepaid expenses and other assets
20,294
11,190
Total current assets
537,543
437,224
PROPERTY AND EQUIPMENT
452,460
451,357
Less accumulated depreciation and amortization
(352,773)
(350,942)
99,687
100,415
OPERATING LEASE RIGHT-OF-USE ASSETS
264,177
279,358
LONG-TERM INVESTMENTS
19,558
18,320
OTHER ASSETS
11,720
10,497
Total assets
$
932,685
$
845,814
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
$
67,812
$
43,399
Accrued employee compensation
33,878
35,865
Accrued store operating expenses
30,724
20,303
Gift certificates redeemable
11,434
14,279
Current portion of operating lease liabilities
82,255
81,762
Income taxes payable
—
10,751
Total current liabilities
226,103
206,359
DEFERRED COMPENSATION
19,558
18,320
NON-CURRENT OPERATING LEASE LIABILITIES
209,472
224,506
Total liabilities
455,133
449,185
COMMITMENTS
STOCKHOLDERS’ EQUITY:
Common stock, authorized 100,000,000 shares of $0.01 par value; 49,783,381 and 49,407,731 shares issued and outstanding at July 31, 2021 and January 30, 2021 respectively
498
494
Additional paid-in capital
163,148
158,058
Retained earnings
313,906
238,077
Total stockholders’ equity
477,552
396,629
Total liabilities and stockholders’ equity
$
932,685
$
845,814
See notes to unaudited condensed consolidated financial statements.
3
THE BUCKLE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands Except Per Share Amounts)
(Unaudited)
Thirteen Weeks Ended
Twenty-Six Weeks Ended
July 31, 2021
August 1, 2020
July 31, 2021
August 1, 2020
SALES, Net of returns and allowances
$
295,120
$
216,025
$
594,245
$
331,438
COST OF SALES (Including buying, distribution, and occupancy costs)
153,101
122,643
304,673
211,231
Gross profit
142,019
93,382
289,572
120,207
OPERATING EXPENSES:
Selling
63,056
38,257
123,056
71,761
General and administrative
11,081
9,593
22,832
19,096
74,137
47,850
145,888
90,857
INCOME FROM OPERATIONS
67,882
45,532
143,684
29,350
OTHER INCOME, Net
222
404
273
978
INCOME BEFORE INCOME TAXES
68,104
45,936
143,957
30,328
INCOME TAX EXPENSE
16,685
11,254
35,269
7,430
NET INCOME
$
51,419
$
34,682
$
108,688
$
22,898
EARNINGS PER SHARE:
Basic
$
1.05
$
0.71
$
2.22
$
0.47
Diluted
$
1.04
$
0.71
$
2.20
$
0.47
Basic weighted average shares
48,946
48,714
48,946
48,719
Diluted weighted average shares
49,341
48,913
49,325
48,918
See notes to unaudited condensed consolidated financial statements.
4
THE BUCKLE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Amounts in Thousands Except Share and Per Share Amounts)
(Unaudited)
Number of Shares
Common Stock
Additional Paid-in Capital
Retained Earnings
Total
FISCAL 2021
BALANCE, May 2, 2021
49,788,891
$
498
$
160,684
$
278,916
$
440,098
Net income
—
—
—
51,419
51,419
Dividends paid on common stock, ($0.33 per share)
—
—
—
(16,429)
(16,429)
Issuance of non-vested stock, net of forfeitures
(5,510)
—
—
—
—
Amortization of non-vested stock grants, net of forfeitures
—
—
2,464
—
2,464
BALANCE, July 31, 2021
49,783,381
$
498
$
163,148
$
313,906
$
477,552
BALANCE, January 31, 2021
49,407,731
$
494
$
158,058
$
238,077
$
396,629
Net income
—
—
—
108,688
108,688
Dividends paid on common stock, ($0.66 per share)
—
—
—
(32,859)
(32,859)
Issuance of non-vested stock, net of forfeitures
375,650
4
(4)
—
—
Amortization of non-vested stock grants, net of forfeitures
—
—
5,094
—
5,094
BALANCE, July 31, 2021
49,783,381
$
498
$
163,148
$
313,906
$
477,552
FISCAL 2020
BALANCE, May 3, 2020
49,408,181
$
494
$
152,841
$
224,614
$
377,949
Net income
—
—
—
34,682
34,682
Issuance of non-vested stock, net of forfeitures
(450)
—
—
—
—
Amortization of non-vested stock grants, net of forfeitures
—
—
1,676
—
1,676
Common stock purchased and retired
—
—
—
—
—
BALANCE, August 1, 2020
49,407,731
$
494
$
154,517
$
259,296
$
414,307
BALANCE, February 2, 2020
49,205,681
$
492
$
152,258
$
236,398
$
389,148
Net income
—
—
—
22,898
22,898
Issuance of non-vested stock, net of forfeitures
227,050
2
(2)
—
—
Amortization of non-vested stock grants, net of forfeitures
—
—
2,633
—
2,633
Common stock purchased and retired
(25,000)
—
(372)
—
(372)
BALANCE, August 1, 2020
49,407,731
$
494
$
154,517
$
259,296
$
414,307
See notes to unaudited condensed consolidated financial statements.
5
THE BUCKLE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Twenty-Six Weeks Ended
July 31, 2021
August 1, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
108,688
$
22,898
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization
9,700
11,010
Amortization of non-vested stock grants, net of forfeitures
5,094
2,633
Deferred income taxes
(1,223)
(632)
Other
229
58
Changes in operating assets and liabilities:
Receivables
286
1,278
Inventory
5,787
4,779
Prepaid expenses and other assets
(9,104)
547
Accounts payable
24,424
21,734
Accrued employee compensation
(1,987)
(13,538)
Accrued store operating expenses
11,005
3,279
Gift certificates redeemable
(2,845)
(2,708)
Income taxes payable
(14,881)
(3,287)
Other assets and liabilities
1,294
1,115
Net cash flows from operating activities
136,467
49,166
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
(9,212)
(3,382)
Change in other assets
—
111
Purchases of investments
(10,700)
(15,953)
Proceeds from sales/maturities of investments
4,229
15,175
Net cash flows from investing activities
(15,683)
(4,049)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of common stock
—
(372)
Payment of dividends
(32,859)
—
Net cash flows from financing activities
(32,859)
(372)
NET INCREASE IN CASH AND CASH EQUIVALENTS
87,925
44,745
CASH AND CASH EQUIVALENTS, Beginning of period
318,789
220,969
CASH AND CASH EQUIVALENTS, End of period
$
406,714
$
265,714
See notes to unaudited condensed consolidated financial statements.
6
THE BUCKLE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THIRTEEN AND TWENTY-SIX WEEKS ENDED JULY 31, 2021 AND AUGUST 1, 2020
(Dollar Amounts in Thousands Except Share and Per Share Amounts)
(Unaudited)
1.Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments necessary for the fair presentation of the results of operations for the interim periods have been included. All such adjustments are of a normal recurring nature. Because of the seasonal nature of the business, results for interim periods are not necessarily indicative of a full year's operations. The accounting policies followed by the Company and additional footnotes are reflected in the consolidated financial statements for the fiscal year ended January 30, 2021, included in The Buckle, Inc.'s 2020 Form 10-K. The condensed consolidated balance sheet as of January 30, 2021 is derived from audited financial statements.
For purposes of this report, unless the context otherwise requires, all references herein to the “Company”, “Buckle”, “we”, “us”, or similar terms refer to The Buckle, Inc. and its subsidiary.
The Company follows generally accepted accounting principles (“GAAP”) established by the Financial Accounting Standards Board (“FASB”). References to GAAP in these notes are to the FASB Accounting Standards Codification (“ASC”).
2.Revenues
The Company is a retailer of medium to better priced casual apparel, footwear, and accessories for fashion conscious young men and women. The Company operates its business as one reportable segment. The Company sells its merchandise through its retail stores and e-Commerce platform. The Company had 442 stores located in 42 states throughout the United States as of July 31, 2021 and 446 stores in 42 states as of August 1, 2020. During the twenty-six week period ended July 31, 2021, the Company opened 1 new store, substantially remodeled 7 stores, and closed 2 stores, which includes 1 new store, 2 substantially remodeled stores, and 1 closed stores for the second quarter. During the twenty-six week period ended August 1, 2020, the Company opened 3 new stores, substantially remodeled 1 store, and closed 5 stores, which includes 3 new stores, no substantially remodeled stores, and 3 closed stores for the second quarter.
Revenue for fiscal 2020 was significantly affected by the impacts of COVID-19. The Company temporarily closed all of its brick and mortar stores beginning March 18, 2020 to protect the health and welfare of its guests, teammates, and communities. The Company began the process of reopening certain stores the week of April 26, 2020, following all appropriate federal, state, and local reopening guidelines. The store closings had a significant impact on the Company's revenue for the twenty-six week period ended August 1, 2020, which was down $73,692 or 18.2% from the same twenty-six week period in the prior year. The Company's online store remained open without interruption and experienced significant growth during the twenty-six week period ended August 1, 2020, growing $30,555 or 64.3% compared to the same twenty-six week period in the prior year.
For the thirteen week periods ended July 31, 2021 and August 1, 2020, online revenues accounted for 14.7% and 21.3%, respectively, of the Company's net sales. For the twenty-six week periods ended July 31, 2021 and August 1, 2020, online revenues accounted for 16.4% and 23.6%, respectively. No sales to an individual customer or country, other than the United States, accounted for more than 10% of net sales.
7
The following is information regarding the Company’s major product lines, stated as a percentage of the Company’s net sales:
Thirteen Weeks Ended
Twenty-Six Weeks Ended
Merchandise Group
July 31, 2021
August 1, 2020
July 31, 2021
August 1, 2020
Denims
33.6
%
32.1
%
37.9
%
36.9
%
Tops (including sweaters)
30.9
30.3
28.5
29.4
Sportswear/Fashions
13.8
15.6
11.3
12.4
Footwear
8.0
9.6
9.5
9.2
Accessories
10.3
9.8
9.4
9.2
Casual bottoms
0.8
0.7
0.8
0.8
Outerwear
0.3
0.3
0.5
0.6
Youth
2.3
1.6
2.1
1.5
100.0
%
100.0
%
100.0
%
100.0
%
3.Earnings Per Share
Basic earnings per share data are based on the weighted average outstanding common shares during the period. Diluted earnings per share data are based on the weighted average outstanding common shares and the effect of all dilutive potential common shares.
Thirteen Weeks Ended
Thirteen Weeks Ended
July 31, 2021
August 1, 2020
Net Income
Weighted Average Shares (a)
Per Share Amount
Net Income
Weighted Average Shares (a)
Per Share Amount
Basic EPS
$
51,419
48,946
$
1.05
$
34,682
48,714
$
0.71
Effect of Dilutive Securities:
Non-vested shares
—
395
(0.01)
—
199
—
Diluted EPS
$
51,419
49,341
$
1.04
$
34,682
48,913
$
0.71
Twenty-Six Weeks Ended
Twenty-Six Weeks Ended
July 31, 2021
August 1, 2020
Net Income
Weighted Average Shares (a)
Per Share Amount
Net Income
Weighted Average Shares (a)
Per Share Amount
Basic EPS
$
108,688
48,946
$
2.22
$
22,898
48,719
$
0.47
Effect of Dilutive Securities:
Non-vested shares
—
379
(0.02)
—
199
—
Diluted EPS
$
108,688
49,325
$
2.20
$
22,898
48,918
$
0.47
(a)Shares in thousands.
8
4.Investments
The following is a summary of investments as of July 31, 2021:
Amortized Cost or Par Value
Gross Unrealized Gains
Gross Unrealized Losses
Other-than- Temporary Impairment
Estimated Fair Value
Held-to-Maturity Securities:
State and municipal bonds
$
8,592
$
10
$
—
$
—
$
8,602
Trading Securities:
Mutual funds
$
16,100
$
3,458
$
—
$
—
$
19,558
The following is a summary of investments as of January 30, 2021:
Amortized Cost or Par Value
Gross Unrealized Gains
Gross Unrealized Losses
Other-than- Temporary Impairment
Estimated Fair Value
Held-to-Maturity Securities:
State and municipal bonds
$
3,359
$
7
$
—
$
—
$
3,366
Trading Securities:
Mutual funds
$
16,121
$
2,199
$
—
$
—
$
18,320
The amortized cost and fair value of debt securities by contractual maturity as of July 31, 2021 is as follows:
Amortized Cost
Fair Value
Held-to-Maturity Securities
Less than 1 year
$
8,592
$
8,602
1 - 5 years
—
—
$
8,592
$
8,602
As of July 31, 2021 and January 30, 2021, all of the Company's investments in held-to-maturity securities are classified in short-term investments. Trading securities are held in a Rabbi Trust, intended to fund the Company’s deferred compensation plan, and are classified in long-term investments.
5.Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories:
•Level 1 – Quoted market prices in active markets for identical assets or liabilities. Short-term and long-term investments with active markets or known redemption values are reported at fair value utilizing Level 1 inputs.
•Level 2 – Observable market-based inputs (either directly or indirectly) such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or inputs that are corroborated by market data.
•Level 3 – Unobservable inputs that are not corroborated by market data and are projections, estimates, or interpretations that are supported by little or no market activity and are significant to the fair value of the assets.
9
As of July 31, 2021 and January 30, 2021, the Company held certain assets that are required to be measured at fair value on a recurring basis including its investments in trading securities.
The Company’s financial assets measured at fair value on a recurring basis are as follows:
Fair Value Measurements at Reporting Date Using
Quoted Prices in Active Markets for Identical Assets
Significant Observable Inputs
Significant Unobservable Inputs
July 31, 2021
(Level 1)
(Level 2)
(Level 3)
Total
Trading securities (including mutual funds)
$
19,558
$
—
$
—
$
19,558
Fair Value Measurements at Reporting Date Using
Quoted Prices in Active Markets for Identical Assets
Significant Observable Inputs
Significant Unobservable Inputs
January 30, 2021
(Level 1)
(Level 2)
(Level 3)
Total
Trading securities (including mutual funds)
$
18,320
$
—
$
—
$
18,320
Securities included in Level 1 represent securities which have publicly traded quoted prices.
The carrying value of cash equivalents approximates fair value due to the low level of risk these assets present and their relatively liquid nature, particularly given their short maturities. The Company also holds certain financial instruments that are not carried at fair value on the condensed consolidated balance sheets, including held-to-maturity securities. Held-to-maturity securities consist primarily of state and municipal bonds. The fair values of these debt securities are based on quoted market prices and yields for the same or similar securities, which the Company determined to be Level 2 inputs. As of July 31, 2021, the fair value of held-to-maturity securities was $8,602 compared to the carrying amount of $8,592. As of January 30, 2021, the fair value of held-to-maturity securities was $3,366 compared to the carrying amount of $3,359.
The carrying values of receivables, accounts payable, accrued expenses, and other current liabilities approximates fair value because of their short-term nature. From time to time, the Company measures certain assets at fair value on a non-recurring basis, specifically long-lived assets evaluated for impairment. These are typically store specific assets, which are reviewed for impairment when circumstances indicate impairment may exist due to the questionable recoverability of the carrying values of long-lived assets. If expected future cash flows related to a store’s assets are less than their carrying value, an impairment loss would be recognized for the difference between the carrying value and the estimated fair value of the store's assets. The fair value of the store's assets is estimated utilizing an income-based approach based on the expected cash flows over the remaining life of the store's lease.
Given the substantial reduction in the Company's sales (and the related impact on cash flow projections) as a result of store closures due to the COVID-19 pandemic, an impairment assessment was triggered for certain stores as of May 2, 2020. This analysis resulted in $1,000 of store-related asset impairment charges in the fiscal quarter ended May 2, 2020. There was no impairment related to long-lived assets for all other periods presented.
10
6.Leases
The Company's lease portfolio is primarily comprised of leases for retail store locations. The Company also leases certain equipment and corporate office space. Store leases for new stores typically have an initial term of 10 years, with options to renew for an additional 1 to 5 years. The exercise of lease renewal options is at the Company's sole discretion and is included in the lease term for calculations of its right-of-use assets and liabilities when it is reasonably certain that the Company plans to renew these leases. Certain store lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. Lease agreements do not contain any residual value guarantees, material restrictive covenants, or options to purchase the leased property.
The Company has elected to apply the practical expedient to account for lease components (e.g. fixed payments for rent, insurance, and real estate taxes) and non-lease components (e.g. fixed payments for common area maintenance) together as a single component for all underlying asset classes. Additionally, the Company elected as an accounting policy to exclude short-term leases from the recognition requirements.
During the period of store closures in fiscal 2020 in response to the COVID-19 pandemic, the Company paid essentially full rent for the month of April but was then able to negotiate substantial rent deferrals for May and June. Consistent with guidance in the FASB Staff Q&A regarding lease concessions related to the effects of the COVID-19 pandemic, the Company made the election to treat all lease concessions as though the enforceable rights and obligations existed in each contract and, therefore, did not apply the lease modification guidance in ASC 842. As such, these deferrals had no impact on rent expense. Amounts deferred and payable in future periods have been included in "accounts payable" on the Company's condensed consolidated balance sheets.
Lease expense is included in cost of sales in the condensed consolidated statements of income. The components of total lease cost are as follows:
Thirteen Weeks Ended
Twenty-Six Weeks Ended
July 31, 2021
August 1, 2020
July 31, 2021
August 1, 2020
Operating lease cost
$
23,630
$
24,431
$
47,327
$
49,021
Variable lease cost (a)
4,544
1,667
9,008
6,156
Total lease cost
$
28,174
$
26,098
$
56,335
$
55,177
(a) Includes variable payments related to both lease and non-lease components, such as contingent rent payments based on performance and payments related to taxes, insurance, and maintenance costs. Also includes payments related to short-term leases with periods of less than twelve months.
Supplemental cash flow information related to leases is as follows:
Thirteen Weeks Ended
Twenty-Six Weeks Ended
July 31, 2021
August 1, 2020
July 31, 2021
August 1, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
$
24,359
$
15,175
$
49,224
$
40,210
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases
$
9,651
$
2,590
$
36,742
$
5,970
The Company uses its incremental borrowing rate as the discount rate to determine the present value of lease payments. As of July 31, 2021, the weighted-average remaining lease term was 4.4 years and the weighted-average discount rate was 3.7%.
11
The table below reconciles undiscounted future lease payments (e.g. fixed payments for rent, insurance, real estate taxes, and common area maintenance) for each of the next five fiscal years and the total of the remaining years to the operating lease liabilities recorded on the condensed consolidated balance sheet as of July 31, 2021:
Fiscal Year
Operating Leases (a)
2021 (remaining)
$
48,912
2022
85,193
2023
67,574
2024
48,487
2025
30,049
Thereafter
36,868
Total lease payments
317,083
Less: Imputed interest
25,356
Total operating lease liability
$
291,727
(a) Operating lease payments exclude $18,093 of legally binding minimum lease payments for leases signed, but not yet commenced.
7.Supplemental Cash Flow Information
The Company had non-cash investing activities during the twenty-six week periods ended July 31, 2021 and August 1, 2020 of $11 and $83, respectively. The non-cash investing activity relates to the change in the balance of unpaid purchases of property, plant, and equipment included in accounts payable as of the end of the period. The liability for unpaid purchases of property, plant, and equipment included in accounts payable was $708 and $719 as of July 31, 2021 and January 30, 2021, respectively. Amounts reported as unpaid purchases are recorded as cash outflows from investing activities for purchases of property, plant, and equipment in the condensed consolidated statement of cash flows in the period they are paid.
Additional cash flow information for the Company includes cash paid for income taxes during the twenty-six week periods ended July 31, 2021 and August 1, 2020 of $51,373 and $11,349, respectively.
8.Stock-Based Compensation
The Company has several stock option plans which allow for granting of stock options to employees, executives, and directors. The Company has not granted any stock options since fiscal 2008 and there are currently no stock options outstanding. The Company also has a restricted stock plan that allows for the granting of non-vested shares of common stock to employees and executives and a restricted stock plan that allows for the granting of non-vested shares of common stock to non-employee directors. As of July 31, 2021, 956,153 shares were available for grant under the Company’s various restricted stock plans, of which 874,592 shares were available for grant to executive officers.
Compensation expense was recognized during fiscal 2021 and fiscal 2020 for equity-based grants, based on the grant date fair value of the awards. The fair value of grants of non-vested common stock awards is the stock price on the date of grant.
Information regarding the impact of compensation expense related to grants of non-vested shares of common stock is as follows:
Thirteen Weeks Ended
Twenty-Six Weeks Ended
July 31, 2021
August 1, 2020
July 31, 2021
August 1, 2020
Stock-based compensation expense, before tax
$
2,464
$
1,676
$
5,094
$
2,633
Stock-based compensation expense, after tax
$
1,860
$
1,265
$
3,846
$
1,988
12
Non-vested shares of common stock granted during the twenty-six week periods ended July 31, 2021 and August 1, 2020 were granted pursuant to the Company’s 2005 Restricted Stock Plan and the Company’s 2008 Director Restricted Stock Plan. Shares granted under the 2005 Plan are typically "performance based" and vest over a period of four years, only upon certification by the Compensation Committee of the Board of Directors that the Company has achieved its pre-established performance targets for the fiscal year.Certain shares granted under the 2005 Plan, however, are "non-performance based" and vest over a period of four years without being subject to the achievement of performance targets.Shares granted under the 2008 Director Plan vest 25% on the date of grant and then in equal portions on each of the first three anniversaries of the date of grant.
A summary of the Company’s stock-based compensation activity related to grants of non-vested shares of common stock for the twenty-six week period ended July 31, 2021 is as follows:
Shares
Weighted Average Grant Date Fair Value
Non-Vested - beginning of year
538,750
$
22.28
Granted
381,300
39.32
Forfeited
(5,650)
24.61
Vested
(76,673)
24.71
Non-Vested - end of quarter
837,727
$
29.79
As of July 31, 2021, there was $14,469 of unrecognized compensation expense related to grants of non-vested shares. It is expected that this expense will be recognized over a weighted average period of approximately 2.2 years. The total fair value of shares vested during the twenty-six week periods ended July 31, 2021 and August 1, 2020 was $3,091 and $744, respectively.
9.Recently Issued Accounting Pronouncements
The Company has considered all recent accounting pronouncements and concluded that there are no recent accounting pronouncements that may have a material impact on the Company's consolidated financial statements, based on current information.
13
THE BUCKLE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto of the Company included in this Form 10-Q. All references herein to the “Company”, “Buckle”, “we”, “us”, or similar terms refer to The Buckle, Inc. and its subsidiary. The following is management’s discussion and analysis of certain significant factors which have affected the Company’s financial condition and results of operations during the periods included in the accompanying condensed consolidated financial statements.
EXECUTIVE OVERVIEW
Company management considers the following items to be key performance indicators in evaluating Company performance.
Comparable Store Sales – Stores are deemed to be comparable stores if they were open in the prior year on the first day of the fiscal period being presented. Stores which have been remodeled, expanded, and/or relocated, but would otherwise be included as comparable stores, are not excluded from the comparable store sales calculation. Online sales are included in comparable store sales. Management considers comparable store sales to be an important indicator of current Company performance, helping leverage certain fixed costs when results are positive. Negative comparable store sales results could reduce net sales and have a negative impact on operating leverage, thus reducing net earnings.
Net Merchandise Margins – Management evaluates the components of merchandise margin including initial markup and the amount of markdowns during a period. Any inability to obtain acceptable levels of initial markups or any significant increase in the Company’s use of markdowns could have an adverse effect on the Company’s gross margin and results of operations.
Operating Margin – Operating margin is a good indicator for management of the Company’s success. Operating margin can be positively or negatively affected by comparable store sales, merchandise margins, occupancy costs, and the Company’s ability to control operating costs.
Cash Flow and Liquidity (working capital) – Management reviews current cash and short-term investments along with cash flow from operating, investing, and financing activities to determine the Company’s short-term cash needs for operations and expansion. The Company believes that existing cash, short-term investments, and cash flow from operations will be sufficient to fund current and long-term anticipated capital expenditures and working capital requirements for the next several years.
14
RESULTS OF OPERATIONS
The following table sets forth certain financial data expressed as a percentage of net sales and the percentage change in the dollar amount of such items compared to the prior period:
Percentage of Net Sales
Percentage of Net Sales
For Thirteen Weeks Ended
Percentage
For Twenty-Six Weeks Ended
Percentage
July 31, 2021
August 1, 2020
Increase/(Decrease)
July 31, 2021
August 1, 2020
Increase/(Decrease)
Net sales
100.0
%
100.0
%
36.6
%
100.0
%
100.0
%
79.3
%
Cost of sales (including buying, distribution, and occupancy costs)
51.9
%
56.8
%
24.8
%
51.3
%
63.7
%
44.2
%
Gross profit
48.1
%
43.2
%
52.1
%
48.7
%
36.3
%
140.9
%
Selling expenses
21.4
%
17.7
%
64.8
%
20.7
%
21.6
%
71.5
%
General and administrative expenses
3.7
%
4.4
%
15.5
%
3.8
%
5.8
%
19.6
%
Income from operations
23.0
%
21.1
%
49.1
%
24.2
%
8.9
%
389.6
%
Other income, net
0.1
%
0.2
%
(45.2)
%
—
%
0.3
%
(72.1)
%
Income before income taxes
23.1
%
21.3
%
48.3
%
24.2
%
9.2
%
374.7
%
Income tax expense
5.7
%
5.2
%
48.3
%
5.9
%
2.3
%
374.7
%
Net income
17.4
%
16.1
%
48.3
%
18.3
%
6.9
%
374.7
%
Results for the twenty-six week period ended August 1, 2020 were significantly impacted by the Company’s closure of all brick and mortar stores due to the COVID-19 pandemic beginning March 18, 2020. As a result of the impact of the store closures on prior year reported net sales, the Company is not separately reporting comparable store sales for all periods presented.
Net sales increased from $216.0 million in the second quarter of fiscal 2020 to $295.1 million in the second quarter of fiscal 2021, a 36.6% increase. Total sales growth for the period was the result of a 42.1% increase in the number of transactions and a 2.6% increase in the average unit retail, partially offset by a 6.3% reduction in the average number of units sold per transaction. Online sales for the quarter decreased 5.5% to $43.4 million for the thirteen week period ended July 31, 2021 compared to $46.0 million for the thirteen week period ended August 1, 2020.
Net sales increased from $331.4 million for the first two quarters of fiscal 2020 to $594.2 million for the first two quarters of fiscal 2021, a 79.3% increase. Total sales growth for the year-to-date period was the result of an 80.1% increase in the number of transactions and a 4.1% increase in the average unit retail, partially offset by a 4.6% reduction in the average number of units sold per transaction. Online sales for the year-to-date period increased 24.5% to $97.2 million for the twenty-six week period ended July 31, 2021 compared to $78.1 million for the twenty-six week period ended August 1, 2020.
The Company's average retail price per piece of merchandise sold increased $1.09, or 2.6%, during the second quarter of fiscal 2021 compared to the second quarter of fiscal 2020. This $1.09 increase was primarily attributable to the following changes (with their corresponding effect on the overall average price per piece): a 4.7% increase in average knit shirt price points ($0.47), a 5.5% increase in average accessories price points ($0.23), a 5.2% increase in average woven shirt price points ($0.13), an increase in average price points for certain other merchandise categories ($0.14), and a shift in the merchandise mix ($0.54); which were partially offset by a 1.5% reduction in average denim price points (-$0.21) and a 3.4% reduction in average sportswear/fashion price points (-$0.21). These changes are primarily a reflection of merchandise shifts in terms of brands and product styles, fabrics, details, and finishes.
For the year-to-date period, the Company's average retail price per piece of merchandise sold increased $1.77, or 4.1%, compared to the same period in fiscal 2020. This $1.77 increase was primarily attributable to the following changes (with their corresponding effect on the overall average price per piece): a 4.9% increase in average knit shirt price points ($0.47), a 6.5% increase in average accessories price points ($0.26), a 3.2% increase in average footwear price points ($0.13), an increase in average price points for certain other merchandise categories ($0.10), and a shift in the merchandise mix ($0.93); which were partially offset by a 2.3% reduction in average sportswear/fashion price points (-$0.12). These changes are primarily a reflection of merchandise shifts in terms of brands and product styles, fabrics, details, and finishes.
15
Gross profit after buying, distribution, and occupancy expenses was $142.0 million in the second quarter of fiscal 2021, compared to $93.4 million in the second quarter of fiscal 2020. As a percentage of net sales, gross profit was 48.1% in the second quarter of fiscal 2021, compared to 43.2% in the second quarter of fiscal 2020. The gross margin increase was the result of leveraged occupancy, buying, and distribution expenses (4.40%, as a percentage of net sales) and an improvement in merchandise margins (0.50%, as a percentage of net sales).
Year-to-date, gross profit was $289.6 million for the twenty-six week period ended July 31, 2021, compared to $120.2 million for the twenty-six week period ended August 1, 2020. As a percentage of net sales, gross profit was 48.7% for the first two quarters of fiscal 2021, compared to 36.3% for the first two quarters of fiscal 2020. The gross margin increase for the year-to-date period was the result of leveraged occupancy, buying, and distribution expenses (10.50%, as a percentage of net sales) and an improvement in merchandise margins (1.90%, as a percentage of net sales).
Selling expenses were $63.1 million in the second quarter of fiscal 2021, compared to $38.3 million in the second quarter of fiscal 2020. As a percentage of net sales, selling expenses were 21.4% of net sales in the second quarter of fiscal 2021, compared to 17.7% in the second quarter of fiscal 2020. Year-to-date, selling expenses were $123.1 million for the first two quarters of fiscal 2021, compared to $71.8 million for the first two quarters of fiscal 2020. As a percentage of net sales, selling expenses were 20.7% of net sales for the first two quarters of fiscal 2021, compared to 21.6% for the first two quarters of fiscal 2020.
General and administrative expenses were $11.1 million in the second quarter of fiscal 2021, compared to $9.6 million in the second quarter of fiscal 2020. As a percentage of net sales, general and administrative expenses were 3.7% of net sales in the second quarter of fiscal 2021, compared to 4.4% in the second quarter of fiscal 2020. Year-to-date, general and administrative expenses were $22.8 million for the first two quarters of fiscal 2021, compared to $19.1 million for the first two quarters of fiscal 2020. As a percentage of net sales, general and administrative expenses were 3.8% of net sales in fiscal 2021, compared to 5.8% in fiscal 2020.
In total, selling, general, and administrative expenses were 25.1% of net sales for the second quarter of fiscal 2021, compared to 22.1% for the second quarter of fiscal 2020. The increase was the result of increases in expense related to incentive compensation accruals (2.50%, as a percentage of net sales) and store labor-related expenses (1.30%, as a percentage of net sales); which were partially offset by decreased shipping costs (0.70%, as a percentage of net sales) and sales leverage across several other expense categories (0.10%, as a percentage of net sales).
For the 26-week year-to-date period, total selling, general, and administrative expenses were 24.5% of net sales for fiscal 2021, compared to 27.4% for fiscal 2020. The decrease was the result of reductions (as a percentage of net sales) in store and home office labor-related expenses (2.85%) and shipping costs (0.65%) along with leverage across several other expense categories (1.75%); which were partially offset by an increase in expense related to incentive compensation accruals (2.35%, as a percentage of net sales).
As a result of the above changes, the Company's income from operations was $67.9 million, or 23.0% of net sales, for the second quarter of fiscal 2021, compared to income from operations of $45.5 million, or 21.1% of net sales, for the second quarter of fiscal 2020.
Year-to-date, income from operations was $143.7 million for the twenty-six week period ended July 31, 2021 compared to $29.4 million for the twenty-six week period ended August 1, 2020. Income from operations was 24.2% of net sales for the first two quarters of fiscal 2021 compared to 8.9% of net sales for the first two quarters of fiscal 2020.
Income tax expense as a percentage of pre-tax income was 24.5% for the second quarter of both fiscal 2021 and fiscal 2020, bringing the Company's net income to $51.4 million in the second quarter of fiscal 2021 compared to $34.7 million in the second quarter of fiscal 2020.
Income tax expense as a percentage of pre-tax income was 24.5% for both the first two quarters of fiscal 2021 and the first two quarters of fiscal 2020, bringing year-to-date net income to $108.7 million for fiscal 2021 compared to $22.9 million for fiscal 2020.
16
LIQUIDITY AND CAPITAL RESOURCES
As of July 31, 2021, the Company had working capital of $311.4 million, including $406.7 million of cash and cash equivalents and $8.6 million of short-term investments. The Company's cash receipts are generated from retail sales and from investment income, and the Company's primary ongoing cash requirements are for inventory, payroll, occupancy costs, dividend payments, new store expansion, remodeling, and other capital expenditures. Historically, the Company's primary source of working capital has been cash flow from operations. During the first two quarters of fiscal 2021 and fiscal 2020, the Company's cash flow from operations was $136.5 million and $49.2 million, respectively. Changes in operating cash flow between periods is primarily a function of changes in net income, along with changes in inventory and accounts payable based on the timing and amount of merchandise purchased in each respective period. Operating cash flow is also impacted by the timing of certain other payments, including rent and income taxes. The Company's strong operating cash flow for the first six months of fiscal 2021 compared to the first six months of fiscal 2020 is primarily attributable to the 374.7% or $85.8 million increase in net income.
The uses of cash for both twenty-six week periods primarily include payment of annual bonuses accrued at fiscal year end, inventory purchases, dividend payments, construction costs for new and remodeled stores, other capital expenditures, and purchases of investment securities.
During the first two quarters of fiscal 2021 and 2020, the Company invested $8.6 million and $2.6 million, respectively, in new store construction, store renovation, and store technology upgrades. The Company also spent $0.6 million and $0.8 million in the first two quarters of fiscal 2021 and 2020, respectively, in capital expenditures for the corporate headquarters and distribution facility.
During the remainder of fiscal 2021, the Company anticipates completing six additional store construction projects, which are all remodels/relocations. Management estimates that total capital expenditures during fiscal 2021 will be approximately $12.0 to $15.0 million, which includes primarily planned store projects and technology investments. The Company believes that existing cash and cash equivalents, investments, and cash flow from operations will be sufficient to fund current and long-term anticipated capital expenditures and working capital requirements for the next several years. The Company has a consistent record of generating positive cash flow from operations each year and, as of July 31, 2021, had total cash and investments of $434.9 million, including $19.6 million of long-term investments.
Future conditions, however, may reduce the availability of funds based upon factors such as a decrease in demand for the Company's product, change in product mix, competitive factors, and general economic conditions as well as other risks and uncertainties which would reduce the Company's sales, net profitability, and cash flows. Also, the Company's acceleration in store openings and/or remodels or the Company entering into a merger, acquisition, or other financial related transaction could reduce the amount of cash available for further capital expenditures and working capital requirements.
The Company has available an unsecured line of credit of $25.0 million with Wells Fargo Bank, N.A. for operating needs and letters of credit. The line of credit agreement has an expiration date of July 31, 2023 and provides that $10.0 million of the $25.0 million line is available for letters of credit. Borrowings under the line of credit provide for interest to be paid at a rate based on SOFR. The Company has, from time to time, borrowed against these lines of credit. There were no bank borrowings during the first two quarters of fiscal 2021 or 2020. The Company had no bank borrowings as of July 31, 2021 and was in compliance with the terms and conditions of the line of credit agreement.
17
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon The Buckle, Inc.’s condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires that management make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the financial statement date, and the reported amounts of sales and expenses during the reporting period. The Company regularly evaluates its estimates, including those related to inventory, investments, incentive bonuses, and income taxes. Management bases its estimates on past experience and on various other factors that are thought to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Management believes that the estimates and judgments used in preparing these consolidated financial statements were the most appropriate at that time. Presented below are those critical accounting policies that management believes require subjective and/or complex judgments that could potentially affect reported results of operations. The critical accounting policies and estimates utilized by the Company in the preparation of its condensed consolidated financial statements for the period ended July 31, 2021 have not changed materially from those utilized for the fiscal year ended January 30, 2021, included in The Buckle Inc.’s 2020 Annual Report on Form 10-K.
1.Revenue Recognition. Retail store sales are recorded, net of expected returns, upon the purchase of merchandise by customers. Online sales are recorded, net of expected returns, when merchandise is tendered for delivery to the common carrier. Shipping fees charged to customers are included in revenue and shipping costs are included in selling expenses. The Company recognizes revenue from sales made under its layaway program upon delivery of the merchandise to the customer. Revenue is not recorded when gift cards and gift certificates are sold, but rather when a card or certificate is redeemed for merchandise. A current liability for unredeemed gift cards and certificates is recorded at the time the card or certificate is purchased. The liability recorded for unredeemed gift cards and gift certificates was $11.4 million and $14.3 million as of July 31, 2021 and January 30, 2021, respectively. Gift card and gift certificate breakage is recognized as revenue in proportion to the redemption pattern of customers by applying an estimated breakage rate. The estimated breakage rate is based on historical issuance and redemption patterns and is re-assessed by the Company on a regular basis. Sales tax collected from customers is excluded from revenue and is included as part of “accrued store operating expenses” on the Company's condensed consolidated balance sheets.
The Company establishes a liability for estimated merchandise returns, based upon the historical average sales return percentage, that is recognized at the transaction value. The Company also recognizes a return asset and a corresponding adjustment to cost of sales for the Company's right to recover returned merchandise, which is measured at the estimated carrying value, less any expected recovery costs. Customer returns could potentially exceed the historical average, thus reducing future net sales results and potentially reducing future net earnings. The accrued liability for reserve for sales returns was $4.0 million as of July 31, 2021 and $2.6 million as of January 30, 2021.
The Company's Buckle Rewards program allows participating guests to earn points for every qualifying purchase, which (after achievement of certain point thresholds) are redeemable as a discount off a future purchase. Reported revenue is net of both current period reward redemptions and accruals for estimated future rewards earned under the Buckle Rewards program. A liability has been recorded for future rewards based on the Company's estimate of how many earned points will turn into rewards and ultimately be redeemed prior to expiration. As of July 31, 2021 and January 30, 2021, $11.0 million and $10.2 million was included in "accrued store operating expenses" as a liability for estimated future rewards.
18
Through partnership with Comenity Bank, the Company offers a private label credit card ("PLCC"). Prior to October 2020, Customers with a PLCC were enrolled in our B-Rewards incentive program and earned points for every qualifying purchase on their card. At the end of each rewards period, customers who exceeded a minimum point threshold received a reward to be redeemed on a future purchase. The B-Rewards program also provided other discount and promotional opportunities to cardholders on a routine basis. Reported revenue was net of both current period reward redemptions, current period discounts and promotions, and accruals for estimated future rewards earned under the B-Rewards program. A liability was recorded for future rewards based on the Company's estimate of how many earned points would turn into rewards and ultimately be redeemed prior to expiration, which was included in "gift certificates redeemable" on the Company's consolidated balance sheets. In October 2020, the Company merged the B-Rewards program and the Buckle Rewards program enabling participating guests to earn additional points for qualifying purchases on their PLCC card under the newly enhanced Buckle Rewards program. Effective January 30, 2021, and for all future periods, the accrual for points earned under the combined Buckle Rewards program is included in "accrued store operating expenses" on the Company's consolidated balance sheets as referenced in the previous paragraph.
2.Inventory. Inventory is valued at the lower of cost or net realizable value. Cost is determined using an average cost method that approximates the first-in, first-out (FIFO) method. Management makes adjustments to inventory and cost of goods sold, based upon estimates, to account for merchandise obsolescence and markdowns that could affect net realizable value, based on assumptions using calculations applied to current inventory levels within each different markdown level. Management also reviews the levels of inventory in each markdown group and the overall aging of the inventory versus the estimated future demand for such product and the current market conditions. Such judgments could vary significantly from actual results, either favorably or unfavorably, due to fluctuations in future economic conditions, industry trends, consumer demand, and the competitive retail environment. Such changes in market conditions could negatively impact the sale of markdown inventory, causing further markdowns or inventory obsolescence, resulting in increased cost of goods sold from write-offs and reducing the Company’s net earnings. The adjustment to inventory for markdowns and/or obsolescence was $7.9 million as of July 31, 2021 and $10.8 million as of January 30, 2021.
3.Income Taxes. The Company records a deferred tax asset and liability for expected future tax consequences resulting from temporary differences between financial reporting and tax bases of assets and liabilities. The Company considers future taxable income and ongoing tax planning in assessing the value of its deferred tax assets. If the Company determines that it is more than likely that these assets will not be realized, the Company would reduce the value of these assets to their expected realizable value, thereby decreasing net income. Estimating the value of these assets is based upon the Company’s judgment. If the Company subsequently determined that the deferred tax assets, which had been written down, would be realized in the future, such value would be increased. Adjustment would be made to increase net income in the period such determination was made.
4.Leases. The Company's lease portfolio is primarily comprised of leases for retail store locations. The Company also leases certain equipment and corporate office space. Store leases for new stores typically have an initial term of 10 years, with options to renew for an additional 1 to 5 years. The exercise of lease renewal options is at the Company's sole discretion and is included in the lease term for calculations of its right-of-use assets and liabilities when it is reasonably certain that the Company plans to renew these leases. Certain store lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. Lease agreements do not contain any residual value guarantees, material restrictive covenants, or options to purchase the leased property.
The Company has elected to apply the practical expedient to account for lease components (e.g. fixed payments for rent, insurance, and real estate taxes) and non-lease components (e.g. fixed payments for common area maintenance) together as a single component for all underlying asset classes. Additionally, the Company elected as an accounting policy to exclude short-term leases from the recognition requirements.
Consistent with guidance in the FASB Staff Q&A regarding lease concessions related to the effects of the COVID-19 pandemic, the Company made the election to treat all lease concessions as though the enforceable rights and obligations existed in each contract and, therefore, did not apply the lease modification guidance in ASC 842.
19
5.Investments. Investments classified as short-term investments include securities with a maturity of greater than three months and less than one year. Available-for-sale securities are reported at fair value, with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders’ equity (net of the effect of income taxes), using the specific identification method, until they are sold. Held-to-maturity securities are reported at amortized cost. Trading securities are reported at fair value, with unrealized gains and losses included in earnings, using the specific identification method.
OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL OBLIGATIONS, AND COMMERCIAL COMMITMENTS
As referenced in the table below, the Company has contractual obligations and commercial commitments that may affect the financial condition of the Company. Based on management’s review of the terms and conditions of its contractual obligations and commercial commitments, there is no known trend, demand, commitment, event, or uncertainty that is reasonably likely to occur which would have a material effect on the Company’s financial condition, results of operations, or cash flows. In addition, the commercial obligations and commitments made by the Company are customary transactions which the Company believes to be similar to those of other comparable retail companies.
The following table identifies the material obligations and commitments as of July 31, 2021:
Payments Due by Fiscal Year
Contractual obligations (dollar amounts in thousands):
Total
2021 (remaining)
2022-2023
2024-2025
Thereafter
Purchase obligations
$
13,882
$
6,835
$
5,613
$
1,434
$
—
Deferred compensation
19,558
—
—
—
19,558
Operating lease payments (a)
317,083
48,912
152,767
78,536
36,868
Total contractual obligations
$
350,523
$
55,747
$
158,380
$
79,970
$
56,426
(a) See Footnote 6 to the condensed consolidated financial statements.
The Company has available an unsecured line of credit of $25.0 million for operating needs and letters of credit, which is excluded from the preceding table. The line of credit agreement has an expiration date of July 31, 2023 and provides that $10.0 million of the $25.0 million line is available for letters of credit. Certain merchandise purchase orders require that the Company open letters of credit. When the Company takes possession of the merchandise, it releases payment on the letters of credit. The amounts of outstanding letters of credit reported reflect the open letters of credit on merchandise ordered, but not yet received or funded. The Company believes it has sufficient credit available to open letters of credit for merchandise purchases. There were no bank borrowings during the first two quarters of fiscal 2021 or the first two quarters of fiscal 2020. The Company had outstanding letters of credit totaling $4.4 million and $1.8 million as of July 31, 2021 and January 30, 2021, respectively. The Company has no other off-balance sheet arrangements.
SEASONALITY
The Company's business is seasonal, with the holiday season (from approximately November 15 to December 30) and the back-to-school season (from approximately July 15 to September 1) historically contributing the greatest volume of net sales. For fiscal years 2020, 2019, and 2018, the holiday and back-to-school seasons accounted for approximately 35% of the Company's fiscal year net sales. Quarterly results may vary significantly depending on a variety of factors including the timing and amount of sales and costs associated with the opening of new stores, the timing and level of markdowns, the timing of store closings, the remodeling of existing stores, competitive factors, and general economic conditions.
20
FORWARD LOOKING STATEMENTS
Information in this report, other than historical information, may be considered to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “1995 Act”). Such statements are made in good faith by the Company pursuant to the safe-harbor provisions of the 1995 Act. In connection with these safe-harbor provisions, this management’s discussion and analysis contains certain forward-looking statements, which reflect management’s current views and estimates of future economic conditions, Company performance, and financial results. The statements are based on many assumptions and factors that could cause future results to differ materially. Such factors include, but are not limited to, changes in product mix, changes in fashion trends, competitive factors, and general economic conditions, economic conditions in the retail apparel industry, as well as other risks and uncertainties inherent in the Company’s business and the retail industry in general. Any changes in these factors could result in significantly different results for the Company. The Company further cautions that the forward-looking information contained herein is not exhaustive or exclusive. The Company does not undertake to update any forward-looking statements, which may be made from time to time by or on behalf of the Company.
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk - The Company is exposed to market risk related to interest rate risk on the cash and investments in interest-bearing securities. These investments have carrying values that are subject to interest rate changes that could impact earnings to the extent that the Company did not hold the investments to maturity. If there are changes in interest rates, those changes would also affect the investment income the Company earns on its cash and investments. For each one-quarter percent decline in the interest/dividend rate earned on cash and investments, the Company’s net income would decrease approximately $0.5 million, or less than $0.01 per share. This amount could vary based upon the number of shares of the Company’s stock outstanding and the level of cash and investments held by the Company.
ITEM 4 – CONTROLS AND PROCEDURES
The Company maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that material information, which is required to be timely disclosed, is accumulated and communicated to management in a timely manner. An evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) was performed as of the end of the period covered by this report. This evaluation was performed under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer.
Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures as of the end of the period covered by this report were effective to provide reasonable assurance that information required to be disclosed by the Company in the Company’s reports that it files or submits under the Exchange Act is accumulated and communicated to management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized, and reported within the time periods specified by the SEC’s rules and forms.
Change in Internal Control Over Financial Reporting
There were no changes in the Company's internal control over financial reporting that occurred during the Company's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
21
THE BUCKLE, INC.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings: None
Item 1A. Risk Factors:
There have been no material changes from the risk factors disclosed under “Item 1A - Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds:
The following table sets forth information concerning purchases made by the Company of its common stock for each of the months in the fiscal quarter ended July 31, 2021:
Total Number of Shares Purchased
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans
Maximum Number of Shares that May Yet Be Purchased Under Publicly Announced Plans
May 2, 2021 to May 29, 2021
-
-
-
410,655
May 30, 2021 to July 3, 2021
-
-
-
410,655
July 4, 2021 to July 31, 2021
-
-
-
410,655
-
-
-
The Board of Directors authorized a 1,000,000 share repurchase plan on November 20, 2008. The Company has 410,655 shares remaining to complete this authorization.
Item 3. Defaults Upon Senior Securities: None
Item 4. Mine Safety Disclosures: None
Item 5. Other Information: None
Item 6. Exhibits:
Exhibit 10.1
Revolving Line of Credit Note and Fifth Amendment to Credit Agreement, dated July 16, 2021 between The Buckle, Inc. and Buckle Brands, Inc. and Wells Fargo Bank, N.A. for a $25.0 million line of credit
Exhibit 31.1
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer (Section 302 of the Sarbanes-Oxley Act of 2002)
Exhibit 31.2
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer (Section 302 of the Sarbanes-Oxley Act of 2002)
Exhibit 32.1
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101
The following materials from The Buckle, Inc.’s Quarterly Report on Form 10-Q for the quarter ended July 31, 2021, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Income; (iii) Condensed Consolidated Statements of Stockholders’ Equity; (iv) Condensed Consolidated Statements of Cash Flows; and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and in detail.
Exhibit 104
Cover page formatted as Inline XBRL and contained in Exhibit 101
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
THE BUCKLE, INC.
Date:
September 9, 2021
By:
/s/ DENNIS H. NELSON
DENNIS H. NELSON,
President and CEO
(principal executive officer)
Date:
September 9, 2021
By:
/s/ THOMAS B. HEACOCK
THOMAS B. HEACOCK,
Senior Vice President of Finance, Treasurer, and CFO
Revolving Line of Credit Note and Fifth Amendment to Credit Agreement, dated July 16, 2021 between The Buckle, Inc. and Buckle Brands, Inc. and Wells Fargo Bank, N.A. for a $25.0 million line of credit
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101
The following materials from The Buckle, Inc.’s Quarterly Report on Form 10-Q for the quarter ended July 31, 2021, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Income; (iii) Condensed Consolidated Statements of Stockholders’ Equity; (iv) Condensed Consolidated Statements of Cash Flows; and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and in detail.
Exhibit 104
Cover page formatted as Inline XBRL and contained in Exhibit 101
