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Boot Barn Holdings, Inc. Announces Second Quarter Fiscal Year 2023 Financial Results

October 26, 2022

Boot Barn Holdings, Inc. (NYSE: BOOT) today announced its financial results for the second fiscal quarter ended September 24, 2022. The Company has also filed a Supplemental Financial Presentation that has been made available at investor.bootbarn.com.

For the quarter ended September 24, 2022:

  • Net sales increased 12.4% over the prior-year period to $351.5 million, cycling 69.5% net sales growth in the prior-year period.
  • Same store sales increased 2.3% compared to the prior-year period, cycling 61.7% same store sales growth in the prior-year period. The 2.3% increase in consolidated same store sales is comprised of an increase in retail store same store sales of 3.9% and a decrease in e-commerce same store sales of 7.0%.
  • Net income was $32.1 million, or $1.06 per diluted share, compared to $37.9 million, or $1.25 per diluted share in the prior-year period. Excluding a $0.03 per share tax benefit related primarily to income tax accounting for share-based compensation, net income per diluted share was $1.22 in the prior-year period.
  • The Company opened 10 new stores bringing its total count to 321.

“We are pleased to have followed up our strong start to fiscal 2023 with solid second quarter results,” said Jim Conroy, President and Chief Executive Officer. “Sales and earnings exceeded expectations as the market share gains we’ve made over the past two years proved sustainable despite the multiple headwinds pressuring consumer discretionary spending. Our top-line performance was driven by new store expansion and positive retail store same store sales growth, which were up mid-single digits for the quarter. This was accompanied by further merchandise margin expansion fueled primarily by an increase in exclusive brand penetration and better full-price selling. While current macroeconomic factors are creating general marketplace uncertainty, we feel good about our prospects for the upcoming holiday season, and remain very confident in our ability to deliver profitable growth and increased shareholder value over the long-term.”

Operating Results for the Second Quarter Ended September 24, 2022 Compared to the Second Quarter Ended September 25, 2021

  • Net sales increased 12.4% to $351.5 million from $312.7 million in the prior-year period. Consolidated same store sales increased 2.3% with retail store same store sales increasing 3.9% and e-commerce same store sales decreasing 7.0%. The increase in net sales was the result of the incremental sales from new stores opened over the past twelve months and the increase in consolidated same store sales, which saw an increase in average unit retail prices, driven in part by inflation.
  • Gross profit was $129.1 million, or 36.7% of net sales, compared to $118.2 million, or 37.8% of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The decrease in gross profit rate of 110 basis points was driven by 160 basis points of deleverage in buying, occupancy and distribution center costs, partially offset by a 50 basis-point increase in merchandise margin. The merchandise margin expansion was primarily a result of growth in exclusive brand penetration and better full-price selling.
  • Selling, general and administrative expenses were $84.9 million, or 24.2% of net sales, compared to $68.0 million, or 21.8% of net sales, in the prior-year period. The increase in selling, general and administrative expenses was primarily a result of higher store payroll, other store-related expenses and marketing expenses compared to the prior-year period. Selling, general and administrative expenses as a percentage of net sales increased by 240 basis points primarily as a result of higher marketing expenses, other store-related expenses and higher store payroll.
  • Income from operations decreased $6.0 million to $44.2 million, or 12.6% of net sales, compared to $50.1 million, or 16.0% of net sales, in the prior-year period, primarily due to higher selling, general and administrative expenses.
  • Net income was $32.1 million, or $1.06 per diluted share, compared to net income of $37.9 million, or $1.25 per diluted share in the prior-year period. Excluding a $0.03 per share tax benefit related primarily to income tax accounting for share-based compensation, net income per diluted share was $1.22 in the prior-year period.

Operating Results for the Six Months Ended September 24, 2022 Compared to the Six Months Ended September 25, 2021

  • Net sales increased 15.9% to $717.4 million from $619.0 million in the prior-year period. Consolidated same store sales increased 6.1% with retail store same store sales increasing 7.0% and e-commerce same store sales increasing 0.8%. The increase in net sales was the result of the incremental sales from new stores opened over the past twelve months and the increase in consolidated same store sales, which saw an increase in average unit retail prices, driven in part by inflation.
  • Gross profit was $266.9 million, or 37.2% of net sales, compared to $234.6 million, or 37.9% of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The decrease in gross profit rate of 70 basis points was driven by 110 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 30 basis-point headwind from increased freight expense. The merchandise margin expansion was primarily a result of growth in exclusive brand penetration and better full-price selling.
  • Selling, general and administrative expenses were $170.4 million, or 23.7% of net sales, compared to $130.8 million, or 21.1% of net sales, in the prior-year period. The increase in selling, general and administrative expenses was primarily a result of higher store payroll, other store-related expenses and marketing expenses compared to the prior-year period. Selling, general and administrative expenses as a percentage of net sales increased by 260 basis points primarily as a result of an increase in other store-related expenses, store payroll, and marketing expenses.
  • Income from operations decreased $7.2 million to $96.6 million, or 13.5% of net sales, compared to $103.8 million, or 16.8% of net sales, in the prior-year period, primarily due to higher selling, general and administrative expenses.
  • Net income was $71.4 million, or $2.35 per diluted share, compared to net income of $78.5 million, or $2.59 per diluted share in the prior-year period. Net income per diluted share in the current-year and prior-year periods includes an approximately $0.03 and $0.12 per share benefit, respectively, primarily due to income tax accounting for share-based compensation. Excluding the tax benefits, net income per diluted share in the current-year period was $2.32, compared to $2.47 in the prior-year period.

Current Business

The following table includes total net sales growth and same store sales growth/(decline) for the periods indicated below:

 

Four Weeks

Fiscal July

 

 

Four Weeks

Fiscal August

 

 

Five Weeks

Fiscal

September

 

 

Thirteen Weeks

Ended

September 24, 2022

 

 

Preliminary

Four Weeks

Fiscal

October

 
Total Net Sales Growth

11.2

%

13.1

%

12.7

%

12.4

%

7.9

%

 
Retail Stores SSS

1.6

%

4.4

%

5.1

%

3.9

%

1.7

%

E-commerce SSS

(3.0

)%

(1.3

)%

(13.5

)%

(7.0

)%

(17.6

)%

Total SSS

1.0

%

3.6

%

2.2

%

2.3

%

(1.3

)%

 

Balance Sheet Highlights as of September 24, 2022

  • Cash of $19.7 million.
  • $146.8 million drawn under our $250 million revolving credit facility.

Fiscal Year 2023 Outlook

The Company is providing updated guidance for the fiscal year ending April 1, 2023, superseding in its entirety the previous guidance issued in its first quarter earnings report on July 27, 2022. As a result, for the fiscal year ending April 1, 2023, the Company now expects:

  • To open 40 new stores.
  • Total sales of $1.65 billion to $1.67 billion, representing growth of 10.9% to 12.2% over the prior year.
  • Same store sales range of approximately (1.0)% to 0.5%, with retail store same store sales of approximately 2.0% to 3.0% and e-commerce same store sales of (13.0)% to (11.0)%.
  • Gross profit between $617 million and $625 million, or approximately 37.4% of sales. Gross profit includes an estimated 100 basis points of pressure from freight expense.
  • Income from operations between $235 million and $243 million. This represents approximately 14.2% to 14.6% of sales.
  • Interest expense of $4.6 million.
  • Effective tax rate of 25.2% for the remaining six months of the year.
  • Net income of $173.3 million to $179.3 million.
  • Net income per diluted share of $5.70 to $5.90 based on 30.4 million weighted average diluted shares outstanding.
  • Capital expenditures between $80 million and $87 million.
  • Fiscal year 2023 is a 53-week year and the Company expects to generate approximately $34.0 million of sales and earn approximately $0.19 per diluted share in the 53rd week, which is included in the above guidance range.

For the fiscal third quarter ending December 24, 2022, the Company expects:

  • Total sales of $502 million to $514 million, representing growth of 3.3% to 5.8% over the prior year.
  • Same store sales range of approximately (5.0)% to (3.0)%, with retail store same store sales of (2.0)% to flat and e-commerce same store sales of (21.0)% to (17.0)%.
  • Gross profit between $184 million and $189 million, or approximately 36.8% of sales. Gross profit includes an estimated 200 basis points of pressure from freight expense.
  • Income from operations between $71 million and $76 million. This represents approximately 14.1% to 14.8% of sales.
  • Net income per diluted share of $1.71 to $1.83 based on 30.3 million weighted average diluted shares outstanding.

Conference Call Information

A conference call to discuss the financial results for the second quarter of fiscal year 2023 is scheduled for today, October 26, 2022, at 4:30 p.m. ET (1:30 p.m. PT). Investors and analysts interested in participating in the call are invited to dial (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 Supplemental Financial Presentation is also available on the investor relations section of the Company’s website. A telephone replay of the call will be available until November 26, 2022, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 13733847. 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 322 stores in 40 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 24,

 

March 26,

2022

 

2022

Assets
Current assets:
Cash and cash equivalents

$

19,686

 

 

$

20,674

 

Accounts receivable, net

 

11,059

 

 

 

9,662

 

Inventories

 

641,021

 

 

 

474,300

 

Prepaid expenses and other current assets

 

42,978

 

 

 

37,195

 

Total current assets

 

714,744

 

 

 

541,831

 

Property and equipment, net

 

204,267

 

 

 

155,247

 

Right-of-use assets, net

 

302,007

 

 

 

241,147

 

Goodwill

 

197,502

 

 

 

197,502

 

Intangible assets, net

 

60,782

 

 

 

60,813

 

Other assets

 

6,643

 

 

 

3,315

 

Total assets

$

1,485,945

 

 

$

1,199,855

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Line of credit

$

146,830

 

 

$

28,549

 

Accounts payable

 

171,148

 

 

 

131,394

 

Accrued expenses and other current liabilities

 

116,530

 

 

 

133,408

 

Short-term lease liabilities

 

46,847

 

 

 

43,117

 

Total current liabilities

 

481,355

 

 

 

336,468

 

Deferred taxes

 

28,374

 

 

 

26,895

 

Long-term lease liabilities

 

299,803

 

 

 

234,584

 

Other liabilities

 

2,476

 

 

 

2,232

 

Total liabilities

 

812,008

 

 

 

600,179

 

 

 

 

Stockholders’ equity:

 

 

 

Common stock, $0.0001 par value; September 24, 2022 - 100,000 shares authorized, 30,001 shares issued; March 26, 2022 - 100,000 shares authorized, 29,820 shares issued

 

3

 

 

 

3

 

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

 

 

 

 

 

Additional paid-in capital

 

206,444

 

 

 

199,054

 

Retained earnings

 

476,849

 

 

 

405,477

 

Less: Common stock held in treasury, at cost, 190 and 135 shares at September 24, 2022 and March 26, 2022, respectively

 

(9,359

)

 

 

(4,858

)

Total stockholders’ equity

 

673,937

 

 

 

599,676

 

Total liabilities and stockholders’ equity

$

1,485,945

 

 

$

1,199,855

 

Boot Barn Holdings, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

 

 

 

 

Thirteen Weeks Ended

 

Twenty-Six Weeks Ended

 

 

September 24,

 

September 25,

 

September 24,

 

September 25,

 

 

2022

 

2021

 

2022

 

2021

Net sales

$

351,545

 

$

312,717

 

$

717,401

 

 

$

619,044

Cost of goods sold

 

222,449

 

 

194,566

 

 

450,475

 

 

 

384,466

Gross profit

 

129,096

 

 

118,151

 

 

266,926

 

 

 

234,578

Selling, general and administrative expenses

 

84,946

 

 

68,037

 

 

170,351

 

 

 

130,821

Income from operations

 

44,150

 

 

50,114

 

 

96,575

 

 

 

103,757

Interest expense

 

1,362

 

 

1,162

 

 

2,087

 

 

 

3,725

Other income/(loss), net

 

 

 

14

 

 

(273

)

 

 

118

Income before income taxes

 

42,788

 

 

48,966

 

 

94,215

 

 

 

100,150

Income tax expense

 

10,734

 

 

11,105

 

 

22,843

 

 

 

21,644

Net income

$

32,054

 

$

37,861

 

$

71,372

 

 

$

78,506

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

1.08

 

$

1.28

 

$

2.40

 

 

$

2.67

Diluted

$

1.06

 

$

1.25

 

$

2.35

 

 

$

2.59

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

29,808

 

 

29,555

 

 

29,778

 

 

 

29,458

Diluted

 

30,313

 

 

30,356

 

 

30,351

 

 

 

30,312

Boot Barn Holdings, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Twenty-Six Weeks Ended

September 24,

 

September 25,

2022

 

2021

Cash flows from operating activities
Net income

$

71,372

 

$

78,506

 

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

 

 

Depreciation

 

16,792

 

 

12,871

 

Stock-based compensation

 

7,143

 

 

5,968

 

Amortization of intangible assets

 

32

 

 

36

 

Noncash lease expense

 

22,951

 

 

18,737

 

Amortization and write-off of debt issuance fees and debt discount

 

74

 

 

1,189

 

Loss on disposal of assets

 

250

 

 

90

 

Gain on adjustment of right-of-use assets and lease liabilities

 

 

 

(247

)

Deferred taxes

 

1,479

 

 

(6,630

)

Changes in operating assets and liabilities:

 

 

Accounts receivable, net

 

(972

)

 

5,852

 

Inventories

 

(166,721

)

 

(74,514

)

Prepaid expenses and other current assets

 

(5,857

)

 

(25,366

)

Other assets

 

(3,329

)

 

(523

)

Accounts payable

 

36,472

 

 

36,312

 

Accrued expenses and other current liabilities

 

(27,199

)

 

14,634

 

Other liabilities

 

244

 

 

507

 

Operating leases

 

(14,868

)

 

(18,794

)

Net cash (used in)/provided by operating activities

$

(62,137

)

$

48,628

 

Cash flows from investing activities

 

 

Purchases of property and equipment

$

(52,459

)

$

(22,251

)

Net cash used in investing activities

$

(52,459

)

$

(22,251

)

Cash flows from financing activities

 

 

Borrowings on line of credit - net

$

118,281

 

$

 

Repayments on debt and finance lease obligations

 

(419

)

 

(61,872

)

Tax withholding payments for net share settlement

 

(4,501

)

 

(2,648

)

Proceeds from the exercise of stock options

 

247

 

 

4,540

 

Net cash provided by/(used in) financing activities

$

113,608

 

$

(59,980

)

 

 

Net decrease in cash and cash equivalents

 

(988

)

 

(33,603

)

Cash and cash equivalents, beginning of period

 

20,674

 

 

73,148

 

Cash and cash equivalents, end of period

$

19,686

 

$

39,545

 

 

 

Supplemental disclosures of cash flow information:

 

 

Cash paid for income taxes

$

45,519

 

$

26,005

 

Cash paid for interest

$

1,642

 

$

2,495

 

Supplemental disclosure of non-cash activities:

 

 

Unpaid purchases of property and equipment

$

21,551

 

$

7,195

 

Boot Barn Holdings, Inc.

Store Count

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

September 24,

 

June 25,

 

March 26,

 

December 25,

 

September 25,

 

June 26,

 

March 27,

 

December 26,

2022

 

2022

 

2022

 

2021

 

2021

 

2021

 

2021

 

2020

Store Count (BOP)

311

300

289

278

276

 

273

266

 

265

Opened/Acquired

10

11

11

11

3

 

3

8

 

1

Closed

(1

)

(1

)

Store Count (EOP)

321

311

300

289

278

 

276

273

 

266

 

Boot Barn Holdings, Inc.

Selected Store Data

 

Thirteen Weeks Ended

September 24,

 

June 25,

 

March 26,

 

December 25,

 

September 25,

 

June 26,

 

March 27,

 

December 26,

2022

 

2022

 

2022

 

2021

 

2021

 

2021

 

2021

 

2020

Selected Store Data:
Same Store Sales growth

 

2.3

%

 

10.0

%

 

33.3

%

 

54.2

%

 

61.7

%

 

78.9

%

 

26.9

%

 

4.6

%

Stores operating at end of period

 

321

 

 

311

 

 

300

 

 

289

 

 

278

 

 

276

 

 

273

 

 

266

 

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

 

3,451

 

 

3,333

 

 

3,194

 

 

3,063

 

 

2,940

 

 

2,915

 

 

2,854

 

 

2,787

 

Average store square footage, end of period

 

10,751

 

 

10,717

 

 

10,648

 

 

10,597

 

 

10,575

 

 

10,563

 

 

10,455

 

 

10,477

 

Average net sales per store (in thousands)

$

966

 

$

1,031

 

$

1,094

 

$

1,372

 

$

965

 

$

942

 

$

792

 

$

889

 

 

Investor Contact:
ICR, Inc.
Brendon Frey, 203-682-8216
BootBarnIR@icrinc.com
or
Company Contact:
Boot Barn Holdings, Inc.
Mark Dedovesh
Vice President, Investor Relations & Financial Planning
BootBarnIRMedia@bootbarn.com

Source: Boot Barn

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