Everyone knows fashion retailing is a cyclical business. The better the economy is, the more consumers spend. Conversely, when the economy is weak, people tend to stay at home and keep their purse strings tied tight. As a result, when it looks an economic rough patch is on the horizon, investors steer clear of retailers that sell anything but the basic necessities of life. After all, looking good isn't quite as important during tough times.
But there's just one problem with that strategy: Sometimes that mindset doesn't quite work to investors' advantage. Right now, for example, there's one retailer that's managed to grow its top and bottom line for years now, no matter what kind of economic environment.
Better yet, the stock has shrugging off bear markets on its way to becoming one of top-performing stocks for the past 10 years, rising more than 650%. And the next several years don't look like they're going to be any different.
Amazing stats
The Buckle (NYSE: BKE) is a small-cap retailer made up of more than 400 stores selling competitively-priced casual apparel, footwear and accessories for young men and women. But this description doesn't do the stock justice. A few key statistics and figures paint the true picture.
The company has had 10 straight years of rising revenue, from $401 million in 2003 to $1.06 billion in fiscal 2012. (Even when the recession was hitting other retailers in 2008, The Buckle kept chugging.)
Profits have also been rising for 10 straight years, from $32 million in 2003 to $151.5 million in fiscal 2012. The fact that the company didn't have to slash prices and crimp margins when things got rough during the Great Recession underscores just how in touch The Buckle is with consumer demand, walking that fine line between "needs" and "wants."
Net margin growth in eight of the past 10 years -- from 8% in 2003 to 14.2% in fiscal 2012 -- is just as impressive. This is because, for many retailers, expansion comes at the expense of margins. For The Buckle, however, growth has scaled quite nicely, as it has actually achieved an economy of scale.
These are phenomenal stats, not just for retailing, but for any kind of business. Take a look at the chart below...
The growth streak almost seems too good to be true, prodding cautious investors to wonder whether such a track record is truly sustainable. Well, it is sustainable, because The Buckle has managed to do a handful of things consistently, which most other retail companies never even come close to doing. (more)
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