Boot Barn President and CEO Jim Conroy updated analysts on the progress of the company’s strategic initiatives, which include opening new stores, on Thursday following a less-than-stellar performance in the second quarter.
In the second quarter of fiscal 2024, the Irvine, Calif.-based footwear company reported a 6.5 percent increase in net sales to $374.5 million in the second quarter of fiscal 2024, up from $351.5 million last year.
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Same-store sales in the quarter, however, posted a strong result. In Q2, the company reported consolidated same-store sales of 4.8 percent, retail store same-store sales of 3.8 percent and e-commerce same-store sales of 11.7 percent.
But despite declining same-store sales for the period, Conroy remained positive on the company’s quarterly earnings call Thursday.
“We are pleased with our second-quarter results, which reflect the expansion of the brand’s national footprint,” the CEO told analysts. “New-store sales were partially in the single-digit mid-digit decline of 4.8 percent in the same-store sales guidance range. The business was up 62 percent last year.” Considering he’s riding a bike, we feel pretty good about this performance.
Conroy said Boot Bar’s “consistent success” is a result of the group’s execution of four strategic initiatives and demonstrates the brand’s “potential for future growth.”
One of these key growth principles is the expansion of the company’s store portfolio across the country. In the second quarter, Conroy said, Boot Barn opened 10 new stores, bringing the total openings in the past 12 months to 50, compared to 93 in the past two years. Boot Bar currently has a total of 371 stores across the US
“We continue to be very pleased with the success of our store rollout, with the group of stores opened in the last two years estimated to pay back in 18 months, with each store expected to pay back in less than three years,” the CEO said. “We believe we have the potential for 900 or more stores in the United States, which will provide significant growth in sales and earnings in the future.”
He also noted that Boot Bar is in the process of completing its store remodeling and relocation program, with only 60 stores remaining on its work list.
The company’s second initiative focuses on driving same-store sales growth. “Our comp sales were in line with expectations through August, but September was softer than expected,” Conroy said. “The softening trend in same-store sales was broad-based across both geographic and merchandise categories, leading us to believe the trend was driven by macro pressures and declining consumer spending.”
Conroy added that “functional categories” such as work boots and men’s western merchandise showed less decline than Boot Bar’s “discretionary categories” such as women’s western merchandise. According to the executive, women’s boots were down 8 percent in Q2, while women’s apparel was down 9 percent over the period.
“While we believe the macro pressures are temporary, we are closely monitoring our inventory levels, markup plans and cost structure to increase revenue despite pressure on same-store sales growth,” the executive said. “Honestly, the team has done a great job of leveling our landscape and inventory as we head into the holiday season.”
Bootbarn’s third initiative looks at strengthening the company’s overall leadership. In the second quarter, e-commerce sales, which represent 10 percent of total revenue, fell 11.7 percent.
“Our main site, bootbarn.com, did moderate, single-digit sales declines, much better than the balance of our e-commerce businesses,” Conroy said. “It’s encouraging that the Canal Barn site is maintaining its size, and while we’re looking to grow our other sites, they serve a different strategic purpose and cater to a more valuable customer.”
For the latest initiative, the company is introducing exclusive brands. During the second quarter, specialty brands continued to post strong double-digit sales growth, increasing more than 600 basis points to 38.6 percent. “The product design and development team continues to find opportunities to build market share, and our specialty brand business alone is on track to generate more than $600 million in annual revenue,” Conroy said.
Looking ahead, Boot Bar expects to build about 26 stores in the final two quarters of the year, Conroy added. “Despite lower same-store sales, we expect to see continued expansion in our merchandise margins for the balance of the year, as evidenced by the execution across the merchandise group,” he said.
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