Boot Barn Holdings, Inc. Q3 FY2026 earnings call

• New store growth: Opened 25 stores in Q3, ending with 514 stores. Planned 15 store openings in Q4, with 20 projected in Q1 FY2027. New stores on average generate ~$3.2 million in annual sales in their first full year and pay back initial investment in less than two years.
• Same-store sales: Consolidated same-store sales grew 5.7%, with broad-based growth across major merchandise categories. Men's and Ladies Western Boots comped positive high single digits, men's and ladies apparel outperformed chain average led by denim, and work boots comped positive mid-single digits. Field team provided best-in-class customer service.
• Omnichannel: Online comp sales grew 19.6%. Launched exclusive brand sites for Cody James and Hawx, which attracted new customers. Planning to launch standalone sites for Cheyenne, Cleo, and Wolf.
• Merchandise margin expansion and exclusive brands: Merchandise margin increased 110 basis points. Pricing strategy: Increasing exclusive brand ticket prices in Q4, working with factory partners to mitigate tariff impact, and adding new exclusive brand products priced accordingly.

In the third quarter, revenue increased 16% to $706 million. Consolidated same-store sales grew 5.7%. Merchandise margin rate increased 110 basis points. New store growth: Opened 25 stores in the quarter, ending with 514 stores, and planned 15 store openings in the fourth quarter. Same-store sales: Consolidated same-store sales grew 5.7%, with brick-and-mortar same-store sales up 3.7% and online comp sales up 19.6%. Merchandise margin: Increased 110 basis points compared to the prior year period, driven by buying economies of scale, supply chain efficiencies, and 240 basis points of growth in exclusive brands. Revenue contribution: Revenue from new store growth, same-store sales, omnichannel, and merchandise margin expansion all contributed to the overall financial performance.

• Fourth quarter: Expected total sales at high end of range $535M, consolidated same-store sales increase 5%, merchandise margin ~50.5% of sales (60 basis points decrease from prior year), income from operations $59M or 11.1% of sales, earnings per diluted share $1.45.
• Full-year: Raised total sales to $2.25B (18% growth FY2025), same-store sales increase 7% (retail store 6%, e-commerce 15%), merchandise margin ~50.8% of sales (70 basis point increase), income from operations $301M or 13.4% of sales, net income $226M, EPS $7.35.

• Factors affecting forward-looking statements, including tariffs which have been mitigated through cost concessions but could still impact margins. Unusual shrink levels in prior year which may affect current quarter expectations. Freight expense variability and storm impacts on sales.

Q: On the 9% comp for the first twenty-six days of January before storms, could you elaborate on drivers and remaining quarter guide?

A: Broad-based across major merchandise categories, work business a bit soft due to warm weather. Remaining quarter guide considers March business and typical forecasting leading to 3%-5% consolidated comp.

Q: On merchandise margin outlook for 4Q, elaborate on shrink, freight, and product margin?

A: Expect 40 basis points headwind on shrink, freight expense down from prior year, product margin up 20 bps with half from exclusive brand penetration and half from buying economies.

Q: On openings for FY2027, how to think about level?

A: Pipeline strong for Q1 with 20 lined up, confident in 12%-15% new unit range but timing still early.

Q: On strength of Work Boots and other categories optimization?

A: Work Boots had mid-single-digit comp, reinvigorated by marketing/remerchandising. Other categories under review for improvement but specific details not shared.

Q: On sales impacted by winter storm, are stores back and trend normal?

A: Stores back to normal, sales not typically gained back after storm.

Q: On gross margin upside and leverage points?

A: Gross margin upside from exclusive brands, buying economies, and freight renegotiations. Leverage point for buying, occupancy, and distribution center costs expected to be around 7% as sales grow.

Q: On pricing strategy for exclusive brands?

A: Style-by-style price increases, retags ongoing in January, February, March, with concessions from factory partners and new product priced at factory level.

Q: On exclusive brand websites, thoughts on development and new sites?

A: Launched Cody James and Hawx sites for storytelling, attracting net new customers. Planning to launch sites for Cheyenne, Cleo, Wolf. These sites built on Shopify, cost-effective to launch.

Q: On new store productivity and payback time?

A: New stores generate ~$3.2M in year one, path to maturity takes 5-6 years, with new stores contributing to consolidated comps tailwind.

Q: On drivers of quarter-to-date acceleration prior to storms and segmenting brands?

A: Broad-based, transaction-driven, third-party and exclusive brands performing well. March being large month in quarter impacts guide.

Q: On new units and EPS algorithm?

A: New units perform like existing stores, EPS algorithm still around 20% with shift to 15% new unit growth slightly adjusting EPS.