Boot Barn Holdings Inc

Previous wording

statements. These statements are based on the beliefs and assumptions of our management based on information currently available to management. These forward-looking statements are subject to numerous risks and uncertainties, including the risks and uncertainties described under the section titled “Risk Factors” in our Fiscal 2024 10-K, and those identified in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in an evolving environment. New risks and uncertainties emerge from time to time and it is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ materially from those contained in any forward-looking statement. We qualify all of our forward-looking statements by these cautionary statements.

Current wording

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate”, “believe”, “can”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “project”, “seek”, “should”, “target”, “will”, “would” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to management. These forward-looking statements are subject to numerous risks and uncertainties, including the risks and uncertainties described under the section titled “Risk Factors” in our Fiscal 2024 10-K, and those identified in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in an evolving environment. New risks and uncertainties emerge from time to time and it is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ materially from those contained in any forward-looking statement. We qualify all of our forward-looking statements by these cautionary statements.

Previous wording

We believe that Boot Barn is the largest lifestyle retail chain devoted to western and work-related footwear, apparel and accessories in the U.S. As of June 29, 2024, we operated 411 stores in 46 states, as well as our e-commerce websites consisting primarily of bootbarn.com, sheplers.com, countryoutfitter.com, idyllwind.com and third-party marketplaces, as well as the Boot Barn app. Our product offering is anchored by an extensive selection of western and work boots and is complemented by a wide assortment of coordinating apparel and accessories. Our stores feature a comprehensive assortment of brands and styles, coupled with attentive, knowledgeable store associates. Many of the items that we offer are basics or necessities for our customers’ daily lives and typically represent enduring styles that are not meaningfully impacted by changing fashion trends.

Current wording

We believe that Boot Barn is the largest lifestyle retail chain devoted to western and work-related footwear, apparel and accessories in the U.S. As of September 28, 2024, we operated 425 stores in 46 states, as well as our e-commerce websites consisting primarily of bootbarn.com, sheplers.com, countryoutfitter.com, idyllwind.com and third-party marketplaces, as well as the Boot Barn app. Our product offering is anchored by an extensive selection of western and work boots and is complemented by a wide assortment of coordinating apparel and accessories. Our stores feature a comprehensive assortment of brands and styles, coupled with attentive, knowledgeable store associates. Many of the items that we offer are basics or necessities for our customers’ daily lives and typically represent enduring styles that are not meaningfully impacted by changing fashion trends.

Previous wording

Net sales reflect revenue from the sale of our merchandise at retail locations, as well as sales of merchandise through our e-commerce websites and app. We recognize revenue upon the purchase of merchandise by customers at our stores and upon delivery of the product in the case of our e-commerce websites and app. Net sales also include shipping and handling fees for e-commerce shipments that have been delivered to our customers. Net sales are net of estimated and

Current wording

Net sales reflect revenue from the sale of our merchandise at retail locations, as well as sales of merchandise through our e-commerce websites and app. We recognize revenue upon the purchase of merchandise by customers at our stores and upon delivery of the product in the case of our e-commerce websites and app. Net sales also include shipping and handling fees for e-commerce shipments that have been delivered to our customers. Net sales are net of estimated and actual sales returns and deductions for estimated future award redemptions. Revenue from the sale of gift cards is deferred until the gift cards are used to purchase merchandise.

Previous wording

If the criteria described with respect to acquired stores above are met, then all net sales of such acquired store, excluding those net sales before our acquisition of that store, are included for the period presented. However, when an acquired store is included for the period presented, the net sales of such acquired store for periods before its acquisition are included (to the extent relevant) for purposes of calculating “same store sales growth” and illustrating the comparison between the applicable periods. Pre-acquisition net sales numbers are derived from the books and records of the acquired company, as prepared prior to the acquisition, and are not been independently verified by us.

Current wording

If the criteria described with respect to acquired stores above are met, then all net sales of such acquired store, excluding those net sales before our acquisition of that store, are included for the period presented. However, when an acquired store is included for the period presented, the net sales of such acquired store for periods before its acquisition are included (to the extent relevant) for purposes of calculating “same store sales growth” and illustrating the comparison

Previous wording

Gross profit is equal to our net sales less our cost of goods sold. Cost of goods sold includes the cost of merchandise, obsolescence and shrinkage provisions, store and distribution center occupancy costs (including rent, depreciation and utilities), inbound and outbound freight, supplier allowances, occupancy-related taxes, compensation costs for merchandise purchasing, exclusive brand design and development, distribution center personnel, and other inventory acquisition-related costs. These costs are significant and can be expected to continue to increase as we grow. The components of our reported cost of goods sold may not be comparable to those of other retail companies, including our competitors.

Current wording

Gross profit is equal to our net sales less our cost of goods sold. Cost of goods sold includes the cost of merchandise, obsolescence and shrinkage provisions, store and distribution center occupancy costs (including rent, depreciation and utilities), inbound and outbound freight, supplier allowances, occupancy-related taxes, compensation costs for merchandise purchasing, exclusive brand design and development, distribution center personnel, and other inventory acquisition-related costs. These costs are significant and can be expected to continue to increase as we grow. The

Previous wording

Net sales. Net sales increased $39.7 million, or 10.3%, to $423.4 million for the thirteen weeks ended June 29, 2024 from $383.7 million for the thirteen weeks ended July 1, 2023. Consolidated same store sales increased 1.4%. Excluding the impact of the 6.7% increase in e-commerce same store sales, same store sales increased by 0.8%. The increase in net sales was the result of incremental sales from new stores and the increase in consolidated same store sales.

Current wording

Net sales. Net sales increased $51.3 million, or 13.7%, to $425.8 million for the thirteen weeks ended September 28, 2024 from $374.5 million for the thirteen weeks ended September 30, 2023. Consolidated same store sales increased 4.9%. Excluding the impact of the 10.1% increase in e-commerce same store sales, same store sales increased by 4.3%. The increase in net sales was the result of incremental sales from new stores and the increase in consolidated same store sales.

Previous wording

Gross profit. Gross profit increased $14.7 million, or 10.4%, to $156.7 million for the thirteen weeks ended June 29, 2024 from $142.0 million for the thirteen weeks ended July 1, 2023. As a percentage of net sales, gross profit was 37.0% for both the thirteen weeks ended June 29, 2024 and July 1, 2023. Gross profit increased primarily due to an increase in sales and merchandise margin, partially offset by the occupancy costs of new stores. Gross profit rate was flat when compared to the prior-year period, as a result of a 100 basis-point increase in merchandise margin rate, offset by 100 basis points of deleverage in buying, occupancy and distribution center costs. The increase in merchandise margin rate was the result of supply chain efficiencies, while the deleverage in buying, occupancy and distribution center costs was driven primarily by the addition of new stores.

Current wording

Gross profit. Gross profit increased $18.9 million, or 14.1%, to $152.9 million for the thirteen weeks ended September 28, 2024 from $133.9 million for the thirteen weeks ended September 30, 2023. As a percentage of net sales, gross profit increased by 10 basis points to 35.9% for the thirteen weeks ended September 28, 2024 from 35.8% for the thirteen weeks ended September 30, 2023. Gross profit increased primarily due to an increase in sales and merchandise margin, partially offset by the occupancy costs of new stores. The increase in gross profit rate of 10 basis points was driven primarily by a 70 basis-point increase in merchandise margin rate, partially offset by 60 basis points of deleverage in buying, occupancy and distribution center costs. The increase in merchandise margin rate was primarily the result of supply chain efficiencies, while the deleverage in buying, occupancy and distribution center costs was driven by the occupancy of new stores.

Previous wording

Income from operations. Income from operations increased $4.0 million, or 8.6%, to $50.2 million for the thirteen weeks ended June 29, 2024 from $46.2 million for the thirteen weeks ended July 1, 2023. The increase in income from operations was attributable to the factors noted above. As a percentage of net sales, income from operations was 11.9% and 12.1% for the thirteen weeks ended June 29, 2024 and July 1, 2023, respectively.

Current wording

Income from operations. Income from operations increased $1.4 million, or 3.6%, to $40.0 million for the thirteen weeks ended September 28, 2024 from $38.6 million for the thirteen weeks ended September 30, 2023. The increase in income from operations was attributable to the factors noted above. As a percentage of net sales, income from operations was 9.4% and 10.3% for the thirteen weeks ended September 28, 2024 and September 30, 2023, respectively.

Previous wording

Interest expense. Interest expense was $0.3 million and $1.0 million for the thirteen weeks ended June 29, 2024 and July 1, 2023, respectively. The decrease in interest expense in the current-year period was primarily the result of a lower debt balance in the current year.

Current wording

Interest expense. Interest expense was $0.4 million and $0.5 million for the thirteen weeks ended September 28, 2024 and September 30, 2023, respectively. The decrease in interest expense in the current-year period was primarily the result of a lower average debt balance in the current year.

Previous wording

Income tax expense. Income tax expense was $11.6 million for the thirteen weeks ended June 29, 2024, compared to $11.2 million for the thirteen weeks ended July 1, 2023. Our effective tax rate was 22.9% and 24.6% for the thirteen weeks ended June 29, 2024 and July 1, 2023, respectively. The tax rate for the thirteen weeks ended June 29, 2024 was lower than the tax rate for the thirteen weeks ended July 1, 2023, primarily due to a higher tax benefit due to income tax accounting for share-based compensation compared to the thirteen weeks ended July 1, 2023.

Current wording

Income tax expense. Income tax expense was $11.1 million for the thirteen weeks ended September 28, 2024 compared to $10.4 million for the thirteen weeks ended September 30, 2023. Our effective tax rate was 27.4% and 27.3% for the thirteen weeks ended September 28, 2024 and September 30, 2023, respectively. The tax rate for the thirteen weeks ended September 28, 2024 was consistent with the tax rate for the thirteen weeks ended September 30, 2023.

Previous wording

Net income. Net income was $38.9 million for the thirteen weeks ended June 29, 2024 compared to $34.3 million for the thirteen weeks ended July 1, 2023. The increase in net income was primarily attributable to the factors noted above.

Current wording

Net income. Net income was $29.4 million for the thirteen weeks ended September 28, 2024 compared to $27.7 million for the thirteen weeks ended September 30, 2023. The increase in net income was primarily attributable to the factors noted above.

Previous wording

Selling, general and administrative expenses. SG&A expenses increased $10.8 million, or 11.3%, to $106.5 million for the thirteen weeks ended June 29, 2024 from $95.7 million for the thirteen weeks ended July 1, 2023. The increase in selling, general and administrative expenses as compared to the prior-year period was primarily a result of higher store payroll and store-related expenses associated with operating more stores, corporate general and administrative expenses, and marketing expenses in the current year. As a percentage of net sales, SG&A increased by 20 basis points to 25.2% for the thirteen weeks ended June 29, 2024 from 24.9% for the thirteen weeks ended July 1, 2023, primarily as a result of

Current wording

Selling, general and administrative expenses. SG&A expenses increased $28.3 million, or 14.8%, to $219.4 million for the twenty-six weeks ended September 28, 2024 from $191.1 million for the twenty-six weeks ended September 30, 2023. The increase in selling, general and administrative expenses as compared to the prior-year period was primarily a result of higher store payroll and store-related expenses associated with operating more stores, marketing expenses, and incentive-based compensation in the current year. As a percentage of net sales, SG&A increased by 60 basis points to 25.8% for the twenty-six weeks ended September 28, 2024 from 25.2% for the twenty-six weeks ended September 30, 2023, primarily as a result of higher incentive-based compensation and marketing expenses in the current year, partially offset by lower store payroll and store-related expenses.

Previous wording

We rely on cash flows from operating activities and our credit facility as our primary sources of liquidity. Our primary cash needs are for inventories, operating expenses, occupancy expenses, capital expenditures associated with opening new stores and remodeling or refurbishing existing stores, improvements to our distribution facilities, marketing and information technology expenditures, debt service and taxes. We have historically used cash for acquisitions and the subsequent rebranding and integration of the stores acquired in those acquisitions. In addition to cash and cash equivalents, the most significant components of our working capital are accounts receivable, inventories, accounts payable and accrued expenses and other current liabilities. We believe that cash flows from operating activities and the availability of cash under our credit facility will be sufficient to cover working capital requirements, anticipated capital expenditures and other anticipated cash needs for at least the next 12 months from the date of this filing.

Current wording

We rely on cash flows from operating activities and our credit facility as our primary sources of liquidity. Our primary cash needs are for inventories, operating expenses, occupancy expenses, capital expenditures associated with opening new stores and remodeling or refurbishing existing stores, improvements to our distribution facilities, marketing and information technology expenditures, debt service and taxes. We have historically used cash for acquisitions and the subsequent rebranding and integration of the stores acquired in those acquisitions. In addition to cash and cash equivalents, the most significant components of our working capital are accounts receivable, inventories, accounts payable and accrued expenses and other current liabilities. We believe that cash flows from operating activities and the

Previous wording

We are planning to continue to open new stores, remodel and refurbish our existing stores, and make improvements to our e-commerce and information technology infrastructure, which will result in increased capital expenditures. Included in our fiscal 2025 capital expenditures are continued investments in our new distribution center in Kansas City, Missouri. We estimate that our total capital expenditures in fiscal 2025 will be between $115.0 million and $120.0 million (including the capital expenditures made during the thirteen weeks ended June 29, 2024), which is net of estimated landlord tenant allowances of $30.2 million. We anticipate that we will use cash flows from operations to fund these expenditures.

Current wording

We are planning to continue to open new stores, remodel and refurbish our existing stores, and make improvements to our e-commerce and information technology infrastructure, which will result in increased capital expenditures. Included in our fiscal 2025 capital expenditures are continued investments in our new distribution center in Kansas City, Missouri. We estimate that our total capital expenditures in fiscal 2025 will be between $115.0 million and $120.0 million (including the capital expenditures made during the twenty-six weeks ended September 28, 2024), which is net of estimated landlord tenant allowances of $30.2 million. We anticipate that we will use cash flows from operations to fund these expenditures.

Previous wording

The Company currently has a $250.0 million syndicated senior secured asset-based revolving credit facility for which Wells Fargo Bank, National Association is agent (“Wells Fargo Revolver”). Under the Wells Fargo Revolver, the sublimit for letters of credit is $10.0 million and the current maturity date is July 11, 2027.

Current wording

The Company has a $250.0 million syndicated senior secured asset-based revolving credit facility (the “Wells Fargo Revolver”) for which Wells Fargo Bank, National Association is agent (“Wells Fargo”). Under the Wells Fargo Revolver, the sublimit for letters of credit is $10.0 million, and the maturity date is July 11, 2027.

Previous wording

The amounts outstanding under the Wells Fargo Revolver and letter of credit commitments as of June 29, 2024 and March 30, 2024 were zero and $2.3 million, respectively. Total interest expense incurred on the Wells Fargo Revolver during the thirteen weeks ended June 29, 2024 was $0.2 million, and the weighted average interest rate for the thirteen weeks ended June 29, 2024 was 8.5%. Total interest expense incurred on the Wells Fargo Revolver during the thirteen weeks ended July 1, 2023 was $0.9 million, and the weighted average interest rate for the thirteen weeks ended July 1, 2023 was 6.6%.

Current wording

The amounts outstanding under the Wells Fargo Revolver and letter of credit commitments as of September 28, 2024 and March 30, 2024 were zero and $2.3 million, respectively. Total interest expense incurred on the Wells Fargo Revolver during the thirteen and twenty-six weeks ended September 28, 2024 was $0.2 million and $0.4 million, respectively, and the weighted average interest rate for the thirteen weeks ended September 28, 2024 was 8.5%. Total interest expense incurred on the Wells Fargo Revolver during the thirteen and twenty-six weeks ended September 30, 2023 was $0.3 million and $1.2 million, respectively, and the weighted average interest rate for the thirteen weeks ended September 30, 2023 was 8.2%.

Previous wording

Cash and cash equivalents were $83.4 million as of June 29, 2024 compared to $75.8 million as of March 30, 2024.

Current wording

Cash and cash equivalents were $37.4 million as of September 28, 2024 compared to $75.8 million as of March 30, 2024.

Previous wording

Net cash provided by operating activities was $70.8 million for the thirteen weeks ended July 1, 2023. The significant components of cash flows used in operating activities were net income of $34.3 million, the add-back of non-cash depreciation and intangible asset amortization expense of $10.6 million, and stock-based compensation expense of $5.0 million. Accounts payable and accrued expenses and other current liabilities increased by $24.7 million due to the timing of payments. Inventory decreased by $23.2 million as a result of a decrease in purchases.

Current wording

Net cash provided by operating activities was $33.5 million for the twenty-six weeks ended September 28, 2024. The significant components of cash flows provided by operating activities were net income of $68.3 million, the add-back of non-cash lease expense of $32.2 million, depreciation and intangible asset amortization expense of $29.6 million, and stock-based compensation expense of $10.9 million. Accounts payable and accrued expenses and other current liabilities increased by $29.6 million due to the timing of payments. Inventory increased by $113.9 million as a result of an increase in purchases.

Previous wording

Net cash provided by operating activities was $41.3 million for the thirteen weeks ended June 29, 2024. The significant components of cash flows provided by operating activities were net income of $38.9 million, the add-back of non-cash depreciation and intangible asset amortization expense of $14.3 million, and stock-based compensation expense of $5.8 million. Accounts payable and accrued expenses and other current liabilities decreased by $4.3 million due to the timing of payments. Inventory increased by $28.0 million as a result of an increase in purchases.

Current wording

Net cash provided by operating activities was $145.5 million for the twenty-six weeks ended September 30, 2023. The significant components of cash flows provided by operating activities were net income of $61.9 million, the add-back of non-cash depreciation and intangible asset amortization expense of $22.6 million, and stock-based compensation expense of $7.8 million. Accounts payable and accrued expenses and other current liabilities increased by $20.7 million due to the timing of payments. Inventory decreased by $3.9 million as a result of a decrease in purchases.

Previous wording

Net cash used in investing activities was $27.1 million for the thirteen weeks ended June 29, 2024, which was attributable to capital expenditures related to store construction, continued investments in our Kansas City, Missouri distribution center, improvements to our e-commerce information technology infrastructure, and improvements to our distribution facilities.

Current wording

Net cash used in investing activities was $65.4 million for the twenty-six weeks ended September 28, 2024, which was attributable to capital expenditures related to store construction, investments in our Kansas City, Missouri distribution center, improvements to our e-commerce information technology infrastructure, and improvements to our distribution facilities.

Previous wording

Net cash used in investing activities was $29.9 million for the thirteen weeks ended July 1, 2023, which was attributable to $29.9 million in capital expenditures related to store construction, investments in our Kansas City, Missouri distribution center, improvements to our e-commerce information technology infrastructure, and improvements to our distribution facilities.

Current wording

Net cash used in investing activities was $64.7 million for the twenty-six weeks ended September 30, 2023, which was attributable to capital expenditures related to store construction, investments in our Kansas City, Missouri distribution center, improvements to our e-commerce information technology infrastructure, and improvements to our distribution facilities.

Previous wording

Net cash used in financing activities was $6.7 million for the thirteen weeks ended June 29, 2024. We paid $7.4 million in taxes related to the vesting of restricted stock, partially offset by the receipt of $1.0 million related to the exercise of stock options.

Current wording

Net cash used in financing activities was $6.6 million for the twenty-six weeks ended September 28, 2024. We paid $7.6 million in taxes related to the vesting of restricted stock. We also received $1.4 million from the exercise of stock options.

Previous wording

Net cash used in financing activities was $42.0 million for the thirteen weeks ended July 1, 2023. We paid $39.8 million on our revolving line of credit and paid $2.3 million in taxes related to the vesting of restricted stock.

Current wording

Net cash used in financing activities was $60.3 million for the twenty-six weeks ended September 30, 2023. We paid $66.0 million on our revolving line of credit and paid $2.4 million in taxes related to the vesting of restricted stock. We also received $8.6 million from the exercise of stock options.