Boot Barn’s net sales for the fiscal first quarter rose 19.4 percent to $365.9 million, with growth across most major merchandise categories.
In a Nutshell: Boot Barn Holdings Inc., in reporting fiscal first quarter results on Wednesday, said in light of recent macroeconomic uncertainty, it was providing updated guidance for the fiscal year ending April 1, replacing the previous guidance issued in its fourth quarter and fiscal year 2022 earnings report on May 10.
The company now expects total sales of $1.68 billion to $1.70 billion, representing growth of 12.9 percent to 14.2 percent over the prior year, compared to previous guidance of total sales of $1.74 billion.
Same store sales are projected to range of approximately flat to up 2 percent, versus a prior outlook of 4.8 percent growth.
Net income of $182.7 million to $188.6 million is forecast, compared to the prior outlook of net income of $197 million. Net income per diluted share is expected to be $6.00 to $6.20, versus the prior net income per diluted share of $6.41.
Income from operations is projected to be between $247 million and $255 million, representing about 14.7 percent to 15 percent of sales, compared to income from operations of $266 million or 15.3 percent of sales previously forecast.
Boot Barn company now expects to open 40 new stores, after opening 11 new stores in the quarter, bringing its total count to 311.
“We’re still seeing elevated freight costs, but we are seeing the cost of containers come down,” Jim Watkins, chief financial officer, told analysts on a conference call. “So, we’re encouraged that while we’ll still see a freight headwind the rest of the year…as spot rates continue to come down and at some point, the fuel surcharges that we’ve seen increase at some point, those will reverse, whether that’s next year or beyond.”
In the recent quarter, selling, general and administrative (SG&A) expenses were $85.4 million, or 23.3 percent of net sales, compared to $62.8 million, or 20.5 percent of net sales, in the prior-year period. The increase in SG&A expenses was mainly attributed to higher store payroll and overhead, in addition to increased marketing expenses in the current-year period compared to the prior-year period. SG&A as a percentage of net sales increased 280 basis points, primarily as a result of higher store labor and marketing expense as a percentage of sales.
Jim Conroy, president and CEO, told analysts on the conference call that the company has seen “some modest inflation on product cost and input costs.”
“Our merchants and our exclusive brands teams have been hustling and working with our vendor partners and manufacturers to…grow economies of scale to offset some of these inflationary pressures,” he said. “But our approach…has been consistent, which is pass those price increases onto the customers, while maintaining the same merchandise margin rate.”
Sales: Net sales for the fiscal first quarter ended June 25 increased 19.4 percent over the prior-year period to $365.9 million.
Same store sales rose 10 percent compared to the prior-year period, comprised of an increase in retail store same-store sales of 10.1 percent and a rise of 9.3 percent in e-commerce.
“During the first quarter, we saw broad based growth across most major merchandise categories, ladies apparel and boots, work apparel, cowboy hats, ball caps and belts were our strongest performing categories,” Conroy said on the conference call. “Additionally, we saw healthy growth in men’s Western apparel, kids apparel and accessories. Sales of flame-resistant apparel exceeded the chain average, while sales of men’s Western boots were a headwind during the quarter with negative comps versus the prior year period.”
Earnings: Net income was $39.3 million, or $1.29 per diluted share, compared to $40.6 million, or $1.35 per diluted share, in the prior-year period.
Income from operations decreased $1.2 million to $52.4 million, or 14.3 percent of net sales, compared to $53.6 million, or 17.5 percent of net sales, in the prior-year period, primarily due to higher SG&A expenses.
Gross profit was $137.8 million, or 37.7 percent of net sales, compared to $116.4 million, or 38 percent of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The decrease in gross profit rate of 30 basis points was driven by 70 basis points of deleverage in buying, occupancy and distribution center costs, partially offset by a 40 basis-point increase in merchandise margin.
Merchandise margin increased 40 basis points despite a 70 basis-point headwind from increased freight charges. The merchandise margin expansion was primarily a result of growth in exclusive brand penetration and better full-price selling.
CEO’s Take: Conroy said: “Our first quarter performance represents a strong start to the new year. Following the tremendous growth and profitability we achieved in fiscal 2022, we are very pleased to report another quarter of double-digit same store sales growth and earnings per share that were ahead of our expectations. Our merchandise and marketing strategies combined with our expanding omnichannel capabilities continue to fuel strong full-price selling in stores and online. Our new stores are proving to be highly productive and we feel great about our real estate pipeline.”
“We believe the addition of these new stores will help us to further gain share in the combined $40 billion Western, work and country lifestyle markets,” Conroy added. “Given the current tone of the business, we continue to expect total sales to grow double digits versus last year, driven by new store openings with same store sales flat to growing low single digits.”