Boot Barn Holdings Inc. reported earnings rose 19.5 percent in the third quater ended December 26 on a 6.5 percent revenue gain.
For the quarter ended December 26, 2020:
- Net sales increased 6.5 percent to $302.3 million. Wall Street’s consensus target had been $304 million;
- Same-store sales increased 4.6 percent, comprised of an increase in retail store same-store sales of 1.9 percent and an increase in e-commerce sales of 16.3 percent;
- Net income was $29.6 million, or $1.00 per diluted share, compared to net income of $24.8 million, or $0.85 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes an approximately $0.01 per share benefit due to income tax accounting for share-based compensation compared to a $0.04 per share benefit in the prior-year period. Excluding the tax benefit in both periods, net income per diluted share in the current-year period was $0.99, compared to $0.81 in the prior-year period. Wall Street’s consensus target had been 97 cents; and
- Cash and cash equivalents were $76.3 million.
Jim Conroy, CEO, commented, “Our strong third-quarter results against a difficult economic backdrop demonstrate the power of our business model. The work we’ve done over the last several years successfully executing our key strategic initiatives has provided the foundation to navigate the ongoing headwinds from COVID-19 and deliver mid-single-digit same-store sales growth and a 150-basis point improvement in operating margin. We are encouraged that same-store sales have accelerated in the fourth quarter with continued strength in the margin. While the near term is likely to remain volatile, we believe our merchandising strategies, omnichannel capabilities and organizational expertise, combined with the adjustments we’ve made to our operating model during the pandemic, have us well-positioned to build on our recent accomplishments and head into fiscal 2022 with good momentum.”
Operating Results For The Third Quarter Ended December 26, 2020
Net sales increased 6.5 percent to $302.3 million from $284.0 million in the prior-year period. Consolidated same-store sales increased 4.6 percent with retail store same-store sales up 1.9 percent and e-commerce same-store sales up 16.3 percent. The increase in net sales was the result of an increase of 4.6 percent in same-store sales and the sales contribution from new and acquired stores over the past twelve months.
Gross profit was $106.8 million, or 35.3 percent of net sales, compared to $97.0 million, or 34.2 percent of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The increase in gross profit rate of 120 basis points was driven by a 150-basis point increase in merchandise margin, partially offset by 30 basis points of deleveraging in buying and occupancy costs. Merchandise margin increased 150 basis points primarily as a result of better full-price selling and reduced promotions.
Selling, general and administrative expenses were $65.2 million, or 21.6 percent of net sales, compared to $62.1 million, or 21.9 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 net sales decreased by 30 basis points primarily as a result of expense leverage on higher sales.
Income from operations increased 19.0 percent to $41.6 million, or 13.8 percent of net sales, compared to $35.0 million, or 12.3 percent of net sales, in the prior-year period. This increase represents approximately 150 basis points of improvement in operating profit margin.
Net income was $29.6 million, or $1.00 per diluted share, compared to net income of $24.8 million, or $0.85 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes an approximately $0.01 per share benefit due to income tax accounting for share-based compensation compared to a $0.04 per share benefit in the prior-year period. Excluding the tax benefit in both periods, net income per diluted share in the current-year period was $0.99, compared to $0.81 in the prior-year period.
Operating Results For The Nine Months Ended December 26, 2020
Net sales decreased 3.4 percent to $634.6 million from $656.9 million in the prior-year period. Consolidated same-store sales decreased 3.2 percent with retail store same-store sales down 8.9 percent and e-commerce same-store sales up 24.9 percent. The decrease in retail store sales was primarily due to decreased traffic in our stores that resulted from customers staying at home in response to the COVID-19 and temporary store closures.
Gross profit was $202.5 million, or 31.9 percent of net sales, compared to $218.5 million, or 33.3 percent of net sales, in the prior-year period. Gross profit decreased primarily due to decreased sales resulting from the COVID-19. The decrease in gross profit rate was driven by 140 basis points of deleveraging in buying and occupancy costs primarily as a result of lower sales.
Selling, general and administrative expenses were $149.0 million, or 23.5 percent of net sales, compared to $154.6 million, or 23.5 percent of net sales, in the prior-year period. The decrease in selling, general and administrative expenses was primarily a result of reduced marketing expenses and lower payroll.
Income from operations decreased 16.4 percent to $53.5 million, or 8.4 percent of net sales, compared to $64.0 million, or 9.7 percent of net sales, in the prior-year period. The decline in income from operations is primarily a result of the negative impact on sales and gross margin from decreased traffic in our stores that resulted from customers staying at home in response to the COVID-19 and temporary store closures.
Net income was $34.8 million, or $1.19 per diluted share, compared to net income of $42.2 million, or $1.45 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes an approximately $0.01 per share benefit due to income tax accounting for share-based compensation compared to a $0.07 per share benefit in the prior-year period. Excluding the tax benefit in both periods, net income per diluted share in the current-year period was $1.18, compared to $1.38 in the prior-year period.
Current Business
In the first four weeks of January, sales were up 21 percent. Same-store sales grew 17 percent with retail store comps ahead 20 percent and e-commerce comps up 7 percent.
Photo courtesy Boot Barn