Ladies and gentlemen, thank you for standing by, and welcome to the fourth quarter earnings release conference call. [Operator Instructions] Also, as a reminder, today's teleconference is being recorded. .

Dennis Nelson, President and CEO; Karen Rhoads, Senior Vice President of Finance and CFO; Pat Whisler, Senior Vice President of Women's Merchandising; Kelli Molczyk, Vice President of Women's Merchandising; Bob Carlberg, Senior Vice President of Men's Merchandising; Kyle Hanson, Vice President, General Counsel and Corporate Secretary; and Tom Heacock, Vice President of Finance, Treasurer and Corporate Controller.

As they review the operating results for the fourth quarter which ended January 30, 2016, they would like to reiterate their policy of not giving future sales or earnings guidance and have the following safe harbor statement..

Safe harbor statement under the Private Securities Litigation Reform Act of 1995. All forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on factors which may be beyond the company's control.

Accordingly, the company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Such factors include, but are not limited to, those described in the company's filings with the Securities and Exchange Commission.

The company does not undertake to publicly update or revise any forward-looking statements even if experience or future change make it clear that any projected results expressed or implied therein will not be realized. .

Additionally, the company does not authorize the reproduction or dissemination of transcripts or audio recordings of the company's quarterly conference calls without its expressed written consent. Any unauthorized reproductions or recordings of the call should not be relied upon as the information may be inaccurate. .

And at this time, we will turn the conference call over to your host, Ms. Karen Rhoads. Please go ahead. .

Thank you. Good morning, everyone. Thank you for joining the call this morning. Our March 11, 2016, press release reported that net income for the 13-week fourth quarter ended January 30, 2016, was $54.3 million or $1.13 per share on a diluted basis.

That's compared to net income of $60.1 million or $1.25 per share on a diluted basis for the prior year 13-week fourth quarter ended January 31, 2015.

Our net income for the 52-week fiscal year that ended January 30, 2016, was $147.3 million or $3.06 per share on a diluted basis compared to net income of $162.6 million or $3.38 per share on a diluted basis for the prior year 52-week fiscal year ended January 31, 2015. .

Our net sales for the 13-week fourth quarter decreased 6.1% to $332.0 million compared to net sales of $353.5 million for the prior year 13-week fourth quarter. Comparable-store sales for the quarter were down 7.2% in comparison to the same 13-week period in the prior year, and online sales increased 7.1% to $35.3 million.

Net sales for the 52-week fiscal year decreased 2.9% to $1.12 billion compared to net sales of $1.153 billion for the fiscal 2014. Comparable-store sales for the full year were down 4.4% in comparison to the same 52-week period in the prior year, and online sales increased 11.8% to $105.5 million. .

Gross margin for the quarter was 47.0%, down approximately 40 basis points from 47.4% for the fourth quarter last year.

The decrease was driven primarily by deleveraged occupancy, buying and distribution expenses resulting from the comparable-store sales decline, which had about a 70 basis point impact, and was partially offset by a 30 basis point improvement in merchandise margins for the quarter.

For the fiscal year, gross margin was 43.0%, down approximately 100 basis points from 44.0% for the same period last year.

The decrease was driven primarily by deleveraged occupancy, buying and distribution expenses resulting from the comparable-store sales decline, which had about a 90 basis point impact, and by a 10 basis point reduction in merchandise margin. .

Selling expense was 19.5% of net sales for the fourth quarter of fiscal 2015 compared to 18.6% of net sales for the fourth quarter of fiscal 2014, with increases in store payroll expense, expense related to the incentive bonus accruals and online fulfillment and marketing expenses.

For the fiscal year, selling expense was 19.0% of net sales compared to 18.4% for fiscal 2014. Increases in store payroll expense, online fulfillment and marketing expenses as well as certain other selling expenses were partially offset by a reduction as a percentage of net sales in expense related to the incentive bonus accrual. .

General and administrative expenses for the quarter were 2.4% of net sales compared to 2.1% of net sales for the fourth quarter of fiscal 2014. An increase in equity compensation expense was partially offset by reduction as a percentage of net sales in certain other expense categories.

For the fiscal year, general and administrative expenses were 3.5% of net sales compared to 3.3% of net sales for fiscal 2014 with increases as a percentage of net sales across several expense categories. .

Our operating margin for the quarter was 25.1% compared to 26.7% for the fourth quarter of fiscal 2014. For the full year, our operating margin was 20.5% compared to 22.3% for fiscal 2014.

Other income for the quarter was $3.3 million compared to $1.9 million for the fourth quarter of fiscal 2014, and other income for the full fiscal year was $5.2 million compared to $2.7 million last year. .

Income tax expense as a percentage of pretax net income was 37.2% for the fourth quarter of fiscal 2015 compared to 37.6% for the fourth quarter of fiscal 2014, bringing fourth quarter net income to $54.3 million for fiscal 2015 versus $16.1 million for fiscal 2014.

For the full fiscal year, income tax expense was 37.3% of pretax net income for fiscal 2015 and 37.4% for fiscal 2014, bringing net income to $147.3 million for fiscal 2015 versus $162.6 million for fiscal 2014. .

inventory of $149.6 million, which was up approximately 15% from inventory of $129.9 million at the end of fiscal 2014; and total cash and investments of $231.5 million, which compares to $203.3 million at the end of fiscal 2014.

As of the end of the year, inventory on a comparable-store basis was up approximately 13% compared to the same time a year ago, and total markdown inventory was up compared to the same time a year ago. We also ended the quarter with $172.8 million in fixed assets, net of accumulated depreciation. .

$22.6 million for new store construction, store remodels and store technology upgrades; and $12 million for capital spending at the corporate headquarters and distribution center.

We currently expect our fiscal 2016 capital expenditures to be in the range of $31 million to $35 million, which includes, primarily, new store and store remodeling projects as well as certain IT investments. .

During the quarter, we spent approximately $2.5 million to repurchase 83,596 shares of Buckle common stock at an average price of $30.29. This brings our total shares repurchased for the full year to 103,693 shares at a total cost of approximately $3.2 million or $31.01 per share and leaves 440,270 shares remaining on our current authorization. .

For the quarter, UPTs increased approximately 2.0%, the average transaction value increased about 1%, and the average unit retail decreased approximately 1%. For the full fiscal year, UPTs increased approximately 0.5%, the average transaction value increased approximately 2% and the average unit retail increased approximately 1.5%.

Additionally, our average sales per square foot for the year was $430 compared to $459 in fiscal 2014, and our average sales per store was $2.2 million compared to $2.3 million for fiscal 2014. .

Buckle ended the year with 468 retail stores in 44 states compared to 460 stores in 44 states at the end of fiscal 2014. Additionally, our total square footage was 2.378 million square feet as of the end of the fiscal year compared to 2.343 million square feet at the same time a year ago. .

And at this time, I'd like to turn the call over to Tom Heacock. .

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

Men's merchandise sales for the quarter were down approximately 1.5%, with strong categories including casual bottoms, sweaters and accessories. Our average denim price point increased from $91.25 in the fourth quarter of fiscal 2014 to $92 in the fourth quarter of fiscal 2015.

For the quarter, our men's business was approximately 49% of net sales compared to 47% last year, and our average men's price points decreased approximately 1% from $59.35 to $58.85. .

For the full year, men's merchandise sales were up approximately 2%, with strong categories including casual bottoms, knit shirts, shorts and accessories. Our average denim price points increased from $92.05 in fiscal 2014 to $93.05 in fiscal 2015.

For the year, our men's business was approximately 45.5% of net sales compared to 43.5% last year, and average men's price points decreased approximately 0.5% from $55.85 to $55.65. .

Women's merchandise sales for the quarter were down approximately 11%, with strong categories including casual bottoms, woven tops and dresses. Our average denim price points decreased from $98.20 in the fourth quarter of fiscal 2014 to $95.70 in the fourth quarter of fiscal 2015.

For the quarter, our women's business was approximately 51% of net sales compared to 53% last year, and average women's price points decreased approximately 2% from $52.05 to $51.15. .

For the full year, women's merchandise sales were down approximately 6.5%, with strong categories including casual bottoms, woven tops and dresses. Our average denim price points decreased from $98.90 in fiscal 2014 to $96.15 in fiscal 2015.

For the full year, our women's business was approximately 54.5% of net sales compared to 56.5% last year, and our average women's price points increased approximately 2.5% from $49 to $50.30. .

For the quarter, combined accessories sales were down approximately 1%, and combined footwear sales were down approximately 3%. These 2 categories account for approximately 9.5% and 5.5%, respectively, of fourth quarter net sales, which compares to 9% and 5.5% for each in the fourth quarter of last year.

Our average accessory price points were up approximately 2%, and average footwear price points were down approximately 2.5%. .

For the full year, combined accessories sales were up approximately 1%, and combined footwear sales were down approximately 2%. And these 2 categories accounted for approximately 9% and 6% of net sales for fiscal 2015, which compares to 8.5% and 6% for each in fiscal 2014.

Our average accessory price points for the full year were up approximately 7.5%, and average footwear price points were up approximately 0.5%. .

For the quarter, denim accounted for approximately 46% of sales, and tops accounted for approximately 30.5%, which compares to 46.5% and 31.5% for each in the fourth quarter of last year.

For the full year, denim accounted for approximately 42.5% of sales, and tops accounted for approximately 31%, which compares to 43.5% and 31% for each in fiscal 2014.

Our private label business was up slightly as a percentage of sales for both the quarter and the year and represent approximately 38.5% of sales for the quarter and 36% for the full year. .

During the fourth quarter, we opened 1 new store, completed 1 substantial remodel and closed 1 store post holiday, bringing our count for the full year to 9 new stores, 14 full remodels and 1 store closure. As of the end of the year, 385 of our 468 stores were in our newest format.

For fiscal 2016, we anticipate opening 4 new stores, which includes 3 for back-to-school and 1 for holiday. We also anticipate completing 18 full remodels during the year, and by season, we anticipate 9 of the remodeled stores will be completed for spring, 7 for back-to-school and 2 for holiday..

And with that, we welcome your questions. .

[Operator Instructions] First question will come from Ed Yruma with KeyBanc Capital Markets. .

If memory serves me correctly, I think this is the first time you guys have bought back shares in some time.

I guess, how do we think about your thought process around share buyback and I guess, as that relates to the special dividend that you sometimes pay, kind of the balance between share buyback and dividend?.

Okay. Thank you, Ed. And if I could take a moment before I answer your question, I'd just like to thank our management team and teammates for a good fourth quarter in a difficult environment.

And I also want to thank Pat Whisler, our Executive VP of Ladies' Merchandise for her 40 years with The Buckle and for her impact on the growth of The Buckle during her career. In regards to the buyback and special dividends, Ed, we realized we're not experts in trading.

So by nature, we're very conservative on our approach there, and we'll probably be consistent with that thought process as we go forward. .

Got it. And a follow-up, if I may. Obviously, inventory levels were higher than the sales growth or just the change in sales.

How would you assess the quality of inventory? And did you take out -- did you take enough markdowns during the quarter to enter the spring season clean?.

Yes. Last year, we were low in our men's denim inventory, and so we have been building that up and feel the quality of our inventory is good.

And Tom, do you want to comment on the reserve?.

Yes. I mean I think we continue to look at that and look at where we're at as far as inventory.

And I think that's part of the reason, when you look at the fourth quarter, that merchandise margins were higher, was looking ahead at the holiday at end of the third quarter, that the merchandise margin -- or the merchandise reserve was a little bit higher at the end of the third quarter compared to a year ago.

And the same holds true at the end of the fourth quarter. .

The next question in queue will come from Simeon Siegel with Nomura Securities. .

This is Julie Kim on for Simeon. Regarding the -- could you give more color on the continued increase in penetration you're finding in the e-com channel? I believe e-com sales were up 11 point.

[Audio Gap].

Your margins in your store fleet strategy. .

Okay. You kind of cut out there for a second, Julie, so if I don't answer it completely, please advise. We continually work on improving our marketing for our Internet site and improvement of our presentation with e-mails and just doing a better job of keeping our online store in inventory as well.

And so -- as well as it also does a nice job of helping us clear certain sale product, which we had a little bit more of than past years. And we'll continue to look at developing programs and testing remarketing and such to continue to grow our online business. .

Do you have an estimated, like, ideal penetration rate for that channel?.

No, we haven't put a specific number on it. We think we'll continue to grow that slowly. We also do a lot of special orders for our stores where the guests will pick up product that they request through the store, and we fulfill that through our online store in majority. And so I think that also would add to that if we did not do specials. .

The next question will come from Adrienne Yih with Wolfe Research. .

I was wondering if you could help us out with the gross margin. The gross margin, good to see you came in much better than expected for the fourth quarter, down only 40 bps.

And I was wondering when we go into Q1, with this excess -- or with the inventory growing faster than sales, and you had said the quality is really good, how should I think about -- or how should we think about the pressure on margins Q1? And then -- actually Q2 because that's where -- if there was any seasonal product, that's where you'd need to clear it.

My follow-up to that really is, do you do any packaway? And was there any need to do any packaway, if so, just because of the warmer weather in the fourth quarter?.

We did maybe a small part of our packaways in a few items in outerwear and a few in sweaters, but probably not any greater amount than an average year.

Do you want to comment on it any other?.

And on the margins, I think that's hard for us to answer. I mean we don't give forward guidance. So we just have to see what happens. .

Okay.

Any philosophy or broader commentary on how you manage through inventory, when we could see that inventory gap close between its sales and inventory growth?.

Well, as far as -- I think the inventory will probably be fairly consistent for the first half of the year, just as what we have planned and how we'll manage it. But I think we've shown over the years that we can keep a good handle on that and feel good about going forward with that. .

[Operator Instructions] Next in queue is Liz Pierce with Brean Capital. .

Nice job on handling this tough environment. So just to clarify on the inventory, Dennis.

Last year, on the denim, was that for men's -- was that a port-related issue? Or was that something else?.

Part of it was a port issue and just strong selling last year. So it's kind of a combination. And maybe we had some new fits that worked well last year, as I remember, and so we are trying to catch up with that. .

So was it mainly the men's side where, if we're just looking at kind of buckets of inventory that was low? Or was the women's accessories and footwear, was that also low?.

You're speaking of last year, Liz?.

Yes, sorry. .

Well, let me think just a second. Yes, I think it was more in the men's. There might have been selected areas in the ladies. But we did have some -- our more -- our DayTrip price point of shorts and capris last year were delivered late and also lost some during the spring season. So having that price point back in the store for this spring will be good.

But otherwise, I think the ladies, as I remember, the inventory was fairly on track. .

Okay, that's helpful. And while we're talking about ladies, just in terms of Pat's retirement, I presume everything in terms of the structure of the team is in place.

Did you bring new people in? Or was it just promoting from within?.

It's pretty much promoting from within. Kelli Molczyk is our -- also a VP of Ladies' Merchandise, and she was given that position almost 1.5 years ago and has been with us 19, 20 years. And we have Stacy that works with denim and accessories and categories, has been with us over 20 years.

And Melissa has been over 20 years in footwear and other categories. We feel we have a strong bench and that Pat helped develop a strong team as she takes her retirement. .

Wow, that's impressive. And then, I guess, also on denim, I mean, any -- we continue to hear chatter in the vendor community about denim coming back, resurging. Clearly, it's the biggest component for you guys. I was intrigued by the fact that you didn't really lose much on price point for the year.

What else are you seeing or hearing as we think about back-to-school?.

Well, we have added some brands that sell in the $60 to $70 price range as well as expanding some of our private label and to complement the brands that we continually use going forward. And the team is doing a little more fashion, some different looks, some higher rise, still a variety of fits, some curvy styles, variety of finishes.

So our denim business continues to be pretty good, and we think we'll do a good job with it going forward.

Ladies, do you have anything to add?.

This is Pat. Just to say -- kind of to echo what Dennis is saying, we have some opportunities in price points, fits, finishes that we just feel good about and the addition of some of the curvier fits that we think will address some of the guests in a variety of bottom openings and such.

So with -- denim is always a solid part of our business all the time. But when it's trending up and we have some things to work with and the creativity of team, it sure is a bonus. .

So it sounds like maybe you're optimistic that we're finally going to see that trending up?.

Well, we're always optimistic, but we'll have to just see how it plays out. .

[Operator Instructions] Next in queue is Paul Alexander with BB&T Capital Markets. .

Just stepping back and looking at the overall trend of the business. The last 2 quarters, comp trend's really -- it worsened significantly versus last 1.5 years before that. And February comps were still pretty challenged.

So how should we be thinking about the big picture? What are the biggest challenges? Is it macro, certain regions? Is it fashion trends, cycle related? Is it maybe certain categories? Is it anything about competition? Just big picture, kind of where are we headed? And are there any milestone moments that we should be looking for to kind of turn the trend around?.

Thank you, Paul. The -- my point of view would be that it would be more macro. There's a lot of different parts of our country that the economy is a little challenging that the teams are working through.

I think our stores, from the response of our teammates and from what we hear with other vendors, that we look unique and special and have a good presentation going. So I think our teams are doing a good job, and our service in our stores is excellent.

So I think it's just the challenge of getting the excitement back for guests to come into the stores and feel good about their pocketbooks as well as we are reviewing our promotions for back-to-school, how we can create a little more excitement there from what we've done in the past.

I know the teams are putting in more of a variety of price points, hitting some of the lower price points again for some of the guests as well as our stores are testing out what we call Buckle Select, which is where in-store stylists will be in touch with guests and helping them find outfits and getting ready for occasions for the guests that are just too busy to get into the store and shop as well as they're still doing quite a bit of appointments with our guests' Get Fitted situations.

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At this time, there's no additional questions in queue. Please continue. .

With no additional questions, again, we would like to thank everyone for joining the call today, and have a great weekend. This concludes the call. .

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