Boot Barn Holdings Inc. reported sales in the second quarter September 25 grew 69.5 percent against the year-ago period and 67.1 percent against the 2019 quarter.

The retailer said that due to the impact of COVID-19 on the company’s results in its second fiscal quarter ended September 26, 2020, it has provided the below quarterly highlights in comparison to its second fiscal quarter ended September 28, 2019, two years ago.

For the quarter ended September 25, 2021:

  • Net sales increased 67.1 percent to $312.7 million, compared to the quarter ended September 28, 2019, two years ago;
  • Compared to the quarter ended September 28, 2019, same-store sales increased 53.6 percent, comprised of an increase in retail same-store sales of 53.0 percent and an increase in e-commerce same-store sales of 57.1 percent;
  • Net income was $37.9 million, or $1.25 per diluted share, compared to $7.7 million, or $0.26 per diluted share in the two-year ago period. Net income per diluted share in the current-year and two-year ago periods include an approximately $0.03 and $0.02 per share benefit, respectively, due to income tax accounting for share-based compensation. Excluding the tax benefit in both periods, net income per diluted share in the current-year period was $1.22, compared to $0.24 in the two-year ago period; and
  • The company opened three new stores and closed one during the thirteen weeks ended September 25, 2021.

Compared to the year-ago quarter, sales rose increased 69.5 percent to $312.7 million.

Jim Conroy, president and CEO, commented, “Our business continued to grow at an exceptional pace in the second quarter as our teams are doing an excellent job executing our strategic initiatives and capitalizing on heightened consumer demand to expand our market share. We are experiencing strong gains both in stores and online fueled by an increasing customer count, a compelling assortment and a fulfilling shopping experience. The consistency and duration of the outsized growth in sales seems to indicate that we have captured significant market share which should be sustainable. With our sales momentum continuing thus far in the third quarter and inventories in a solid position, we are optimistic about our prospects for the upcoming holiday season. Looking further ahead, we see a long runway for sustained growth and believe the company is poised to deliver increased shareholder value for years to come.”

Operating Results for the second quarter ended September 25, 2021, compared to the second quarter ended September 26, 2020

  • Net sales increased 69.5 percent to $312.7 million from $184.5 million in the prior-year period. Consolidated same-store sales increased 61.7 percent with retail store same-store sales up 66.0 percent and e-commerce same-store sales up 41.6 percent. The increase in net sales was the result of an increase of 61.7 percent in consolidated same-store sales and the incremental sales from new stores opened over the past twelve months. Net sales in the prior-year period were adversely impacted by decreases in retail store sales resulting from decreased traffic in our stores from customers staying at home in response to the COVID-19 crisis.
  • Gross profit was $118.2 million, or 37.8 percent of net sales, compared to $55.5 million, or 30.1 percent of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The increase in gross profit rate of 770 basis points was driven by 410 basis points of leverage in buying and occupancy costs as a result of expense leverage on higher sales and a 360-basis point increase in merchandise margin. Merchandise margin increased 360 basis points primarily as a result of better full-price selling and growth in exclusive brand penetration.
  • Selling, general and administrative expenses were $68.0 million, or 21.8 percent of net sales, compared to $45.4 million, or 24.6 percent of net sales, in the prior-year period. The increase in selling, general and administrative expenses was primarily a result of higher store payroll, higher overhead and increased marketing expenses in the current-year period compared to the prior-year period which was impacted by COVID-19. Selling, general and administrative expenses as a percentage of net sales decreased by 290 basis points primarily as a result of expense leverage on higher sales.
  • Income from operations increased $40.1 million to $50.1 million, or 16.0 percent of net sales, compared to $10.0 million, or 5.4 percent of net sales, in the prior-year period. This increase represents 1,060 basis points of improvement in operating profit margin.
  • Net income was $37.9 million, or $1.25 per diluted share, compared to a net income of $5.8 million, or $0.20 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes an approximately $0.03 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 in the current-year period was $1.22, compared to net income per diluted share of $0.20 in the prior-year period.

Operating results for the six months ended September 25, 2021 compared to the six months ended September 26, 2020

  • Net sales increased 86.3 percent to $619.0 million from $332.3 million in the prior-year period. Consolidated same-store sales increased 69.1 percent with retail store same-store sales up 81.5 percent and e-commerce same-store sales up 24.4 percent. The increase in net sales was the result of an increase of 69.1 percent in consolidated same-store sales, the sales contribution from temporarily closed stores that were excluded from the comp base, and the incremental sales from new stores opened over the past twelve months. Net sales in the prior-year period were adversely impacted by decreases in retail store sales resulting from decreased traffic in our stores from customers staying at home in response to the COVID-19 crisis and temporary store closures.
  • Gross profit was $234.6 million, or 37.9 percent of net sales, compared to $95.7 million, or 28.8 percent of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The increase in gross profit rate of 910 basis points was driven by 520 basis points of leverage in buying and occupancy costs as a result of expense leverage on higher sales and a 390 basis point increase in merchandise margin. Merchandise margin increased 390 basis points primarily as a result of better full-price selling, increased penetration of store sales compared to the prior year, and growth in exclusive brand penetration.
  • Selling, general and administrative expenses were $130.8 million, or 21.1 percent of net sales, compared to $83.9 million, or 25.2 percent of net sales, in the prior-year period. The increase in selling, general and administrative expenses was primarily a result of higher store payroll, higher overhead and increased marketing expenses in the current-year period compared to the prior-year period which was impacted by COVID-19. Selling, general and administrative expenses as a percentage of net sales decreased by 410 basis points primarily as a result of expense leverage on higher sales.
  • Income from operations increased $92.0 million to $103.8 million, or 16.8 percent of net sales, compared to $11.8 million, or 3.6 percent of net sales, in the prior-year period. This increase represents 1,320 basis points of improvement in operating profit margin.
  • Net income was $78.5 million, or $2.59 per diluted share, compared to net income of $5.3 million, or $0.18 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes a $0.12 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 in the current-year period was $2.47, compared to net income per diluted share of $0.18 in the prior-year period.

Balance sheet highlights as of September 25, 2021

  • Cash of $39.5 million;
  • Average inventory per store increased 8.8 percent on a same-store basis compared to September 26, 2020;
  • Total debt of $50.0 million, including a zero balance under the revolving credit facility; and
  • On July 26, 2021, the company expanded its revolving credit facility to $180.0 million.

Current Business
For the first four weeks of the current quarter, sales were up 58 percent against the year-ago quarter and 67 percent against the 2019 quarter. Retail segment sales were up 58 percent against the year-ago quarter and 67 percent against the 2019 quarter. E-commerce segment sales were up 58 percent against the year-ago quarter and 69 percent against the 2019 quarter.

Fiscal Year 2022 Outlook
The company provided the following full-year fiscal 2022 guidance:

  • New unit growth of 10 percent, in line with prior guidance;
  • Exclusive brand penetration growth of 350 basis points compared to full-year fiscal 2021;
  • Effective tax rate of 25.4 percent; and
  • Capital expenditures between $36.0 to $39.0 million.

CFO Appointment
Boot Barn also announced the appointment of Jim Watkins as CFO, effective November 1, 2021. Watkins has worked at Boot Barn in a variety of roles since October 2014, most recently as the company’s senior vice president, Finance and Investor Relations. Prior to Boot Barn, Watkins was the vice president, Corporate Controller and Principal Accounting Officer of Mindspeed Technologies, a publicly-traded semiconductor company. Prior to Mindspeed, he worked as an auditor at Ernst & Young for 12 years. Watkins is a CPA licensed in California.

Greg Hackman will continue as Boot Barn’s executive vice president and COO. Hackman joined Boot Barn in 2015 as CFO and has also held the role of chief operating officer since August 2020.

Conroy stated, “I feel fortunate to have the chance to work with both Greg and Jim as we continue to build the Boot Barn business. This new alignment will give Jim the well-deserved acknowledgment of his contributions to the company and the finance organization. It also demonstrates the leadership capabilities of Greg as he has helped position Jim for this expanded role. Given the outsized growth we are presently experiencing, I believe we will benefit greatly from Greg’s more intense focus on sales support functions to help ensure we can continue to scale the business to support the future needs of a national multi-billion-dollar retailer.”

Photo courtesy Boot Barn