Investment Strategy - The investment approach focuses on long-only investments, evaluating companies from an operational, buy-and-hold perspective [1] - The strategy does not prioritize market-driven dynamics or future price actions but emphasizes understanding long-term earnings power and competitive industry dynamics [1] - Most recommendations are holds, with only a small fraction of companies considered as buys at any given time [1] Article Focus - Articles provide insights into operational aspects of companies and industries, offering valuable information for future investors [1] - The content aims to introduce a healthy dose of skepticism in a market that tends to be bullish-biased [1] Disclosure - The author has no stock, option, or derivative positions in the mentioned companies and no plans to initiate such positions within the next 72 hours [2] - The article represents the author's personal opinions and is not influenced by compensation or business relationships with the mentioned companies [2]

Core Viewpoint - Boot Barn's stock experienced a significant decline of 20% following the announcement of a surprise CEO departure, despite strong financial results for Q2 2025 [1][3]. Financial Performance - Boot Barn reported Q2 net sales of $426 million, reflecting a year-over-year growth of nearly 14%, surpassing management's expectations of 8% to 10% growth [2]. - Same-store sales growth was nearly 5%, contributing to the overall positive financial performance [2]. Leadership Change - CEO Jim Conroy, who has been with Boot Barn for 12 years, is leaving to take the CEO position at Ross Stores, a much larger company with a market capitalization of nearly $50 billion [3][4]. - John Hazen, the Chief Digital Officer, will serve as the interim CEO, providing continuity within the company [5]. Market Reaction - Despite the strong financial results and increased full-year guidance, the unexpected leadership change has led to investor concerns and a significant drop in stock price [3][5]. - The market capitalization of Boot Barn is approximately $4 billion, indicating a substantial difference in scale compared to Ross Stores [4]. Investment Opportunity - The current stock pullback may present a buying opportunity for investors, given Boot Barn's continued strong performance and positive financial outlook [5].

Core Insights - Boot Barn Holdings, Inc. reported strong second-quarter fiscal 2025 results, with revenues and earnings exceeding expectations and showing year-over-year growth [1][2] - The company raised its fiscal 2025 guidance following this performance [1] Financial Performance - Adjusted earnings were 95 cents per share, a 5.6% increase from 90 cents in the prior year, surpassing the Zacks Consensus Estimate of 93 cents [3] - Net sales reached $425.8 million, a 13.7% year-over-year increase, exceeding the Zacks Consensus Estimate of $423 million [4] - Consolidated same-store sales rose 4.9% year over year, driven by a 4.3% increase in retail store sales and a 10.1% increase in e-commerce sales, outperforming the expected growth of 3.2% [5] Margin and Cost Analysis - Gross profit increased by 14.1% to $152.9 million, attributed to higher sales and improved merchandise margins [6] - Gross margin improved by 10 basis points to 35.9%, with a 70-basis point increase in merchandise margin, partially offset by a 60-basis point increase in occupancy and distribution costs [7] - SG&A expenses rose 18.4% year over year to $112.9 million, primarily due to higher store payroll and related costs [8] Future Outlook - For the fiscal third quarter, Boot Barn estimates net sales between $582 million and $595 million, indicating growth of 11.8-14.3% from the previous year [11] - The company anticipates same-store sales growth of 3.5-6%, with retail store sales expected to increase by 3-5% and e-commerce sales by 7.5-10% [12] - For the full fiscal year, total revenues are projected to be between $1.87 billion and $1.91 billion, up from the previous estimate of $1.82 billion to $1.85 billion, reflecting a growth of 12.4-14.4% [13] Financial Health - Boot Barn ended the quarter with $37.4 million in cash and cash equivalents, without drawing from its $250 million revolving credit facility [10] - Average inventory per store increased approximately 10.5% on a same-store basis from September 30, 2023 [10]

Group 1 - The consensus price target for Boot Barn Holdings Inc is $149.46 based on ratings from 14 analysts [1] - The highest price target is $192 issued by Benchmark on October 9, 2024, while the lowest is $83 from B. Riley Securities on February 1, 2024 [1] - Recent analyst ratings from BTIG, Craig-Hallum, and UBS suggest an average price target of $170.67, indicating a potential upside of 12.28% for Boot Barn Holdings Inc [1]

Financial Data and Key Metrics Changes - Revenue increased by 14% to $426 million, with same-store sales growth of 4.9% [12][24] - Earnings per diluted share were $0.95, compared to $0.90 in the prior year [13][27] - Gross profit increased by 14% to $153 million, with a gross profit rate of 35.9% [25] Business Line Data and Key Metrics Changes - Same-store sales in brick-and-mortar increased by 4.3%, while e-commerce same-store sales grew by 10.1% [12][24] - The men's western boots and apparel business saw high-single-digit positive comps, while ladies' western boots and apparel improved to mid-single digits [16][17] Market Data and Key Metrics Changes - October same-store sales were 5.1%, with store comps increasing by 4.3% and e-commerce increasing by 12.5% [22] - The company expects to open 60 new stores this year, maintaining a commitment to 15% new-store growth annually [15][35] Company Strategy and Development Direction - The company is focused on expanding its store base, driving same-store sales growth, strengthening omnichannel leadership, and expanding merchandise margins [11][20] - The new store pipeline remains healthy, with potential to open an additional 500 stores in the U.S. [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current business tone and preparation for a successful holiday season [22][38] - The company raised its full-year guidance, expecting total sales to reach $1.91 billion, representing a 14% growth over fiscal '24 [32][34] Other Important Information - John Hazen will assume the role of Interim CEO after Jim Conroy's departure [6][7] - The company is testing an AI solution named Cassidy to enhance customer experience and sales conversion [19] Q&A Session Summary Question: Can you elaborate on the material inflection in comps? - Management noted broad-based sequential improvement across categories and channels, with positive same-store sales growth in every major merchandise department and region [40][41] Question: What are the drivers of merchandise margin expansion? - Expected merchandise margin improvement of 100 basis points in Q3, driven by supply-chain efficiencies and better-buying economies of scale [42] Question: What categories are gaining market share? - Management indicated that the company is taking market share, particularly in ladies' western boots and apparel, and attributed this to brand resonance and marketing efforts [45][47] Question: How is the Cody James Black brand performing? - The brand is performing well and is now in 300 stores, contributing positively to the overall business [71] Question: What is the company's exposure to China? - Approximately 30% of products are sourced from China, down from 37% last year, indicating a derisked exposure [67][91] Question: What are the expectations for promotional activity during the holiday season? - The company plans to maintain its everyday low-price model with minimal promotional activity, similar to the previous year [96]

Core Insights - Boot Barn reported revenue of $425.8 million for the quarter ended September 2024, reflecting a 13.7% increase year-over-year and a surprise of +0.78% over the Zacks Consensus Estimate of $422.53 million [1] - The company's EPS for the quarter was $0.95, up from $0.91 in the same quarter last year, with an EPS surprise of +2.15% compared to the consensus estimate of $0.93 [1] Performance Metrics - Same Store Sales growth was 4.9%, exceeding the average estimate of 3.2% from four analysts [3] - Average store square footage at the end of the period was 11,105, slightly above the average estimate of 11,063 based on two analysts [3] - Boot Barn opened 15 new stores, surpassing the two-analyst average estimate of 14 [3] - The total number of stores operating at the end of the period was 425, matching the average estimate from two analysts [3] Stock Performance - Over the past month, Boot Barn's shares have returned -4.3%, while the Zacks S&P 500 composite increased by +2% [4] - The stock currently holds a Zacks Rank 1 (Strong Buy), suggesting potential for outperformance in the near term [4]

Core Insights - Boot Barn (BOOT) reported quarterly earnings of $0.95 per share, exceeding the Zacks Consensus Estimate of $0.93 per share, and showing an increase from $0.91 per share a year ago, resulting in an earnings surprise of 2.15% [1] - The company achieved revenues of $425.8 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.78% and up from $374.46 million year-over-year [2] - Boot Barn's stock has increased approximately 105.8% since the beginning of the year, significantly outperforming the S&P 500's gain of 21.8% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.09 on revenues of $585.38 million, while the estimate for the current fiscal year is $5.38 on revenues of $1.87 billion [7] - The trend of estimate revisions for Boot Barn is favorable, contributing to a Zacks Rank 1 (Strong Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Retail - Apparel and Shoes industry, to which Boot Barn belongs, is currently ranked in the top 24% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8] - Another company in the same industry, Gap (GAP), is expected to report quarterly earnings of $0.57 per share, reflecting a year-over-year decline of 3.4%, with revenues projected at $3.81 billion, a 1% increase from the previous year [9]

Group 1 - The CEO of Boot Barn Holdings Inc. will be leaving next month [1] - The company forecasts better sales and profits for the full year [1] - Despite the positive forecast, shares dropped 13% after hours [1]

| --- | --- | --- | --- | --- | --- | |--------------|-------|---------------------------------------------------------------------------------------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | October 2024 | | Supplemental Financial Presentation Offering everyone a piece of the American spirit—one handshake at a time. | | | | 0 Important Information Forward-Looking Statements This presentation contains forward-looking statements that are subjec ...

Financial Performance - Net sales for Q2 FY2025 increased by 13.7% to $425.8 million compared to $374.5 million in the prior-year period[5]. - Net income for the quarter was $29.4 million, or $0.95 per diluted share, up from $27.7 million, or $0.90 per diluted share, in the prior-year period[5]. - Gross profit for the quarter was $152.9 million, representing a gross margin of 35.9%, compared to $133.9 million and a gross margin of 35.7% in the prior year[25]. - Net income for the quarter was $29.4 million, or $0.96 per diluted share, compared to $27.7 million, or $0.92 per diluted share, in the same quarter last year, reflecting a 6.3% increase in net income[25]. - Total current assets increased to $807.1 million as of September 28, 2024, compared to $729.6 million as of March 30, 2024, marking a 10.6% increase[23]. - The company reported a total of $1.87 billion in assets as of September 28, 2024, up from $1.71 billion as of March 30, 2024, reflecting a 9.5% increase[23]. - Cash and cash equivalents at the end of the period were $37.4 million, a decrease from $75.8 million at the beginning of the period[27]. - Operating cash flow for the quarter was $33.5 million, compared to $145.5 million in the same quarter last year, indicating a decrease in cash generated from operations[27]. Sales and Growth Projections - For the fiscal year ending March 29, 2025, total sales are expected to be between $1.874 billion and $1.907 billion, representing growth of 12.4% to 14.4%[18]. - Same store sales growth for FY2025 is projected to be approximately 3.0% to 5.0%, with retail store same store sales growth of 2.5% to 4.5% and e-commerce same store sales growth of 7.5% to 9.5%[18]. - For Q3 FY2025, total sales are expected to be between $582 million and $595 million, representing growth of 11.8% to 14.3% over the prior-year period[19]. - The company anticipates continued growth in net sales and plans to open additional stores in the upcoming quarters as part of its expansion strategy[24]. Store Operations - The company opened 15 new stores, bringing the total store count to 426[5]. - The company opened 15 new stores during the quarter, bringing the total store count to 425 as of September 28, 2024, up from 411 at the end of the previous quarter[29]. - Total retail store selling square footage at the end of September 2024 was 4,720,000 square feet[30]. - Average retail store selling square footage increased to 11,105 square feet in September 2024[30]. - The number of stores operating at the end of the period increased from 411 in June 2024 to 425 in September 2024[30]. - Comparable stores operating during the period increased to 363 from 349 in June 2024[30]. - Same store sales grew by 4.9%, with retail store same store sales increasing by 4.3% and e-commerce same store sales increasing by 10.1%[5]. - Same store sales decline was recorded at (5.9)% for March 2024[30]. - Average sales per comparable store for September 2024 was $952,000[30]. - Average sales per comparable store was $980,000 in June 2024[30]. Expenses - Selling, general and administrative expenses for FY2025 are projected to be between $476.5 million and $480.4 million, or approximately 25.4% to 25.2% of sales[18]. - Selling, general, and administrative expenses for the quarter were $112.9 million, which is 26.5% of net sales, compared to $95.3 million or 25.5% of net sales in the prior year[25].