BUCKLE INC (BKE)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto of the Company included in this Form 10-Q. All references herein to the “Company,” “Buckle,” “we,” “us,” or similar terms refer to The Buckle, Inc. and its subsidiary. The following is management’s discussion and analysis of certain significant factors which have affected the Company’s financial condition and results of operations during the periods included in the accompanying condensed consolidated financial statements.

EXECUTIVE OVERVIEW

Company management considers the following items to be key performance indicators in evaluating Company performance.

Comparable Store Sales – Stores are deemed to be comparable stores if they were open in the prior year on the first day of the fiscal period being presented. Stores which have been remodeled, expanded, and/or relocated, but would otherwise be included as comparable stores, are not excluded from the comparable store sales calculation. Online sales are included in comparable store sales. Management considers comparable store sales to be an important indicator of current Company performance, helping leverage certain fixed costs when results are positive. Negative comparable store sales results could reduce net sales and have a negative impact on operating leverage, thus reducing net earnings.

Merchandise Margin – Management evaluates the components of merchandise margin including initial markup and the amount of markdowns during a period. Any inability to obtain acceptable levels of initial markups or any significant increase in the Company’s use of markdowns could have an adverse effect on the Company’s gross margin and results of operations. Merchandise margin is net sales less merchandise cost of goods sold (COGS), as further described in Footnote 10, "Segment Reporting".

Operating Margin – Operating margin is a good indicator for management of the Company’s success. Operating margin can be positively or negatively affected by comparable store sales, merchandise margins, occupancy costs, and the Company’s ability to control operating costs.

Cash Flow and Liquidity (working capital) – Management reviews current cash and short-term investments along with cash flow from operating, investing, and financing activities to determine the Company’s short-term cash needs for operations and expansion. The Company believes that existing cash, short-term 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.

16

RESULTS OF OPERATIONS

The following table sets forth certain financial data expressed as a percentage of net sales and the percentage change in the dollar amount of such items compared to the prior period:

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

The Company's average retail price per piece of merchandise sold increased $2.17, or 4.3%, during the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025. This $2.17 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), a 5.2% increase in average knit shirt price points ($0.55), a 5.2% increase in average accessories price points ($0.28), a 9.0% 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); which were partially offset by a shift in the merchandise mix (-$0.17). 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 million in the first quarter of fiscal 2026, compared to $127.0 million in the first quarter of fiscal 2025. As a percentage of net sales, gross profit was 46.2% in the first quarter of fiscal 2026, compared to 46.7% in the first quarter of fiscal 2025. The current quarter gross margin decrease was the result of increased buying, distribution, and occupancy expenses (0.40%, as a percentage of net sales) and a reduction in merchandise margins (0.10%, as a percentage of net sales).

Selling, general, and administrative expenses were 25.6% of net sales for the first quarter of fiscal 2026, compared to 30.7% for the first quarter of fiscal 2025. The decrease was due to a 660 basis point impact from the recognition of a $19.1 million interchange fee litigation settlement during the first quarter of 2026, as disclosed in our 2025 Form 10-K. The proceeds from this settlement were recorded as a reduction to selling expenses for the quarter. Absent the impact of this settlement, selling, general, and administrative expenses were up 150 basis points for the quarter driven by increases in incentive and equity compensation accruals (1.00%, as a percentage of net sales), store labor-related expenses (0.30%, as a percentage of net sales), and certain other selling, general, and administrative expense categories (0.20%, as a percentage of net sales).

17

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

LIQUIDITY AND CAPITAL RESOURCES

As of May 2, 2026, the Company had working capital of $240.3 million, including $266.2 million of cash and cash equivalents and $23.8 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 quarter of fiscal 2026 and fiscal 2025, the Company's cash flow from operations was $49.3 million and $31.0 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 thirteen 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 quarter of fiscal 2026 and 2025, the Company invested $13.5 million and $10.0 million, respectively, in new store construction, store renovation, and store technology upgrades. The Company also spent $1.2 million and $1.4 million in the first quarter of fiscal 2026 and 2025, respectively, in capital expenditures for the corporate headquarters and distribution facility.

During the remainder of fiscal 2026, the Company anticipates opening 12 new stores and completing an additional 9 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 May 2, 2026, had total cash and investments of $323.8 million, including $33.8 million of long-term investments.

Future conditions, however, may reduce the availability of funds based upon factors such as a decrease in demand for the Company's product, change in product mix, competitive factors, and general economic conditions as well as other risks and uncertainties which would reduce the Company's sales, net profitability, and cash flows. Also, the Company's acceleration in store openings and/or remodels or the Company entering into a merger, acquisition, or other financial related transaction could reduce the amount of cash available for further capital expenditures and working capital requirements.

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 quarter of fiscal 2026 or 2025. The Company had no bank borrowings as of May 2, 2026 and was in compliance with the terms and conditions of the line of credit agreement.

18

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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, an

[Excerpt truncated for page length; source filing is linked above.]

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto of the Company included in this Form 10-K. The following is management’s discussion and analysis of certain significant factors which have affected the Company’s financial condition and results of operations during the periods included in the accompanying consolidated financial statements included in this Form 10-K.

EXECUTIVE OVERVIEW

Company management considers the following items to be key performance indicators in evaluating Company performance.

Comparable Store Sales – Stores are deemed to be comparable stores if they were open in the prior year on the first day of the fiscal period being presented. Stores which have been remodeled, expanded, and/or relocated, but would otherwise be included as comparable stores, are not excluded from the comparable store sales calculation. Online sales are included in comparable store sales. Management considers comparable store sales to be an important indicator of current Company performance, helping leverage certain fixed costs when results are positive. Negative comparable store sales results could reduce net sales and have a negative impact on operating leverage, thus reducing net earnings.

Merchandise Margin – Management evaluates the components of merchandise margin including initial markup and the amount of markdowns during a period. Any inability to obtain acceptable levels of initial markups or any significant increase in the Company’s use of markdowns could have an adverse effect on the Company’s gross margin and results of operations. Merchandise margin is net sales less merchandise cost of good sold (COGS), as further described in Footnote N, "Segment Reporting".

Operating Margin – Operating margin is a good indicator for management of the Company’s success. Operating margin can be positively or negatively affected by comparable store sales, merchandise margins, occupancy costs, and the Company’s ability to control operating costs.

Cash Flow and Liquidity (working capital) – Management reviews current cash and short-term investments along with cash flow from operating, investing, and financing activities to determine the Company’s short-term cash needs for operations and expansion. The Company believes that existing cash, short-term investments, and operating cash flow will be sufficient to fund current and long-term anticipated capital expenditures and working capital requirements for the next several years.

20

RESULTS OF OPERATIONS

The following table sets forth certain financial data expressed as a percentage of net sales and the percentage change in the dollar amount of such items compared to the prior period:

Fiscal 2025 Compared to Fiscal 2024

Net sales for the 52-week fiscal year ended January 31, 2026, increased 6.6% to $1.298 billion from net sales of $1.218 billion for the 52-week fiscal year ended February 1, 2025. Comparable store net sales for the 52-week fiscal year increased 5.6% from comparable store net sales for the prior year 52-week period ended February 1, 2025. The increase in total net sales for the year was the result of a 4.2% increase in the number of transactions and a 3.6% increase in the average unit retail, partially offset by a 1.2% decrease in average number of units sold per transaction. Online sales for the fiscal year increased 9.8% to $217.1 million for the 52-week fiscal year ended January 31, 2026 compared to $197.7 million for the 52-week fiscal year ended February 1, 2025.

The Company’s average retail price per piece of merchandise sold increased $1.80, or 3.6%, during fiscal 2025 compared to fiscal 2024. This $1.80 increase was primarily attributable to the following changes (with their corresponding effect on the overall average price per piece): a 3.5% increase in average denim price points ($0.75), a 3.7% increase in average knit shirt price points ($0.42), a 4.2% increase in average accessories price points ($0.23), a 5.9% increase in average footwear price points ($0.14), an increase in average price points for certain other merchandise categories ($0.22), and a shift in the merchandise mix ($0.04). 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 costs increased from $592.8 million in fiscal 2024 to $635.9 million in fiscal 2025. As a percentage of net sales, gross profit was 49.0% in fiscal 2025 compared to 48.7% in fiscal 2024. The gross margin increase was the result of an increase in merchandise margins (0.20%, as a percentage of net sales) and leveraged occupancy, buying, and distribution expenses (0.10%, as a percentage of net sales). Merchandise shrinkage was 0.4% of net sales in fiscal 2025 compared to 0.5% of net sales in fiscal 2024.

Selling expenses increased from $293.2 million in fiscal 2024 to $308.5 million in fiscal 2025. As a percentage of net sales, selling expenses decreased from 24.1% in fiscal 2024 to 23.7% in fiscal 2025.

General and administrative expenses increased from $58.2 million in fiscal 2024 to $65.9 million in fiscal 2025. As a percentage of net sales, general and administrative expenses increased from 4.8% in fiscal 2024 to 5.1% in fiscal 2025.

21

In total, selling, general, and administrative expenses were 28.8% of net sales for fiscal 2025 compared to 28.9% of net sales for fiscal 2024. The decrease was the result of reductions related to non-recurring digital commerce investments made in fiscal 2024 (0.25%, as a percentage of net sales), store labor-related expenses (0.20%, as a percentage of net sales), and ecommerce shipping expense (0.15%, as a percentage of net sales). These reductions were partially offset by increases in expense related to incentive compensation accruals (0.35%, as a percentage of net sales) and equity compensation expense (0.15%, as a percentage of net sales).

As a result of the above changes, the Company’s income from operations increased from $241.4 million for fiscal 2024 to $261.4 million for fiscal 2025. Income from operations was 20.2% as a percentage of net sales in fiscal 2025 compared to 19.8% as a percentage of net sales in fiscal 2024.

Other income was $14.7 million in fiscal 2025 compared to $16.4 million in fiscal 2024. The Company’s other income is derived primarily from investment income related to the Company’s cash and investments.

Income tax expense as a percentage of pre-tax income was 24.0% for fiscal 2025 and 24.2% for fiscal 2024, bringing net income to $209.7 million in fiscal 2025 versus $195.5 million in fiscal 2024.

Fiscal 2024 Compared to Fiscal 2023

A discussion of fiscal 2023 and year-over-year comparisons between fiscal 2024 and fiscal 2023 can be found in PART II, ITEM 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended February 1, 2025, filed with the United States Securities and Exchange Commission on April 2, 2025.

LIQUIDITY AND CAPITAL RESOURCES

As of January 31, 2026, the Company had working capital of $211.2 million, including $249.5 million of cash and cash equivalents and $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, and 2023 the Company's cash flow from operations was $251.1 million, $242.0 million, and $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.

During fiscal 2025, 2024, and 2023, the Company invested $40.7 million, $40.3 million, and $35.9 million, respectively, in new store construction, store renovation, and store technology upgrades. The Company spent $4.7 million, $2.0 million, and $1.4 million in fiscal 2025, 2024, and 2023, respectively, in capital expenditures for the corporate headquarters and distribution facility.

During fiscal 2026, the Company anticipates opening 14 new stores and completing approximately 13 store remodels and/or relocations. 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 had a consistent record of generating positive cash flow each year and, as of January 31, 2026, had total cash and investments of $306.6 million, including $32.4 million of long-term investments.

Future conditions, however, may reduce the availability of funds based upon factors such as a decrease in demand for the Company’s product, change in product mix, competitive factors, and general economic conditions as well as other risks and uncertainties which would reduce the Company’s sales, net profitability, and cash flows. Also, the Company’s acceleration in store openings and/or remodels, or entering into a merger, acquisition, or other financial related transaction could reduce the amount of cash available for further capital expenditures and working capital requirements.

22

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 borrowings during fiscal 2025, 2024, and 2023. The Company had no bank borrowings

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]