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Item 8. Financial Statements and Supplementary Data

2024-04-03 compared with 2023-03-29 · 47 added, 49 removed, 477 unchanged (17% of the section changed)

4 unchanged sentences

We have audited the accompanying consolidated balance sheets of The Buckle, Inc.

and subsidiary (the "Company") as of January 28, 2023 and January 29, 2022, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows, for each of the three fiscal years in the period ended January 28, 2023, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 28, 2023 and January 29 2022, and the results of its operations and its cash flows for each of the three years in the period ended January 28, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 28, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 29, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

and subsidiary (the "Company") as of February 3, 2024 and January 28, 2023, the related consolidated statements of income, stockholders' equity, and cash flows, for each of the three fiscal years in the period ended February 3, 2024, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 3, 2024 and January 28, 2023, and the results of its operations and its cash flows for each of the three years in the period ended February 3, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of February 3, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 3, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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Changes in assumptions applied to the current inventory levels within each different markdown level and the overall aging of inventory could have a significant impact on the valuation of inventory.

The adjustment to inventory for markdowns and obsolescence was $6.3 million as of January 28, 2023.

The adjustment to inventory for markdowns and obsolescence was $9.1 million as of February 3, 2024.

Given the judgments made by management to estimate the adjustment to inventory for markdowns and obsolescence, auditing the adjustment to inventory for markdowns and obsolescence involved a higher degree of auditor judgment and the involvement of more senior members of the engagement team in executing, supervising, and reviewing the results of the procedures.

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Omaha, Nebraska

March 29, 2023

April 3, 2024

We have served as the Company’s auditor since 1990.

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(Amounts in Thousands Except Share and Per Share Amounts)

ASSETS January 28,

ASSETS February 3,

2024 January 28,

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Common stock, authorized 100,000,000 shares of $ 0.01 par value;

50,092,616 and 49,728,651 shares issued and outstanding at January 28, 2023 and January 29, 2022, respectively

50,445,186 and 50,092,616 shares issued and outstanding at February 3, 2024 and January 28, 2023, respectively

Additional paid-in capital 192,686 178,964

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Earnings Total

BALANCE, February 1, 2020 49,205,681 $ 492 $ 152,258 $ 236,398 $ 389,148

BALANCE, January 30, 2021 49,407,731 $ 494 $ 158,058 $ 238,077 $ 396,629

Net income — — — 254,820 254,820

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Amortization of non-vested stock grants, net of forfeitures — — 9,273 — 9,273

Common stock purchased and retired ( 25,000 ) — ( 372 ) — ( 372 )

BALANCE, January 29, 2022 49,728,651 $ 497 $ 167,328 $ 145,099 $ 312,924

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Amortization of non-vested stock grants, net of forfeitures — — 13,725 — 13,725

BALANCE, January 28, 2023 50,092,616 $ 501 $ 178,964 $ 196,849 $ 376,314

BALANCE, February 3, 2024 50,445,186 $ 504 $ 192,686 $ 220,030 $ 413,220

See notes to consolidated financial statements.

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CASH FLOWS FROM FINANCING ACTIVITIES:

Purchases of common stock — — ( 372 )

Payment of dividends ( 196,738 ) ( 202,876 ) ( 347,798 )

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All references in these consolidated financial statements to fiscal years are to the calendar year in which the fiscal year begins.

Fiscal 2022 represents the 52-week period ended January 28, 2023, fiscal 2021 represents the 52-week period ended January 29, 2022, and fiscal 2020 represents the 52-week period ended January 30, 2021.

Fiscal 2023 represents the 53-week period ended February 3, 2024, fiscal 2022 represents the 52-week period ended January 28, 2023, and fiscal 2021 represents the 52-week period ended January 29, 2022.

Nature of Operations - The Company is a retailer of medium to better-priced casual apparel, footwear, and accessories for fashion-conscious young men and women.

The Company operates its business as one reportable segment and sells its merchandise through its retail stores and e-Commerce platform.

The Company operated 441 stores located in 42 states throughout the United States as of January 28, 2023.

The Company operated 444 stores located in 42 states throughout the United States as of February 3, 2024.

During fiscal 2023, the Company opened 9 new stores, substantially remodeled 18 stores, and closed 6 stores.

During fiscal 2021, the Company opened 1 new store, substantially remodeled 15 stores, and closed 4 stores.

During fiscal 2022, the Company opened 4 new stores, substantially remodeled 23 stores, and closed 3 stores.

During fiscal 2021, the Company opened 1 new store, substantially remodeled 15 stores, and closed 4 stores.

Principles of Consolidation - The consolidated financial statements include the accounts of The Buckle, Inc.

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A current liability for unredeemed gift cards and certificates is recorded at the time the card or certificate is purchased.

The liability recorded for unredeemed gift certificates and gift cards was $ 16,777 and $ 16,470 as of January 28, 2023 and January 29, 2022, respectively.

The liability recorded for unredeemed gift certificates and gift cards was $ 16,667 and $ 16,777 as of February 3, 2024 and January 28, 2023, respectively.

Gift card and gift certificate breakage is recognized as revenue in proportion to the redemption pattern of customers by applying an estimated breakage rate.

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The Company also recognizes a return asset and a corresponding adjustment to cost of sales for the Company's right to recover returned merchandise, which is measured at the estimated carrying value, less any expected recovery costs.

The accrued liability for reserve for sales returns was $ 2,979 as of January 28, 2023 and $ 3,013 as of January 29, 2022.

The accrued liability for reserve for sales returns was $ 2,551 as of February 3, 2024 and $ 2,979 as of January 28, 2023.

The Company's Buckle Rewards program allows participating guests to earn points for every qualifying purchase, which (after achievement of certain point thresholds) are redeemable as a discount off a future purchase.

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A liability has been recorded for future rewards based on the Company's estimate of how many earned points will turn into rewards and ultimately be redeemed prior to expiration.

As of January 28, 2023 and January 29, 2022, $ 10,137 and $ 10,640 was included in "accrued store operating expenses" as a liability for estimated future rewards.

As of February 3, 2024 and January 28, 2023, $ 10,355 and $ 10,137 was included in accrued store operating expenses as a liability for estimated future rewards.

Effective July 1, 2022, the Company entered into a new five year agreement (the "Agreement") with the Bank, to continue providing guests with PLCC services.

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Management also reviews the levels of inventory in each markdown group and the overall aging of the inventory versus the estimated future demand for such product and the current market conditions.

The adjustment to inventory for markdowns and/or obsolescence reduced the Company’s inventory valuation by $ 6,295 and $ 5,604 as of January 28, 2023 and January 29, 2022, respectively.

The adjustment to inventory for markdowns and/or obsolescence reduced the Company’s inventory valuation by $ 9,113 and $ 6,295 as of February 3, 2024 and January 28, 2023, respectively.

Property and Equipment - Property and equipment are stated on the basis of historical cost.

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The Company’s plan covers eligible employees, and management makes estimates at period end to record a reserve for unpaid claims based upon historical claims information.

The accrued liability as a reserve for unpaid health care claims was $ 792 and $ 850 as of January 28, 2023 and January 29, 2022, respectively.

The accrued liability as a reserve for unpaid health care claims was $ 930 and $ 792 as of February 3, 2024 and January 28, 2023, respectively.

Leases - The Company's lease portfolio is primarily comprised of leases for retail store locations.

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Additionally, the Company elected as an accounting policy to exclude short-term leases from the recognition requirements.

Consistent with guidance in the FASB Staff Q&A regarding lease concessions related to the effects of the COVID-19 pandemic, the Company made the election to treat all lease concessions as though the enforceable rights and obligations existed in each contract and, therefore, did not apply the lease modification guidance in ASC 842.

Other Income - The Company’s other income is derived primarily from interest and dividends received on cash and investments.

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Actual results could differ from these estimates.

Recently Issued Accounting Pronouncements - The Company has considered all recent accounting pronouncements and concluded that there are no recent accounting pronouncements that may have a material impact on the Company's consolidated financial statements, based on current information.

Recently Issued Accounting Pronouncements - In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires enhanced disclosures around significant segment expenses.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024.

The ASU requires public entities to adopt this new guidance on a retrospective basis.

The Company is currently evaluating the effect that the new ASU will have on its disclosures.

In December 2023, the FASB issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires business entities to expand their annual disclosures of income taxes paid and the effective rate reconciliation.

The ASU is effective for fiscal years beginning after December 15, 2024.

The Company plans to adopt ASU 2023-09 effective for fiscal 2025.

Supplemental Cash Flow Information - The Company had non-cash investing activities during fiscal years 2023, 2022, and 2021 of $( 1,031 ), $( 1,098 ), and $( 637 ), respectively.

The non-cash investing activity relates to the change in the balance of unpaid purchases of property, plant, and equipment included in accounts payable as of the end of the year.

The liability for unpaid purchases of property, plant, and equipment included in accounts payable was $ 2,454 , $ 1,356 , and $ 719 as of January 28, 2023, January 29, 2022, and January 30, 2021, respectively.

The liability for unpaid purchases of property, plant, and equipment included in accounts payable was $ 3,485 , $ 2,454 , and $ 1,356 as of February 3, 2024, January 28, 2023, and January 29, 2022, respectively.

Amounts reported as unpaid purchases are recorded as cash outflows from investing activities for purchases of property, plant, and equipment in the consolidated statement of cash flows in the period they are paid.

Additional cash flow information for the Company includes cash paid for income taxes during fiscal years 2023, 2022, and 2021 of $ 60,598 , $ 81,135 , and $ 98,522 , respectively.

The following is a summary of investments as of January 28, 2023:

The following is a summary of investments as of February 3, 2024:

Par Value Gross

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Mutual funds $ 20,871 $ — $ ( 247 ) $ — $ 20,624

The amortized cost and fair value of debt securities by contractual maturity as of January 28, 2023 is as follows:

The amortized cost and fair value of debt securities by contractual maturity as of February 3, 2024 is as follows:

Held-to-Maturity Securities

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Total $ 22,210 $ 22,222

As of January 28, 2023 and January 29, 2022, all of the Company's investments in held-to-maturity securities are classified in short-term investments.

As of February 3, 2024 and January 28, 2023, all of the Company's investments in held-to-maturity securities are classified in short-term investments.

Trading securities are held in a Rabbi Trust, intended to fund the Company’s deferred compensation plan, and are classified in long-term investments.

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• Level 3 – Unobservable inputs that are not corroborated by market data and are projections, estimates, or interpretations that are supported by little or no market activity and are significant to the fair value of the assets.

As of January 28, 2023 and January 29, 2022, the Company held certain assets that are required to be measured at fair value on a recurring basis including its investments in trading securities.

As of February 3, 2024 and January 28, 2023, the Company held certain assets that are required to be measured at fair value on a recurring basis including its investments in trading securities.

The Company’s financial assets measured at fair value on a recurring basis are as follows:

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Inputs Significant

January 28, 2023 (Level 1) (Level 2) (Level 3) Total

February 3, 2024 (Level 1) (Level 2) (Level 3) Total

Trading securities (including mutual funds) $ 24,993 $ — $ — $ 24,993

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The fair values of these debt securities are based on quoted market prices and yields for the same or similar securities, which the Company determined to be Level 2 inputs.

As of January 28, 2023, the fair value of held-to-maturity securities was $ 20,992 compared to the carrying amount of $ 20,997 .

As of February 3, 2024, the fair value of held-to-maturity securities was $ 22,222 compared to the carrying amount of $ 22,210 .

As of January 28, 2023, the fair value of held-to-maturity securities was $ 20,992 compared to the carrying amount of $ 20,997 .

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The Company uses its incremental borrowing rate as the discount rate to determine the present value of lease payments.

As of January 28, 2023, the weighted-average remaining lease term was 4.9 years and the weighted-average discount rate was 4.7 %.

As of February 3, 2024, the weighted-average remaining lease term was 5.4 years and the weighted-average discount rate was 5.7 %.

The table below reconciles undiscounted future lease payments (e.g.

fixed payments for rent, insurance, real estate taxes, and common area maintenance) for each of the next five fiscal years and the total of the remaining years to the operating lease liabilities recorded on the consolidated balance sheet as of January 28, 2023:

Fiscal Year Operating Leases (a)

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The Company has, from time to time, borrowed against these lines of credit.

There were no bank borrowings as of January 28, 2023 or January 29, 2022.

The Company had outstanding letters of credit totaling $ 3,277 and $ 2,735 as of January 28, 2023 and January 29, 2022, respectively.

There were no bank borrowings as of February 3, 2024 or January 28, 2023.

The Company had outstanding letters of credit totaling $ 3,176 and $ 3,277 as of February 3, 2024 and January 28, 2023, respectively.

The provision for income taxes consists of:

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Accrued compensation 6,318 5,197

Deferred payroll taxes (a)

Accrued store operating costs 2,880 2,886

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Net deferred income tax asset $ 9,441 $ 8,352

(a) Relates to the liability for deferred payment of the employer's portion of Social Security taxes, as provided for under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted on March 27, 2020.

As of January 28, 2023 and January 29, 2022, respectively, the net deferred income tax assets of $ 8,352 and $ 9,494 are classified in "other assets." There were no unrecognized tax benefits recorded in the Company’s consolidated financial statements as of January 28, 2023 or January 29, 2022.

As of February 3, 2024 and January 28, 2023, respectively, the net deferred income tax assets of $ 9,441 and $ 8,352 are classified in other assets.

There were no unrecognized tax benefits recorded in the Company’s consolidated financial statements as of February 3, 2024 or January 28, 2023.

Fiscal years 2020 through 2023 remain subject to potential federal examination.

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RELATED PARTY TRANSACTIONS

Included in "other assets" is a note receivable of $ 1,425 as of January 28, 2023 and $ 1,395 as of January 29, 2022, respectively, from a life insurance trust fund controlled by the Company’s Chairman.

Included in other assets is a note receivable of $ 1,455 as of February 3, 2024 and $ 1,425 as of January 28, 2023, respectively, from a life insurance trust fund controlled by the Company’s Chairman.

The note was created over three years , beginning in July 1994, when the Company paid life insurance premiums of $ 200 each year for the Chairman on a personal policy.

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The Company also has a restricted stock plan that allows for the granting of non-vested shares of common stock to employees and executives and a restricted stock plan that allows for the granting of non-vested shares of common stock to non-employee directors.

As of January 28, 2023, 646,918 shares were available for grant under the Company’s various restricted stock plans, of which 584,107 shares were available for grant to executive officers.

As of February 3, 2024, 3,042,561 shares were available for grant under the Company’s various restricted stock plans, of which 3,000,000 shares were available for grant to executive officers.

The 3,000,000 shares available for grant to employees and executive officers represents the entirety of the shares authorized for issuance under the Company's 2023 Employee Restricted Stock Plan, which was approved by stockholders at the Company's 2023 annual meeting to replace the Company's 2005 Restricted Stock Plan, as the Company has not yet granted any shares under the new plan.

Compensation expense was recognized during fiscal 2023, 2022, and 2021 for equity-based grants, based on the grant date fair value of the awards.

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Shares granted under the 2008 Director Plan vest 25 % on the date of grant and then in equal portions on each of the first three anniversaries of the date of grant.

A summary of the Company’s stock-based compensation activity related to grants of non-vested shares of common stock for the fiscal year ended January 28, 2023 is as follows:

A summary of the Company’s stock-based compensation activity related to grants of non-vested shares of common stock for the fiscal year ended February 3, 2024 is as follows:

Shares Weighted Average

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Non-Vested - end of year 654,256 $ 40.60

As of January 28, 2023, there was $ 10,237 of unrecognized compensation expense related to grants of non-vested shares.

As of February 3, 2024, there was $ 11,707 of unrecognized compensation expense related to grants of non-vested shares.

It is expected that this expense will be recognized over a weighted average period of approximately 2.0 years.

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Fiscal Years Ended

January 28, 2023 January 29, 2022 January 30, 2021

February 3, 2024 January 28, 2023 January 29, 2022

Net Income Weighted

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The Company sells its merchandise through its retail stores and e-Commerce platform.

The Company operated 441 stores located in 42 states throughout the United States as of January 28, 2023.

Revenue for fiscal 2020 was significantly affected by the impacts of COVID-19.

The Company temporarily closed all of its brick and mortar stores beginning March 18, 2020 to protect the health and welfare of its guests, teammates, and communities.

The Company began the process of reopening certain stores the week of April 26, 2020, following all appropriate federal, state, and local reopening guidelines.

The store closings had a significant impact on the Company's revenue during the first half of fiscal 2020, with total revenue down $ 73,692 or 18.2 % compared to the first half of fiscal 2019.

With a strong second half of the year, however, total sales for the 52-week period ended January 30, 2021 were up $ 1,024 or 0.1 % compared to the 52-week period ended February 1, 2020.

The Company's online store remained open without interruption and experienced significant growth.

For the full fiscal year ended January 30, 2021, the Company's online store grew by $ 79,759 or 72.0 %.

The Company operated 444 stores located in 42 states throughout the United States as of February 3, 2024.

During fiscal years 2023, 2022, and 2021, online revenues accounted for 16.4 %, 17.1 %, and 17.1 %, respectively, of the Company's net sales.

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Fiscal Years Ended

Merchandise Group January 28,

Merchandise Group February 3,

2024 January 28,

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data