Ladies and gentlemen, good morning. Thank you for standing by, and welcome to the Fourth Quarter Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. .

Members of Buckle management on the call today are Dennis Nelson, President and CEO; Karen Rhoads, Senior Vice President of Finance and Chief Financial Officer; Pat Whisler, Senior Vice President of Women's Merchandising; Bob Carlberg, Senior Vice President of Men's Merchandising; Kyle Hanson, Vice President, General Counsel and Corporate Secretary; Tom Heacock, Vice President of Finance, Treasurer and Corporate Controller.

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At this time, I'd like to turn the conference over to our host, Chief Financial Officer, Ms. Karen Rhoads. Please go ahead. .

Thank you. And good morning, everyone. Thanks for joining the call this morning. We want to share with you our results. Our March 13, 2015 press release reported that net income for the 13-week fourth quarter that ended January 31, 2015, was $60.1 million or $1.25 per share on a diluted basis.

That is compared to net income of $59.3 million or $1.23 per share on a diluted basis for the prior year 13-week fourth quarter that ended February 1, 2014. .

Our net income for the 52-week fiscal year that ended January 31, 2015, was $162.6 million or $3.38 per share on a diluted basis. That is compared to net income of $162.6 million or $3.39 per share on a diluted basis for the prior year 52-week fiscal year that ended February 1, 2014..

Our net sales for the 13-week fourth quarter increased 4.3% to $353.5 million compared to net sales of $339.0 million for the prior year 13-week fourth quarter. .

Comparable store sales for the quarter were up 1.1% in comparison to the same 13-week period in the prior year. And our online sales, which for last fiscal year were not included in comparable store sales, increased 12.6% to $33.0 million..

Net sales for the 52-week fiscal year increased 2.2% to $1.153 billion compared to net sales of $1.128 billion for fiscal 2013..

Comparable store sales for the fiscal year were flat in comparison to the same 52-week period in the prior year. And online sales, which are not included in comparable store sales, increased 6.0% to $94.3 million. .

Gross margin for the quarter was 47.4%, down approximately 20 basis points from 47.6% for the fourth quarter last year. The decrease was driven by a 30 basis point reduction in merchandise margins, partially offset by reductions as a percentage of net sales and certain other occupancy, buying and distribution expenses. .

For the fiscal year, gross margin was 44.0%, down approximately 20 basis points from 44.2% for the same period last year. The decrease was driven by a 10% basis point reduction in merchandise margin and an increase as a percentage of net sales in certain other occupancy, buying and distribution expenses. .

Selling expense for the quarter was 18.6% of net sales compared to 18.5% for the fourth quarter of fiscal 2013. And for the fiscal year, selling expense was 18.4% of net sales compared to 18.3% for fiscal 2013..

General and administrative expenses for the quarter were 2.1% of net sales compared to 1.3% for the fourth quarter of fiscal 2013. This was driven by an increase in equity compensation expense and certain other general and administrative expenses. .

For the fiscal year, general and administrative expenses were 3.3% of net sales compared to 3.1% for fiscal 2013, driven by an increase in equity compensation expense as well as increases in certain other general and administrative expenses. Our operating margin for the quarter was 26.7% compared to 27.8% for the fourth quarter of fiscal 2013. .

For the full fiscal year, our operating margin was 22.3% compared to 22.8% for fiscal 2013. Other income for the quarter was $1.9 million compared to $2.2 million for the fourth quarter of fiscal 2013. And other income for the full fiscal year was $2.7 million compared to $3.5 million last year..

Income tax expense as a percentage of pretax net income was 37.6% for the fourth quarter of fiscal 2014 compared to 38.6% in the fourth quarter of fiscal 2013, bringing fourth quarter net income to $60.1 million for fiscal 2014 versus $59.3 million for fiscal 2013..

For the full fiscal year, income tax expense was 37.4% of pretax net income for fiscal 2014 and 37.6% for fiscal 2013, bringing net income to $162.6 million for fiscal 2014 compared to $162.6 million for fiscal 2013..

Inventory of $129.9 million, which was up approximately 4.5% from inventory of $124.1 million at the end of fiscal 2013; and total cash and investments of $203.3 million, which compares to $228.5 million at the end of fiscal 2013. .

As of the end of the year, inventory on a comparable store basis was up slightly and total markdown inventory was up compared to the same time a year ago. We also ended the year with $172.7 million in fixed assets net of accumulated depreciation..

Our capital expenditures for the quarter were $9.2 million and depreciation expense was $8.4 million. For the full fiscal year, capital expenditures were $45.5 million and depreciation expense was $31.7 million..

$31.2 million for new store construction, store remodels and store technology upgrades; and $14.3 million for capital spending at the corporate headquarters and distribution center..

We currently expect our fiscal 2015 capital expenditures to be in the range of $35 million to $39 million, which includes primarily new store and store remodeling projects, IT investments and completion of the construction of a new office building as part of our home office campus in Kearney, Nebraska..

For the quarter, UPTs increased approximately 3.5%, the average transaction value increased approximately 5%, and the average unit retail increased approximately 1.5%..

For the full fiscal year, UPTs increased 2.5%, the average transaction value increased 4% and average unit retail increased approximately 1.5%..

Additionally, our average sales per square foot for the year were $459 compared to $461 in fiscal 2013. And our average sales per store was $2.3 million in both fiscal 2014 and 2013..

The Buckle ended the year with 460 retail stores in 44 states compared to 450 stores in 43 states at the end of fiscal 2013. Additionally, our total square footage was 2.343 million square feet as of the end of the year compared to 2.271 million square feet at the same time a year ago..

At this time, I'd like to turn the call over to Tom Heacock, Vice President of Finance, Treasurer and Corporate Controller. .

Good morning, and thanks for joining us this morning. I'd like to start by highlighting the performance from our various merchandise categories for both the quarter and the full fiscal year. .

Men's merchandise sales for the quarter were up approximately 10%, with strong categories including denim and casual bottoms, woven and knit shirts, sweaters, outerwear and accessories. Average denim price points increased from $88.45 in the fourth quarter of fiscal 2013 to $91.25 in the fourth quarter of fiscal 2014..

For the quarter, our men's business was approximately 47% of sales compared to 44.5% last year, and our average men's price points decreased approximately 1% from $59.90 to $59.35..

For the full fiscal year, men's merchandise sales were up approximately 7%, with strong categories, again, including denim and casual bottoms, knit shirts, sweaters, shorts, outerwear and accessories. Average denim price points increased from $89.15 in fiscal 2013 to $92.05 in fiscal 2014. .

For the full year, our men's business was approximately 43.5% of sales compared to 41.5% last year and our average men's price points increased slightly from $55.60 to $55.85. .

Women's merchandise sales for the fourth quarter were flat in comparison to the same period last year, and strong categories included woven and knit tops, sweaters, active apparel, outerwear and footwear.

Our average denim price points on the women's side increased from $98.85 in the fourth quarter of fiscal 2013 -- sorry, decreased from $98.85 in the fourth quarter of fiscal 2013 to $98.20 in the fourth quarter of fiscal 2014. .

For the quarter, our women's business was approximately 53% of net sales compared to 55.5% last year and our average women's price points increased approximately 4.5% from $49.80 to $52.05..

For the full fiscal year, women's merchandise sales were down approximately 1%, with strong categories including casual bottoms, woven and knit tops, sweaters, active apparel, outerwear and footwear. Our average denim price points for the full year increased from $98.40 in fiscal 2013 to $98.90 in fiscal 2014. .

For the year, our women's business was approximately 56.5% of net sales compared to 58.5% last year and average women's price points increased approximately 1.5% from $48.15 to $49..

For the quarter, combined accessory sales were up approximately 4.5% and combined footwear sales were up approximately 10%. These 2 categories accounted for approximately 9% and 5.5%, respectively, of fourth quarter net sales, which compares to 9% and 5% for each in the fourth quarter of fiscal 2013.

Our average accessory price points were up approximately 3.5% and average footwear price points were up approximately 12.5%..

For the full fiscal year, combined accessory sales were up approximately 3% and combined footwear sales were up approximately 4.5%. These 2 categories accounted for 8.5% and 6%, respectively, of net sales for both fiscal 2014 and 2013.

Average accessory price points were up approximately 3.5% for the year and average footwear price points were up approximately 8.5%..

For the quarter, denim accounted for approximately 46.5% of sales and tops accounted for approximately 31.5%, which compares to 48.5% and 30.5% for each in the fourth quarter of last year. .

For the full year, denim accounted for approximately 43.5% of sales and tops accounted for approximately 31%, which compares to 45.5% and 30% for each in fiscal 2013..

Our private label business was up slightly as a percentage of sales for both the quarter and the year and represent approximately 35% of sales for the full year. .

During the fourth quarter, we opened 2 new stores, completed 1 substantial remodel and closed 3 stores post holiday, bringing our count for the full year to 16 new stores, 18 full remodels and 6 store closures. .

As of the end of the year, 365 of our 460 stores were our newest format. For 2015, we anticipate opening 9 new stores, which includes 2 stores that opened earlier this week, 1 additional for spring, 1 for back-to-school and 5 for holiday.

We also anticipate completing 11 substantial remodels during the year and by season, we anticipate 6 of the remodeled stores will be completed for spring and 5 will be completed for back-to-school..

New stores openings for spring includes stores in Mount Pleasant, South Carolina; Omaha, Nebraska; and Bradley, West Virginia. .

And with that, we'll open it up to your questions. .

[Operator Instructions] Our first question today comes from Ed Yruma with KeyBanc Capital. .

Dennis, I have a bigger-picture question first. 2014 was really the first kind of flattish earnings that you guys have had since 2008.

I'm just trying to understand, was it the environment? Was it denim? Was there something you could have done differently? And then I guess, is this kind of the earnings trajectory we should expect from Buckle going forward?.

I think it was a combination of things. The denim cycle in the ladies was a little more challenging after all our years of growth. So that was a little bit of it. I think the challenging environment was part of it. So a combination of things.

I'm sure there's things where we are working on to continue to improve that we feel like we're in a very good position going forward. And as you know, we don't make forward projections. So thank you. .

Got it. And a follow-up. I was wondering if you could give us an update on how the kids' assortment in the stores that you have is performing and whether this is something you expect to take more spaces in the store. .

Yes. We've been pretty happy with our kids' business. And I know in the boys part of it, we plan to expand more stores for back-to-school. Spring and summer, we are kind of maintaining the status quo for the number of stores we have. But it's been a nice plus. Still a very small part of our business, but we do like it. .

Our next question today comes from the line of Simeon Siegel representing Nomura Securities. .

Karen, can you talk about merch margin dynamics? With AUR up but merchandise margin is down, is that mainly driven by mix? And then I guess maybe to the past question, how do you view the promotional environment in general? So maybe what's the right way to think about that going forward? And then just -- I think you had initially said it will be minimal, but can you just update was there any impact from the port strike?.

I was going to say I'll let the merchandisers cover the port strike. But on the merch margin, I think a little bit of the gains came from markdowns. It would be combined a little bit product -- with product mix.

But actually, where we kind of cleaned up on the markdowns at the end of the year, I think we feel pretty good about where that product is at the current time. I don't know, Dennis, if you have any further comments on [indiscernible]. .

No, I mean, it's pretty much a seasonal deal and kind hits certain points. But we feel very good about our margin, our inventory. So we're ready for spring there. On the port strikes, we did have several categories that impact to a certain degree and probably started toward mid, late November.

We started seeing the impact and have the deliveries anywhere from 2 to 10 weeks late. And so that has had an effect in starting for spring. .

Our next question today comes from the line of Thomas Filandro with SIG. .

Dennis, could you expand -- or maybe Karen, as well, expand a little on that port comment. Is there a lingering issue here that we should be concerned about? Are you seeing any staggering of product coming in for the spring season? And then I have 2 other questions. Just that one quick, please. .

Okay. Yes, we still have some delays on some of our product. We have started to see a better pickup over the last 10 days on product coming in, but there could still be some impact to that business. .

And the next question I have is sort of an odd question. But there has been some concern out there that your business could be negatively impacted in the so-called shelf space with employment issues. So I'd be curious if you experienced any regional variance in the business and particularly, trying to highlight those shelf space.

And then a question for both Pat and Bob, just can you tell us what you're seeing in terms of trends for either brands or silhouettes in denim and any comments about any trends in tops for spring?.

Okay. Regards to the regional, through fourth quarter, we did not see any real change in what was going on in our stores. So I'll defer to Bob and Pat now. .

Well, on the men's side for denim, we're seeing some movement toward the straights or kind of the slimmer bottom openings. A lot of light and destructed seems to be working. From the top side, we've just really continued to get past the competitors as far as bodies, fabrics, washes, colors, blocking, just making the product a lot more interesting.

So on a 360-degree look at the products, you would see details on all aspects of the product. .

This is Pat. And on the denim side for the ladies, what I really enjoy is that we kind of had a quiet cycle there on denim. It was very a singular focus, and I see that opening up a little bit, which we are loving. Plays kind of into our strong suit. More destructed denims, just some nice abrasions in a variety of fabrics and finishes.

So we feel good about the denim picture. Our tops continue to be a great mix of private label and branded. We have a brand -- in-house brand by Gimmicks, which is kind of a cornerstone brand for us. And it's performing very well and just kind of enhances the whole top selection.

But we're getting West Coast brands, a nice blend of in-house brands and overall, feeling pretty good about the mix. .

Next, we'll go to the line of Paul Alexander with BB&T Capital. .

Just a follow-up on that denim point. Do you think there's enough trend out there now where you think you can return women's denim to positive territory? And then a follow-up question.

Can you talk about the increase in e-commerce growth in fourth quarter? Was that driven by new investments or projects or was it more clearance-related? And does that channel the outperformance versus stores makes you -- make you think any differently about e-com investment going forward?.

This is Dennis. I'll take the gals' denim part. We're seeing more interest in a variety of brands as well as what Pat mentioned as far as different finishes and we're still selling variety of different fits. And so we are encouraged with what we have going on there.

And then I'll -- Kyle, do you want to comment on the online?.

Sure. We increased our support for paid search, and that also led to some new acquisition strategies primarily in fourth quarter. And then worked with some targeted display services, tested some of those and then actually increase our e-mail volume. .

I just might add -- this is Pat again, I might add to that. I think our teams did an excellent job of maximizing the inventory levels as we went into the quarter and getting us some good shape on our product selection. We've also worked on enhancing our visual presentation of product online and have a team focus on that aspect going forward.

And then there's more of an overlap there with merchandising. And we have Kelly Molesick [ph], who is working closely with that team as well. .

Your next question comes from the line of Liz Pierce, representing Bean Capital -- Brean Capital. .

Nice job on the quarter. I'm going to just kind of follow-up on a couple of other questions that have already been asked. On the kids' business, Dennis, so you mentioned that you're going to expand the boys, but I noticed that there seems to be more kind of visuals on the website on all of them.

So does that mean the girls is outperforming on the web versus the store?.

We started the ladies' side more aggressively than the boys and actually 6 to 12 months kind of ahead of the boys. So we have expanded the product lines there and have a little more experience with it. And so what you'll see for back-to-school is kind of the men's adding additional stores to kind of have about the same level as the ladies. .

Okay.

So basically playing catch-up?.

Somewhat, yes. .

Okay. All right. It looks really cute. And I also just wanted to -- I'll say to Pat, on her visuals, because I think that the website looks so much better and I was wondering if that had a lot to do with the year-over-year increase. But clearly, it's a couple of things. So anyway, that's all I have. .

[Operator Instructions] And we will go to the line of Steve Marotta with CL King & Associates. .

Can you please talk about e-commerce initiatives for the current year and what's going on there in order to drive increase sales?.

Thanks for the question. In addition to working with the visuals, as Pat mentioned, we are going to continue just to review our paid search programs as well as looking at strengthening or retarding services through display.

And new acquisition, making sure that we're watching our e-mail list attrition rate and being wise in how we're spending our dollars there in marketing perspective. .

And the only thing I can think to add there is we do have the same overlap onto our e-mail approach, which I think is working well. .

[Operator Instructions] And we'll go to the line of Lee Giordano's with CRT Capital. .

Just on the 9 new stores for this year, wondering if that's the maximum if the plans are finalized? Or if you might be renting that up even further? That's it. .

I mean, it's possible that there could be another 1 or 2 added. But for planning stages, it's getting a little late. So I would -- my best guess is it will stay at 9. .

Presenters, there are no other participants queuing up at this time. .

Okay. With no other calls coming in then or questions coming up, we would like to thank everybody for joining us today and wish everyone a great weekend. .

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International participants may dial (320) 365-3844. And that does conclude our conference for today. We thank you for your participation and using the AT&T Executive Teleconference. You may now disconnect..