Boot Barn (BOOT)

Clothing and footwear retailer Boot Barn (NYSE:BOOT) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 18.7% year on year to $505.4 million. Guidance for next quarter’s revenue was optimistic at $694 million at the midpoint, 2.5% above analysts’ estimates. Its GAAP profit of $1.37 per share was 7.5% above analysts’ consensus estimates.

Company Overview

With a strong store presence in Texas, California, Florida, and Oklahoma, Boot Barn (NYSE:BOOT) is a western-inspired apparel and footwear retailer.

Footwear sales–like their apparel counterparts–are driven by seasons, trends, and innovation more so than absolute need and similarly face the bigger-picture secular trend of e-commerce penetration. Footwear plays a part in societal belonging, personal expression, and occasion, and retailers selling shoes recognize this. Therefore, they aim to balance selection, competitive prices, and the latest trends to attract consumers. Unlike their apparel counterparts, footwear retailers most sell popular third-party brands (as opposed to their own exclusive brands), which could mean less exclusivity of product but more nimbleness to pivot to what’s hot.

Niche apparel competitors include The Buckle (NYSE:BKE), Urban Outfitters (NASDAQ:URBN), and American Eagle Outfitters (NYSE:AEO).

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years.

With $2.07 billion in revenue over the past 12 months, Boot Barn is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers. On the bright side, it can grow faster because it has more white space to build new stores.

As you can see below, Boot Barn’s 16.7% annualized revenue growth over the last six years (we compare to 2019 to normalize for COVID-19 impacts) was impressive as it opened new stores and increased sales at existing, established locations.

This quarter, Boot Barn reported year-on-year revenue growth of 18.7%, and its $505.4 million of revenue exceeded Wall Street’s estimates by 2.1%. Company management is currently guiding for a 14.1% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 11% over the next 12 months, a deceleration versus the last six years. Still, this projection is healthy and indicates the market is baking in success for its products.

Number of Stores

A retailer’s store count influences how much it can sell and how quickly revenue can grow.

Boot Barn operated 498 locations in the latest quarter. It has opened new stores at a rapid clip over the last two years, averaging 15.1% annual growth, much faster than the broader consumer retail sector. This gives it a chance to scale into a mid-sized business over time.

When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.

Same-Store Sales

A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales is an industry measure of whether revenue is growing at those existing stores and is driven by customer visits (often called traffic) and the average spending per customer (ticket).

Boot Barn’s demand has been healthy for a retailer over the last two years. On average, the company has grown its same-store sales by a robust 2.9% per year. This performance gives it the confidence to meaningfully expand its store base.

In the latest quarter, Boot Barn’s same-store sales rose 8.4% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.

We prefer higher gross margins because they not only make it easier to generate more operating profits but also indicate product differentiation, negotiating leverage, and pricing power.

Boot Barn’s unit economics are higher than the typical retailer, giving it the flexibility to invest in areas such as marketing and talent to reach more consumers. As you can see below, it averaged a decent 37.5% gross margin over the last two years. Said differently, Boot Barn paid its suppliers $62.48 for every $100 in revenue.

Boot Barn’s gross profit margin came in at 36.4% this quarter, in line with the same quarter last year. Zooming out, Boot Barn’s full-year margin has been trending up over the past 12 months, increasing by 1.2 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold.

Boot Barn has been an efficient company over the last two years. It was one of the more profitable businesses in the consumer retail sector, boasting an average operating margin of 12.5%.

Analyzing the trend in its profitability, Boot Barn’s operating margin rose by 1.8 percentage points over the last year, as its sales growth gave it operating leverage.

In Q3, Boot Barn generated an operating margin profit margin of 11.2%, up 1.8 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, and administrative overhead.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Boot Barn has shown mediocre cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 1.6%, subpar for a consumer retail business. The divergence from its good operating margin stems from its capital-intensive business model, which requires Boot Barn to make large cash investments in working capital and capital expenditures.

Taking a step back, an encouraging sign is that Boot Barn’s margin expanded by 2.4 percentage points over the last year. We have no doubt shareholders would like to continue seeing its cash conversion rise as it gives the company more optionality.

Boot Barn burned through $17.5 million of cash in Q3, equivalent to a negative 3.5% margin. The company’s cash burn slowed from $46.11 million of lost cash in the same quarter last year. These numbers deviate from its longer-term margin, but we wouldn’t read too much into the short term because investment needs can be seasonal, causing temporary swings.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Boot Barn’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 15.8%, slightly better than typical consumer retail business.

Boot Barn reported $64.73 million of cash and $668 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $336.7 million of EBITDA over the last 12 months, we view Boot Barn’s 1.8× net-debt-to-EBITDA ratio as safe. We also see its $702,000 of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

Revenue beat on healthy same-store sales, which is a good start. We were also impressed by Boot Barn’s optimistic full-year EPS guidance, which blew past analysts’ expectations. We were also glad its EPS guidance for next quarter exceeded Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock remained flat at $193.95 immediately after reporting.

Updated: December 4, 2025 at 9:33 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Boot Barn.

When it comes to Boot Barn’s business quality, there are some positives, but it ultimately falls short. Although its revenue growth was mediocre over the last three years, its growth over the next 12 months is expected to be higher. And while Boot Barn’s brand caters to a niche market, its new store openings have increased its brand equity.

Boot Barn’s P/E ratio based on the next 12 months is 27.8x. At this valuation, there’s a lot of good news priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $227.31 on the company (compared to the current share price of $198.12).