Boot Barn Holdings, Inc.

Previous wording

We are the largest lifestyle retail chain devoted to western and work-related footwear, apparel and accessories in the United States. As of March 30, 2024, we operated 400 stores in 45 states, as well as an e-commerce channel, consisting primarily of bootbarn.com, sheplers.com, countryoutfitter.com, idyllwind.com and third-party marketplaces. Our stores feature a comprehensive assortment of brands and styles, coupled with attentive, knowledgeable store associates. 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. 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 are the largest lifestyle retail chain devoted to western and work-related footwear, apparel and accessories in the United States. As of March 29, 2025, we operated 459 stores in 49 states, as well as an e-commerce channel, consisting primarily of bootbarn.com, sheplers.com, countryoutfitter.com, idyllwind.com and third-party marketplaces. Our stores feature a comprehensive assortment of brands and styles, coupled with attentive, knowledgeable store associates. 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. 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

In assessing the performance of our business, we consider a variety of performance and financial measures. The key indicators we use to evaluate the financial condition and operating performance of our business are net sales and gross profit. In addition, we also review other important metrics, such as same store sales, new store openings, selling, general and administrative (“SG&A”) expenses, and operating income.

Current wording

In assessing the performance of our business, we consider a variety of performance and financial measures. The key indicators we use to evaluate the financial condition and operating performance of our business are net sales and gross profit. In addition, we also review other important metrics, such as same store sales, new store openings, selling, general and administrative (“SG&A”) expenses, operating income, and net income.

Previous wording

Our business is moderately seasonal and as a result our revenues fluctuate from quarter to quarter. In addition, our revenues in any given quarter can be affected by a number of factors including the timing of holidays and weather patterns. The third quarter of our fiscal year, which includes the Christmas shopping season, has historically produced higher sales and disproportionately higher operating results than the other quarters of our fiscal year. In fiscal 2024, fiscal 2023 and fiscal 2022 we generated approximately 31%, 31% and 33% of our net sales during our third fiscal quarter, respectively. In addition, neither the western nor the work component of our business has been meaningfully impacted by fashion trends or seasonality historically. We believe that many of our customers are driven primarily by utility and brand, and our best-selling styles.

Current wording

Our business is moderately seasonal and as a result our revenues fluctuate from quarter to quarter. In addition, our revenues in any given quarter can be affected by a number of factors including the timing of holidays and weather patterns. The third quarter of our fiscal year, which includes the Christmas shopping season, has historically produced higher sales and disproportionately higher operating results than the other quarters of our fiscal year. In fiscal 2025, fiscal 2024 and fiscal 2023, we generated approximately 32%, 31% and 31% of our net sales during our third fiscal quarter, respectively. In addition, neither the western nor the work component of our business has been meaningfully impacted by fashion trends or seasonality historically. We believe that many of our customers are driven primarily by utility and brand, and our best-selling styles.

Previous wording

If the criteria described with respect to acquired stores above are met, then all net sales of an 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 stores 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 have 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 an 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 stores 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 independently verified by us.

Previous wording

Opening new stores is an important part of our growth strategy. We opened 55, 45, and 28 stores in fiscal 2024, 2023 and 2022, respectively. We also closed one store in fiscal 2022 (and none in fiscal 2024 or 2023). Accordingly, same store sales are only one measure we use to assess the success of our business and growth strategy. Some of our competitors and other retailers may calculate “same” or “comparable” store sales differently than we do. As a result, data in this annual report regarding our same store sales may not be comparable to similar data made available by other retailers.

Current wording

Opening new stores is an important part of our growth strategy. We opened 60, 55 and 45 stores in fiscal 2025, fiscal 2024 and fiscal 2023, respectively. We also closed one store in fiscal 2025 (and none in fiscal 2024 or fiscal 2023). Accordingly, same store sales are only one measure we use to assess the success of our business and growth strategy. Some of our competitors and other retailers may calculate “same” or “comparable” store sales differently than we do. As a result, data in this annual report regarding our same store sales may not be comparable to similar data made available by other retailers.

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, inventory acquisition-related costs, and compensation costs for merchandise purchasing, exclusive brand design and development and distribution center personnel. These costs are significant and can be expected to continue to increase as we grow.

Current wording

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

Previous wording

The components of our reported cost of goods sold may not be comparable to those of other retail companies, including our competitors.

Current wording

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.

Previous wording

Our selling, general and administrative (“SG&A”) expenses are composed of labor and related expenses, other operating expenses, and general and administrative expenses not included in cost of goods sold. Specifically, our SG&A expenses include the following:

Current wording

Our SG&A expenses are composed of labor and related expenses, other operating expenses, and general and administrative expenses not included in cost of goods sold. Specifically, our SG&A expenses include the following:

Previous wording

We operate on a fiscal calendar which results in a 52- or 53-week fiscal year ending on the last Saturday of March unless April 1st is a Saturday, in which case the fiscal year ends on April 1st. In a 52-week fiscal year, each quarter includes thirteen weeks of operations; in a 53-week fiscal year, the first, second and third quarters each include thirteen weeks of operations and the fourth quarter includes fourteen weeks of operations. Fiscal 2024 was a 52-week period, fiscal 2023 was a 53-week period and fiscal 2022 was a 52-week period. For ease of reference, we identify our fiscal years by reference to the calendar year in which the fiscal year ends.

Current wording

We operate on a fiscal calendar which results in a 52- or 53-week fiscal year ending on the last Saturday of March unless April 1st is a Saturday, in which case the fiscal year ends on April 1st. In a 52-week fiscal year, each quarter includes thirteen weeks of operations; in a 53-week fiscal year, the first, second and third quarters each include thirteen weeks of operations, and the fourth quarter includes fourteen weeks of operations. Fiscal 2025 and fiscal 2024 were 52-week periods and fiscal 2023 was a 53-week period. For ease of reference, we identify our fiscal years by reference to the calendar year in which the fiscal year ends.

Previous wording

The following table summarizes key components of our results of operations for the periods indicated, both in dollars and as a percentage of our net sales. The following discussion contains references to fiscal 2024, fiscal 2023, and

Current wording

The following table summarizes key components of our results of operations for the periods indicated, both in dollars and as a percentage of our net sales. The following discussion contains references to fiscal 2025 and fiscal 2024,

Previous wording

fiscal 2022, which represent our fiscal years ended March 30, 2024, April 1, 2023 and March 26, 2022. Fiscal 2024 was a 52-week period, fiscal 2023 was a 53-week period and fiscal 2022 was a 52-week period.

Current wording

which represent our fiscal years ended March 29, 2025 and March 30, 2024. Fiscal 2025 and fiscal 2024 were both 52-week periods.

Previous wording

Net sales. Net sales in fiscal 2024 increased by $9.4 million, or 0.6%, to $1.667 billion compared to $1.658 billion in fiscal 2023. Consolidated same store sales decreased 6.2%. Excluding the impact of the 10.6% decrease in e-commerce same store sales, same store sales decreased by 5.6%. Net sales increased primarily due to the incremental sales from new stores opened over the past twelve months partially offset by the decrease in consolidated same store sales and sales from the 53rd week in the prior year.

Current wording

Net sales. Net sales in fiscal 2025 increased by $244.1 million, or 14.6%, to $1.911 billion compared to $1.667 billion in fiscal 2024. Consolidated same store sales increased 5.5%. Excluding the impact of the 9.7% increase in e-commerce same store sales, same store sales increased by 5.0%. Net sales increased primarily due to the incremental sales from new stores and the increase in consolidated same store sales.

Previous wording

Gross profit. Gross profit increased by $3.8 million, or 0.6%, to $614.4 million in fiscal 2024 from $610.6 million in fiscal 2023. As a percentage of net sales, gross profit was 36.9% and 36.8% for fiscal 2024 and fiscal 2023, respectively. Gross profit increased primarily due to merchandise margin expansion and sales growth. As a percentage of net sales, gross profit rate was approximately flat driven primarily by a 160 basis-point increase in merchandise margin rate offset by 160 basis points of deleverage in buying, occupancy and distribution center costs. The increase in merchandise margin rate was driven primarily by a 120 basis-point improvement in freight expense as a percentage of net sales and 40 basis points of product margin expansion resulting primarily from growth in exclusive brand penetration and buying economies of scale. The deleverage in buying, occupancy and distribution center costs was driven primarily by the higher occupancy costs of new stores, depreciation expense related to the opening of the new Kansas City distribution center and the impact of a 52-week year when compared to a 53-week year last year.

Current wording

Gross profit. Gross profit increased by $102.6 million, or 16.7%, to $717.0 million in fiscal 2025 from $614.4 million in fiscal 2024. As a percentage of net sales, gross profit was 37.5% and 36.9% for fiscal 2025 and fiscal 2024, respectively. Gross profit increased primarily due to an increase in sales and merchandise margin, partially offset by the occupancy costs of new stores. As a percentage of net sales, gross profit rate increased by 70 basis points driven primarily by a 130 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, lower shrink expense, better buying economies of scale, and growth in exclusive brand penetration. The deleverage in buying, occupancy and distribution center costs was driven by the occupancy costs of new stores.

Previous wording

Selling, general and administrative expenses. SG&A expenses increased by $37.4 million, or 9.9%, to $416.2 million in fiscal 2024 from $378.8 million in fiscal 2023. As a percentage of net sales, SG&A expenses were 25.0% for fiscal 2024 compared to 22.9% for fiscal 2023. SG&A expenses increased primarily as a result of higher general and

Current wording

Selling, general and administrative expenses. SG&A expenses increased by $61.5 million, or 14.8%, to $477.7 million in fiscal 2025 from $416.2 million in fiscal 2024. SG&A expenses increased primarily as 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 expenses were 25.0% in both fiscal 2025 and fiscal 2024.

Previous wording

Income from operations. Income from operations decreased by $33.6 million, or 14.5%, to $198.2 million for fiscal 2024 from $231.8 million for fiscal 2023. As a percentage of net sales, income from operations was 11.9% and 14.0% for fiscal 2024 and fiscal 2023, respectively. The change in income from operations was attributable to the factors noted above.

Current wording

Income from operations. Income from operations increased by $41.1 million, or 20.8%, to $239.4 million for fiscal 2025 from $198.2 million for fiscal 2024. As a percentage of net sales, income from operations was 12.5% and 11.9% for fiscal 2025 and fiscal 2024, respectively. The change in income from operations was attributable to the factors noted above.

Previous wording

Interest expense. Interest expense decreased by $3.6 million, or 61.9%, to $2.2 million in fiscal 2024 from $5.9 million in fiscal 2023. The decrease in interest expense was primarily the result ofa lower debt balance, partially offset by a higher weighted average interest rate compared to the prior year.

Current wording

Interest expense. Interest expense decreased by $0.7 million, or 33.1%, to $1.5 million in fiscal 2025 from $2.2 million in fiscal 2024. The decrease in interest expense was primarily the result ofa lower average debt balance during the fiscal year.

Previous wording

Income tax expense. Income tax expense was $50.4 million in fiscal 2024 compared to $55.3 million in fiscal 2023. Our effective tax rate was 25.5% and 24.5% for fiscal 2024 and fiscal 2023, respectively. The effective tax rate for fiscal 2024 is higher than fiscal 2023 primarily due to changes to state enacted tax rates, partially offset by a higher tax benefit due to income tax accounting for share-based compensation compared to the prior year.

Current wording

Income tax expense. Income tax expense was $59.2 million in fiscal 2025 compared to $50.4 million in fiscal 2024. Our effective tax rate was 24.6% and 25.4% for fiscal 2025 and fiscal 2024, respectively. The effective tax rate for fiscal 2025 is lower than fiscal 2024 primarily due to reductions in nondeductible expenses, as well as an increase in pretax book income, partially offset by reduced stock-based compensation tax benefits.

Previous wording

Net income. Net income decreased by $23.6 million, or 13.8%, to $147.0 million in fiscal 2024 from net income of $170.6 million in fiscal 2023. The change in net income was attributable to the factors noted above.

Current wording

Net income. Net income increased by $33.9 million, or 23.1%, to $180.9 million in fiscal 2025 from net income of $147.0 million in fiscal 2024. The change in net income was attributable to the factors noted above.

Previous wording

Our liquidity is moderately seasonal. Our cash requirements generally increase in our third fiscal quarter as we incur additional marketing expenses and increase our inventory in advance of the Christmas shopping season. Our cash flows from operations increased in fiscal 2024 compared to fiscal 2023, primarily as a result of a $105.6 million decrease

Current wording

Our liquidity is moderately seasonal. Our cash requirements generally increase in our third fiscal quarter as we incur additional marketing expenses and increase our inventory in advance of the Christmas shopping season. Our cash flows from operations decreased in fiscal 2025 compared to fiscal 2024, primarily as a result of a $138.4 million increase in cash paid for inventories year-over-year, a $4.1 million decrease in cash paid for prepaid expenses and other current assets, and a $24.0 million increase in cash provided by accounts payable and accrued expenses and other current liabilities.

Previous wording

As of the end of fiscal 2024, we did not have any material capital expenditure commitments. As of March 30, 2024, we did not have an amount outstanding under the Wells Fargo Revolver. We had $250.0 million of remaining availability under the Wells Fargo Revolver and $75.8 million of cash on hand as of March 30, 2024. Our primary ongoing sources of liquidity include funds provided by operations and borrowings under our revolving credit facility. We expect our cash from operations will continue to be sufficient to support our operations and anticipated capital expenditures for the foreseeable future. We estimate that our capital expenditures in fiscal 2025 will be between approximately $115.0 million and $120.0 million, 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

As of the end of fiscal 2025, we did not have any material capital expenditure commitments. As of March 29, 2025, we did not have an amount outstanding under the Wells Fargo Revolver (as defined below). We had $250.0 million of remaining availability under the Wells Fargo Revolver and $69.8 million of cash on hand as of March 29, 2025. Our primary ongoing sources of liquidity include funds provided by operations and borrowings under our revolving credit facility. We expect our cash from operations will continue to be sufficient to support our operations and anticipated capital expenditures for the foreseeable future. We estimate that our capital expenditures in fiscal 2026 will be between approximately $115.0 million and $120.0 million, which is net of estimated landlord tenant allowances of $35.5 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. The Company previously had a $200.0 million syndicated senior secured term loan for which GCI Capital Markets LLC was agent (“2015 Golub Term Loan”).

Current wording

The Company currently has a $250.0 million syndicated senior secured asset-based revolving credit facility (“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 current maturity date is July 11, 2027.

Previous wording

The amounts outstanding under the Wells Fargo Revolver and letter of credit commitments as of March 30, 2024 were zero and $2.3 million, respectively. The amounts outstanding under the Wells Fargo Revolver and letter of credit commitments as of April 1, 2023 were $66.0 million and $0.8 million, respectively. Total interest expense incurred in fiscal 2024 on the Wells Fargo Revolver was $1.7 million and the weighted average interest rate for fiscal 2024 was 7.0%. Total interest expense incurred in fiscal 2023 on the Wells Fargo Revolver was $5.2 million and the weighted average interest rate for fiscal 2023 was 4.3%. Total interest expense incurred in fiscal 2022 on the Wells Fargo Revolver was $0.7 million and the weighted average interest rate for fiscal 2022 was 3.4%.

Current wording

The amounts outstanding under the Wells Fargo Revolver and letter of credit commitments as of March 29, 2025 were zero and $2.9 million, respectively. The amounts outstanding under the Wells Fargo Revolver and letter of credit commitments as of March 30, 2024 were zero and $2.3 million, respectively. Total interest expense incurred in fiscal 2025 on the Wells Fargo Revolver was $0.8 million and the weighted average interest rate for fiscal 2025 was 7.8%. Total interest expense incurred in fiscal 2024 on the Wells Fargo Revolver was $1.7 million and the weighted average interest rate for fiscal 2024 was 7.0%. Total interest expense incurred in fiscal 2023 on the Wells Fargo Revolver was $5.2 million and the weighted average interest rate for fiscal 2023 was 4.3%.

Previous wording

The Wells Fargo Revolver contains customary provisions relating to mandatory prepayments, restricted payments, voluntary payments, affirmative and negative covenants, and events of default. In addition, the terms of the Wells Fargo Revolver require the Company to maintain, on a consolidated basis, a Consolidated Fixed Charge Coverage Ratio (as defined in the Wells Fargo Revolver) of at least 1.00:1.00 during such times as a covenant trigger event shall exist. The Wells Fargo Revolver also requires the Company to pay additional interest of 2.0% per annum upon triggering certain specified events of default set forth therein. For financial accounting purposes, the requirement for the Company

Current wording

The Wells Fargo Revolver contains customary provisions relating to mandatory prepayments, restricted payments, voluntary payments, affirmative and negative covenants, and events of default. In addition, the terms of the Wells Fargo Revolver require the Company to maintain, on a consolidated basis, a Consolidated Fixed Charge Coverage Ratio (as defined in the Wells Fargo Revolver) of at least 1.00:1.00 during such times as a covenant trigger event shall exist. The Wells Fargo Revolver also requires the Company to pay additional interest of 2.0% per annum upon triggering certain specified events of default set forth therein. For financial accounting purposes, the requirement for the Company to pay a higher interest rate upon an event of default is an embedded derivative. As of March 29, 2025, the fair value of this embedded derivative was estimated and was not significant.

Previous wording

Cash and cash equivalents were $75.8 million as of March 30, 2024 compared to $18.2 million as of April 1, 2023.

Current wording

Cash and cash equivalents were $69.8 million as of March 29, 2025 compared to $75.8 million as of March 30, 2024.

Previous wording

Net cash provided by operating activities was $88.9 million for the fiscal year ended April 1, 2023. The significant components of cash flows provided by operating activities were net income of $170.6 million, the add-back of non-cash depreciation and amortization expense of $35.9 million and stock-based compensation expense of $9.7 million. Inventories increased $115.2 million as a result of an increase in purchases. Accounts payable and accrued expenses and other current liabilities decreased by $21.2 million due to the timing of payments.

Current wording

Net cash provided by operating activities was $147.5 million for fiscal 2025. The significant components of cash flows provided by operating activities were net income of $180.9 million, the add-back of non-cash depreciation and amortization expense of $62.5 million and stock-based compensation expense of $11.0 million. Inventories increased $148.1 million as a result of an increase in purchases. Accounts payable and accrued expenses and other current liabilities increased by $18.2 million due to the timing of payments.

Previous wording

Net cash provided by operating activities was $236.1 million for the fiscal year ended March 30, 2024. The significant components of cash flows provided by operating activities were net income of $147.0 million, the add-back of non-cash depreciation and amortization expense of $49.5 million and stock-based compensation expense of $12.9 million. Inventories increased $9.6 million as a result of an increase in purchases. Accounts payable and accrued expenses and other current liabilities decreased by $5.8 million due to the timing of payments.

Current wording

Net cash provided by operating activities was $236.1 million for fiscal 2024. The significant components of cash flows provided by operating activities were net income of $147.0 million, the add-back of non-cash depreciation and amortization expense of $49.5 million and stock-based compensation expense of $12.9 million. Inventories increased $9.6 million as a result of an increase in purchases. Accounts payable and accrued expenses and other current liabilities decreased by $5.8 million due to the timing of payments.

Previous wording

Net cash used in investing activities was $124.5 million for fiscal 2023, which was primarily attributable to capital expenditures related to store construction, investments in a new distribution center in Kansas City, Missouri, improvements to our e-commerce information technology infrastructure, and improvements to our stores and distribution facilities.

Current wording

Net cash used in investing activities was $148.2 million for fiscal 2025, which was primarily attributable to capital expenditures related to store construction, investments in our new Store Support Center, improvements to our distribution center facilities, and improvements to our e-commerce information technology infrastructure.

Previous wording

Interest expense on line of credit relates to our Wells Fargo Revolver and was determined using an interest rate of 0.25% applied to the unutilized portion of the $250.0 million revolving line of credit on March 30, 2024, the last day of the fiscal year.

Current wording

Interest expense on our line of credit relates to our Wells Fargo Revolver and was determined using an interest rate of 0.25% applied to the unutilized portion of the $250.0 million revolving line of credit on March 29, 2025, the last day of the fiscal year.

Previous wording

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires the appropriate application of certain accounting policies, some of which require us to make estimates and assumptions about future events and their impact on amounts reported in our financial statements.

Current wording

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires the appropriate application of certain accounting policies, some of which require us to make estimates and assumptions about future events and their impact on amounts reported in our financial statements. Since future events and their impact cannot be determined with absolute certainty, our actual results will inevitably differ from our estimates.

Previous wording

The policies and estimates discussed below involve the selection or application of alternative accounting policies that are material to our financial statements. With respect to critical accounting policies, even a relatively minor variance between actual and expected experience can potentially have a materially favorable or unfavorable impact on subsequent results of operations. However, our historical results for the periods presented in our financial statements have not been materially impacted by such variances. Our accounting policies are more fully described in Note 2 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Management has discussed the development and selection of these critical accounting policies and estimates with our board of directors.

Current wording

variance between actual and expected experience can potentially have a materially favorable or unfavorable impact on subsequent results of operations. However, our historical results for the periods presented in our financial statements have not been materially impacted by such variances. Our accounting policies are more fully described in Note 2 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Management has discussed the development and selection of these critical accounting policies and estimates with our board of directors.

Previous wording

We recognize the sales from gift cards, gift certificates and store credits as they are redeemed for merchandise. Prior to redemption, we maintain an unearned revenue liability for gift cards, gift certificates and store credits until we are released from such liability, including potential obligations arising under state escheatment laws. Our gift cards, gift certificates and store credits do not have expiration dates, and unredeemed gift cards, gift certificates and store credits are

Current wording

We recognize the sales from gift cards, gift certificates and store credits as they are redeemed for merchandise. Prior to redemption, we maintain an unearned revenue liability for gift cards, gift certificates and store credits until we are released from such liability, including potential obligations arising under state escheatment laws. Our gift cards, gift certificates and store credits do not have expiration dates, and unredeemed gift cards, gift certificates and store credits are subject to state escheatment laws. Amounts remaining after escheatment are recognized in net sales in the period escheatment occurs and the liability is considered to be extinguished.

Previous wording

Operating and finance lease liabilities are recognized at the lease commencement date based on the present value of the fixed lease payments using the Company's incremental borrowing rates for its population of leases. The Company does not separate lease and non-lease components for all of its leases, and leases with an initial term of 12 months or less are excluded from balance sheet capitalization. Related operating and finance lease right-of-use assets are recognized based on the initial present value of the fixed lease payments, reduced by cash payments received from landlords as lease incentives, plus any prepaid rent and other direct costs from executing the leases. Amortization of both operating and finance lease right-of-use assets is performed on a straight-line basis and recorded as part of rent expense in cost of goods sold and selling, general and administrative expenses on the consolidated statements of operations. The majority of total lease costs is recorded as part of cost of goods sold, with the balance recorded in selling, general and administrative expenses on the consolidated statements of operations. The interest expense amortization component of the finance lease liabilities is recorded within interest expense on the consolidated statements of operations.

Current wording

landlords as lease incentives, plus any prepaid rent and other direct costs from executing the leases. Amortization of both operating and finance lease right-of-use assets is performed on a straight-line basis and recorded as part of rent expense in cost of goods sold and selling, general and administrative expenses on the consolidated statements of operations. The majority of total lease costs is recorded as part of cost of goods sold, with the balance recorded in selling, general and administrative expenses on the consolidated statements of operations. The interest expense amortization component of the finance lease liabilities is recorded within interest expense on the consolidated statements of operations.

Previous wording

Goodwill and indefinite-lived intangible assets. Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets. Intangible assets with indefinite lives include the Boot Barn trademark that was acquired as part of the recapitalization with Freeman Spogli & Co. on December 12, 2011, the Sheplers trademark acquired as part of our acquisition of Sheplers, Inc. and Sheplers Holding Corporation in June of fiscal 2016, the cost to register the Boot Barn trademark in Hong Kong, and the www.countryoutfitter.com website trademark we acquired as part of our asset acquisition in

Current wording

Goodwill and indefinite-lived intangible assets. Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets. Intangible assets with indefinite lives include the Boot Barn trademark that was acquired as part of the recapitalization with Freeman Spogli & Co. on December 12, 2011, the Sheplers trademark acquired as part of our acquisition of Sheplers, Inc. and Sheplers Holding Corporation in June of fiscal 2016, the cost to register the Boot Barn trademark in Hong Kong, and the www.countryoutfitter.com website trademark we acquired as part of our asset acquisition in February of fiscal 2017. We test goodwill and indefinite-lived intangible assets for impairment at least annually on the first day of the fourth quarter or more frequently if indicators of impairment exist, in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350,Goodwill and Other. This guidance provides us the option to first assess qualitative factors such as macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and other relevant entity-specific events to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.

Previous wording

GAAP has established guidance for reporting information about a company’s operating segments, including disclosures related to a company’s products and services, geographic areas and major customers. We monitor and review our segment reporting structure in accordance with authoritative guidance to determine whether any changes have occurred that would impact our reportable segments. Our retail stores and e-commerce websites represent two operating segments. Given the similar qualitative and economic characteristics of the two operating segments, our retail stores and e-commerce websites were aggregated into one reporting segment in accordance with guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting (“ASC 280”). As a result of this, our operations represent two reporting units, retail stores and e-commerce, for the purpose of our goodwill impairment analysis.

Current wording

GAAP has established guidance for reporting information about a company’s operating segments, including disclosures related to a company’s products and services, geographic areas and major customers. The Company monitors and reviews its segment reporting structure in accordance with authoritative guidance to determine whether any changes

Previous wording

Long-lived assets consist of leasehold improvements, machinery and equipment, furniture and fixtures, software and vehicles. Long-lived assets are subject to depreciation and amortization. We assess potential impairment of our definite-lived intangible assets and long-lived assets whenever events or changes in circumstances indicate that the asset’s carrying value may not be recoverable. Factors that are considered important that could trigger an impairment review include a current-period operating or cash flow loss combined with a history of operating or cash flow losses and a projection or forecast that demonstrates continuing losses or insufficient income associated with the use of a long-lived asset or asset group. Other factors include a significant change in the manner of the use of the asset or a significant negative industry or economic trend. This evaluation is performed based on estimated undiscounted future cash flows from operating activities compared with the carrying value of the related assets. If the undiscounted future cash flows are less than the carrying value, an impairment loss is recognized, measured by the difference between the carrying value and the estimated fair value of the assets, with such estimated fair values determined using the best information available and in accordance with FASB ASC Topic 820,Fair Value Measurements (“ASC 820”).

Current wording

Long-lived assets consist of leasehold improvements, machinery and equipment, furniture and fixtures, software and vehicles. Long-lived assets are subject to depreciation and amortization. We assess potential impairment of our definite-lived intangible assets and long-lived assets whenever events or changes in circumstances indicate that the asset’s carrying value may not be recoverable. Factors that are considered important that could trigger an impairment review include a current-period operating or cash flow loss combined with a history of operating or cash flow losses and a projection or forecast that demonstrates continuing losses or insufficient income associated with the use of a long-lived asset or asset group. Other factors include a significant change in the manner of the use of the asset or a significant negative industry or economic trend. This evaluation is performed based on estimated undiscounted future cash flows from operating activities compared with the carrying value of the related assets. If the undiscounted future cash flows are less than the carrying value, an impairment loss is recognized, measured by the difference between the carrying value and the estimated fair value of the assets, with such estimated fair values determined using the best information available and in accordance with FASB ASC Topic 820,Fair Value Measurements.

Previous wording

We account for employee stock options, restricted stock units and performance share units in accordance with relevant authoritative literature. Stock options are granted with exercise prices equal to or greater than the market value, as reported on the New York Stock Exchange (or on any other national securities exchange on which our common stock is then listed) on the date of grant as authorized by our board of directors. Stock option grants are generally subject to forfeiture if employment terminates prior to vesting. We have selected the Black-Scholes option pricing model for estimating the grant date fair value of stock option awards granted with only service conditions. We have considered the retirement and forfeiture provisions of the options and utilized the simplified method to estimate the expected life of the options. We base the risk-free interest rate on the yield of a zero-coupon U.S. Treasury security with a maturity equal to

Current wording

We account for employee stock options, restricted stock units and performance share units in accordance with relevant authoritative literature. Stock options are granted with exercise prices equal to or greater than the market value, as reported on the New York Stock Exchange (or on any other national securities exchange on which our common stock is then listed) on the date of grant as authorized by our board of directors. Stock option grants are generally subject to forfeiture if employment terminates prior to vesting. We have selected the Black-Scholes option pricing model for estimating the grant date fair value of stock option awards granted with only service conditions. We have considered the retirement and forfeiture provisions of the options and utilized the simplified method to estimate the expected life of the options. We base the risk-free interest rate on the yield of a zero-coupon U.S. Treasury security with a maturity equal to the expected life of the option from the date of the grant. Stock volatility for each grant is measured using historical daily price changes of our stock and our competitors’ common stock over the most recent period equal to the expected option term of the awards. The fair value of stock options granted with both service and market vesting conditions is estimated using a Monte Carlo simulation model. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period based on the number of years for which the requisite service is expected to be rendered. Forfeitures are recognized as incurred.

Previous wording

We recognize interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying statement of operations. See Note 12 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information regarding our tax disclosures.

Current wording

We recognize interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying statement of operations. See Note 13 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information regarding our income tax disclosures.