Market Overview

Boot Barn Holdings, Inc. Announces Fourth Quarter and Fiscal Year 2019 Financial Results

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Fourth Quarter Results Exceeded Guidance

Fiscal Year Same Stores Sales Increased 10% and Operating Income Grew
39%

Boot Barn Holdings, Inc. (NYSE:BOOT) today announced its financial
results for the fourth fiscal quarter and fiscal year ended March 30,
2019.

Highlights for the quarter ended March 30, 2019, were as follows:

  • Net sales increased 12.9% to $192.8 million.
  • Same store sales increased 8.7%, including an increase in retail store
    same store sales of 9.8% and an increase in e-commerce sales of 3.3%.
  • Net income was $8.7 million, or $0.30 per diluted share, compared to
    $6.9 million, or $0.24 per diluted share in the prior-year period. Net
    income per diluted share in the current-year period includes $0.02 per
    share of tax expense related to a return to provision adjustment. Net
    income per diluted share in the prior-year period includes $0.06 per
    share of tax benefit from the exercise of stock options.
  • The Company opened six new stores during the quarter.

Highlights for the fiscal year ended March 30, 2019, were as follows:

  • Net sales increased 14.6% to $776.9 million.
  • Same store sales increased 10.0%, including an increase in retail
    store same store sales of 9.5% and an increase in e-commerce sales of
    12.2%.
  • Net income was $39.0 million, or $1.35 per diluted share, compared to
    $28.9 million, or $1.05 per diluted share in the prior-year period.
    Net income per diluted share in fiscal year 2019 includes $0.13 per
    share of tax benefit from the exercise of stock options and $0.02 per
    share of tax expense related to a return to provision adjustment. Net
    income per diluted share in fiscal year 2018 includes $0.25 per share
    of tax benefit from the revaluation of deferred tax liabilities and
    $0.06 per share of tax benefit from the exercise of stock options.
  • The Company added 17 stores during the year, including 12 new stores
    and 5 acquired stores.

Jim Conroy, Chief Executive Officer, commented, "We delivered
outstanding financial results in fiscal 2019 with same store sales
growth of 10%, including strong gains in both our retail stores and
e-commerce channel. The combination of double digit top-line growth and
meaningful merchandise margin expansion helped raise our operating
margin 150 basis points to 8.3% of sales and drove a significant
increase in profitability. We believe our enhanced merchandise
assortments featuring a broader offering of exclusive brands, multiple
omni-channel initiatives aimed at improving the shopping experience, and
new marketing programs have combined to drive our strong performance."

"We continued to experience strength across the business in the fourth
quarter, highlighted by our eighth consecutive quarter of positive same
store sales growth in our retail stores and further improvements in
e-commerce profitability," continued Conroy. "We completed another
successful rodeo season in Texas, which along with solid results in each
of our other geographies, allowed us to exceed expectations. Our recent
performance reflects the progress we are making executing our strategic
initiatives and underscores our ability to drive sustained growth even
in the face of more challenging comparisons. We are now at the halfway
point of the first fiscal quarter and our business continues to be very
strong with consolidated same store sales growth of 7.5% along with
solid merchandise margin performance. Overall, we have strong momentum
as we head into fiscal 2020 and we remain very excited about our growth
prospects for the current year and beyond."

Operating Results for the Fourth Quarter Ended March 30, 2019

  • Net sales increased 12.9% to $192.8 million from $170.8 million in the
    prior-year period. Consolidated same store sales increased 8.7%.
    Excluding the impact of the 3.3% increase in e-commerce same store
    sales, same store sales increased by 9.8%. The increase in net sales
    was driven by the 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 $63.4 million, or 32.9% of net sales, compared to
    $52.9 million, or 31.0% 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 due to a 150
    basis point increase in merchandise margin rate and 40 basis points of
    leverage in buying and occupancy costs. The higher merchandise margin
    was driven by better full-price selling, growth in exclusive brand
    penetration, and a benefit from lower shrink.
  • Selling, general and administrative expense was $46.9 million, or
    24.3% of net sales, compared to $41.6 million, or 24.4% of net sales,
    in the prior-year period. The increase in selling, general and
    administrative expenses was primarily a result of additional costs to
    support higher sales and expenses for both new and acquired stores.
  • Income from operations grew 46.2% to $16.5 million, or 8.6% of net
    sales, compared to $11.3 million, or 6.6% of net sales, in the
    prior-year period. This increase represents approximately 200 basis
    points of improvement in operating profit margin.
  • Net income was $8.7 million, or $0.30 per diluted share, compared to
    $6.9 million, or $0.24 per diluted share in the prior-year period. Net
    income per diluted share in the current-year period includes $0.02 per
    share of tax expense related to a return to provision adjustment. Net
    income per diluted share in the prior-year period includes $0.06 per
    share of tax benefit from the exercise of stock options.
  • Opened 6 new stores, bringing the total count at quarter-end to 240
    stores in 33 states.

Operating Results for the Fiscal Year Ended March 30, 2019

  • Net sales increased 14.6% to $776.9 million from $677.9 million in the
    prior-year period. Consolidated same store sales increased 10.0%.
    Excluding the impact of the 12.2% increase in e-commerce same store
    sales, same store sales increased by 9.5%. The increase in net sales
    was driven by the 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 $251.4 million, or 32.4% of net sales, compared to
    $207.9 million, or 30.7% 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 due to a 110
    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 better full-price selling and growth in exclusive brand
    penetration.
  • Selling, general and administrative expense was $187.1 million, or
    24.1% of net sales, compared to $161.7 million, or 23.8% 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, selling, general and administrative expenses increased
    as a result of higher incentive compensation, the marketing launch of
    the Miranda Lambert product line, and an insurance gain in the
    prior-year period that did not occur in the current-year period.
  • Income from operations grew 39.1% to $64.3 million, or 8.3% of net
    sales, compared to $46.3 million, or 6.8% of net sales, in the
    prior-year period. This increase represents approximately 150 basis
    points of improvement in operating profit margin.
  • Net income was $39.0 million, or $1.35 per diluted share, compared to
    $28.9 million, or $1.05 per diluted share in the prior-year period.
    Net income per diluted share in fiscal year 2019 includes $0.13 per
    share of tax benefit from the exercise of stock options and $0.02 per
    share of tax expense related to a return to provision adjustment. Net
    income per diluted share in fiscal year 2018 includes $0.25 per share
    of tax benefit from the revaluation of deferred tax liabilities and
    $0.06 per share of tax benefit from the exercise of stock options.
  • Added 17 stores through new openings and acquisitions and closed three
    stores.

Balance Sheet Highlights as of March 30, 2019

  • Cash of $16.6 million.
  • Average inventory per store was up 3.0% on a same store basis compared
    to March 31, 2018.
  • Total net debt of $174.3 million, including a zero balance under the
    revolving credit facility.

Fiscal Year 2020 Outlook

For the fiscal year ending March 28, 2020 the Company expects:

  • To open or acquire 25 stores.
  • Same store sales growth of approximately 5.0%.
  • Income from operations between $71.5 million and $74.4 million.
  • Interest expense of approximately $15.5 million.
  • Net income of $41.7 million to $44.0 million.
  • Net income per diluted share of $1.42 to $1.50 based on 29.4 million
    weighted average diluted shares outstanding.

For the fiscal first quarter ending June 29, 2019, the Company expects:

  • Same store sales growth of approximately 6.0%.
  • Total sales of $178 million to $180 million.
  • Net income per diluted share of $0.20 to $0.22 based on 29.1 million
    weighted average diluted shares outstanding.

Conference Call Information

A conference call to discuss the financial results for the fourth
quarter of fiscal year 2019 is scheduled for today, May 16, 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 (888) 394-8218. 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 June 16, 2019, by
dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and
entering the conference identification number: 2167505. 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 239 stores in 33 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)

 
March 30, March 31,
2019 2018
Assets
Current assets:
Cash and cash equivalents $ 16,614 $ 9,016
Accounts receivable, net 8,095 4,389
Inventories 240,734 211,472
Prepaid expenses and other current assets   11,900   16,250
Total current assets 277,343 241,127
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