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

Jan 25th, 2023 16:10 EST

IRVINE, Calif.--(BUSINESS WIRE)--Boot Barn Holdings, Inc. (NYSE: BOOT) today announced its financial results for the third fiscal quarter ended December 24, 2022. A Supplemental Financial Presentation is available at investor.bootbarn.com.

For the quarter ended December 24, 2022:

  • Net sales increased 5.9% over the prior-year period to $514.6 million, cycling 60.7% net sales growth in the prior-year period.
  • Same store sales decreased 3.6% compared to the prior-year period, cycling 54.2% same store sales growth in the prior-year period. The 3.6% decrease in consolidated same store sales is comprised of a decrease in retail store same store sales of 0.8% and a decrease in e-commerce same store sales of 15.2%.
  • Net income was $52.8 million, or $1.74 per diluted share, compared to $69.2 million, or $2.27 per diluted share in the prior-year period. Excluding a $0.04 per share tax benefit related primarily to income tax accounting for share-based compensation, net income per diluted share was $2.23 in the prior-year period.
  • The Company opened 12 new stores, or 33 stores year-to-date, bringing its total store count to 333.

Jim Conroy, President and Chief Executive Officer, commented “I would like to thank the entire Boot Barn team for continuing to achieve solid sales and margin performance on top of a record-setting holiday season last year. Over the past few years, our annual average store volume has grown by more than 55%, with the elevated level proving sustainable through yet another holiday quarter. This growth, coupled with a very successful new store roll-out program has us on track to nearly double our annual sales this year as compared to pre-pandemic levels. Looking forward, our growth opportunities remain as strong as ever, with very successful recent store openings combined with a robust new store pipeline. We feel good about our level of store inventory with weeks of supply back to pre-pandemic levels and are pleased that our retail store same store sales remain positive on a year-to-date basis. As we head into fiscal 2024, we have multiple levers of earnings growth from same store sales, new store openings, and margin accretion from exclusive brands and lower freight charges.”

Operating Results for the Third Quarter Ended December 24, 2022 Compared to the Third Quarter Ended December 25, 2021

  • Net sales increased 5.9% to $514.6 million from $485.9 million in the prior-year period. Consolidated same store sales decreased 3.6% with retail store same store sales decreasing 0.8% and e-commerce same store sales decreasing 15.2%. The increase in net sales was the result of the incremental sales from new stores opened over the past twelve months, partially offset by the decrease in consolidated same store sales. Higher average unit retail prices, driven in part by inflation, further contributed to the increase in net sales.
  • Gross profit was $187.8 million, or 36.5% of net sales, compared to $191.7 million, or 39.4% of net sales, in the prior-year period. Gross profit decreased primarily due to higher freight expense and cost of merchandise. The decrease in gross profit rate of 290 basis points was driven primarily by a 190 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 driven primarily by a 180 basis-point headwind from higher freight expense.
  • Selling, general and administrative expenses were $115.3 million, or 22.4% of net sales, compared to $99.5 million, or 20.5% of net sales, in the prior-year period. The increase in selling, general and administrative expenses was primarily a result of higher store-related expenses, store payroll, and marketing expenses compared to the prior-year period. Selling, general and administrative expenses as a percentage of net sales increased by 190 basis points primarily as a result of higher store-related expenses and store payroll.
  • Income from operations decreased $19.7 million to $72.5 million, or 14.1% of net sales, compared to $92.2 million, or 19.0% of net sales, in the prior-year period, primarily due to the factors noted above.
  • Net income was $52.8 million, or $1.74 per diluted share, compared to net income of $69.2 million, or $2.27 per diluted share in the prior-year period. Excluding a $0.04 per share tax benefit related primarily to income tax accounting for share-based compensation, net income per diluted share was $2.23 in the prior-year period.

Operating Results for the Nine Months Ended December 24, 2022 Compared to the Nine Months Ended December 25, 2021

  • Net sales increased 11.5% to $1.232 billion from $1.105 billion in the prior-year period. Consolidated same store sales increased 1.8% with retail store same store sales increasing 3.6% and e-commerce same store sales decreasing 7.5%. The increase in net sales was the result of the incremental sales from new stores opened over the past twelve months and an increase of 1.8% in consolidated same store sales, which saw an increase in average unit retail prices, driven in part by inflation.
  • Gross profit was $454.7 million, or 36.9% of net sales, compared to $426.2 million, or 38.6% of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The decrease in gross profit rate of 170 basis points was driven by 120 basis points of deleverage in buying, occupancy and distribution center costs and a 50 basis-point decrease in merchandise margin. The decline in merchandise margin rate was driven primarily by a 90 basis-point headwind from higher freight expense, partially offset by growth in exclusive brand penetration.
  • Selling, general and administrative expenses were $285.7 million, or 23.2% of net sales, compared to $230.3 million, or 20.8% of net sales, in the prior-year period. The increase in selling, general and administrative expenses was primarily a result of higher store payroll, 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 230 basis points primarily as a result of an increase in store-related expenses, store payroll, and marketing expenses.
  • Income from operations decreased $26.9 million to $169.1 million, or 13.7% of net sales, compared to $195.9 million, or 17.7% of net sales, in the prior-year period, primarily due to the factors noted above.
  • Net income was $124.1 million, or $4.09 per diluted share, compared to net income of $147.7 million, or $4.86 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 $0.17 per share benefit, respectively, primarily due to income tax accounting for share-based compensation. Excluding the tax benefits, net income per diluted share in the current-year period was $4.06, compared to $4.69 in the prior-year period.

Current Business

Our preliminary consolidated same store sales in fiscal January have declined 1.5% compared to the prior-year period, driven by a 16.0% decrease in e-commerce sales, partially offset by growth in retail store same store sales of 1.2%.

Balance Sheet Highlights as of December 24, 2022

  • Cash of $50.4 million.
  • $59.1 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 second quarter earnings report on October 26, 2022. As a result, for the fiscal year ending April 1, 2023, the Company now expects:

  • To open 43 new stores (33 stores opened Q3 year-to-date).
  • Total sales of $1.67 billion to $1.68 billion, representing growth of 12.2% to 12.9% over the prior year.
  • Same store sales range of approximately 0.5% to 1.0%, with retail store same store sales of approximately 2.5% to 3.0% and e-commerce same store sales of (10.5)% to (9.5)%.
  • Gross profit between $611 million and $615 million, or approximately 36.6% of sales. Gross profit includes an estimated 140 basis point decline from freight expense, partially offset by 40 basis points of product margin expansion.
  • Income from operations between $228 million and $232 million. This represents approximately 13.7% to 13.8% of sales.
  • Interest expense of $6.0 million.
  • Effective tax rate of 25.1% for the remaining three months of the year.
  • Net income of $167.2 million to $170.0 million.
  • Net income per diluted share of $5.51 to $5.60 based on 30.4 million weighted average diluted shares outstanding.
  • Capital expenditures between $90 million and $95 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 fourth quarter ending April 1, 2023, the Company expects:

  • Total sales of $438 million to $448 million, representing growth of 14.4% to 17.0% over the prior year.
  • Same store sales range of approximately (3.0)% to (0.5)%, with retail store same store sales of flat to 2.0% growth and e-commerce same store sales of (20.0)% to (16.0)%.
  • Gross profit between $156 million and $160 million, or approximately 35.7% of sales. Gross profit includes an estimated 290 basis point decline from freight expense, partially offset by 40 basis points of product margin expansion.
  • Income from operations between $59 million and $63 million. This represents approximately 13.5% to 14.0% of sales.
  • Net income per diluted share of $1.42 to $1.51 based on 30.4 million weighted average diluted shares outstanding.

Conference Call Information

A conference call to discuss the financial results for the third quarter of fiscal year 2023 is scheduled for today, January 25, 2023, 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 February 25, 2023, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 13735762. 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 336 stores in 41 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)

December 24,

March 26,

2022

2022

Assets
Current assets:
Cash and cash equivalents $

50,392

 

$

20,674

 

Accounts receivable, net

14,811

 

9,662

 

Inventories

592,151

 

474,300

 

Prepaid expenses and other current assets

51,524

 

37,195

 

Total current assets

708,878

 

541,831

 

Property and equipment, net

231,651

 

155,247

 

Right-of-use assets, net

307,146

 

241,147

 

Goodwill

197,502

 

197,502

 

Intangible assets, net

60,766

 

60,813

 

Other assets

6,509

 

3,315

 

Total assets $

1,512,452

 

$

1,199,855

 

Liabilities and stockholders’ equity
Current liabilities:
Line of credit $

59,071

 

$

28,549

 

Accounts payable

153,934

 

131,394

 

Accrued expenses and other current liabilities

182,790

 

133,408

 

Short-term lease liabilities

49,226

 

43,117

 

Total current liabilities

445,021

 

336,468

 

Deferred taxes

27,401

 

26,895

 

Long-term lease liabilities

308,165

 

234,584

 

Other liabilities

2,655

 

2,232

 

Total liabilities

783,242

 

600,179

 

 
Stockholders’ equity:
Common stock, $0.0001 par value; December 24, 2022 - 100,000 shares authorized, 30,005 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

208,945

 

199,054

 

Retained earnings

529,621

 

405,477

 

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

(9,359

)

(4,858

)

Total stockholders’ equity

729,210

 

599,676

 

Total liabilities and stockholders’ equity $

1,512,452

 

$

1,199,855

 

Boot Barn Holdings, Inc. Consolidated Statements of Operations (In thousands, except per share data) (Unaudited)

Thirteen Weeks Ended

 

Thirty-Nine Weeks Ended

December 24,

 

December 25,

 

December 24,

 

December 25,

2022

 

2021

 

2022

 

2021

Net sales $

514,553

 

$

485,904

 

$

1,231,954

 

$

1,104,948

 

Cost of goods sold

326,739

 

294,245

 

777,214

 

678,711

 

Gross profit

187,814

 

191,659

 

454,740

 

426,237

 

Selling, general and administrative expenses

115,318

 

99,467

 

285,669

 

230,288

 

Income from operations

72,496

 

92,192

 

169,071

 

195,949

 

Interest expense

2,258

 

1,667

 

4,345

 

5,392

 

Other income/(loss), net

63

 

43

 

(210

)

161

 

Income before income taxes

70,301

 

90,568

 

164,516

 

190,718

 

Income tax expense

17,529

 

21,337

 

40,372

 

42,981

 

Net income $

52,772

 

$

69,231

 

$

124,144

 

$

147,737

 

 
Earnings per share:
Basic $

1.77

 

$

2.34

 

$

4.17

 

$

5.01

 

Diluted $

1.74

 

$

2.27

 

$

4.09

 

$

4.86

 

Weighted average shares outstanding:
Basic

29,813

 

29,637

 

29,790

 

29,518

 

Diluted

30,294

 

30,443

 

30,340

 

30,382

 

Boot Barn Holdings, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited)

Thirty-Nine Weeks Ended

December 24,

 

December 25,

2022

 

2021

Cash flows from operating activities
Net income $

124,144

 

$

147,737

 

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation

25,968

 

19,800

 

Stock-based compensation

9,562

 

7,807

 

Amortization of intangible assets

47

 

54

 

Noncash lease expense

35,203

 

28,701

 

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

101

 

1,834

 

Loss on disposal of assets

250

 

150

 

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

 

(258

)

Deferred taxes

506

 

689

 

Changes in operating assets and liabilities:
Accounts receivable, net

(4,571

)

5,797

 

Inventories

(117,851

)

(109,882

)

Prepaid expenses and other current assets

(14,430

)

(41,596

)

Other assets

(3,194

)

(608

)

Accounts payable

19,571

 

84,411

 

Accrued expenses and other current liabilities

32,785

 

73,490

 

Other liabilities

423

 

1,306

 

Operating leases

(21,464

)

(28,876

)

Net cash provided by operating activities $

87,050

 

$

190,556

 

Cash flows from investing activities
Purchases of property and equipment $

(83,056

)

$

(39,749

)

Net cash used in investing activities $

(83,056

)

$

(39,749

)

Cash flows from financing activities
Borrowings on line of credit, net $

30,522

 

$

 

Repayments on debt and finance lease obligations

(626

)

(112,085

)

Tax withholding payments for net share settlement

(4,501

)

(2,710

)

Proceeds from the exercise of stock options

329

 

5,554

 

Net cash provided by/(used in) financing activities $

25,724

 

$

(109,241

)

 
Net increase in cash and cash equivalents

29,718

 

41,566

 

Cash and cash equivalents, beginning of period

20,674

 

73,148

 

Cash and cash equivalents, end of period $

50,392

 

$

114,714

 

 
Supplemental disclosures of cash flow information:
Cash paid for income taxes $

58,324

 

$

41,694

 

Cash paid for interest $

4,002

 

$

3,497

 

Supplemental disclosure of non-cash activities:
Unpaid purchases of property and equipment $

27,474

 

$

9,620

 

Boot Barn Holdings, Inc. Store Count

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

December 24,

 

September 24,

 

June 25,

 

March 26,

 

December 25,

 

September 25,

 

June 26,

 

March 27,

2022

 

2022

 

2022

 

2022

 

2021

 

2021

 

2021

 

2021

Store Count (BOP)

321

 

311

 

300

 

289

 

278

 

276

 

273

 

266

 

Opened/Acquired

12

 

10

 

11

 

11

 

11

 

3

 

3

 

8

 

Closed

 

 

 

 

 

(1

)

 

(1

)

Store Count (EOP)

333

 

321

 

311

 

300

 

289

 

278

 

276

 

273

 

Boot Barn Holdings, Inc. Selected Store Data

Thirteen Weeks Ended

December 24,

 

 

September 24,

 

 

June 25,

 

 

March 26,

 

 

December 25,

 

 

September 25,

 

 

June 26,

 

 

March 27,

2022

 

 

2022

 

 

2022

 

 

2022

 

 

2021

 

 

2021

 

 

2021

 

 

2021

Selected Store Data:
Same Store Sales (decline)/growth

(3.6

)

%

2.3

 

%

10.0

 

%

33.3

 

%

54.2

 

%

61.7

 

%

78.9

 

%

26.9

 

%

Stores operating at end of period

333

 

321

 

311

 

300

 

289

 

278

 

276

 

273

 

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

3,598

 

3,451

 

3,333

 

3,194

 

3,063

 

2,940

 

2,915

 

2,854

 

Average store square footage, end of period

10,806

 

10,751

 

10,717

 

10,648

 

10,597

 

10,575

 

10,563

 

10,455

 

Average net sales per store (in thousands) $

1,320

 

$

966

 

$

1,031

 

$

1,094

 

$

1,372

 

$

965

 

$

942

 

$

792

 

 

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