Boot Barn Holdings, Inc. (BOOT) September 2026 Conference Transcript

Welcome, everybody, to the Boot Barn Fireside Chat at this year's 2026 Goldman Sachs Global Consumer Conference. I'm John Kepor. I cover specialty apparel and retail. I'm very pleased to introduce John Hazen, CEO, and Jim Watkins, CFO. Hello, everybody. Thank you guys for being here. Let us jump into it. So I'm sure everybody knows that last night there was a business update to the quarter, and we heard a little bit more detail about September and August.

So I guess maybe if you guys want to very quickly encapsulate what was in the press release would be helpful. Yeah, just taking one step further back from there, this was a recap where we're almost through our Q2, but we kicked off the year with a plus five comp in our first quarter and business then was flat in July and we put out the release looking at all of August and the first three weeks of September where in both August and September we saw comps improve to a plus two and we expect to hit the high end of our guidance from a total sales standpoint and from an EPS standpoint and be within guidance from a same store sales standpoint. So we feel great about Q1 and where we are with Q2 with just a couple weeks left. Okay.

July's flat comp was maybe a little bit softer than people expected. I think you guys did a very good job of tackling why and maybe delineating why that might have been. Obviously, we're seeing an acceleration now, which is positive. But you had pointed out there was a deceleration across all major Western categories, particularly women's boots. So I think we're all curious about exactly what improved from July, how much of that was women's boots or not, how much it was Western wear or not, that sort of thing.

Yeah, and that ironically gave us a little bit of confidence in July that it was so broad-based in Western, yet not in work. Our work business held up nicely during that July timeframe when the overall comp was flat. As we moved into August and September, we're still softer in women's boots, and women's boots is roughly 11% of our business. It's smaller than men's apparel, work boots, men's Western boots. So the merchandising team is working on improving the women's business, getting freshness in for the holiday season, both from third-party and exclusive brands. So we're excited with what we have coming for the holiday season in the women's business. And outside of that, we haven't given an update by every other merchandise category, but suffice it to say it was broad-based, and work continued to perform very nicely in August and September, both work boots and work apparel.

You had pointed out that in July there were some exogenous factors like the World Cup and things like that, the cadence of some concerts and things like that as well. I'm wondering if there's anything about August or maybe September exogenously that may have been either a pressure point or a little bit of help that you'd like to expound on.

Yeah, the July was, we believed and we saw that stadium tours were down in July, and the day after we reported Live Nation came out and said attendance was down, I think it was 14% domestically. to kind of reinforce our theory on what was going on with stadium concerts during that time. If we look at the concert activity, I'd say we're normalized right now. It's not a catch-up. We're not going to get what was perhaps lost during summer, but everything feels very normalized, and big announcements already starting for next summer. Kenny Chesney just announced a massive stadium tour for next summer, so we're seeing those already begin, looking forward a little bit. So it's – and then as we got into August and September, the only thing, and we don't talk about this often, but we live in Southern California, and the weather was incredibly hot across the rest of the country, and we tend to do better when the weather is cooler and wetter. But it was a record-breaking heat that we normally don't see in Southern California and in other parts of the country as well.

Okay, thank you. Being that we're at a consumer conference, one of the major themes I think all of the fireside chats are touching on is generally just the consumer, the trends in the consumer. Just considering the change in the company over the past few years, can you explain the types of consumers that differ now that shop at Boot Barn versus maybe three or four or five years ago? And then if we could answer that, and then we'll dip into some more about general health.

Yeah, first of all, our core consumer is really what drives our business. We very much are a replenishment business, whether it be boots or apparel. Many of our top-selling denim styles have been in the line for several years, five-plus years in some cases. So much of our business is driven by whether it's a traditional blue-collar tradesmen on the work business or if you look at our western business working in agriculture ranching farming those sorts of things so that that's always kind of been the core of our business as we look to open the aperture four or five years ago we we came up with another segment we coined our country lifestyle segment and and that customer is someone who's perhaps never been never worked on a ranch, never ridden a horse, never been around cattle, but wears a baseball cap instead of a cowboy hat, drives an F-150, listens to country music, enjoys hunting and fishing in a rural lifestyle. And so that's where we looked at additional apparel, additional entry points from a Western boot standpoint, and started marketing to that sort of consumer that isn't a core Western guy but loves a rural lifestyle coupled with country music and a pickup truck.

I guess how do you perceive the funnel of that new lifestyle customer into the brand? I don't know if that's like maybe we could talk about a pace of it accelerating or not. Just generally, how do you see the entry of those consumers to move on?

It's gotten much easier with the way digital marketing works today. For many years, digital marketing was somebody types in cowboy boots into Google and you market to them and you convert them into a customer, whether it be in stores, which is where we want them to convert, or online. But they had to have the top of mind to say, I'm interested in cowboy boots or cowboy hats or anything within Western lifestyle. As everybody, I'm sure, knows today, you discover brands based on meta-advertising, really. It's meta more than anything. TikTok, as well, for the younger customer. But being able to introduce people to brands or products they didn't know they were interested in is something that is unique to meta and TikTok. And it's not just the algorithm. If it was just the algorithm, this would work well on YouTube. The reason it works well on Instagram and TikTok, it's the one place the consumer wants to be interrupted. He or she does not mind an ad. They enjoy the ads versus if you're in the middle of a YouTube video for whatever you're watching, you're going to be somewhat annoyed by whatever ad interrupts your experience. That's not the case in the world of social. And so from a product discovery standpoint, We love using Meta and TikTok for bringing new folks into the funnel.

As you were saying that, I realize that that's how I scroll. I mean, a YouTube ad sends me over the edge. You're right. I guess touching on marketing very quickly, and then I want to pivot back to the consumer a little bit more. It's been about two years since you guys pivoted to a digital first, I guess, strategy. I guess have you seen – What have you seen in terms of that engagement involving the acquisition, new customers, the cost to acquire them? And what would you say about retention involving the strategy?

Yeah, we are very pleased with the ramp up in digital advertising. It really, we haven't shifted what we do from an e-commerce PPC spend standpoint. The e-commerce business is a great business. It's 10% of our business. The vast majority of our business runs through our stores. And so the advertising that we're doing digitally is around driving folks into the stores and the awareness of our exclusive brands and of Boot Barn. And back to what I was just mentioning, it really is going through Meta and TikTok. If you rewound the tape three years, you would have to set up a target. I'm looking for a 25 to 35-year-old female or male who maybe lives 50 miles outside of these major metropolitan areas. You would try and intuit what sort of customer you're trying to target manually. All of that audience building has gone digital now, and so we're seeing better performance from these ads because now you simply tell the AI audience building tool, find me customers who would like X, Y, or Z, and it's off to the races.

Okay, so a quick pivot back to consumers, and then you mentioned AI, so I would like to touch on that as well. I guess very simply, how do you see the health of the consumer evolving in the back half of the calendar year of 26? And same question about 27, I guess internally, where are you thinking about the consumer being? Same, better or worse, I guess?

I'll start with where the customer is today. We have not seen any divergence in a K-shaped customer, a K-shaped economy. We are doing well across price points in good, better, and best. And, you know, our customer had always been, you know, pretty fiscally responsible. So we feel great about the health of our customer today. Looking forward, I feel good, very good about the holiday season. I think from an inventory, a marketing, a merchandising, a store operations perspective, we're ready for a great holiday season. And I think the customer is going to show up. So the big question, of course, is everything going on with diesel prices, oil, a war, interest rates, the Fed tomorrow, pick a topic. So there is some unknowns in there, but today we feel very good about our consumer across all income levels.

Okay, which is sort of a reiteration of what you've been saying all year. I think it stands apart from a lot of the other commentary we've heard. There was a brief digression to AI, but I have some questions about it. They're kind of in two modes. The first is essentially, I guess on the cost side, you know, how much do you think that AI will change your business and in what kind of ways will it shape your cost structure? Do you think that there's any kind of efficiency tailwinds that you guys can reap over the next year or two? And then I have a second question as a follow-up that I'll get to.

Yeah, I think the, you know, you hear about, I grew up on the technology side of the business, the digital side of the business. So I hear often about AI helping from a routing and saving on logistics costs and freight costs. I think there could be an opportunity there. I am more focused on the margin opportunity and how allocation and replenishment will work coupled with AI. Every time I walk into a store, I see three or four things that I know right away we should change about that store, given the customer, the weather, the size of the store, I can't do that at scale. We can't do that at scale. So what I'm most excited about is less markdowns and better product allocation, style allocation based on the individual attributes of the store, not a cluster, not all the stores in Florida or Arizona or the Northeast, but with the scale and the speed of AI, I think we're going to be able to allocate better at an individual store level and have less markdowns and more margin opportunities. So that is, and we're doing many, many other things with AI within the company. We just had a town hall last week. Every town hall, I bring up a partner from the Store Support Center and highlight the work they were doing with AI. This particular meeting, it was our director of allocation and how she's using it to look at some of these data center builds and figure out where we might need more work boots. So the company overall has really embraced AI, but if I had to pick a piece of it that I'm most excited about, it's allocation.

I guess I'm not sure how much you guys want to expound on that, but of all the apparel retailers we cover, most of them do not have a direct read-through from the AI build-out, the CapEx build-in AI, because most people don't sell products that you can wear that in any way kind of circle the current build of AI. But you guys do. You make work boots. It seems fairly germane to the cycle we're walking into now. Now, to the degree that you care to expound on it, how do you see that opportunity playing out?

Sure. We have always had a B2B business where we would sell to oil and gas firms, construction firms, really bulk orders to someone who might want to outfit his entire team in work boots. More and more often, those are data centers, and one of the adjustments I made coming in as CEO was to reinvigorate our WorkBoot business, our WorkBoot business overall. And we've had five quarters of improving comps in WorkBoot. We're at roughly double-digit comps in WorkBoot now. And we have recently rebranded our commercial or B2B business, BootBarn Workforce. And so BootBarn Workforce is now a digital platform that we are rolling out alongside the business that has occurred in stores. and we're going to go after data centers as well as traditional construction firms and oil and gas, but really try to build this B2B business. You'll see marketing on Meta and on LinkedIn for Boot Barn Workforce. We have a sales team whose job is to kind of drive sales with those different firms, and we're mapping all the different data centers and where they are, what phase in their life cycle they are. When they're clearing dirt, you need regular work boots. When they're building the four walls, you're looking at comp-toe or steel-toe work boots. And when they're racking and putting in electrical, it's our FR clothing for arc-resistant protection that is required. So tying this together back to the allocation piece of it, we'll even look at how a particular store might shift in the inventory levels of each of those three based on where that data center is in its life cycle.

Very, very interesting.

Seemingly very unique for apparel.

All right, let's pivot and talk a little bit about pricing, cost, that kind of thing. Last we heard on promo and pricing, promo levels have been rational, even in women's boots. You guys are expecting AUR growth and flat to 1% transaction growth as far as I remember. Have those dynamics changed at all?

Have they changed your pricing philosophy or at least shown where you can more easily take consistent price? not not really last year we were dealing with the impact of tariffs and on the business and we had price increases from our third-party vendors that we passed through to the customers and and those are what we're generating the aur increases now as we cycle those or as we we get close to cycling those that happened almost a year ago on the third on the exclusive brand side of the business we were working with our factories through the tariff environment and we had some price increases related to those. But I think that's all pretty well baked into the landscape now. We expect the AUR, as you mentioned, up 2% to 3% this year. But as we look at price increases this year, it's really back to kind of a normal level of much more moderated price increases than what we saw a year ago, which is good.

And is it fair to say that the pricing we should expect in the second half of the calendar year should be fairly similar to the first half of the year, or will there be continuous? Yes, it should be very similar to what we have the first half of the year.

Okay.

One of the other ways you guys stand out, at least to me, is the way you talked about freight management and expense management around freight. You spoke earlier about how you've renegotiated contracts and you've actually found room for tailwinds in freight, whereas everybody else seems to be reporting pretty serious headwinds. How much of that was driven by scale specifically? And does that open the door to any other opportunities for savings with other partners as it pertains to finished goods, tech, advertising, anywhere else you could leverage scale?

Yes, all of those things. Anywhere we can, we're revisiting contracts, working with suppliers and vendors to get better rates. As we grow and we've doubled our sales over the last five years or so, we have more purchasing power, and that's enabled us to get better discounts. And we've gone back to whether that's a third-party vendor who's selling product to us or boots to us, or in the situation we're talking about, It's going back to the logistics partners internationally and domestically and renegotiating those rates where we can. And so getting better discounts is really a part of what we're going after right now. And for this year, it's been very beneficial to us. We renegotiated some contracts a little less than a year ago, and we're seeing the benefit of that now where we've got some discounts that year over year are allowing us to offset some of the wild fuel increases that we've seen more recently. And so anywhere we can, we're looking for opportunities to use the scale and the size that we've grown to to get better rates.

That sort of feeds into the question about comp leverage points and how that informs margin, things like that. I guess how do you balance the pursuit of new door growth with the resulting occupancy deal leverage? Obviously, the new store growth is very productive, but I'm curious about that dynamic. And then are there opportunities to offset costs elsewhere in the margin structure or to expand the margin elsewhere that could help address the magnitude of deleverage? And how would you characterize the dynamism or how static or variable they are at the 12% to 15% expansion from a store-based standpoint?

Yes. So we really, every store in the chain is four-wall EBITDA positive. And so as we open, we've opened roughly 100 stores over the last 12 months. And so that's a really nice model for us to generate some additional profit dollars as we've got those stores open. And if you look at our leverage points and the profitability, this year, if you exclude the tariff refund benefit for a second, we expect to leverage our operating margin at a 3% comp, and we've guided the year at the high end of the range at a 4% comp. So expecting to see some nice EBIT margin expansion of roughly 30 basis points at the high end of our range excluding tariffs. And so, yes, there is some deleverage related to opening that many new stores. And when a store is opening at 75% productivity of what a mature store does, then that just creates some pressure on that line. But if we look back at the last six years, we've grown our merchandise margin rate more than 600 basis points or 100 basis points a year. This year we've guided that at 60 basis points. And so that helps us offset almost all of that buying and occupancy deleverage. And then at the operating expense line, at a 1.5% or a 2% comp, being able to leverage those expenses is something that allows us to get that EBIT margin expansion. So it doesn't really play into the equation when we're looking at new store sites and the number of stores we're going to open. It's really looking at those individual stores and what does that add to the portfolio of stores and how does that help us grow profit as a company, not necessarily concerned about the occupancy rate for those new stores because we know that over time those will fix themselves as they grow and mature.

To new stores, I think you've spoken before about how new stores have been performing better over time. I guess what exactly is driving that? Is it a matter of assortment? Is it layout? Is it anything that can be retroactively applied to the legacy fleet over time?

Yes, great question. If you look back to the IPO, we've grown the volume probably almost double what a new store used to do coming out of the gate versus what it does today. And I think there's a variety of things that goes into that. I mean, the brand is stronger. The store operations team has learned quite a bit, and they do a phenomenal job. The merchandising, all the things that the marketing has been elevated. And so all of that helps the new store opening. But then really the site selection is also very key to that. We've had some minor shifts, I guess, in the sites that we select over the years. We're more into a power center with other stronger tenants. If we went back 10 or 15 years, we were opening off the side of the freeway on an easy access for the work customer going to and from the store. And so I think being a little bit more in that mainstream center has been very helpful to us. And so finding the right site has been something that's key to that strategy.

Okay. Perhaps this is related, but you've also mentioned that new stores operate with, I think the language was controlled costs, more controlled costs. I'm curious about how those efficiencies have been realized, and similarly, how retroactively could that be adopted?

Yeah. So, yeah, we're controlling the costs. We've been negotiating, again, back with vendors, but fixture vendors and with the general contractors that we're putting out, you know, multiple bids and trying to keep the cost down there. About a year and a half ago, we started implementing some efficiencies on the building management system and making sure that we're being efficient on the utility costs. And so there's some upfront costs that we put in the store that pays back in three years or less and is good for the environment. So that's been helpful on the cost side of things. Retroactively, we are going in and implementing that in some of the stores. And back to your earlier question, we do a number of relocations of stores every year. And so as leases expire or get close to expiration, we're looking at opportunities where maybe the market has shifted within a certain area. And if we can be in a better location, we can see a pretty nice comp lift in those stores. Particularly, we're looking to relocate stores that are already outperforming the chain average, and if we can get those into an even better part of the market, then that's been a nice win for us. We're also focused on the fleet and making sure that we've got all the necessary repairs and the uplifts, and whether that's paint and boot fixtures and flooring in a lot of stores or it's a bigger remodel, we want to make sure we've got the right balance there. So there's some opportunity that we have to either lift the comp or at least keep the store's brand right as we're building the brand across the country.

Maybe turning back to some of the category specifics. In the women's business, which we touched on slightly, I'm wondering what differs between today's environment in that category and maybe how is it different than fiscal 2024 for when you guys were up against many years of building comp in the ladies' western boots segment?

Yeah, the women's western boots, the place where we are a little bit softer is in the leather bottom boots. So these are boots that have a leather, not the shaft of the boot, but the actual sole of the boot is leather versus, if you imagine, a rubber-soled boot. There you go. And that's where we're seeing the challenge. So it's more on a traditional Western silhouette, a boot that is handcrafted in Mexico. And that's, in some ways, we can react quicker and get down to our factories in Mexico from an exclusive brand standpoint and ramp up production and try different styles. So that's kind of where we're, the merchandising team is kind of hustling and working to improve the women's Western boot business.

And pivoting to WorkBoots, I think this is kind of a pet project of yours, right? I guess, can you dive into what the company has done specifically to generate, I mean, five consecutive quarters, at least, of growth in the WorkBoots category? Where do you envision that category going to as part of the total business over the long term? I guess maybe the data center thing plays into this.

Sure, it absolutely does. At our last count, there were 2,100 data centers being built in some fashion right now domestically, so it will be somewhat of a tailwind to the work business. We did three things to reinvigorate the work business. We changed the way we merchandised boots. They were merchandised by style, not by size, and this was a heavy lift, but we re-merchandised every single store. And so if you're a size 9, you walk in and you see all the size 9s that are lace-up or all the size 9s that are pull-on by safety toe, non-safety toe, which made it easier for the customer, and we kind of scratched our heads and wondered why we hadn't done it sooner. But the secondary effect of that was the store partners became so much more comfortable selling work boots and being in the work boot aisles. The way that boots used to be merchandised, if they didn't have the style the customer was looking for, and they normally come in and say, I want another pair of these, is typically what would happen with work boots, they would have to then know something about the next style over and the style after that and be able to speak to it. And it's intimidating. I've been in stores and have done it. Now they can take the customer and go, I'm sorry we don't have that particular style, but here are all the other size nines. Which one of these appeals to you? That conversation gets so much easier. So we're thrilled with that piece of it. We've brought in new brands and new styles from third party that are performing incredibly well in work. We've built up the sales team on workforce, and we continue to see that B2B business grow. And then we had been leaning more towards country, and I'm thrilled that we did it, but we were focused on that country lifestyle customer for a few years and the fashion customer before that. So from a marketing standpoint, we've now pivoted to some true blue-collar kind of trades marketing. When I think about the Boot Barn customer and kind of the legacy of Boot Barn and how the customer views us, I want them to be proud of the work they're doing and the life that they are building. And so much of our advertising revolves around the pride in being a tradesman and working anywhere in the trades, whether it be in energy or data centers or traditional construction.

Pivoting to denim, and you mentioned a little bit about the fashion versus work. I know that denim is one of these nebulous categories where it's used both as work and it's used also as fashion. But as Boupon becomes more of a denim destination, I guess, how quickly can the business respond to the fashion whims, I guess, given that, like, silhouette preferences and cuts and things like that shift? There's probably, I mean, I assume, a geographic kind of preference. So it seems like quite like a complicated, you know, checkerboard that shifts around.

It can be. To break down our denim business or our apparel business, men's apparel is roughly 20% of our business. Women's apparel is roughly 10% of our business. Within women's apparel, half of that is denim. So roughly 5% of our overall business is denim. If we looked at that denim, we have had some new styles come in that are a wide-leg trouser, a riding jean, but in a wide-leg silhouette, but it's one or two styles. If we looked at that 5% of our business on the women's denim side, 90% of it is traditional bootcut jeans. And denim is having a moment in mainstream. I was doing my own channel checks a few months ago, and, you know, It was kind of a sea of sameness of everyone selling, everyone from Walmart to Target to all the typical teen denim retailers selling that wide-leg denim. It was kind of everywhere. But we are rooted in Western lifestyle and Western culture, and most of what we sell is still boot cut. So we'll get some freshness in there to be sure. And we've got some great new silhouettes, but it's a tiny, tiny piece of our business.

I guess keeping with the theme of the fashion versus the replenishment-based shopper, I guess to the degree you can disaggregate between the two, how would you characterize the replenishment cycle for a work boot or a work product versus the purchase frequency of a lifestyle customer?

The purchase frequency is similar. We know that our customer shops roughly two times a year. That work customer, again, because I've seen it personally, it's usually a typical tradesman. He comes in and he drops the boots on the counter and says, I want another pair of these. So theirs is very much the same product in many cases over and over again. When it comes to Western or country lifestyle, the denim is very much replenishment in the Western side of things. Folks keep buying the same styles over and over again from all the traditional Western denim retailers. And then I think that second purchase on the Western side is we've really become a little bit more of a lifestyle retailer, a little bit more of a one-stop where that customer can come in there and they can get a sweater, a pair of jeans, outerwear, boots, belts, hats, accessories, pick a category. And so it's twice a year for both the work side and more the Western or lifestyle side, just for very different reasons.

It sounds like you're alluding to the idea that basket has expanded, the number of items per purchase has expanded. I heard you guys speak a little bit about the trade-up that you guys try to do in-store, if you could expound on how exactly that's been disseminated across the stores and how productive that's been.

Yeah, we're on with the field every week, and every week the field is focused and talking about units per transaction. So it's absolutely a focus of the field. It depends on the product. If we're looking at boots, the easiest add-ons are a matching belt or boot care. It's kind of a no-brainer. We have our own Boot Barn branded boot care that we retail. When it comes to jeans, you try to add a top. So we look at what is typically in a basket. We look at the basket composition from a transaction standpoint, and then we use that. We're going to be in Denver with all of our store managers next week, close to 600 store managers. And UPT is one of the classes that's being taught, and they'll kind of go through all the different. If someone's buying this, they're typically also adding this, and it depends on what that first item is, right? So we coach the stores and the teams on how to drive that UPT up.

We have a little bit of time left. I think maybe we can get one question squeezed in. We haven't talked about exclusive brands.

We may as well now.

I guess if you can speak very quickly about the work you've done to grow that business, how you think about the balance between third party and your own, and why 50% penetration is still the right.

Yeah, we've seen incredible exclusive brand growth over the last several years. We're sitting just north of 40% at this point. The only reason we've guided it flat for the remainder of the year is the success we're having with work boots and the third-party work boots. If not for work boots, we would be continuing to grow exclusive brands. So the rest of the exclusive brand business is performing quite nicely. We're a house of brands. We're a retailer. We have to have the brands that the customer wants. And we've created real brands with our exclusive brands. Cody James or Cheyenne or Eidelin can stand next to all the other brands in Western, and we're incredibly proud of them. But we have to acknowledge that we don't want to be only boot barn exclusive brands. And so 50, I think, is the right balance. North of 50 makes me uncomfortable, but I am fully confident we can get to that 50%, and that's where we're heading. Fantastic.

I don't think we have time for another question. We don't have to run the clock either. I think that's enough for now. Thank you guys very much for being here. Thank you everyone for coming.