Boot Barn Holdings Inc. (NYSE: BOOT) is a leading specialty retailer of western and work apparel, footwear, and accessories. Customers include outdoor enthusiasts, ranchers, farmers, hunters, anglers, fashionistas, and rugged western country lifestyle enthusiasts. The company started with one store in 1978 and has grown to become the largest western lifestyle and workwear retailer in the nation, with 411 stores across the United States. The company's vision is "to offer a piece of the American spirit."
Boot Barn competes with footwear and workwear retailers in the retail/wholesale sector, which includes companies like Wolverine World Wide Inc. (NYSE: WWW), Tractor Supply Co. (NASDAQ: TSCO), V.F. Corp. (NYSE: VFC) and Columbia Sportswear Co. (NASDAQ: COLM).
Boot Barn’s Competitive Advantages
The company possesses a number of competitive advantages:
- Omnichannel Presence: While the retailer operates 411 brick-and-mortar stores, its products can be purchased seamlessly online and through its mobile app. This provides convenient access around the clock and flexibility for its customers. Its B Rewarded loyalty program is another value-added program that rewards points for every dollar spent and doubles the points when using a Boot Barn credit card. Points are used to earn rewards, monetary discounts, and early access to sales.
- High-Quality Private Label Brands: In addition to its wide assortment of boots, accessories, and apparel from leading brands like Tony Lama, Wrangler, Levi Strauss & Co. (NYSE: LEVI), UGG, Lucchese, and Durango, it also offers 10 premium private label brands with high-quality handcrafted boots, including Cody James, Shyanne, Idyllwind, Moonshine Spirit, and El Dorado. These private-label brands come with greater margins and exclusivity of their products. The infrequency of promotions leads to higher margins, unlike sneaker retailers.
- Growing Footprint and Popularity: Boot Barn is the largest specialty retailer of its kind, with 411 stores in 46 states, of which 11 were recently opened in the second quarter of 2024. Boot Barn expects to have 460 stores by the end of fiscal 2025 and 900 stores by fiscal year 2030. The company continues to gain popularity and brand recognition through sponsorships, including over 600 rodeos and community-sponsored events annually.
Solid Growth Metrics in Fiscal Q1 2025
Boot Barn has an average of 9% in-store sales (SSS) between fiscal 2020 and 2025 estimates. The company reported fiscal Q1 2025 EPS of $1.26, beating consensus estimates by 19 cents. Net income was $38.9 million, up from $34.3 million in the year-ago period. Merchandise margin rose 100 bps, offset by 100 bps, deleveraging in buying, occupancy, and distribution center costs. The merchandise margin rate was due to supply chain efficiencies, while the deleveraging was due to costs driven by the addition of new stores. Revenues rose 10.3% YoY to $423.4 million, beating $415.04 million consensus estimates. SSS grew 1.4% YoY, which was comprised of 0.8% growth in its retail stores and 6.7% YoY growth in e-commerce sales.
Raising the Full Year 2025 Guidance
Boot Barn raises its fiscal full year 2025 forecasts for EPS of $5.05 to $5.35, up from previous guidance of $4.55 to $4.85 versus $4.99 consensus estimates. Full-year 2025 revenue of $1.816 billion to $1.85 billion, up from the previous estimate of $1.766 billion to $1.800 billion versus $1.82 billion consensus analyst estimates. The company plans on opening 60 new stores in fiscal 2025, with SSS to range from down 1% to up 1.2% YoY. Gross profit is expected between $672 million to $688.8 million or 37% to 37.2% of sales.
Boot Barn CEO Jim Conroy commented, “During the first quarter, we grew merchandise margin by 100 basis points. Exclusive brand penetration increased slightly over last year to 38.1%, wrapping an outsized 630 basis points of growth in the prior year period.”
Surprise Comp SSS Update
On Sept. 10, 2024, Boot Barn provided a surprise update stating that quarter-to-date (QTD) comps for fiscal Q2 2025 indicated SSS growth of 4%. This was comprised of 3.4% retail comps and 9.2% e-commerce comps for the first 10 weeks of fiscal Q2 2025. While it is 10 weeks into the second quarter, the 4% YoY SSS growth is a vast improvement over its previous guidance of negative 1% to position 1% in Q2 2025.
This acceleration of the improving SSS trend, which had negative 0.3% in July, 6% in August, and 8.2% in the first part of September, sent shares surging to new all-time highs.
BOOT Triggers a Rare Bullish Megaphone Breakout
A bullish megaphone is comprised of an ascending upper trendline resistance comprised of higher highs and a descending trendline support comprised of lower lows. This forms the shape of a megaphone. The breakout occurs when the stock surges above the upper trendline.
BOOT triggered the bullish megaphone breakout on the SSS update, indicating 4% YoY growth, which was a significant improvement from previously forecast SSS growth of negative 1% to positive 1%. This caused a gap from $140.47 to 148.32, the gap fill range. Shares peaked at $162.16 before retesting the upper gap fill. The daily relative strength index (RSI) turned back up towards the 68-band. Fibonacci (Fib) pullback support levels are at $148.32, $140.47, $128.69 and $123.49.
Boot Barn’s average consensus price target is $141.10, and its highest analyst price target sits at $165.00.
Actionable Options Strategies
Bullish investors can buy on pullbacks using cash-secured puts at the fib pullback support levels to buy the dip and write covered calls to execute a wheel strategy for income.
A Poor Man’s Covered Call (PWCC) strategy is less capital intensive on this speculation, which involves buying a deep in-the-money (ITM) back-month call and selling out-of-the-money (OTM) front-month calls.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
