Boot Barn(BOOT) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total net sales increased by nearly 20% year-over-year, reaching $366 million [7][21] - Consolidated same-store sales grew by 10%, with retail store same-store sales also up by 10% and e-commerce sales increasing by 9% [8][21] - Earnings per diluted share were $1.29, with an adjusted EPS of $1.26, which was $0.12 better than guidance [10][23] - EBIT margin rate was 14.3%, exceeding guidance of 12.8% by 150 basis points [9] Business Line Data and Key Metrics Changes - Strong sales growth was observed across major merchandise categories, particularly in ladies' apparel, work apparel, and accessories [13] - Exclusive brand penetration increased to 31.7%, up approximately 540 basis points from the prior year [17] - The company opened 11 new stores, bringing the total to 311 stores across 38 states [19] Market Data and Key Metrics Changes - The North and West regions showed strength, while the Southern region, including Texas, lagged but still posted positive comp sales growth [14] - E-commerce channel comp sales grew by 9%, indicating continued strength in digital sales [16] Company Strategy and Development Direction - The company is focused on four strategic initiatives: driving same-store sales growth, strengthening omnichannel leadership, expanding exclusive brands, and expanding the store base [11][19] - Plans to open 40 new stores during the fiscal year, with new markets including New York, New Jersey, and Maryland [28] Management's Comments on Operating Environment and Future Outlook - Management noted a deceleration in discretionary purchases but emphasized that functional categories remain strong [20] - The company updated its fiscal 2023 guidance, expecting total sales between $1.68 billion and $1.70 billion, representing growth of 12.9% to 14.2% [27] Other Important Information - Inventory increased by 80% year-over-year to $534 million, primarily to support increased sales volume and new store openings [24][25] - The company amended its revolving credit facility, increasing capacity from $180 million to $250 million [26] Q&A Session Summary Question: Drivers of sequential moderation in same-store sales - Management indicated that the deceleration was primarily due to a decrease in transactions, with July showing a slight decline compared to the first quarter [32][33] Question: Gross margin outlook for the second quarter - Management expects to generate 80 basis points of product margin improvement, offset by 100 basis points of freight headwind for the full year [39][60] Question: Inventory positioning and management - Management expressed confidence in inventory levels, attributing the increase to comp store inventory build, exclusive brands, and new store openings [44][45] Question: Competitive environment and pricing discipline - Management stated that they maintain a full-price selling strategy and do not expect to change their promotional stance despite competitive pressures [56] Question: Business reaction in a recessionary scenario - Management believes that their core customers will continue to need functional products, indicating resilience during economic downturns [71]