Boot Barn: Growth At An Unreasonable Price

Boot Barn: Growth At An Unreasonable Price


Boot Barn released its fiscal Q2 2022 results last month, reporting 69% revenue growth and 510% growth in quarterly earnings per share, representing massive top and bottom-line beats.

Notably, merchandise margin saw significant expansion on a 2-year basis, up 320 basis points despite freight headwinds, helped by more full-priced selling and exclusive brand penetration.

However, with Boot Barn currently the most overbought it’s been since its IPO debut and trading at ~26x FY2023 earnings estimates, the stock remains vulnerable to a sharp correction.

In summary, I see this near-parabolic ascent as an opportunity for investors to sell their positions into strength above $128.00 per share.

ferrantraite/E+ via Getty Images We saw a mixed Q3 performance for the Retail Sector ( XRT ) in Q3, with supply chain headwinds persisting for many companies. However, Boot Barn ( BOOT ) knocked it out of the park yet again in CYQ3, reporting a top and bottom-line beat, with 69% revenue growth and 500% growth in quarterly earnings per share [EPS]. Between high double-digit same-store sales growth and margin expansion, Boot Barn is now expected to grow annual EPS by more than 150% in FY2023 from FY2021 levels. However, at more than ~26x FY2023 earnings estimates, I see the stock as fully-valued. Therefore, I believe investors would be wise to take profits into strength above $127.00 per share. (Source: Company Website)

Boot Barn released its CYQ3 (fiscal Q2 2022) results last month, reporting high double-digit same-store sales growth of 54% (2-year basis), with retail same-store sales up 53% and E-Commerce same-store sales soaring 57%. The company attributed the sharp increase in revenue ($312.7 million) to strong same-store sales and unit growth, with merchandise margins benefiting from higher full-price selling and growth in exclusive brand penetration. These results are nothing short of outstanding, making Boot Barn one of the best growth stories in the mid-cap space by a wide margin. Let’s take a closer look below: (Source: Company Filings, Author’s Chart)

As shown above, Boot Barn posted another quarter of record revenue in fiscal Q2 2022, with revenue up 69% year-over-year to $312.7 million. On a two-year basis, revenue increased 67%, with broad-based strength in every region, though Texas was below the chain average. The strong sales performance was steady unit growth, with the store count up from 248 stores in fiscal Q2 2020 to 278 stores as of quarter-end. During the quarter, the company opened three new stores and closed 1, for a total of 2 net new stores in the period. Boot Barn noted that its unit growth is expected to accelerate in fiscal Q3 and fiscal Q4, with plans for 11 stores in fiscal Q3 and 10 in fiscal Q4. Assuming no development delays, this would translate to a total of 27 new stores in FY2022. (Source: Company Presentation)

This ambitious unit growth rate is expected to continue according to the company, with Boot Barn confident that it can grow new units by at least 10% annually going forward. Given the significant whitespace shown above in several states, this doesn’t seem unreasonable, with lots of white space left in both new markets and existing states. The company has also noted that its cannibalization from new stores in existing markets is less than anticipated, and stores in new markets are outperforming expectations. Some investors might be skeptical of a 10% unit growth rate going forward, but with the company enjoying an 11% compound annual unit growth rate since FY2013 and its business firing on all cylinders, the company should have no problem meeting its goal for the next couple of years.

Finally, moving to margins, we saw a massive increase in merchandise margins, with margins increasing by 320 basis points on a two-year basis despite the impact of higher freight costs. The company estimates that this was a 40 basis point headwind on a two-year basis, meaning that the actual margin expansion was above 350 basis points. The company attributed the meaningful margin expansion to less discounting and growth in exclusive brand penetration. This is because the company’s exclusive brands carry higher margins. As of Q3, exclusive brands came in at 28.8% of net sales, and three of them are now included in the company’s top 5 brands, including Cody James and Shyanne. (Source:, Author’s Chart)

Given the incredible performance across the board both from a unit growth, same-store sales, and margin standpoint, it’s no surprise that Boot Barn posted a massive beat in Q3, with quarterly earnings per share of $1.22 vs. $0.20 in […]

source Boot Barn: Growth At An Unreasonable Price

Leave a Reply