Good morning, and thank you for standing by. Welcome to Buckle's Third Quarter Earnings Release Webcast. [Operator Instructions].

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; Brady Fritz, Senior Vice President, General Counsel and Corporate Security. .

As a review, operating results in the third quarter, which ended October 28, 2023, 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, as 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 changes make it clear that any projected results expressed or implied therein will not be realized. .

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

As a reminder, this webcast is being recorded. .

And I'd now like to turn the conference over to your host, Tom Heacock. .

Good morning, and thanks for being with us this morning. .

Our November 17, 2023 press release reported a net income for the 13-week third quarter, which ended October 28, 2023, was $51.8 million or $1.04 per share on a diluted basis, which compares to net income of $61.4 million or $1.24 per share on a diluted basis for the prior year 13-week third quarter, which ended October 29, 2022.

Year-to-date, net income for the 39-week period ended October 28, 2023, was $140.3 million or $2.81 per share on a diluted basis compared to net income of $166.8 million or $3.37 per share on a diluted basis for the prior year 39-week period ended October 29, 2022. .

Net sales for the 13-week third quarter decreased 8.7% to $303.5 million compared to net sales of $332.3 million for the prior year 13-week third quarter. Comparable store sales for the quarter decreased 9.2% in comparison to the same 13-week period in the prior year, and our online sales decreased 16.2% to $46.1 million.

Year-to-date net sales decreased 6.9% to $878.7 million for the 39-week fiscal period ended October 28, '23 compared to net sales of $943.4 million for the prior year 39-week fiscal period, which ended October 29, 2022.

Comparable store sales for the year-to-date period were down 7.3% in comparison to the same 39-week period in the prior year and our online sales decreased 9.4% to $141 million. .

For the quarter, UPTs decreased approximately 0.5%, the average unit retail increased about 0.5% and the average transaction value increased slightly. Year-to-date, our UPTs were flat. The average unit retail increased approximately 0.5% and the average transaction value increased also about 0.5%. .

Gross margin for the quarter was 48.5%, down 130 basis points from 49.8% in the third quarter of 2022. The current quarter decline is the result of deleverage buying, distribution and occupancy expense as merchandise margins were flat for the quarter.

Year-to-date gross margin was 47.7%, down 140 basis points from 49.1% in the prior year, with the year-to-date decline being the result of 110 basis points of deleverage buying, distribution and occupancy expense along with a 30 basis point decline in merchandise margins. .

Selling, general and administrative expenses for the quarter were 27.4% of net sales compared to 25.9% for the third quarter of 2022, and year-to-date, SG&A was 27.8% of sales compared to 26% for the same period last year.

The third quarter increase was due to a 130 basis point increase in store labor-related expenses, a 30 basis point increase in G&A salaries, a 30 basis point increase in equity compensation expense and a 20 basis point increase in marketing spend.

These increases were partially offset by a 50 basis point decrease in incentive compensation accruals and a 10 basis point decrease in certain other SG&A expense categories. .

Our operating margin for the quarter was 21.1% compared to 23.9% for the third quarter of fiscal 2022, and for the year-to-date period, our operating margin was 19.9% compared to 23.1% for the same period last year.

Income tax expense as a percentage of pretax net income for both the current and prior year fiscal quarter was 24.5%, bringing third quarter net income to $51.8 million for 2023 compared to $61.4 million for 2022.

Income tax expense as a percentage of pretax net income for both the current and prior year year-to-date periods was also 24.5%, bringing year-to-date net income to $140.3 million for fiscal 2023, compared to $166.8 million for fiscal 2022. .

inventory of $152.3 million which was essentially flat with inventory levels at the same time a year ago and $357.6 million of total cash and investments. We ended the quarter with $124.1 million in fixed assets, net of accumulated depreciation. Our capital expenditures for the quarter were $10.1 million and depreciation expense was $5 million.

For the year-to-date period, capital expenditures were $28 million and depreciation expense was $14.9 million. .

$27 million for new store construction, store remodels and technology upgrades and $1 million for capital spending at the corporate headquarters and distribution center. .

During the quarter, we opened 3 new stores and completed 4 full store remodels, 2 of which were relocations into new outdoor shopping centers.

Additionally, we opened 2 new stores earlier this month in Park City, Utah, in Bristol, Tennessee and completed 1 additional full store remodel, which brings our year-to-date count to 7 new stores, 15 full remodels and 3 store closures.

For the remainder of the year, we anticipate opening 2 additional new stores and completing 4 more full remodeling projects. Buckle ended the quarter with 443 retail stores in 42 states compared with 441 stores in 42 states at the end of the third quarter last year. .

And now I'll turn it over to Adam Akerson, our Vice President of Finance. .

Thanks, and good morning..

Women's merchandise sales for the quarter were down about 10.5% against the prior year and represented approximately 45.5% of sales compared to 46.5% in the prior year.

Average denim price points increased from $78.55 in the third quarter of fiscal '22 to $79.50 in the third quarter of fiscal '23, while overall average women's price points increased about 1% from $48.80 to $49.35. .

On the men's side, merchandise sales for the quarter were down about 7% against the prior year representing approximately 54.5% of total sales compared to 53.5% in the prior year. Average denim price points increased from $87.25 in the third quarter of fiscal '22 to $87.95 in the third quarter of fiscal '23.

For the quarter, overall average men's price points increased approximately 2% from $51.80 to $52.85. .

On a combined basis, accessory sales for the quarter were down approximately 5% against the prior year, while footwear sales were down about 31%. These 2 categories accounted for approximately 10% and 6%, respectively, of third quarter net sales, which compares to 9.5% and 7.5% for each in the third quarter of fiscal '22.

For the quarter, average accessory price points were up approximately 2.5%, and average footwear price points were up about 8.5%. .

Denim accounted for approximately 43.5% of sales and tops accounted for approximately 30.5%, which compares to 42.5% and 30.5% for each in the third quarter of fiscal '22. .

For both our men's and women's business, better performing categories included our short sleeve and shorts business, in addition to lightweight long sleeves as the weather remained unseasonably warm across much of the country.

Given slower sell-throughs in some of our more traditional fall assortments, we were pleased with our ability to keep both inventory levels and merchandise margins flat year-over-year. .

Our Q3 comparisons also continue to be challenged with declines in our Hey Dude volume particularly on the men's side. Third quarter net sales for our men's business without Hey Dude were down 4.1%. .

We remain encouraged by the growth and performance in our youth business with the combined youth business growing approximately 2% for the quarter building on growth of 26.5% a year ago. We were also pleased with the continued growth in our private brands with private label representing 47% of sales versus 46% in the third quarter of fiscal '22. .

And with that, we welcome your questions. .

[Operator Instructions] Our first question is from Mauricio Serna. .

Great. Hopefully, you can hear me. This is Mauricio Serna from UBS. .

Just wanted to ask about -- I know that in Q4, I think you have an additional week in the quarter, so I just want to make sure like, I suppose there's a contribution to sales, but also wanted to understand if that tends to be historically good or bad for margins?.

And then on -- on the comp sales for this quarter, the 3Q, I noted that it deteriorated like every month was weaker than the previous one.

So to ask if there's anything that you would call out maybe from a fashion standpoint that is -- you think this is causing this weakening performance? And I would probably think that it's also probably relatively weaker compared to peers. .

Thank you. The fifth week, we would project sales of approximately $17 million for that week. And then for the comp sales, I mean, we're going against 2 of our best years ever. And I think as was mentioned in the script, the unseasonably warm weather probably had more of an effect on people getting out and just traffic in the stores.

As we travel our stores, the teams seem very excited and the product is looking very good. And -- so I think from that standpoint, our fashion, we are on target and just looking to build the traffic. .

Got it.

And sorry, I don't know if you -- can you tell us like if the additional week, is that good for the margins? Or how does that affect the company's margins?.

Yes, that is a better margin week just without being fully loaded for some of the costs that are -- I mean, not allocated for that week. So like a rent or different things are not fully allocated. So it is a better margin week than a typical week for January. .

Our next question is from [ John Bragg ]. .

It looks like we have a follow-up question from Mauricio Serna. .

Got it. Okay. Sorry. Yes, I just had a couple of follow-ups. I guess like if I look into the results, the selling expenses, I noted that it was down 5%.

Just wanted to understand like what were the main drivers behind that?.

And then I know that you talked about the inventory being in good shape. Maybe you could elaborate a little bit more on that, like how do you feel about that, especially as we come into the holiday season, like -- now like December is a particularly important month for you.

So how do you feel about inventory and I guess, the consumer at this point ahead of the holiday season?.

Mauricio, this is Tom. I'll take the first question and turn it over to Dennis for the second question. .

But really, the driver when you look at SG&A, a lot of those are people related, so compensation, benefits, costs, the decrease quarter-over-quarter for the selling expense really around accruals for incentive compensation, which is consistent with the trend that we've seen so far this year. .

On the inventory, we feel pretty good about that. I would say we have normal markdown cadence right now, and we'll just be offering a few specials over the Black Friday weekend. The youth and gals has had some nice growth. So we have some of the increase there. But our selection and our private brands in denim, we feel really good about.

And the fall/winter inventory, we are comfortable with as we go into holiday and expect to see a good season. .

[Operator Instructions] There are no further questions. I will now turn the call back over to Buckle for any closing remarks. .

We thank everyone for their participation today, and everybody, have a wonderful weekend and enjoy your week next week..