Is The Buckle tightening for shareholders’ profits?
The Buckle, Inc. (NYSE:BKE) also operates a retail offering of casual apparel along with footwear and clothing accessories. This retailer saw its net sales increase by almost 7% in the 2012 fourth quarter, led primarily by sales of its men’s clothing category. In comparing the company’s first quarter 2013 sales figures with those of 2012, however, the Buckle appeared somewhat flat.
In the fourth quarter of 2012, Buckle saw an increase in its women’s wear lines and footwear sales in the high-single digits compared to last year’s quarterly results. And, although not considered impressive by many analysts, these figures did beat sell-side projections.
Analysts expect this company’s share price to drop throughout the next year by roughly 12%, and investors would be well advised to take a wait-and-see attitude with this particular stock – especially since its dividend yield of only 1.7% is also somewhat weak.
Nevertheless, The Buckle, Inc. (NYSE:BKE) continues to produce very healthy cash flow that can support not only its current dividend but can allow the company to initiate a stock buyback as well. Buckle generated more than $220 million in cash flow last year alone. Keeping this in mind, any significant weakness in the share price will definitely be a good entry point; Or, if you are a long-term investor, you can always sell a covered call on your stock holdings!
How to revive?
As the The Gap Inc. (NYSE:GPS)’s current strategy seems to indicate, all three of these retailers will likely need to beef up their online presence in unique ways – especially if they want to continue competing with large online retailers such as Amazon.com, Inc. (NASDAQ:AMZN) that offer convenience and low prices to boot.
Another option is to capitalize on each of their individual specialty niches in order to build even deeper brand loyalty, and likewise continued sales, with their current customers. This will mean continuing to differentiate their brands, as consumers without such brand loyalty are much more likely to obtain clothing and other apparel elsewhere – especially if such consumers are more price conscious than brand conscious.
The bottom line
Going forward, investors in the retail apparel sector would certainly be wise to determine both the marketing and the online sales plans of a particular company prior to diving into a substantial share purchase.
And, here again, when looking for investment in retailers that have substantial ups and downs due to their seasonal nature, it is best to check on both the short-term and long-term outlooks for such companies – as this could make a very big difference in the immediate performance of the stock price.
The article Are Clothing Retailers Still a Worthy Bet? originally appeared on Fool.com and is written by Nauman Aly.
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