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Buckle (BKE)Stock (Apparel Stores Industry, Fashion Industry, Retail Industry)
 The company is one of the smallest players in the youth retail market[2] as its $620 million of sales places Buckle far behind the major players in its niche like Abercrombie & Fitch ($3.75 billion of sales in 2007[3]) and American Eagle ($3.0 billion[4]). However Buckle differentiates itself from these larger competitors, which sell only their own private brands, by offering other company's brands as well as its own in Buckle stores. Thus Buckle is able to profit from the image of brands such as Guess, Quiksilver and Lucky Brand Jeans to appeal to young consumers, while at the same time earning high profit margins from its own private label merchandise. On its $620 million of total revenue in 2007, Buckle earned a 41.1% gross margin[5] and a 17.7% operating margin[5]. Buckle made about $620 million in sales[5] from its stores and e-commerce operations, a 16.9% increase from its $530 million of sales in 2006[5]. The double-digit sales growth was fueled by a 13.2% increase in same store sales[5] in 2007. Buckle's sales have grown by nearly $200 million since 2003, from $423 million in FY03 to $620 million in FY07[5]. Over the same time period, Buckle's store base steadily grew from 316 locations in 2003 to 368 stores in 2007[5], adding about 11-12 stores annually on average[5]. At the end of FY08, Buckle operated no stores in New Jersey, Delaware, New York or the rest of New England (Connecticut, Massachusetts, etc.)[6], an area holding a great deal of potential for future growth.
[edit] Business OverviewBuckle was founded as a men's clothing store, by the name of Mills Clothing, in Nebraska in 1948 and over time grew into a clothing store, named Buckle, for young men and women specializing in denim jeans.[7] At the end of Q1 FY08 Buckle operated 375 stores[1], after adding 7 locations during the quarter to its 2007 year end 368 store count[5]. In addition to its brick-and-mortar stores, Buckle operates an e-commerce website which features a style and trend guide (the "Style Shop") to complement its merchandise offerings.  Buckle targets 12 to 24 year old men and women with apparel and other related merchandise, such as footwear, swimwear, sunglasses, jewelry, watches and purses.[8] Despite its wide range of products, Buckle specializes in denim jeans, which accounted for 43% of its sales in 2007 ($267 million)[8]. Buckle's own private branded jeans, BKE, represented 41% of total denim sales in 2007[9]. On a company-wide basis merchandise from branded manufacturers represented approximately 70% of Buckle's total sales in 2007[10], with sales of Buckle's BKE private brand making up the other 30%[10].
Buckle's strong growth continued in the first quarter of 2008 as the retailer's net sales grew 32.4% to $160 million as same store sales grew 25.6% during the quarter and Buckle opened 8 new store locations.[1] This growth continued in the summer of 2008 as Buckle's same store sales increased 20.9% and net sales grew 28.7%[11] in July. [edit] Trends and Forces[edit] Geographical Expansion into the Northeast to Reach New Customers Despite operating 375 stores at the end of Q1 FY08[1], Buckle is missing out on a large number of customers because the company doesn't have any stores in in most New England states, including New Jersey, Delaware and New York.[6] Nearly 6 million Americans between 15 and 24 years of age live In the nine Northeast states where Buckle does not have stores[12], representing a significant opportunity for Buckle to gain new customers, particularly in New York (2.6 million 15-24 year olds) and New Jersey(1.1 million).[12] Buckle began expanding into the Northeast in Q1 FY08 when the retailer opened up 2 stores in Maryland[1] and has future plans to open more stores in New England. [edit] Private Label Sales Boost ProfitabilityIn addition to brand name apparel and accessories, Buckle sells its own private branded merchandise under the brand name BKE. The BKE assortment includes both men's and women's apparel and accessories, with a focus on jeans. Prices for BKE merchandise are in the lower end of Buckle's total assortment price range; at Buckle the price for a pair of men's jeans varies between brands: MEK - $215[13], Lucky Brand Jeans - $102[14], BKE - $76[15]. Buckle is able to charge lower prices on its BKE brand of merchandise because it receives these jeans at lower costs direct from its own manufacturers while it has to pay more for branded merchandise because companies such as Guess? (GES) mark-up their products before selling them to retailers such as Buckle in order to secure themselves a profit. In 2007, the BKE brand accounted for 41% of Buckle's total denim sales[9]. On a company-wide basis, approximately 30% of total sales were of Buckle's private label[10]. The popularity of Buckle's private brand, BKE, helps to boost the company's profit margins as private label merchandise earns retailer's higher merchandise margins than branded merchandise. By growing BKE's penetration of sales, Buckle could grow its gross profit. [edit] Second Half Strength: Back-to-School and Holiday ShoppingDue to the surge of shopping in the second half of the fiscal year created by the back-to-school and holiday seasons, Buckle's performance in the third and fourth quarters is incredibly important to the company's success. In 2007, the second half of the year accounted for 60% of total sales and 69% of total net income.[16]
 [edit] CompetitionAs a specialty apparel retailer in the United States, Buckle competes for the favor of 12 to 24 year olds with retailers such as Abercrombie & Fitch, American Eagle and Aeropostale. Each of these three companies is larger than Buckle in terms of sales and store locations, but Buckle exhibited stronger net sales and same store sales growth than all three of these companies in 2007. One major point of differentiation for Buckle from these three companies is that Buckle relies heavily on branded merchandise (70% of its sales[10]), while Abercrombie & Fitch, American Eagle and Aeropostale only sell their own private branded products. In addition to these three retailers, Buckle also competes with Pacific Sunwear which, like Buckle, sells a mix of branded and private label merchandise in its PacSun stores, with its private branded products accounting for 30% of its sales in 2007[20]. However, Pacific Sunwear's merchandise revolves around the extreme sports lifestyle, whereas Buckle is simply a fashionable apparel retailer.
 Buckle2004 Data 2005 Data 2006 Data 2007 Data 2008 Data Most Recent Data Available [edit] References
Categories: Retail | Fashion | Apparel Stores | Mature |
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