Boot Barn (BOOT)

Clothing and footwear retailer Boot Barn (NYSE:BOOT) missed Wall Street’s revenue expectations in Q1 CY2025, but sales rose 16.8% year on year to $453.7 million. On the other hand, the company expects next quarter’s revenue to be around $487 million, close to analysts’ estimates. Its GAAP profit of $1.22 per share was 1.6% below 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).

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $1.91 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 16.2% 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 expanded its reach.

This quarter, Boot Barn’s revenue grew by 16.8% year on year to $453.7 million but fell short of Wall Street’s estimates. Company management is currently guiding for a 15% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 13.9% over the next 12 months, a slight 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

The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow.

Boot Barn sported 459 locations in the latest quarter. Over the last two years, it has opened new stores at a rapid clip by averaging 15% annual growth, among the fastest in the 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

The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. 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 within its existing locations has barely increased over the last two years as its same-store sales were flat. Boot Barn should consider improving its foot traffic and efficiency before expanding its store base.

In the latest quarter, Boot Barn’s same-store sales rose 6% year on year. This growth was a well-appreciated turnaround from its historical levels, showing the business is regaining momentum.

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 37.2% gross margin over the last two years. Said differently, Boot Barn paid its suppliers $62.79 for every $100 in revenue.

This quarter, Boot Barn’s gross profit margin was 37.1%, up 1.3 percentage points year on year and exceeding analysts’ estimates by 1.7%. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting it strives to keep prices low for customers and has stable input costs (such as labor and freight expenses to transport goods).

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

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 12.2%.

Analyzing the trend in its profitability, Boot Barn’s operating margin might fluctuated slightly but has generally stayed the same over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Boot Barn generated an operating profit margin of 11%, up 1.1 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Boot Barn has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 5.6% over the last two years, quite impressive for a consumer retail business.

Taking a step back, we can see that Boot Barn’s margin dropped by 2.8 percentage points over the last year. This decrease came from the higher costs associated with opening more stores.

Boot Barn broke even from a free cash flow perspective in Q1. This result was good as its margin was 8 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, causing temporary swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative 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 15.3%, slightly better than typical consumer retail business.

Boot Barn reported $69.77 million of cash and $563 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 $365.8 million of EBITDA over the last 12 months, we view Boot Barn’s 1.3× net-debt-to-EBITDA ratio as safe. We also see its $805,000 of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Boot Barn blew past analysts’ EBITDA expectations this quarter. On the other hand, its revenue and EPS fell short along with its full-year guidance for both metrics. Overall, this was a weaker quarter, but the stock traded up 11.2% to $148 immediately following the results due to the EBITDA beat.

Updated: June 14, 2025 at 10:24 PM EDT

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.

Boot Barn isn’t a terrible business, but it doesn’t pass our quality test. Although its revenue growth was good over the last six years, it’s expected to deteriorate over the next 12 months and its brand caters to a niche market. And while the company’s new store openings have increased its brand equity, the downside is its poor same-store sales performance has been a headwind.

Boot Barn’s P/E ratio based on the next 12 months is 25.3x. At this valuation, there’s a lot of good news priced in - you can find better investment opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $183.71 on the company (compared to the current share price of $157.27).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.