Boot Barn Holdings, Inc. (BOOT Quick QuoteBOOT - Free Report) posted third-quarter fiscal 2024 results, wherein revenues were in line and earnings beat the Zacks Consensus Estimate. The top and bottom lines grew year over year. This growth was led by the company’s expansion efforts and improved operational efficiencies, even amid market challenges and a decline in same-store sales.

BOOT anticipates sales growth, driven by its strategy of opening new stores and enhancing merchandise margins. With 11 new stores recently added, bringing the total to 382, and plans for another 52 stores in fiscal 2024, it aims to bolster its market presence.

Q3 in Detail

Boot Barn’s earnings of $1.81 per share increased 4% from $1.74 reported in the year-ago quarter. The metric beat the Zacks Consensus Estimate by a penny.

Sales of $520.4 million rose 1.1% year over year, almost in line with the Zacks Consensus Estimate of $520.3 million. The solid net sales can be attributed to the addition of sales from stores that were opened in the last twelve months, somewhat negated by a decline in consolidated same-store sales.

Same-store sales declined 9.7% in the fiscal third quarter. Retail store same-store sales and e-commerce same-store sales plunged 9.5% and 11.5%, respectively. Both channels faced headwinds in the quarter despite strong growth in recent times. The downturn in same-store sales reflects slowed momentum for Boot Barn's established locations across both online and physical retail stores.

Gross profit increased 6.1% to $199.1 million. Gross margin expanded 180 basis points (bps) to 38.3%, driven by a 300-bps lift in merchandise margin. This was partly offset by a 120-bps rise in distribution and occupancy costs. Merchandise margin benefited from 250 bps of freight leverage and 50 bps of product margin growth stemming from fewer promotions and greater exclusive brand mix.

The higher buying, occupancy and distribution center costs were mainly the result of higher occupancy costs of 49 new stores and investments in the Kansas City distribution center.

SG&A expenses grew to $124 million in the fiscal third quarter, up 7.5% year over year. As a percentage of sales, SG&A expense of 23.8% rose 140 bps year over year. The increase reflects greater overhead, payroll and operating costs associated with new stores, higher admin costs and general inflationary pressures.

Operating income increased 3.6% to $75.1 million. The operating margin of 14.4% expanded 30 bps from 14.1% last year. The improvement was driven by gross margin expansion that outweighed increased expenses.

Image Source: Zacks Investment Research

Other Financial Details

Boot Barn ended the quarter with $107 million in cash and cash equivalents. Notably, the company did not draw any funds from its $250 million revolving credit facility during the quarter. Average inventory per store decreased 1% on a same-store basis compared with Dec 24, 2022.

Guidance

For the fourth quarter of fiscal 2024, Boot Barn estimates net sales in the $376-$386 million band, indicating a decline of 9.3-11.7% from the year-ago levels.

The company expects a decline in same-store sales of 6.3-9%. Retail store same-store sales are forecast to decrease 5.5-8.5% and e-commerce same-store sales are likely to be down 13%. Gross profit is projected in the range of $130.7-$135.6 million.

For fiscal 2024, management continues to anticipate opening 52 stores. It now expects total revenues to be between $1.654 billion and $1.664 billion for fiscal 2024, indicating a decline of 0.2% to an increase of 0.4% from the year-ago levels.

The company suggests same-store sales to decline 6.3-7% in fiscal 2024. Retail store same-store sales and e-commerce same-store sales are anticipated to decrease 5.5-6.3% and 11.7%, respectively.

Gross profit is projected in the range of $605.7-$610.6 million for fiscal 2024. SG&A expenses are estimated in the $411.8-$412.7 million band. Earnings are projected in the range of $4.65-$4.75 per share.

Shares of this Zacks Rank #3 (Hold) company have lost 17% against 22.8% and 5.5% growth of the industry and S&P 500, respectively, in the six-month period.

Key Picks

American Eagle Outfitters (AEO Quick QuoteAEO - Free Report) , along with its subsidiaries, engages in the designing and marketing of casual clothing. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for American Eagle Outfitter’s current financial-year sales suggests growth of 5% from the year-ago figures.

Abercrombie & Fitch (ANF Quick QuoteANF - Free Report) , through its subsidiaries, operates as a specialty retailer in the United States, Europe, the Middle East, Asia, the Asia-Pacific, Canada and internationally. It sports a Zacks Rank #1 at present. ANF delivered an average earnings surprise of 713% in the trailing four quarters.

The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and EPS suggests growth of 15.1% and 2,320%, respectively, from the year-ago figures.

Canada Goose (GOOS Quick QuoteGOOS - Free Report) is a global outerwear brand. It currently sports a Zacks Rank #1. GOOS delivered an average earnings surprise of 59.1% in the trailing four quarters.

The Zacks Consensus Estimate for Canada Goose’s current financial-year sales suggests growth of 2.6% from the year-ago figures.