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A Look at Buckle: Fundamentals Don't Matter Anymore

Just a few more things.

The company hasn't filed its 10-Q for the third quarter, but for the 2Q it said its sales per square foot were up 25.8% for the first half. Annual sales per square foot bottomed out at $274 in 2002 and 2003 after rising from $225 in 1994 to $344 in 2003. Since 2003 they've been climbing again,to $335 last year, and unless the fourth quarter this year is a bomb, should be up again. Is this a repeat of that previous cycle, and so a likely top in productivity for the time being?

I used only a five-year span in the previous comment to illustrate the company's ragged longterm comp performance. I could have used seven years.
Here's what that (1999-2006) looks like, in sequence (all %s): +0.9, -6.0, -6.2, -0.5, +1.1, +6.3, +1.4 and 0.0. Not a barn burner.

So, flash in the pan? Or undervalued top performer?

A Look at Buckle: Fundamentals Don't Matter Anymore

There's merit to your general point of view. With respect to BKE, however, there is a rational explanation, whether or not (in the environment you sketch)it's a factor in its price decline, That is, that BKE will have very difficult prior-year comps to match in the months ahead, for which the general economic outlook is gloomy. Furthermore, its longterm comp history is quite ragged, despite its uninterrupted double-digit scores over the last 15 months. In fact, before starting that run, it had reported negative same store sales in 35 of the previous 67 months. Over that five-and-a-half year period (2001-05) its annual comps came to -6.2%, -0.5%, +1.1%, +6.3% and +1.4%. I couldn't find my 2000 monthly comp record, but BKE's annual SSS for that year were also negative, namely -6.0%.

Maybe they've found some magic ingredients. Since 2002 they've roughly tripled the proportion of sales that is private label, and net profit margin, which seemed confined to an 8-10% range for years, climbed to 12.1% last year, and for the first nine months this year was up 1.8 points to 13.0% (excluding the write down for auction related securities).

The last two months its SSS have trended down, although still alternating with APP for best in apparel retail, from +22.4% to +19.7% to +14.5%. On the favorable side, they've managed this against prior year matching comps of +16.7%, +10.9% and +14.9%. In the next three months they face +18.2%, +18.7% and +19.1% from last year.

All told, I like BKE at these prices, although I don't see my way clear to buy it, considering all the other alternatives in the stock universe.

Just wanted to give my version of a "Guide to the Perplexed."

August Same-Store Sales Roundup

Isn't it about time that people in the financial media stop giving respect to the "estimates" guessing game? It's bad enough when applied to quarterly earnings, but becomes absolutely ridiculous applied to monthly sales reports.

Isn't it obvious that what matters is the change from the comparable period (or the monthly number as part of a pattern of monthly numbers for that company) or how the sales report in itself or as part of a pattern compares to that of peers, not even beginning to consider the relative impact of markdowns on the sales numbers and their implications for earnings, not what analysts estimate, with something like a 15% accuracy record.

It is mindboggling that reviews of analyst ratings (most based on predicted earnings changes) over the last several years have found
that the most rewarding buys are those earmarked "sell" by the analysts, the net best returns come from recommended "holds," and the worst from recommended "buys."

This same skill when applied to same store sales finds that the list above comes close enough to the reported comp to be considered accurate in predicting the number (whatever that number is worth in isolation) for by my reckoning six (JWN, TJX, LTD, BJ, FDO and FRED), or 15%, of the 40 companies for which estimates were made.

I've followed specialty retail, especially apparel, sporting goods and variety, closely for the last nine years, and since whenever this "estimating" disease took hold this kind of whistling-oin-the-wind inaccuracy has been the norm.

I just don't get it.

But this reference to variation from a "consensus" estimate is now a virtually standard reference in the lead of earnings or comp-sales related news stories throughout the financial media.

And it is meaningless in relation to a company's prospects.

To me it seems to be merely a fast shuffle creating more trading commissions and profits for brokers and trading firms.