BKE 10-K & 10-Q changes, risk factors and insider trading

Dependence on Private Label Merchandise. Sales from private label merchandise accounted for approximately 47% of net sales forin both fiscal 20242025 and 46% for fiscal 2023.2024. The Company may increase or decrease the percentage of net sales from private label merchandise in the future. The Company’s private label products generally earn a higher margin than branded products. Thus, reductions in the private label mix would decrease the Company’s merchandise margins and, as a result, reduce net earnings.

Reliance on Consumer Spending Trends. The continued success of the Company depends, in part, upon numerous factors that impact the levels of individual disposable income and thus, consumer spending. Factors include the political environment, the threat or outbreak of war (including, the ongoing conflictconflicts in Ukraine and Iran), terrorism, civil unrest, economic conditions, employment, consumer debt, interest rates, inflation, and consumer confidence. A decline in consumer spending, for any reason, could have an adverse effect on the Company’s net sales, gross profits, and results from operations.

As of FebruaryJanuary 1,31, 2025,2026, the Company had working capital of $225.3$211.2 million, including $266.9$249.5 million of cash and cash equivalents and $23.8$24.7 million of short-term investments. The Company’s cash receipts are generated from retail sales and from investment income, and the Company's primary ongoing cash requirements are for inventory, payroll, occupancy costs, dividend payments, new store expansion, remodeling, and other capital expenditures. Historically, the Company’s primary source of working capital has been cash flow from operations. During fiscal 2025, 2024, 2023, and 20222023 the Company's cash flow from operations was $242.0$251.1 million, $254.6$242.0 million, and $242.4$254.6 million, respectively. Changes in operating cash flow between each of the three years is primarily a function of changes in net income, along with changes in inventory and accounts payable based on the timing and amount of merchandise purchased in each respective period. Operating cash flow is also impacted by the timing of certain other payments, including rent, income taxes, and annual incentive bonuses. The primary drivers of change in operating cash flow for fiscal 2024 compared to both fiscal 2023 and fiscal 2022 were the reductions in net income, partially offset by the impact of changes in inventory and accounts payable as the Company continued to manage and adjust to changing trends over the last several years.

During fiscal 2025,2026, the Company anticipates opening 714 new stores and completing approximately 18-2213 store remodels and/or relocations. Management estimates that total capital expenditures during fiscal 20252026 will be approximately $50.0$60.0 to $55.0$65.0 million, which includes primarily planned store projects and technology investments. The Company also plans to purchase a new corporate aircraft as a replacement for the plane that was sold during fiscal 2025. The Company believes that existing cash and cash equivalents, investments, and cash flow from operations will be sufficient to fund current and long-term anticipated capital expenditures and working capital requirements for the next several years. The Company has had a consistent record of generating positive cash flow each year and, as of FebruaryJanuary 1,31, 2025,2026, had total cash and investments of $318.8$306.6 million, including $28.1$32.4 million of long-term investments.

The Company has available an unsecured line of credit of $25.0 million with Wells Fargo Bank, N.A. for operating needs and letters of credit. The line of credit agreement has an expiration date of July 31, 20252028 and provides that $10.0 million of the $25.0 million line is available for letters of credit. Borrowings under the line of credit provide for interest to be paid at a rate based on SOFR. The Company has, from time to time, borrowed against these lines of credit. There were no borrowings during fiscal 2025, 2024, 2023, and 2022.2023. The Company had no bank borrowings as of FebruaryJanuary 1,31, 20252026 and was in compliance with the terms and conditions of the line of credit agreement.

Stock repurchase plan - The Company did not repurchase any shares of its common stock during fiscal 2024,2025, fiscal 2023,2024, or fiscal 2022.2023. As of FebruaryJanuary 1,31, 2025,2026, 410,655 shares remained available under the Company's current 1,000,000 share repurchase plan that was approved by the Board of Directors on November 20, 2008.

1.Revenue Recognition. Retail store sales are recorded, net of expected returns, upon the purchase of merchandise by customers. Online sales are recorded, net of expected returns, when the merchandise is tendered for delivery to the common carrier. Shipping fees charged to customers are included in revenue and shipping costs are included in selling expenses. The Company recognizes revenue from sales made under its layaway program upon delivery of the merchandise to the customer. Revenue is not recorded when gift cards and gift certificates are sold, but rather when a card or certificate is redeemed for merchandise. 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 $17.0$17.2 million and $16.7$17.0 million as of FebruaryJanuary 1,31, 20252026 and February 3,1, 2024,2025, 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. The estimated breakage rate is based on historical issuance and redemption patterns and is re-assessed by the Company on a regular basis. Sales tax collected from customers is excluded from revenue and is included as part of accrued store operating expenses on the Company's consolidated balance sheets.

The Company establishes a liability for estimated merchandise returns, based upon the historical average sales return percentage, that is recognized at the transaction value. 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. Customer returns could potentially exceed the historical average, thus reducing future net sales results and potentially reducing future net earnings. The accrued liability for reserve for sales returns was $2.6 million as of both FebruaryJanuary 1,31, 20252026 and February 3,1, 2024.2025.

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. In addition, through partnership with Bread Financial and Comenity Bank (collectively the "Bank"), the Company offers a private label credit card ("PLCC") program. Buckle Rewards members with a PLCC earn additional points under the Buckle Rewards program for every qualifying purchase on their PLCC card. Reported revenue is net of both current period reward redemptions and accruals for estimated future rewards earned under the Buckle Rewards program. 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 Februaryboth 1,January 202531, 2026 and February 3,1, 2024,2025, $10.3 million and $10.4 million was included in accrued store operating expenses as a liability for estimated future rewards.

2.Inventory. Inventory is valued at the lower of cost or net realizable value. Cost is determined using an average cost method that approximates the first-in, first-out (FIFO) method. Management makes adjustments to inventory and cost of goods sold, based upon estimates, to account for merchandise obsolescence and markdowns that could affect net realizable value, based on assumptions using calculations applied to current inventory levels within each different markdown level. 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. Such judgments could vary significantly from actual results, either favorably or unfavorably, due to fluctuations in future economic conditions, industry trends, consumer demand, and the competitive retail environment. Such changes in market conditions could negatively impact the sale of markdown inventory, causing further markdowns or inventory obsolescence, resulting in increased cost of goods sold from write-offs and reducing the Company’s net earnings. The adjustment to inventory for markdowns and/or obsolescence was $8.6 million as of January 31, 2026 and $9.2 million as of February 1, 2025 and $9.1 million as of February 3, 2024.2025.

The following table identifies the material obligations and commitments as of FebruaryJanuary 1,31, 20252026:

The Company has available an unsecured line of credit of $25.0 million, which is excluded from the preceding table. The line of credit agreement has an expiration date of July 31, 20252028 and provides that $10.0 million of the $25.0 million line of credit is available for letters of credit. Certain merchandise purchase orders require that the Company open letters of credit. When the Company takes possession of the merchandise, it releases payment on the letters of credit. The amounts of outstanding letters of credit reported reflect the open letters of credit on merchandise ordered, but not yet received or funded. The Company believes it has sufficient credit available to open letters of credit for merchandise purchases. There were no bank borrowings during fiscal 2025, 2024, 2023, and 2022.2023. The Company had outstanding letters of credit totaling $2.2$1.7 million and $3.2$2.2 million as of FebruaryJanuary 1,31, 20252026 and February 3,1, 2024,2025, respectively. The Company has no other off-balance sheet arrangements.

Included in other assets is a note receivable of $1.5 million as of both FebruaryJanuary 1,31, 20252026 and February 3,1, 2024,2025, 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 $0.2 million each year for the Chairman on a personal policy. The note accrues interest at 5% of the principal balance per year and is to be paid from the life insurance proceeds. The note is secured by a life insurance policy on the Chairman.

Net sales increased from $272.1$305.7 million in the firstsecond quarter of fiscal 2025 to $288.7$319.8 million in the firstsecond quarter of fiscal 2026, a 6.1%4.6% increase. Comparable store net sales for the thirteen week quarter ended MayAugust 2,1, 2026 increased 5.1%2.1% from comparable store net sales for the prior year thirteen week period ended MayAugust 3,2, 2025. Total sales growth for the period was the result of a 2.6%1.0% increase in the number of transactions and a 4.3% increase in the average unit retail, partially offset by a 0.9%0.7% reduction in the average number of units sold per transaction. Online sales for the quarter increased 2.8%2.3% to $47.7$44.6 million for the thirteen week period ended MayAugust 2,1, 2026, compared to $46.4$43.6 million for the thirteen week period ended MayAugust 3,2, 2025.

The Company's average retail price per piece of merchandise sold increased $2.17,$2.04, or 4.3%, during the firstsecond quarter of fiscal 2026 compared to the firstsecond quarter of fiscal 2025. This $2.17$2.04 increase was primarily attributable to the following changes (with their corresponding effect on the overall average price per piece): a 3.8% increase in average denim price points ($0.83$0.66), a 5.2%4.8% increase in average knit shirt price points ($0.55$0.56), a 7.4% increase in average shorts price points ($0.33), a 5.2% increase in average accessories price points ($0.28), a 9.0%9.8% increase in average footwear price points ($0.22), a 5.5% increase in average shorts price points ($0.20), and increased average price points across several other merchandise categories ($0.26$0.20); which were partially offset by a shift in the merchandise mix (-$0.17-$0.21). These changes are primarily a reflection of merchandise shifts in terms of brands and product styles, fabrics, details, and finishes.

Gross profit after buying, distribution, and occupancy expenses was $133.5$153.0 million in the firstsecond quarter of fiscal 2026, compared to $127.0$145.0 million in the firstsecond quarter of fiscal 2025. As a percentage of net sales, gross profit was 46.2%47.8% in the firstsecond quarter of fiscal 2026, compared to 46.7%47.4% in the firstsecond quarter of fiscal 2025. The current quarter gross margin decreaseincrease was thedriven resultby ofan increasedimprovement buying,in distribution,merchandise and occupancy expensesmargins (0.40%,1.10%, as a percentage of net sales), which benefited from tariff refunds received during the quarter (0.65%, as a percentage of net sales), partially offset by an increase in buying, distribution, and aoccupancy reduction in merchandise marginsexpenses (0.10%,0.70%, as a percentage of net sales).

Selling, general, and administrative expenses were 25.6%30.4% of net sales for the firstsecond quarter of fiscal 2026, compared to 30.7%29.0% for the firstsecond quarter of fiscal 2025. The decreaseincrease was due to aincreased 660 basis point impact from the recognition of a $19.1 million interchange fee litigation settlement during the first quarter of 2026, as disclosedinvestment in ourcertain 2025marketing Formactivities 10-K. The proceeds from this settlement were recorded(0.45%, as a reductionpercentage of net sales) as well as increased expense attributable to sellingstore labor-related expenses for(0.35%, theas quarter.a Absent the impactpercentage of thisnet settlement,sales), selling,health general,insurance andbenefits administrative expenses were up 150 basis points for the quarter driven by increases in incentive and equity compensation accrualscosts (1.00%,0.30%, as a percentage of net sales), store labor-related expensessupplies (0.30%,0.20%, as a percentage of net sales), and certain other selling, general, and administrative expense categories (0.20%,0.45%, as a percentage of net sales); which were partially offset by a reduction in expense related to incentive and equity compensation accruals (0.35%, as a percentage of net sales).

As a result of the above changes, the Company's income from operations was $59.5$55.8 million, or 20.6%17.4% of net sales, for the firstsecond quarter of fiscal 2026, compared to income from operations of $43.5$56.3 million, or 16.0%18.4% of net sales, for the firstsecond quarter of fiscal 2025. Income tax expense as a percentage of pre-tax income was 24.5% for the firstsecond quarter of both fiscal 2026 and fiscal 2025, bringing the Company's net income to $46.9$44.4 million in the firstsecond quarter of fiscal 2026, compared to $35.2$45.0 million in the firstsecond quarter of fiscal 2025.

As of MayAugust 2,1, 2026, the Company had working capital of $240.3$250.8 million, including $266.2$264.8 million of cash and cash equivalents and $23.8$22.4 million of short-term investments. The Company's cash receipts are generated from retail sales and from investment income, and the Company's primary ongoing cash requirements are for inventory, payroll, occupancy costs, dividend payments, new store expansion, remodeling, and other capital expenditures. Historically, the Company's primary source of working capital has been cash flow from operations. During the first quartertwo quarters of fiscal 2026 and fiscal 2025, the Company's cash flow from operations was $49.3$96.0 million and $31.0$89.4 million, respectively. Changes in operating cash flow between periods is primarily a function of changes in net income, along with changes in inventory and accounts payable based on the timing and amount of merchandise purchased in each respective period. Operating cash flow is also impacted by the timing of certain other payments, including rent, income taxes, and annual incentive bonuses.

The uses of cash for both thirteentwenty-six week periods primarily include payment of annual bonuses accrued at fiscal year end, inventory purchases, dividend payments, construction costs for new and remodeled stores, other capital expenditures, and purchases of investment securities.

During the first quartertwo quarters of fiscal 2026 and 2025, the Company invested $13.5$24.4 million and $10.0$20.2 million, respectively, in new store construction, store renovation, and store technology upgrades. The Company also spent $1.2$20.1 million and $1.4$3.2 million in the first quartertwo quarters of fiscal 2026 and 2025, respectively, in capital expenditures for the corporate headquarters and distribution facility. The fiscal 2026 corporate headquarters amount includes the purchase of a new corporate aircraft, which replaced the plane that was sold during fiscal 2025.

During the remainder of fiscal 2026, the Company anticipates opening 126 new stores and completing an additional 94 full store remodels. Management estimates that total capital expenditures during fiscal 2026 will be approximately $60.0 to $65.0 million, which includes primarily planned store projects and technology investments. The Company also plans to purchase a new corporate aircraft as a replacement for the plane that was sold during fiscal 2025. The Company believes that existing cash and cash equivalents, investments, and cash flow from operations will be sufficient to fund current and long-term anticipated capital expenditures and working capital requirements for the next several years. The Company has a consistent record of generating positive cash flow from operations each year and, as of MayAugust 2,1, 2026, had total cash and investments of $323.8$322.9 million, including $33.8$35.7 million of long-term investments.

The Company has available an unsecured line of credit of $25.0 million with Wells Fargo Bank, N.A. for operating needs and letters of credit. The line of credit agreement has an expiration date of July 31, 2028 and provides that $10.0 million of the $25.0 million line is available for letters of credit. Borrowings under the line of credit provide for interest to be paid at a rate based on SOFR. The Company has, from time to time, borrowed against these lines of credit. There were no bank borrowings during the first quartertwo quarters of fiscal 2026 or 2025. The Company had no bank borrowings as of MayAugust 2,1, 2026 and was in compliance with the terms and conditions of the line of credit agreement.

Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon The Buckle, Inc.’s condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires that management make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the financial statement date, and the reported amounts of sales and expenses during the reporting period. The Company regularly evaluates its estimates, including those related to inventory, investments, incentive bonuses, and income taxes. Management bases its estimates on past experience and on various other factors that are thought to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Management believes that the estimates and judgments used in preparing these consolidated financial statements were the most appropriate at that time. Presented below are those critical accounting policies that management believes require subjective and/or complex judgments that could potentially affect reported results of operations. The critical accounting policies and estimates utilized by the Company in the preparation of its condensed consolidated financial statements for the period ended MayAugust 2,1, 2026 have not changed materially from those utilized for the fiscal year ended January 31, 2026, included in The Buckle Inc.’s 2025 Annual Report on Form 10-K.

1.Revenue Recognition. Retail store sales are recorded, net of expected returns, upon the purchase of merchandise by customers. Online sales are recorded, net of expected returns, when merchandise is tendered for delivery to the common carrier. Shipping fees charged to customers are included in revenue and shipping costs are included in selling expenses. Revenue is not recorded when gift cards and gift certificates are sold, but rather when a card or certificate is redeemed for merchandise. 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 cards and gift certificates was $14.8$13.5 million and $17.2 million as of MayAugust 2,1, 2026 and January 31, 2026, 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. The estimated breakage rate is based on historical issuance and redemption patterns and is re-assessed by the Company on a regular basis. Sales tax collected from customers is excluded from revenue and is included as part of accrued store operating expenses on the Company's condensed consolidated balance sheets.

The Company establishes a liability for estimated merchandise returns, based upon the historical average sales return percentage, that is recognized at the transaction value. 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. Customer returns could potentially exceed the historical average, thus reducing future net sales results and potentially reducing future net earnings. The accrued liability for reserve for sales returns was $4.2$4.9 million as of MayAugust 2,1, 2026 and $2.6 million as of January 31, 2026.

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. In addition, through partnership with Bread Financial and Comenity Bank (collectively the "Bank"), the Company offers a private label credit card ("PLCC") program. Buckle Rewards members with a PLCC earn additional points under the Buckle Rewards program for every qualifying purchase on their PLCC card. Reported revenue is net of both current period reward redemptions and accruals for estimated future rewards earned under the Buckle Rewards program. 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 both MayAugust 2,1, 2026 and January 31, 2026, $10.3 million was included in accrued store operating expenses as a liability for estimated future rewards.

2.Inventory. Inventory is valued at the lower of cost or net realizable value. Cost is determined using an average cost method that approximates the first-in, first-out (FIFO) method. Management makes adjustments to inventory and cost of goods sold, based upon estimates, to account for merchandise obsolescence and markdowns that could affect net realizable value, based on assumptions using calculations applied to current inventory levels within each different markdown level. 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. Such judgments could vary significantly from actual results, either favorably or unfavorably, due to fluctuations in future economic conditions, industry trends, consumer demand, and the competitive retail environment. Such changes in market conditions could negatively impact the sale of markdown inventory, causing further markdowns or inventory obsolescence, resulting in increased cost of goods sold from write-offs and reducing the Company’s net earnings. The adjustment to inventory for markdowns and/or obsolescence was $9.4$9.2 million as of MayAugust 2,1, 2026 and $8.6 million as of January 31, 2026.

The following table identifies the material obligations and commitments as of MayAugust 2,1, 2026:

The Company has available an unsecured line of credit of $25.0 million, which is excluded from the preceding table. The line of credit agreement has an expiration date of July 31, 2028 and provides that $10.0 million of the $25.0 million line is available for letters of credit. Certain merchandise purchase orders require that the Company open letters of credit. When the Company takes possession of the merchandise, it releases payment on the letters of credit. The amounts of outstanding letters of credit reported reflect the open letters of credit on merchandise ordered, but not yet received or funded. The Company believes it has sufficient credit available to open letters of credit for merchandise purchases. There were no bank borrowings during the first quartertwo quarters of fiscal 2026 or the first quartertwo quarters of fiscal 2025. The Company had outstanding letters of credit totaling $1.3$1.6 million and $1.7 million as of MayAugust 2,1, 2026 and January 31, 2026, respectively. The Company has no other off-balance sheet arrangements.