Boot Barn's (BOOT) Q3 Earnings Meet, Sales Miss Estimates

Boot Barn Holdings, Inc. (NYSE:BOOT) posted third-quarter fiscal 2019 results, wherein adjusted earnings came in line, while the top line narrowly missed the Zacks Consensus Estimate. However, the top and bottom lines, both continue to increase year over year for the last five quarters. This may have fueled investors’ sentiments, owing to which shares of this Zacks Rank #2 (Buy) company gained 21% in a year’s time, significantly outperforming the industry’s growth of 1.4%.

Results gained from robust performances in all products, especially in work apparel, work boots, ladies and men's western apparel. Apart from this, solid marketing strategies, robust merchandising initiatives and strong store operations also contributed to the quarterly results.

Such upsides prompted management to raise its fiscal 2019 earnings guidance in the range of $1.31-$1.33, up from the prior view of $1.16-$1.24, that is above the Zacks Consensus Estimate of $1.30.

Q3 Details

The company reported adjusted earnings of 66 cents a share, up 43.5% from the year-ago quarter. This can be attributed to solid sales and higher merchandise margin in the reported quarter.

Moving on, Boot Barn generated net sales of $254 million, up 13% from the year-ago period, which marginally fell short of the Zacks Consensus Estimate of $255 million. The top line was fueled by same-store sales growth of 9.2%, with double-digit increase in e-commerce and high single-digit jump in retail stores. Retail stores also witnessed positive comps for the seventh successive quarter that further strengthened the same-store sales performance.

In the quarter under review, gross margin expanded 170 basis points (bps) to 33.7%, mainly due to a 120-basis point improvement in merchandise margin and a 50-basis point decline in buying and occupancy costs. Operating margin expanded 60 bps to 11.5% in the quarter. Moreover, selling, general & administrative (SG&A) expenses as a percentage of net sales increased 100 bps to 22.2% in the reported quarter.

Store Update

During the quarter under review, the company opened two stores. It currently has 234 stores located in 31 states. Management plans to open 18 new stores, out of which it has opened and acquired 11 stores in the nine months ending Dec 29, 2018.

Balance Sheet and Cash Flow

As of Dec 29, 2018, Boot Barn had approximately $50.6 million in cash and cash equivalents, long-term portion of notes payable of $174 million and total stockholders’ equity of $254.8 million. Also, the company generated cash from operations of $91.6 million in the nine months ending Dec 29, 2018.

Boot Barn Holdings, Inc. Price, Consensus and EPS Surprise

Boot Barn Holdings, Inc. Price, Consensus and EPS Surprise | Boot Barn Holdings, Inc. Quote

Outlook

Sales for the fiscal year are anticipated to be $770-$773 million, along with same-store sales growth of nearly 10%. Additionally, the company expects operating income of $62-$62.7 million, up from the earlier view of $57.5-$60.5 million.

The company also provided guidance for the final quarter of fiscal 2019. Adjusted earnings for the fiscal fourth quarter is projected at 25-27 cents. It estimates sales of $186-$189 million and 5-7% rise in same store sales.

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