The Gap Inc. (GPS), The Buckle, Inc. (BKE): Heartland Meets Hipster – A Tale of Retail Outperformance

The company has a policy of promotion from within but so does Urban Outfitters. However, almost all Buckle, Inc. (NYSE:BKE) C-suite management has worked its way up through the ranks including CEO Dennis Nelson who started as a pants folder at a Buckle while working his way through college in Kearney, Nebraska. He has a large holding of shares (308,600 shares) as does founder, Dennis J. Hirschfeld, who is still active in his role as Chairman. He  holds 16,200,000 shares of Buckle stock for almost a 33% stake.

From their careers web site, “In fact, all of our store managers are former management trainees, assistant managers, or team leaders…(and) Not only that, as a Buckle manager you share in your team’s accomplishments by receiving a percentage of your store’s annual net profits.”

Also like Urban Outfitters they actively recruit on campuses from various degree programs. What they do differently from Urban Outfitters (no yield at all) and Gap are offer special, almost surprise dividends usually in September, but in 2012 in December it paid $6.00 which amounted to more than a 10% distribution and unlike an MLP didn’t generate the slightly onerous tax paperwork.

Caveat Buckle Emptor

Same store sales in January were down by 2%. This has happened in the past to Buckle with January often being a weak month. The company reports on March 8 and with the expanded web presence and gradually growing brand recognition expect decent if not showy numbers. Buckle, Inc. (NYSE:BKE) is off from its highs after those January numbers and is actually down 5.87% over the last 52 weeks.

It is a slower grower than Urban Outfitters with its expected 16.97% five year EPS growth rate. Urban Outfitters has a much higher P/E at 30.48 and has already run 43.09% over the last year. Both Urban Outfitters and Buckle have no debt and are acing their respective niches, urbanwear and less urban wear. Their PEGS are 1.48 and and 1.46 respectively.

Wrapping It Up

I’ve liked both Urban Outfitters and Buckle as stocks, Urban for the growth and Buckle for the value. The Gap Inc. (NYSE:GPS) has the same growth as Buckle but not the value. That eliminates Gap to my mind and just leaves one to decide whether they want momentum as in Urban Outfitters or value as in Buckle.

The article Heartland Meets Hipster- A Tale of Retail Outperformance originally appeared on Fool.com and is written by
AnnaLisa Kraft.

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