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Boot Barn Holdings, Inc. Announces Second Quarter Fiscal Year 2019 Financial Results and Increased Annual Guidance

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Boot Barn Holdings, Inc. (NYSE:BOOT) today announced its financial
results for the second fiscal quarter ended September 29, 2018.

Highlights for the quarter ended September 29, 2018, were as follows:

  • Net sales increased 17.5% to $168.1 million.
  • Same store sales increased 11.3%.
  • Net income was $4.5 million, or $0.16 per diluted share, compared to
    net income of $1.1 million, or $0.04 per diluted share in the
    prior-year period. Net income per diluted share in the second quarter
    of fiscal 2019 includes approximately $0.04 per share of tax benefit
    related to stock option exercises.
  • Added 3 stores through new openings and acquisitions.

Jim Conroy, Chief Executive Officer, commented, "We are very pleased
with our second quarter results and the underlying strength in the
business. Same store sales increased double digits, both in our retail
stores and online, which combined with merchandise margin expansion from
increased full-price selling and exclusive brand penetration, drove 130
basis points of operating margin improvement over last year. During the
quarter, we made significant progress across each of our four strategic
growth initiatives. Most notably, in mid-September we successfully
launched our new exclusive brand, Idyllwind, Fueled by Miranda Lambert.
We are well positioned to continue driving improved results during our
upcoming holiday quarter and over the long term." Mr. Conroy continued,
"We are also pleased with sales through the first three weeks of our
fiscal third quarter, which continue to be very strong both in our
retail stores and online."

Operating Results for the Second Quarter Ended September 29, 2018

  • Net sales increased 17.5% to $168.1 million from $143.1 million in the
    prior-year period. The increase in net sales was driven by an 11.3%
    increase in same store sales, the sales contribution from the stores
    acquired from Wood's Boots, Lone Star and Drysdales, and sales from
    new stores added over the past twelve months.
  • Gross profit was $50.9 million, or 30.3% of net sales, compared to
    $41.7 million, or 29.1% of net sales, in the prior-year period. Gross
    profit increased primarily due to increased sales and an increase in
    merchandise margin rate. Gross profit rate increased primarily from a
    30 basis point increase in merchandise margin rate and 90 basis points
    of leverage in buying and occupancy costs. The higher merchandise
    margin was driven by more full-price selling and increased exclusive
    brand penetration.
  • Selling, general and administrative expense was $42.2 million, or
    25.1% of net sales, compared to $36.1 million, or 25.2% of net sales,
    in the prior-year period. Selling, general and administrative expenses
    increased primarily as a result of increased sales, expenses for new
    and acquired stores, higher marketing costs as a result of the Idyllwind
    launch, and costs associated with the addition of a mid-year physical
    inventory.
  • Income from operations was $8.7 million, or 5.2% of net sales,
    compared to $5.6 million, or 3.9% of net sales, in the prior-year
    period.
  • Net income was $4.5 million, or $0.16 per diluted share, compared to
    $1.1 million, or $0.04 per diluted share, in the prior-year period.
    Net income per diluted share in the second quarter of fiscal 2019
    includes approximately $0.04 per share of tax benefit related to stock
    option exercises.
  • Added 3 stores through new openings and acquisitions, bringing the
    total count at quarter-end to 232 stores in 31 states.

Operating Results for the Six Months Ended September 29, 2018

  • Net sales increased 16.9% to $330.1 million from $282.5 million in the
    prior-year period. The increase in net sales was driven by an 11.4%
    increase in same store sales, the sales contribution from the stores
    acquired from Wood's Boots, Lone Star and Drysdales, and sales from
    new stores added over the past twelve months.
  • Gross profit was $102.4 million, or 31.0% of net sales, compared to
    $83.1 million, or 29.4% of net sales, in the prior-year period. Gross
    profit increased primarily due to increased sales and an increase in
    merchandise margin rate. Gross profit rate increased primarily from an
    80 basis point increase in merchandise margin rate and 80 basis points
    of leverage in buying and occupancy costs. The higher merchandise
    margin was driven by more full-price selling and increased exclusive
    brand penetration.
  • Selling, general and administrative expense was $83.8 million, or
    25.4% of net sales, compared to $72.5 million, or 25.7% of net sales,
    in the prior-year period. Selling, general and administrative expenses
    increased primarily as a result of increased sales, expenses for new
    and acquired stores, higher marketing costs as a result of the Idyllwind
    launch, and costs associated with the addition of a mid-year physical
    inventory. Selling, general and administrative expenses as a
    percentage of sales decreased as a result of expense leverage on
    higher sales.
  • Income from operations was $18.5 million, or 5.6% of net sales,
    compared to $10.6 million, or 3.7% of net sales, in the prior-year
    period.
  • Net income was $11.3 million, or $0.39 per diluted share, compared to
    $1.9 million, or $0.07 per diluted share, in the prior-year period.
    Net income per diluted share in the six months ended September 29,
    2018 includes approximately $0.12 per share of tax benefit related to
    stock option exercises.
  • Added 9 stores through new openings and acquisitions.

Balance Sheet Highlights as of September 29, 2018

  • Cash of $9.4 million.
  • Average inventory per store was up 2.6% on a same store basis compared
    to September 30, 2017.
  • Total net debt of $199.9 million, including $26.1 million drawn under
    the revolving credit facility.

Fiscal Year 2019 Outlook

For the fiscal year ending March 30, 2019, the Company now expects:

  • To add 23 new stores, including the 9 stores opened and acquired
    during the first six months of fiscal 2019.
  • Same store sales growth of 6.5% to 8.0%.
  • Income from operations between $57.5 million and $60.5 million
    compared to the Company's prior outlook of $54.0 million and $57.9
    million.
  • Interest expense of $17.0 million to $18.0 million.
  • Net income of $33.6 million to $35.8 million, compared to the
    Company's prior outlook of $29.9 million to $32.8 million.
  • Net income per diluted share of $1.16 to $1.24 based on 28.9 million
    weighted average diluted shares outstanding, compared to the Company's
    prior outlook of $1.04 to $1.14.

For the fiscal third quarter ending December 29, 2018, the Company
expects:

  • Same store sales growth of 5.0% to 7.0%.
  • Net income per diluted share of $0.56 to $0.60 based on 29.1 million
    weighted average diluted shares outstanding.

Conference Call Information

A conference call to discuss the financial results for the second
quarter of fiscal year 2019 is scheduled for today, October 25, 2018, at
4:30 p.m. ET (1:30 p.m. PT). Investors and analysts interested in
participating in the call are invited to dial (866) 548-4713. 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 25, 2018,
by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international)
and entering the conference identification number: 2518566. 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 232 stores in 31 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: 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 29,     March 31,
2018   2018  

Assets

Current assets:
Cash and cash equivalents $ 9,406 $ 9,016
Accounts receivable, net 4,445 4,389
Inventories 230,089 211,472
Prepaid expenses and other current assets   20,090     16,250  
Total current assets 264,030 241,127
Property and equipment, net 95,014 89,208
Goodwill 195,858 193,095
Intangible assets, net 63,140 63,383
Other assets   1,143     1,128  
Total assets $ 619,185  
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