Boot Barn Holdings, Inc. Announces Second Quarter Fiscal Year 2022 Financial Results and Appoints Jim Watkins Chief Financial Officer

Rhea-AI Summary

Boot Barn Holdings, Inc. (NYSE:BOOT) reported financial results for the second fiscal quarter ended September 25, 2021. Net sales soared by 67.1% to $312.7 million, with same-store sales increasing 53.6%. Net income reached $37.9 million or $1.25 per diluted share, a significant rise from $7.7 million in the prior period. Operating income surged 400% to $50.1 million. The company plans to open 10 new stores this fiscal year and aims for 350 basis points growth in exclusive brand penetration.

Positive

• Net sales increased 67.1% to $312.7 million.
• Net income rose to $37.9 million, or $1.25 per diluted share.
• Same-store sales increased by 53.6%.
• Gross profit margin improved by 770 basis points to 37.8%.
• Company plans to open 10 new stores this fiscal year.

Negative

• None.

IRVINE, Calif.--(BUSINESS WIRE)-- Boot Barn Holdings, Inc. (NYSE:BOOT) today announced its financial results for the second fiscal quarter ended September 25, 2021.

Due to the impact of COVID-19 on the Company’s results in its second fiscal quarter ended September 26, 2020, it has provided the below quarterly highlights in comparison to its second fiscal quarter ended September 28, 2019, two years ago.

For the quarter ended September 25, 2021:

• Net sales increased 67.1% to $312.7 million, compared to the quarter ended September 28, 2019, two years ago.
• Compared to the quarter ended September 28, 2019, same store sales increased 53.6%, comprised of an increase in retail store same store sales of 53.0% and an increase in e-commerce same store sales of 57.1%.
• Net income was $37.9 million, or $1.25 per diluted share, compared to $7.7 million, or $0.26 per diluted share in the two-year ago period. Net income per diluted share in the current-year and two-year ago periods include an approximately $0.03 and $0.02 per share benefit, respectively, due to income tax accounting for share-based compensation. Excluding the tax benefit in both periods, net income per diluted share in the current-year period was $1.22, compared to $0.24 in the two-year ago period.
• The Company opened 3 new stores and closed 1 during the thirteen weeks ended September 25, 2021.

The Company has also provided the below table which includes year-over-year comparisons of retail store sales, e-commerce sales, and total net sales for each of the periods indicated below. In addition, the following table includes retail store sales and e-commerce sales as a percentage of total net sales for the periods indicated below:

(all $ in thousands)		Q2 FY2022			Q2 FY2021			Q2 FY2020				% Change Q2 FY2022 vs. Q2 FY2021			% Change Q2 FY2022 vs. Q2 FY2020
Retail Stores		$	268,403		$	152,932		$	158,895			76	%		69	%
E-commerce		$	44,314		$	31,583		$	28,288			40	%		57	%
Total Net Sales		$	312,717		$	184,515		$	187,183			69	%		67	%
Retail Stores as a % of Net Sales			86	%		83	%		85	%
E-commerce as a % of Net Sales			14	%		17	%		15	%

Jim Conroy, President and Chief Executive Officer, commented, “Our business continued to grow at an exceptional pace in the second quarter as our teams are doing an excellent job executing our strategic initiatives and capitalizing on heightened consumer demand to expand our market share. We are experiencing strong gains both in stores and online fueled by an increasing customer count, a compelling assortment and a fulfilling shopping experience. The consistency and duration of the outsized growth in sales seems to indicate that we have captured significant market share which should be sustainable.  With our sales momentum continuing thus far in the third quarter and inventories in a solid position, we are optimistic about our prospects for the upcoming holiday season. Looking further ahead, we see a long runway for sustained growth and believe the Company is poised to deliver increased shareholder value for years to come.”

Operating Results for the Second Quarter Ended September 25, 2021 Compared to the Second Quarter Ended September 26, 2020

• Net sales increased 69.5% to $312.7 million from $184.5 million in the prior-year period. Consolidated same store sales increased 61.7% with retail store same store sales up 66.0% and e-commerce same store sales up 41.6%. The increase in net sales was the result of an increase of 61.7% in consolidated same store sales and the incremental sales from new stores opened over the past twelve months. Net sales in the prior-year period were adversely impacted by decreases in retail store sales resulting from decreased traffic in our stores from customers staying at home in response to the COVID-19 crisis.
• Gross profit was $118.2 million, or 37.8% of net sales, compared to $55.5 million, or 30.1% of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The increase in gross profit rate of 770 basis points was driven by 410 basis points of leverage in buying and occupancy costs as a result of expense leverage on higher sales and a 360-basis point increase in merchandise margin. Merchandise margin increased 360 basis points primarily as a result of better full-price selling and growth in exclusive brand penetration.
• Selling, general and administrative expenses were $68.0 million, or 21.8% of net sales, compared to $45.4 million, or 24.6% of net sales, in the prior-year period. The increase in selling, general and administrative expenses was primarily a result of higher store payroll, higher overhead and increased marketing expenses in the current-year period compared to the prior-year period which was impacted by COVID-19. Selling, general and administrative expenses as a percentage of net sales decreased by 290 basis points primarily as a result of expense leverage on higher sales.
• Income from operations increased $40.1 million to $50.1 million, or 16.0% of net sales, compared to $10.0 million, or 5.4% of net sales, in the prior-year period. This increase represents 1,060 basis points of improvement in operating profit margin.
• Net income was $37.9 million, or $1.25 per diluted share, compared to a net income of $5.8 million, or $0.20 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes an approximately $0.03 per share benefit due to income tax accounting for share-based compensation. Excluding the tax benefit in the current year period, net income per diluted share in the current-year period was $1.22, compared to net income per diluted share of $0.20 in the prior-year period.

Operating Results for the Six Months Ended September 25, 2021 Compared to the Six Months Ended September 26, 2020

• Net sales increased 86.3% to $619.0 million from $332.3 million in the prior-year period. Consolidated same store sales increased 69.1% with retail store same store sales up 81.5% and e-commerce same store sales up 24.4%. The increase in net sales was the result of an increase of 69.1% in consolidated same store sales, the sales contribution from temporarily closed stores that were excluded from the comp base, and the incremental sales from new stores opened over the past twelve months. Net sales in the prior-year period were adversely impacted by decreases in retail store sales resulting from decreased traffic in our stores from customers staying at home in response to the COVID-19 crisis and temporary store closures.
• Gross profit was $234.6 million, or 37.9% of net sales, compared to $95.7 million, or 28.8% of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The increase in gross profit rate of 910 basis points was driven by 520 basis points of leverage in buying and occupancy costs as a result of expense leverage on higher sales and a 390 basis point increase in merchandise margin. Merchandise margin increased 390 basis points primarily as a result of better full-price selling, increased penetration of store sales compared to the prior year, and growth in exclusive brand penetration.
• Selling, general and administrative expenses were $130.8 million, or 21.1% of net sales, compared to $83.9 million, or 25.2% of net sales, in the prior-year period. The increase in selling, general and administrative expenses was primarily a result of higher store payroll, higher overhead and increased marketing expenses in the current-year period compared to the prior-year period which was impacted by COVID-19. Selling, general and administrative expenses as a percentage of net sales decreased by 410 basis points primarily as a result of expense leverage on higher sales.
• Income from operations increased $92.0 million to $103.8 million, or 16.8% of net sales, compared to $11.8 million, or 3.6% of net sales, in the prior-year period. This increase represents 1,320 basis points of improvement in operating profit margin.
• Net income was $78.5 million, or $2.59 per diluted share, compared to net income of $5.3 million, or $0.18 per diluted share in the prior-year period. Net income per diluted share in the current-year period includes a $0.12 per share benefit due to income tax accounting for share-based compensation. Excluding the tax benefit in the current year period, net income per diluted share in the current-year period was $2.47, compared to net income per diluted share of $0.18 in the prior-year period.

Current Business

The following table includes retail store sales, e-commerce sales, and total net sales for the periods indicated below. It also includes the year-over-year change in retail store sales, e-commerce sales, and total net sales for each of the periods indicated below:

(all $ in thousands)		Preliminary Four Weeks Q3 FY22 QTD			Four Weeks Q3 FY21 QTD			Four Weeks Q3 FY20 QTD				% Change Four Weeks Q3 FY22 QTD vs. Four Weeks Q3 FY21 QTD			% Change Four Weeks Q3 FY22 QTD vs. Four Weeks Q3 FY20 QTD
Retail Stores		$	97,166		$	61,311		$	58,233			58	%		67	%
E-commerce		$	17,804		$	11,262		$	10,542			58	%		69	%
Total Net Sales		$	114,970		$	72,573		$	68,775			58	%		67	%

Balance Sheet Highlights as of September 25, 2021

• Cash of $39.5 million.
• Average inventory per store increased 8.8% on a same store basis compared to September 26, 2020.
• Total debt of $50.0 million, including a zero balance under the revolving credit facility. On July 26, 2021, the Company expanded its revolving credit facility to $180.0 million.

Fiscal Year 2022 Outlook

The Company provides the following full-year fiscal 2022 guidance:

• New unit growth of 10%.
• Exclusive brand penetration growth of 350 basis points compared to full-year fiscal 2021.
• Effective tax rate of 25.4%.
• Capital expenditures between $36.0 to $39.0 million.

CFO Appointment

Boot Barn also announced the appointment of Jim Watkins as Chief Financial Officer, effective November 1, 2021. Jim has worked at Boot Barn in a variety of roles since October 2014, most recently as the Company’s Senior Vice President, Finance and Investor Relations. Prior to joining Boot Barn, Jim was the Vice President, Corporate Controller and Principal Accounting Officer of Mindspeed Technologies, a publicly traded semiconductor company. Prior to Mindspeed, Jim worked as an auditor at Ernst & Young for 12 years. Jim is a Certified Public Accountant in the state of California.

Greg Hackman will continue as Boot Barn’s Executive Vice President and Chief Operating Officer. Greg joined Boot Barn in 2015 as the Chief Financial Officer and has also held the role of Chief Operating Officer since August 2020.

Jim Conroy stated, “I feel fortunate to have the chance to work with both Greg and Jim as we continue to build the Boot Barn business. This new alignment will give Jim the well-deserved acknowledgment of his contributions to the Company and the finance organization. It also demonstrates the leadership capabilities of Greg as he has helped position Jim for this expanded role. Given the outsized growth we are presently experiencing, I believe we will benefit greatly from Greg’s more intense focus on sales support functions to help ensure we can continue to scale the business to support the future needs of a national multi-billion-dollar retailer.”

Conference Call Information

A conference call to discuss the financial results for the second quarter of fiscal year 2022 is scheduled for today, October 27, 2021, at 4:30 p.m. ET (1:30 p.m. PT). Investors and analysts interested in participating in the call are invited to (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 telephone replay of the call will be available until November 27, 2021, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 13724517. 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 281 stores in 36 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)
		September 25,				March 27,
		2021				2021
Assets
Current assets:
Cash and cash equivalents		$	39,545			$	73,148
Accounts receivable, net			13,202				12,771
Inventories			350,274				275,760
Prepaid expenses and other current assets			38,072				12,777
Total current assets			441,093				374,456
Property and equipment, net			124,021				110,444
Right-of-use assets, net			209,964				186,827
Goodwill			197,502				197,502
Intangible assets, net			60,849				60,885
Other assets			3,990				3,467
Total assets		$	1,037,419			$	933,581
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable			140,530				104,641
Accrued expenses and other current liabilities			96,959				77,615
Short-term lease liabilities			42,992				39,400
Total current liabilities			280,481				221,656
Deferred taxes			15,363				21,993
Long-term portion of notes payable, net			49,399				109,781
Long-term lease liabilities			206,988				181,836
Other liabilities			3,931				3,424
Total liabilities			556,162				538,690
Stockholders’ equity:
Common stock, $0.0001 par value; September 25, 2021 - 100,000 shares authorized, 29,734 shares issued; March 27, 2021 - 100,000 shares authorized, 29,348 shares issued			3				3
Preferred stock, $0.0001 par value; 10,000 shares authorized, no shares issued or outstanding			—				—
Additional paid-in capital			194,323				183,815
Retained earnings			291,533				213,027
Less: Common stock held in treasury, at cost, 132 and 96 shares at September 25, 2021 and March 27, 2021, respectively			(4,602	)			(1,954	)
Total stockholders’ equity			481,257				394,891
Total liabilities and stockholders’ equity		$	1,037,419			$	933,581

Boot Barn Holdings, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
		Thirteen Weeks Ended						Twenty-Six Weeks Ended
		September 25,			September 26,			September 25,			September 26,
		2021			2020			2021			2020
Net sales		$	312,717		$	184,515		$	619,044		$	332,281
Cost of goods sold			194,566			129,025			384,466			236,590
Gross profit			118,151			55,490			234,578			95,691
Selling, general and administrative expenses			68,037			45,448			130,821			83,851
Income from operations			50,114			10,042			103,757			11,840
Interest expense			1,162			2,383			3,725			5,024
Other income, net			14			78			118			142
Income before income taxes			48,966			7,737			100,150			6,958
Income tax expense			11,105			1,979			21,644			1,690
Net income		$	37,861		$	5,758		$	78,506		$	5,268
Earnings per share:
Basic shares		$	1.28		$	0.20		$	2.67		$	0.18
Diluted shares		$	1.25		$	0.20		$	2.59		$	0.18
Weighted average shares outstanding:
Basic shares			29,555			28,860			29,458			28,843
Diluted shares			30,356			29,223			30,312			29,165

Boot Barn Holdings, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
		Twenty-Six Weeks Ended
		September 25,				September 26,
		2021				2020
Cash flows from operating activities
Net income		$	78,506			$	5,268
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			12,871				11,948
Stock-based compensation			5,968				3,529
Amortization of intangible assets			36				44
Noncash lease expense			18,737				16,757
Amortization and write-off of debt issuance fees and debt discount			1,189				442
Loss on disposal of assets			90				42
(Gain)/Loss on adjustment of right-of-use assets and lease liabilities			(247	)			295
Store impairment charge			—				384
Deferred taxes			(6,630	)			(250	)
Changes in operating assets and liabilities:
Accounts receivable, net			5,852				3,681
Inventories			(74,514	)			27,777
Prepaid expenses and other current assets			(25,366	)			(206	)
Other assets			(523	)			(450	)
Accounts payable			36,312				(9,985	)
Accrued expenses and other current liabilities			14,634				568
Other liabilities			507				554
Operating leases			(18,794	)			(16,507	)
Net cash provided by operating activities		$	48,628			$	43,891
Cash flows from investing activities
Purchases of property and equipment		$	(22,251	)		$	(14,881	)
Net cash used in investing activities		$	(22,251	)		$	(14,881	)
Cash flows from financing activities
Payments on line of credit - net		$	—			$	(62,137	)
Repayments on debt and finance lease obligations			(61,872	)			(308	)
Tax withholding payments for net share settlement			(2,648	)			(517	)
Proceeds from the exercise of stock options			4,540				61
Net cash used in financing activities		$	(59,980	)		$	(62,901	)
Net decrease in cash and cash equivalents			(33,603	)			(33,891	)
Cash and cash equivalents, beginning of period			73,148				69,563
Cash and cash equivalents, end of period		$	39,545			$	35,672
Supplemental disclosures of cash flow information:
Cash paid for income taxes		$	26,005			$	1,182
Cash paid for interest		$	2,495			$	4,905
Supplemental disclosure of non-cash activities:
Unpaid purchases of property and equipment		$	7,195			$	1,349

Boot Barn Holdings, Inc.
Store Count
		Quarter Ended			Quarter Ended		Quarter Ended			Quarter Ended		Quarter Ended		Quarter Ended		Quarter Ended		Quarter Ended
		September 25,			June 26,		March 27,			December 26,		September 26,		June 27,		March 28,		December 28,
		2021			2021		2021			2020		2020		2020		2020		2019
Store Count (BOP)		276			273		266			265		264		259		251		248
Opened/Acquired		3			3		8			1		1		5		8		3
Closed		(1	)		—		(1	)		—		—		—		—		—
Store Count (EOP)		278			276		273			266		265		264		259		251

Boot Barn Holdings, Inc.
Selected Store Data
		Thirteen Weeks Ended
		September 25,			June 26,			March 27,			December 26,			September 26,			June 27,			March 28,			December 28,
		2021			2021			2021			2020			2020			2020			2020			2019
Selected Store Data:
Same Store Sales growth/(decline)			61.7	%		78.9	%		26.9	%		4.6	%		(5.1	)%		(14.9	)%		(4.7	)%		6.7	%
Stores operating at end of period			278			276			273			266			265			264			259			251
Total retail store square footage, end of period (in thousands)			2,940			2,915			2,854			2,787			2,779			2,770			2,722			2,639
Average store square footage, end of period			10,575			10,563			10,455			10,477			10,486			10,491			10,508			10,514
Average net sales per store (in thousands)		$	965		$	942		$	792		$	889		$	565		$	410		$	590		$	903

Debt Covenant EBITDA Reconciliation
(Unaudited)
		Thirteen Weeks Ended
		September 25, 2021				June 26, 2021				March 27, 2021				December 26, 2020				September 26, 2020				September 28, 2019
Boot Barn's Net Income		$	37,861			$	40,645			$	24,552			$	29,566			$	5,758			$	7,680
Income tax expense			11,105				10,539				6,264				9,909				1,979				1,947
Interest expense			1,162				2,563				2,115				2,303				2,383				3,310
Depreciation and intangible asset amortization			6,737				6,170				6,162				5,994				6,282				5,027
Boot Barn's EBITDA		$	56,865			$	59,917			$	39,093			$	47,772			$	16,402			$	17,964
Non-cash stock-based compensation (a)		$	2,767			$	3,201			$	2,147			$	1,482			$	1,705			$	1,180
Non-cash accrual for future award redemptions (b)			303				339				(255	)			697				372				(11	)
Loss/(Gain) on disposal of assets (c)			94				(4	)			64				(19	)			46				-
(Gain)/loss on adjustment of right-of-use assets and lease liabilities (d)			(214	)			(33	)			-				-				295				-
Store impairment charge (e)			-				-				-				-				384				-
Boot Barn's Adjusted EBITDA		$	59,815			$	63,420			$	41,049			$	49,932			$	19,204			$	19,133
Additional adjustments (f)			1,569				1,046				673				165				1,115				1,442
Consolidated EBITDA per Loan Agreements		$	61,384			$	64,466			$	41,722			$	50,097			$	20,319			$	20,575

________________________
(a)		Represents non-cash compensation expenses related to stock options, restricted stock units and performance share units granted to certain of our employees and directors.
(b)		Represents the non-cash accrual for future award redemptions in connection with our customer loyalty program.
(c)		Represents loss/(gain) on disposal of assets.
(d)		Represents (gain)/loss on adjustment of right-of-use assets and lease liabilities.
(e)		Represents store impairment charges recorded in order to reduce the carrying amount of the assets to their estimated fair values.
(f)		Adjustments to Boot Barn's Adjusted EBITDA as provided in the 2015 Golub Term Loan and June 2015 Wells Fargo Revolver include pre-opening costs, franchise and state taxes, and other miscellaneous adjustments.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211027006027/en/

Investors:

ICR, Inc.

Brendon Frey, 203-682-8216

BootBarnIR@icrinc.com

or

Media:

Boot Barn Holdings, Inc.

Jim Watkins, 949-453-4428

Senior Vice President, Finance & Investor Relations

BootBarnIRMedia@bootbarn.com

Source: Boot Barn Holdings, Inc.

FAQ

What were Boot Barn's net sales for Q2 FY2022?

Boot Barn's net sales for Q2 FY2022 were $312.7 million.

How much did Boot Barn's net income increase in Q2 FY2022?

Boot Barn's net income increased to $37.9 million in Q2 FY2022.

What is the same-store sales percentage increase for Boot Barn?

Boot Barn reported a same-store sales increase of 53.6%.

What is Boot Barn's fiscal year 2022 guidance for new unit growth?

Boot Barn forecasts new unit growth of 10% for fiscal year 2022.

Who was appointed CFO of Boot Barn?

Jim Watkins has been appointed as the Chief Financial Officer of Boot Barn effective November 1, 2021.