bke-20210731

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended July 31, 2021

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ____________ to ____________

Commission File Number: 001-12951

THE BUCKLE, INC.

(Exact name of Registrant as specified in its charter)


Nebraska			47-0366193
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

2407 West 24th Street, Kearney, Nebraska 68845-4915

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (308) 236-8491

____________________________________________________________________

(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. Yes þ 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). Yes þ 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 filer þ;

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.

THE BUCKLE, INC.

FORM 10-Q

INDEX


		Pages
Part I. Financial Information (unaudited)

Item 1.	Financial Statements	3

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21

Item 4.	Controls and Procedures	21


Part II. Other Information

Item 1.	Legal Proceedings	22

Item 1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 3.	Defaults Upon Senior Securities	22

Item 4.	Mine Safety Disclosures	22

Item 5.	Other Information	22

Item 6.	Exhibits	22

Signatures		23

Exhibit Index		24

THE BUCKLE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(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.

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.

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.

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.

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.

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.

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.

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.

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:

SEC Form 10-Q filed by Buckle, Inc. (The)