BOOT Q4 2025: 6% Same-Store Sales Growth Despite $8M Tariff Headwind
- Sustained Same-Store Sales Momentum: Management highlighted consistent 6% same‑store sales growth in Q1—with strong performance driven by increased transactions across multiple categories, underscoring robust organic demand.
- Effective Tariff Mitigation & Pricing Strategy: The team is successfully lowering tariff exposure—diversifying sourcing away from China (targeting around 5% tariffed exclusive brand product)—while exercising strong pricing power through mid‑single‑digit price adjustments accepted by consumers.
- Synergy Between Digital and Store Expansion: New store openings are not only driving brick‑and‑mortar revenue but also creating a halo effect for e‑commerce, as evidenced by digital channels (like bootbarn.com) delivering robust, double‑digit growth that enhances overall brand visibility and sales.
- Persistent Tariff Impact: The company anticipates approximately $8 million in tariff expense for fiscal 2026, with indications that these costs could continue into fiscal '27. This prolonged tariff headwind may pressure margins and earnings over an extended period.
- Potential Softening of Consumer Demand: The planned mid-single digit price increases—necessary to offset higher vendor costs—could lead to softer consumer demand in the second half of the year, which would undermine same-store sales growth and overall revenue.
- Extended Inventory & Margin Pressure: With a rotation of inventory roughly 2x per year, tariff-impacted stock is expected to remain in the system into early next year. This delay in clearing higher-cost inventory may extend the margin pressure and delay recovery from the current headwinds.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Total Sales (High-end) | Q1 2026 | no prior guidance | $491 million | no prior guidance |
Same-Store Sales (High-end) | Q1 2026 | no prior guidance | +6% | no prior guidance |
Merchandise Margin (High-end) | Q1 2026 | no prior guidance | $254 million or 51.7% of sales (140 bp increase over prior year period) | no prior guidance |
Gross Profit (High-end) | Q1 2026 | no prior guidance | $188 million or 38.2% of sales | no prior guidance |
Income from Operations (High-end) | Q1 2026 | no prior guidance | $64 million or 13% of sales | no prior guidance |
EPS (High-end) | Q1 2026 | no prior guidance | $1.52 | no prior guidance |
Total Sales (High-end) | FY 2026 | no prior guidance | $2.15 billion (13% growth over fiscal 2025) | no prior guidance |
Total Sales (Low-end) | FY 2026 | no prior guidance | $2.07 billion (8% growth over fiscal 2025) | no prior guidance |
Same-Store Sales (High-end) | FY 2026 | no prior guidance | +2% (Retail: +1.5%; E‑commerce: +7.5%) | no prior guidance |
Same-Store Sales (Low-end) | FY 2026 | no prior guidance | -2% | no prior guidance |
Merchandise Margin (High-end) | FY 2026 | no prior guidance | $1.08 billion or 50.1% of sales (flat vs fiscal 2025) | no prior guidance |
Merchandise Margin (Low-end) | FY 2026 | no prior guidance | 30 basis points decline | no prior guidance |
Gross Profit (High-end) | FY 2026 | no prior guidance | $793 million or 36.9% of sales | no prior guidance |
Gross Profit (Low-end) | FY 2026 | no prior guidance | 140 basis points of gross profit deleverage | no prior guidance |
Income from Operations (High-end) | FY 2026 | no prior guidance | $266 million or 12.4% of sales | no prior guidance |
Income from Operations (Low-end) | FY 2026 | no prior guidance | $228 million or 11% of sales | no prior guidance |
Net Income (High-end) | FY 2026 | no prior guidance | $197 million | no prior guidance |
EPS (High-end) | FY 2026 | no prior guidance | $6.40 | no prior guidance |
EPS (Low-end) | FY 2026 | no prior guidance | $5.50 | no prior guidance |
New Store Growth | FY 2026 | no prior guidance | 65 to 70 new stores (15% unit growth) | no prior guidance |
Capital Expenditures | FY 2026 | no prior guidance | $115 million to $120 million, net of estimated tenant allowances of $35 million | no prior guidance |
Effective Tax Rate | FY 2026 | no prior guidance | 26% | no prior guidance |
Tariff Impact | FY 2026 | no prior guidance | $8 million incremental cost (impacting H2 fiscal 2026) | no prior guidance |
Share Repurchase Program | FY 2026 | no prior guidance | Authorization to repurchase up to $200 million of common stock (25% planned for FY 2026) | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Same-Store Sales Growth Trends | Q1 discussed modest growth (1.4%) with sequential improvements; Q2 exhibited stronger growth (4.9%); Q3 reported robust expansion (8.6%) driven by transactions and broad category strength. | Q4 delivered solid same-store sales growth (6% consolidated with strong e-commerce growth) with targeted guidance for the next quarter and fiscal year. | Consistent growth maintained over periods although Q4 guidance indicates moderate caution amid market uncertainties. |
Evolving Market Sentiment | Q1 featured cautious optimism due to macro concerns; Q2 showed broad-based positive demand and confidence for the holiday season; Q3 highlighted accelerating demand in western categories. | Q4 sentiment remains positive early in the year with strong same-store sales but shows growing caution regarding tariff‐driven price increases and anticipated softer demand later in fiscal 2026. | Mixed sentiment evolving with earlier optimism now tempered by tariff concerns, indicating greater uncertainty about future consumer behavior. |
Tariff Exposure and Global Sourcing | Q1 noted reduction in China exposure and discussed contingency plans; Q2 detailed shifts in sourcing percentages (e.g. reducing China’s share, increasing Mexico’s share); Q3 focused on negotiating vendor pricing and exploring alternate sourcing as a hedge. | Q4 provided in‐depth analysis: mid‐single digit price hikes due to tariffs, proactive pull‐forward of inventory, and detailed line‐by‐line adjustments for exclusive brands to mitigate tariff costs. | Proactive mitigation strategies persist – consistent focus on reducing risk through diversified sourcing now coupled with explicit pricing adjustments; sentiment is increasingly tactical. |
Inventory and Merchandising Management | Q1 reported modest inventory growth with improved markdown profiles; Q2 highlighted significant efficiency gains and margin expansion (70‐bp improvement) driven by supply chain efficiencies; Q3 noted steady inventory growth, exclusive brand penetration progress, and margin gains. | Q4 emphasized a 25% YoY inventory increase driven by new stores and tariff pull‐forward; meanwhile, merchandise margin expanded by 210 basis points as improved buying economies and exclusive brand growth offset tariff pressures. | Consistent efficiency gains continue to drive margin expansion despite increased inventory investments and tariff risk; proactive measures are in place to sustain profitability. |
Digital, E-Commerce, and Omnichannel | Q1 highlighted strong performance on bootbarn.com and online marketing improvements (14% site growth, strong omnichannel fulfillment); Q2 introduced the Boot Barn app and emerging AI tools; Q3 emphasized traffic growth, customer acquisition via digital channels, and integrated fulfillment. | Q4 underscored continued e-commerce growth (9.8% same-store sales online) and noted a halo effect from new store openings boosting online demand, with ongoing omnichannel integration. | Robust digital momentum maintained – innovative digital tools and strong omnichannel synergy continue to fuel growth, enhancing customer engagement and positioning the channel for future expansion. |
Pricing Strategies and Consumer Demand | Q1 stressed balanced pricing with limited promotions; Q2 maintained an everyday low price approach with emphasis on premium brands like Cody James Black 1978; Q3 reported flat average transaction value with modest adjustments; overall, demand dynamics were steady across quarters. | Q4 focused on mid‐single digit price increases passed onto consumers due to tariffs and detailed testing of price elasticity, with expectations that higher prices could lead to a moderation in consumer demand. | Shifting from stable, balanced pricing to tactical adjustments amid external tariff pressures, potentially impacting demand—indicating a cautious but necessary pricing strategy evolution. |
Exclusive Brand Penetration & Margin Expansion | Q1 established a strong base with exclusive brands at 38.1% and 100‐bp margin expansion; Q2 saw a slight dip in penetration (–50 bp) but plans for 200 bp improvement in coming quarters; Q3 reported further growth with 180 bp improvement in exclusive brand penetration contributing to a 130‐bp margin expansion. | Q4 reported significant achievements with exclusive brand penetration growing by 190 basis points in the quarter and 90 bp for the year, contributing to a 210 bp merchandise margin expansion; guidance for fiscal 2026 projects further gains. | Exceptionally strong performance – exclusive brand initiatives continue to drive superior margin expansion, reinforcing a robust competitive advantage moving forward. |
Leadership Transition and Organizational Uncertainty | Q1 did not mention leadership changes; Q2 and Q3 discussed CEO transition details and new appointments (e.g. appointment of John Kosoff in Q3, CEO stepping down in Q2) with some transitional costs and uncertainty noted. | Q4 reflected a more stabilized environment as CEO John Hazen has settled into his permanent role, emphasizing continuity in strategic initiatives and reduced organizational uncertainty. | Transition phase stabilizing – earlier leadership changes and uncertainty are now resolving into operational continuity, reducing risk for future execution. |
Store Expansion and New Market Penetration | Q1 revealed plans for 60 new stores and an ambition to double the store count; Q2 demonstrated healthy expansion (15 new stores, 60 planned this year); Q3 reported aggressive new openings with strategic market positioning across 49 states. | Q4 continued the expansion trend by opening new stores in four new states, achieving a presence in 49 states, and reinforcing the strategy with strong associated e-commerce halo effects. | Aggressive and consistent expansion – store growth remains a cornerstone strategy with a clear focus on new market penetration, promising substantial long-term revenue opportunities. |
Decline in Workwear Segment Performance | Q1 reported that work boots and work apparel were underperforming (work boots about –1%, work apparel in low single digits negative); Q2 showed a turnaround with workwear turning slightly positive; Q3 acknowledged ongoing challenges with work boots but signs of improvement. | Q4 CEO John Hazen acknowledged persistent challenges in the workwear segment, particularly work boots, but outlined new marketing campaigns and digital sales support measures aimed at reinvigorating the category. | Incremental improvement yet persistent headwinds – workwear remains under pressure; while efforts are underway, it is less emphasized compared to other high‐growth segments, posing a potential area for future focus. |
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Tariff Impact
Q: Quantify tariff headwind on margins?
A: Management explained that tariffs add about $8 million in expense—mainly affecting second‐half margins—and noted mitigation via exclusive brand sourcing and selective pricing, though these costs may persist into fiscal ’27. -
Margin Outlook
Q: How will margins recover despite pressures?
A: Leadership anticipates operating margins will hold flat this year with potential to return to near 15% over time as cost efficiencies and SG&A leverage improve, offsetting new store and tariff challenges. -
SG&A Leverage
Q: Will SG&A costs drop with higher sales?
A: Management expects SG&A ratios to benefit from normalized expenses and increased contribution from new stores, resulting in improved leverage as fixed costs are spread over rising revenues. -
EB Penetration
Q: Will exclusive brand share increase further?
A: The team projects additional exclusive brand penetration—gaining over 100 basis points in Q1—with products remaining competitively priced to win market share. -
Same-Store Growth
Q: What drives same-store sales acceleration?
A: Management credited robust performance in denim, footwear, and apparel—supported by healthy e-commerce and in-store growth—which underscores solid underlying demand. -
Store & E‑comm Impact
Q: How do new stores impact digital sales?
A: New store openings, especially in legacy markets like New York, are creating a halo effect that boosts online sales significantly, reinforcing the overall sales momentum. -
Tariff Duration
Q: How long will tariff headwinds last?
A: Given inventory turns under 2x per year, management expects tariff‐impacted merchandise to affect margins into early fiscal 2027, with a gradual transition as inventory is refreshed. -
China Sourcing
Q: What percent of exclusive orders come from China?
A: For the second half of fiscal ’26, only about 5% of exclusive brand orders are sourced from China, as efforts to shift production to countries like Mexico continue. -
Competitive Pricing
Q: How are competitors handling price increases?
A: Management noted that larger retailers remain rational with modest, low single-digit price hikes, suggesting a stable competitive landscape despite broader tariff-related challenges. -
E‑comm Volatility
Q: Why is digital performance variable?
A: Fluctuations in e-commerce stem from differences in promotional timing and temporary drop-ship issues with a major vendor, although bootbarn.com consistently drives strong performance. -
Work Category Focus
Q: What’s the plan for work boot sales?
A: The company is intensifying marketing and product focus in the work boot segment to revitalize its performance and appeal to its core customer base. -
CEO Strategy
Q: Any shifts under new leadership?
A: CEO John Hazen confirmed that the longstanding four strategic initiatives will continue, with enhanced emphasis on sourcing and exclusive brands, ensuring stability and gradual improvement. -
Consumer Demand
Q: Are customers buying ahead due to tariffs?
A: Management found no evidence of pull-forward buying among consumers despite tariff concerns, reflecting steady purchasing behavior. -
Vintage Stores
Q: How are older stores affecting comps?
A: Analysis shows that year two and older stores outperform, with second-year stores generating higher sales volumes that bolster overall same-store performance.