Boot Barn Holdings Inc. reported earnings plunged 74 percent in its first quarter ended June 25.
Highlights for the quarter ended June 25, 2016, were as follows:
• Net sales increased 39percent to $133.4 million.
• Consolidated same store sales increased 0.4percent.
• Net income was $0.6 million, or $0.02 per diluted share, compared to $2.3 million, or $0.08 per diluted share in the prior-year period.
• The Company opened two new stores.
Jim Conroy, Chief Executive Officer, commented, “We are pleased to have achieved positive same store sales growth without any significant increase in promotions in a challenging retail environment. The growth was led by outsized sales in our e-commerce business with a particularly strong performance from the Sheplers online business. From a merchandise perspective, our initiatives in the work boots and work apparel categories continue to drive modest growth in those departments. I believe we have taken the appropriate steps to manage through the external pressures on our business, as we continue to build our leading position in the industry.”
Operating Results for the First Quarter Ended June 25, 2016
• Net sales increased 39.0percent to $133.4 million from $96.0 million in the prior-year period. Net sales increased due to contributions from Sheplers (which was acquired in the second quarter of fiscal 2016), a 0.4percent increase in same store sales, and 17 new stores opened over the past twelve months.
• Gross profit increased 32.4percent to $40.8 million, or 30.5percent of net sales, compared to gross profit of $30.8 million, or 32.1percent of net sales, in the prior-year period, driven by the addition of the Sheplers business and 17 new stores opened over the past twelve months. As a percentage of sales, consolidated gross margin declined primarily due to a higher percentage of historically lower-margin Sheplers sales compared to the prior-year period when the Company did not own Sheplers.
• Income from operations decreased 8.0percent to $4.5 million, compared to $4.8 million in the prior-year period. The decrease was driven primarily by additional expenses associated with Sheplers, and higher depreciation and amortization expense associated with new stores opened, in line with the Company’s strategic growth objectives. Excluding acquisition-related expenses of $0.9 million, adjusted income from operations was $5.7 million in the first quarter of fiscal year 2016.
• The Company opened 2 new stores and ended the quarter with 210 stores in 29 states.
• Interest expense was $3.6 million, an increase of $2.8 million, or $0.06 per diluted share, compared to the prior-year period, reflecting additional debt associated with the acquisition of Sheplers in the second quarter of fiscal year 2016.
• Net income was $0.6 million, or $0.02 per diluted share, compared to $2.3 million or $0.08 per diluted share in the prior-year period. Excluding acquisition-related expenses and the adjusted provision for income taxes, adjusted net income was $3.0 million or $0.11 per diluted share, in the first quarter of fiscal year 2016.
Balance Sheet Highlights as of June 25, 2016
• Cash: $5.8 million
• Inventories: Average inventory per store was flat compared to June 27, 2015
• Total debt: $253.5 million
• Line of credit: $60.2 million outstanding on revolving credit facility
Fiscal Year 2017 Outlook
For the fiscal year ending April 1, 2017, the Company continues to expect:
• To open 15 new stores, including two opened in the first quarter.
• Consolidated same store sales between slightly negative to slightly positive.
• Income from operations between $42.4 million and $46.8 million.
• Net income of $16.9 million to $19.6 million.
• Net income per diluted share of $0.63 to $0.73 based on 26.8 million weighted average diluted shares outstanding.
For the fiscal second quarter ending September 24, 2016 the Company expects:
• Consolidated same stores sales to be slightly negative to slightly positive;
• Net income per diluted share of $0.00 to $0.02 based on 26.7 million weighted average diluted shares outstanding.
