8-K
Boot Barn Holdings, Inc. (BOOT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 27, 2022
Boot Barn Holdings, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-36711 | 90-0776290 |
|---|---|---|
| (State or other jurisdiction<br><br> of incorporation) | (Commission<br><br> File Number) | (I.R.S. Employer<br><br> Identification No.) |
| 15345 Barranca Parkway,<br> Irvine, California | 92618 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
(949) 453-4400
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
☐ Emerging growth company
☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act.
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.0001 par value | BOOT | The New York Stock Exchange |
Item 2.02 Results of Operations and Financial Condition
On July 27, 2022, Boot Barn Holdings, Inc. issued a press release announcing certain financial results for its fiscal first quarter ended June 25, 2022. The press release is attached hereto as Exhibit 99.1.
The information provided in this Item 2.02, including Exhibit 99.1, is intended to be “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 7.01 Regulation FD Disclosure.
Boot Barn Holdings, Inc. (the “Company”) is furnishing this Current Report on Form 8-K in connection with the disclosure of information contained in a supplemental financial presentation (the “Presentation”) to be used by the Company at various meetings with institutional investors and analysts. This information may be amended or updated at any time and from time to time through another Current Report on Form 8-K or other means. A copy of the Presentation is furnished herewith as Exhibit 99.2 and is incorporated into this Item 7.01 by reference.
The information furnished in this Item 7.01, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any registration statement filed pursuant to the Securities Act of 1933, as amended, except as may be expressly set forth by specific reference in such filing.
The Company expressly disclaims any obligation to update or revise any of the information contained in the Presentation.
The Presentation is available on the Company’s investor relations website located at investor.bootbarn.com, although the Company reserves the right to discontinue that availability at any time.
Item 9.01. Financial Statements and Exhibits.
| Exhibit 99.1 | Earnings press release dated July 27,<br> 2022. |
|---|---|
| Exhibit 99.2 | Supplemental Financial Presentation<br> dated July 27, 2022. |
| Exhibit 104 | The cover page of this Current Report on Form 8-K, formatted in Inline XBRL. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BOOT BARN HOLDINGS, INC. | ||
|---|---|---|
| Date: July 27, 2022 | By: | /s/ James M. Watkins |
| Name: James M. Watkins | ||
| Title: Chief Financial Officer and Secretary<br><br> <br>(Principal Financial Officer and Principal<br><br> <br>Accounting Officer) | ||
| Exhibit 99.1 | ||
| --- |
Boot Barn Holdings, Inc. Announces First Quarter Fiscal Year 2023 Financial Results
IRVINE, Calif.--(BUSINESS WIRE)--July 27, 2022--Boot Barn Holdings, Inc. (NYSE: BOOT) today announced its financial results for the first fiscal quarter ended June 25, 2022. The Company has also filed a Supplemental Financial Presentation that has been made available at investor.bootbarn.com.
For the quarter ended June 25, 2022:
- Net sales increased 19.4% over the prior-year period to $365.9 million.
- Same store sales increased 10.0% compared to the prior-year period, comprised of an increase in retail store same store sales of 10.1% and an increase in e-commerce same store sales of 9.3%.
- Net income was $39.3 million, or $1.29 per diluted share, compared to $40.6 million, or $1.35 per diluted share in the prior-year period. Net income per diluted share in the current-year and prior-year periods includes an approximately $0.03 and $0.09 per share benefit, respectively, primarily due to income tax accounting for share-based compensation. Excluding the tax benefits, net income per diluted share in both periods was $1.26.
- The Company opened 11 new stores bringing its total count to 311.
“Our first quarter performance represents a strong start to the new year,” said Jim Conroy, President and Chief Executive Officer. “Following the tremendous growth and profitability we achieved in fiscal 2022, we are very pleased to report another quarter of double-digit same store sales growth and earnings per share that were ahead of our expectations. Our merchandise and marketing strategies combined with our expanding omni-channel capabilities continue to fuel strong full-price selling in stores and online. Our new stores are proving to be highly productive and we feel great about our real estate pipeline. We believe the addition of these new stores will help us to further gain share in the combined $40 billion western, work and country lifestyle markets. Given the current tone of the business, we continue to expect total sales to grow double digits versus last year driven by new store openings with same store sales flat to growing low single digits.”
Operating Results for the First Quarter Ended June 25, 2022 Compared to the First Quarter Ended June 26, 2021
Net sales increased 19.4% to $365.9 million from $306.3 million in the prior-year period. Consolidated same store sales increased 10.0% with retail store same store sales up 10.1% and e-commerce same store sales up 9.3%. The increase in net sales was the result of the increase in consolidated same store sales and the incremental sales from new stores opened over the past twelve months.
Gross profit was $137.8 million, or 37.7% of net sales, compared to $116.4 million, or 38.0% of net sales, in the prior-year period. Gross profit increased primarily due to increased sales. The decrease in gross profit rate of 30 basis points was driven by 70 basis points of deleverage in buying, occupancy and distribution center costs, partially offset by a 40 basis-point increase in merchandise margin. Merchandise margin increased 40 basis points despite a 70 basis-point headwind from increased freight charges. The merchandise margin expansion was primarily a result of growth in exclusive brand penetration and better full-price selling.
Selling, general and administrative expenses were $85.4 million, or 23.3% of net sales, compared to $62.8 million, or 20.5% of net sales, in the prior-year period. The increase in selling, general and administrative expenses was primarily a result of higher store payroll and overhead, in addition to increased marketing expenses in the current-year period compared to the prior-year period. Selling, general and administrative expenses as a percentage of net sales increased by 280 basis points primarily as a result of higher store labor and marketing expense as a percentage of sales.
Income from operations decreased $1.2 million to $52.4 million, or 14.3% of net sales, compared to $53.6 million, or 17.5% of net sales, in the prior-year period, primarily due to higher selling, general and administrative expenses.
Net income was $39.3 million, or $1.29 per diluted share, compared to net income of $40.6 million, or $1.35 per diluted share in the prior-year period. Net income per diluted share in the current-year and prior-year periods includes an approximately $0.03 and $0.09 per share benefit, respectively, primarily due to income tax accounting for share-based compensation. Excluding the tax benefits, net income per diluted share was $1.26 in both the current-year and prior-year periods.
Current Business
The following table includes same store sales and total net sales growth for the periods indicated below:
| Four Weeks Fiscal April | Four Weeks Fiscal May | Five Weeks Fiscal June | Thirteen Weeks Ended June 25, 2022 | Preliminary Four Weeks Fiscal July | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Retail Stores SSS | 8.1 | % | 14.8 | % | 8.1 | % | 10.1 | % | 1.5 | % |
| E-commerce SSS | 13.1 | % | 8.5 | % | 6.4 | % | 9.3 | % | (4.3) | % |
| Total SSS | 8.8 | % | 13.9 | % | 7.9 | % | 10.0 | % | 0.6 | % |
| Total Net Sales Growth | 18.3 | % | 22.8 | % | 17.7 | % | 19.4 | % | 10.1 | % |
Balance Sheet Highlights as of June 25, 2022
- Cash of $16.0 million.
- $74.9 million drawn under our revolving credit facility, which was expanded earlier this month by $70 million to a capacity of $250 million and extended to July 2027.
Fiscal Year 2023 Outlook
In light of recent macroeconomic uncertainty, the Company is providing updated guidance for the fiscal year ending April 1, 2023, superseding in its entirety the previous guidance issued in its fourth quarter and fiscal year 2022 earnings report on May 10, 2022. As a result, for the fiscal year ending April 1, 2023, the Company now expects:
- To open 40 new stores.
- Total sales of $1.68 billion to $1.70 billion, representing growth of 12.9% to 14.2% over the prior year.
- Same store sales range of approximately flat to 2.0%.
- Income from operations between $247 million and $255 million. This represents approximately 14.7% to 15.0% of sales.
- Interest expense of $4 million.
- Effective tax rate of 25.2% for the remaining nine months of the year.
- Net income of $182.7 million to $188.6 million.
- Net income per diluted share of $6.00 to $6.20 based on 30.5 million weighted average diluted shares outstanding.
- Capital expenditures between $80 million and $87 million.
- Fiscal year 2023 is a 53-week year and the Company expects to generate approximately $34 million of sales and earn approximately $0.19 per diluted share in the 53rd week, which is included in the above guidance range.
For the fiscal second quarter ending September 24, 2022, the Company expects:
- Total sales of $339 million to $346 million, with same store sales of approximately flat.
- Net income per diluted share of $0.87 to $0.93 based on 30.4 million weighted average diluted shares outstanding.
Conference Call Information
A conference call to discuss the financial results for the first quarter of fiscal year 2023 is scheduled for today, July 27, 2022, at 4:30 p.m. ET (1:30 p.m. PT). Investors and analysts interested in participating in the call are invited to dial (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 Supplemental Financial Presentation is also available on the investor relations section of the Company’s website. A telephone replay of the call will be available until August 27, 2022, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 13731781. 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 313 stores in 39 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. <br> Consolidated Balance Sheets <br> (In thousands, except per share data) <br> (Unaudited) | |||||
|---|---|---|---|---|---|
| March 26, | |||||
| 2022 | |||||
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | 16,014 | $ | 20,674 | ||
| Accounts receivable, net | 9,240 | 9,662 | |||
| Inventories | 534,380 | 474,300 | |||
| Prepaid expenses and other current assets | 57,781 | 37,195 | |||
| Total current assets | 617,415 | 541,831 | |||
| Property and equipment, net | 177,447 | 155,247 | |||
| Right-of-use assets, net | 264,569 | 241,147 | |||
| Goodwill | 197,502 | 197,502 | |||
| Intangible assets, net | 60,797 | 60,813 | |||
| Other assets | 3,488 | 3,315 | |||
| Total assets | 1,321,218 | $ | 1,199,855 | ||
| Liabilities and stockholders’ equity | |||||
| Current liabilities: | |||||
| Line of credit | 74,873 | $ | 28,549 | ||
| Accounts payable | 151,638 | 131,394 | |||
| Accrued expenses and other current liabilities | 119,229 | 133,408 | |||
| Short-term lease liabilities | 45,116 | 43,117 | |||
| Total current liabilities | 390,856 | 336,468 | |||
| Deferred taxes | 28,470 | 26,895 | |||
| Long-term lease liabilities | 259,976 | 234,584 | |||
| Other liabilities | 2,382 | 2,232 | |||
| Total liabilities | 681,684 | 600,179 | |||
| Stockholders’ equity: | |||||
| Common stock, 0.0001 par value; June 25, 2022 - 100,000 shares authorized, 29,995 shares issued; March 26, 2022 - 100,000 shares<br> authorized, 29,820 shares issued | 3 | 3 | |||
| Preferred stock, 0.0001 par value; 10,000 shares authorized, no shares issued or outstanding | — | — | |||
| Additional paid-in capital | 204,002 | 199,054 | |||
| Retained earnings | 444,795 | 405,477 | |||
| Less: Common stock held in treasury, at cost, 188 and 135 shares at June 25, 2022 and March 26, 2022, respectively | (9,266 | ) | (4,858 | ) | |
| Total stockholders’ equity | 639,534 | 599,676 | |||
| Total liabilities and stockholders’ equity | 1,321,218 | $ | 1,199,855 |
All values are in US Dollars.
| Boot Barn Holdings, Inc.<br><br> <br>Consolidated Statements of Operations<br><br> <br>(In thousands, except per share data)<br><br> <br>(Unaudited) | |||||
|---|---|---|---|---|---|
| Thirteen Weeks Ended | |||||
| June 25, | June 26, | ||||
| 2022 | 2021 | ||||
| Net sales | $ | 365,856 | $ | 306,327 | |
| Cost of goods sold | 228,026 | 189,900 | |||
| Gross profit | 137,830 | 116,427 | |||
| Selling, general and administrative expenses | 85,405 | 62,784 | |||
| Income from operations | 52,425 | 53,643 | |||
| Interest expense | 725 | 2,563 | |||
| Other (loss)/income, net | (273 | ) | 104 | ||
| Income before income taxes | 51,427 | 51,184 | |||
| Income tax expense | 12,109 | 10,539 | |||
| Net income | $ | 39,318 | $ | 40,645 | |
| Earnings per share: | |||||
| Basic | $ | 1.32 | $ | 1.38 | |
| Diluted | $ | 1.29 | $ | 1.35 | |
| Weighted average shares outstanding: | |||||
| Basic | 29,747 | 29,361 | |||
| Diluted | 30,386 | 30,213 |
| Boot Barn Holdings, Inc.<br><br> <br>Consolidated Statements of Cash Flows<br><br> <br>(In thousands)<br><br> <br>(Unaudited) | ||||||
|---|---|---|---|---|---|---|
| Thirteen Weeks Ended | ||||||
| June 25, | June 26, | |||||
| 2022 | 2021 | |||||
| Cash flows from operating activities | ||||||
| Net income | $ | 39,318 | $ | 40,645 | ||
| Adjustments to reconcile net income to net cash (used in)/provided by operating activities: | ||||||
| Depreciation | 8,022 | 6,152 | ||||
| Stock-based compensation | 4,701 | 3,201 | ||||
| Amortization of intangible assets | 16 | 18 | ||||
| Noncash lease expense | 11,119 | 9,221 | ||||
| Amortization and write-off of debt issuance fees and debt discount | 44 | 1,064 | ||||
| Loss/(gain) on disposal of assets | 177 | (4 | ) | |||
| Gain on adjustment of right-of-use assets and lease liabilities | — | (33 | ) | |||
| Deferred taxes | 1,575 | (5,891 | ) | |||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable, net | 600 | 4,912 | ||||
| Inventories | (60,080 | ) | (21,002 | ) | ||
| Prepaid expenses and other current assets | (20,630 | ) | (7,309 | ) | ||
| Other assets | (173 | ) | (457 | ) | ||
| Accounts payable | 18,024 | 5,252 | ||||
| Accrued expenses and other current liabilities | (21,523 | ) | 19,071 | |||
| Other liabilities | 150 | 568 | ||||
| Operating leases | (7,108 | ) | (9,080 | ) | ||
| Net cash (used in)/provided by operating activities | $ | (25,768 | ) | $ | 46,328 | |
| Cash flows from investing activities | ||||||
| Purchases of property and equipment | $ | (20,835 | ) | $ | (9,294 | ) |
| Net cash used in investing activities | $ | (20,835 | ) | $ | (9,294 | ) |
| Cash flows from financing activities | ||||||
| Borrowings on line of credit - net | $ | 46,324 | $ | — | ||
| Repayments on debt and finance lease obligations | (220 | ) | (61,682 | ) | ||
| Tax withholding payments for net share settlement | (4,408 | ) | (2,476 | ) | ||
| Proceeds from the exercise of stock options | 247 | 3,616 | ||||
| Net cash provided by/(used in) financing activities | $ | 41,943 | $ | (60,542 | ) | |
| Net decrease in cash and cash equivalents | (4,660 | ) | (23,508 | ) | ||
| Cash and cash equivalents, beginning of period | 20,674 | 73,148 | ||||
| Cash and cash equivalents, end of period | $ | 16,014 | $ | 49,640 | ||
| Supplemental disclosures of cash flow information: | ||||||
| Cash paid for income taxes | $ | 19,226 | $ | — | ||
| Cash paid for interest | $ | 534 | $ | 1,496 | ||
| Supplemental disclosure of non-cash activities: | ||||||
| Unpaid purchases of property and equipment | $ | 17,473 | $ | 4,130 |
| Boot Barn Holdings, Inc.<br><br> <br>Store Count | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter Ended | Quarter Ended | Quarter Ended | Quarter Ended | Quarter Ended | Quarter Ended | Quarter Ended | Quarter Ended | |||||||||||||||||
| June 25, | March 26, | December 25, | September 25, | June 26, | March 27, | December 26, | September 26, | |||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | 2021 | 2020 | 2020 | |||||||||||||||||
| Store Count (BOP) | 300 | 289 | 278 | 276 | 273 | 266 | 265 | 264 | ||||||||||||||||
| Opened/Acquired | 11 | 11 | 11 | 3 | 3 | 8 | 1 | 1 | ||||||||||||||||
| Closed | — | — | — | (1) | — | (1) | — | — | ||||||||||||||||
| Store Count (EOP) | 311 | 300 | 289 | 278 | 276 | 273 | 266 | 265 | ||||||||||||||||
| Boot Barn Holdings, Inc.<br><br> <br>Selected Store Data | ||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Thirteen Weeks Ended | ||||||||||||||||||||||||
| June 25, | March 26, | December 25, | September 25, | June 26, | March 27, | December 26, | September 26, | |||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | 2021 | 2020 | 2020 | |||||||||||||||||
| Selected Store Data: | ||||||||||||||||||||||||
| Same Store Sales growth/(decline) | 10.0 | % | 33.3 | % | 54.2 | % | 61.7 | % | 78.9 | % | 26.9 | % | 4.6 | % | (5.1 | )% | ||||||||
| Stores operating at end of period | 311 | 300 | 289 | 278 | 276 | 273 | 266 | 265 | ||||||||||||||||
| Total retail store square footage, end of period (in thousands) | 3,333 | 3,194 | 3,063 | 2,940 | 2,915 | 2,854 | 2,787 | 2,779 | ||||||||||||||||
| Average store square footage, end of period | 10,717 | 10,648 | 10,597 | 10,575 | 10,563 | 10,455 | 10,477 | 10,486 | ||||||||||||||||
| Average net sales per store (in thousands) | $ | 1,031 | $ | 1,094 | $ | 1,372 | $ | 965 | $ | 942 | $ | 792 | $ | 889 | $ | 565 |
Contacts
Investor Contact:
ICR, Inc.
Brendon Frey, 203-682-8216
BootBarnIR@icrinc.com
or
Company Contact:
Boot Barn Holdings, Inc.
Mark Dedovesh
Vice President, Investor Relations & Financial Planning
BootBarnIRMedia@bootbarn.com
| Exhibit 99.2 |
|---|
Supplemental Financial Presentation July 27, 2022
Important Information Forward-Looking Statements This presentation contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this presentation are forward-looking statements. You can identify forward-looking statements by the fact that they generally include words such as "anticipate," "estimate," "expect," "project," "plan,“ "intend," "believe," “outlook” and other words 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 presentation, 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 and national economic conditions, including inflation, or changes in consumer preferences; the Company’s failure to maintain and enhance its strong brand image; the Company’s failure to compete effectively, to maintain good relationships with its key suppliers, and to improve and expand its exclusive product offerings; supply chain disruptions; and the Company’s ability to effectively execute on its growth strategy. 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 presentation after the date of this presentation. Industry and Market Information Statements in this presentation concerning our industry and the markets in which we operate, including our general expectations and competitive position, business opportunity and market size, growth and share, are based on information from independent industry organizations and other third-party sources, data from our internal research and management estimates. Management estimates are derived from publicly available information and the information and data referred to above and are based on assumptions and calculations made by us based upon our interpretation of such information and data. The information and data referred to above are imprecise and may prove to be inaccurate because the information cannot always be verified with complete certainty due to the limitations on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. As a result, please be aware that the data and statistical information in this presentation may differ from information provided by our competitors or from information found in current or future studies conducted by market research institutes, consultancy firms or independent sources. Recent Developments Our business and opportunities for growth depend on consumer discretionary spending, and as such, our results are particularly sensitive to economic conditions and consumer confidence. Inflation (which has occurred over the past twelve months and is continuing) and other challenges affecting the global economy could impact our operations and will depend on future developments, which are uncertain. These and other effects make it more challenging for us to estimate the future performance of our business, particularly over the near-to-medium term. For further discussion of the uncertainties and business risks affecting the Company, see Item 1A, Risk Factors, of our Fiscal 2022 10-K.
Q1 Fiscal 2023 Results Total Net Sales ($MM) EPS Beats Guidance Consolidated SSS% 10.0% Q1 FY2023 Highlights 19% total sales growth 10% same store sales growth $52MM income from operations ($5MM better than guidance1) 14.3% operating income margin (150bps better than guidance1) $1.29 EPS ($0.15 better than guidance1) Store Count 311 1Represents Q1 FY 2023 guidance provided on the Company’s fourth quarter and fiscal year 2022 earnings call on May 10, 2022. 2Earnings per diluted share in Q1 FY 2023 was approximately $1.29, or $1.26 when excluding an approximately $0.03 per share benefit primarily due to income tax accounting for share-based compensation. . 10.0% 311 Total Net Sales Growth 19.4% 19.8% 2 2 1 1
Strategic Initiatives Update 1 2 3 4 Drive Same Store Sales Growth Continue Omni-Channel Leadership Build Out Exclusive Brand Portfolio Expand Our Store Base
Growing Same Store Sales & Opening New Stores Same Store Sales $180MM New Stores $6MM Same Store Sales $299MM New Stores $67MM 97% Three Year Total Net Sales Growth Three Year Sales Highlights2 +66% same store sales growth 73 new stores opened since Q1 FY2020 1Represents the same 228 comp store sales for both periods plus e-commerce comp sales. 2Reflects growth from Q1 FY2020 to Q1 FY2023. 1 Mar 31, 2019 – Jun 29, 2019 Mar 27, 2022 – Jun 25, 2022 1 1
Healthy Inventory Position Men’s Boots Ladies’ Performance Boots Work Boots Men’s Apparel Ladies’ Denim Kids Accessories Ladies’ Apparel Ladies’ Boots “Fashion” 13% Composition of Inventory1 Stores’ Weeks of Supply2 “Functional” 87% Store merchandise margin has improved each fiscal year 1Composition of on-hand inventory in stores and distribution centers as of June 25, 2022. 2Weeks of supply calculated using respective end of quarter store-only on-hand inventory and sales estimates for future weeks of approximately flat comps. Minimal markdown exposure as fashionable product is ~13% of inventory. 24 weeks of store supply is in-line with inventory level required to turn twice a year. Average annual unit store volume has increased 56% from $2.7MM in FY20 to $4.2MM in FY22. 1
Omni-Channel Capabilities Fulfill Online Demand Efficiently Improve Online Profitability Deliver Digital Experience in Store Drive Store Traffic Expand Exclusive Brands % Improve ROAS Lower Cost to Pick & Pack Manage Freight / Delivery Cost Bring Long Tail to Stores Ship to Store BOPIS Return in Store Range Finder (finite aisle) WHIP (endless aisle) Digital Signage Handheld Tablet Roll-out DC Fulfillment Local Store Fulfillment Same Day Delivery Vendor Drop Ship 2
Hand-held Tablets for Store Associate Use 2 Hand-held Tablet Functions Product selection & sales In-store fulfillment Product lookup Line busting Pricing changes
Exclusive Brand Growth 3 Exclusive Brand Sales ($MM) Exclusive Brand Highlights Sales have grown from $5MM in FY12 to over $400MM in FY22 +56% sales CAGR from FY12 to FY22 EB Sales Penetration% 3% 24% 28% 31% 22%
Exclusive Brand Portfolio 3 ARTIST INSPIRED WORK WESTERN COUNTRY RANCH & RODEO
New Units Growing Annually by Over 10% 4 ~13% CAGR Store Count by Year 1Represents FY 2023 guidance provided on the Company’s first quarter 2023 earnings call on July 27, 2022. 1
New Stores Exceeding Expectations METRICS Prior Target New Stores Opened After March 2020 FY2023 New Stores Projection Store Size (sq. ft.) ~10,000 ~10,000 ~12,000 Year 1 Net Sales $1.7MM $4.0MM $3.5MM Sales per Square Foot $170/sq. ft. $400/sq. ft. $292/sq. ft. Net Capital Investment $0.4MM $0.5MM $0.6MM Net Inventory Investment $0.4MM $0.5MM $0.6MM Cash on Cash Return (Yr. 1) ~30% ~100% ~73% Payback Period ~3 years ~1 year ~1.4 years 4
Current Business - SSS% by Week1 Q1 FY2023 SSS% Week Ending 3/19 3/26 4/02 4/09 4/16 4/23 4/30 5/07 5/14 5/21 5/28 6/04 6/11 6/18 6/25 7/02 7/09 7/16 Similar to FY2022, consistent weekly comps in Q1 FY2023. Comps were (6)% when wrapping peak stimulus in the prior-year period. Q2 QTD FY2023 same store sales have been relatively consistent. 1Reflects the Company’s best estimate of financial same store sales on a weekly basis. 7/23
New Stores 40 High-End Guidance Highlights3 14% total sales growth 2% same store sales growth $255MM income from operations 15.0% operating income margin $6.20 EPS Revised Full Year FY2023 Guidance1 Total Net Sales ($MM)1 Earnings Per Share2 Consolidated SSS% 2% 40 1All FY2023 guidance figures have been provided on a 53-week basis. The Company estimates sales of $34 million from the 53rd week. 2FY2023 estimated earnings per share has been provided on a 53-week basis. The Company estimates that included in FY2023 estimated EPS is $0.19 attributed to the 53rd week. 3All high-end guidance highlights have been provided on a 53-week basis. . Total Net Sales Growth 14% 13% Flat
Revised Full Year FY2023 Financial Guidance Metric Low End ($MM) High End ($MM) High End Guidance Comments Total Net Sales1 $1,680 $1,700 14% total sales growth 2% consolidated SSS% growth 40 new stores Income from Operations % $247 14.7% $255 15.0% 80bps product margin expansion vs. LY (100)bps freight headwinds vs. LY GAAP Earnings per Diluted Share2 $6.00 $6.20 1FY2023 estimated net sales have been provided on a 53-week basis. The Company estimates sales of $34 million from the 53rd week. 2FY2023 estimated earnings per share has been provided on a 53-week basis. The Company estimates that included in FY2023 estimated EPS is $0.19 attributed to the 53rd week.
Upside to Valuation Metric FY2023 Earnings per Diluted Share $6.20 PE1 11 Earnings growth CAGR2 36% PEG3 0.3 1Calculated by dividing the July 26, 2022 stock price by FY2023 estimated earnings per diluted share on the high end of the guidance range of $6.20 on a 53-week basis. 2The earnings growth CAGR of 36% is calculated using estimated GAAP earnings per diluted share guidance of $6.20 in FY2023, compared to GAAP earnings per diluted share in FY2015 of $0.54. 3Calculated by dividing the above PE by the above Earnings Growth CAGR for FY2023. National Leader in Attractive Market Leading player in estimated $40 billion industry Brick-and-mortar presence in 39 states and online sales in all 50 states plus international Pressure-tested model World Class Omni-Channel Capabilities Strong variety of omni-channel offerings in place Ability to drive incremental traffic to stores Improved customer satisfaction with added convenience and quicker delivery Strong New Unit Growth Opportunities Proven ability to open stores in both new and existing markets Store-preferred shopping experience Minimal sales cannibalization from opening stores in existing markets Lifestyle Brand with Loyal Customer Genuine lifestyle retail brand Extremely loyal customers seeking authenticity Lifestyle experience across stores, e-commerce and events Profit Enhancement Opportunities Proven ability to drive merchandise margin expansion with full-price selling model Incremental profitability opportunity in online channel Economies of scale in purchasing & ability to leverage expenses Investment Considerations
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