Boot Barn Holdings, Inc. reported flat earnings in the first fiscal quarter ended June 25 as sales jumped 19 percent and same-store sales gained 10 percent. EPS exceeded  guidance, but the footwear retailer reduced its outlook for the year due to “recent macroeconomic uncertainty.” 

For the quarter ended June 25, 2022

  • Net sales increased 19.4 percent over the prior-year period to $365.9 million;
  • Same-store sales increased 10.0 percent compared to the prior-year period, comprised of an increase in retail store same-store sales of 10.1 percent and an increase in e-commerce same-store sales of 9.3 percent;
  • Net income was $39.3 million, or $1.29 per diluted share, compared to $40.6 million, or $1.35 per diluted share in the prior-year period. Net income per diluted share in the current-year and prior-year periods includes approximately $0.03 and $0.09 per share benefit, respectively, primarily due to income tax accounting for share-based compensation. Excluding the tax benefits, net income per diluted share in both periods was $1.26; and
  • The retailer opened 11 new stores bringing its total count to 311.

“Our first quarter performance represents a strong start to the new year,” said Jim Conroy, President and CEO. “Following the tremendous growth and profitability we achieved in fiscal 2022, we are very pleased to report another quarter of double-digit same-store sales growth and earnings per share that were ahead of our expectations. Our merchandise and marketing strategies, combined with our expanding omni-channel capabilities, continue to fuel strong full-price selling in stores and online. Our new stores are proving to be highly productive, and we feel great about our real estate pipeline. We believe the addition of these new stores will help us to further gain share in the combined $40 billion western, work and country lifestyle markets. Given the current tone of the business, we continue to expect total sales to grow double digits versus last year driven by new store openings with same store sales flat to growing low single digits.”

Operating Results for the First Quarter Ended June 25, 2022
Compared to the First Quarter Ended June 26, 2021

  • Net sales increased 19.4 percent to $365.9 million from $306.3 million in the prior-year period. Consolidated same-store sales increased 10.0 percent, with retail store same-store sales up 10.1 percent and e-commerce same-store sales up 9.3 percent. The increase in net sales resulted from the increase in consolidated same-store sales and the incremental sales from new stores opened over the past twelve months;
  • Gross profit was $137.8 million, or 37.7 percent of net sales, compared to $116.4 million, or 38.0 percent of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The decrease in gross profit rate of 30 basis points was driven by 70 basis points of deleveraging in buying, occupancy and distribution center costs, partially offset by a 40 basis-point increase in merchandise margin. Merchandise margin increased 40 basis points despite a 70 basis-point headwind from increased freight charges. The merchandise margin expansion was primarily a result of growth in exclusive brand penetration and better full-price selling;
  • Selling, general and administrative expenses were $85.4 million, or 23.3 percent of net sales, compared to $62.8 million, or 20.5 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 and overhead, in addition to increased marketing expenses in the current-year period compared to the prior-year period. Selling, general and administrative expenses as a percentage of net sales increased by 280 basis points primarily due to higher store labor and marketing expenses as a percentage of sales;
  • Income from operations decreased $1.2 million to $52.4 million, or 14.3 percent of net sales, compared to $53.6 million, or 17.5 percent of net sales, in the prior-year period, primarily due to higher selling, general and administrative expenses; and
  • Net income was $39.3 million, or $1.29 per diluted share, compared to net income of $40.6 million, or $1.35 per diluted share in the prior-year period. Net income per diluted share in the current-year and prior-year periods includes approximately $0.03 and $0.09 per share benefit, respectively, primarily due to income tax accounting for share-based compensation. Excluding the tax benefits, net income per diluted share was $1.26 in both current and prior-year periods.

Sales of $365.9 million were just short of company guidance, calling for sales of $367 million.  Same-store sales growth of 10 percent was in line with guidance. Income from operations of $52.4 million, or 14.3 percent,  exceeded guidance calling for operating earnings of $47 million, or 12.8 percent of sales. Adjusted net income of $1.26 topped guidance of $1.14.

Current Business
In July, same-store sales were up 0.6 percent, with a 1.5 percent retail gain offsetting a 4.3 percent e-commerce decline.

Balance Sheet Highlights As Of June 25, 2022

  • Cash of $16.0 million; and
  • $74.9 million was drawn under its revolving credit facility, which was expanded earlier this month by $70 million to a capacity of $250 million and extended to July 2027.

Fiscal Year 2023 Outlook
In light of recent macroeconomic uncertainty, the company is providing updated guidance for the fiscal year ending April 1, 2023, superseding in its entirety the previous guidance issued in its fourth quarter and fiscal year 2022 earnings report on May 10, 2022. As a result, for the fiscal year ending April 1, 2023, the company now expects:

  • To open 40 new stores;
  • Total sales of $1.68 billion to $1.70 billion, representing a growth of 12.9 percent to 14.2 percent over the prior year;
  • Same-store sales range of approximately flat to 2.0 percent;
  • Income from operations is between $247 million and $255 million; this represents approximately 14.7 percent to 15.0 percent of sales;
  • Interest expense of $4 million;
  • Effective tax rate of 25.2 percent for the remaining nine months of the year;
  • Net income of $182.7 million to $188.6 million;
  • Net income per diluted share of $6.00 to $6.20 based on 30.5 million weighted average diluted shares outstanding;
  • Capital expenditures are between $80 million and $87 million; and
  • Fiscal year 2023 is a 53-week year. The company expects to generate approximately $34 million of sales and earn approximately $0.19 per diluted share in the 53rd week, which is included in the above guidance range.

Previously, guidance called for total sales of $1.740 billion, same-store sales growth of 4.8 percent, income from operations of $266 million or 15.3 percent of sales, and net income per diluted share of $6.41.

For Fiscal Second Quarter Ending September 24, 2022, Boot Barn Expects:

  • Total sales of $339 million to $346 million, with same-store sales of approximately flat; and
  • Net income per diluted share of $0.87 to $0.93 based on 30.4 million weighted average diluted shares outstanding.