The Buckle, Inc.

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The Buckle, Inc.

2407 West 24th St.
Kearney, Nebraska 68847
U.S.A.
(308) 236-8491
Fax: (308) 236-4493
Web site: http://www.buckle.com

Public Company
Incorporated: 1948 as Mills Clothing, Inc.
Employees: 3,000
Sales: $206.4 million (1996)
Stock Exchanges: NASDAQ
SICs: 5611 Men’s & Boys’ Clothing Stores; 5621 Women’s Clothing Stores

Based in the north-central United States, The Buckle, Inc. is one of the leading retailers of medium-to-better-priced casual wear for men and women. Buckle outlets, which average approximately 4,600 square feet, are positioned within college towns and upscale shopping malls in metropolitan areas containing populations of between 20,000 to 250,000 individuals. The company’s eye-catching blue, triangular logo is recognized throughout more than half the country, appearing on storefronts and on shopping bags containing a wide variety of brand-name denims, shirts, outerwear, shoes, accessories, and other sportswear. With its attention to personal customer attention—shoppers who enter Buckle stores are referred to as “guests” rather than customers—The Buckle has gained a strong base of customer loyalty in a highly competitive industry. Services such as free alterations, free gift-wrapping, and layaway options have enhanced its balanced product mix and have led to the repeat traffic that allowed it to prosper in a competitive industry.

The winning Buckle combination—popular brand-name merchandise coupled with a wide range of associated services—is designed to develop customer loyalty among its target market of fashion-conscious 12-to-24-year-olds. Key to the company’s merchandising concept is denim, which has traditionally accounted for over one third of annual sales. The Buckle strives to provide its guests with a continually changing array of the most popular casual fashions, both in denim and related fabrics. Through its highly trained, personable sales staff, the company encourages multiple sales through the purchase of coordinating wardrobe components. While the merchandise mix remains relatively standardized from outlet to outlet, The Buckle allows individual stores to tailor inventories around local buying habits through its use of a company-wide computerized distribution system. This system also facilitates efforts by individual salespeople to search other branches for specific garments that are then speedily transferred where required. While slow-moving apparel items are occasionally marked down to make room for fresher stock, The Buckle does not hold storewide off-price sales at any time during the year.

Company Changes with the Times

The Buckle was founded in 1948 as Mills Clothing, Inc. Situated in downtown Kearney, Nebraska, this modest retail men’s clothier went through several incarnations before assuming its present name and focus. In 1967 Mills Clothing opened a second store in Kearney under the name Brass Buckle, and the company’s second Brass Buckle outlet was opened in Columbus, Nebraska, in 1976. Meanwhile, the original Mills Clothing Store would be renamed Brass Buckle in 1970, adopting the appropriate image as a jeans store offering a wide selection of denim apparel and coordinating shirts. All three outlets were furnished in a rustic motif, with built-in jeans bins and chrome display fixtures. In 1977, now focusing on the marketing of both men’s and women’s casual clothing, the Brass Buckle opened its first mall location, growing its outlets to 17 by the end of 1981. Company retail outlets would operate under the name The Buckle, Inc. after April 23, 1991.

The company’s changing name reflected an adaptive, forward-thinking managerial perspective that allowed it the necessary flexibility to remain on the leading edge of changing fashion trends. To this end, while contracting for a limited number of private-label apparel products with which to stock its stores, The Buckle concentrated on developed relationships with vendors of such popular brands as Levi’s, Girbaud, Lawman, Esprit, Guess?, and others that held name recognition with the company’s target market. In addition, it developed key relationships with both Pepe Clothing Co. and Lucky Brand Dungarees. The Buckle was one of Pepe’s largest customers by 1991; in turn, it received quality, fashion-focused apparel at wholesale prices lower than those offered by the more well-known manufacturers.

As the Buckle’s outlets spread throughout the inland United States, it developed a centralized, semi-automated distribution system within its corporate headquarters in Kearney. Using an efficient bar-coding system, incoming merchandise was received, sorted and packaged for transit, and reshipped to individual outlets, usually within one business day of receipt. Beginning in 1992, the company also began to warehouse a portion of its total inventory, thereby allowing individual stores to eliminate excessive inventories and replace individual items as needed. Such warehouse and distribution systems provided individual Buckle outlets with an ever-changing stock of products, and consumers with an uncluttered retail environment and a constantly changing array of new fashions. Every trip to The Buckle would reveal something new.

Motivated Teammates Make the Difference

At The Buckle, employees have always been highly valued assets, which may be one of the reasons why staff turnaround has been low. The company is organized around a tiered management system: ten district managers—who also serve as store managers—are supervised by three regional managers, who in turn are supervised by two vice-presidents of sales. Each outlet employs, in addition to the store manager, up to two assistant managers, between one and three full-time salespeople, and a staff of part-time salespeople as store volume and season demands. A seamstress also works on-site at most Buckle outlets as part of a team of dedicated personnel. None of the company’s employees are represented by a union.

In addition to recruiting new managers from college campuses, The Buckle has traditionally held with the policy of promoting people from within company ranks: in 1967 Daniel J. Hirschfeld, who had been with the company since 1962, became company president and CEO; while Dennis Nelson, company president since 1991 (when Hirschfeld relinquished one of his two titles and its accordant responsibilities), first joined The Buckle in 1970 as a part-time sales staffer. Within its sales management team alone the company could boast almost 90 years of combined Buckle experience by 1996. The company has continued to rely upon the expertise of its employee team, not only in terms of day-to-day operations at individual outlets, but in overall buying decisions as well. Management was quick to recognize an understanding of future fashion trends as crucial to the continued health of their business, and has consistently solicited the recommendations of store managers in such decisions due to their daily contact with customers.

Carefully Orchestrated Expansion Since the Early 1980s

The Buckle’s strategy for expanding its retail market was to target high-traffic shopping malls near large universities and colleges or in economically vital cities with more than 20,000 residents. Particularly because of its reliance on college-aged consumers, business has traditionally been seasonal, with highest sales levels occurring during the periods November 15–December 30 and July 15–September 1. These two periods have combined to generate approximately 40 percent of the company’s sales on an annual basis. The cost of opening a new Buckle location was estimated at $410,000 in 1996, $290,000 of which were construction costs and the remaining $120,000 relegated to starting inventory. Because of such high start-up costs, new store openings were scheduled to coincide with The Buckle’s two busiest seasons. Most new stores became profitable within the first year of operation. Marketing to its new and existing customer base was done through both local radio and newspaper and via direct mail using a list generated through The Buckle Club, an in-store signup that boasts over 900,000 “members.” Three mailing fliers were sent to customers throughout the course of each year, and a birthday club discount card was mailed during their birth month.

As expansion efforts increased, so did The Buckle’s financial leverage. Shadowing a rise in sales from their 1988 level of just under $50 million to $57.4 million by the end of fiscal 1989, the company’s net income would jump from $4.3 million to $4.8 million over the same period. And in 1989 The Buckle opened an additional six new outlets, while also beginning to alter its product mix with the inclusion of more higher-end clothing items. This change, coupled with a slight rise in retail prices, would cause the average annual sales per square foot in the company’s retail outlets to increase from $221 to $238 over the course of the year.

The Buckle Gives Itself a Shiny New Image, 1990

In 1990 The Buckle got a new look, with redesigned store layouts, enhanced lighting arrays, and new fixtures that presented a more modern, forward-looking attitude. Beginning a five-year renovation schedule to update its older stores to appeal to savvy college-aged consumers, each of the company’s newest outlets would boast this new look. A special buying opportunity with one of The Buckle’s suppliers helped stock the company’s newly designed retail spaces with fresh merchandise, while also contributing to net income by providing the opportunity for a higher-than-usual initial price markup.

Company Perspectives:

The Buckle team is focused on the delivery of our mission statement—“To create the most enjoyable shopping experience possible for our guests.” We will remain open to constant changes in our business and continue to provide you with a unique specialty store.

Continuing its steady policy of expansion, the company opened new stores and beefed up the sales in existing stores. While newer Buckle locations tended toward higher-end malls that commanded higher costs of occupancy, this increased overhead was largely absorbed by corresponding increases in sales and prices. In tandem with its expansion, the company worked to streamline record-keeping and scheduling, refining its centralized system to increase efficiency among its many outlets and decrease managerial overhead. The decision to sell its internal Buckle credit card business to the Omaha-based First Credit Service Center in 1990 unburdened the company of the headaches associated with the delinquent portion of its accounts receivable balance, although the company would reintroduce a private label credit card in fiscal 1995. The Buckle invested in a new computer system during 1991 that further offset the increasing administrative and managerial functions required of such a large-scale operation. By year end 1990, the company was able to report a net income of $3.8 million on gross sales of $68.9 million.

Males in the 1990s Give Buckle a Boost

In 1987 The Buckle operated 45 stores in the north-central Midwest. Net sales for that year were posted at $38 million; only a year later, during which time the company continued refining its internal processes and opened 15 new outlets, that figure would increase to over $86.7 million, resulting in net income of $4.9 million.

Part of the reason for the company’s successful expansion was the changing consumer market. Heading into the 1990s, young men, who had for years relied on blue jeans, T-shirts, and flannel shirts to get them through their college years, were becoming increasingly clued in to fashion. The color palette for menswear blossomed, expanding well beyond the traditional somber hues of navy, forest green and burgundy, and introducing even lavenders and pinks into men’s closets. And styles—several layers of coordinating, oversized garments—also dictated an increased demand for menswear. The Buckle’s trend of retailing the increasingly popular, and increasingly higher-end, denims and shirts would help boost its annual sales per square foot of retail space 5.9 percent during fiscal 1991 alone.

Company Goes Public in 1992

By the end of fiscal 1991 The Buckle had 5 million shares of stock outstanding, privately held. In early 1992 the company decided to undertake its first public offering, presenting an additional 1.7 million shares on the NASDAQ National Market System. With 89 stores then in operation, the company used the funds generated from the sale of stock to fund further expansion and continue the final three years of its existing store remodeling program.

The year 1992 welcomed the addition of 18 new Buckle outlets and an expanded market area that now included Tennessee, Ohio, Michigan, and Texas. The company also started its “Buckle Kids” line for younger customers, giving each store a more family-friendly orientation. By the end of fiscal 1992 the company was able to post net income of $7.9 million on sales of $112.9 million—a 30 percent jump over 1991 levels.

Through 1994 sales continued their steady climb despite some fluctuations in the Juniors market, moving from $129.6 million in 1993 to close at a year-end 1994 level of $145 million. Store openings also rose, with 27 new Buckle outlets opening for business in 1993 and an additional 16 during 1994. October 1994 witnessed the unveiling of the Buckle’s “Primo Card,” a frequent-shopper program that rewarded loyal customers with percentage-off savings. Unlike others in the retail fashion industry, The Buckle reported a strong Christmas in 1994, with sales up 7 percent over the five-week holiday shopping season.

By the close of fiscal 1995, with income of $9.8 million, the company’s net sales had climbed to $172.3 million, an increase of almost 20 percent over the previous year. Advancements made during that year included the opening of 17 new outlets and The Buckle’s inclusion as one of Forbes magazine’s “World’s Best Small Companies in America.” The following year would only further the company’s reputation as a leader in the field of casual apparel retailing. At the end of fiscal 1996 The Buckle posted $206.4 million in net sales, an increase of over 21 percent from the previous year.

Looking Forward

By 1996, in addition to opening 14 stores and incorporating the state of Wyoming within its growing market area, The Buckle had renovated the last of its existing stores. It now operated 181 stores in 22 states throughout the Midwest region, with plans for continued expansion toward both the East and West Coasts. Company management expected to continue its policy of targeting malls for expansion with higher traffic flows situated in increasingly larger urban areas than the company’s historic markets had been. Management’s success in choosing location speaks for itself: The Buckle, with its primary mission to act in the best interest of the consumer and a proven ability to adapt to a constantly changing retail climate, has closed only one store since 1982.