Boot Barn Holdings Inc. on Wednesday announced it had raised its net income, EPS and revenue guidance for fiscal 2020 after posting a solid fiscal second quarter ended September 28.

Highlights for the quarter ended September 28, 2019, were as follows:

  • Net sales increased 11.3 percent to $187.2 million.
  • Same store sales increased 7.8 percent, including an increase in retail store same store sales of 8 percent and an increase in e-commerce sales of 7 percent.
  • Net income was $7.7 million, or $0.26 per diluted share, compared to $4.5 million, or $0.16 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes $0.02 per share of tax benefit from the exercise of stock options compared to approximately $0.04 per share of tax benefit from the exercise of stock options in the prior-year period. Excluding the tax benefit in both years, net income per diluted share in the current-year period doubled to $0.24, compared to $0.12 in the prior-year period.

Jim Conroy, CEO, said, “We sustained our strong momentum from early in the new fiscal year and delivered an outstanding second quarter. For the tenth consecutive quarter, our physical locations posted positive same store sales, which along with an acceleration in e-commerce growth, fueled a consolidated 7.8 percent comp gain. There were a number of highlights from our performance led by broad-based strength across virtually all categories and geographies, strong full-price selling, a sharp increase in exclusive brand penetration, and the addition of eight stores in the quarter. On top of robust top-line results, we also achieved a 170 basis point improvement in operating margin and earnings per share that were well ahead of expectations. Same store sales growth has accelerated to approximately 10 percent as we have moved into the third quarter and we believe that the strategies we have in place have us well positioned to capitalize on our opportunities during the upcoming holiday shopping season and over the long-term.”

Operating Results for the Second Quarter Ended September 28, 2019

  • Net sales increased 11.3 percent to $187.2 million from $168.1 million in the prior-year period. Consolidated same store sales increased 7.8 percent with retail stores up 8 percent and e-commerce same store sales up 7 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 $59.3 million, or 31.7 percent of net sales, compared to $50.9 million, or 30.3 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 140 basis point increase in gross profit rate was driven by a 200 basis point increase in merchandise margin rate, partially offset by 60 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 expense was $46.4 million, or 24.8 percent of net sales, compared to $42.2 million, or 25.1 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 48.7 percent to $12.9 million, or 6.9 percent of net sales, compared to $8.7 million, or 5.2 percent of net sales, in the prior-year period. This increase represents approximately 170 basis points of improvement in operating profit margin.
  • Net income was $7.7 million, or $0.26 per diluted share, compared to $4.5 million, or $0.16 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes $0.02 per share of tax benefit from the exercise of stock options compared to approximately $0.04 per share of tax benefit from the exercise of stock options in the prior-year period. Excluding the tax benefit in both years, net income per diluted share in the current-year period grew 100 percent to $0.24, compared to $0.12 in the prior-year period.

Operating Results for the Six Months Ended September 28, 2019

  • Net sales increased 13 percent to $373 million from $330.1 million in the prior-year period. Consolidated same store sales increased 8.6 percent with retail stores up 9.5 percent and e-commerce same store sales up 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 $121.5 million, or 32.6 percent of net sales, compared to $102.4 million, or 31 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 160 basis point increase in gross profit rate was driven by a 170 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 expense was $92.5 million, or 24.8 percent of net sales, compared to $83.8 million, or 25.4 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 60 basis points as a result of expense leverage on higher sales.
  • Income from operations grew 56.5 percent to $29 million, or 7.8 percent of net sales, compared to $18.5 million, or 5.6 percent of net sales, in the prior-year period. This increase represents approximately 220 basis points of improvement in operating profit margin.
  • Net income was $17.4 million, or $0.60 per diluted share, compared to $11.3 million, or $0.39 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes $0.03 per share of tax benefit from the exercise of stock options compared to approximately $0.12 per share of tax benefit from the exercise of stock options in the prior-year period. Excluding the tax benefit in both years, net income per diluted share in the current-year period grew 111.1 percent to $0.57, compared to $0.27 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 6.5 percent, compared to the Company’s prior outlook of 6 percent.
  • Income from operations of $78 million to $81 million, compared to the Company’s prior outlook of $75.4 million to $78.6 million.
  • Interest expense of approximately $13.6 million, compared to the Company’s prior outlook of approximately $14.2 million.
  • Net income of $49 million to $51.3 million, compared to the Company’s prior outlook of $46.2 million to $48.5 million.
  • Net income per diluted share of $1.67 to $1.75 based on 29.3 million weighted average diluted shares outstanding, compared to the Company’s prior outlook of $1.57 to $1.65.

For the fiscal third quarter ending December 28, 2019, the Company expects:

  • Same store sales growth of 5 percent.
  • Total sales of $275 million to $280 million.
  • Net income per diluted share of $0.73 to $0.77 based on 29.3 million weighted average diluted shares outstanding.