Q3 2022 Boot Barn Holdings Inc Earnings Call
Yeah.
Good day, everyone and welcome to the boot Barn holdings third quarter fiscal year 2022 earnings call. As a reminder, this call's being recorded now I would like to turn the conference over to your host Mark The Dovish Vice President of financial planning. Please go ahead Sir.
Thank you good afternoon, everyone. Thank you for joining us today to discuss Dupont's third quarter fiscal 2022 earnings results with me on today's call are Jim Conroy, President and Chief Executive Officer, Greg Heckman, Executive Vice President and Chief operating Officer, and Jim <unk> Chief Financial Officer.
Today's press release is available on the Investor Relations section of Dupont's website at <unk> Dot com. Shortly after we end this call a recording of the call will be available as a replay for 30 days on the Investor Relations section of the company's website.
I would like to remind you that certain statements. We will make in this presentation are forward looking statements.
Forward looking statements reflect boot barns judgment and analysis only as of today and actual results may differ materially from current expectations based on a number of factors affecting boot barns.
Accordingly, you should not place undue reliance on these forward looking statements.
More thorough discussion of these risks and uncertainties associated with the forward looking statements to be made during this conference call and webcast. We refer you to the disclaimer regarding forward looking statements that is included in our third quarter fiscal 2022 earnings release as well as our filings with the SEC referenced in that disclaimer, we do not undertake any obligation to update or all.
Any forward looking statements, whether as a result of new information future events or otherwise I will now turn the call over to Jim Conroy Boot barns, President and Chief Executive Officer, Jim.
Thank you Mark and good afternoon. Thank you everyone for joining us on today's call I'll review, our third quarter of fiscal 'twenty two results.
Highlight each of our key strategic initiatives and provide an update on current business.
Following my remarks, Jim Watkins, who will review our financial performance in more detail and then we will open the call up for questions.
Consistent with our last earnings call and given the impact Covid had on our performance in fiscal 'twenty one.
We believe that a comparison of our third quarter results to the same period two years ago provides the most helpful view into our performance.
Our business continues to perform extremely well as third quarter total sales grew 71% on a two year basis with retail stores up 71% and e-commerce up 70% the consistency and broad based strength of the business has been remarkable with every one of the.
13 weeks in the quarter growing in excess of 55% on a two year basis.
The majority of the sales growth was the result of an increase in transactions with a substantial portion coming from new customers underscoring the success of our merchandise and marketing initiatives aimed at broadening our consumer audience.
At the same time, better full price selling and growth in exclusive brand penetration fueled a 420 basis point increase in merchandise margin over the same period two years ago.
The combination of strong sales growth and robust merchandize margin expansion helped drive earnings of $2.27 per diluted share compared to 85 cents in the same period two years ago.
When adjusting for the tax benefit in both years, we grew earnings per diluted share more than 175% to $2.23 compared to 81 cents in the same period two years ago.
I would now like to provide an update on each of our four initiatives beginning with driving same store sales growth.
Third quarter same store sales on a two year basis improved sequentially from Q2 with strong comps each week and across all regions.
Geographically sales growth in the west again outperformed the rest of the chain, while sales and Michelle were up strong double digits, but below the chain average.
From a merchandise perspective every major category demonstrated solid double digit growth.
Ladies apparel and ladies western boots.
Oh boy hats ball caps and belt remain our strongest performing categories when compared to the two year ago period.
Additionally, we saw healthy growth in mens western boots accessories kids boots and men's apparel.
Work boots and work apparel, while also double digit positive.
While flame resistant work apparel was negative in the quarter compared to two years ago. It has shown sequential improvement each quarter and has turned double digit positive in January .
We believe that a strong portion of the growth can be attributed to the work done by the merchandising team and managing the challenges of the supply chain to ensure healthy in stock positions.
Spanning our customer segments by broadening our product assortment and bolstering our legacy offerings.
From a marketing perspective, our investments in traditional marketing programs, such as radio TV and direct mail. In addition to digital advertising drove increased traffic into our stores and to our e-commerce sites.
We continue to execute on our strategy of expanding the addressable market to include customers that are adjacent to a pure western customer.
With the addition of a more fashionable wonder west customer a few years ago.
Followed by the more recent edition of the just country segment, we have grown our active customer count significantly.
At the same time, we've evolved and upgraded the creative aesthetic of the brand, which has embraced these new segments, while not losing sight of our legacy western customer.
As we continue to gain more insights from our database analytics. It is becoming increasingly apparent that these new customers are exhibiting similar shopping patterns toward a legacy customers in terms of average transaction size and their propensity to be repeat customers.
We believe the ability for us to connect with a broader customer lifestyle will provide growth opportunities for years to come.
From an operational perspective, our teams performed extremely well during the holiday shopping season, working hard amidst a difficult labor environment.
I am very pleased with the partnership between our field organization and human resources team that was able to support the volume associated with such a strong sales trend coupled with the typical holiday build.
The team was able to fill the increased hours needed to support our existing stores as well as recruit train and onboard the store teams for the 11 stores that we opened in the quarter.
This achievement is more notable when you consider that we took the decision to significantly ramp up our ship from store capability to support our online channel during the busy period around cyber week.
Moving to our second initiative strengthening our Omnichannel leadership.
Camera sales in the third quarter grew 70% compared with the same period, two years ago, and EBIT increased more than 200% over the same time as our focus on enhancing the profitability of our ecommerce business continues to drive exceptional results.
Specifically in the third quarter, we reduced our online only promotions in order to better align the in store pricing during the holidays.
Adding to our omni channel capabilities, we recently made the merchandise in our stores available for sale in our online channels.
These orders are executed online, but fulfilled by the stores, our merchandising store ops ecommerce and technology teams worked relentlessly to develop and implement in store fulfillment in advance of the holidays.
With our online customers now able to see the vast selection of our exclusive brand assortment only previously available in our stores. We also drove incremental exclusive brand penetration growth online.
In addition, we believe we can elevate the in store shopping experience, even further with inventory purchases focused on more exciting product that will broaden the store selection and expose customers. The product that was previously only available online.
By placing more exciting product in stores it will not only be available for in store purchases. We will also be able to offer these products to online customers utilizing this in store fulfillment capability mitigating markdown exposure by selling in bulk channels.
This will be yet another tactic for us to leverage our ecommerce channel to drive incremental growth in store.
Now to our third strategic initiative exclusive brands.
It was a fantastic quarter for our exclusive brands as penetration grew 570 basis points compared to the same period two years ago, representing 28, 3% of sales in the third quarter.
We had six exclusive brands in our current portfolio and three of them are in our top five overall brands.
In the coming months, we will be introducing four new exclusive brands expanding our offering to address our just country segment, while also refining our western offering to target bolt a younger rodeo customer and a more traditional ranching cowboy.
The new assortment looks fantastic and will be arriving in stores and online this spring.
I would also like to commend our exclusive brands team on their execution involved designing compelling product and in securing its delivery for the holidays, while many of our third party branded vendors struggled to deliver our orders due to global supply chain disruptions our exclusive brands team proved to be successful in obtaining.
Turning merchandise to sell both online and in our stores.
Finally, our fourth initiative expanding our store base. It was a very busy period as we opened 11 stores during the third quarter, bringing our total store count to 289 stores across 37 states.
We expect to open another 11 stores in the fourth quarter, bringing our store count to 300 at the end of fiscal 'twenty two.
We are extremely pleased with recent new store performance.
New stores opened during the last two fiscal years are paying back in approximately one year.
Well ahead of our targeted three year period.
Additionally, our pipeline for new store openings is very strong for the coming fiscal year.
We are particularly excited to continue to expand the geographic reach of the brand into the northeast with stores scheduled to open in upstate New York, Delaware, Maryland, New Jersey, and West Virginia.
Yeah.
Turning to current business.
Our fourth quarter is off to a strong start with consolidated sales growth on a two year basis through the first four weeks increasing 89%.
This not only represent a sequential improvement from the incredibly strong results in the third quarter that has extended the trend to 45 consecutive weeks of more than 55% sales growth on a two year basis.
These sales continued to be driven by increases in transactions, coupled with strong expansion in merchandise margin.
January sales growth has been broad based.
Across all merchandise categories and geographies.
Yeah.
I'd like to now turn the call over to Jim Watkins.
Thank you Jim.
Compared to the two year ago period, net sales increased 71% to $486 million driven by a consolidated same store sales increase of 61%.
Brick and mortar same store sales were up 59% and E. Commerce same store sales were up 59% versus two years ago.
The increase in net sales was primarily a result of the increase in the fame and same store sales and the incremental sales from new stores opened during the past 24 months.
Gross profit increased 98% to $192 million or 39, 4% of sales compared to gross profit of $97 million or 34, 2% of sales in the two year ago period.
The 530 basis point increase in gross profit rate resulted from a 420 basis point increase in merchandise margin rate.
And 110 basis points of leverage in buying and occupancy costs.
The merchandise margin rate increase was primarily a result of better full price selling and growth in exclusive brand penetration.
Operating expense for the quarter was $99 $5 million or 25% of sales compared to $62 $1 million or 21, 9% of sales in the two year ago period.
Operating expense increased primarily as a result of higher store payroll.
Store overhead costs and marketing expense.
Operating expenses as a percentage of sales decreased by 140 basis points, primarily as a result of expense leverage on higher sales.
Income from operations was $92 million or 19% of sales in the quarter.
Expanding 670 basis points compared to $35 million or 12, 3% of sales in the two year ago period.
Net income was $69 million or $2.27 per diluted share compared to the $24 $8 million or <unk> 85 per diluted share in the two year ago period.
Excluding the <unk> <unk> per share tax benefit in both the current year and the two year ago period net income per diluted share in the current year was $2 23, compared to 81 and the two year ago period.
Turning to the balance sheet.
On a consolidated basis inventory increased 57% over the prior year period to $386 million.
This increase was primarily driven by inventory held at both our Fontana in Wichita distribution centers, a 22% increase in same store inventory and inventory for new stores added in the last 12 months.
We finished the quarter with no debt, having repaid the remaining $50 million outstanding on our term loan. We also had $115 million in cash on hand at the end of the quarter.
While our sales growth has been very consistent for the past several months, we're not providing sales and EPS guidance for the fourth quarter.
We reiterate our previously provided full year fiscal 'twenty two guidance to grow new units, 10% and our recently updated 450 basis point exclusive brand penetration growth when compared to last year.
We now expect capital capital expenditures to be in the range of $41 million to $43 million and our fourth quarter effective tax rate should be 25, 4%.
Now I would like to turn the call back to Jim for some closing remarks.
Thank you Jim.
We are extremely pleased with the results of our third quarter and the consistent growth we're seeing across the business. We believe that we are well positioned for a strong finish to our fiscal year.
I'd like to thank the more than 10000 associates across the country, whose dedication to both our boot barn family and our customers helped deliver an exceptional holiday quarter in a challenging environment.
Now I would like to open the call to take your questions.
Kyle.
At this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys one moment.
While we poll for questions.
Our first question is from Matthew boss with J P. Morgan. Please proceed with your question.
Thanks, and congrats on another strong quarter guys.
Thanks, Matt Thank you.
So Jim as we think about more than 40 weeks.
Growth over 50% the fourth quarter up 71% in January is up nearly 90% and that's despite lapping stimulus.
To bridge, if we think about pre pandemic, 6% to 7% same store sales. That's basically what you did in the three years into the crisis.
How best to think about that maybe relative to the algorithm that you talk about 3% to 5% same store sales and as we look forward. What you think a reasonable run rate on the other side of this crisis might be taking into account all in terms of market share and customer acquisition that you've seen.
Sure Great question, and it's hard to lay out sort of next years.
Full year comp guidance until we get through March and April so if I, if I skipped past sort of fiscal 'twenty three and just think what we expect the business can do on a longer term basis.
As you well know that we went public in October of 2014 with a low to mid single digit same store sales algorithm.
We've been averaging 11% over the last 11 years.
And you're right to call out that are coming into the pandemic, we were probably more closer to six to seven so I think again longer term, we would stick to low to mid single digits, we would hope to outperform that.
Our near term fiscal 'twenty three same store sales will outline when we get to our fourth quarter call and we'll have the benefit of seeing how our business performed cycling the March and April business from last year.
With that said the bullish side of me.
Would say that we are we're cycling a very strong January and we're consistently putting up really strong numbers, which seems to be.
Perhaps I'm, even more unique relative to the rest of what's happening in the retail market. So we feel pretty encouraged by our current business and and I'll have a more cogent and specific answer when we get to our May call.
Great and then maybe as a follow up.
Your new stores.
And given the consistency that you're seeing at brick and mortar.
Leave your sales per new door has nearly doubled since the IPO could you speak to brand awareness, maybe how this factors into what you spoke to in terms of market share and maybe some of the mom and pop consolidation and just confidence expanding in the northeast you mentioned a few new states there in the prepared remarks, just how best to think.
About unit growth opportunity, maybe relative to that 10% historical target.
Sure you're right, you're factually right that our new store revenue.
Since March 2020 basically.
Every store and certainly.
All new stores on average have.
Dramatically exceeded what we have typically modeled and what we would have modeled when we went public at 1.7 or one 8 million and these new stores are opening at $4 million and we would've modeled a three year payback and they are paying back in around one year. So we are increasingly in.
Bold and by our new store capability.
We've seen very fast customer receptivity coming to your brand awareness question for brand new stores opening in brand new markets.
So that will be opened in Pennsylvania, Ohio, and Virginia, where we have stores in and around Richmond in Virginia Beach that are going to be 4 million dollar stores and.
More than double what we would've expected.
So I think the brand has become.
Extremely well known.
I think credit goes to the marketing team is we've really expanded our customer outreach.
I also think that.
You had.
Look in a question around taking share from within the industry well.
Well one of the things we did when the pandemic first emerged was we made the decision to remain open.
And by doing so we accelerated the share gain we believe that we were already getting from.
An extremely fragmented industry and as customers.
A bit about the boot barn model, we haven't it doesn't appear we havent forfeit any of those customers back and right on top of that we then expanded our addressable market.
With a customer base, that's adjacent to a western customer, we're calling adjust country customer.
And as we look at the sales gains that we're getting now.
Most of it is driven by transactions and half of those incremental transactions are driven by new customers. So we're really pleased with the execution across the board new stores comp stores.
The expanded market.
And yeah, we do expect that when we outline our guidance for next fiscal year.
We will likely come out with a number that's higher than 10% new units.
We opened 11 stores last quarter expect to open 11 stores this quarter and having a robust pipeline going into the next fiscal year.
That's great color congrats again.
Thanks, Matt.
Our next question is from Max <unk> with Cowen <unk> Company. Please proceed with your question.
Hey, Thanks, a lot for taking my question and also congratulations on just the ongoing incredible incredible momentum. So first question is.
How does the ongoing consistency and the topline grill impact your outlook and just confidence in your ability to continue to be able to lock in these new shoppers and then just more broadly I'm you know your ability to maintain this.
This new revenue base, which is obviously significantly above where we were previously and just confidence that there won't be any sort of a large give back whether it's you know in fiscal 'twenty three or in the future.
Sure.
New customers one of the things I mentioned briefly in my remarks was the new customers are feeling familiar to us in other words their average basket is roughly in line, it's actually slightly larger than our legacy customer.
And their propensity to return to shop.
He is roughly in line and again slightly faster than our legacy customers. So.
We feel that the new shoppers and new customers that we have added are going to be sticky we've now.
Been able to see repeat visits and can measure how long it takes them to come back and how frequently they come back and again, we feel pretty good about that.
As we think about the kind of future growth. There is there's still plenty of opportunities for us to get ongoing growth.
We've got this expanded customer base, we continue to sort of hammer.
Hammer against that we think we can increase frequency of shop.
We've expanded our merchandise assortment a bit.
We're starting to see rodeos in concerts come back right. We haven't had the Houston rodeo at all last year and only 50% of it two years ago, we haven't seen a lot of the outdoor music concerts like stagecoach happen.
And they're all starting to come back.
While we try not to get people hung up on this we are seeing a resurgence in the oil markets right. Our west Texas business has turned positive or flame resistant work apparel business has turned positive. So there is there's plenty of places for us to get continued growth.
And again, it's a little bit too early to say, whether we'll give it back what we've gotten this year we have four.
Far outpaced our growth versus the industry I mean, when you look at other public companies in our space. Our growth is is exceedingly higher than theirs.
But that doesn't necessarily mean, we will give it back we think we've gotten to a new floor and we can grow from here.
Got it that's very helpful. And then just switching gears to the new brands. How are you thinking today about how big these brands can get do you think they could ultimately challenge any of your other exclusive brands in the portfolio. Once they scale just curious given the potential you know very large tam for Jess.
Country.
Longer term. These brands can also you know squeak into the top five if not bigger just given the much bigger customer base that they might potentially be interesting for thanks a lot.
It's a very astute question next.
There is little doubt in our mind that the overall market for what we're calling a country customer is bigger than the overall market for a western customer so theoretically those.
New brands.
Brothers and sons on the mens side, Cleveland and the Lady side could be every bit as big as our western customer.
The the counterbalance I suppose to that answer though is we will have and will continue to have a larger share of the market and pure Western then we'll likely will in country.
But I wouldn't be surprised if those new brands and a couple or three years are in our top 10 brands.
The most recent <unk>.
Example of that was relaunched Idaho wind in the fall of 2018.
It's three.
And a little bit years old now and it's in our top five brands and that's really more of a fashion brand right. That's almost.
Almost purely a wonder west brand, so and that's a smaller segment than countries. So we are we are pretty bullish about.
Our extension into this much larger customer base and in our exclusive brands ability to penetrate eight and I think a couple of years from now we will say to you all that there now and they're in the top 10 brands as well.
Great. Thanks, a lot best regards.
That's nice.
Our next question is from Stephens, a cone with Citi. Please proceed with your question.
Great. Good afternoon, guys. Thanks for taking my question first question was just on the outlook for margin in the fourth quarter. I was just curious if you can give a little bit more color.
Decided merchandize margin expansion has continued thus far in January would you expect to see leverage on buying and occupancy and SG&A in the fourth quarter. If the sales growth rate were to continue to hold.
Yeah, Hey, Dave Hey, Dan This is Jim Watkins.
Yeah.
What we're going to see in the fourth quarter and again, we're not providing guidance at this time.
But typically in the fourth quarter, we see fewer promotions than the holiday period in Q3, so as you're looking to model out merchandise margin expansion.
I would look at that is seeing growth, but maybe not quite as big and robust as we saw in the third quarter.
Again fewer fewer markdowns than and.
<unk> freight is.
Something that is with us.
To stay for a while and so I would model and the continued rate headwind.
Maybe maybe a little more than the 30 basis points, but probably not as much as 100 basis points or something that high.
And then our exclusive brand penetration.
We updated our guidance for the full year this year to be 450 basis points.
Of exclusive brand penetration and so I think you can model that in as well for the fourth quarter from a margin standpoint, as far as leveraging occupancy and buying we're not really going to guide.
Around that but again looking at growth against the two year ago period, Yeah, you have to remember it gets a little bit tricky as you look back to <unk>.
March two years ago, and the onset of Covid and the sharp decline that we found sales there so something to factor in is as you look at the two year.
Occupancy and buying leverage it's going to be a little bit tricky to model that.
Okay.
Thanks for that color.
The follow up I had is just that.
I was curious on the flame resistant kind of turning double digit positive in January and alluding to the fact that west Texas is comping positive.
I know, there's there's potential there, but I guess I was curious if you look back at this past year, even a longer term period, how much has that been a drag to the overall business is there a way to quantify it.
Sure I mean, it's.
It's a little complicated because it's.
It's still a drag right because while it's significantly positive our business is.
Growing at such an outsized rate that if it's not growing.
70% or 89%, it's going to pull the the number now and I fully recognize you can do that arithmetic is quickly okay.
Flame resistant merchandise is a low single digit piece of our business.
And if it's you know 70 points off the trend the drag is the you know call it 3% from 70%.
I think the the reason we would call something out like that is more.
While we believe.
The <unk>.
Connection or correlation to oil is.
There is really no longer relevant some investors are still very curious as to what's happening in that part of our business. So just.
As a courtesy we continue to kind of call out that business and.
It does speak to the health of the stores in those markets.
But again those markets are becoming a smaller and smaller portion of our total business.
Okay. Thanks Best of luck guys for the rest of the year.
Thank you.
Our next question is from Jonathan Komp with Baird. Please proceed with your question.
Yeah, Hi, good afternoon. Thank you I wanted to follow up and ask on the longer term sales perspective.
Jim Conroy I know last quarter, you talked about.
The gold whose scale up to become a multibillion dollar a national retailer.
Any more context on that comment and I'm wondering if that's something we should expect to take longer than say, a three year horizon looking out.
Well, if multibillion starts with the two.
It'll be less than three or four years to be honest when you take.
Our current run rate.
Any growth in E com, which we expect will happen.
Plus.
Yeah.
10 to 12% to 13% new stores growing each year.
Yeah, well hit 2 billion faster than three years I think.
So you know we'll have to see what happens on the stores same store sales line, but you know it's.
It's exciting to have crossed the 1 billion in the first nine months.
And to have added you know now more than $100 million in sales every year for the last 10 years right.
We've got a pretty high growth rate.
So we think we'll continue to grow going forward and and it'll be again I think everybody is waiting to see what happens when we cycle March and April but we continue to believe we have.
More sales growth drivers are in.
In our back pocket.
And.
Have a decade's worth of.
Growth of 22% sales growth on average so.
I don't think we're out of ideas to continue to grow the business.
Yeah, that's really helpful. And then maybe a separate question on the merchandize margin Tom it's been strong for quite a while so.
Maybe four or five years now.
So could you just give us a broader context your current merchandise margin rates, how how far above the trough for the Lowe's looking back you are today and then as you look at the drivers the last few years, how much is structural and sustainable versus.
Anything that's.
The risk of giving back going forward.
What was your question centered on merchandise margin I'll I'll address that one.
I think so just one of the things we said when we presented at ICR was.
At least just in the holiday quarter the Christmas quarter.
We were up.
270 basis points in margin. This most recent year and over a four year period, we were up 590 basis points of rate, we've added six points of merchandise margin.
In four years.
And so where we are as you might expect pretty proud of that fact, we do think there's still opportunities for us to grow our merchandise margin going forward. We continue with the narrative of fewer promotions and we think there's still opportunities to reduce promotions.
We continue to build the narrative around our online pricing versus our stores and we still think there's opportunity to get our online prices even more in line with stores.
The shep lose business, which had been a drag on margin is now at par essentially with boot barn Dot com.
We of course have the ability to continue to grow exclusive brands launching new exclusive brands. So that's a margin driver.
While freight has been a headwind and many of our vendors are passing along rate increases.
Once we see those container prices come back down and we expect that number to come right back to us so that could be a further driver.
And I'd say the last thing is.
This ability to ship product from our stores.
To an online customer gives us the ability to take a broken size assortment right, you're having one pair of boots inside seven and a half in one store.
And to find that customer in that market to come into that store, it's difficult to find that customer online and sun.
Much more macro view into these items is easier. So we think we can actually move through clearance out of the stores.
Quicker and at a lower discount than we otherwise would have by leveraging our online channel. So I'm not sure we'll build another six points of margin over the next four years, but.
Kind of coming back to the comments about sales growth I don't think we're out of ideas to build more margin growth.
Yeah.
That's really helpful color best of luck. Thank you.
Thanks, John .
Okay.
Our next question is from Cory <unk> with Jefferies. Please proceed with your question.
Yeah. Thanks for taking my question and congrats on the quarter.
To ask a question as it relates to exclusive brands penetration.
Can you provide a little bit more color as to what's really driving the growth in this segment and what about it is really sustainable in your view you mentioned at ICR that you were expecting I believe it was 450 basis points of improvement in penetration for this fiscal year and that number is.
Meaningfully from prior estimates so if we could get a little bit more.
Color here I think that would be very helpful. Thank you.
Sure No great question.
There's two pieces to this.
Perhaps three.
You've got the laughing because now I have to remember the three points I was going to make.
The first things, we absolutely are developing designing.
Designing and developing what we believe to be compelling merchandize high quality product.
At the same quality standards of the leading brands in the industry not a price leader.
And we think the the product.
On its surface or on its face.
Is selling extremely well the second piece is while I want to thank our third party branded vendors for <unk>.
Working tirelessly to get us product during the holiday quarter.
Yeah and.
Many of them did an outstanding job of trying to support our sales trend.
But the truth of the matter is our exclusive brand vendor ourselves essentially performed the best performed the best by a lot. So not only did we have.
Yeah.
Really good product, but we had it available to sell on the shelf because we were able to move that product through our supply chain at perhaps a better.
Right and then the third party brands in totality.
And the last piece the third piece.
We are launching new brands and when we launch new brands that opens up open to buy dollars for our merchants to fund into them will spend.
Well it turns out to be a modest amount of money to launch those brands from a marketing standpoint.
We'll bring them to life in the store both from a merchandising standpoint and from a store associate training standpoint. So I think when you couple all that together our exclusive brands, while it's grown quite nicely that 450 basis points year over year.
Well.
We are pretty darn confident will continue to grow that going forward, we'll likely give a conservative guide when we lay out our guidance next year, we'll likely circle back to our long term algorithm.
Roughly two and a half points of penetration.
I see no reason why we can't continue to get really nice growth in exclusive brands.
That's great and then a follow up is in the release around ICR you had mentioned that the company paid down the remaining balance on its term loan.
So I think a natural question is are there any updates as to how we should be thinking about the allocation of excess cash.
Yeah, I'll take that one Cory it's Jim Watkins.
Yeah, just I wanted to remind you that that.
December is the high point of cash generation after a holiday sales and so we are building and.
Building back up the inventory in our stores and reinvesting that in the business and paying down our payables and so there will be a you know some of that usage there.
And then as we look into next year, the new store grew.
Growth plan that Jim mentioned that call it 13% and investing in the new stores is another use of that cash.
And in the short term, we're planning to operate with the cash balance and then invest that in the business that we don't have any plans.
For a dividend or a stock buyback or anything along those lines at this point.
Great. Thank you very much.
Thank you.
Our next question is from Jeremy Hamblin with Craig Hallum. Please proceed with your question.
Thanks, I'll add my congratulations so my my question actually has to do on the cost side, you guys have executed incredibly well on top line.
It sounds like there's a ton of.
<unk> tailwind here for calendar 'twenty two.
As we think about the cost side.
Your business also.
Leveraging really nice neat nicely on SG&A.
But I wanted to get a sense of the variability.
You know if you see a little bit of softening in here.
You know, it's hard to imagine continuing to drive your two year stack numbers higher although you just did that in January despite lapping stimulus.
Is this kind of the embedded SG&A run rate.
Do you feel like those are structural in nature, how much flexibility do you have and how much of that is really being driven by.
Some of what Youre doing to attract this huge swath of new customers to your to your stores and online.
Yeah, Hey, Jeremy it's Jim Watkins.
I'll jump in there I think from a from an SG&A cost cost structure, we've talked about the variable nature of our store labor and during this last year.
<unk> took off.
And accelerated we were working hard to get the right employees in place and we Werent able to frankly to keep up with the store labor.
Demands that we needed in the store and so we've been investing the last.
Last quarter, particularly and we will continue to invest as we as we move into next year from both from a cost and an hour standpoint to make sure that we have the labor to code.
Service, our customers and drive that sales growth and so that is variable in nature, our store labor and so as you're modeling out into Q4 and into next year, which I think is what's behind your question that is a big component.
Sure.
You know of our of our SG&A is the labor cost and that is largely variable variable.
The other the other piece would be around marketing and we've historically targeted a 3% marketing spend.
<unk> of our store sales and again, we've talked about over the last couple of quarters that.
We haven't been able to spend as quickly as the sales have accelerated and so we were able to invest a little bit more on that in our third quarter and will continue to right size that going forward, but those are two items that can that can flex with sales as we look into the future.
Great and then just as a follow up.
It appears to us that.
You know most of the industry is also seeing pretty strong results, although maybe not quite as strong as what you've seen.
But can you give us a sense for what you're seeing out there from competitors on whether they're getting a little promotional or whether or not you feel like they're holding the line or perhaps even more likely.
Possibly a little less promotional on a year over year basis.
Okay.
I can take this and.
I think if theres been any change in the promotional stance within the industry, it's been less promotional rather than more promotional.
Yeah, I I wish we could give you a hard and fast numbers on industry growth.
But it's just not an industry that tracks.
Total sales or share per retailer well at all or it doesn't track it at all.
We do however have a few public companies.
<unk>.
But we buy denim problem that we buy work boots from that we buy western boots from.
And while I take your point that.
Many of them have been growing one one just reported yesterday.
Their growth rates are more yeah, Matt not naming names, but you know, 7%, 17%, 10% and ours is 70% and <unk>.
I must admit that it does feel bad.
We're being thrown into a bucket of what the whole industry is growing.
And I don't think that's true I think the industry is showing modest growth.
But we are really showing outsized growth and I feel almost obligated to credit.
The team for adding dramatically to our customer base.
The merchants, who have gotten our inventory position where were up year over year coming into the holiday quarter in the fourth quarter.
The stores team for managing through callouts from Covid, and everything else and hiring people.
For for seasonal hires.
Yeah, we tend to try to take a stance towards humility, but in this case I think we have to recognize that our growth.
Is outpacing.
By a lot.
Why the other public companies in our space are reporting.
Yeah agreed congratulations and best wishes guys. Thanks. Thank.
Thank you.
Our next question is from Sam Poser with Williams trading. Please proceed with your question.
Good evening. Thank you guys for taking my questions I've got a handful here.
Back up on the question about SG&A, a moment ago, you talked about marketing.
And how you're trying to run at around 3%, but sales keep outpacing. So the question is sort of what comes first chicken or the egg.
Besides the execution in the stores is that marketing just driving incremental sales. So as you bumped your marketing and sales team to follow with them.
And.
I mean can you talk about that because you talk about marketing I sort of like an afterthought almost to the <unk>.
Very strong.
Results.
Sure.
I would say that if you went back.
24 to 36 months.
We had been evolving the brand.
Tim you know our brand so well Greg.
Visibility into it from a consumer perspective, but.
For the benefit of everybody on the call we've elevated the brand we've extended the reach of the brand. We've contemporize the brand we've changed our media mix to get new customers and that's been an ongoing story. So it's been several years now where our same store sales had been driven in part typically roughly half of <unk>.
Same store sales growth has been driven by the addition of new customers into the boot barn brand and while our business has massively accelerated in the last.
Nine months or 10 months.
Once again roughly half of that growth at least that half of that transaction growth is due to new customers. So.
I I don't know if it's the chicken or the egg, but I can tell you that we didn't come out one day and take our 3% marketing spend.
Up to six hoping for sales to increase we continue that to budget at 3%, we'd probably became much more efficient with that spend.
Added more sales and then 3% on a bigger number just became more spend.
And where we're continuing to spend more dollars every year, but we will continue to budget, 3% and if our sales.
Outpace our sales plan will come in at less than 3%, which is what happened this year and last year in outside of Covid almost every year.
Okay, Great I've got a few more okay. So you talked about March and April being important let me just read all of the questions that we can go through March and April are still very important to mention is that because and because those are the most impacted by stimulus last year end.
I'm sure about rodeos and festivals and so on.
That come back in that time period.
And and that's sort of why Youre, not guiding Q4, and you know.
Or sort of get out for the 'twenty three guidance.
The next question sorry, you talked about the <unk>.
Core growth you talked about you said, 10%, but then a second ago, you said, 13% next year. So should we be modeling opening 39 stores next year.
Also your your your wholesale.
The nationally branded vendors theyre, taking price increases your tune it take some price increases, but I would assume that if they all react food if they take it to a 5% price increase on RF group.
You could take a lesser increase and widen the gap to that.
Help your exclusive brands.
And then lastly, your gross margins sequentially on an annual on a quarterly basis tends to peak in Q3, and then sort of equal sort of looks sort of like Q2, and Q4 is there anything going on right now that would prevent that from happening this year.
Or how should we think about it differently this year.
Okay, So, let's let's step through.
Those questions. The first the only reason, we're calling out March and April is we don't.
Wanted to lay out guidance for and again. This is for as you well know for next fiscal year right. We're still in fiscal 'twenty two.
Until we get through the end of our fourth quarter and that call will be roughly in may timeframe, and we will have.
Cycled.
52, plus weeks since we saw the spike in business.
And reflecting back to March 17th of 'twenty one.
Or thereabouts, that's when the stimulus came we called out on our next call that ended March our business was up dramatically April our business was up dramatically with we ascribed essentially all of that spike to stimulus.
And what was our Q4 call and then in our Q1 call. We said Hey, you know our business continues to be really strong.
And we kind of blamed it on pent up demand and refilling closets etcetera.
And then as we got into the second and third quarter, We said look where.
This just looks like a new basis for our business, we can see the absolute dollars each week.
Just remain extremely constant each now seeing 45 weeks of.
Plus 55% versus two years ago on or to your total sales basis et cetera.
But it would just be it would just be.
And frankly, a bit you're responsible to try to project what April business and next year's business is going to look like until we had visibility into cycling.
What is just beginning.
Once in a lifetime year.
That said one of the things we just said to an earlier question is we feel pretty good about cycling our January business with solid with solid numbers. So that's the March and April piece on the store count piece.
Our long term algorithm of 10% new units.
We will hit that this year, we had signaled pretty solidly that we expect to guide higher than that next year. So if you want to model, 12%, 13% new stores for next year, that's fine, we'll refine that guidance when we get to our Q4.
Call.
And in terms of when you asked the question around price increases.
Wholesale cost increases to us from vendors.
A pretty straight forward to model if we receive.
A cost increase from a vendor.
In most cases.
And there are some exceptions. So that's been in most cases, we pass along that cost increase with the standard markup. So we have taken the decision to maintain our margin rate.
So as some of our bigger vendors pass along cost increases some of them might be permanent some of them might be transitory.
We are going to be.
Price the goods in the store with a markup.
But we're not really doing that to advantage our exclusive brands.
And occasionally has that.
Result.
Because our exclusive brand team.
For whatever reason seems to have done a better job of managing down costs and we're seeing some cost increase there just not as much.
And a better job of managing freight costs, we're seeing some cost increases there as well, but not as much as our third party brands. So.
Result of all of that is our margin rate will be maintained on our third party brands.
Sometimes the price goes up and sometimes that does giving an advantage to some of our exclusive brands because where we had the same model, but we're working really hard to keep those costs down.
Your last question was on gross margin run rate Q4 versus Q1, and two and I will turn that over to the gentlemen from West Virginia, Jim market [laughter], Utah.
Hey, Sam I think you're thinking about that the right way and in general the Q1, Q2, and Q4 gross margin rate have tend to be.
Pretty similar as we looked at Q4 again, we're not providing guidance, but I think youre thinking about that the right way the one piece I would add as well.
We talked about.
Labor in the D C and the rates going up and having increased head count there to support the growing business and so there are some some wage pressure I would say just generally speaking that that we're looking at moving forward.
But to answer your question I think youre thinking about that the right way.
Thanks, very much continued success.
Thanks Sam.
Yes.
Our next question is from Peter Keith with Piper Sandler. Please proceed with your question.
Hey, Thanks, everyone here for taking me towards the end.
Store growth. So I'm, just kind of teasing out that you can run rate above 10% I think you've also hinted that maybe as.
As Youre looking at the country, you could do more than 500, which has been a target for a couple of years.
At the heart of my question is if you are reassessing a total store target.
What might be a timeframe, where you could kind of share with the street.
What do you think of a more appropriate target might be.
I'm sorry. The question is around when do we think we'll be able to provide an update on Tam and store count Okay. I see thank you Brett.
The plan would be to outline that on our Q4 call.
We're doing some work now to quantify.
Increase Tam size and store count, but you're right.
Have signaled that we think the numbers are bigger than where we started certainly when we met you when we first went public.
So yeah, I would just stay tuned to our Q4 call.
Perfect.
Second question for me.
With all of the new customers that you've been getting its certainly exciting aspect of the story.
We had the customer segmentation marketing capabilities. So what I'm wondering is do you have.
The capability to identify customers that are coming in and put them in and went to one of your four segments.
And if so which which of the four segments do you think your youre, garnering the most new customer growth.
Yeah.
So we do and the original the initial segmentation that they are pointed to.
Is determined almost entirely by what they buy in their first few transactions and while.
All of our business is growing in all the segments are growing and we're really thrilled with the underlying <unk>.
Sales trends and customer count trend.
As you might expect our slowest growing in terms of rate of growth segment will be our western segment in our faster growing ones are the ones that are newer and just starting out like wonder western and just country.
The only other thing that gets thrown in there is as we then market to those customers new or legacy.
Many customers belong to multiple segments, so they own.
If they tend to buy.
Work and western product they'll get a little bit of work and a little bit of western marketing, whether that's direct mail or email or whatever.
And so it's not they're not crystal clear lines between each of the segments, but the newer ones and the smaller ones are growing faster and we're of course very excited about the country.
Segment and.
Yeah, a lot of things that we've done over the last couple of years has really been been aligned to that segment to see because we think that's a very big opportunity for us.
Okay. It sounds good thanks, so much.
Thanks Peter.
Our next question is from Dylan Carden with William and Blair. Please proceed with your question.
Hey, Thanks, a lot I'm just curious you know I agree that people tend to overestimate.
The correlation to the oil patch, but but you have historically spoken to the high degree of exposure you have to sort of more agricultural industries ranching and farming and you've kind of seen.
Obviously sort of the spike in prices in those fields I'm kind of wondering Jim. The last time, you saw prices as high you were kind of just coming in to the company but.
Can you attribute any of the strength here.
Maybe by category by region to some of that inflation commodity inflation and then as you think about the sort of newer customer.
Is there a way to kind of identify them for us. This is sort of who that is generically kind of come in to the store.
Sure.
On the on the oil piece.
Yeah, we've seen such broad based growth and Wow.
While the price of a barrel of oil.
It is higher than it's been.
In the last 12 months or so.
It wasn't until recently that we saw the business turn up so we've been saying for a long time that.
We don't believe our business correlates that closely with oil and the price of about oil was up.
Nicely over the last 12 months on our Fr business in our West, Texas business was still not only lagging machine, but literally negative when virtually every part of our business was positive.
I do think going forward it'll be eight we'd like to see that part of our business get more in line with the rest of the company.
And perhaps at some point become a tailwind but even.
We use an example in the script, even flame resistant work apparel solidly double digit growth in January versus two years ago.
Phil.
A pretty significant drag on our comp or our comp on our total sales growth versus two years ago period.
In terms of the new customers that I don't have a great sort of.
Weighted to describe them demographically.
Although we do know that they are.
They are that adjacent customer base, where we are seeing.
Ladies western apparel growing significantly in some of the more fashionable lines like Idaho and is growing significantly.
We are seeing what we have put forth as.
This just country customer and the merchandise to go after that customer like ball caps graphic tee shirts.
Footwear, thats not cowboy boots growing really nicely.
So once we get some more information.
From a demographic perspective, we will share that we have some work to do there where we have to append the database with a third party.
But you haven't done yet.
But then we'll be able to share that information.
Gotcha, and I am sorry, I, probably wasn't clear when I said spiking commodity prices I meant on the agricultural side corn soy wheat, they're all sort of.
Decade highs and I was just curious if that might be having an impact on some parts of the business.
And I'm sure it is.
And look we.
We almost always try to point to external factors.
Because.
We tried to again start with more of a humble tone.
But having spent a fair amount of time trying to benchmark our growth again.
Other companies that we can tease out how their businesses that would be benefiting from the exact same trends.
Again.
With a heavy dose of humility our growth is just much higher.
Sometimes 10 times higher.
I can't I can't blame it on.
Commodities or oil or fashion trend or yellow stand when I have to.
To give some credit to the.
The merchant and the marketing team and the sourcing for actually executing better than other companies out there.
Aye.
Analytically Theres no other answer I can get to.
Youre not cutting Kevin cautionary check now that's great. Thanks, Jim.
Yes.
With that message.
[laughter].
Take care guys I appreciate the question taking the question.
Yeah.
Our next question is from Rick Nelson with Stephens. Please proceed with your question.
Thanks, a lot.
Good afternoon like to follow up on Mexico.
Brands, you got six exclusive brands now.
Training for new ones in the spring.
Could you speak to those heartburn.
These new ones are targeting them.
The potential of the next four relative to the first six.
Sure.
So the first.
The first thing we did was we said look we've got.
This casual western customers that we're calling just country and this person.
Maybe isn't a rodeo fan, but might be wearing cowboy boots, and a baseball hat and going to listen to a country music artist. So we came up with two brands one for men and one for women that's going after this country segment on the mens side. The brand is called brothers and sons and on the ladies side.
And so Cleo in Wolf.
We then look more specifically at.
Our.
Core western customer or the.
The customer we've had for 40 years.
And we said look if you if you really look closely.
And you look at other third party brands in our industry.
There are multiple dimensions to a western customer.
And I'll give you two somewhat.
Ends of the spectrum extremes Theres a younger more aggressive.
More modern fit.
Rodeo customer.
That we have.
Isolated as a customer that we want to put our brand against so the brand. We're developing there is called rank 45 and that brand is consistent for mens and ladies.
Then there is a more traditional tends to be more mature older customer.
Moving and working on a ranch.
And that customer needs less modern fit our more traditional fit.
Basic colors more traditional styles and the brand that has been launched there it's called Blue Ranch, where.
So when you put all that together, it's brothers and sons Cleo in Wolf.
Ranked 45 in Blue Ranch, where.
All going after a different dimensions of customers that we believe are already in the store.
Thanks for that Jim also like to ask about inventory up 22% per store.
Do you think inventory is working back now.
Australia.
Competitors are getting more product or do you pick your getting outsized allocations.
I think we're in a very good spot from an inventory standpoint.
Our inventories now up more in line still lagging, but more in line with our sales trend.
As it relates to competitors.
As we shop.
Other stores.
It certainly appears that we are more in stock than they are whether that's due to getty.
Getting priority or do too.
Our exclusive brand filling the gaps for third party brands.
I have some holes.
Or the fact that we have just been we started earlier and we're buying more aggressively.
Our field team constantly will give us feedback on what they're seeing out there and they're seeing.
Empty shelves for <unk>.
Competitors.
<unk> <unk>.
Directly in our in our space and even competitors that are right.
Right outside the pure western industry.
So I do think it's part of the reason why our sales have been so strong is that.
I think we're executing well I think the marketing is great I think the product slate all of those things. We also just happen to have the product available in the size that a customer wants for for that same day purchased.
Okay.
Okay.
So our prepared comments.
Look.
Thanks, Patrick.
Our next question is from Jay sole with UBS. Please proceed with your question.
Great. Thank you so much I have two questions first as you know we've talked a lot about on this call the opportunity to add to the store count, but Jim you know given the economics of the store have improved a lot over the past year plus and <unk>.
You've really talked about how you've done how much work you've done to elevate the brand are you seeing opportunities to move into different types of real estate essentially higher quality real estate, where you can put your stores maybe in places where you want to have considered before.
They can take advantage of the investments you've made in brand and the fact that the stores in a higher productivity and what does that mean to the way you've thought about the store growth potential in the brand potential.
I'm going to give you.
The answer I hope hopefully doesn't seen conflicting.
The overarching answer is now we are opening 10 or 11000 square foot stores in regional centers that are.
In and around our core customer and that customer lives and works outside there.
There.
Ranching or farming or or working with horses et cetera.
Or in.
Construction or some other blue collar type employment.
We haven't done we haven't said hey, we're going to go for a high end.
Mall or high Street location with some very few exceptions.
The one difference and this is the part that might seem contradictory is.
We are getting.
I would say better spaces better co kenyans more visibility than we had in the past, but the centers themselves are.
Are pretty consistent with our strategy.
It needs to be easy to get in and out our customers almost always driving on their way to and from work.
We wanted to have co tenants that are meaningful to us. So oftentimes, we'll look at the home improvement chains or sporting goods stores, where we believe we can share customers and siphon off some traffic from them.
And with very few exceptions, we haven't gone off of that model, we have a store downtown Nashville on Broadway that's been open for seven and a half years now that is.
Not that model at all and does extremely well but.
Going forward the direction to the team as we have a working model, let's just execute against state and stamp it out across the country.
Got it okay, they're not to follow up on that point.
The leverage on buying and occupancy was 140 basis points in the quarter.
Can you maybe elaborate on that I think given the strength and the same store sales number I think was up 55, 7%.
Based on the trends in the past, maybe we would've thought the leverage would have been higher is there any sort of.
Additional color you can give on that thank you sure sure.
Sure Hey, Joe Jim Watkins.
Yeah, Jim has alluded to this already but you know like others, we've been battling supply chain and labor shortages and Covid and so we really made a conscious effort to pay up to support the sales growth of 71% that we saw and so couple of things you know increasing the wages in our distribution centers to attract and retain.
Employees, so that we can receive the goods and deliver them to our stores into our customers. So it was an investment we made there consciously.
Similarly.
With goods, arriving later in the year with the supply chain, we did receive more goods.
Our distribution center in Q3.
Well, we would have normally received some of those into Q2, which pushed some of that labor cost and those hours into the third quarter.
And so you know what are the leverage rate maybe it could have been a little higher you know outside of the thing from from buying and occupancy we believe that would've come at the expense of sales and so yeah. We're thrilled with what we saw as far as the growth from a from an earnings standpoint, you know because of <unk>.
Driving that sales.
Got it understood. Thank you so much.
Thanks Jay.
Our next question is from Mitch <unk> with Seaport. Please proceed with your question.
Yes, thanks for taking my questions two questions first for Jim Watkins.
You guys have given us the sales for the first weeks first four weeks of Q4 on a this year L Y L. L Y do you happen to have that on a L. L. L Y basis, because I think as we think about the balance of the quarter you really have to go back three years to kind of normalize for Covid and stimulus in the Houston Road.
And all of those things. So I was hoping you might have that.
Youre trying to figure out the January number from three years ago, but I'm trying to figure out the three year growth either the number three years ago or the growth on a three year basis, because again I think that would be helpful. As we think about the balance of the quarter. Given that you have to go back that far to kind of normalize for all of these extraneous factors right No I hear you.
I don't have that number handy I think I think the way we're looking at it is.
The plus 89% on a two year basis and really the consistent sales that we're seeing.
And an acceleration from the third quarter.
Is is how we're looking at so we're pleased at what we're seeing from a sales dollar.
<unk> standpoint, and that run rate.
Big enough.
I'm wondering about the years ago and try to parse that out it's just a little bit.
And then secondly on the margins just to follow up on John <unk> question from earlier, so if I look at LTM op margin your 16.8% that's up 730 bips from pre Covid.
As we think about you know what structure, what's more structural versus less structural I think we can like we can back into the benefit that you're getting from exclusive brands, but do you happen to know how much margin you've picked up on the E Commerce business with all the changes you've taken there to improve the profitability of that business and then.
In addition, when you think about maybe the hit that you're taking on sort of elevated incentive comp and elevated freight how much margin drag is in that L. T M op margin versus what would be kind of normal for those line items.
Yeah. So.
The first part of your question on the on the E comm versus versus stores.
We're not going to provide the detail on that but Jim did talk about it in his prepared remarks about the outsized EBIT growth that we saw from an ecommerce standpoint versus versus the sales.
It was 70% sales growth on a two year basis, and a 200% EBIT growth we've got.
That number right and so so we're seeing it.
We're seeing nice growth there the second part of your question Mitch Sorry remind me again, if it was on the SG&A.
You know I would imagine that.
Based on on well, obviously, there's trade issues, there's I would imagine that your incentive comp is probably elevated relative to normal levels, given how well the business is performing I'm just curious how much maybe just like from a dollar standpoint or whatnot. Those pieces are elevated relative to what relative to what they would normally just so.
You can kind of back into.
So kind of a normal level for those pieces.
Mentioned, Greg I haven't had a chance to talk too much so I'm going to.
Okay.
Youre right there is elevated comp whether it's the store support team us or whether the store.
You know the store associates got a little bit higher sales bonus, but I think in the scheme of things those are relatively small compared to the increase in dollar sales. So that percentage is going to be relatively minor I think if I put a pencil to paper.
The bigger.
And if you think about the first half of the year when I was CFO . So I can really talk about this now.
We were under invested in store labor right, we just could not get enough bodies and so we got really nice leverage in both store labor and marketing in the first half of the year that is frankly more of a tailwind to the EBIT rate that you quoted on a TTM basis. So I think the best way for you to think about it is to kind of anchor.
Back to what the gyms, both of them said, which is you know what kind of targeting or believe that an EBIT rate in the 12% to 14% rate next year. It makes sense, when we reinvest in marketing and store labor and things normalize.
And that of course is dependent on the topline in the assumptions around store comps right.
That seemed like a reasonable starting point as opposed to trying to unpack or disaggregate. Some of these are <unk> and headwinds.
Fair enough all right guys. Thank you and good luck.
Okay. That's helpful.
Our next question is from John Lawrence with Benchmark. Please proceed with your question.
Great. Thanks, guys congratulations on the quarter.
Thanks, John .
Would you would you just step back in and let me ask this a different way that somebody's.
Touched around the edges of it but.
All of the new store growth the new economics, all of those things you've done marketing was reached the customer well.
Can you speak to a little bit about the lifestyle of that customer now with Covid has anything changed in their lifestyle staying at home more often.
Self reliance all of that that's a when you look at the activities of our customer has that.
Bring in these new customers into the store or online.
Yeah.
I mean, it's hard to find something specific to.
To COVID-19 .
Our core customer.
<unk>.
It tends to be.
Living and working in outdoor lifestyle are ready they tend to be more of a blue collar worker.
Eight.
Or are the bull's eye of our customer base is not an office employee that now is working from home now with that said.
We're probably benefiting a bit from casuals Asian, some other companies have called that out.
Probably benefiting a bit from.
Increased hiking and camping and less air travel.
Yes.
There is another thing we can assign specific numbers too, but a lot has been written about.
People.
Waistband, so to speak changing sizes during COVID-19 , so perhaps that's been a benefit.
But I think when you when you step back from all of these things that might be helping that business.
I almost feel obliged again to circle back to we're also.
Executing on a number of things that we outlined for a few years now.
Gone out and gotten new customers, we broaden our product assortment and we're able to staff our stores, we managed our supply chain, we completely transformed our omnichannel capabilities.
And again, while all of these other macro things might be helping a little bit.
It certainly seems that our business is outpacing.
Virtually every other retailer out there so I can't I can't blame it on one macro factor or even a collection of macro factors.
And for the folks that listen in on these calls here in the office I want them to smile, knowing that they are getting and deserve some credit for.
45 consecutive weeks of 55% growth over an LOI period.
Okay.
Great. Thanks, Congrats and good luck.
Thank you very much.
Thank you everyone for joining the call today.
We look forward to speaking with you all on our fourth quarter earnings call.
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
Okay.
[music].