Boot Barn Holdings, Inc. reported earnings more than doubled in the third quarter ended December 25 on a 71 percent revenue gain when compared to the 2019 third quarter.

Due to the impact of COVID-19 on the company’s results in its third fiscal quarter ended December 26, 2020, Boot Barn has provided the below quarterly highlights in comparison to its third fiscal quarter ended December 28, 2019, two years ago.

For the quarter ended December 25, 2021:

  • Net sales increased 71.1 percent to $485.9 million, compared to the quarter ended December 28, 2019, two years ago
  • Compared to the quarter ended December 28, 2019, same-store sales increased 61.0 percent comprised of an increase in retail same-store sales of 59.1 percent and an increase in e-commerce same-store sales of 69.3 percent.
  • Net income was $69.2 million, or $2.27 per diluted share, compared to $24.8 million, or $0.85 per diluted share in the two-year ago period. Net income per diluted share in both the current-year and two-year ago periods includes an approximately $0.04 per share benefit due to income tax accounting for share-based compensation. Excluding the tax benefit in both periods, net income per diluted share in the current-year period was $2.23, compared to $0.81 in the two-year ago period.
  • The company opened 11 new stores during the thirteen weeks ended December 25, 2021.

“Our strong third-quarter results once again demonstrated Boot Barn is a high growth retailer with significant opportunity ahead of us,” said Jim Conroy, president and CEO. “We increased top-line sales in excess of 64 percent in each of the first three quarters of fiscal 2022 compared to pre-pandemic levels two years ago and surpassed $1 billion in sales for the first nine months of this fiscal year, which is greater than any full-year period in the company’s history. On a year-to-date basis, we expanded merchandise margin 330 basis points and improved earnings per share 235 percent compared to the same period two years ago. We continue to demonstrate that we have increased the size of our target market as we have extended beyond our legacy Western customers. We believe that this expansion has resulted in the tremendous sales growth we have seen with strength in both our store and online channels. Importantly, this top-line growth has been accompanied by multiple years of merchandise margin expansion and outsized growth in earnings. I do want to commend the entire Boot Barn team for overcoming the challenges associated with the supply chain, labor shortage and inflation that seems to be disrupting much of the retail landscape.

Operating Results for the Third Quarter ended December 25, 2021 compared to the Third Quarter ended December 26, 2020

  • Net sales increased 60.7 percent to $485.9 million from $302.3 million in the prior-year period. Consolidated same-store sales increased 54.2 percent with retail store same-store sales up 55.7 percent and e-commerce same-store sales up 48.4 percent. The increase in net sales was the result of an increase of 54.2 percent in consolidated same-store sales and the incremental sales from new stores opened over the past twelve months.
  • Gross profit was $191.7 million, or 39.4 percent of net sales, compared to $106.8 million, or 35.3 percent of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The increase in gross profit rate of 410 basis points was driven by 140 basis points of leverage in buying and occupancy costs as a result of expense leverage on higher sales and a 270 basis point increase in merchandise margin. Merchandise margin increased 270 basis points primarily as a result of better full-price selling and growth in exclusive brand penetration.
  • Selling, general and administrative expenses were $99.5 million, or 20.5 percent of net sales, compared to $65.2 million, or 21.6 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, higher store overhead and 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 decreased by 110 basis points primarily as a result of expense leverage on higher sales.
  • Income from operations increased $50.6 million to $92.2 million, or 19.0 percent of net sales, compared to $41.6 million, or 13.8 percent of net sales, in the prior-year period. This increase represents 520 basis points of improvement in operating profit margin.
  • Net income was $69.2 million, or $2.27 per diluted share, compared to a net income of $29.6 million, or $1.00 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes an approximately $0.04 per share benefit due to income tax accounting for share-based compensation compared to a $0.01 per share benefit in the prior-year period. Excluding the tax benefit in the current year period, net income per diluted share in the current-year period was $2.23, compared to net income per diluted share of $0.99 in the prior-year period.

Operating Results for the Nine Months ended December 25, 2021 compared to the Nine Months ended December 26, 2020

  • Net sales increased 74.1 percent to $1.1 billion from $634.6 million in the prior-year period. Consolidated same-store sales increased 61.8 percent with retail store same-store sales up 68.7 percent and e-commerce same-store sales up 35.8 percent. The increase in net sales was the result of an increase of 61.8 percent in consolidated same-store sales, the incremental sales from new stores opened over the past twelve months, and the sales contribution from temporarily closed stores that were excluded from the comp base. Net sales in the prior-year period were adversely impacted by decreases in retail store sales resulting from decreased traffic in our stores from customers staying at home in response to the COVID-19 pandemic and temporary store closures.
  • Gross profit was $426.2 million, or 38.6 percent of net sales, compared to $202.5 million, or 31.9 percent of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The increase in gross profit rate of 670 basis points was driven by 340 basis points of leverage in buying and occupancy costs as a result of expense leverage on higher sales and a 330 basis point increase in merchandise margin. Merchandise margin increased 330 basis points primarily as a result of better full-price selling, increased penetration of store sales compared to the prior year, and growth in exclusive brand penetration.
  • Selling, general and administrative expenses were $230.3 million, or 20.8 percent of net sales, compared to $149.0 million, or 23.5 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, higher store overhead and increased marketing expenses in the current-year period compared to the prior-year period which was impacted by COVID-19. Selling, general and administrative expenses as a percentage of net sales decreased by 260 basis points primarily as a result of expense leverage on higher sales.
  • Income from operations increased $142.5 million to $195.9 million, or 17.7 percent of net sales, compared to $53.5 million, or 8.4 percent of net sales, in the prior-year period. This increase represents 930 basis points of improvement in operating profit margin.
  • Net income was $147.7 million, or $4.86 per diluted share, compared to net income of $34.8 million, or $1.19 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes a $0.17 per share benefit due to income tax accounting for share-based compensation compared to a $0.01 per share benefit in the prior-year period. Excluding the tax benefit in the current year period, net income per diluted share in the current-year period was $4.69, compared to net income per diluted share of $1.18 in the prior-year period.

Balance Sheet highlights as of December 25, 2021

  • Cash of $114.7 million;
  • Average inventory per store increased 22.0 percent on a same-store basis compared to December 26, 2020; and
  • No debt is outstanding. During the quarter the company paid the remaining balance of the $50.0 million term loan and had zero drawn on its revolving credit facility.

Fiscal Year 2022 Outlook
The company provided the following full-year fiscal 2022 guidance:

  • New unit growth of 10 percent;
  • Exclusive brand penetration growth of 450 basis points compared to full-year fiscal 2021;
  • Effective tax rate for the fourth quarter of 25.4 percent; and
  • Capital expenditures between $41.0 million to $43.0 million.

Photo courtesy Boot Barn