BUCKLE INC

Previous wording

Net sales increased from $272.1 million in the first quarter of fiscal 2025 to $288.7 million in the first quarter of fiscal 2026, a 6.1% increase. Comparable store net sales for the thirteen week quarter ended May 2, 2026 increased 5.1% from comparable store net sales for the prior year thirteen week period ended May 3, 2025. Total sales growth for the period was the result of a 2.6% increase in the number of transactions and a 4.3% increase in the average unit retail, partially offset by a 0.9% reduction in the average number of units sold per transaction. Online sales for the quarter increased 2.8% to $47.7 million for the thirteen week period ended May 2, 2026, compared to $46.4 million for the thirteen week period ended May 3, 2025.

Current wording

Net sales increased from $305.7 million in the second quarter of fiscal 2025 to $319.8 million in the second quarter of fiscal 2026, a 4.6% increase. Comparable store net sales for the thirteen week quarter ended August 1, 2026 increased 2.1% from comparable store net sales for the prior year thirteen week period ended August 2, 2025. Total sales growth for the period was the result of a 1.0% increase in the number of transactions and a 4.3% increase in the average unit retail, partially offset by a 0.7% reduction in the average number of units sold per transaction. Online sales for the quarter increased 2.3% to $44.6 million for the thirteen week period ended August 1, 2026, compared to $43.6 million for the thirteen week period ended August 2, 2025.

Previous wording

The Company's average retail price per piece of merchandise sold increased $2.17, or 4.3%, during the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025. This $2.17 increase was primarily attributable to the following changes (with their corresponding effect on the overall average price per piece): a 3.8% increase in average denim price points ($0.83), a 5.2% increase in average knit shirt price points ($0.55), a 5.2% increase in average accessories price points ($0.28), a 9.0% increase in average footwear price points ($0.22), a 5.5% increase in average shorts price points ($0.20), and increased average price points across several other merchandise categories ($0.26); which were partially offset by a shift in the merchandise mix (-$0.17). These changes are primarily a reflection of merchandise shifts in terms of brands and product styles, fabrics, details, and finishes.

Current wording

The Company's average retail price per piece of merchandise sold increased $2.04, or 4.3%, during the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025. This $2.04 increase was primarily attributable to the following changes (with their corresponding effect on the overall average price per piece): a 3.8% increase in average denim price points ($0.66), a 4.8% increase in average knit shirt price points ($0.56), a 7.4% increase in average shorts price points ($0.33), a 5.2% increase in average accessories price points ($0.28), a 9.8% increase in average footwear price points ($0.22), and increased average price points across several other merchandise categories ($0.20); which were partially offset by a shift in the merchandise mix (-$0.21). These changes are primarily a reflection of merchandise shifts in terms of brands and product styles, fabrics, details, and finishes.

Previous wording

Gross profit after buying, distribution, and occupancy expenses was $133.5 million in the first quarter of fiscal 2026, compared to $127.0 million in the first quarter of fiscal 2025. As a percentage of net sales, gross profit was 46.2% in the first quarter of fiscal 2026, compared to 46.7% in the first quarter of fiscal 2025. The current quarter gross margin decrease was the result of increased buying, distribution, and occupancy expenses (0.40%, as a percentage of net sales) and a reduction in merchandise margins (0.10%, as a percentage of net sales).

Current wording

Gross profit after buying, distribution, and occupancy expenses was $153.0 million in the second quarter of fiscal 2026, compared to $145.0 million in the second quarter of fiscal 2025. As a percentage of net sales, gross profit was 47.8% in the second quarter of fiscal 2026, compared to 47.4% in the second quarter of fiscal 2025. The current quarter gross margin increase was driven by an improvement in merchandise margins (1.10%, as a percentage of net sales), which benefited from tariff refunds received during the quarter (0.65%, as a percentage of net sales), partially offset by an increase in buying, distribution, and occupancy expenses (0.70%, as a percentage of net sales).

Previous wording

Selling, general, and administrative expenses were 25.6% of net sales for the first quarter of fiscal 2026, compared to 30.7% for the first quarter of fiscal 2025. The decrease was due to a 660 basis point impact from the recognition of a $19.1 million interchange fee litigation settlement during the first quarter of 2026, as disclosed in our 2025 Form 10-K. The proceeds from this settlement were recorded as a reduction to selling expenses for the quarter. Absent the impact of this settlement, selling, general, and administrative expenses were up 150 basis points for the quarter driven by increases in incentive and equity compensation accruals (1.00%, as a percentage of net sales), store labor-related expenses (0.30%, as a percentage of net sales), and certain other selling, general, and administrative expense categories (0.20%, as a percentage of net sales).

Current wording

For the 26-week year-to-date period, selling, general, and administrative expenses were 28.1% of net sales for fiscal 2026, compared to 29.8% for the same period in fiscal 2025. The decrease was due to a 315 basis point impact from the recognition of a $19.1 million interchange fee litigation settlement during the first quarter of 2026, as disclosed in our 2025 Form 10-K. The proceeds from this settlement were recorded as a reduction to selling expenses in the first quarter. Absent the impact of this settlement, selling, general, and administrative expenses were up 145 basis points for the year-to-date period driven by increases in store labor-related expenses (0.35%, as a percentage of net sales), marketing expenses (0.30%, as a percentage of net sales), expense related to incentive and equity compensation accruals (0.30%, as a percentage of net sales), store supplies (0.15%, as a percentage of net sales), and certain other selling, general, and administrative expense categories (0.35%, as a percentage of net sales).

Previous wording

As a result of the above changes, the Company's income from operations was $59.5 million, or 20.6% of net sales, for the first quarter of fiscal 2026, compared to income from operations of $43.5 million, or 16.0% of net sales, for the first quarter of fiscal 2025. Income tax expense as a percentage of pre-tax income was 24.5% for the first quarter of both fiscal 2026 and fiscal 2025, bringing the Company's net income to $46.9 million in the first quarter of fiscal 2026, compared to $35.2 million in the first quarter of fiscal 2025.

Current wording

As a result of the above changes, the Company's income from operations was $55.8 million, or 17.4% of net sales, for the second quarter of fiscal 2026, compared to income from operations of $56.3 million, or 18.4% of net sales, for the second quarter of fiscal 2025. Income tax expense as a percentage of pre-tax income was 24.5% for the second quarter of both fiscal 2026 and fiscal 2025, bringing the Company's net income to $44.4 million in the second quarter of fiscal 2026, compared to $45.0 million in the second quarter of fiscal 2025.

Previous wording

As of May 2, 2026, the Company had working capital of $240.3 million, including $266.2 million of cash and cash equivalents and $23.8 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 quarter of fiscal 2026 and fiscal 2025, the Company's cash flow from operations was $49.3 million and $31.0 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, income taxes, and annual incentive bonuses.

Current wording

As of August 1, 2026, the Company had working capital of $250.8 million, including $264.8 million of cash and cash equivalents and $22.4 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 2026 and fiscal 2025, the Company's cash flow from operations was $96.0 million and $89.4 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, income taxes, and annual incentive bonuses.

Previous wording

The uses of cash for both thirteen 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.

Current wording

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.

Previous wording

During the first quarter of fiscal 2026 and 2025, the Company invested $13.5 million and $10.0 million, respectively, in new store construction, store renovation, and store technology upgrades. The Company also spent $1.2 million and $1.4 million in the first quarter of fiscal 2026 and 2025, respectively, in capital expenditures for the corporate headquarters and distribution facility.

Current wording

During the first two quarters of fiscal 2026 and 2025, the Company invested $24.4 million and $20.2 million, respectively, in new store construction, store renovation, and store technology upgrades. The Company also spent $20.1 million and $3.2 million in the first two quarters of fiscal 2026 and 2025, respectively, in capital expenditures for the corporate headquarters and distribution facility. The fiscal 2026 corporate headquarters amount includes the purchase of a new corporate aircraft, which replaced the plane that was sold during fiscal 2025.

Previous wording

During the remainder of fiscal 2026, the Company anticipates opening 12 new stores and completing an additional 9 full store remodels. Management estimates that total capital expenditures during fiscal 2026 will be approximately $60.0 to $65.0 million, which includes primarily planned store projects and technology investments. The Company also plans to purchase a new corporate aircraft as a replacement for the plane that was sold during fiscal 2025. 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 May 2, 2026, had total cash and investments of $323.8 million, including $33.8 million of long-term investments.

Current wording

During the remainder of fiscal 2026, the Company anticipates opening 6 new stores and completing an additional 4 full store remodels. Management estimates that total capital expenditures during fiscal 2026 will be approximately $60.0 to $65.0 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 August 1, 2026, had total cash and investments of $322.9 million, including $35.7 million of long-term investments.

Previous wording

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, 2028 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 quarter of fiscal 2026 or 2025. The Company had no bank borrowings as of May 2, 2026 and was in compliance with the terms and conditions of the line of credit agreement.

Current wording

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, 2028 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 2026 or 2025. The Company had no bank borrowings as of August 1, 2026 and was in compliance with the terms and conditions of the line of credit agreement.

Previous wording

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. 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 $14.8 million and $17.2 million as of May 2, 2026 and January 31, 2026, 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.

Current wording

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. 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 $13.5 million and $17.2 million as of August 1, 2026 and January 31, 2026, 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.

Previous wording

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 $4.2 million as of May 2, 2026 and $2.6 million as of January 31, 2026.

Current wording

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 $4.9 million as of August 1, 2026 and $2.6 million as of January 31, 2026.

Previous wording

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 $9.4 million as of May 2, 2026 and $8.6 million as of January 31, 2026.

Current wording

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 $9.2 million as of August 1, 2026 and $8.6 million as of January 31, 2026.

Previous wording

The Company has available an unsecured line of credit of $25.0 million, which is excluded from the preceding table. The line of credit agreement has an expiration date of July 31, 2028 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 quarter of fiscal 2026 or the first quarter of fiscal 2025. The Company had outstanding letters of credit totaling $1.3 million and $1.7 million as of May 2, 2026 and January 31, 2026, respectively. The Company has no other off-balance sheet arrangements.

Current wording

The Company has available an unsecured line of credit of $25.0 million, which is excluded from the preceding table. The line of credit agreement has an expiration date of July 31, 2028 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 2026 or the first two quarters of fiscal 2025. The Company had outstanding letters of credit totaling $1.6 million and $1.7 million as of August 1, 2026 and January 31, 2026, respectively. The Company has no other off-balance sheet arrangements.