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Boot Barn Holdings, Inc. Announces Second Quarter Fiscal Year 2021 Financial Results

October 28, 2020

IRVINE, Calif.--(BUSINESS WIRE)-- Boot Barn Holdings, Inc. (NYSE: BOOT) today announced its financial results for the second fiscal quarter ended September 26, 2020.

For the quarter ended September 26, 2020:

  • Net sales decreased 1.4% to $184.5 million.
  • Same store sales decreased 5.1%, comprised of a decrease in retail store same store sales of 9.1% and an increase in e-commerce sales of 17.6%.
  • Net income was $5.8 million, or $0.20 per diluted share, compared to net income of $7.7 million, or $0.26 per diluted share in the prior-year period. Net income per diluted share in the prior-year period includes a $0.02 per share benefit due to income tax accounting for share-based compensation.
  • The company opened 1 new store during the quarter.
  • Cash and cash equivalents were $35.7 million.

Jim Conroy, Chief Executive Officer, commented, “Our business continues to show resilience amidst challenging operating conditions. Following a slow start to the second quarter due to the changing sentiment around COVID-19, same store sales trends improved each month, turning positive in September driven by stronger store traffic. Our teams have done an outstanding job serving our customers in whichever channel they choose to engage with us and we have adjusted our merchandise assortments to reflect the shift in demand towards more functional and work-related categories. The speed at which we adapted our operations and reconfigured our inventory drove strong full price selling in the quarter. I am particularly pleased with the contributions from our e-commerce business, whose second quarter operating income more than doubled when compared to the prior-year period.”

Mr. Conroy continued, “Our third quarter has started well with retail store same store sales improving to flat and e-commerce sales trends remaining strong. In addition to solid demand for work boots, we’ve also seen a nice sequential improvement in western boots, western apparel, and hats. As we approach the beginning of the holidays, we are encouraged with our current momentum and are prepared to execute well as we enter the busy holiday shopping season.”

Operating Results for the Second Quarter Ended September 26, 2020

  • Net sales decreased 1.4% to $184.5 million from $187.2 million in the prior-year period. Consolidated same store sales decreased 5.1% with retail store same store sales down 9.1% and e-commerce same store sales up 17.6%. The decrease in retail store sales was primarily due to decreased traffic in our stores that resulted from customers staying at home in response to the COVID-19 crisis.
  • Gross profit was $55.5 million, or 30.1% of net sales, compared to $59.3 million, or 31.7% of net sales, in the prior-year period. Gross profit decreased primarily due to decreased sales resulting from the COVID-19 crisis. The decrease in gross profit rate of 160 basis points was driven by 110 basis points of deleverage in buying and occupancy costs and a 50-basis point decline in merchandise margin rate. The deleverage in buying and occupancy costs was primarily a result of lower volume sales. Merchandise margin declined 50 basis points primarily as a result of 30 basis points of pressure from e-commerce mix shift. Higher freight, partially offset by improved product margin, comprised the balance of the decline.
  • Selling, general and administrative expenses were $45.4 million, or 24.6% of net sales, compared to $46.4 million, or 24.8% of net sales, in the prior-year period. The decrease in selling, general and administrative expenses and 20 basis points of leverage as a percentage of sales was primarily a result of lower marketing and pay-per-click expenses.
  • Income from operations decreased 22.4% to $10.0 million, or 5.4% of net sales, compared to $12.9 million, or 6.9% of net sales, in the prior-year period. This decline in income from operations is a result of the negative impact on sales and gross margin from decreased traffic in our stores that resulted from customers staying at home in response to the COVID-19 crisis.
  • Net income was $5.8 million, or $0.20 per diluted share, compared to net income of $7.7 million, or $0.26 per diluted share in the prior-year period. Net income per diluted share in the prior-year period includes a $0.02 per share benefit due to income tax accounting for share-based compensation.

Operating Results for the Six Months Ended September 26, 2020

  • Net sales decreased 10.9% to $332.3 million from $373.0 million in the prior-year period. Consolidated same store sales decreased 9.7% with retail store same store sales down 17.4% and e-commerce same store sales up 33.7%. The decrease in retail store sales was primarily due to decreased traffic in our stores that resulted from customers staying at home in response to the COVID-19 crisis and temporary store closures.
  • Gross profit was $95.7 million, or 28.8% of net sales, compared to $121.5 million, or 32.6% of net sales, in the prior-year period. Gross profit decreased primarily due to decreased sales resulting from the COVID-19 crisis. The decrease in gross profit rate of 380 basis points was driven by 260 basis points of deleverage in buying and occupancy costs and a 120-basis point decline in merchandise margin rate. The deleverage in buying and occupancy costs was primarily a result of lower volume sales. Merchandise margin declined 120 basis points primarily as a result of 80 basis points of pressure from e-commerce mix shift.
  • Selling, general and administrative expenses were $83.9 million, or 25.2% of net sales, compared to $92.5 million, or 24.8% of net sales, in the prior-year period. The decrease in selling, general and administrative expenses was primarily a result of lower payroll and reduced marketing expenses. Selling, general and administrative expenses as a percentage of sales increased by 40 basis points as a result of deleverage from lower sales.
  • Income from operations decreased 59.2% to $11.8 million, or 3.6% of net sales, compared to $29.0 million, or 7.8% of net sales, in the prior-year period. This decline in income from operations is a result of the negative impact on sales, gross margin and selling, general and administrative expenses from decreased traffic in our stores that resulted from customers staying at home in response to the COVID-19 crisis and temporary store closures.
  • Net income was $5.3 million, or $0.18 per diluted share, compared to net income of $17.4 million, or $0.60 per diluted share in the prior-year period. Net income per diluted share in the prior-year period includes a $0.03 per share benefit due to income tax accounting for share-based compensation.

Current Business

The following table includes same store sales, net sales and e-commerce as a percentage of net sales for the periods indicated below:

Four Weeks
Fiscal July

 

Four Weeks
Fiscal August

 

Five Weeks
Fiscal September

 

Thirteen Weeks
Ended
September 26, 2020

 

 

Preliminary
Four Weeks
Fiscal October

Retail Stores SSS

(15)%

(13)%

(1)%

(9)%

0%

E-commerce SSS

24%

16%

14%

18%

13%

Total SSS

(10)%

(9)%

1%

(5)%

2%

 

Net Sales

(7)%

(4)%

5%

(1)%

6%

E-commerce as % of Net Sales

18%

17%

16%

17%

16%

 

Fiscal Year 2021 Outlook

The COVID-19 crisis continues to adversely affect the Company’s results. Due to the ongoing uncertainty created by COVID-19, the Company is not providing third quarter and fiscal year 2021 guidance at this time.

Conference Call Information

A conference call to discuss the financial results for the second quarter of fiscal year 2021 is scheduled for today, October 28, 2020, at 4:30 p.m. ET (1:30 p.m. PT). Investors and analysts interested in participating in the call are invited to (877) 451-6152. The conference call will also be available to interested parties through a live webcast at investor.bootbarn.com. Please visit the website and select the “Events and Presentations” link at least 15 minutes prior to the start of the call to register and download any necessary software. A telephone replay of the call will be available until November 28, 2020, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 13712343. Please note participants must enter the conference identification number in order to access the replay.

About Boot Barn

Boot Barn is the nation’s leading lifestyle retailer of western and work-related footwear, apparel and accessories for men, women and children. The Company offers its loyal customer base a wide selection of work and lifestyle brands. As of the date of this release, Boot Barn operates 266 stores in 36 states, in addition to an e-commerce channel www.bootbarn.com. The Company also operates www.sheplers.com, the nation’s leading pure play online western and work retailer and www.countryoutfitter.com, an e-commerce site selling to customers who live a country lifestyle. For more information, call 888-Boot-Barn or visit www.bootbarn.com.

Forward Looking Statements

This press release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this press release are forward-looking statements. Forward-looking statements refer to our current expectations and projections relating to, by way of example and without limitation, our financial condition, liquidity, profitability, results of operations, margins, plans, objectives, strategies, future performance, business and industry. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate", "estimate", "expect", "project", "plan“, "intend", "believe", “may”, “might”, “will”, “could”, “should”, “can have”, “likely”, “outlook” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events, but not all forward-looking statements contain these identifying words. These forward-looking statements are based on assumptions that the Company’s management has made in light of their industry experience and on their perceptions of historical trends, current conditions, expected future developments and other factors they believe are appropriate under the circumstances. As you consider this press release, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond the Company’s control) and assumptions. These risks, uncertainties and assumptions include, but are not limited to, the following: the effect of COVID-19 on our business operations, growth strategies, store traffic, employee availability, financial condition, liquidity and cash flow; decreases in consumer spending due to declines in consumer confidence, local economic conditions or changes in consumer preferences; the Company’s ability to effectively execute on its growth strategy; and the Company’s failure to maintain and enhance its strong brand image, to compete effectively, to maintain good relationships with its key suppliers, and to improve and expand its exclusive product offerings. The Company discusses the foregoing risks and other risks in greater detail under the heading “Risk factors” in the periodic reports filed by the Company with the Securities and Exchange Commission. Although the Company believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect the Company’s actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. Because of these factors, the Company cautions that you should not place undue reliance on any of these forward-looking statements. New risks and uncertainties arise from time to time, and it is impossible for the Company to predict those events or how they may affect the Company. Further, any forward-looking statement speaks only as of the date on which it is made. Except as required by law, the Company does not intend to update or revise the forward-looking statements in this press release after the date of this press release.

Boot Barn Holdings, Inc.

Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

 

September 26,

 

March 28,

2020

 

2020

Assets
Current assets:
Cash and cash equivalents

$

35,672

 

$

69,563

 

Accounts receivable, net

 

13,281

 

 

12,087

 

Inventories

 

260,940

 

 

288,717

 

Prepaid expenses and other current assets

 

14,428

 

 

14,284

 

Total current assets

 

324,321

 

 

384,651

 

Property and equipment, net

 

107,764

 

 

109,603

 

Right-of-use assets, net

 

171,601

 

 

170,243

 

Goodwill

 

197,502

 

 

197,502

 

Intangible assets, net

 

60,929

 

 

60,974

 

Other assets

 

2,189

 

 

1,738

 

Total assets

$

864,306

 

$

924,711

 

Liabilities and stockholders’ equity
Current liabilities:
Line of credit

$

67,763

 

$

129,900

 

Accounts payable

 

81,003

 

 

95,334

 

Accrued expenses and other current liabilities

 

53,180

 

 

52,612

 

Short-term lease liabilities

 

35,941

 

 

34,779

 

Total current liabilities

 

237,887

 

 

312,625

 

Deferred taxes

 

19,551

 

 

19,801

 

Long-term portion of notes payable, net

 

109,402

 

 

109,022

 

Long-term lease liabilities

 

166,243

 

 

160,935

 

Other liabilities

 

1,189

 

 

635

 

Total liabilities

 

534,272

 

 

603,018

 

 
Stockholders’ equity:
Common stock, $0.0001 par value; September 26, 2020 - 100,000 shares authorized, 28,958 shares issued; March 28, 2020 - 100,000 shares authorized, 28,880 shares issued

 

3

 

 

3

 

Preferred stock, $0.0001 par value; 10,000 shares authorized, no shares issued or outstanding

 

 

 

 

Additional paid-in capital

 

172,839

 

 

169,249

 

Retained earnings

 

158,909

 

 

153,641

 

Less: Common stock held in treasury, at cost, 92 and 71 shares at September 26, 2020 and March 28, 2020, respectively

 

(1,717

)

 

(1,200

)

Total stockholders’ equity

 

330,034

 

 

321,693

 

Total liabilities and stockholders’ equity

$

864,306

 

$

924,711

 

Boot Barn Holdings, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

Thirteen Weeks Ended

 

Twenty-Six Weeks Ended

September 26,

 

September 28,

 

September 26,

 

September 28,

2020

 

2019

 

2020

 

2019

Net sales

$

184,515

 

$

187,183

 

$

332,281

 

$

372,950

Cost of goods sold

 

129,025

 

 

127,845

 

 

236,590

 

 

251,456

Gross profit

 

55,490

 

 

59,338

 

 

95,691

 

 

121,494

Selling, general and administrative expenses

 

45,448

 

 

46,404

 

 

83,851

 

 

92,499

Income from operations

 

10,042

 

 

12,934

 

 

11,840

 

 

28,995

Interest expense, net

 

2,383

 

 

3,310

 

 

5,024

 

 

7,214

Other income, net

 

78

 

 

3

 

 

142

 

 

14

Income before income taxes

 

7,737

 

 

9,627

 

 

6,958

 

 

21,795

Income tax expense

 

1,979

 

 

1,947

 

 

1,690

 

 

4,394

Net income

$

5,758

 

$

7,680

 

$

5,268

 

$

17,401

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic shares

$

0.20

 

$

0.27

 

$

0.18

 

$

0.61

Diluted shares

$

0.20

 

$

0.26

 

$

0.18

 

$

0.60

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic shares

28,860

28,502

28,843

28,441

Diluted shares

 

29,223

 

 

29,161

 

 

29,165

 

 

29,091

 
Boot Barn Holdings, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Twenty-Six Weeks Ended

September 26,

 

September 28,

2020

 

2019

Cash flows from operating activities
Net income

$

5,268

 

 

$

17,401

 

Adjustments to reconcile net income to net cash provided by/(used in) operating activities:

 

 

 

Depreciation

 

11,948

 

 

 

9,757

 

Stock-based compensation

 

3,529

 

 

 

2,145

 

Amortization of intangible assets

 

44

 

 

 

72

 

Amortization of right-of-use assets

 

16,757

 

 

 

15,115

 

Amortization of debt issuance fees and debt discount

 

442

 

 

 

503

 

Loss on disposal of property and equipment

 

42

 

 

 

12

 

Loss/(gain) on adjustment of right-of-use assets and lease liabilities

 

295

 

 

 

(193

)

Store impairment charge

 

384

 

 

 

 

Deferred taxes

 

(250

)

 

 

(835

)

Changes in operating assets and liabilities, net of acquisition:

 

 

 

Accounts receivable, net

 

3,681

 

 

 

1,865

 

Inventories

 

27,777

 

 

 

(58,642

)

Prepaid expenses and other current assets

 

(206

)

 

 

(4,239

)

Other assets

 

(450

)

 

 

(369

)

Accounts payable

 

(9,985

)

 

 

24,599

 

Accrued expenses and other current liabilities

 

568

 

 

 

3,014

 

Other liabilities

 

554

 

 

 

302

 

Operating leases

 

(16,507

)

 

 

(14,645

)

Net cash provided by/(used in) operating activities

$

43,891

 

 

$

(4,138

)

Cash flows from investing activities

 

 

 

Purchases of property and equipment

$

(14,881

)

 

$

(15,475

)

Acquisition of business, net of cash acquired

 

 

 

 

(3,688

)

Net cash used in investing activities

$

(14,881

)

 

$

(19,163

)

Cash flows from financing activities

 

 

 

(Payments)/Borrowings on line of credit - net

$

(62,137

)

 

$

85,000

 

Repayments on debt and finance lease obligations

 

(308

)

 

 

(65,300

)

Debt issuance fees paid

 

 

 

 

(1,233

)

Tax withholding payments for net share settlement

 

(517

)

 

 

(483

)

Proceeds from the exercise of stock options

 

61

 

 

 

1,922

 

Net cash (used in)/provided by financing activities

$

(62,901

)

 

$

19,906

 

 

 

 

Net decrease in cash and cash equivalents

 

(33,891

)

 

 

(3,395

)

Cash and cash equivalents, beginning of period

 

69,563

 

 

 

16,614

 

Cash and cash equivalents, end of period

$

35,672

 

 

$

13,219

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

Cash paid for income taxes

$

1,182

 

 

$

4,704

 

Cash paid for interest

$

4,905

 

 

$

6,494

 

Supplemental disclosure of non-cash activities:

 

 

 

Unpaid purchases of property and equipment

$

1,349

 

 

$

3,543

 

Boot Barn Holdings, Inc.

Store Count

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

September 26,

 

June 27,

 

March 28,

 

December 28,

 

September 28,

 

June 29,

 

March 30,

 

December 29,

2020

 

2020

 

2020

 

2019

 

2019

 

2019

 

2019

 

2018

Store Count (BOP)

264

259

251

248

240

240

 

234

232

Opened/Acquired

1

5

8

3

8

1

 

6

2

Closed

(1

)

Store Count (EOP)

265

264

259

251

248

240

 

240

234

 

Boot Barn Holdings, Inc.

Selected Store Data

 

Thirteen Weeks Ended

September 26,

 

June 27,

 

March 28,

 

December 28,

 

September 28,

 

June 29,

 

March 30,

 

December 29,

 

2020

 

2020

 

2020

 

2019

 

2019

 

2019

 

2019

 

2018

 

Selected Store Data:

Same Store Sales (decline)/growth

 

(5.1

)

%

 

(14.9

)

%

 

(4.7

)

%

 

6.7

%

 

7.8

%

 

9.4

%

 

8.7

%

 

9.2

%

Stores operating at end of period

 

265

 

 

264

 

 

259

 

 

251

 

248

 

240

 

240

 

234

Total retail store square footage, end of period (in thousands)

 

2,779

 

 

2,770

 

 

2,722

 

 

2,639

 

2,616

 

2,537

 

2,539

 

2,486

Average store square footage, end of period

 

10,486

 

 

10,491

 

 

10,508

 

 

10,514

 

10,549

 

10,570

 

10,580

 

10,624

Average net sales per store (in thousands)

$

565

 

$

410

 

$

590

 

$

903

$

635

$

660

$

666

$

862

Debt Covenant EBITDA Reconciliation

(Unaudited)

 

Thirteen Weeks Ended

September 26,
2020

 

June 27,
2020

 

March 28,
2020

 

December 28,
2019

 

September 28,
2019

Boot Barn's Net Income/(Loss)

$

5,758

 

$

(490

)

 

$

5,729

 

 

$

24,819

 

$

7,680

 

Income tax expense/(benefit)

 

1,979

 

 

(289

)

 

 

930

 

 

 

7,040

 

 

1,947

 

Interest expense, net

 

2,383

 

 

2,641

 

 

 

2,941

 

 

 

3,155

 

 

3,310

 

Depreciation and intangible asset amortization

 

6,282

 

 

5,710

 

 

 

5,872

 

 

 

5,682

 

 

5,027

 

Boot Barn's EBITDA

$

16,402

 

$

7,572

 

 

$

15,472

 

 

$

40,696

 

$

17,964

 

 

 

 

 

 

 

 

 

 

 

Non-cash stock-based compensation (a)

$

1,705

 

$

1,824

 

 

$

1,582

 

 

$

1,181

 

$

1,180

 

Non-cash accrual for future award redemptions (b)

 

372

 

 

(302

)

 

 

(447

)

 

 

575

 

 

(11

)

Loss/(gain) on disposal of assets (c)

 

46

 

 

(4

)

 

 

28

 

 

 

377

 

 

-

 

Loss on adjustment of right-of-use assets and lease liabilities (d)

 

295

 

 

-

 

 

 

-

 

 

 

7

 

 

-

 

Store impairment charge (e)

 

384

 

 

-

 

 

 

191

 

 

 

-

 

 

-

 

Boot Barn's Adjusted EBITDA

$

19,204

 

$

9,090

 

 

$

16,826

 

 

$

42,836

 

$

19,133

 

 

 

 

 

 

 

 

 

 

 

Additional adjustments (f)

 

1,115

 

 

1,590

 

 

 

2,269

 

 

 

1,404

 

 

1,442

 

Consolidated EBITDA per Loan Agreements

$

20,319

 

$

10,680

 

 

$

19,095

 

 

$

44,240

 

$

20,575

 

 
(a) Represents non-cash compensation expenses related to stock options, restricted stock awards, restricted stock units and performance share units granted to certain of our employees and directors.
(b) Represents the non-cash accrual for future award redemptions in connection with our customer loyalty program.
(c) Represents loss/(gain) on disposal of assets.
(d) Represents loss on adjustment of right-of-use assets and lease liabilities.
(e) Represents store impairment charges recorded in order to reduce the carrying amount of the assets to their estimated fair values.
(f) Adjustments to Boot Barn's Adjusted EBITDA as provided in the 2015 Golub Term Loan and June 2015 Wells Fargo Revolver include pre-opening costs, franchise and state taxes, and other miscellaneous adjustments.

 

Investor Contact:
ICR, Inc.
Brendon Frey, 203-682-8216
BootBarnIR@icrinc.com

or

Media Contact:
Boot Barn Holdings, Inc.
Jim Watkins, 949-453-4428
Senior Vice President, Finance & Investor Relations
BootBarnIRMedia@bootbarn.com

Source: Boot Barn Holdings, Inc.

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