Barn (BOOT 24.37, +2.41, +10.97%) is trading nicely higher after reporting impressive Q4 (Mar)
earnings last night. Boot Barn is the largest retail chain devoted to western
and work-related footwear, apparel, and accessories. With 230 stores in 31
states, BOOT has 3x as many stores as its nearest direct competitor that sells
primarily western and work wear.
BOOT offers an extensive selection of western and work boots along with coordinating apparel and accessories. Many of its items are basics/necessities and typically represent enduring styles that are not impacted by changing fashion trends. Its boot selection typically takes up a third of the store. It also sells an assortment of denim, western shirts, cowboy hats, belts, belt buckles, western-style jewelry, and accessories. Its work assortment includes rugged footwear, outerwear, overalls, denim, and shirts for physically demanding jobs. The vast majority of its merchandise is sold at full price, without inventory markdowns.
Boot Barn was founded in 1978 and, over the past 40 years, has grown both organically and through M&A of competing chains, which are then rebranded and re-merchandised under the Boot Barn banner. Its stores are typically freestanding or located in strip malls. It also operates websites such as bootbarn.com, sheplers.com, and countryoutfitter.com.
Turning to the Q4 (Mar) results, non-GAAP EPS doubled to $0.24 from $0.12 last year. Revenue rose 4.8% year/year to $170.8 mln. Both results were well ahead of market expectations, especially the EPS. The Q1 (Jun) EPS guidance was also impressive at $0.10-0.12, which was better than expected. BOOT also said it expects to open 23 stores this fiscal year.
Same store comps are always important for retailers and BOOT posted impressive MarQ results at +12.1%. This was a nice acceleration from its +5.2% comps in DecQ. Looking ahead, BOOT guided to JunQ comps of approx +10%. Double digit comps for retailers are rare to see. Importantly, BOOT held true to its full-price selling model which boosts comps and it leads to improved merchandise margin, which saw a 90bps increase in MarQ. For all of FY19, BOOT guided to comp growth in the mid-single digits.
BOOT says it has been excited about it has been seeing in April and May as its double-digit same store comps have continued. We are already at the mid-point of JunQ so BOOT should have some pretty good visibility which gives investors confidence that they will meet that +10% comp guidance in JunQ.
Overall, BOOT says it's very pleased with the top-line momentum its business has experienced across most of the country both in store and online during MarQ. Its investments in merchandising, marketing, and omni-channel fueled double-digit gains in retail comps and helped return its e-commerce business to double-digit growth as well. As mentioned before, BOOT held true to its full-price selling model. That shows the strength of its brands.
In addition to earnings, BOOT also added Anne MacDonald to its Board of Directors. She is an experienced branding and marketing executive. She has served as Chief Marketing Officer for several global companies including Macy's, Citigroup, and Travelers Insurance. She will help develop both the Boot Barn brand and each of BOOT's exclusive brands.
In sum, the stock has been quite strong since early November when BOOT reported strong Q2 (Sep) results which was followed up by an impressive Q3 (Dec) report in late January and now they posted yet another strong result in Q4 (Mar) with nice same store comp acceleration. Looking ahead, BOOT feels it still has a lot of growth ahead and the potential to double its store base.
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