Today is fashion Friday and I was struggling to come up with a stock pick when I looked at the same store sales numbers for April. There was blood in the streets, carnage everywhere. Red numbers pretty much across the board, especially among fashion retailers. Then I noticed the number for a company I’ve liked for some time but have never thought about owning, until now. I’m referring to Buckle (BKE), the Kearney Nebraska retailer of medium to better-priced men and women’s clothing. They managed to eke out a 1.8 percent gain in April when everyone else was tanking, translating into 6.4 percent same store sales growth year to date. That’s awesome.

Some things I like about Buckle:

• Royce Funds own 17.2 percent of the shares. This fund family has a 14.5 percent annual return over five years. That's exceptional. If they believe in the company, I'm sold.
  

• Chairman Dan Hirschfeld, son of the founder, owns 46 percent of the outstanding shares and CEO Dennis Nelson, nine percent. Management has some skin in the game. That's always a plus.
  

• Company has zero debt. Think margin of safety.
  

• Buckle will open 20 stores in 2007 at a cost of $800,000 per store including seven remodels of existing stores. The average store generates $1.5 million or $302 per square foot. You do the math.

• The average sales per square foot grew 2.5 percent annually over the last four years.

• Earnings grew 17.5 percent each year in the same period.
  

• Same Store Sales have increased for eight straight months, averaging 5.4 percent. Given same store sales for 2006 were flat, this is a marked improvement.

• The average dollars per transaction were up an average 4.3 percent for the first three months of 2007; the units per transaction were up an average of 1 percent. Customers are clearly spending more.

• The average transaction is $79 and the average price point $40.50.
  

• They promote store managers from within. The average district manager has been with the company 20 years.

• In 2006, the company bought back $16,000,000 in company stock.

• They pay one of the highest dividends in apparel retailing with the current yield around 2.2 percent.

Buckle is a company that makes money year in, year out no matter the economic conditions. They’re not top of mind compared to Abercrombie (ANF) or American Eagle (AEO), their bigger competitors but they do get the job done. Senior management, all experienced retailers, is committed to growing the business. Despite comparable sales that were flat in 2006, they still produced net margins of 10.5 percent, one of the highest in company history. At the end of last year, they introduced a redesigned web site with over 6,000 sku's for clients to choose. In coming years, this revenue stream is sure to become a bigger part of their overall business.

As I pointed out at the beginning of my post, the company is firing on all cylinders in 2007 and I don’t see them stumbling any time soon. I love the way they operate their business; sure, others squeeze more out of their square footage but at the end of the day, Buckle understands retail.

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