What happened
Shares of Boot Barn Holdings (NYSE: BOOT) were climbing this week after the footwear retailer reported better-than-expected results in its third-quarter earnings report.
According to data from S&P Global Market Intelligence, the stock was up 14.2% for the week as of early Thursday afternoon.
So what
Most of those gains came on Thursday when the stock jumped on the earnings report, though its results were mixed.
The company was lapping booming growth from earlier in the pandemic and still delivered 5.9% revenue growth to $514.6 million, slightly ahead of analyst estimates at $514.1 million, and coming after revenue grew 60.7% in the quarter a year ago.
Same-store sales declined 3.6% after a 54.2% jump in the category. Retail comparable sales were down 0.8% while e-commerce comps fell 15.2%.
Gross margin fell 290 basis points in the quarter to 36.5% due to higher freight expenses and cost of merchandise. Additionally, selling, general, and administrative costs rose 190 basis points as a percentage of revenue to 22.4% due to high payroll, marketing, and store-related expenses. As a result, earnings per share (EPS) fell from an adjusted $2.23 in the quarter a year ago to $1.74, which was in line with estimates at $1.75.
The company opened 12 new stores in the quarter, and 33 year to date, which brings it to a total of 333.
CEO Jim Conroy said in the release, "Looking forward, our growth opportunities remain as strong as ever, with very successful recent store openings combined with a robust new store pipeline."
Now what
Guidance for the fourth quarter was mixed as the company called for revenue growth of 14.4% to 17% to a range of $438 million to $448 million, but that's driven entirely by new store openings as it expects comparable sales to fall 0.5% to 3% in the quarter. Still, that was better than the analyst consensus at $433.1 million.
On the bottom line, the company expects margins to get squeezed again, and forecast EPS of $1.42 to $1.51, worse than the analyst consensus at $1.62.
For the full year, Boot Barn raised its revenue guidance slightly but cut its earnings-per-share guidance from a range of $5.70 to $5.90 to a range of $5.51 to $5.60.
Considering the macroeconomic challenges and the difficult comparisons the company is facing, investors seemed to be pleased with the results and guidance.
After the brand caught fire last year, it could return to above-average growth in a friendlier economy as Conroy has done an excellent job at growing the Western-wear retail brand.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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