Boot Barn Holdings Inc. on Tuesday announced net income per diluted share for the fiscal third quarter ended December 28, 2019, at 81 cents, one cent shy of Wall Street’s estimates for the period.

The company reported that net sales increased 11.8 percent to $284 million, while same-store sales increased 6.7 percent, including an increase in retail store same-store sales of 5.7 percent and an increase in e-commerce sales of 11 percent.

Boot Barn’s net income was $24.8 million, or $0.85 per diluted share, compared to $19 million, or 66 cents per diluted share in the prior-year period. Net income per diluted share in the current-year period includes a 4 cent per share benefit due to income tax accounting for share-based compensation. Excluding the tax benefit in the current-year period, net income per diluted share was 81 cents, compared to 66 cents in the prior-year period.

Jim Conroy, CEO, commented, “Our third quarter results reflect continued focus on our key strategic initiatives. Consolidated same-store sales increased for the 11th consecutive quarter with healthy growth in both customer count and transaction size. We continue to experience nice gains in the business due to effective marketing, compelling merchandise assortments, and great selling and service in the stores. During the quarter, we expanded our physical footprint with the opening of three new stores and are on pace to meet our annual target of 10 percent unit growth this fiscal year. Importantly, we are converting our top-line success into significant bottom line improvement thanks to enhanced merchandise margins and operating expense leverage. The high level of execution across the organization has us well positioned to deliver a solid finish to fiscal 2020 and carry our momentum into next year.”

Operating Results for the Third Quarter Ended December 28, 2019

  • Net sales increased 11.8 percent to $284 million from $254 million in the prior-year period. Consolidated same-store sales increased 6.7 percent with retail store same-store sales up 5.7 percent and e-commerce same-store sales up 11 percent. The increase in net sales was driven by the increase in same-store sales and sales from stores added over the past twelve months.
  • Gross profit was $97 million, or 34.2 percent of net sales, compared to $85.7 million, or 33.7 percent of net sales, in the prior-year period. Gross profit increased primarily due to increased sales and an increase in merchandise margin rate. The increase in gross profit rate was driven by a 50 basis point increase in merchandise margin rate primarily driven by growth in exclusive brand penetration.
  • Selling, general and administrative expenses were $62.1 million, or 21.9 percent of net sales, compared to $56.4 million, or 22.2 percent of net sales, in the prior-year period. The increase in selling, general and administrative expenses was primarily a result of additional costs to support higher sales and expenses for both new and acquired stores. Selling, general and administrative expenses, as a percentage of sales, decreased by 30 basis points as a result of expense leverage on higher sales.
  • Income from operations grew 19.4 percent to $35 million, or 12.3 percent of net sales, compared to $29.3 million, or 11.5 percent of net sales, in the prior-year period. This increase represents approximately 80 basis points of improvement in operating profit margin.
  • Net income was $24.8 million, or $0.85 per diluted share, compared to $19 million, or $0.66 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes a $0.04 per share benefit due to income tax accounting for share-based compensation. Excluding the tax benefit in the current-year period, net income per diluted share was $0.81, compared to $0.66 in the prior-year period.

Operating Results for the Nine Months Ended December 28, 2019

  • Net sales increased 12.5 percent to $656.9 million from $584.1 million in the prior-year period. Consolidated same-store sales increased 7.8 percent with retail store same-store sales up 7.9 percent and e-commerce same-store sales up 7.4 percent. The increase in net sales was driven by the increase in same-store sales and sales from stores added over the past twelve months.
  • Gross profit was $218.5 million, or 33.3 percent of net sales, compared to $188 million, or 32.2 percent of net sales, in the prior-year period. Gross profit increased primarily due to increased sales and an increase in merchandise margin rate. The 110 basis point increase in the gross profit rate was driven by a 120 basis point increase in merchandise margin rate, partially offset by 10 basis points of deleverage in buying and occupancy costs. Better full-price selling and growth in exclusive brand penetration fueled the improvement in merchandise margin.
  • Selling, general and administrative expenses were $154.6 million, or 23.5 percent of net sales, compared to $140.2 million, or 24 percent of net sales, in the prior-year period. The increase in selling, general and administrative expenses was primarily a result of additional costs to support higher sales and expenses for both new and acquired stores. Selling, general and administrative expenses, as a percentage of sales, decreased by 50 basis points as a result of expense leverage on higher sales.
  • Income from operations grew 33.8 percent to $64 million, or 9.7 percent of net sales, compared to $47.8 million, or 8.2 percent of net sales, in the prior-year period. This increase represents approximately 150 basis points of improvement in operating profit margin.
  • Net income was $42.2 million, or $1.45 per diluted share, compared to $30.3 million, or $1.05 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes a $0.07 per share benefit due to income tax accounting for share-based compensation compared to an approximately $0.12 per share benefit in the prior-year period. Excluding the tax benefit in both periods, net income per diluted share in the current-year period was $1.38, compared to $0.93 in the prior-year period.

Fiscal Year 2020 Outlook
For the fiscal year ending March 28, 2020, the company now expects:

  • To open or acquire 25 stores, including stores opened fiscal year-to-date;
  • Same-store sales growth of approximately 7 percent, compared to the company’s prior outlook of approximately 6.5 percent.
  • Income from operations of $81.7 million to $82.3 million, compared to the company’s prior outlook of $78 million to $81 million;
  • Interest expense of approximately $13.3 million, compared to the company’s prior outlook of approximately $13.6 million;
  • Net income of $53.1 million to $53.5 million, compared to the company’s prior outlook of $49 million to $51.3 million; and
  • Net income per diluted share of $1.81 to $1.83 based on 29.3 million weighted average diluted shares outstanding, compared to the company’s prior outlook of $1.67 to $1.75.

For the fiscal fourth-quarter ending March 28, 2020, the company expects:

  • Same-store sales growth of approximately 5 percent;
  • Total sales of $212 million to $214 million; and
  • Net income per diluted share of $0.36 to $0.38 based on 29.5 million weighted average diluted shares outstanding.

Photo courtesy Boot Barn