Boot Barn’s Q4 Comps Expand 26.9 Percent

Boot Barn Holdings Inc. reported earnings increased more than four-fold in the fourth quarter ended March 27 as same-store sales grew 27 percent.

For The Quarter Ended March 27, 2021

• Net sales increased 37.2 percent to $258.9 million;
• Same-store sales increased 26.9 percent, comprised of an increase in retail store same-store sales of 28.5 percent and an increase in e-commerce sales of 19.5 percent;
• Net income was $24.6 million, or $0.82 per diluted share, compared to net income of $5.7 million, or $0.20 per diluted share in the prior-year period. Net income per diluted share in the current year period includes an approximately $0.07 per share benefit due to income tax accounting for share-based compensation. Net income per diluted share in the prior-year period includes a $0.01 per share benefit due to income tax accounting for share-based compensation and a $0.01 per share benefit from the realization of a state tax operating loss. Excluding the tax benefit in both periods, net income per diluted share in the current-year period was $0.75, compared to $0.18 in the prior-year period; and
• The company opened eight new stores.

For The Fiscal Year Ended March 27, 2021

• Net sales increased 5.7 percent to $893.5 million;
• Same-store sales increased 3.1 percent, comprised of a decrease in retail store same-store sales of 1.1 percent and an increase in e-commerce sales of 23.6 percent;
• Net income was $59.4 million, or $2.01 per diluted share, compared to net income of $47.9 million, or $1.64 per diluted share in the prior-year period. Net income per diluted share in the current year period includes an approximately $0.09 per share benefit due to income tax accounting for share-based compensation. Net income per diluted share in the prior-year period includes a $0.07 per share benefit due to income tax accounting for share-based compensation and a $0.01 per share benefit from the realization of a state tax operating loss. Excluding the tax benefit in both periods, net income per diluted share in the current-year period grew 23 percent to $1.92, when compared to $1.56 in the prior-year period; and
• The company opened 15 new stores.

Jim Conroy, CEO, commented, “I am extremely pleased with the strong finish to fiscal 2021. The pace of our business has been accelerating throughout the year, which along with a recent boost from government stimulus, culminated in record fourth quarter and fiscal year results. Our merchandise, marketing and omnichannel initiatives drove better full-priced selling, fueling margin expansion and solid profitability. At the same time, we increased our store footprint in existing and new geographies, bringing the full Boot Barn experience to a wider consumer audience.”

Conroy continued, “I am very proud of the entire Boot Barn team, and particularly the store’s organization, who have demonstrated incredible resolve throughout the pandemic and have served our customers on the frontline every day. The circumstances of the past year have highlighted the strengths of our business model, enhanced our operational capabilities, and fortified our leadership position in the industry. The combination of solid execution across the organization and macro tailwinds has created tremendously strong topline sales growth in the first six weeks of fiscal 2022. We believe we have started the year with great momentum and sound strategies in place to capitalize on the numerous growth opportunities we believe exist for Boot Barn over the near and long term.”

Operating Results For The Fourth Quarter Ended March 27, 2021
Net sales increased 37.2 percent to $258.9 million from $188.6 million in the prior-year period. Consolidated same-store sales increased 26.9 percent with retail store same-store sales up 28.5 percent and e-commerce same-store sales up 19.5 percent. The increase in net sales was the result of an increase of 26.9 percent in same-store sales, the sales contribution from temporarily closed stores that were excluded from the comp base, and the incremental sales from new stores opened over the past twelve months.

Gross profit was $92.4 million, or 35.7 percent of net sales, compared to $58.0 million, or 30.7 percent of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The increase in gross profit rate of 500 basis points was driven by a 300-basis point increase in merchandise margin and 200 basis points of leverage in buying and occupancy costs. Merchandise margin increased 300 basis points primarily as a result of better full-price selling and a 120 basis point benefit from a lower shrink.

Selling, general and administrative expenses were $59.5 million, or 23.0 percent of net sales, compared to $48.3 million, or 25.6 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 increased incentive-based compensation. 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 238.9 percent to $32.9 million, or 12.7 percent of net sales, compared to $9.7 million, or 5.1 percent of net sales, in the prior-year period. This increase represents approximately 760 basis points of improvement in operating profit margin.

Net income was $24.6 million, or $0.82 per diluted share, compared to net income of $5.7 million, or $0.20 per diluted share in the prior-year period. Net income per diluted share in the current year period includes an approximately $0.07 per share benefit due to income tax accounting for share-based compensation. Net income per diluted share in the prior-year period includes a $0.01 per share benefit due to income tax accounting for share-based compensation and a $0.01 per share benefit from the realization of a state tax operating loss. Excluding the tax benefit in both periods, net income per diluted share in the current-year period was $0.75, compared to $0.18 in the prior-year period.

Operating Results For The Fiscal Year Ended March 27, 2021
Net sales increased 5.7 percent to $893.5 million from $845.6 million in the prior-year period. Consolidated same-store sales increased 3.1 percent with retail store same-store sales declining 1.1 percent and e-commerce same-store sales up 23.6 percent. The decrease in retail store sales was primarily due to decreased traffic in our stores in the first half of our fiscal year that resulted from customers staying at home in response to the COVID-19 crisis and temporary store closures. The increase in net sales was the result of incremental sales from new stores opened during the past twelve months and an increase of 3.1 percent in same-store sales.

Gross profit was $294.9 million, or 33.0 percent of net sales, compared to $276.5 million, or 32.7 percent of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The increase in gross profit rate of 30 basis points was driven by a 90-basis point increase in merchandise margin, partially offset by 60 basis points of deleveraging in buying and occupancy costs. Merchandise margin increased 90 basis points primarily as a result of better full-price selling, lower shrink and increased exclusive brand penetration.

Selling, general and administrative expenses were $208.6 million, or 23.3 percent of net sales, compared to $202.8 million, or 24.0 percent of net sales, in the prior-year period. The increase in selling, general and administrative expenses was primarily a result of higher store labor and increased incentive-based compensation, partially offset by reduced marketing spend. Selling, general and administrative expenses as a percentage of net sales decreased 70 basis points primarily as a result of expense leverage on higher sales.

Income from operations increased 17.2 percent to $86.3 million, or 9.7 percent of net sales, compared to $73.7 million, or 8.7 percent of net sales, in the prior-year period. This increase represents approximately 100 basis points of improvement in operating profit margin.

Net income was $59.4 million, or $2.01 per diluted share, compared to net income of $47.9 million, or $1.64 per diluted share in the prior-year period. Net income per diluted share in the current year period includes an approximately $0.09 per share benefit due to income tax accounting for share-based compensation. Net income per diluted share in the prior-year period includes a $0.07 per share benefit due to income tax accounting for share-based compensation and a $0.01 per share benefit from the realization of a state tax operating loss. Excluding the tax benefit in both periods, net income per diluted share in the current-year period was $1.92, compared to $1.56 in the prior-year period.

Balance Sheet Highlights As Of March 27, 2021

• Cash of $73.1 million;
• Average inventory per store decreased approximately 8.7 percent on a same-store basis compared to March 28, 2020;
• Total debt of $111.5 million, including zero balance drawn under the $165 million revolving credit facility; and
• Subsequent to March 27, 2021, the company made a voluntary prepayment of $41.5 million on the term loan facility, reducing the outstanding principal balance to $70.0 million.

Fiscal Year 2022 Outlook
The company is not providing complete full-year fiscal 2022 guidance, but is providing the following outlook for the full fiscal year:

• New unit growth of 10 percent;
• Exclusive brand penetration growth of 250 basis points;
• Effective tax rate of 26.0 percent; and
• Capital expenditures between $33.0 to $36.0 million.

Photo courtesy Boot Barn