Full-Year Revenue: $1.9 billion, a record level. Fourth-Quarter Revenue Increase: 17%. Fourth-Quarter Same-Store Sales Increase: 6%. Fourth-Quarter Merchandise Margin Expansion: 210 basis points. Full-Year Earnings Per Diluted Share: $5.88, a 23% increase. Fourth-Quarter Earnings Per Diluted Share: $1.22, up from $0.96 in the prior year. New Stores Opened in Fiscal '25: 60 new stores. Total Stores at Year-End: 459 stores. Fourth-Quarter Gross Profit Increase: 21% to $169 million. Fourth-Quarter Gross Profit Rate: 37.1%, up 130 basis points. Fourth-Quarter SG&A Expenses: $119 million or 26.2% of sales. Fourth-Quarter Net Income Per Diluted Share: $1.22. Inventory Increase: 25% to $747 million. Cash at Year-End: $70 million with zero drawn on $250 million credit line. Fiscal '26 Revenue Guidance (High End): $2.15 billion. Fiscal '26 Earnings Per Diluted Share Guidance (High End): $6.40. Fiscal '26 New Store Openings Plan: 65 to 70 new stores. Share Repurchase Program: Up to $200 million authorized.

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Release Date: May 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Boot Barn Holdings Inc (NYSE:BOOT) achieved a record full-year fiscal 2025 revenue of $1.9 billion, marking significant growth over the past four years. The company opened 60 new stores in fiscal 2025, expanding into four new states, and plans to open 65 to 70 new stores in fiscal 2026. Fourth-quarter revenue increased by 17%, with consolidated same-store sales rising by 6%, driven by strong performance in both physical stores and e-commerce. Merchandise margin expanded by 210 basis points in the fourth quarter, contributing to a 23% increase in earnings per diluted share for the year. Boot Barn Holdings Inc (NYSE:BOOT) has successfully reduced its reliance on Chinese factories for exclusive brand products, with only 5% expected to be produced in China by the second half of fiscal 2026.

Negative Points

The company faces ongoing uncertainty regarding tariffs, which could impact consumer demand and merchandise margins in the second half of fiscal 2026. Boot Barn Holdings Inc (NYSE:BOOT) anticipates an $8 million incremental cost due to tariffs, affecting the second half of fiscal 2026. The work boots business experienced low-single-digit negative growth, indicating challenges in this category. The company expects potential softness in consumer demand due to anticipated price increases from third-party vendors. SG&A expenses as a percentage of net sales slightly deleveraged by 10 basis points, primarily due to higher legal expenses and store payroll.

Story Continues

Q & A Highlights

Q: Can you elaborate on April and May same-store sales and what is driving the acceleration despite tougher comparisons? A: John Hazen, CEO, explained that the first six weeks of the first quarter showed strong sales trends across all major merchandise categories and geographies. The company is guiding a 6% increase for the quarter, consistent with Q4. However, they expect comps to flatten in the second half of the year due to anticipated price increases affecting consumer demand.

Q: Can you elaborate on the pricing power for Boot Barn today compared to 2018 or 2019, and quantify the tariff headwind to margins or earnings? A: James Watkins, CFO, stated that the tariff impact is estimated at $8 million for the year. Historically, Boot Barn has seen good pricing power with 2-3% annual price increases. However, with mid-single-digit increases expected due to tariffs, they anticipate some demand elasticity and have adjusted their guidance accordingly.

Q: Is there a possibility of product shortages from China, and can Boot Barn capitalize on this with its buying power? A: John Hazen, CEO, noted that only 5% of their exclusive brand products are sourced from China for the second half of fiscal '26. They have diversified production to other countries like Cambodia and Vietnam, reducing reliance on China. They are well-positioned to handle any potential shortages.

Q: How is Boot Barn planning to handle price increases due to tariffs, and what is the strategy for exclusive brands? A: John Hazen, CEO, mentioned that they are reviewing each product line to decide on pricing strategies. While they aim to maintain merchandise margin rates, they may hold prices on certain items to gain market share. Exclusive brands will be managed by reducing costs and resourcing production to countries with lower tariffs.

Q: Can you discuss the performance of new markets versus legacy markets and the impact of new store openings on online demand? A: John Hazen, CEO, stated that new store openings have positively impacted online demand, particularly in states like New York. The company plans to open 65-70 new stores across both legacy and new markets, which is expected to enhance brand awareness and drive online sales.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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