- William Blair analyst Dylan Carden reiterated an Outperform rating on the shares of Boot Barn Holdings Inc (NYSE:BOOT).
- The company reported mixed earnings for Q4, with sales coming below the consensus, driven by a 6% decline in same-store sales.
- The analyst noted that the weakness was more pointed in the e-commerce business.
- While initial consensus sales estimates for fiscal 2024 implied an acceleration in annualized growth trends, they now represent a more believable deceleration and negative comp growth that the analyst feels is more reflective of some natural cooling in the business following two years of outsized growth.
- While some remain focused on the implications of fashion benefits embedded in more recent increases in store volume, after three years, the analyst believes this is a narrative that fails to recognize the underlying core customer base, with still only 10% of the business that could be considered more at risk from a fashion standpoint.
- The theory ignores more tangible facts such as a roughly 50% increase in the number of items now being sold in stores, which in turn has attracted new customers, said the analyst.
- The analyst believes in the durability of higher store volumes and in turn margins of the business.
- Quicker payback periods, now within 18 months, allows for the company to accelerate its store rollout, going from 10% prior target unit growth to now 15%.
- After a reset year in fiscal 2024, the analyst believes the algorithm for growth in the business has therefore shifted to something around mid- to high-teens top-line growth at faster earnings growth given margin recapture opportunity.
- Price Action: BOOT shares are trading lower by 11.56% at $66.17 on the last check Thursday.
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