Clothing and footwear retailer Boot Barn (NYSE:BOOT) fell short of analysts' expectations in Q2 FY2024, with revenue up 6.52% year on year to $374.5 million. Next quarter's outlook also missed expectations with revenue guided to $528.5 million at the midpoint, or 2.98% below analysts' estimates. Turning to EPS, Boot Barn made a GAAP profit of $0.90 per share, down from its profit of $1.06 per share in the same quarter last year.
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Boot Barn (BOOT) Q2 FY2024 Highlights:
- Revenue: $374.5 million vs analyst estimates of $377.6 million (0.83% miss)
- EPS: $0.90 vs analyst estimates of $0.89 (1.03% beat)
- Revenue Guidance for Q3 2024 is $528.5 million at the midpoint, below analyst estimates of $544.7 million
- The company dropped its revenue guidance for the full year from $1.73 billion to $1.69 billion at the midpoint, a 2.43% decrease
- Free Cash Flow of $39.9 million is up from -$68 million in the same quarter last year
- Gross Margin (GAAP): 35.8%, down from 36.7% in the same quarter last year
- Store Locations: 371 at quarter end, increasing by 50 over the last 12 months
With a strong store presence in Texas, California, Florida, and Oklahoma, Boot Barn (NYSE:BOOT) is a western-inspired apparel and footwear retailer.
Footwear RetailerFootwear sales–like their apparel counterparts–are driven by seasons, trends, and innovation more so than absolute need and similarly face the bigger-picture secular trend of e-commerce penetration. Footwear plays a part in societal belonging, personal expression, and occasion, and retailers selling shoes recognize this. Therefore, they aim to balance selection, competitive prices, and the latest trends to attract consumers. Unlike their apparel counterparts, footwear retailers most sell popular third-party brands (as opposed to their own exclusive brands), which could mean less exclusivity of product but more nimbleness to pivot to what’s hot.
Sales GrowthBoot Barn is a small retailer, which sometimes brings disadvantages compared to larger competitors that benefit from economies of scale. On the other hand, one advantage is that its growth rates can be higher because it's growing off a small base.
As you can see below, the company's annualized revenue growth rate of 20% over the last four years (we compare to 2019 to normalize for COVID-19 impacts) was excellent as it added more brick-and-mortar locations and increased sales at existing, established stores.
This quarter, Boot Barn grew its revenue by 6.52% year on year, missing analysts' expectations. The company is guiding for revenue to rise 2.71% year on year to $528.5 million next quarter, slowing from the 5.9% year-on-year increase it recorded in the same quarter last year. Looking ahead, the analysts covering the company expect sales to grow 7.12% over the next 12 months.
Number of StoresWhen a retailer like Boot Barn is opening new stores, it usually means it's investing for growth because demand is greater than supply. Since last year, Boot Barn's store count increased by 50 locations, or 15.6%, to 371 total retail locations in the most recently reported quarter.
Over the last two years, the company has rapidly opened new stores, averaging 13.6% annual growth in its physical footprint. This store growth is among the fastest in the consumer retail sector and gives Boot Barn a chance to scale towards a mid-sized company over time. With an expanding store base and demand, revenue growth can come from multiple vectors: sales from new stores, sales from e-commerce, or increased foot traffic and higher sales per customer at existing stores.
Same-Store SalesSame-store sales growth is an important metric that tracks demand for a retailer's established brick-and-mortar stores and e-commerce platform.
Boot Barn has generated solid demand for its products over the last two years. On average, the company's same-store sales have grown by a healthy 13.1% year on year. This performance gives it the confidence to rapidly expand its store count. When a company has strong demand, more locations should help it reach more customers seeking its products and boost revenue growth.
Key Takeaways from Boot Barn's Q2 Results Sporting a market capitalization of $2.06 billion, Boot Barn is among smaller companies, but its more than $38.7 million in cash on hand and positive free cash flow over the last 12 months puts it in an attractive position to invest in growth.
We struggled to find many strong positives in these results. Revenue and EPS both missed, and full year guidance was lowered, showing that the headwinds to the business will continue. Overall, this was a mediocre quarter for Boot Barn. The company is down 6.19% on the results and currently trades at $65 per share.
The author has no position in any of the stocks mentioned in this report.
