Release Date: October 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Boot Barn Holdings Inc (BOOT, Financial) reported a 14% increase in revenue for the second quarter, with consolidated same-store sales growth of 4.9%.
- The company opened 15 new stores in the second quarter, bringing the total to 425 stores across 46 states, and plans to open 60 new units this year.
- E-commerce sales grew by 10.1%, with bootbarn.com experiencing a 15% increase, showcasing strong online momentum.
- Merchandise margin increased by 70 basis points due to supply chain efficiencies, contributing to overall gross profit growth.
- Boot Barn Holdings Inc (BOOT) raised its full-year guidance, expecting total sales to reach $1.91 billion, a 14% growth over the previous fiscal year.
Negative Points
- The departure of CEO James Conroy, who is leaving to join Ross Stores, introduces potential leadership uncertainty.
- SG&A expenses increased by 100 basis points, primarily due to higher incentive-based compensation, legal, and marketing expenses.
- Exclusive brand penetration decreased by 50 basis points, although this was expected due to high growth in the prior year.
- Occupancy costs of new stores contributed to a 60 basis point deleverage in buying, occupancy, and distribution center costs.
- The company anticipates potential distractions and uncertainties due to the upcoming election, which could impact consumer behavior.
Q & A Highlights
Q: Could you elaborate on the material inflection in comps that you saw as the second quarter progressed? And what trends have you seen in October?
A: James Conroy, President and CEO, explained that there was broad-based sequential improvement across categories, channels, and regions. Every major merchandise department and region had positive same-store sales growth. October's performance was in line with the second quarter, with a 5% increase in same-store sales.
Q: Could you elaborate on the drivers of merchandise margin expansion in the 3Q gross margin outlook and the runway for gross margin multiyear?
A: James Watkins, CFO, stated that they expect a 100 basis point improvement in merchandise margin in the third quarter, driven by supply chain efficiencies and better buying economies of scale, including exclusive brand penetration improvements.
Q: What categories are you gaining market share in, and what might be the drivers for that?
A: James Conroy noted that they are seeing market share gains, particularly in ladies' western boots and apparel. The brand's resonance, aided by connections with country music stars, is contributing to this growth.
Q: How are the new stores performing compared to legacy stores?
A: James Watkins mentioned that new stores continue to perform well across all regions. While new stores open at a lower volume than legacy stores, they are seeing outperformance in same-store sales in their second year of operation.
Q: How has the ladies' merchandise assortment evolved, and what is the balance between fashion and function?
A: James Conroy explained that they adjusted the ladies' western boot assortment to include more functional and performance-based products, along with lower price points. The apparel business, particularly denim, has also turned positive.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
