Market Overview

Boot Barn Holdings, Inc. Announces Third 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 third fiscal quarter ended December 29, 2018.

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

  • Net sales increased 13.0% to $254.0 million.
  • Same store sales increased 9.2%, with double-digit growth in
    e-commerce and high single-digit growth in retail stores.
  • Net income was $19.0 million, or $0.66 per diluted share, compared to
    net income of $20.1 million, or $0.73 per diluted share in the
    prior-year period. Net income per diluted share in the prior-year
    period was $0.46 when excluding $0.27 related to tax reform.
  • The Company opened two new stores during the quarter.

Jim Conroy, Chief Executive Officer, commented, "Our strong results in
the third quarter reflect the continued strength across the country and
in nearly all major product categories. Our strong merchandising
initiatives, segmented marketing, and solid store operations drove
double-digit growth in e-commerce and high single-digit growth in retail
stores while expanding our consolidated merchandise margin 120 basis
points. Our same store sales trend through the first five weeks of the
fourth quarter is in line with our third quarter performance and we
continue to hold true to our full-price selling model. Notably, our
Texas stores also continue to perform better than company average. We
are confident that the strategies we have in place have us well
positioned to conclude a very successful fiscal 2019 with a strong
fourth quarter performance."

Operating Results for the Third Quarter Ended December 29, 2018

  • Net sales increased 13.0% to $254.0 million from $224.7 million in the
    prior-year period. The increase in net sales was driven by a 9.2%
    increase in same store sales, the sales contribution from acquired
    stores and sales from new stores added over the past twelve months.
  • Gross profit was $85.7 million, or 33.7% of net sales, compared to
    $71.9 million, or 32.0% 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
    120 basis point increase in merchandise margin rate and a 50 basis
    point decrease in buying and occupancy costs. The higher merchandise
    margin was driven by more full-price selling and growth in exclusive
    brand penetration.
  • Selling, general and administrative expense was $56.4 million, or
    22.2% of net sales, compared to $47.5 million, or 21.2% of net sales,
    in the prior-year period. The increase in SG&A expenses was primarily
    a result of additional costs to support higher sales and expenses for
    both new and acquired stores. As a percentage of net sales, SG&A
    increased primarily as a result of higher incentive compensation in
    the thirteen weeks ended December 29, 2018 and a gain from insurance
    claims in the thirteen weeks ended December 30, 2017 that did not
    occur in the current year period.
  • Income from operations grew 20.1% to $29.3 million, or 11.5% of net
    sales, compared to $24.4 million, or 10.9% of net sales, in the
    prior-year period. This increase represents more than 60 basis points
    of improvement in operating profit margin.
  • Net income was $19.0 million, or $0.66 per diluted share, compared to
    $20.1 million, or $0.73 per diluted share, in the prior-year period,
    which included $0.27 related to tax reform.
  • Opened 2 new stores, bringing the total count at quarter-end to 234
    stores in 31 states.

Operating Results for the Nine Months Ended December 29, 2018

  • Net sales increased 15.2% to $584.1 million from $507.2 million in the
    prior-year period. The increase in net sales was driven by a 10.4%
    increase in same store sales, the sales contribution from acquired
    stores and sales from new stores added over the past twelve months.
  • Gross profit was $188.0 million, or 32.2% of net sales, compared to
    $155.0 million, or 30.6% 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
    100 basis point increase in merchandise margin rate and 60 basis
    points of leverage in buying and occupancy costs. The higher
    merchandise margin was driven by more full-price selling and growth in
    exclusive brand penetration.
  • Selling, general and administrative expense was $140.2 million, or
    24.0% of net sales, compared to $120.0 million, or 23.7% of net sales,
    in the prior-year period. Selling, general and administrative expenses
    increased primarily as a result of additional costs to support higher
    sales and expenses for both new and acquired stores. As a percentage
    of net sales, SG&A increased primarily as a result of higher incentive
    compensation in the thirty-nine weeks ended December 29, 2018 and a
    gain from insurance claims in the thirty-nine weeks ended December 30,
    2017 that did not occur in the current year period.
  • Income from operations grew 36.7% to $47.8 million, or 8.2% of net
    sales, compared to $35.0 million, or 6.9% of net sales, in the
    prior-year period. This increase represents 130 basis points of
    improvement in operating profit margin.
  • Net income was $30.3 million, or $1.05 per diluted share, compared to
    $22.0 million, or $0.81 per diluted share, in the prior-year period,
    which included $0.27 related to tax reform. Net income per diluted
    share in the thirty-nine weeks ended December 29, 2018 includes
    approximately $0.12 per share of tax benefit related to stock option
    exercises.
  • Added 11 stores through new openings and acquisitions and closed three
    stores.

Balance Sheet Highlights as of December 29, 2018

  • Cash of $50.6 million.
  • Average inventory per store was up 3.8% on a same store basis compared
    to December 30, 2017.
  • Total net debt of $174.0 million, including a zero balance under the
    revolving credit facility.

Fiscal Year 2019 Outlook

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

  • To add 18 new stores, including the 11 stores opened and acquired
    during the first 9 months of fiscal 2019.
  • Same store sales growth of approximately 10%.
  • Total sales of $770 million to $773 million.
  • Income from operations between $62.0 million and $62.7 million
    compared to the Company's prior outlook of between $57.5 million and
    $60.5 million.
  • Interest expense of approximately $16.5 million.
  • Net income of $37.7 million to $38.2 million, compared to the
    Company's prior outlook of $33.6 million to $35.8 million.
  • Net income per diluted share of $1.31 to $1.33 based on 28.8 million
    weighted average diluted shares outstanding, compared to the Company's
    prior outlook of $1.16 to $1.24.

For the fiscal fourth quarter ending March 30, 2019, the Company expects:

  • Same store sales growth of 5.0% to 7.0%.
  • Total sales of $186 million to $189 million.
  • Net income per diluted share of $0.25 to $0.27 based on 28.9 million
    weighted average diluted shares outstanding.

Conference Call Information

A conference call to discuss the financial results for the third quarter
of fiscal year 2019 is scheduled for today, February 5, 2019, at 4:30
p.m. ET (1:30 p.m. PT). Investors and analysts interested in
participating in the call are invited to dial (800) 289-0438. 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 March 5, 2019, by
dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and
entering the conference identification number: 6028469. 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 234 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)

 
December 29, March 31,
2018 2018
Assets
Current assets:
Cash and cash equivalents $ 50,614 $ 9,016
Accounts receivable, net 8,006 4,389
Inventories 225,241 211,472
Prepaid expenses and other current assets   14,348     16,250  
Total current assets 298,209 241,127
Property and equipment, net 97,206 89,208
Goodwill 195,858 193,095
Intangible assets, net 62,992 63,383
Other assets  
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