May 14, 2008 - Buckle, Inc. (BKE-NYSE) has done away with the notion that Midwestern kids wear only overalls. With about 370 mostly mall-based stores in 38 states, The Buckle sells fashion-conscious 12- to 24-year-olds the clothes they've just got to have: mid- to higher-priced casual apparel (pants, tops, outerwear, shoes, and accessories), including brand names such as Dr. Martens, Fossil, Lucky, Polo, and Silver. Denim, which accounts for about 40% of sales, is popular with its customers. The Buckle operates under the names Buckle and The Buckle; it also has an online store. Born and raised in Nebraska, it has expanded into the South and West.

Earnings have been higher every year since 2002, starting with $ .98, then $1.04, going to $1.29, jumping to $1.69, then $1.86, followed by $2.44. This year analysts look for $2.80 and $3.00 next. Sales have gone from $501.1 million in 2005 to a current run rate of $695 million with expectations of $745 million next year. Over the next 5 years, sales are predicted to be up 9% a year, on average, while earnings increase by 12.5% a year. In April, same store sales were up 34%, well above analysts' expectations of an increase of 15%.

As you might expect, the stock price reflects the good performance by management, going from a low in 2003 of $10.30 to its just hit, all-time high of $51.30. In fact, since February, the stock is up 17%, and 63% since January. (All prices reflect a 3 for 2 split in early 2007.)

While the company emphasizes fashions for the 12 to 24 year olds, moms and dads haven't missed the opportunity to look a little younger by wearing the well-fitting denim goods that Buckle offers. About 70% of the company's merchandise is from brand names, the remainder designed and made by Buckle, to its specifications. Management monitors what's hot and what's not, quick to drop lines that don't sell and fast to add the ones that are moving, all the while carefully managing inventory levels.

Here are some of the impressive numbers BKE carries: Return on Equity is an eye-popping 23%. There is no debt on the books. Current assets outnumber current liabilities by 3.4 to 1 with $167 million in cash. There's an annual dividend of $1.00, giving a yield of 2%. Net profit margin was 12.1% in 2007. Look for 12.5% this year and next. Market cap is $1.5 billion on 30.441 million shares. Officers and directors own 51.3% of the stock.

Some of the officers have been selling stock lately as it hits new highs. The CEO began a 10b5-1 program that allows him to sell up to 1.2 million shares over a 12 month period. The insiders sold about 20% of their stake, nothing to be concerned about, as most are likely diversifying their portfolios. The 1.2 million shares from the CEO represents less than10% of his holdings.

Take a closer look at Buckle if you're thinking about adding a retailer to your positions. It's growing in all the right ways, most importantly, the bottom line. And it's still only in the mid-west.

- Company Web site: www.buckle.com

- Ted Allrich