Boot Barn Holdings, Inc. reported sales fell steeper than expected in the fiscal fourth quarter ended April 1, but earnings rose slightly and topped guidance. 

Sales of $425.7 million came in below Boot Barn’s guidance in the range of  $438 million to $448 million. The same-store sales decline of 5.5 percent missed guidance in the range of negative 3.0 percent to 0.5 percent. Adjusted EPS of $1.51 came in at the high-end of guidance in the range of $1.42 to $1.51 a share.

For the quarter ended April 1, 2023 (14 weeks) compared to the quarter ended March 26, 2022 (13 weeks):

  • Net sales increased 11.0 percent over the prior-year period to $425.7 million, cycling 48.1 percent net sales growth in the prior-year period.
  • Same store sales decreased 5.5 percent compared to the prior-year period, cycling 33.3 percent same store sales growth in the prior-year period. The 5.5 percent decrease in consolidated same store sales is comprised of a decrease in retail store same store sales of 3.3 percent and a decrease in e-commerce same store sales of 18.4 percent.
  • Net income was $46.4 million, or $1.53 per diluted share, compared to $44.7 million, or $1.47 per diluted share in the prior-year period. Excluding a $0.02 per share tax benefit related primarily to income tax accounting for share-based compensation, net income per diluted share was $1.51 in the current-year period.
  • The company opened 12 new stores, bringing its total store count to 345.

For the fiscal year ended April 1, 2023 (53 weeks) compared to the fiscal year ended March 26, 2022 (52 weeks):

  • Net sales increased 11.4 percent over the prior fiscal year to $1.658 billion, cycling 66.6 percent net sales growth in the prior fiscal year.
  • Same store sales decreased 0.1 percent compared to the prior fiscal year, cycling 53.7 percent same store sales growth in the prior fiscal year. The 0.1 percent decrease in consolidated same store sales is comprised of an increase in retail store same store sales of 1.8 percent and a decrease in e-commerce same store sales of 10.2 percent.
  • Net income was $170.6 million, or $5.62 per diluted share, compared to $192.5 million, or $6.33 per diluted share in the prior fiscal year. Net income per diluted share in fiscal 2023 and fiscal 2022 includes an approximately $0.05 and $0.17 per share benefit, respectively, primarily due to income tax accounting for share-based compensation. Excluding the tax benefit in both years, net income per diluted share in fiscal 2023 was $5.57, compared to $6.16 in fiscal 2022.
  • The company opened 45 new stores during fiscal 2023, bringing its total store count to 345.

Jim Conroy, president and chief executive officer, commented “I am proud of the team for delivering another solid performance as we were able to hold on to the outsized gains from the prior year. We experienced double-digit total sales growth while expanding product margin for the 7th consecutive year. While our e-commerce business faced top-line sales pressure, our stores achieved positive same-store sales growth for the year as they cycled a remarkable 57 percent comp store growth in fiscal 2022. Our new store opening efforts continue to pay off as we added 45 new stores, including expansion into five new states. Once again, our exclusive brands have exceeded our expectations with penetration growing nearly six percentage points during fiscal 2023. I am encouraged by the ongoing progress across each of our four strategic initiatives and feel the company is well positioned for continued growth.”

Operating Results for the Fourth Quarter Ended April 1, 2023 (14 weeks)
Compared to the Fourth Quarter Ended March 26, 2022 (13 weeks)

  • Net sales increased 11.0 percent to $425.7 million from $383.3 million in the prior-year period. Consolidated same-store sales decreased 5.5 percent with retail store same-store sales decreasing 3.3 percent and e-commerce same-store sales decreasing 18.4 percent. The increase in net sales was the result of the incremental sales from new stores opened over the past twelve months and the extra week of sales in the fourth quarter of fiscal 2023, partially offset by the consolidated same-store sales decline of 5.5 percent.
  • Gross profit was $155.8 million, or 36.6 percent of net sales, compared to $148.8 million, or 38.8 percent of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The decrease in gross profit rate of 220 basis points was driven primarily by a 120 basis-point decrease in merchandise margin and 100 basis points of deleverage in buying, occupancy and distribution center costs. The decline in merchandise margin rate was primarily driven by a 140 basis-point headwind from higher freight expense, partially offset by 30 basis points of product margin expansion resulting from growth in exclusive brand penetration.
  • Selling, general and administrative expenses were $93.1 million, or 21.9 percent of net sales, compared to $86.4 million, or 22.6 percent of net sales, in the prior-year period. The increase in selling, general and administrative expenses was primarily a result of an additional week of operating expenses in the fourth quarter of fiscal 2023, higher store payroll and increased store-related 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 70 basis points primarily as a result of lower incentive-based compensation, marketing expenses, and leverage from the 14th week.
  • Income from operations increased $0.3 million to $62.7 million, or 14.7 percent of net sales, compared to $62.4 million, or 16.3 percent of net sales, in the prior-year period, primarily due to the factors noted above.
  • Net income was $46.4 million, or $1.53 per diluted share, compared to net income of $44.7 million, or $1.47 per diluted share in the prior-year period. Excluding a $0.02 per share tax benefit related primarily to income tax accounting for share-based compensation, net income per diluted share was $1.51 in the current-year period.

Operating Results for the Fiscal Year Ended April 1, 2023 (53 weeks)
Compared to the Fiscal Year Ended March 26, 2022 (52 weeks)

  • Net sales increased 11.4 percent to $1.658 billion from $1.488 billion in the prior fiscal year. Consolidated same-store sales decreased 0.1 percent with retail store same-store sales increasing 1.8 percent and e-commerce same-store sales decreasing 10.2 percent. The increase in net sales was the result of the incremental sales from new stores opened over the past twelve months and the additional sales from the 53rd week.
  • Gross profit was $610.6 million, or 36.8 percent of net sales, compared to $575.1 million, or 38.6 percent of net sales, in the prior fiscal year. Gross profit increased primarily due to increased sales. The decrease in gross profit rate of 180 basis points was driven by 110 basis points of deleverage in buying, occupancy and distribution center costs and a 70 basis-point decrease in merchandise margin. The decline in merchandise margin rate was primarily driven by a 100 basis-point headwind from higher freight expense, partially offset by 30 basis points of product margin expansion resulting from growth in exclusive brand penetration.
  • Selling, general and administrative expenses were $378.8 million, or 22.9 percent of net sales, compared to $316.7 million, or 21.3 percent of net sales, in the prior fiscal year. The increase in selling, general and administrative expenses was primarily a result of higher store payroll and store-related expenses, increased marketing expenses in fiscal 2023 compared to fiscal 2022, and additional operating expenses in the 53rd week. Selling, general and administrative expenses as a percentage of net sales increased by 160 basis points primarily as a result of an increase in store-related expenses, store payroll and marketing expenses.
  • Income from operations decreased $26.6 million to $231.8 million, or 14.0 percent of net sales, compared to $258.3 million, or 17.4 percent of net sales, in the prior fiscal year, primarily due to the factors noted above.
  • Net income was $170.6 million, or $5.62 per diluted share, compared to net income of $192.5 million, or $6.33 per diluted share in the prior fiscal year. Net income per diluted share in fiscal 2023 and fiscal 2022 includes an approximately $0.05 and $0.17 per share benefit, respectively, primarily due to income tax accounting for share-based compensation. Excluding the tax benefits, net income per diluted share in fiscal 2023 was $5.57, compared to $6.16 in fiscal 2022.

Sales by Channel
By channel, total net sales grew 11.0 percent in the quarter. Overall same-store sales were down 5.5 percent with retail store same-store sales declining 3.3 percent and e-commerce same-store sales dropping 18.4 percent. 

Balance Sheet Highlights as of April 1, 2023

  • Cash of $18.2 million.
  • $66.0 million drawn under our $250 million revolving credit facility.

Fiscal Year 2024 Outlook
The company is providing guidance for what it can reasonably estimate at this time. For the fiscal year ending March 30, 2024 the company expects:

  • To open 52 new stores.
  • Total sales of $1.690 billion to $1.723 billion, representing growth of 2.0 percent to 4.0 percent over the prior year, which was a 53-week year.
  • Same-store sales decline of approximately (6.5) percent to (4.5) percent, with retail store same-store sales declines of approximately (7.0) percent to (5.2) percent and e-commerce same-store sales declines of (3.0) percent to growth of 1.0 percent.
  • Gross profit between $613.7 million and $629.7 million, or approximately 36.3 percent to 36.5 percent of sales. Gross profit reflects an estimated 150 basis point increase in merchandise margin which includes a 100 basis point improvement from freight expense. We expect to grow exclusive brand penetration by 400 basis points. We anticipate 180 basis points of deleverage in buying, occupancy and distribution center costs primarily resulting from negative same-store sales, higher occupancy from new stores, and the cost of the new Kansas City distribution center.
  • Selling, general and administrative expenses between $416.2 million and $419.8 million. This represents approximately 24.6 percent to 24.4 percent of sales.
  • Income from operations of between $197.5 million and $209.9 million. This represents approximately 11.7 percent to 12.2 percent of sales.
  • Interest expense of $4.3 million.
  • Effective tax rate of 25.6 percent.
  • Net income of $143.8 million to $153.0 million.
  • Net income per diluted share of $4.70 to $5.00 based on 30.6 million weighted average diluted shares outstanding.
  • Capital expenditures between $90 million and $95 million.

For the fiscal first quarter ending July 1, 2023, the company expects:

  • Total sales of $357 million to $364 million, representing a decline of (2.4) percent to (0.5) percent over the prior-year period.
  • Same-store sales decline of approximately (9.0) percent to (7.0) percent, with retail store same-store sales decline of (8.0) percent to (6.0) percent and e-commerce same-store sales decline of (17.0) percent to (15.0) percent.
  • Gross profit between $127.5 million and $131.1 million, or approximately 35.7 percent to 36.0 percent of sales. Gross profit reflects an estimated 80 basis point increase in merchandise margin which assumes flat freight expense year-over-year. We anticipate 250 basis points of deleverage in buying, occupancy and distribution center costs primarily resulting from negative same-store sales, higher occupancy from new stores, and the cost of the new Kansas City distribution center.
  • Selling, general and administrative expenses between $93.8 million and $94.9 million. This represents approximately 26.3 percent to 26.1 percent of sales.
  • Income from operations between $33.7 million and $36.2 million. This represents approximately 9.4 percent to 9.9 percent of sales.
  • Net income per diluted share of $0.79 to $0.85 based on 30.6 million weighted average diluted shares outstanding.

Photo courtesy Boot Barn