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Boot Barn Holdings, Inc. Announces Third Quarter Fiscal Year 2019 Financial Results and Increased Annual Guidance

February 5, 2019

IRVINE, Calif.--(BUSINESS WIRE)--Feb 5, 2019--Boot Barn Holdings, Inc. (NYSE:BOOT) today announced its financial results for the third fiscal quarter ended December 29, 2018.

Highlights for the quarter ended December 29, 2018, were as follows:

Net sales increased 13.0% to $254.0 million. Same store sales increased 9.2%, with double-digit growth in e-commerce and high single-digit growth in retail stores. Net income was $19.0 million, or $0.66 per diluted share, compared to net income of $20.1 million, or $0.73 per diluted share in the prior-year period. Net income per diluted share in the prior-year period was $0.46 when excluding $0.27 related to tax reform. The Company opened two new stores during the quarter.

Jim Conroy, Chief Executive Officer, commented, “Our strong results in the third quarter reflect the continued strength across the country and in nearly all major product categories. Our strong merchandising initiatives, segmented marketing, and solid store operations drove double-digit growth in e-commerce and high single-digit growth in retail stores while expanding our consolidated merchandise margin 120 basis points. Our same store sales trend through the first five weeks of the fourth quarter is in line with our third quarter performance and we continue to hold true to our full-price selling model. Notably, our Texas stores also continue to perform better than company average. We are confident that the strategies we have in place have us well positioned to conclude a very successful fiscal 2019 with a strong fourth quarter performance.”

Operating Results for the Third Quarter Ended December 29, 2018

Net sales increased 13.0% to $254.0 million from $224.7 million in the prior-year period. The increase in net sales was driven by a 9.2% increase in same store sales, the sales contribution from acquired stores and sales from new stores added over the past twelve months. Gross profit was $85.7 million, or 33.7% of net sales, compared to $71.9 million, or 32.0% of net sales, in the prior-year period. Gross profit increased primarily due to increased sales and an increase in merchandise margin rate. Gross profit rate increased primarily from a 120 basis point increase in merchandise margin rate and a 50 basis point decrease in buying and occupancy costs. The higher merchandise margin was driven by more full-price selling and growth in exclusive brand penetration. Selling, general and administrative expense was $56.4 million, or 22.2% of net sales, compared to $47.5 million, or 21.2% of net sales, in the prior-year period. The increase in SG&A expenses was primarily a result of additional costs to support higher sales and expenses for both new and acquired stores. As a percentage of net sales, SG&A increased primarily as a result of higher incentive compensation in the thirteen weeks ended December 29, 2018 and a gain from insurance claims in the thirteen weeks ended December 30, 2017 that did not occur in the current year period. Income from operations grew 20.1% to $29.3 million, or 11.5% of net sales, compared to $24.4 million, or 10.9% of net sales, in the prior-year period. This increase represents more than 60 basis points of improvement in operating profit margin. Net income was $19.0 million, or $0.66 per diluted share, compared to $20.1 million, or $0.73 per diluted share, in the prior-year period, which included $0.27 related to tax reform. Opened 2 new stores, bringing the total count at quarter-end to 234 stores in 31 states.

Operating Results for the Nine Months Ended December 29, 2018

Net sales increased 15.2% to $584.1 million from $507.2 million in the prior-year period. The increase in net sales was driven by a 10.4% increase in same store sales, the sales contribution from acquired stores and sales from new stores added over the past twelve months. Gross profit was $188.0 million, or 32.2% of net sales, compared to $155.0 million, or 30.6% of net sales, in the prior-year period. Gross profit increased primarily due to increased sales and an increase in merchandise margin rate. Gross profit rate increased primarily from a 100 basis point increase in merchandise margin rate and 60 basis points of leverage in buying and occupancy costs. The higher merchandise margin was driven by more full-price selling and growth in exclusive brand penetration. Selling, general and administrative expense was $140.2 million, or 24.0% of net sales, compared to $120.0 million, or 23.7% of net sales, in the prior-year period. Selling, general and administrative expenses increased primarily as a result of additional costs to support higher sales and expenses for both new and acquired stores. As a percentage of net sales, SG&A increased primarily as a result of higher incentive compensation in the thirty-nine weeks ended December 29, 2018 and a gain from insurance claims in the thirty-nine weeks ended December 30, 2017 that did not occur in the current year period. Income from operations grew 36.7% to $47.8 million, or 8.2% of net sales, compared to $35.0 million, or 6.9% of net sales, in the prior-year period. This increase represents 130 basis points of improvement in operating profit margin. Net income was $30.3 million, or $1.05 per diluted share, compared to $22.0 million, or $0.81 per diluted share, in the prior-year period, which included $0.27 related to tax reform. Net income per diluted share in the thirty-nine weeks ended December 29, 2018 includes approximately $0.12 per share of tax benefit related to stock option exercises. Added 11 stores through new openings and acquisitions and closed three stores.

Balance Sheet Highlights as of December 29, 2018

Cash of $50.6 million. Average inventory per store was up 3.8% on a same store basis compared to December 30, 2017. Total net debt of $174.0 million, including a zero balance under the revolving credit facility.

Fiscal Year 2019 Outlook

For the fiscal year ending March 30, 2019, the Company now expects:

To add 18 new stores, including the 11 stores opened and acquired during the first 9 months of fiscal 2019. Same store sales growth of approximately 10%. Total sales of $770 million to $773 million. Income from operations between $62.0 million and $62.7 million compared to the Company’s prior outlook of between $57.5 million and $60.5 million. Interest expense of approximately $16.5 million. Net income of $37.7 million to $38.2 million, compared to the Company’s prior outlook of $33.6 million to $35.8 million. Net income per diluted share of $1.31 to $1.33 based on 28.8 million weighted average diluted shares outstanding, compared to the Company’s prior outlook of $1.16 to $1.24.

For the fiscal fourth quarter ending March 30, 2019, the Company expects:

Same store sales growth of 5.0% to 7.0%. Total sales of $186 million to $189 million. Net income per diluted share of $0.25 to $0.27 based on 28.9 million weighted average diluted shares outstanding.

Conference Call Information

A conference call to discuss the financial results for the third quarter of fiscal year 2019 is scheduled for today, February 5, 2019, at 4:30 p.m. ET (1:30 p.m. PT). Investors and analysts interested in participating in the call are invited to dial (800) 289-0438. The conference call will also be available to interested parties through a live webcast at investor.bootbarn.com. Please visit the website and select the “Events and Presentations” link at least 15 minutes prior to the start of the call to register and download any necessary software. A telephone replay of the call will be available until March 5, 2019, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 6028469. Please note participants must enter the conference identification number in order to access the replay.

About Boot Barn

Boot Barn is the nation’s leading lifestyle retailer of western and work-related footwear, apparel and accessories for men, women and children. The Company offers its loyal customer base a wide selection of work and lifestyle brands. As of the date of this release, Boot Barn operates 234 stores in 31 states, in addition to an e-commerce channel www.bootbarn.com. The Company also operates www.sheplers.com, the nation’s leading pure play online western and work retailer and www.countryoutfitter.com, an e-commerce site selling to customers who live a country lifestyle. For more information, call 888-Boot-Barn or visit www.bootbarn.com.

Forward Looking Statements

This press release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this press release are forward-looking statements. Forward-looking statements refer to our current expectations and projections relating to, by way of example and without limitation, our financial condition, liquidity, profitability, results of operations, margins, plans, objectives, strategies, future performance, business and industry. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate”, “estimate”, “expect”, “project”, “plan“, “intend”, “believe”, “may”, “might”, “will”, “could”, “should”, “can have”, “likely”, “outlook” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events, but not all forward-looking statements contain these identifying words. These forward-looking statements are based on assumptions that the Company’s management has made in light of their industry experience and on their perceptions of historical trends, current conditions, expected future developments and other factors they believe are appropriate under the circumstances. As you consider this press release, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond the Company’s control) and assumptions. These risks, uncertainties and assumptions include, but are not limited to, the following: decreases in consumer spending due to declines in consumer confidence, local economic conditions or changes in consumer preferences; the Company’s ability to effectively execute on its growth strategy; and the Company’s failure to maintain and enhance its strong brand image, to compete effectively, to maintain good relationships with its key suppliers, and to improve and expand its exclusive product offerings. The Company discusses the foregoing risks and other risks in greater detail under the heading “Risk factors” in the periodic reports filed by the Company with the Securities and Exchange Commission. Although the Company believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect the Company’s actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. Because of these factors, the Company cautions that you should not place undue reliance on any of these forward-looking statements. New risks and uncertainties arise from time to time, and it is impossible for the Company to predict those events or how they may affect the Company. Further, any forward-looking statement speaks only as of the date on which it is made. Except as required by law, the Company does not intend to update or revise the forward-looking statements in this press release after the date of this press release.

View source version on businesswire.com:https://www.businesswire.com/news/home/20190205005939/en/

CONTACT: Investors:

ICR, Inc.

Brendon Frey, 203-682-8216

BootBarnIR@icrinc.com

or

Media:

Boot Barn Holdings, Inc.

Jim Watkins, 949-453-4428

Vice President, Investor Relations

BootBarnIRMedia@bootbarn.com

KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA

INDUSTRY KEYWORD: PROFESSIONAL SERVICES FINANCE RETAIL FASHION

SOURCE: Boot Barn Holdings, Inc.

Copyright Business Wire 2019.

PUB: 02/05/2019 04:10 PM/DISC: 02/05/2019 04:10 PM

http://www.businesswire.com/news/home/20190205005939/en

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