Boot Barn Holdings reported net sales decreased 1.4 percent in the second quarter ended September 26, to $184.5 million. Same-store sales decreased 5.1 percent, comprised of a decrease in retail store same-store sales of 9.1 percent and an increase in e-commerce sales of 17.6 percent.
Net income was $5.8 million, or 20 cents per diluted share, compared to net income of $7.7 million, or 26 cents per diluted share, in the prior-year period. Net income per diluted share in the prior-year period includes a $0.02 per share benefit due to income tax accounting for share-based compensation.
Jim Conroy, chief executive officer, commented, “Our business continues to show resilience amidst challenging operating conditions. Following a slow start to the second quarter due to the changing sentiment around COVID-19, same-store sales trends improved each month, turning positive in September driven by stronger store traffic. Our teams have done an outstanding job serving our customers in whichever channel they choose to engage with us, and we have adjusted our merchandise assortments to reflect the shift in demand toward more functional and work-related categories. The speed at which we adapted our operations and reconfigured our inventory drove strong full-price selling in the quarter. I am particularly pleased with the contributions from our e-commerce business, whose second-quarter operating income more than doubled when compared to the prior-year period.”
Conroy continued, “Our third quarter has started well with retail store, same-store sales improving to flat and e-commerce sales trends remaining strong. In addition to solid demand for work boots, we’ve also seen a nice sequential improvement in western boots, western apparel, and hats. As we approach the beginning of the holidays, we are encouraged with our current momentum and are prepared to execute well as we enter the busy holiday shopping season.”
Operating Results For The Second Quarter Ended September 26, 2020
Net sales decreased 1.4 percent to $184.5 million from $187.2 million in the prior-year period. Consolidated same-store sales decreased 5.1 percent with retail store same-store sales down 9.1 percent and e-commerce same-store sales up 17.6 percent. The decrease in retail store sales was primarily due to decreased traffic in its stores that resulted from customers staying at home in response to COVID-19.
Gross profit was $55.5 million, or 30.1 percent of net sales, compared to $59.3 million, or 31.7 percent of net sales, in the prior-year period. Gross profit decreased primarily due to decreased sales resulting from COVID-19. The decrease in gross profit rate of 160 basis points was driven by 110 basis points of deleveraging in buying and occupancy costs and a 50-basis point decline in merchandise margin rate. The deleverage in buying and occupancy costs was primarily a result of lower volume sales. Merchandise margin declined 50 basis points primarily as a result of 30 basis points of pressure from e-commerce mix shift. Higher freight, partially offset by improved product margin, comprised the balance of the decline.
Selling, general and administrative expenses were $45.4 million, or 24.6 percent of net sales, compared to $46.4 million, or 24.8 percent of net sales, in the prior-year period. The decrease in selling, general and administrative expenses and 20 basis points of leverage as a percentage of sales was primarily a result of lower marketing and pay-per-click expenses.
Income from operations decreased 22.4 percent to $10.0 million, or 5.4 percent of net sales, compared to $12.9 million, or 6.9 percent of net sales, in the prior-year period. This decline in income from operations is a result of the negative impact on sales and gross margin from decreased traffic in its stores that resulted from customers staying at home in response to COVID-19.
Net income was $5.8 million, or 20 cents per diluted share, compared to net income of $7.7 million, or 26 cents per diluted share in the prior-year period. Net income per diluted share in the prior-year period includes a 2 cents per share benefit due to income tax accounting for share-based compensation.
Operating Results For The Six Months Ended September 26, 2020
Net sales decreased 10.9 percent to $332.3 million from $373.0 million in the prior-year period. Consolidated same-store sales decreased 9.7 percent with retail store same-store sales down 17.4 percent and e-commerce same-store sales up 33.7 percent. The decrease in retail store sales was primarily due to decreased traffic in its stores that resulted from customers staying at home in response to COVID and temporary store closures.
Gross profit was $95.7 million, or 28.8 percent of net sales, compared to $121.5 million, or 32.6 percent of net sales, in the prior-year period. Gross profit decreased primarily due to decreased sales resulting from COVID-19. The decrease in gross profit rate of 380 basis points was driven by 260 basis points of deleverage in buying and occupancy costs and a 120-basis point decline in merchandise margin rate. The deleverage in buying and occupancy costs was primarily a result of lower volume sales. Merchandise margin declined 120 basis points primarily as a result of 80 basis points of pressure from the e-commerce mix shift.
Selling, general and administrative expenses were $83.9 million, or 25.2 percent of net sales, compared to $92.5 million, or 24.8 percent of net sales, in the prior-year period. The decrease in selling, general and administrative expenses was primarily a result of lower payroll and reduced marketing expenses. Selling, general and administrative expenses, as a percentage of sales, increased 40 basis points as a result of deleverage from lower sales.
Income from operations decreased 59.2 percent to $11.8 million, or 3.6 percent of net sales, compared to $29.0 million, or 7.8 percent of net sales, in the prior-year period. This decline in income from operations is a result of the negative impact on sales, gross margin and selling, general and administrative expenses from decreased traffic in our stores that resulted from customers staying at home in response to the COVID-19 crisis and temporary store closures.
Net income was $5.3 million, or 18 cents per diluted share, compared to net income of $17.4 million, or 60 cents per diluted share in the prior-year period. Net income per diluted share in the prior-year period includes a 3 cents per share benefit due to income tax accounting for share-based compensation.
Fiscal Year 2021 Outlook
COVID-19 continues to adversely affect the company’s results. Due to the ongoing uncertainty created by the pandemic, the company is not providing third quarter and fiscal year 2021 guidance at this time.
Photo courtesy Boot Barn
