Boot Barn Holdings Inc. reported a profit against a small loss in the first quarter ended June 26 as sales gained 107 percent. The retailer also cited strong growth against its first fiscal quarter ended June 29, 2019.
Boot Barn highlighted comparisons against the 2019 first quarter due to the impact of COVID-19 on the company’s results in its first fiscal quarter ended June 27, 2020
For the quarter ended June 26, 2021
- Net sales increased 64.9 percent to $306.3 million compared to June 29, 2019;
- Compared to June 29, 2019, same-store sales increased 52.3 percent, comprised of an increase in retail store same-store sales of 51.7 percent and an increase in e-commerce same-store sales of 55.8 percent;
- Net income was $40.6 million, or $1.35 per diluted share, compared to $9.7 million, or $0.33 per diluted share, in the two-year ago period. Net income per diluted share in the current-year and two-year ago periods includes an approximately $0.09 and $0.01 per share benefit, respectively, 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 $1.26, compared to $0.32 in the two-year ago period; and
- The company opened three new stores during the thirteen weeks ended June 26, 2021.
Jim Conroy, president and CEO, Boot Barn, commented, “It has been a fantastic start to fiscal 2022 with sales and profitability up significantly on a two-year basis. While we believe there are macro tailwinds at play, our strategy to expand our addressable market, coupled with superb execution by the entire team in securing merchandise and staffing the stores to meet the additional demand, has resulted in another exceptional quarter. We believe that our sharp focus on our merchandise, marketing and omnichannel initiatives over the past several years combined with the expansion of our store base has increased our market share and strengthened our foundation for outsized growth. We have maintained our strong momentum thus far in the second quarter as the team continues to perform extremely well managing the ongoing strength in demand.”
Operating results for the first quarter ended June 26, 2021, compared to the first quarter ended June 27, 2020
- Net sales increased 107.3 percent to $306.3 million from $147.8 million in the prior-year period. Consolidated same-store sales increased 78.9 percent with retail store same-store sales up 104.5 percent and e-commerce same-store sales up 9.8 percent. The increase in net sales was the result of an increase of 78.9 percent in consolidated 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. Net sales in the prior-year period were adversely impacted by decreases in retail store sales resulting from decreased traffic in its stores from customers staying home in response to COVID-19 and temporary store closures.
- Gross profit was $116.4 million, or 38.0 percent of net sales, compared to $40.2 million, or 27.2 percent of net sales, in the prior-year period. Gross profit increased primarily due to higher sales. The increase in gross profit rate of 1,080 basis points was driven by 660 basis points of leverage in buying and occupancy costs as a result of expense leverage on higher sales and a 420-basis point increase in merchandise margin rate. Merchandise margin rate increased 420 basis points primarily as a result of the increased penetration of store sales, which generate higher merchandise margins than e-commerce, when compared to the prior year, in addition to better full-price selling and growth in exclusive brand penetration.
- Selling, general and administrative expenses were $62.8 million, or 20.5 percent of net sales, compared to $38.4 million, or 26.0 percent of net sales, in the prior-year period. The increase in selling, general and administrative expenses was primarily a result of higher store payroll, higher 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 550 basis points primarily as a result of expense leverage on higher sales.
- Income from operations increased $51.8 million to $53.6 million, or 17.5 percent of net sales, compared to $1.8 million, or 1.2 percent of net sales, in the prior-year period. This increase represents 1,630 basis points of improvement in operating profit margin.
- Net income was $40.6 million, or $1.35 per diluted share, compared to a net loss of $0.5 million, or $0.02 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. Excluding the tax benefit in the current-year period, net income per diluted share in the current-year period was $1.26, compared to a net loss per diluted share of $0.02 in the prior-year period.
Balance sheet highlights as of June 26, 2021
- Cash of $49.6 million;
- Average inventory per store was flat on a same-store basis compared to June 29, 2020;
- The company prepaid $61.5 million of its term loan facility reducing total debt to $50.0 million including a zero balance drawn under the $165 million revolving credit facility; and
- Subsequent to June 26, 2021, the company expanded its revolving credit facility to $180.0 million.
The fiscal year 2022 outlook
The company is providing the following full-year fiscal 2022 guidance:
- New unit growth of 10 percent;
- Exclusive brand penetration growth of 350 basis points, which represents an increase from the company’s prior outlook 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