Boot Barn Holdings, Inc. reported net sales increased 1.1 percent year-over-year (YoY) to $520.4 million in the fiscal third quarter ended December 30, 2023. Same-store sales decreased 9.7 percent YoY, cycling 51 percent same-store sales growth on a 2-year stack basis. The 9.7 percent decrease in consolidated same-store sales is said to be comprised of a decrease in retail store same-store sales of 9.4 percent and a decrease in e-commerce same-store sales of 11.5 percent. The increase in net sales was said to be the result of the incremental sales from new stores opened over the past twelve months, partially offset by the decrease in consolidated same-store sales.

Gross margin was up 180 basis points to 38.3 percent of net sales, compared to 36.5 percent of net sales, in the prior-year period, driven primarily by a 300 basis-point increase in merchandise margin rate partially offset by 120 basis points of deleverage in buying, occupancy and distribution center costs. The increase in merchandise margin rate was driven by a 250 basis-point improvement in freight expense as a percentage of net sales and 50 basis points of product margin expansion resulting primarily from lower promotional activity and growth in exclusive brand penetration. The deleverage in buying, occupancy and distribution center costs was driven primarily by the occupancy costs of 49 new stores and operating costs related to the new Kansas City distribution center.

Gross profit increased primarily due to merchandise margin expansion and sales growth.

Selling, general and administrative (SG&A) expenses were $124.0 million, or 23.8 percent of net sales, compared to $115.3 million, or 22.4 percent of net sales, in the prior-year period. The increase in SG&A expenses was said to be primarily a result of higher general and administrative expenses, store payroll associated with operating 49 new stores and other operating expenses in the current year. SG&A expenses as a percentage of net sales increased by 140 basis points primarily as a result of higher overhead, payroll and other operating expenses.

The resulting income from operations increased $2.6 million to $75.1 million, or 14.4 percent of net sales, in fiscal Q3, compared to $72.5 million, or 14.1 percent of net sales, in the prior-year period, primarily due to the factors driving the SG&A and gross profit variances YoY.

Net income was $55.6 million, or $1.81 per diluted share, for the most recent quarter, compared to net income of $52.8 million, or $1.74 per diluted share in the prior-year period.

The company opened 11 new stores, bringing its total store count to 382.

Boot Barn ended the quarter with cash of $107 million and zero drawn under its $250 million revolving credit facility.

Average inventory per store decreased approximately 1 percent on a same-store basis compared to December 24, 2022.

“I am pleased with our third quarter performance,” commented Jim Conroy, president and CEO of Boot Barn Holdings, Inc. “We added 11 new stores and were able to maintain our consistent track record of delivering growth. Excluding three quarters in calendar 2020 that were impacted by the pandemic, the third quarter marks our 38th consecutive quarter of year-over-year sales growth since our IPO in 2014, nearly ten years ago. Our top line was driven by the sales from the 49 new stores opened over the past 12 months, which more than offset a 9.7 percent decline in same-store sales. We also grew earnings compared to last year through a combination of sales growth, disciplined expense control and an increase in merchandise margin, which benefited from improved freight. These results underscore the strength of the Boot Barn business model and are a testament to solid execution across the organization.”

Fiscal Year 2024 Outlook
The company provided updated guidance for the fiscal year ending March 30, 2024, superseding in its entirety the previous guidance issued in its second quarter earnings report on November 2, 2023.

For the fiscal year ending March 30, 2024, the company now expects:

  • To open 52 new stores.
  • Total sales of $1.65 billion to $1.66 billion, representing a decline of 0.2 percent to 0.4 percent over the prior year, which was a 53-week year.
  • Same-store sales decline of approximately 7.0 percent to 6.3 percent, with retail store same-store sales declines of 6.3 percent to 5.5 percent and an e-commerce same-store sales decline of 11.7 percent.
  • Gross profit between $605.7 million and $610.6 million, or approximately 36.6 percent to 36.7 percent of sales.
  • Gross profit reflects an estimated 170 basis-point increase in merchandise margin, including a 130 basis-point improvement from freight expense. We anticipate 180 basis points of deleverage in buying, occupancy and distribution center costs.
  • SG&A expenses between $411.8 million and $412.7 million, representing approximately 24.9 percent to 24.8 percent of sales.
  • Income from operations between $194.0 million and $198.0 million, representing approximately 11.7 percent to 11.9 percent of sales.
  • Net income of $142.8 million to $145.8 million.
  • Net income per diluted share of $4.65 to $4.75 based on 30.7 million weighted average diluted shares outstanding.
  • Capital expenditures between $95 million and $105 million.

For the fiscal fourth quarter ending March 30, 2024, the Company expects:

  • Total sales of $376 million to $386 million, representing a decline of 11.7 percent to 9.3 percent YoY, which was a 14-week quarter.
  • Same-store sales decline of approximately 9.0 percent to 6.3 percent YoY, with retail store same-store sales declines of 8.5 percent to 5.5 percent and an e-commerce same-store sales decline of 13.0 percent.
  • Gross profit between $130.7 million and $135.6 million, or approximately 34.8 percent to 35.2 percent of sales.
  • Gross profit reflects an estimated 160 basis-point increase in merchandise margin YoY, including a 140 basis-point improvement from freight expense. BOOT anticipates 310 basis points of deleverage in buying, occupancy and distribution center costs.
  • Selling, general and administrative expenses between $96.7 and $97.6 million. This represents approximately 25.7 percent to 25.3 percent of sales.
  • Income from operations between $34.0 million and $38.0 million, representing approximately 9.0 percent to 9.8 percent of sales.
  • Net income per diluted share of 82 cents to 92 cents based on 30.7 million weighted average diluted shares outstanding.

Image courtesy Boot Barn Holdings, Inc.