Prepared remarks
Good morning. Thank you for joining us, and welcome to Buckle's First Quarter Earnings Release Webcast. Members of Buckle's management on the call today are Dennis Nelson, President and CEO; Tom Heacock, Senior Vice President of Finance, Treasurer and CFO; Adam Akerson, Vice President of Finance and Corporate Controller; and Brady Fritz, Senior Vice President, General Counsel and Corporate Secretary. Before we begin, I want to remind you that the company does not provide guidance on future sales or earnings. All forward-looking statements made during this call are in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may vary significantly due to risks and uncertainties outlined in the company's SEC filings. The company is not obligated to publicly update or revise these statements unless required by law. Furthermore, the company does not permit the reproduction or distribution of transcripts or audio recordings of its quarterly conference calls without explicit written consent. Any unauthorized reproductions or recordings should not be considered reliable as the information may be inaccurate. Just a reminder, today’s webcast is being recorded. I will now turn the conference over to your host, Tom Heacock.
Good morning, and thanks for joining us this morning. Our May 23, 2025 press release reported that net income for the 13-week first quarter ended May 3, 2025, was $35.2 million or $0.70 per share on a diluted basis compared to net income of $34.8 million or $0.69 per share on a diluted basis for the prior year 13-week first quarter, which ended May 4, 2024. Net sales for the 13-week first quarter increased 3.7% to $272.1 million compared to net sales of $262.5 million for the prior year 13-week first quarter. Comparable store sales for the quarter increased 3% in comparison to the same 13-week period in the prior year, and our online sales increased 4.5% to $46.4 million. For the quarter, UPTs increased slightly. The average unit retail increased approximately 1% and the average transaction value increased approximately 1.5%. Gross margin for the quarter was 46.7%, a 70 basis point increase from 46% in the first quarter of last year, with the current quarter margin improvement being the result of a 60 basis point increase in merchandise margins along with a 10 basis points of leverage from buying, distribution and occupancy expenses.
Selling, general and administrative expenses for the quarter were 30.7% of net sales compared to 29.8% for the first quarter of last year. And the first quarter increase was due to a 45 basis point increase in incentive compensation accruals, a 25 basis point increase in health insurance-related costs, a 20 basis point increase in equity compensation expense and a 40 basis point increase in other SG&A expense categories. These increases were partially offset by a 25 basis point decrease in e-commerce shipping expenses and a 15 basis point reduction in certain marketing expenses. Our operating margin for the quarter was 16% compared to 16.2% for the first quarter of fiscal 2024. Income tax expense as a percentage of pretax net income for both the current and prior year fiscal quarter was 24.5%, bringing first quarter net income to $35.2 million for fiscal 2025 compared to $34.8 million for fiscal 2024.
Our press release also included a balance sheet as of May 3, 2025, which included the following: inventory of $132.4 million up 1.3% from the same time a year ago and $320 million of total cash and investments. We ended the quarter with $152.1 million in fixed assets net of accumulated depreciation. Our capital expenditures for the quarter were $11.4 million and depreciation expense was $5.9 million. First quarter capital spending is broken down as follows: $10 million for new store construction, store remodels and technology upgrades and $1.4 million for capital spending at the corporate headquarters and distribution center. During the quarter, we completed 5 full store remodels, 3 of which were relocations into new outdoor shopping centers and closed 2 stores. For the remainder of the year, we anticipate opening 7 new stores, completing 16 additional full remodel projects and closing one youth store as it combines with our full-line location as a part of a remodel. Buckle ended the quarter with 439 retail stores in 42 states compared with 440 stores in 42 states at the end of the first quarter of last year.
Thanks, Tom, and good morning. Our women's business continued its strong momentum from the back half of 2024 through the first quarter of 2025 with merchandise sales increasing about 10.5% against the prior year, and representing approximately 50% of sales, which compares to 47% last year. The strong results continue to be headlined by the performance of our denim category. For the quarter, women's denim increased approximately 11% with average denim price points increasing from $80.85 in the first quarter of fiscal 2024 to $84.85 in the first quarter of fiscal 2025. This AUR increase is primarily the result of continued growth in our private label, increasing its percentage of our total denim mix along with strong performance of higher price point national brands. Complementing our strong denim selection, our merchandising team did a great job delivering a balanced assortment of tops, shorts, dresses, outerwear, footwear and accessories, which all delivered growth for the quarter.
For the quarter, average women's price points increased about 2% from $48 to $49.05. On the men's side, we were pleased to see sequential improvement throughout the quarter, resulting in positive year-over-year sales in fiscal April. For the quarter, men's merchandise sales were down about 2.5% against the prior year representing approximately 50% of total sales compared to 53% in the prior year. For the quarter, our men's denim category was down about 0.5% with private branded denim increasing about 1%. Average denim price points increased from $88.65 in the first quarter of fiscal 2024 to $89.70 in the first quarter of 2025. In other categories, we saw stronger performance in our tees, polos, denim shorts and fragrance selections. For the quarter, overall average men's price points increased approximately 1.5% from $53.60 to $54.40. On a combined basis, accessory sales for the quarter increased approximately 3.5% against the prior year, while footwear sales were down about 7%.
These 2 categories accounted for approximately 11% and 5.5%, respectively, of the first quarter net sales, which compares to 11% and 6% for each in the first quarter of fiscal 2024. For the quarter, average accessory price points were up approximately 1%, and average footwear price points were up about 2.5%. Also on a combined basis, our youth business continued its growth during the quarter increasing approximately 11.5% year-over-year. For the quarter, denim accounted for approximately 43.5% of sales, and tops accounted for approximately 27% which compares with 43% and 27.5% for each in the first quarter of 2024. As previously mentioned, we continued to see nice growth in our private brands across nearly every category. For the quarter, private label represented 47.5% of sales versus 46% in the first quarter of 2024. And with that, we welcome your questions.
Questions and answers
Our first question is from Mauricio.
Great. This is Mauricio Serna from UBS Research. Just a couple of questions. Maybe could you elaborate a little bit more on how are you thinking about the China tariffs and other tariffs impact on your gross margin as we head into the second quarter, upcoming quarters? Like how are you thinking about that? And then on the report, just one thing that stuck out just on the balance sheet, we see a big uptick, I think, like a 10% increase or so in the operating lease assets right of use. Just wanted to understand what was like the driver behind that big increase.
Mauricio, thank you for the question. We have vendors and brands where we have had no increases in our costs as we look even forward to the second quarter as well as we've had others that have low to mid-single-digit increases. So we think we're working with our vendors, managing the tariffs and our product has worked out well. Tom, do you want to comment on the other?
And then Mauricio, was your second question just on the lease liability on the balance sheet, is that what the question was? Sorry, it looks like we lost Mauricio. But yes, Mauricio, that's really just a function of new stores and remodels over the last 12 months. So every one of those at the inception of the lease would have both assets and liabilities that are recognized on the balance sheet.
Okay. There are no further questions in queue. I believe Mauricio is raising his hand again, so we're going to go ahead and ask him to unmute.
Great. Thanks for taking a follow-up. Maybe could you talk about in the gross margin result this quarter saw a nice uptick on the like contribution for merchandise margin? Like what is driving that? And then on the part that is actually like the occupancy, it seems like you got a little bit of leverage. I was just curious on that too, because I think, and you recall that maybe like in the first quarter, you kind of require a higher comp sales growth to kind of like leverage expense? And then just lastly, again, just following up on the tariff commentary. Like anything that you're doing on your side in terms of relocating the production for your private label? How are you dealing with the tariff for the private label, I guess that's like the part that was just like concerned because I recall that particular business had a huge exposure to China.
Correct. Yes. On the as I mentioned, we are working closely with our vendors. They are sourcing from other countries as well, as well as wanting to maintain our business and a long history of working with key vendors and helping us out on holding price and working ahead as well as the first quarter, we're very excited about our ladies business. The trends have been very good, strong denim, but also all categories we're having good sell-throughs at regular price. And the men's business is still 50% of our business, and we're having good sell-throughs in all our key categories there, and we're feeling really good about the inventory. Do you want to comment on the other?
And then Mauricio, I think your second questions were about merchandise margin drivers during the quarter. And really, that's a function I mean we've seen continued growth there. But the increase in private label is a big driver, and we saw an increase there again in the first quarter and then also a strong regular price selling during the quarter. So both of those were contributing factors to the 60 basis point increase. And then on the leverage that we saw, which was about 10 basis points for Q1, looking at total occupancy costs for Q1 were up about 3.5%. So with total sales better than that, we did get a little bit of leverage.
Got it. And then, sorry, can you hear me? I don't know if I'm still on mute or not.
We can hear you.
Perfect. So regarding SG&A, it looks like it was elevated. Is there any insight on how we should think about the potential for achieving some leverage in SG&A if we continue to experience positive trends in comparable sales?
During the quarter, total SG&A dollars increased by just over $5 million. Store payroll remained flat as a percentage of sales, which has been consistent for several quarters. However, total payroll dollars rose by just over $2 million, which is the main contributor to the increase in SG&A expenses. Much of this is due to store labor and sales labor that varies based on overall results. Other factors included incentive compensation driven by strong quarter performance, with pre-bonus net income up year-over-year, leading to a higher accrual. Additionally, equity compensation and health insurance costs, which are self-funded and subject to claims, showed a year-over-year increase. Better performance was noted in the previous year's first quarter, and equity compensation primarily depends on the stock price at the time of grant for new shares.
There are no further questions. It looks like there's nothing else to discuss. I will now turn the call back over to Buckle for any closing remarks.
Thank you, everybody, for participating in the call, and we hope you enjoy the rest of the day, and have a wonderful holiday weekend.