What Boot Barn’s CEO Says About the Taylor Swift Effect – Sourcing Journal

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Taylor Swift might be filling stadiums but she doesn’t seem to be filling Boot Barn stores.

“While she is an amazing performer, we actually don’t see massive swings in our business from Taylor Swift,” Boot Barn CEO Jim Conroy, speaking with Wall Street analysts during the company’s first-quarter Aug. 2 call, said of the singer whose “Eras” tour takes her to cities where the retailer operates. Boot Barn stores see a bigger sales surge when country artists such as George Strait, Garth Brooks or Morgan Wallen come to town, he said.

UBS softlines and retail analyst Jay Sole see potential in Boot Barn but believes negative consumer spending trends would harm the chain’s price-earnings ratio.

Boot Barn is aiming for growth by adding stores, improving same-store sales, investing in omnichannel and putting resources behind its private labels.

Those exclusive brands, which grew 600 basis points to 38 percent of sales, for the third consecutive quarter of growth over 500 basis points, could be the key to attracting new customers. Boot Barn expects to end the fiscal year with 39 percent of sales from private labels, and drive healthier margins, Conroy said.The company added a Kansas distribution center to support new stores and the exclusive brand business.

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Cody James, Shyanne and Idyllwind, the private labels behind most of Boot Barn’s exclusive brand business, are priced competitively with national rivals like Ariat, Carhartt, Chippewa, Durango, Double H, Johnny Was, Levi’s, Lucchese, Tony Lama and Wrangler, according to Conroy.

Sole sees major private-label potential.

“Our view is these brands are going to achieve a size and scale on par or better than many national country and western brands over the next few years. While we don’t believe Boot management is focused right now on making these brands become standalone brands with their own websites and stores, we do think this is a material long-term opportunity for the company,” he wrote in a research note.

Sole estimates that the average Boot Barn customer spends $200 to $250 annually with the retailer, but is probably shopping elsewhere for apparel. “Given the moment in Boot’s apparel business, we believe there could be an additional opportunity for Boot to sell significantly more apparel to its customers,” he wrote.

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In the first quarter, men’s western boots and apparel achieved low single digit positive comps, with men’s denim outperforming non-denim, Conroy said. Women’s boots and apparel declined in the quarter, but showed sequential improvement from year-end.

lazyload fallback

A slim straight stretch denim jeans look from Cody James.

Boot Barn Holdings inc.

Conroy credited new stores opened in the past year for three-month sales through July 1 rising 4.9 percent. This offset a 2.9 percent decline in consolidated comparable-store sales, including a 1.8 percent decrease in retail same-store sales and a 10.8 percent drop in e-commerce comps. The latter marks a sequential improvement from the 18 percent decilne in the prior fiscal fourth quarter.

“New stores continue to add to our top-line growth and outperformed our expectations. With our acceleration in new store openings, we’ve been able to open 86 stores over the last two years,” Conroy told investors. “With the opening of 16 new stores in the first quarter, we ended the quarter with 361 stores across 44 states.”

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The company wants to have at least 900 doors eventually. New stores “continue to pay back in fewer than 18 months,” Conroy said.

A customer base of 7.5 million active members marks a 23 percent year-over-year, according to Conroy.

He expects the e-commerce business will improve in the next two months.

Conroy said the company can fulfill most e-commerce orders from virtually any store or distribution center it operates. This helps maximize selling margin and minimize shipping time and cost.

For the quarter, net sales rose 5 percent to $383.7 million from $365.9 million a year ago. Net income fell 13 percent to $34.3 million, or $1.13 a diluted share, from $39.3 million, or $1.29, a year ago. On an adjusted basis, diluted earnings per share (EPS) was $1.11 for the quarter.

For the second quarter ending Sept. 30, Boot Barn guided diluted EPS to the range of 84 cents to 90 cents on total sales between $372 million to $379 million.

For the full year ending March 30, 2024, the company expects to open 52 new stores, and projected diluted EPS between $5.05 to $5.35 on total sales between $1.72 billion to $1.75 billion.

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