Boot Barn Holdings Inc. announced preliminary results for the third quarter of fiscal year 2018 ended December 30, 2017 in advance of its participation in the ICR Conference on Monday, January 8, 2018.
Preliminary Results for the Third Quarter of Fiscal Year 2018
For the third quarter ended December 30, 2017, the company expects to report:
- Net sales increased 13 percent to approximately $225 million.
- Same store sales increased approximately 5.2 percent, with stores outperforming e-commerce sales. This compares with third quarter guidance of 2.0 percent to 4.0 percent.
- Net income per diluted share of $0.70 to $0.71 based on 27.6 million weighted average diluted shares outstanding. Excluding the impact of the change in federal tax law, preliminary net income per diluted share is estimated to be $0.45 to $0.46 compared to guidance of $0.40 to $0.43, which was based on 27.2 million weighted average diluted shares outstanding. Net income per diluted share includes approximately $0.02 arising from a $1.0 million pre-tax net gain from insurance and other settlements, primarily related to losses suffered in the second quarter from Hurricane Harvey.
- The company opened four new stores during the quarter.
Jim Conroy, chief executive officer, commented, “I am very pleased with our performance in the third quarter, in which we delivered strong same store sales growth, solid merchandise margin performance, and earnings that exceeded our guidance. Our same store sales was driven by growth in all major product categories and strength in virtually every geography across the country, with particularly solid performance in Texas. It was further encouraging to see that the majority of our retail same store sales growth was driven by an increase in transactions, indicating strong customer traffic.”
The company currently plans to report third quarter results on January 31, 2018.
Fiscal Year 2018 Outlook
Given the strong sales performance, the company has raised its outlook for its fiscal year 2018, which ends March 31, 2018:
- Same store sales growth of 3.0 percent to 4.0 percent, compared to the company’s prior outlook of low single digit same store sales growth.
- Income from operations between $42.3 million and $43.8 million, compared to the company’s prior outlook of $40.0 million to $42.5 million.
- Net income between $23.3 million and $24.5 million. Excluding the impact of the change in federal tax law, the company expects net income to be between $16.7 million and $17.6 million, compared to the company’s prior outlook of $15.4 million to $16.6 million.
- Net income per diluted share of $0.85 to $0.89 based on 27.6 million weighted average diluted shares outstanding.
- Excluding the impact of the change in federal tax law, the company expects net income per diluted share of $0.60 to $0.64 compared to the company’s prior outlook of $0.57 to $0.61, which was based on 27.2 million weighted average diluted shares outstanding.
Conroy continued, “I am further encouraged that we continue to make progress on each of our four strategic initiatives. Many of our efforts to drive same store sales are building momentum, including both the increased focus on our work business and the changes we have made with our marketing. We have also transformed our e-commerce and omni channel capabilities this year. While that created disruption to the business in the Spring and resulted in some expense pressure during the holiday period as we retrofitted our Wichita distribution center, we are well positioned for additional growth going forward. Finally, we have continued to invest in our design and development capability for exclusive brands which we expect to drive merchandise margin expansion.
Recent changes in tax law lowered the federal corporate tax rate from 35 percent to 21 percent, which the company estimates will result in an effective tax rate of 25 percent during the year ending March 30, 2019, the first full fiscal year under the new law. During the quarter ended December 30, 2017, the company is required to re-measure deferred taxes under the new effective tax rate of 25 percent. The company estimates the deferred tax impact will result in a non-cash tax benefit of $6.0 million, or approximately $0.22 per share, to its 3rd quarter earnings. Due to the timing of the company’s fiscal year, the fiscal year 2018 effective tax rate is expected to be 35.5 percent, excluding the impact from the $6.0 million re-measurement of deferred taxes. The 35.5 percent rate is calculated by blending nine months at the company’s historical rate of 39 percent and three months at the company’s new rate of 25 percent and applying the blended rate to the entire fiscal year. The reduction in the company’s full year effective tax rate from 39.0 percent, assumed in its earlier guidance, to 35.5 percent, is expected to result in lower tax expense of $0.8 million, or $0.03 cents per diluted share, during the quarter ended December 30, 2017.