Earnings call transcript: Boot Barn Holdings beats Q1 2026 estimates

Boot Barn Holdings, with a market capitalization of $5.2 billion, reported strong financial results for Q1 2026, surpassing Wall Street expectations with an earnings per share (EPS) of $1.74, compared to the forecasted $1.53. This 13.73% surprise was accompanied by a revenue of $504.1 million, exceeding the anticipated $492.34 million. InvestingPro data shows 7 analysts have revised their earnings upward for the upcoming period, signaling growing confidence in the company’s trajectory. Despite these positive results, Boot Barn’s stock fell 2.78% to $171.90 in after-hours trading, reflecting investor caution amid broader market conditions.

Key Takeaways

• Boot Barn’s Q1 revenue increased by 19% year-over-year.
• Same-store sales saw a growth of 9.4%.
• The company opened 14 new stores, with plans for 65-70 more in FY26.
• Stock price declined by 2.78% in after-hours trading despite earnings beat.
• Cautious outlook due to potential macroeconomic uncertainties.

Company Performance

Boot Barn Holdings demonstrated robust performance in Q1 2026, with substantial growth in revenue and profitability. The company’s focus on exclusive brands and strategic expansion through new store openings contributed to its success. The retail sector’s overall health, particularly in western and work apparel, supported Boot Barn’s performance, positioning it favorably against competitors.

Financial Highlights

• Revenue: $504.1 million, up 19% year-over-year.
• Earnings per share: $1.74, a 38% increase from the previous year.
• Gross profit: $197 million, a 26% rise.
• Gross profit rate: 39.1%, an increase of 210 basis points.
• Merchandise margin rate: Increased by 180 basis points.

Earnings vs. Forecast

Boot Barn exceeded analyst expectations with an EPS of $1.74 versus the forecasted $1.53, marking a 13.73% positive surprise. Revenue also surpassed projections, coming in at $504.1 million compared to the expected $492.34 million, a 2.39% surprise. This performance stands out against previous quarters, showcasing the company’s ability to leverage market trends and operational efficiencies.

Market Reaction

Despite the earnings beat, Boot Barn’s stock dropped 2.78% to $171.90 in after-hours trading. This decline may reflect broader market volatility, evidenced by the stock’s beta of 1.69, indicating higher sensitivity to market movements. According to InvestingPro analysis, the company is trading above its Fair Value, which might explain some investor hesitation. The stock remains within its 52-week range, having recently reached a high of $179.89, with strong returns over both three-month and one-year periods. For deeper insights into Boot Barn’s valuation and 12 additional ProTips, consider exploring the comprehensive Pro Research Report available on InvestingPro.

Outlook & Guidance

Boot Barn projects full-year total sales of $2.18 billion, a 14% increase, building on its impressive five-year revenue CAGR of 18%. The company anticipates a merchandise margin of $1.1 billion, representing 50.3% of sales. While optimistic about new store growth, Boot Barn remains cautious about potential macroeconomic challenges in the latter half of the fiscal year. InvestingPro analysis indicates the company maintains a healthy financial position with a current ratio of 2.45, suggesting strong ability to meet short-term obligations while funding expansion plans.

Executive Commentary

CEO John Hasen expressed satisfaction with the quarterly results and the company’s strategic momentum. He stated, "We continue to be confident in our ability to execute on our four strategic initiatives and drive growth in the current fiscal year and over the long term." CFO Jim Watkins highlighted effective inventory management, noting, "Our markdowns as a percentage of inventory are below last year and below historical levels."

Risks and Challenges

• Potential macroeconomic uncertainties affecting consumer spending.
• Tariff-related cost increases impacting pricing strategies.
• Challenges in maintaining growth momentum amid market saturation.
• Supply chain disruptions potentially affecting inventory levels.
• Competition from other retailers in the western and work apparel segments.

Q&A

Analysts inquired about Boot Barn’s pricing strategy concerning tariff-related costs and the potential for exclusive brand marketing. The company expressed confidence in its store growth strategy and highlighted ongoing improvements in sourcing and the work wear category.

Full transcript - Boot Barn Holdings Inc (BOOT) Q1 2026:

Conference Operator: Good day, everyone, and welcome to the Boot Barn Holdings Inc. First Quarter twenty twenty six Earnings Conference Call. As a reminder, this call is being recorded. I would now like to turn the conference over to your host, mister Mark Dittovish, Senior Vice President of Investor Relations and Finance. Please go ahead.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings: Thank you. Good afternoon, everyone. Thank you for joining us today to discuss Boot Barn’s first quarter fiscal twenty twenty six earnings results. With me on today’s call are John Hasen, Chief Executive Officer and Jim Watkins, Chief Financial Officer. A copy of today’s press release along with a supplemental financial presentation is available on the Investor Relations section of Boot Barn’s website at bootbarn.com.

Shortly after we end this call, a recording of the call will be available as a replay for thirty days on the Investor Relations section of the company’s website. I would like to remind you that certain statements we will make during this call are forward looking statements. These forward looking statements reflect Barn’s judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting Boot Barn’s business. Accordingly, you should not place undue reliance on these forward looking statements. For a more thorough discussion of the risks and uncertainties associated with the forward looking statements to be made during this conference call and webcast, we refer you to the disclaimer regarding forward looking statements that is included in our first quarter fiscal twenty twenty six earnings release as well as our filings with the SEC referenced in that disclaimer.

We do not undertake any obligation to update or alter any forward looking statements whether as a result of new information, future events, or otherwise. I will now turn the call over to John Hazen, Boot Barn’s Chief Executive Officer. John?

John Hasen, Chief Executive Officer, Boot Barn Holdings: Thank you, Mark, and good afternoon. Thank you, everyone, for joining us. On this call, I will review our first quarter fiscal twenty six results, discuss the progress we have made across each of our four strategic initiatives, and provide an update on current business. Following my remarks, Jim Watkins will review our financial performance in more detail, and then we will open up the call for questions. We are very pleased with our start to fiscal twenty six as first quarter results significantly increased compared to the prior year and exceeded our expectations.

First quarter revenue increased 19% to 504,000,000, and consolidated same store sales increased 9.4%. In addition to strong sales growth, merchandise margin rate increased a 180 basis points compared to the prior year period. The strength in sales and margin combined with solid expense control resulted in earnings per diluted share of $1.74 during the quarter, which equates to 38% growth compared to the prior year period of 1.26 The team’s ability to deliver strong top and bottom line results reflect the execution of our four strategic initiatives, which I’ll now spend some time discussing. Let’s begin with new store growth. We opened 14 stores in the first quarter, ending the period with 473 stores across 49 states.

Our new stores continue to exceed expectations across all geographies and are projected to generate approximately $3,200,000 in annual revenue and payback in less than two years. We are on track to open 65 to 70 new stores this year in both legacy and new markets. In addition to strong revenue in their first year of operation, new stores are also helping drive same store sales growth once they turn comp. New stores opened over the last six years currently comprise approximately 40% of our comp store count and have outperformed stores opened prior to 2019 by approximately 350 basis points over the last year, resulting in more than a 100 basis point tailwind to consolidated comps. We are very pleased that our new stores are continuing to attract new customers and grow sales after their initial opening, which couples nicely with our sales and customer growth in legacy stores.

This underscores the growth potential of our new store initiative as we believe we have the market potential to double our store count in The US alone over the next several years. Moving to our second initiative, same store sales. First quarter consolidated same store sales grew 9.4% with brick and mortar same store sales increasing 9.5%. Store comp growth was driven by an 8.5% increase in transactions and a 1% increase in units per transaction and flat average unit retail. From a merchandising perspective, we saw broad based growth across all major merchandise categories in the first quarter led by the combined ladies western boots and apparel businesses, which comped positive mid teens.

This was followed by the combined men’s western boots and apparel businesses, which comped positive high single digits. Our denim business, which is included in the figures just mentioned, comped positive high teens. Our work boots business comped low single digit positive, and our work apparel business comped high single digit positive. We are extremely pleased to see the broad based growth across categories continue through the first quarter. From a store operations perspective, I am proud of the team’s performance, delivering strong results and best in class customer service during an especially busy quarter.

In the first quarter, the team was able to open 14 new stores, navigate the complexity of several large scale remodels, and work through labor intensive reticketing on third party goods. I would like to extend a heartfelt thank you to the entire field organization for their hard work and dedication. Moving to our third initiative, omnichannel. In the first quarter, ecommerce comp sales grew 9.3% and bootbarn.com, which is approximately 75% of our online sales comp low double digit profit. We are very pleased with the momentum in our online business and the continued innovation from our omnichannel team.

The team is actively advancing its AI initiatives, including the rollout of our new AI powered search functionality on our websites. Boot Barn now leverages AI to enhance product copy, support store associates through our Cassidy assistant, develop multimedia training modules, empower the new search experience. In addition to improving our technical abilities, the team’s focus on being a stores first organization continues to generate benefits. More than half of our online orders are being fulfilled by the stores, which helps increase merchandise margin and provides the customer with a broader assortment of merchandise to shop. Buy online, pick up in store, and ship to store have both reached record levels, which will drive increased traffic to our stores, help to reduce shipping costs, and improve customer loyalty as we encourage them to shop both in store and online.

Now to our fourth strategic initiative, merchandise margin expansion and exclusive brands. During the first quarter, merchandise margin increased a 180 basis points compared to the prior year period. Remarkably, merchandise margin rate has increased approximately 630 basis points over the last six years or over 100 basis points per year on average. First quarter exclusive brand penetration increased 250 basis points to 40.6 of sales. I am proud of the team’s commitment to drive sales growth while increasing merchandise margin and growing exclusive brands.

From a marketing perspective, we are using the creative team’s outstanding content to further support our own exclusive brands, starting with our leading brand, Hawx. In the first quarter, we launched a new website and marketing campaign for Hawx that focuses on work boots and clothing for blue collar workers across industries. We are encouraged by the early returns, and the positive results give us confidence to move forward with our strategy to market our exclusive brands directly, and we expect to launch a direct marketing campaign later this year to support our leading men’s brand, Cody James. I’d now like to provide a recap on our pricing strategy as it relates to tariffs, which remains consistent with what we shared on our call in mid May. We have received third party cost increases from our vendor partners, and our field organization has begun reticketing these items to reflect the new MSRP.

We expect the reticketing of third party items to be completed by the August, resulting in maintaining merchandise margin rate. For exclusive brands, we are planning on hold we plan to hold off on price increases until the fall in order to gauge price elasticity. We will then review exclusive brands by individual style to determine if we should raise or hold price on certain items, which could result in giving up margin rate in order to maintain or gain market share. Now turning to current business. We are four weeks into the ’26, and we have continued to see broad based growth as consolidated same store sales increased 11.7%, driven by an 11% increase in transactions and a 1% increase in average unit retail.

While we are pleased with the start to our second quarter, we are mindful that July was the softest month of the second quarter last year. We remain cautious of overall consumer sentiment and macro uncertainty, and we’ll continue to manage our business prudently. I would like now to turn the call over to Jim.

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Thank you, John. In the first quarter, net sales increased 19% to $504,000,000. The increase in net sales was the result of the incremental sales from new stores and the increase in consolidated same store sales. The 9.4% increase in same store sales is comprised of a 9.5% increase in retail store same store sales and a 9.3% increase in ecommerce same store sales. Gross profit increased 26% to a $197,000,000 compared to gross profit of a $157,000,000 in the prior year period.

Gross profit rate increased 210 basis points to 39.1% when compared to the prior year period as a result of a 180 basis point increase in merchandise margin rate and 30 basis points of leverage in buying occupancy and distribution center costs. The increase in merchandise margin rate was primarily the result of better buying economies of scale, lower freight expense, and growth in exclusive brand penetration. The leverage in buying occupancy and distribution center costs was driven by lower incentive based compensation and lower distribution center labor costs in the current year period, partially offset by the occupancy cost of new stores. SG and A expenses for the quarter were 127,000,000 or 25.1% of sales compared to $107,000,000 or 25.2% of sales in the prior year period. SG and A expenses as a percentage of net sales decreased by 10 basis points, primarily as a result of lower incentive based compensation in the current year period, partially offset by higher marketing expenses due to timing.

Income from operations was $71,000,000 or 14% of sales in the quarter compared to $50,000,000 or 11.9 of sales in the prior year period. Net income per diluted share increased 38% to a dollar 74, which compares to a dollar 26 per diluted share in the prior year period. Turning to the balance sheet. On a consolidated basis, inventory increased 23 over the prior year period to $774,000,000 and increased approximately 2.7% on a same store basis. Total inventory increased as a result of adding 15% new stores and growth in exclusive brands.

We feel good about the health of our inventory, and our markdowns as a percentage of inventory are below last year and below historical levels. During the quarter, we purchased approximately 78,000 shares of our common stock for an aggregate purchase price of $12,500,000 as part of our authorized $200,000,000 share repurchase program. We finished the quarter with $95,000,000 in cash and zero drawn on our $250,000,000 revolving line of credit. Now turning to our raised outlook for fiscal twenty six. We are increasing full year guidance due to our first quarter results and the strong start to our second quarter.

We are maintaining our original guidance for the second half of the fiscal year, which assumes that the uncertainty around tariffs and the resulting impact on consumer spend will result in flat comps in the second half of the year and unmitigated tariff expenses will increase our cost of goods sold, resulting in a merchandise margin decline in the second half of the fiscal year. The supplemental financial presentation that we released today outlines the low and high end of our guidance range for both the full year and second quarter. I will only be speaking to the high end of the range for both periods in my following remarks. For the full year, we expect total sales to be $2,180,000,000, representing growth of 14% over fiscal twenty five. We expect same store sales to increase 3.5% with a retail store same store sales increase of 3% and ecommerce same store sales growth of 8.5%.

We expect merchandise margin to be $1,100,000,000 or approximately 50.3% of sales, a 20 basis point increase over the prior year period, which includes exclusive brand penetration growth of a 160 basis points. We expect gross profit to be $812,000,000 or approximately 37.2% of sales. We anticipate 50 basis points of deleverage in buying occupancy and distribution center costs due to the occupancy of new stores and 50 basis points of leverage in SG and A. Our income from operations is expected to be $277,000,000 or 12.7% of sales. We expect net income for fiscal twenty six to be $206,000,000 and earnings per diluted share to be $6.70.

We plan to grow new units by 15%, adding between sixty five and seventy new stores during fiscal twenty six. We expect our capital expenditures to be between a $115,000,000 to $120,000,000, which is net of estimated tenant allowances of $35,000,000. And for the balance of the year, we expect our effective tax rate to be 26%. As we look to the ’26, we expect total sales at the high end of our guidance range to be $495,000,000 and a consolidated same store sales increase of 6.5%. We expect merchandise margin to be 249,000,000 or approximately 50.3% of sales, a 70 basis point increase over the prior year period, which includes a 250 basis point increase in exclusive brand penetration.

We expect the gross profit to be a $178,000,000 or approximately 36% of sales, which includes 60 basis points of deleverage in buying, occupancy, and distribution center costs. Our income from operations is expected to be $53,000,000 or 10.7% of sales, a 130 basis point increase over the prior year period. We expect earnings per diluted share to increase 34% to a dollar 27. Now I would like to turn the call back to John for some closing remarks.

John Hasen, Chief Executive Officer, Boot Barn Holdings: Thank you, Jim. We are very pleased with our first quarter results and the positive momentum that has continued into the current quarter. We continue to be confident in our ability to execute on our four strategic initiatives and drive growth in the current fiscal year and over the long term. I would now like to open the call for questions. Operator?

Conference Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.

At this time, we will pause momentarily to assemble a roster. The first question comes from the line of Matthew Boss with JPMorgan. Please go ahead.

Matthew Boss, Analyst, JPMorgan: Great, and congrats on a nice quarter.

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Thanks, Matt.

Matthew Boss, Analyst, JPMorgan: So John, could you speak to drivers of demand strength in the first quarter and elaborate on the acceleration in July, notably the double digit transactions? And then if you could just walk through the bridge map to flat comps in the back half of the year.

John Hasen, Chief Executive Officer, Boot Barn Holdings: Yeah. Absolutely. Yeah. As you said, Matt, we we went from the the transactions went from 8.3% in q one to double digit in July. So, almost all of that comp growth in July was driven by transactions.

AUR was up one in July as as some of those price increases have started. The the performance was really broad based. It was strengths across all of our regions. We saw positive comp trends, throughout July, across all major merchandise categories. But the one worth calling out is denim.

We continue to believe that denim is going to be we’re gonna be a denim destination. It’s a standout category for us, especially on the women’s side across both third party brands that we carry and our own exclusive brands. And and we delivered double digit growth in both men’s and women’s denim during the quarter. But but that transaction growth, I I I’d have to give credit to our team, both from a store operation side and and how they convert those customers in store as well as the marketing team that continues to lean into cultural moments that really resonate with our customer. Looking to the back half of the year, as we said on our first call, we we had applied a haircut to q three and q four to those flat comps.

And we still believe, given all the noise around the macro environment, that there will be, could be some softening of consumer demand during that time. That that flat comp in q three and q four is not a result of solely mid single digit price increases on our third party brands, but rather the macro environment continued to be somewhat at risk.

Matthew Boss, Analyst, JPMorgan: Great. And then maybe, Jim, as a follow-up, could you speak to what you saw on markdown levels relative to a year ago in in the first quarter and then here in July? And what’s embedded in your merchandise margin outlook as it relates to promotional activity and pricing in the in the second quarter and back half of the year?

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Sure.

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Yeah. The mark the markdowns, have continued to be low, pretty low or or very low, I should say, when compared to last year. And also, historical levels pre COVID, they’re very low. And so we’re expecting that to to continue with us, the markdowns to be low. We feel that our inventory is in a very healthy position.

It’s fresh. We’ve got the the inventory that we want as we head into, the back half of the year and and and this most recent upcoming quarter.

Matthew Boss, Analyst, JPMorgan: Great. Best of luck.

Conference Operator: Thank you. Thanks, Matt. Thank you. Next question comes from the line of Peter Keith with Piper Sandler. Please go

Peter Keith, Analyst, Piper Sandler: John, you had mentioned around Hawx that you’re starting to do some marketing and branding around Hawx. And I know I think you did some marketing with Cody James at some concert activity earlier in the year. So I’m wondering if this is a new initiative around exclusive brand marketing. And and could that sort of be an early indicator of distribution of these brands outside of Boot Barn over time?

John Hasen, Chief Executive Officer, Boot Barn Holdings: Yeah. Peter, it’s, when, when I took the permanent role, we we kinda talked about the adjustments adjustments I was gonna make under the four strategic initiatives, which were the sourcing initiative, our exclusive brands, and and reinvigorating the work business. And and the one that we’ve made the most progress on thus far is the exclusive brands piece. It’s, easier to move quickly on some of these marketing initiatives. We’ve been very pleased with, with the early results, around Hawx and our ability to advertise the brand using Meta’s tools to target blue collar customers we weren’t otherwise be able to target and find.

And and it’s been a pretty, material spend over the quarter that’s that’s resulted in millions of impressions and, over a million sessions as well to, the Hawk site that we launched, a bilingual site in both English and Spanish. Cody James at, at the Morgan Wallen Festival in Gulf Shores, Alabama was a great success. We got a lot of coverage. Again, millions of impressions, and reels, views around that concert, and it was the first time we sponsored a stage at a concert with one of our exclusive brands. So so that was exciting as well.

We’re going to, I’ve directed the team to to take Cody James and mimic or copy paste what we have done with Hawx and launch a, dedicated site for Cody as well and, and implement many of the same marketing techniques that we used with Meta’s tools along with some other initiatives specifically for Cody James. So I I’m very, encouraged by the early results. There are no plans currently to sell the brands at wholesale to, other companies and other retailers. Not to say it couldn’t happen one day. But for now, we’re gonna focus on driving these brands at Boot Barn.

Peter Keith, Analyst, Piper Sandler: Okay. Very good. And, on, the, the tariff related price increases, are the, supplier price increases kind of the same as when you updated us, three months ago? I I I think China and various tariffs have have moved around quite a bit. Is it still kind of at that mid single digit level?

And then it’s probably early, but any read on on product where prices have gone up if there’s been any, demand shifts?

John Hasen, Chief Executive Officer, Boot Barn Holdings: Yeah. It is, still that mid single digit price increase. We’re we’re roughly halfway through the ticket the retickets in stores. We will be completed by the August. And so all the third party price increases will be completed, as I said, at the August, and we’re gonna hold lower for longer on exclusive brands, and see what that price elasticity looks like.

It is it’s too early to see if there’s been we we haven’t seen any, slowdown in any particular brand because of price increases. You you can see that the July we had was quite nice. And while while in exclusive brands performed nicely in in q one, that was prior to any of the price increases. So it’s still too early to see the impact of those price increases.

Peter Keith, Analyst, Piper Sandler: Okay. Very good. Thank you, good luck.

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Thanks, Peter.

Conference Operator: Thank you. Next question comes from the line of Steven Zaton with Citigroup. Please go ahead.

Steven Zaton, Analyst, Citigroup: Great. Good afternoon. Thanks very much for taking my question. I wanna stick on the exclusive brand questions for a moment. So could you talk a little bit more about the strategy for that lower for longer pricing?

You know, will you kinda take it month by month to measure elasticity? And then just bigger picture, right, how much bigger can exclusive brand penetration be? Seems like a year where there’s a lot of disruption from tariffs. You know, could we start to see exclusive brand penetration stay above this 40% threshold for some time?

John Hasen, Chief Executive Officer, Boot Barn Holdings: Yeah. It’s, it was above 40% for q one, and we expect it to stay in that range throughout the rest and and and slightly higher than that for the for the remainder of this fiscal year. We’ve said publicly that we’d like to get I’d like to get exclusive brands to 50% penetration over the next five to six years, so one to 200 basis points of improvement a year. There may be a a larger increase this year with some of the lower for longer strategy that we are testing. That that window is October preholiday or or those retickets or price increases on exclusive brands would have to happen post holiday.

So if you think of the windows where we either hold or increase prices on some items or many items on the exclusive brand side, it’s really October or Jan or January are the two windows for those price increases.

Steven Zaton, Analyst, Citigroup: Okay. Understood. And then I guess the follow-up I had just as we think maybe, Jim, on the cost side of the business, you know, focusing on SG and A, has anything changed in your thinking around the year in terms of hurdle rate for SG and A through the through the balance of the year?

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: No. The the hurdle rates still remain where they were when we guided them a couple months ago. You know, just just a reminder, that we we could leverage this year, s g and a at a flat comp, and so we’ve got some leverage modeled in for for the year. And at the at the margin side of things on on the EBIT, we expect to leverage that at a 3% comp for the year. Maybe that comes down just slightly because, the merchandise margin guide for the year has gone up just slightly.

Steven Zaton, Analyst, Citigroup: Okay. Thanks for the detail. Best of luck, guys.

Conference Operator: Thanks, Steve. Thank you. Next question comes from the line of Jay Sole with UBS. Please go ahead.

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Terrific. Thank you. You know, it’s an interesting stat you gave on the prepared remarks about how the newer stores are comping better as they mature, and I guess, you know, consumers in those local markets get more aware of them. I think you talked about stores in the open the last six years, but do you see any nuances between, say, stores open, like, the last year or the year before versus stores that are open maybe four or five, six years ago? And if you do, can you talk about those?

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Sure. We we haven’t seen significant differences between the the different class years and kinda talked about that a little bit on on the most recent call, or the last call about how the the, you know, the the early open stores in that six year period were are outperforming the stores in the more recent periods. And so that that they continue to to gain momentum, as they age. As we look at each of those class years, it’s it’s very consistent, behavior in in improving and and really driving top waterfall, but then also looking at those legacy stores and seeing that, the those older stores are still adding good volume, despite all the new stores that we’re adding.

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Got it. And I guess just thinking about what the productivity per store should be given just a huge growth during the post COVID period and then sort of normalization and then now where we are today. I mean, do you feel like it’s sort of smoothed out to where you’re seeing consistent trends? And if so, what should the average store, like a mature store, deliver in terms of sales per store in a given year?

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Yeah. We we haven’t put a a a target number out there. We’ve talked about it in the past that that the the new stores open at 75% of the mature store. And and and so if you do the math, you get to roughly, you know, at at at the $3.02 $3,200,000 is the sales volume in year one for a new store. It’s roughly $4,200,000 of a or a a more mature store or a legacy store.

But we we plan on on growing the comps in those legacy stores, into the future, and and and so that number will continue to go up in in the way we’re thinking about the business. Next

Conference Operator: question comes from the line of Max Vaclenko with C. D.

Max Vaclenko, Analyst, CD: Hey, guys. Nice job on all the momentum. So first question is on exclusive brands. Can you walk us through the journey of how you’re thinking about where product margins can go over time? I think previous comments make it sound like you think that the opportunity to drive upside is quite large, and I think that you do have a new, VP of sourcing.

So just curious how we should think about that on a multiyear basis.

John Hasen, Chief Executive Officer, Boot Barn Holdings: Yeah. The, the new head of sourcing is on board. Jennifer started, a few months back. She’s been amazing and a great add to the team, and she’s in the process of of hiring a full sourcing team here, 10 to 12 folks that we’re gonna be hiring, on the sourcing team. That being said, the gains from sourcing are going to be into mid twenty seven, And and for a full year, it’s gonna be fiscal twenty eight by the time we see the gains on the sourcing side.

We do think it’s gonna be, you know, over a 100 or 200 bips. We think there’s an opportunity there, but we are but that is, you know, could be multiyear to get there. She’s meeting with all the factories. The team is going through recosting exercises with many of the factories. So we’re not ready to to guide nor commit to what those sourcing margin gains will be, but we still believe that there is opportunity there, and that’s why we’re be building out this team.

Max Vaclenko, Analyst, CD: Got it. That’s helpful. And then on the work side, so with that now flipping positive on both sides of that business, do you think that you can maintain that? And do you think some of the challenges are now behind? Or is it more about just easier compares?

And then how do you dissect what or dissect what happened to that business as it used to be pretty steady pre pandemic?

John Hasen, Chief Executive Officer, Boot Barn Holdings: Yeah. If we look at all the way back to q one of last year, we were negative one in Work Boots, and and in this particular quarter, we were plus one in Work Boots. It it has been very steady. Admittedly, q four of last year was the toughest comp at a negative three one. But in general, it’s a steady business.

I I’m not ready to declare victory on WorkBoots by any means yet. It it is still comping, you know, well below the rest of the business. It traditionally does. It doesn’t go or down as much as some of the other merchandise categories. But I I still think there’s work to be done on, no pun intended, on the work boot side.

And, again, early days of the Hawks initiative, The Cody James marketing will be around the work, the western, and the 1978. So there’ll be another, hit of Boot Barn work marketing coming as we get into September. And, hope hope to have another good update for you guys next quarter. But I I don’t I I don’t think it’s going to there’s nothing to indicate that it’s gonna fall off, but I’m not ready to declare victory that that we’ve gotten WorkBoots back, to where they should be in a low single digit, comp, for the quarter.

Max Vaclenko, Analyst, CD: Awesome. Well, thanks a lot, guys. Maintain the momentum.

Conference Operator: Thank you, Max. Thanks. Thank you. Next question comes from the line of Janine Stichter with BTIG. Please go ahead.

Janine Stichter, Analyst, BTIG: Hi. Thanks for taking my questions. Question first for John.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings0: I just wanna hear your thoughts on the competitive landscape. I know when we were initially going through all this tariff volatility, it seemed like there was gonna be a lot of disruption with some of the independents in the market. Curious anecdotally what you’re seeing in the broader market and if you still see a share gain opportunity from some of this volatility.

John Hasen, Chief Executive Officer, Boot Barn Holdings: Yeah. I think, you know, we’re not uniquely disadvantaged as we look at what’s happening with tariffs in the market. Everyone will be facing into the same MSRP increases. And I think our exclusive brands and the inventory position that we are in heading into our q three or the holiday season puts us puts us in a nice place relative to the competition. Again, this this industry, one one of the great things about it is it’s very rational from a promotional standpoint, and, I I respect, all of our competitors greatly.

But you you do see some of the smaller mom and pops kinda regress and take less risk when they run into these disruptive situations. So I do think we are in a better position than most, if not all, as we head into the holiday season given our exclusive brands and given how we’ve approached, the last few months.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings0: Great. And then, maybe for Jim, on the gross margin, just want to clarify, when does tariff inventory actually start to hit the gross margin? I’m wondering if we have a period here in Q2 when you have ticket increases, but you’re not yet flowing through the higher tariff side?

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Yeah. That’s a correct assumption. So as as the price increases go into place on on on the cost side of things, we’re we’re purchasing those those goods, but we’ll have goods that are in the in the store that are still purchased at the at the lower price. And so as we’re raising the the MSRP that we’ve been given by the the third party vendors that that come along with those cost increases, there is a period of time that’s kind of in the middle of this the second quarter here where we will have a a little bit better of a margin opportunity. And you’re seeing that in our in our guide for the quarter as we’ve we’ve got our merchandise margin up 70 basis points.

That stays with us, maybe to a lesser degree in the in the third quarter, but a little bit as we head into the the third quarter.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings0: Perfect. That’s helpful. Thanks so much.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings1: Thanks, Janine.

Conference Operator: Thank you. Next question comes from the line of Jonathan Komp with Baird. Please go ahead.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings2: Yes. Hi, good afternoon. I want to ask about inventory. It looks like at quarter end, it was up less than 3% on a comp store basis. And just given that you’re guiding to flat comps in the back half, is there a risk that you could actually run too lean or run out of goods that you need based on how you’re aligning your buying plans?

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: It’s a great question, John. We we feel very good about the inventory flow that we that we’ve got. If if you think about positive comps that we’ve got guided here in the second quarter, you’re right. Normally, you would you would see a little bit higher inventory headed into that that period. But we’ve we’ve looked at the inventory that we’ve got, the the inventory that’s in transit and on order, and feel that we’ve got enough inventory to handle the the guide that we’ve put out there, but also some upside if we needed to, yeah, if if we have the good fortune of beating, the the guide that we put out there, we think that we’ll be in a good spot.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings2: Okay. That’s very helpful. And then, John, maybe a bigger picture question. You’re clearly putting your own stamp on the four strategic priorities. Just as you approach in a few months, one year, your interim leadership and permanent leadership, are there any entirely kind of entirely new initiatives or new priorities that you’re considering or just any other thoughts you have on sort of next frontier of growth opportunities?

Thank you.

John Hasen, Chief Executive Officer, Boot Barn Holdings: Yeah. Absolutely. No. I I, I’m comfortable with the big three adjustments that we are making now, the sourcing, the exclusive brand marketing, and really treating those brands truly as as real brands, and then reinvigorating the work, both, how we merchandise the work boots in stores, how we talk about work in general, and and approach, the blue collar, customer and the tradesmen. So I I I catch myself, I think, often about different things that we might wanna do over time, but but it’s a lot harder, to maintain simplicity and focus than than a complexity trap.

So I’m sticking with these three for the foreseeable future. And and, yes, there’s other things I’d I’d think about, perhaps as we go into next year. But I think sourcing the marketing piece and work are are enough adjustments for the team at this point in time.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings2: Certainly. Can’t argue with that. Thank you. Take care. Thanks again.

John Hasen, Chief Executive Officer, Boot Barn Holdings: Thanks. Thanks, John.

Conference Operator: Thank you. Next question comes from the line of Chris Nathorn with Bank of America. Please go ahead.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings1: Thanks, guys. So just looking at

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: the 2Q guide, can you just remind us what drove the inflection last August in your business? And just whether you’re comfortable with the category mix that’s driving the momentum as it relates to fashion product versus your core product?

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Yeah. So as as we went as we went back to to go back to last year, we saw a kind of a steady increase as we as we started the year. And it really if you look at May, things turned positive in May, and then we June was positive again. July was general softness in in retail. And and if you go back and and look at our last year transcript, we talked about some toughness in the business from hurricanes and some hot weather out West and different things.

And then the business strengthened in in August, and we were seeing some broad based category growth as we look back a year ago in August. And so, since August, the the business has been in that mid to high single digit range really for twelve months now. We had a couple exceptions, you know, February being the the most notable. And so as we head into the month of August, we we’ve got the the business guided. We think, accordingly, it’s it’s more in that mid single digit or or low to mid single digit comp range for for August and September to to reflect some of the stronger comps that we had, beginning a year ago.

But we like where the business is is positioned. We think the consumer, is is pretty healthy. They’re shopping with us well. And and think we can get carry this momentum at least for the next couple of months. And then, you know, John talked earlier about how we’re thinking about the back half of the year, beyond that and with some of the pressure that the tariffs and consumer sentiment may may pose for us.

John Hasen, Chief Executive Officer, Boot Barn Holdings: As we look at and I’ll just add in that. As we look at, you know, the fashion side of the business, as you mentioned, it you know, the the penetration of women’s apparel is up slightly versus q one of last year, but that’s entirely driven by our denim business. And and I I do believe we’re becoming a a jeans destination. And and and so it’s not, anything kinda truly fashion or apparel that driven outside of jeans or denim that is driving that business.

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Yep. Got it. That’s very clear. And I was just needing a follow-up. I I was curious how big your denim business is today.

And then is that pretty well rounded across men’s, women’s, different styles? If you can just elaborate on the denim strength, that’d be really helpful.

John Hasen, Chief Executive Officer, Boot Barn Holdings: Yeah. The denim business as sorry. As we look at the penetration of denim, it’s roughly half the men’s apparel business and and and less than that on the women’s side. I don’t think we share the total penetration of denim typically here, but it’s call it, half of the men’s apparel business and slightly less than that on the women’s side.

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: You still there, Chris?

Conference Operator: Yep. This is Yopeda. Mister Nardone, are you done with your questions?

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings1: Yes. All set. Thank you.

Conference Operator: Thank you.

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Thank you, Chris.

Conference Operator: Next question comes from the line of Jeremy Hamblin with Craig Hallum Capital Group. Please go ahead.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings3: Thanks, and congrats on the the the strength of the business. I wanted to come to the store openings. You know, you’ve seen some of the best kind of new unit productivity. Opened 14 in the quarter. Wanted to get a sense for the cadence of the, you know, 65 to 70 guidance for the remainder of the year.

Do expect that to be evenly split? Or any color you might be able to share on on that here for the last three quarters.

John Hasen, Chief Executive Officer, Boot Barn Holdings: Yeah. Absolutely. We yeah. So we opened 14 stores in q one. We plan on opening 16 in q two, which would get us to 30.

And the remaining of the stores the remaining stores will open, over the back half, and we we we haven’t mapped out exactly how many q three and q four. So call it the 35 to 40 stores will open in the back half of the year.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings3: Great. And just, digging in a little bit deeper on on where you’re opening the new stores in in in that, you know, kind of outsized, AUV you’re getting at 3.2 mil. Is this going to inform how you’re thinking about where to put stores, you know, in f y twenty seven and beyond? And have you considered at all even potentially taking a slightly higher unit growth opportunity given, you know, how well the business is performing?

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Yeah. Great great question, Jeremy. We’re we’re we’re thrilled with how well the the new units are are opening. I think the 15%, growth or new new unit openings that that we’ve been doing the last, you know, three or four years now, it seems to be working pretty well for us. As you know, that that number continue that results in in higher number of stores we have to open each year.

And so I don’t I don’t see us expanding that, down what we’ve already got stated there, the 15% new units. Just to to make sure that we’re getting the right locations, we’re being patient, and not trying to to rush those new units. And then also operationally making sure that we’re not, taxing the the the field team too much, the distribution center folks and and and just we’re doing it prudently. So I I think that that probably, stays where where it is for for right now, and doesn’t expand beyond 15%.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings3: But just to clarify, as you look into f y twenty seven and beyond, you still feel comfortable, with that roughly 15% unit growth even as the base gets larger?

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Yeah. I think I think we’re we’re we’re comfortable with that. It’s something that we’re always looking at. We haven’t guided next year yet, and and and so we can’t give you an exact number of the stores that we’re gonna put out there. But but the 15% is something that we’ve we’ve stated, and we’ve done that for four years and and feel good about for right now.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings3: Great. Thanks for the good, taking the questions, and best wishes.

John Hasen, Chief Executive Officer, Boot Barn Holdings: Thank you, Jeremy. Thank you.

Conference Operator: Thank you. Next question comes from the line of Sam Poser with Williams Trading. Please go ahead.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings1: Thank you for taking my questions, guys. One, how how much have you narrowed the assortment within the stores? And if so, how much is it, you know, is a narrow and deeper assortment maybe helping you, or how do you foresee that driving sales and margins going forward?

John Hasen, Chief Executive Officer, Boot Barn Holdings: Hey, Sam. Yeah. I think we we have gone deeper for sure in denim. We I’ve been in many stores over the last several months, and I’ve heard from store partners and managers across the country how much happier they are with the depth of our denim inventory, and people can come in and buy make multiunit purchases in the same size at once, which they struggled with in the past. So I think the place that has happened the most really is is denim.

I think we’re pretty steady state as we look at men’s and women’s apparel. We do have our tried and true, our top styles that drive a disproportionate amount of business that we’re always focusing on that top 3% of styles, that drive almost, 50% of the business depending on the quarter. So we, we we’re always focusing on those tried and trues, but I think the biggest difference is on the denim side and and how well inventoried we are both in third party denim and in our own exclusive brands.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings1: Thank you. And then can within the flat comps in the back half of the year, is that flat in Q3 and Q4? Or do you foresee how would you flow that?

John Hasen, Chief Executive Officer, Boot Barn Holdings: Yes. We have it flat in both Q3 and Q4. We stated, we stated on the last call that, you know, if if not for tariffs and macro uncertainty, those would have been plus threes in q three and q four. And given everything that’s going on and and the macro environment, we we are holding that guidance, and, we’ll update it as we get to the next call.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings1: Thank you, guys. Continued success.

John Hasen, Chief Executive Officer, Boot Barn Holdings: Thanks, Sam.

Conference Operator: Thank you. Our next question comes from the line of Cory Tardlov with Jefferies. Please go ahead.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings4: Great. Thanks, and good afternoon. I just wanted to ask on price increases. Is there perhaps like a a time line that you could give in terms of when you’re expecting to see these price increases come through? And then just on the exclusive brand penetration, has that changed at all as you’ve tweaked the pricing across the other brands that you sell in your store?

John Hasen, Chief Executive Officer, Boot Barn Holdings: Yeah. So so as we said a little bit earlier, I’ll just walk through that timeline one more time. We have received price increases from, many third party partners or vendors. We’ve started to reticket those items in stores. We’re about halfway done with the reticketing process, and the reticketing will be complete by the August.

So the price increases, which are mid single digit that we’ve received from third party vendors, will be done August. We are holding lower for longer on our exclusive brands, and we really have two windows where we can increase price on exclusive brands as well to preserve rate. And those windows are October and then into January post holiday. Obviously, you can’t do it in November or December. So we’re gonna see how exclusive brand penetration performs against third party vendors over the course of September and probably the October and make the call style by style on what we, what we keep lower and maintain pricing on versus what we increase prices on to preserve margin rate.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings4: Understood. It just no color as of yet based on reaction?

John Hasen, Chief Executive Officer, Boot Barn Holdings: No. It’s still early days. With with with, you know, with half of these items, roughly half of the styles being reticketed, and and that was really completed within, you know, a week or two of where we are right now at at the time of this call. It’s still too early, and haven’t seen any change. We had nice EV penetration throughout, q one.

So, the the penetration we talked about was not driven by some dislocation between pricing of EV and third party brands.

Mark Dittovish, Senior Vice President of Investor Relations and Finance, Boot Barn Holdings4: Understood. Thank you so much. Really appreciate the help.

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Thank you, Corey. Thanks.

Conference Operator: Thank you. Next question comes from the line of Ashley Owens with KeyBanc Capital Markets. Please go ahead.

Janine Stichter, Analyst, BTIG: Hey. Great. Thanks for taking my question. So the follow-up on the exclusive brands questions a bit, would be curious at all how you plan to communicate or market some of that pricing differential to consumers over the next couple of months, what levers you have in place to drive incremental sales to exclusive brands by choosing to hold those prices, and if it could carry on, further past January? Thanks.

John Hasen, Chief Executive Officer, Boot Barn Holdings: Yeah. We we generally don’t talk about price. We’ve never been a very promotional retailer, a very full price business. And I I I’m personally, especially from some past experience in in at in other, positions I’ve had at other companies, I’m very careful about being promotional or talking about pricing because it’s hard to walk back from that. So we know that many of our customers come to bootbarn.com, and they browse the product on bootbarn.com before going into stores.

And as you filter and look at different products and different price buckets, they’ll be able to see that price differential there. But I I don’t see a world where we’re gonna be screaming it from the rooftop and putting it in emails that, you know, we’re still pre tariff pricing like you see in the automotive industry and and and things of that sort. So I don’t think we’re gonna take the approach that you perhaps have seen in other businesses. That being said, a lot of these prices, especially on on the the boots side of things, there are, you know, psychological price barriers that have been breached with some of these mid single digit price increases. We’re now we have a boot that’s under $200, and other boots are now above $200.

So I think that will work in our favor. But, I I don’t think we’re gonna have kind of a, pre tariff pricing, marketing campaign in any way around this. And and we’ll let the consumer choose, and and they’ll they’ll see the pricing whether they’d be in stores or they’re doing their research at home on bootbarn.com before coming in.

Janine Stichter, Analyst, BTIG: Okay. Gotcha. And then just as a follow-up, you know, we know you’re performing really well in denim. It’s been seen by some other brands in apparel are really trying to capitalize in on this, in some of the denim tailwinds. We’ve seen this over the past week.

Just any plans to lean into additional marketing there?

John Hasen, Chief Executive Officer, Boot Barn Holdings: We’re doing things in stores. So so we’re focusing on fit guides and talking about denim in stores and and making sure our partners are educated on the different fits and the different rises, especially on the women’s side. So so denim guys that each store partner will have are are going out as we speak. I think they landed in all stores over the last week or so, and they look great. So we’re gonna be educating partners on denim.

And our denim continues to be very much our bootcut silhouette as you would imagine given our business and given the footwear or the boots that we sell. And and so it it really comes down to the rise, the stretch, the different types of bootcuts that continue to sell very well for us. I I don’t think we’re gonna do have any real kinda denim or jean campaign, like like others have seen over the last couple of weeks with American Eagle and some others. I I think we’ll continue to market who Boot Barn is and our our broad assortment of product that includes denim, but no large dedicated denim campaign in the works right now.

Janine Stichter, Analyst, BTIG: Okay. Great. I appreciate the color. Thank you.

Conference Operator: Thank you. Next question comes from the line of Jeff Lick with Stephens Inc. Please go ahead.

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Good afternoon. Thanks for squeezing me in, and congrats on

Conference Operator: a great quarter.

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: John or Jim, I was just wondering, what is typically the spread between exclusive brands and the national third party brands? And how much will it widen here in this interim period? And do you I’m curious. Does your research indicate, like, just how much does exclusive brand adoption, you know, kinda revolve around price or and or, you know, once you try it, you get a lot of repeat customers. I’m just because it seems like you’re running an interesting little, test tube here with pricing.

John Hasen, Chief Executive Officer, Boot Barn Holdings: Yeah. The the spread between exclusive brands and third party brands, and and we’ve said this publicly for several quarters, is generally a thousand basis points. Is is what we’ve seen up into up until now. The honest answer is we don’t know how much price and and especially its psychological price barriers are gonna play into the customer’s choice. And that’s why we’re running this kinda large scale elasticity test.

We we have the opportunity to stay lower for longer. And, you know, EV penetration, why we want to get to 50% over the next five to six years, 100 to 200 basis points increase per year, it it’s been our experience that sometimes that isn’t a straight line kinda growth, and there there has been step function, jumps in the past. And and let’s see if this can be one of them. And we we don’t know how the customer will react to holding these prices if everything else has has gone up and and people seem to absorb inflation quite well as they had have overall the last four or five years. It may not be a factor.

But if a boot start starts with a two and ours starts with a $1.99 or a $1.89, it it may make a difference. But that’s why we’re running this test, and that’s why we’re gonna decide style by style where we hold and where we increase, price to preserve, margin rate.

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: I’m just curious. Did you have kind of detailed conversations with different vendors about, hey. This is kinda what you’re gonna be what we’re doing, and did any vendor say, you know what? I’ll, I’ll keep the price the same. I don’t wanna go through that test.

I don’t wanna lose share.

John Hasen, Chief Executive Officer, Boot Barn Holdings: No. The the vendors have been look. They they’re dealing with a very difficult situation, a very fluid, a very dynamic situation, and it’s it’s very with all especially today on on tariff, day eve, I suppose. It’s it’s almost impossible for them to do this style They they many of the vendors have have put these mid single digit price increases across the board to kinda insulate them against these these increased costs and tariffs.

And and so they they, they had to do it across the board, and they couldn’t you know, they’re they’re not going product by product or style by style. And so for them to back off of that across the entire industry, I think, would be difficult for them to do. But we we said it on the last call, and and I think most of them are aware that that we’re taking this tactic. They’ve listened to the call, but we haven’t had any any of them come back and say, hey. We’re gonna rewind some of those price increases or rescind them.

That has not happened.

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: Well, great. Thanks again for taking my question,

Jim Watkins, Chief Financial Officer, Boot Barn Holdings: and congrats on the quarter. Thank you, Jeff. Thanks.

Conference Operator: Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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