Boot Barn(BOOT) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fiscal 2022 was a record-setting year for Boot Barn, with consolidated same-store sales increasing by 54%, compared to a positive 3% in the prior year [10] - Total sales reached $1.5 billion, marking the first time the company surpassed the $1 billion mark [11] - Earnings per share tripled to $6.33, with an EBIT margin rate of 17.4% [12] Business Line Data and Key Metrics Changes - In Q4, consolidated same-store sales grew by 33%, with e-commerce sales increasing by 50% and retail store same-store sales growing by 31% [14] - Merchandise margin increased by 270 basis points year-over-year, driven by greater full-price selling and growth in exclusive brand penetration [12][41] - Exclusive brand penetration reached 29.6% in Q4, a 540 basis point increase from the prior year [29] Market Data and Key Metrics Changes - The southern region outperformed other regions, attributed to a full rodeo season in Texas [18] - The total addressable market (TAM) has doubled from $20 billion to $40 billion, incorporating a new casual outdoor segment [36] Company Strategy and Development Direction - The company aims to expand its store count to 900 over time, with plans to open 40 new stores in fiscal 2023 [50][36] - Boot Barn is focusing on broadening its customer base beyond traditional western customers, which has led to increased sales and customer retention [21][34] - The company is investing in its omni-channel capabilities to enhance customer experience and drive sales [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued growth of the business, with same-store sales growth of approximately 12% in the first six weeks of fiscal 2023 [38] - The company is aware of potential economic headwinds but remains optimistic about its ability to grow despite these challenges [101][102] - Management anticipates that the freight headwinds will eventually dissipate, allowing for improved margins in the future [82] Other Important Information - The company plans to open a new Midwest distribution center to support exclusive brand initiatives and e-commerce [49] - Boot Barn's inventory increased by 72% year-over-year, driven by growth in same-store inventory and new store openings [47] Q&A Session Summary Question: What are the drivers of the sequential acceleration in same-store sales? - Management attributed the acceleration to extending reach to more customers, broadening assortment, and strong operational execution [56] Question: How confident is the company in retaining new shoppers gained over the past 12-18 months? - Management noted that new shoppers are shopping with similar frequency and basket size as legacy customers, indicating strong retention [63] Question: What is the outlook for gross versus SG&A margins? - Management expects some pressure on margins due to elevated freight costs and increased wages, but anticipates long-term margin improvement [78][82] Question: How does the expansion into the country lifestyle segment affect markdown volatility? - Management acknowledged a slight increase in markdown risk but emphasized that much of the product remains functional in nature [90] Question: What are the key segments of the business that have been invested in to support store growth? - Investments have been made in real estate, construction, and store operations to support new store openings and training [108]