The Buckle (NYSE:BKE) has specialized in selling fashionable apparel, especially private label denim, to young men and women in smaller markets across the United States. This focus has led to quite a long stretch of sales and profit growth, and the current fiscal year was no exception. Strangely though, this success has largely gone unnoticed by investors. 

Fourth-Quarter Highlights
Sales improved 9.2% to $274.4 from new store openings and a comparable sales increase of 3.8%. Online sales grew 35.6% to $18 million. The company cited particular strength in the sales of men and women’s denim and footwear, with sweaters and accessories particularly strong in the women’s segment. Women’s sales accounted for 59% of total sales for the quarter where the average price point for jeans grew to $93.10. 

Profitability improved as management stated it had to rely less on merchandise markdowns and saw strong sales of new products, such as the Buckle’s popular private label line of denim jeans and related apparel. Selling expenses also fell as a percent of sales, as did general and administrative costs. The end result was a 22.7% increase in net income to $42.1 million, or 90 cents per diluted share.

Full-Year Recap
Sales for the full year grew 13.4% to $898.3 million as comps improved 7.8%. Sales growth was driven by similar dynamics as during the fourth quarter, with the women’s segment accounting for 60.5% of total sales. High profit private label merchandise accounted for 29% of sales and is a primary reason that net margins came in at 14.2%. Full year net income grew 21.9% to $127.3 million, or $2.73 per diluted share.

Outline
The Buckle doesn’t provide forward guidance, but analysts currently project sales for the coming year to grow 6.8% to $959.5 million and earnings of $2.80 per share, which would represent only modest growth from the just completed period.

Bottom Line
The Buckle ended the year in a strong financial condition, with $135.3 million ($2.90 per diluted share) in cash on the balance sheet and no long-term debt. The Buckle, along with Aeropostale (NYSE:ARO), American Eagle Outfitters (NYSE:AEO) and Urban Outfitters (Nasdaq:URBN), has been one of the strongest teen retailers for a number of years now. The Buckle’s advantage has been in high-priced, private label denim, which rivals such as Gap (NYSE:GPS) has been slow to catch on to. At a trailing P/E ratio under 14, the stock is very reasonably valued and has sufficient cushion should comparable sales start to struggle going forward. (To learn more, see Analyzing Retail Stocks.)

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