By Thomas J. Ryan
Boot Barn Inc. (NYSE:BOOT) reported a profit of $479,000, or 2 cents a share, in its second quarter ended September 24, rebounding from a loss of $3.3 million, or 13 cents, a year ago. The western boot retailer had expected earnings between 0 cents and 2 cents a share.
Revenues increased 3.3 percent to $134 million, with consolidated same-store sales ahead 1.8 percent. Comps were expected to be slightly negative to slightly positive.
On the October 26 conference call with analysts, Jim Conroy, CEO, said the strategies the retailer put in place helped offset the drag of oil and commodity pressures that are affecting Texas, Colorado, Wyoming and North Dakota
“On a consolidated basis, we have experienced sequential improvement in same-store sales in each of the last three quarters driven by improvement in our store’s business,” Conroy said.
Same-store growth was boosted by strength in work boots and men’s western boots. The Boot Barn chain saw growth in sales of men’s and ladies western apparel, led by sales of dresses and graphic tees as part of its summer festival styling. Men’s jeans, shirts and outerwear also experienced strong growth during the quarter.
For the quarter, same-store sales in the company’s brick-and-mortar stores declined low-single digits, with the legacy Boot Barn stores outperforming the rebranded Sheplers stores. E-commerce sales also delivered a strong performance and now represent 17 percent of trailing 12-month total sales.
By region, strong sales continued to be seen in many of its markets, particularly in the West. While challenges continue in Colorado, Wyoming and North Dakota due to softness of local economies dependent on oil and other commodities, same-store sales in the 30 stores across these three states improved sequentially from negative teens in the first quarter to high-single-digit declines in this quarter. Same-store sales in Texas stores performed in line with the prior quarter, experiencing negative mid-single-digit declines.
The bottom line benefited from a reduction in SG&A expenses to 23.9 percent of sales from 28 percent a year ago.
Gross margins eroded to 27.2 percent from 29.6 percent on an adjusted basis a year ago. The decline in the margin rate primarily reflects occupancy costs associated with the opening of 13 stores over the last 12 months, additional depreciation expense from its rebranded Sheplers stores and higher loyalty rewards redemption, shrink and aged inventory provision.
Looking ahead, Boot Barn slightly raised its guidance for the year on the improved second-quarter performance. Comps are expected to be slightly positive, up from previous expectations of slightly negative to slightly positive comps. EPS is projected in the range of 66 cents to 73 cents, up from 63 cents to 73 cents previously.
For the third quarter ended December 24, earnings are expected in the range of 38 to 43 cents a share, which compares with 45 cents a year ago. Comps are expected to be slightly positive.
“Our new merchandise categories and product offerings are resonating well with our customers, and we believe we have appropriately invested in the right level and composition of inventory,” Conroy said. “We remain committed to prudently investing in our business as we continue to grow our leading market share of the western and work wear markets across our channels.”
Photo courtesy Boot Barn
