The Buckle, Inc. (BKE) Earnings

Management highlights

- Overall Financial Results * Q2 2026 (13 weeks ended August 1, 2026): Net income was $44.4 million ($0.87 diluted EPS), compared to $45 million ($0.89 diluted EPS) in Q2 2025. Net sales grew 4.6% YoY to $319.8 million; comparable store sales grew 2.1% YoY, and online sales grew 2.3% YoY to $44.6 million. * Year-to-date (26 weeks ended August 1, 2026): Net income was $91.3 million ($1.79 diluted EPS), up from $80.2 million ($1.59 diluted EPS) YoY. Net sales grew 5.3% YoY to $608.6 million; comparable store sales grew 3.5% YoY, and online sales grew 2.5% YoY to $92.2 million. * Key retail metrics: For both the quarter and year-to-date, units per transaction (UPT) decreased ~1% YoY, average unit retail increased ~4.5% YoY, and average transaction value increased ~3.5% YoY. - Margin & Expense Performance * Q2 2026 gross margin was 47.8%, up 40 basis points YoY. Merchandise margins improved 110 basis points, including 65 basis points from received tariff refunds, partially offset by a 70 basis point increase in buying, distribution, and occupancy expenses tied to new/relocated store growth. * Year-to-date gross margin held steady at 47.1% YoY: a 55 basis point merchandise margin increase was fully offset by a 55 basis point increase in buying, distribution, and occupancy expenses. * Q2 2026 SG&A was 30.4% of net sales, up from 29.0% YoY. Increases came from higher marketing (45 bps), store labor (35 bps), health insurance (30 bps), store supplies (20 bps), and other categories (45 bps), partially offset by a 35 bps reduction in incentive/equity compensation accrual. Year-to-date SG&A fell to 28.1% of sales from 29.8% YoY. - Balance Sheet & Capital Expenditures * As of August 1, 2026, inventory was $161.4 million (up 13.3% YoY), total cash and investments were $322.9 million, and net fixed assets were $191.7 million. * Q2 2026 capital expenditures were $29.8 million; year-to-date capital expenditures were $44.5 million. Of year-to-date spending, $24.4 million went to new store construction, remodels, and technology upgrades, while $20.1 million went to corporate headquarters and distribution center projects (including a new corporate aircraft replacement). - Store Operations * Q2 2026: 5 new stores opened, 5 full-store remodels completed (4 relocations to new outdoor shopping centers), 1 store closed. Post-quarter, 1 additional new store opened, bringing year-to-date totals to 9 new stores, 10 full remodels, and 2 closures. * The company ended Q2 with 446 retail stores across 42 states, up from 440 stores at Q2 2025. 5 additional new stores and 4 more full remodels are planned for the remainder of the fiscal year.

Guidance

Buckle maintains its longstanding policy of not providing future sales or earnings guidance. The only forward-looking operational update is that 5 additional new stores and 4 more full remodel projects are planned for the remainder of the current fiscal year.

Segment performance

Women's: Sales grew 9.5% year-over-year, contributing 50% of total company revenue in Q2 2026, up from 47.5% in Q2 2025. Women's denim grew 11% YoY with average price points rising from $85.35 to $92.50; alternative pants grew nearly 50% YoY, women's tops grew ~10.5% YoY, and women's shorts saw strong accelerating sales in July. Men's: Total sales were essentially flat YoY, contributing 50% of total company revenue in Q2 2026, down from 52.5% in Q2 2025. Men's denim declined ~3.5% YoY (softness concentrated in higher-priced national brands, while private label denim outperformed), with average denim price points staying nearly flat at $89.20 vs $89.30 YoY. Men's tops grew 3.5% YoY, and slight growth in the shorts category partially offset the denim decline. Accessories & Footwear: Combined accessory sales grew ~2.5% YoY, and footwear sales grew ~0.5% YoY. Accessories contributed 11.5% of Q2 net sales (stable YoY), with average price points up ~5%. Footwear contributed 5% of Q2 net sales (stable YoY), with average price points up 10%. Kids': Sales grew 11% YoY (on top of 23% YoY growth in Q2 2025), with broad-based growth across denim, shorts, casual bottoms, and tees, driven by popular mini-me styling aligned with adult trends. Denim accounted for 35.5% of kids' segment sales and tees accounted for 30.5%, flat from Q2 2025. Private Label: Represented 44.5% of total company sales in Q2 2026, up 100 basis points from 43.5% in Q2 2025.

Risks & headwinds

- Rising marketing service costs from platform providers are contributing to higher SG&A expenses, alongside increased marketing investment for customer acquisition and retention. - Men's denim sales (particularly higher-priced national brands) have seen continued softness, and the men's footwear business has experienced 50 consecutive months of year-over-year volume declines after losing the large, exclusive Hey Dude brand volume the company held previously. Industry-wide, the footwear business is currently difficult for most operators. - Shifting back-to-school start dates across U.S. states can create comparability challenges for same-store sales in different regional markets.

Analyst Q&A

• Q: The analyst asked what drove the 45 basis points of merchandise margin expansion not tied to Q2 tariff refunds, whether additional future tariff refunds are expected, and how refunds are accounted for. /

  A: The 45 basis points of organic margin expansion came from a 100 basis point increase in the company's private label sales mix. All expected tariff refunds have been received, totaling $2.5 million. Most of the refund was recognized as a cost of goods sold credit in Q1, with small remaining amounts to be recognized in Q2 and Q3.

• Q: The analyst asked how much marketing spending increased year-over-year, where the incremental investments are allocated, and what early returns management has seen on this spending. /

  A: Marketing spend increased 45 basis points as a share of net sales, with broad-based increases across CTV, Spotify, search, social media, creator partnerships, and email marketing, focused on both new customer acquisition and existing customer retention. Management is pleased with the early customer response to the increased investment. Higher marketing platform costs and new marketing analytics tooling investments also contributed to the increased spending.

• Q: The analyst asked why the men's category has underperformed the women's category, and why footwear volumes have seen 50 consecutive months of declines, and if footwear is being de-emphasized. /

  A: Strong new fashion product excitement across women's denim and casual categories has driven consistent, rapid growth for the women's business, while the men's business has remained steady rather than growing quickly. Footwear volume declines stem from losing the large exclusive Hey Dude brand volume the company previously held; footwear remains a steady but smaller business, and the entire footwear industry is currently facing difficult conditions.

• Q: The analyst asked if a delayed back-to-school shopping season slowed July sales, and if there has been a shift in spending into August. /

  A: Shifting back-to-school start dates across different states change which month shopping occurs each year, creating some comp challenges in individual regional markets, but these shifts generally average out across the total store portfolio overall.