It's as though nothing can stop The Buckle (NYSE: BKE). The retailer has been on a tear throughout the recession, posting double-digit revenue and comps while rivals faced plummeting sales.

IN PICTURES: 20 Tools For Building Up Your Portfolio

Resisting The Recession
Once again, The Buckle's third-quarter results proved to be an anomaly in the retail sector. Sales grew 9.8% to $231.2 million and same-store sales rose 4.3%. The bottom line improved 14.4% to 71 cents per share. And most importantly, the gross margin widened 70 basis points over last year, indicating no promotional activity was used to generate growth.

I want to highlight The Buckle's margin expansion given that most peers are experiencing margin erosion. The Buckle utilizes a distribution system that delivers inventory daily. Not only does this keep the merchandise layout fresh, but it allows variation in the merchandise mix at each specific location.

The Buckle essentially tailors its inventory to reflect the buying patterns at various locations. While this results in incremental distribution costs, the added expenses are offset by the lack of markdowns necessary and the ability to appropriately manage inventory. Inventory for the quarter was just about flat compared to last year.

All In The Family
I think the family roots still lingering in The Buckle's board room have played a role in the retailer's success. The founder's son is still chairman, and 44% of the company is owned by insiders. The seasoned management team consists of executives who all have more than 20 years of experience with the company.

The strong relationships and loyalty built within the corporation, along with a deep understanding of the business, have resulted in steady and ongoing growth with mitigated risk. Rather than chasing after quick profits in high profile yet costly locations, The Buckle has focused its expansion in more regional locations. It is most popular in Midwestern states.

Robust And Unique Business Model
I also like that The Buckle's business model is built on a dual merchandising strategy, combining lower price point in-house items with high price point brand name items. This allows shoppers to pair cheaper private-label merchandise with their favorite brand name clothes - a key factor in the company's superior margins.

The Buckle operates a phenomenal business model and is a retailer we'll see standing tall regardless of how long this recession lingers. With superior customer service and an ever-changing merchandise layout, the stores give shoppers a reason to pay full price for their products. And that's something not many other retailers have been able to figure out.

Bottom Line
The debt-free retailer is selling at just 11 times next year's earnings - a bargain given that ailing Abercrombie & Fitch (NYSE: ANF) is selling at 22 times next year's earnings. And competitors Zumiez (Nasdaq: ZUMZ) and Urban Outfitters (Nasdaq: URBN) are selling at 26 and 21 times forward earnings, respectively.

While The Buckle is not a growth play, the company has a proven track record of solid, steady growth over the years and makes a great core retail holding. (To learn more, see Analyzing Retail Stocks.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  2. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  3. Economics

    A Look at Greece’s Messy Fiscal Policy

    Investigate the muddy fiscal policy, tax problems, and inability to institute austerity that created the Greek crises in 2010 and 2015.
  4. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  5. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
  6. Professionals

    Tips for Helping Clients Though Market Corrections

    When the stock market sees a steep drop, clients are bound to get anxious. Here are some tips for talking them off the ledge.
  7. Stock Analysis

    The Safest Stocks You Can Invest in Right Now

    These stocks are likely to hold up better than others in a bear market, but there's a twist.
  8. Investing Basics

    5 Reasons to Expect Lower Stock Returns

    Lower stock returns are likely here to stay for some time. Here are five reasons why.
  9. Investing Basics

    What to Cut From Your Portfolio Right Now

    Owning stocks may shortly become too scary for your portfolio. Here's why, and here are some alternatives.
  10. Personal Finance

    Careers: Equity Research Vs. Investment Banking

    Equity research is sometimes viewed as the unglamorous, lower-paid cousin to investment banking. In this article, we compare the two careers.
RELATED TERMS
  1. The New Deal

    A series of domestic programs designed to help the United States ...
  2. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  3. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  4. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  5. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
  6. BHD (Berhad)

    The suffix Bhd. is an abbreviation of a Malay word "berhad," ...
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  6. How does the risk of investing in the industrial sector compare to the broader market?

    There is increased risk when investing in the industrial sector compared to the broader market due to high debt loads and ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!