Q4 2024 Boot Barn Holdings Inc Earnings Call

Good day, everyone and welcome to the boot barn, Holdings' first quarter 'twenty 'twenty four earnings call.

Operator: Good day everyone, and welcome to the Boot Barn Holdings earnings call for quarter 2024. As a reminder, this call is being recorded. Now I'd like to turn the conference over to your host, Mr. Mark Dedovesh, Senior Vice President of Financial Planning. Please go ahead, sir.

Speaker Change: As a reminder, this call is being recorded now I'd like to turn the conference over to your host Mr. Mark They're dovish senior Vice President of financial planning. Please go ahead Sir.

Speaker Change: Thank you good afternoon, everyone. Thank you for joining us today to discuss boot barns fourth quarter and fiscal 2024 earnings results with me todays call are Jim Conroy, President and Chief Executive Officer, and Jim Watkins Chief Financial Officer.

Mark Dedovesh: Thank you. Good afternoon, everyone.

Mark Dedovesh: Thank you for joining us today to discuss Boot Barn's fourth quarter and fiscal 2024 earnings results. With me on today's call are Jim Conroy, President and Chief Executive Officer, and Jim Watkins, Chief Financial Officer. A copy of today's press release, along with a supplemental financial presentation, is available on the Investor Relations section of Boot Barn's website at bootbarn.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.

Speaker Change: A copy of today's press release, along with a supplemental financial presentation is available on the Investor Relations section of boot barns website at <unk> Dot com shortly.

Speaker Change: 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.

Mark Dedovesh: I would like to remind you that certain statements we will make in this presentation are forward-looking statements. These forward-looking statements reflect Boot Barn's judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting Boot Barn's business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with 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 fourth quarter and fiscal 2024 earnings release, as well as our filings with the SEC referenced in that disclaimer.

Speaker Change: I would like to remind you that certain statements. We will make in this presentation are forward looking statements. These 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 business. Accordingly, you should not place undue reliance on these forward looking statements for a more thorough discussion of the risks and uncertainties associated.

Boot Barn: But 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 fourth quarter and fiscal 'twenty 'twenty four earnings release as well as our filings with the SEC referenced in that disclaimer, we do not undertake any obligation to update or alter any forward looking statements, whether as a result of new information future events or otherwise I will now.

Mark Dedovesh: We do not undertake any obligation to update or alter 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 Barn's President and Chief Executive Officer.

Speaker Change: I'll turn the call over to Jim Conroy Boot barns, President and Chief Executive Officer, Jim.

James G. Conroy: Thank you, Mark, and good afternoon. Thank you, everyone, for joining us.

Speaker Change: Thank you Mark and good afternoon. Thank you everyone for joining us.

James G. Conroy: On this call, I will review our fourth quarter fiscal 24 results, discuss the progress we have made across each of our four strategic initiatives, and provide an update on current business. Following my remarks, Jim Watkins will review our financial performance in more detail, and then we will open the call to questions. We are pleased with Fiscal 24's results as we grew revenue to record levels, opened 55 new stores, which exceeded our original plan, and expanded exclusive brands by 370 bases.

Speaker Change: On this call I will review, our fourth quarter fiscal 'twenty four results discuss the progress we have made across each of our four strategic initiatives and provide an update on current business.

Speaker Change: Following my remarks, Jim Watkins will review our financial performance in more detail and then we will open the call up for questions.

Jim Watkins: We are pleased with fiscal 'twenty results as we grew revenue to record levels opened 55, new stores, which exceeded our original plan and.

Jim Watkins: An expanded exclusive brands by 370 basis points.

James G. Conroy: Our full-year fiscal 24 revenue grew to approximately $1.7 billion, which is nearly 100% growth over pre-pandemic levels just four years ago. When excluding the 53rd week of fiscal 23, total revenue grew 2% year-over-year, with growth driven by the new stores added over the last 12 months, which offset a mid-single-digit same-store sales decline. Foolier Merchandise Margin grew 160 basis points, comprised of 120 basis points of pre-improvement and 40 basis points of product margin expansion.

Jim Watkins: Our full year fiscal 'twenty four revenue grew to approximately $1 $7 billion, which is nearly 100% growth over pre pandemic levels, just four years ago.

Speaker Change: When excluding the 50 <unk> week of fiscal 23 total revenue grew 2% year over year with growth driven by the new stores added over the last 12 months, which offset a mid single digit same store sales decline.

Speaker Change: Full year merchandise margin grew 160 basis points comprised of a 120 basis points of rate improvement and 40 basis points of product margin expansion.

Speaker Change: The growth in product margin was driven by another healthy increase in exclusive brand penetration and buying economies of scale.

James G. Conroy: The growth in product margin was driven by another healthy increase in exclusive brand penetration and buying economies of scale. For the year, we achieved earnings per diluted share of $4.80, which, while down from last year, is nearly triple our pre-pandemic earnings from four years ago.

For the year, we achieved earnings per diluted share of $4.80, which while down from last year is nearly triple our pre pandemic earnings from four years ago.

Speaker Change: Turning to our fourth quarter results same store sales declined five 9% on a consolidated basis slightly better than the high end of our guidance range and meaningfully better than our third quarter performance.

James G. Conroy: Turning to our fourth-quarter results, same store sales declined 5.9% on a consolidated basis, slightly better than the high end of our guidance range and meaningfully better than our third-quarter performance. We also saw sequential improvement from February to March driven by better comp growth in our retail stores. From a margin perspective, fourth-quarter merchandise margin expanded 160 basis points driven by free improvement and supply chain efficiencies, which offset slight pressure from a 20 basis point decline in exclusive brands penetration, which we anticipated and called out on our last earnings call.

Speaker Change: We also saw a sequential improvement from February to March driven by better comp growth in our retail stores.

Speaker Change: From a margin perspective fourth quarter merchandise margin expanded 160 basis points, driven by freight improvements and supply chain efficiencies, which offset slight pressure from a 20 basis point decline in exclusive brand penetration, which we anticipated and called out on our last earnings call.

Speaker Change: Overall, I am pleased with the Companys ability to hold on to the market share gains we achieved over the past few years. In addition to introducing the boot barn brand to new markets I believe the company's foundation is solid and we were up and we have multiple growth levers that are proven their effectiveness and I'm confident in the runway for future growth.

James G. Conroy: Overall, I'm pleased with the company's ability to hold on to the market share gains we achieved over the past few years, in addition to introducing the Boot Barn brand to new markets. I believe the company's foundation is solid, and we have multiple growth levers that have proven their effectiveness, and I am confident in the runway for future growth. We have seen some exciting recent trends in the performance of the business, which I will summarize at the end of my remarks, but I do want to start with our traditional review of our four strategic initiatives.

Speaker Change: We have seen some exciting recent trends and the performance of the business, which I will summarize at the end of my remarks, but I do want to start with our traditional review of our four strategic initiatives.

James G. Conroy: Let's begin with expanding our store base. I would like to take a moment to recognize and celebrate the team as they opened 55 stores in fiscal 24, more than one store per week on average. Over the past 12 years, the company has transformed from a regional retailer with 86 stores in eight states to a true national lifestyle brand with 400 stores across 45 states.

Speaker Change: Let's begin with expanding our store base.

Speaker Change: Yeah.

Speaker Change: I would like to take a moment to recognize and celebrate the team as they opened 55 stores in fiscal 'twenty four or more than one store per week on average over the past 12 years. The company has transformed from a regional retailer with 86 stores in eight states to a true national lifestyle.

Speaker Change: Brand with 400 stores across 45 states.

James G. Conroy: This accelerated growth is a testament to the careful coordination across nearly every function in the company, from locating and building the stores, creating a compelling product assortment, Staffing the stores, and attracting a loyal set of customers in each of our new markets. In addition to opening a high number of stores each year, we are also opening stores with much higher first-year sales volumes than our historical average. The store portfolio is extremely healthy, and we see no signs of slowing momentum as new stores are generating a 60% cash on cash return on capital in their first year.

company: This accelerated growth is a testament to the careful coordination across nearly every function in the company from locating in building the stores, creating a compelling product assortment staffing the stores and attracting a loyal set of customers in each of our new markets.

Speaker Change: In addition to opening a high number of stores. Each year. We also are opening stores with much higher first year sales volumes than our historical average.

Speaker Change: The store portfolio is extremely healthy and we see no signs of slowing momentum as new stores are generating a 60% cash on cash return on capital in their first year.

Speaker Change: As we look at the roadmap for the future. We continue to believe that we have the opportunity to open at least 500 more stores in the United States alone and plan to maintain our recent pace of adding 15% new units annually.

James G. Conroy: As we look at the roadmap for the future, we continue to believe that we have the opportunity to open at least 500 more stores in the United States alone and plan to maintain our recent pace of adding 15% new units annually. Moving to our second initiative, driving same-store sales growth. In the fourth quarter, same store sales declined 5.9%, driven by fewer transactions, partially offset by a modest increase in AUR and a larger transaction size.

Speaker Change: Moving to our second initiative driving same store sales growth.

Speaker Change: Fourth quarter same store sales declined five 9% driven by fewer transactions, partially offset by a modest increase in AUR and a larger transaction size.

Speaker Change: From a merchandise category perspective, we are seeing some encouraging trends in the business with broad based sequential improvement across virtually every major product department from our third quarter to our fourth quarter.

James G. Conroy: From a merchandise category perspective, we are seeing some encouraging trends in the business with broad-based sequential improvement across virtually every major product department from our third quarter to our fourth quarter. Additionally, our V-rewarded customer database grew 18% year over year, reaching 8.4 million total active customers. This growth represents more than a million customers being added to the program each year for the past three years.

Speaker Change: Our b rewarded customer database grew 18% year over year, reaching $8 4 million total active customers. This growth represents more than a million customers being added to the program each year for the past three years.

James G. Conroy: We continue to harness the power of this information to assist with planning our media spending, customizing our customer communications, and tailoring our merchandise assortments by store based on local demographics. From a geographic standpoint, each of the four regions showed sequential improvement in the quarter versus Q3. The West, North, and South regions were in line with the chain average, and the East was slightly below the chain average.

Speaker Change: We continue to harness the power of this information to assist with planning our media spending customizing, our customer communications and tailoring our merchandise assortments by store based on local demographics.

Speaker Change: From a geographic standpoint, each of the four regions showed sequential improvement in the quarter versus Q3.

Speaker Change: The west North and South regions were in line with chain average and the east was slightly below the chain average.

Speaker Change: Our stores team continues to execute well as evidenced by another solid year over year improvement in customer service scores in the fourth quarter.

James G. Conroy: Our stores team continues to execute well, as evidenced by another solid year-over-year improvement in customer service scores in the fourth quarter. I do want to explicitly thank the entire field team for their efforts and hard work in driving sales, opening new store locations, and supporting our omni-channel initiatives by fulfilling online orders. Moving to our third initiative, Strengthening our Omnichannel Leadership. In the fourth quarter, our e-commerce sales declined 7.6%, better than the high end of our guidance range. Our branded site of bootbarn.com, which was approximately 75% of our online sales in Q4, comped down to low single digits in the quarter.

Speaker Change: I do want to explicitly thank the entire field team for their efforts and hard work in driving sales opening new store locations and supporting our omnichannel initiatives by fulfilling online orders.

Speaker Change: Moving to our third initiative strengthening our Omnichannel leadership.

Speaker Change: In the fourth quarter, our E Commerce sales declined seven 6% better than the high end of our guidance range, our branded side of boot barn, Dot com, which is approximately 75% of our online sales in Q4, comped down low single digits in the quarter.

digital team: The digital team continues to make progress on our development of artificial intelligence as mentioned on a prior call. We already have a working model of generative AI embedded in our in store banded platform.

James G. Conroy: The digital team continues to make progress on our development of artificial intelligence. As mentioned on a prior call, we already have a working model of generative AI embedded in our in-store Bandit platform that helps both customers and sales associates build full outfits, which has been slowly gaining traction. We are in the process now of taking the learnings from my platform, and we'll be adding new AI-enabled functionality to our bootbarn.com site over the next few months.

digital team: That helps both customers and sales associates build full outfits, which has been slowly gaining traction.

Speaker Change: We are in the process now of taking the learnings from that platform and we'll be adding new AI enabled functionality to our boot barn dot com site over the next few months.

James G. Conroy: Additionally, we are in the beginning stages of using AI to help create more fulsome product descriptions and landing pages to further support our organic search results. We expect the immediate benefits of this additional AI functionality to be minor, but believe we will have an early advantage in what we expect will become an increasingly complicated online channel in the near future.

Speaker Change: Additionally, we are in the beginning stages of using AI to help create more fulsome product descriptions and landing pages to further support our organic search results.

Speaker Change: We expect the immediate benefits of this additional AI functionality to be minor, but believe we will have an early advantage of what we expect will become an increasingly complicated online channel in the near future.

Speaker Change: Now to our fourth strategic initiative exclusive brands and margin expansion.

James G. Conroy: Now to our fourth strategic initiative, Exclusive Brands and Margin Expansion. During the fourth quarter, exclusive branch penetration decreased 20 basis points to 37.1%, which is in line with the expectations outlined on our last earnings call. For the full year, Exclusive Brands penetration increased 370 basis points to 37.7%, which is an increase of more than 1,400 basis points over the last three years, far exceeding our stated goal of 250 basis points per year.

Speaker Change: During the fourth quarter exclusive brand penetration decreased 20 basis points to 37, 1%, which is inline with the expectations outlined on our last earnings call.

Speaker Change: For the full year exclusive brands penetration increased 370 basis points to 37, 7%, which is an increase of more than 1400 basis points over the last three years far exceeding our stated goal of 250 basis points per year.

Speaker Change: We believe we have additional opportunities to expand exclusive brand penetration to augment the product Assortments from our third party national brands, which continued to build our merchandize margin.

James G. Conroy: We believe we have additional opportunities to expand exclusive brand penetration to augment the product assortments from our third-party national brands, which continue to build our merchandise market. Additionally, we have been able to grow our markup on merchandise from third-party vendors and expect to see continued tailwinds to merchandise margin as that higher-margin merchandise works its way through our inventory. Consistent with recent years, we expect merchandise margin to continue to build through a combination of exclusive brand penetration, buying economies of scale, and ongoing supply chain efficiency.

Speaker Change: Additionally, we have been able to grow our markup on merchandize from third party vendors and expect to see continued tailwind to merchandize margin as that higher markup product works through our inventory.

Speaker Change: Consistent with recent years, we expect merchandise margin to continue to build through a combination of exclusive brand penetration buying economies of scale and ongoing supply chain efficiencies.

James G. Conroy: I would like to commend the merchandising and exclusive brands organizations for continuing to develop compelling assortments with appropriate regional variation to drive the business forward. Now, turning to current business and some of the positive trends I noted earlier. Through the first six weeks of Q1, quarter to date, same store sales are flat, and May's business has turned Komp positive. It is great to see the momentum in the business and the sequential improvement from Q4. To summarize,

Speaker Change: I'd like to commend the merchandising and exclusive brands organizations for continuing to develop compelling assortments with appropriate regional variation to drive the business forward.

Speaker Change: Turning to current business and some of the positive trends I noted earlier through.

Speaker Change: Through the first six weeks of Q1 quarter to date same store sales are flat and media business has turned comp positive.

Speaker Change: It is great to see the momentum in the business and the sequential improvement from Q4.

Speaker Change: To summarize.

Speaker Change: We have seen broad based sequential improvement across virtually all major merchandise departments.

Jim Watkins: We have seen broad-based sequential improvement across virtually all major merchandise departments, both stores and e-commerce channels, and in all four regional geographies. This trajectory began as we progressed from our third quarter into the fourth quarter, then improved in April, and again into May, where we have seen positive same-store sales in both channels on a month-to-date basis. While we are quite pleased to see the inflection in this business, we are careful to note that we are commenting on a relatively short recent trend and are about to cycle the most difficult year-ago trend in the month of June.

Speaker Change: Both stores and e-commerce channels.

Speaker Change: And in all four regional geographies.

Speaker Change: This trajectory began as we progressed from our third quarter into the fourth quarter.

Speaker Change: Then improved in April and again into May where we have seen positive same store sales in bolt channels on a month to date basis.

Speaker Change: While we are quite pleased to see the inflection in this business. We are careful to note that we are commenting on a relatively short recent trend and are about to cycle. The most difficult year ago trend in the month of June.

Jim Watkins: Additionally, the macro environment continues to be somewhat uncertain, and our core customer is still facing persistent inflationary pressure. Accordingly, we have incorporated these considerations into our guidance and plan to manage the business cautiously until we feel this trend will endure or continue to improve. I'd like to now turn the call over to Jim.

Speaker Change: Additionally, the macro environment continues to be somewhat uncertain and our core customer is still facing persistent inflationary pressure.

Speaker Change: Accordingly, we have incorporated these considerations into our guidance and plan to manage the business cautiously until we feel this trend will endure or continue to improve.

Speaker Change: I'd like to now turn the call over to Jim.

Speaker Change: Thank you Jim.

Speaker Change: In the fourth quarter net sales decreased eight 7% to $388 million.

Jim Watkins: In the fourth quarter, net sales decreased 8.7% to $388 million. As a reminder, the fourth quarter of fiscal 23 was a 14-week quarter.

Speaker Change: As a reminder, the fourth quarter of fiscal 23 was a 14 week quarter.

Jim Watkins: The decrease in net sales was the result of the decrease in consolidated same-store sales and the impact of a 13-week quarter when compared to a 14-week quarter in the prior year period, partially offset by the incremental sales from new stores opened during the past 12 months. The 5.9% decrease in same-store sales is comprised of a decrease in retail store same-store sales of 5.7% and a decrease in e-commerce same-store sales of

Jim: The decrease in net sales was the result of the decrease in consolidated same store sales and the impact of a 13 week quarter and compared to a 14 week quarter in the prior year period, partially offset by the incremental sales from new stores opened during the past 12 months.

Jim: The five 9% decrease in same store sales is comprised of a decrease in retail stores same store sales of five 7% and a decrease in E. Commerce same store sales of seven 6%.

Jim: Gross profit decreased 11% to $139 million or 35, 9% of sales compared to gross profit of $156 million or <unk> 36, 6% of sales in the prior year period.

Jim Watkins: Gross profit decreased 11% to $139 million, or 35.9% of sales, compared to $156 million, or 36.6% of sales in the prior year period. The 70 basis point decrease in gross profit rate was comprised of 230 basis points of deleverage in buying, occupancy, and distribution center costs, partially offset by a 160 basis point increase in merchandise margin. The deleverage in buying occupancy and distribution center costs was driven primarily by the higher occupancy costs of new stores.

Speaker Change: The 70 basis point decrease in gross profit rate was comprised of 230 basis points of deleverage in buying occupancy and distribution center costs, partially offset by a 160 basis point increase in merchandise margin rate.

Speaker Change: The deleverage in buying occupancy and distribution center costs was driven primarily by the higher occupancy cost of new stores.

Jim Watkins: The impact of the 14th week and the 4th quarter of Fiscal 23, and the depreciation expense related to the opening of our new Kansas City Distribution Center. The increase in merchandise margin rate was driven by a 160 basis point improvement in freight expense and supply chain efficiency. Selling general administrative expenses for the quarter were $101 million, or 26.1% of sales, compared to $93 million, or 21.9% of sales, in the prior year period.

Speaker Change: The impact of the 14th week in the fourth quarter of fiscal 'twenty three.

Speaker Change: And the depreciation expense related to the opening of our new Kansas City distribution Center.

Speaker Change: The increase in merchandise margin rate was driven by a 160 basis point improvement in freight expense and supply chain efficiencies.

Speaker Change: Selling general and administrative expenses for the quarter were $101 million or 26, 1% of sales compared to $93 million or 21, 9% of sales in the prior year period.

Speaker Change: Selling general and administrative expenses as a percentage of net sales increased by 420 basis points, primarily as a result of higher marketing expenses nor.

Jim Watkins: Selling general and administrative expenses as a percentage of net sales increased by 420 basis points primarily as a result of higher marketing expenses, normalized Incentive-Based Compensation when compared to the prior year reversal of Incentive-Based Compensation, a $2 million partial impairment of the Shepard's Trademark, higher store labor, and the impact of a 13-week quarter when compared to a 14-week quarter in the prior year

Speaker Change: Normalized incentive based compensation when compared to the prior year reversal of incentive base.

Speaker Change: Incentive based compensation of $2 million partial impairment of the <unk> trademark.

Speaker Change: Higher store labor and the impact of a 13 week quarter, when compared to a 14 week quarter in the prior year.

Speaker Change: Income from operations was $38 million or nine 8% of sales in the quarter compared to $63 million or 14, 7% of sales in the prior year period.

Jim Watkins: Income from operations was $38 million, or 9.8% of sales in the quarter, compared to $63 million, or 14.7% of sales in the prior year period. Net income was $29 million, or $0.96 per diluted share, compared to $46 million, or $1.53 per diluted share, in the prior year period. Turning to the balance sheet, on a consolidated basis, inventory increased 2% over the prior year period to $599 million and increased approximately 1% on a same-store basis. We finished the quarter with $76 million in cash and zero drawn on our $250 million revolving line of credit.

Speaker Change: Net income was $29 million or <unk> 96 per diluted share compared to $46 million or $1 53 per diluted share in the prior year period.

Speaker Change: Turning to the balance sheet on a consolidated basis inventory increased 2% over the prior year period to $599 million and increased approximately 1% on a same store basis.

Speaker Change: We finished the quarter was $76 million in cash and zero drawn on our $250 million revolving line of credit.

Speaker Change: Turning to our outlook for fiscal 'twenty five.

Jim Watkins: Turning to our Outlook for fiscal 25. The supplemental financial presentation we released today lays out the low and high end of our guidance ranges for both the full year and first quarter. I will only be speaking to the high end of the range for both periods and in my following remarks.

Speaker Change: Yes.

Speaker Change: The supplemental financial presentation, we released today lays out the low and high end of our guidance ranges for both the full year and first quarter.

Speaker Change: I will only be speaking to the high end of the range for both periods in my following remarks.

Speaker Change: For the year, we expect total sales at the high end of our guidance range to be $1 8 billion.

Jim Watkins: For the year, we expect total sales at the high end of our guidance range to be $1.8 billion, representing growth of 8% over fiscal 24. We expect same-store sales to decline 1.6%, with a retail store same-store sales decline of 2% and e-commerce same-store sales growth of 2%. We expect gross profit to be $664 million, or approximately 36.9% of sales. Growth profit reflects an estimated 110 basis point increase in gross profit and Merchandise Margin. We expect to grow our exclusive brand penetration by 110 basis points.

Speaker Change: Representing growth of 8% over fiscal 'twenty four.

Speaker Change: We expect same store sales declined one 6% with a retail store same store sales decline of 2% and E Commerce same store sales growth of 2%.

Speaker Change: We expect gross profit to be $664 million or approximately 36, 9% of sales.

Speaker Change: Gross profit reflects an estimated 110 basis point increase.

Speaker Change: In merchandize margin.

Speaker Change: We expect to grow exclusive brand penetration by 110 basis points.

Speaker Change: And we anticipate a 110 basis points of deleverage in buying occupancy and distribution center costs, and 70 basis points of deleverage in SG&A.

Jim Watkins: And we anticipate 110 basis points of deleverage in buying, occupancy, and distribution center costs and 70 basis points of deleverage in SG&A. Regarding leverage points for fiscal 25, we expect to leverage buying occupancy and distribution center costs with a 6% comp. We expect to leverage SG&A with a 2% comp and expect to leverage EBIT at 3.5% consolidated same-store sales growth. Our income from operations is expected to be $201 million, or 11.2% of sales.

Speaker Change: Regarding leverage points for fiscal 'twenty, five we expect to leverage buying occupancy and distribution center costs with the 6% comp.

Speaker Change: We expect to leverage SG&A with a 2% comp and expect to leverage EBIT at three 5% consolidated same store sales growth.

Speaker Change: Our income from operations is expected to be $201 million or 11, 2% of sales. We expect net income for fiscal 'twenty five to be a $149 million and earnings per diluted share to be $4 85.

Speaker Change: We expect our capital expenditures to be $120 million.

Speaker Change: And for the year, we expect our effective tax rate to be 26, 2%.

Speaker Change: We plan to grow new units by 15%, adding 60, new stores during the year, we anticipate opening roughly 25 stores in the first half of the year and 35 stores in the second half of the year.

Jim Watkins: We expect net income for fiscal 25 to be $149 million and earnings per diluted share to be $4.85. We expect our capital expenditures to be $120 million. And for the year, we expect our effective tax rate to be 26.2%. We plan to grow new units by 15%, adding 60 new stores during the year. We anticipate opening roughly 25 stores in the first half of the year and 35 stores in the second half of the year.

Speaker Change: As we look to the first quarter, we expect total sales at the high end of our guidance range to be $407 million. We expect the same store sales decline of two 5% with retail store same store sales declining, 3% and E Commerce same store sales increasing 2%.

Jim Watkins: As we look to the first quarter, we expect total sales at the high end of our guidance range to be $407 million. We expect same-store sales to decline by 2.5%, with retail-store same-store sales declining 3%, and e-commerce same-store sales increasing 2%. We expect gross profit to be $146 million, or approximately 36% of sales. Gross profit reflects an estimated 70 basis points increase in merchandise margin, and we anticipate 170 basis points of deleverage in buying, occupancy, and distribution center costs, primarily resulting from higher occupancy from new stores and negative same-store sales. Our income from operations is expected to be $41 million, or 10.1% of sales. We expect earnings per diluted share to be $1.

Speaker Change: We expect gross profit to be $146 million.

Speaker Change: We're approximately 36% of sales.

Speaker Change: Gross profit reflects an estimated 70 basis point increase in merchandise margin and we anticipate a 170 basis points of deleverage in buying occupancy and distribution center costs, primarily resulting from higher occupancy from new stores and negative same store sales.

Speaker Change: Our income from operations is expected to be $41 million or 10, 1% of sales, we expect earnings per diluted share to be one dollar.

Jim: Now I would like to turn the call back to Jim for some closing remarks.

James G. Conroy: Now, I would like to turn the call back to Jim for some closing remarks.

Jim: Thank you Jim.

James G. Conroy: As we embark on fiscal 25, I do want to reflect on the performance of the business versus pre-pandemic levels. In that four-year period, store count has grown by 141 stores, comp sales have increased by more than 50% on a stacked basis, total revenue has grown by nearly 100%, merchandise margin has expanded by 450 basis points, and earnings per share has nearly tripled from $1.64 to $4.80.

Jim: As we embark on fiscal 'twenty five I do want to reflect on the performance of the business versus pre pandemic levels in that four year period store count has grown by 141 stores.

Jim: Comp sales have increased by more than 50% on a stacked basis.

Jim: Total revenue has grown by nearly 100% merchandise margin has expanded by 450 basis points.

Speaker Change: And earnings per share has nearly tripled from $1 64 to $4 80.

Speaker Change: This performance is a result of the incredible teamwork and superb execution by the entire boot barn team operating in a challenging retail environment.

James G. Conroy: This performance is a result of the incredible teamwork and superb execution by the entire Boot Barn team operating in a challenging retail environment. I want to explicitly recognize their performance and express my tremendous gratitude to each and every one of the partners across the Boot Barn organization for your commitment and hard work. I also want to thank our shareholders for their engagement with the company, belief in our growth strategy, and support of the management team. Now I would like to open the call to take your questions.

Speaker Change: I went to explicitly recognizes performance and express my tremendous gratitude to each and every one of the partners across the boot barn organization for your commitment and hard work.

Management team: I also want to thank our shareholders for their engagement with the company belief in our growth strategy and support of the management team.

Julie: Now I would like to open the call to take your questions Julie.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star 1. If you'd like to withdraw your question, please press star 2. As a reminder, this call is scheduled for one hour, so please limit yourself to one question and one follow-up. One moment, please, for your first question. Your first question comes from Matthew Buff from J.P. Morgan in Canada. Please go ahead.

Julie: Thank you ladies and gentlemen, we will now begin the question and answer session. So do you have a question. Please press star one if you'd like to which I. A question. Please press star two.

Julie: This call is scheduled for one hour. So please limit yourself to one question and one follow up one moment. Please for your first question.

Julie: Your first question comes from Matthew Boss from J P. Morgan Canada. Please go ahead.

Matthew Robert Boss: Great. Thanks. Jim, maybe you could elaborate on the drivers of the same-store sales acceleration in April and May, if it was possible to break down performance across categories, maybe notably your core replenishment business relative to the inflection in ladies, and then just how you're assessing the potential sustainability of current momentum over the balance of the year relative to the macro backdrop that it seems that you've embedded.

Julie: Great. Thanks.

Julie: Jim.

Matthew Robert Boss: Maybe if you could elaborate on drivers of the same store sales acceleration in April and May.

Jim: If it was possible to break down performance across categories, maybe notably your core replenishment business relative to the inflection and Lady It and then just how you're assessing the potential sustainability of current momentum over the balance of the year relative to the macro backdrop that it seems that.

Jim: I think you said about it.

Jim: Okay, great. Thanks for the question.

James G. Conroy: Okay, great. Thanks for the question. Matt, in terms of categories, it's just incredible. Every single department, from Work Boots to Ladies Apparel, has seen sequential positive improvement. And we saw that building from Q3 into Q4. And then Q4 into April, and then April into May.

Jim: Matt.

James G. Conroy: So the sequential improvement story is just fantastic. And it's across the board. Ladies, Western Boots from Q3 into the current quarter has improved sequentially by 15 points, work boots have improved five points, work apparel has improved 11 points, and Men's Western Boots has improved nine points. I could just keep going.

Jim: In terms of categories.

Jim: It's just incredible every single department.

Matt: From work boots, ladies apparel has seen sequential positive improvement.

Matt: And we saw that building from Q3 into Q4.

Matt: And then Q4 into April and then April into May So the sequential improvement story is.

Matt: Fantastic.

Matt: And it's across the board so.

Speaker Change: Ladies western boots from Q3.

Matt: Into the current quarter has improved sequentially by 15 points.

Matt: Work boots have improved five points work apparel has improved 11 points mens western boots has improved nine points. So I can just keep going as every single category on the schedule that im looking at.

James G. Conroy: It's every single category on the schedule that I'm looking at, and it's when I think about the other ways to dissect the business. We've seen it in both channels, right? We saw it in our e-commerce business and in our stores. We've seen it in every region of the country.

Matt: And it's when I think about.

Matt: The other ways to dissect the business.

Matt: We've seen it in both channels right, we saw it in our ecommerce business and in our stores we've seen it in every region of the country.

Matt: Okay.

James G. Conroy: It's been a build-up and a sequential improvement in transactions, so it's not a higher AUR or a higher ticket. It's literally just more healthy transactions on an average store basis. Um, I don't see any significant difference between fashion and non-fashion. The ladies' business has improved slightly more than the men's business, but it also has further to go, in terms of sustainability. We've clearly put out a guide that we think has some conservatism in it. Bye. There's...

Matt: It's been a buildup and a sequential improvement in transactions. So its not higher AUR higher ticket, it's literally just more healthy transactions on an average.

Matt: Average store basis.

Matt:

Speaker Change: I don't see any significant difference between <unk> and non fashion.

Speaker Change: The ladies business has improved slightly more than the mens business, but it also had further to go.

Speaker Change: In terms of sustainability.

Speaker Change: But we clearly put out a guide that we think has some conservatism in it.

Speaker Change: Hi.

Speaker Change: There is.

James G. Conroy: There's no reason to believe that these numbers will turn the opposite direction on us, and at the risk of getting kind of too far over our skis, we just got through Mother's Day, which is our weakest business. And we're positive comping in May, and we're heading into Father's Day, which is our strongest business, and a much bigger holiday for us than Mother's Day. So I don't want to play out too bullish of a tone, but if I just take the composition of the business, that will shift from a little over-indexing ladies to over-indexing men, and June being a much bigger month than May.

Speaker Change: And there is no reason to believe that these numbers will turn the opposite direction on us.

Speaker Change: And at the risk of getting too far over our skis.

Speaker Change: We just got through mother's day.

Speaker Change: <unk> is our weakest business.

Speaker Change: And we are positive comping in May.

Speaker Change: And we're.

Speaker Change: Heading into father's day, which is our strongest business and a much bigger holiday for us and mother's day.

Speaker Change: So I don't want to play out too bullish of atone, but if I just take the composition of the business that will shift from.

Speaker Change: A little over indexing, ladies to over indexing mens and June being a much bigger month in may.

James G. Conroy: You could get yourself comfortable that there's more sales to be had in the very foreseeable future. Jim did call out some conservatism in our third quarter with an election and a shortened holiday period. So we'll see how that plays out. But right now, what we're seeing, all the indications in the business are telling us that the performance has started to improve.

Speaker Change: You could get yourself comfortable that there is there is more sales to be had in the very foreseeable future.

Jim: Jim did call out some some conservatism in our third quarter with an election in a shortened holiday period. So we'll see how that plays out but right now what we're seeing all the indications and the businesses are telling us that the performance.

Jim: Has started to inflect positively.

Jim: Sure.

Jim Watkins: Great. And then maybe just to follow up on the bottom line, if you could just help break down your EBIT margin forecast between puts and takes on the Flatish Gross Margin Guide relative to the deleverage on SG&A embedded in the forecast.

Jim: Great and then maybe just a follow up on the bottom line.

Jim: If you could just help break down your EBIT margin forecast between puts and takes on the flattish gross margin guide relative to the deleverage on SG&A embedded in the forecast.

Speaker Change: Sure.

Speaker Change: So yeah.

Jim Watkins: So, yeah, as you pointed out, we're planning the year with 110 basis points of merchandise margin expansion, Matt, and with the exact same amount of de-leverage and buying occupancy and distribution center costs. And so, as we look at what's driving merchandise margin growth for the year, About two-thirds of that expansion will be supply chain efficiencies, and the other third will be improvements from exclusive brand penetration and better pricing from vendors due to economies of scale, including things like bulk purchases and better discounts from vendors.

Matt: Yes, as you pointed out we're planning the year with 110 basis points of merch margin expansion, Matt and.

Speaker Change: But the similar or the exact same amount of deleverage in buying occupancy and distribution center costs and so as we look at what's driving the merchandize margin growth for the year.

Matt Smith: About two thirds of that expansion will be supply chain efficiencies.

Matt Smith: And the other third will be improvements from exclusive brand penetration and better pricing from vendors due to economies of scale, including things like bulk purchases and better discounts from vendors.

Jim Watkins: The de-leverage is really just coming from the negative same store sales guide that we have on the buying occupancy and distribution center cost. And as you look at the, as we look at SG&A with 70 basis points of de-leverage there, it's really just the de-leverage that we're seeing from the negative same store sales guide. You know, included in there, we have a little bit of pressure from health insurance and some other inflationary costs.

Speaker Change: The deleverage is really just coming from the negative same store sales guide that we have on the buying occupancy and distribution center costs.

Speaker Change: And then as you look at the as we look at the SG&A was.

Speaker Change: It was 70 basis points of deleverage there, it's really just the deleverage that we're seeing from the negative same store sales guide included in there we have a little bit of pressure from health insurance and some some other.

Speaker Change: Inflation area cost.

Jim Watkins: And then, as we called out on the last call, we've got the new corporate headquarters that's worth about 30 basis points in the current year, or about $6 million higher than last year. And just a reminder on that facility, as we get into fiscal 26, the run rate, and incremental cost of that is more like $4.8 million, more or less.

Speaker Change: Increases and then as we called out on the last call. We've got the new corporate headquarters.

Speaker Change: That's worth about 30 basis points in the current year or about $6 million higher than last year and just a reminder, on that facility as we get into fiscal 'twenty six.

Speaker Change: The run rate incremental cost of that is more like $4 8 million.

Speaker Change: More or less.

Speaker Change: Okay.

Speaker Change: Okay.

Matthew Robert Boss: Congratulations on the improvement. Best of luck!

Speaker Change: Congrats on the improved best of luck.

Matt Smith: Thank you Matt.

Operator: Thank you, Matt. Your next question comes from Peter Keith from Piper Sandler. Please go ahead. Hi, this is Alexia Morgan on behalf of Peter Keith. Thanks for taking our question. One question that we're getting a lot from.

Matt Smith: Your next question comes from Peter Keith from Piper Sandler. Please go ahead.

Operator: Your next question comes from Peter Keith on behalf of Piper Sandler. Please go ahead.

Matt Smith: Hi, This is Alexia Morgan on for Peter Keith Thanks for taking a question one.

Alexia Morgan: One question that we're getting a lot from investors is whether you might be exploring more reps firms.

Alexia Morgan: Are you able to give any detail around the possible impact you're seeing there if youre getting a lift from that at all and then.

Alexia Morgan: My second question would just be how and you touched on this a little bit how you might think about sequencing comps throughout the year and what are the drivers to eventually get to positive.

Alexia Morgan: Okay great.

James G. Conroy: Great. On the first question around Beyonce... I suppose we anticipated this question because first it was Yellowstone, then it was Taylor Swift, and now it's Beyonce. We love Beyonce. We love the fact that she's wearing hats. We love the fact that she seems to continue leaning into Western, notably, you know, she's been doing this for five years now, but now she's got a new album. And I think that's sort of hitting the zeitgeist of the people that are newer to watching country music.

Speaker Change: On the first question around beyond say.

Beyond Say: I suppose we anticipated this question because first it.

Beyond Say: It was yellow zone that it was Taylor Swift and now it's beyond say.

Beyond Say: We love beyond say, we love that she is wearing hats, we love. The fact that she seems to continue to be leaning into western.

Notably she: Notably she has been doing this for five years now, but now she has got a new album and I think thats sort of hit that guy used of the people that.

Speaker Change: Newer to watching country music.

James G. Conroy: It's not apparent to us that she's having a meaningful impact on our business. If the sequential improvement that we saw was being entirely driven by ladies' fashion cowboy boots or Ladies Western Fashion Apparel, then I would feel differently, but we've seen just a very broad-based improvement for several months now, going back to the third quarter, that it would kind of be foolhardy to tie it all to, or really any of it to, Beyonce.

Notably she: It's not apparent to us that she is having a meaningful impact on our business.

Speaker Change: If the sequential improvement that we saw was being entirely driven by ladies fashion Cowboy boots.

Not identified: Ladies western fashion apparel.

Not identified: Then I would feel differently, but we've seen just very broad based improvement.

Not identified: For several months now going back to the third quarter that it would kind of.

Full hardie: Full hardie to tie it all too or really any of it to be on say, what we did we did ask our customers.

James G. Conroy: What we did, we asked our customers. Many people were aware that she had released an album, right? And this was a proper customer survey; very few people commented that, like, 3% commented that it was going to change their buying behavior in a positive way. So, some of the qualitative comments were almost like, "Are you joking that Beyonce is going to impact our business?". It's more, you know; we've been in this category forever. That said, hopefully, she'll introduce a new customer to Boot Barn, and that might help us get some additional business. But it's just a fringe piece or an icing on top of our typical customer database.

Not identified: Many people were aware that she.

Not identified: Had released an album right in this or that.

Not identified: Proper customer survey.

Speaker Change: Very few people commented that like 3% commented that it was going to change their buying behavior in a positive way so.

Speaker Change: Some some of the qualitative comments, where we're almost like are you joking that the answer is going to impact our business it's more.

Speaker Change: We've been in this category forever.

Speaker Change: That said hopefully she'll introduce a new customer to boot barn, and that might help us get some additional business, but it's just a fringe piece or an icing on top of.

Speaker Change: Our typical customer database.

James G. Conroy: And just to give you a little bit of the rhythm of the year and how we're looking at same-store sales. Again, just backing up, the way we've provided the guide is similar to what we've done the last two years. We've taken the last few months of sales and projected the sales for the balance of the year using the historical seasonality of the business. And then one of the things that was a little bit different this year, what we did in the guide, is we reduced the sales from what the output was for the second half of the year to account for distractions around the upcoming presidential election, a shorter holiday shopping period between Thanksgiving and Christmas, and some of the continued macro uncertainty.

Speaker Change: And just to give you a little bit of cadence of the year and how we're looking at same store sales again just backing up.

Speaker Change: So the way we've we've provided the guide is similar to what we've done the last two years. We've taken the last few months of sales are projected the sales for the balance of the year using the historical seasonality of the business.

Speaker Change: And then one of the things that was a little bit different this year than what we did in the guide as we reduced the sales from what the output was for the second half of the year to account for district distraction around the upcoming presidential election, a shorter holiday shopping period between Thanksgiving and Christmas and some of the continued macro.

Speaker Change: Uncertainty.

Speaker Change: Okay.

James G. Conroy: And so, as we look at how the guidance lays out for the year, we expect the second quarter same-store sales to look similar to what we've guided for the first quarter. As we get into the third quarter, we expect store comps to be slightly better than the second quarter and then strengthened to be slightly positive comps in the fourth quarter.

Speaker Change: And so as we look at how the guidance lays out for the year. We expect the second quarter same store sales to look similar to what we've guided for the first quarter as we get into the third quarter, we expect store comps to be slightly better than the second quarter, and then strengthen to be slightly positive comps in the fourth quarter.

Speaker Change: Okay.

Operator: Great. Thank you. You're welcome. Thank you.

Speaker Change: Great. Thank you.

Speaker Change: Youre welcome Thanks again.

Operator: Your next question comes from Steven Zaccone from Citi. Please go ahead. Great, thanks very much for taking the time.

Speaker Change: Your next question comes from Steven Zaccone from Citi. Please go ahead.

Steven Emanuel Zaccone: Great, thanks very much for taking my question. I wanted to follow up on Matt Boss's question from Canada. If you think about, you know, where you're running now, quarter to date, and then as you think about the guidance for the year, where are the potential areas of conservatism? Is it somewhat of the ladies business doing better now that maybe that could moderate over the next couple of quarters? Because it seems like the overall business is seeing a pretty broad-based improvement. So just help us understand why there was so much conservatism in the year.

Steven Emanuel Zaccone: Great. Thanks, very much for taking my question.

Steven Emanuel Zaccone: I wanted to follow up on Matt Boss, Canada question. If you think about where you are running now quarter to date and then as you think about the guidance for the year.

Speaker Change: Are the potential areas of conservatism is it somewhat of the ladies business doing better now that may be that could moderate over the next couple of quarters because it seems like the overall business, we're seeing a pretty broad based improvement. So just help us understand why is that so much conservatism in the year.

James G. Conroy: Yeah, I would say as we look at the next month and a half, if you look at June, that was our toughest comp on a one-year comp basis to LAP. And so as we're looking, you know, square at that, we've embedded a kind of a softening of our current comp just because we're going up against tougher numbers. If you look at the two-year stack, May and June, we're copying a two-year stack that's the toughest of the year.

Speaker Change: Yeah, I would say as we look at the next month and a half if you look at June that was our toughest comp.

Speaker Change: One year.

Speaker Change: Comp basis to lap and so as we're looking square at that we've embedded.

Speaker Change: Kind of a softening of our current comp just because we're going up against tougher numbers.

Speaker Change: If you look at the two year stack may in May and June were Comping, a two year stack. That's that's the toughest of the year and so it's really early in the year for us to declare a victory.

James G. Conroy: And so it's really early in the year for us to declare victory, so we have embedded some conservatism there. I would say that, as I just mentioned a minute ago, Steve, the... Hooding. You know, a reduction or some conservatism in the second half of the year, particularly in the third quarter when we do have some more macro events or some calendar shifts that are a little bit harder to plan through. That's probably where I would say we have the most conservatism in the guide.

Speaker Change: So we have embedded some conservatism there I would say that as I just mentioned a minute ago Steve.

Speaker Change: Putting some.

Speaker Change: A reduction or some conservatism in the second half of the year, particularly in the third quarter when we do have.

Speaker Change: Some more macro events or some calendar shifts that are a little bit harder to to plan through that.

Speaker Change: That's probably where I would say we have the most conservatism in the guide.

Jim Watkins: Okay, that's helpful. And then you gave some comments around the leverage points for this year with buying an occupancy as G&A and then overall EBIT margin. Do you see those as the run rate going forward beyond fiscal 25 as the right level to leverage?

Speaker Change: Okay. That's helpful. And then you gave some comments around the leverage points for this year with buying and occupancy SG&A and then overall EBIT margin do you see those as the run rate going forward beyond fiscal 'twenty five is the right level to leverage.

Speaker Change: I think so I think for right now that's where we got him again.

Jim Watkins: I think so. I think for right now, that's where we've got them.

Steven Emanuel Zaccone: Again, the.., you know, the EBIT leverage at 2% to 3% or somewhere, I'm sorry, the 3.5% is really kind of the..., youtube.com.uk lower sales volume and a higher occupancy rate than a more mature store, you know, that's just a little bit higher of a hurdle that we've got to clear at a 6% comp to get leveraged there. The nice thing is that with the merchandise margin growth that we've seen, you know, 650 basis points over the last six years and another guide this year at 110 basis points.

Speaker Change: Okay.

Speaker Change: The EBIT leverage.

Speaker Change: Leverage at a 2% to 3% or somewhere.

Speaker Change #100: I'm sorry, the three 5%.

Speaker Change: <unk> is really kind of the <unk>.

I would: Right that I would I would kian on again, the SG&A leverage at 2% I think that stays there it's been roughly around that level. It was a little bit higher last year, and so I think it stays at 2% maybe comes down a little bit more and then on the buying occupancy and distribution center costs. The way we've been layering in the new stores and.

I would: Their occupancy rate as they open.

I would:

I would: Lower sales volume and a higher occupancy rates than our more mature store, that's just a little bit higher of a hurdle that we've got a clear had a 6% comp to get leverage there.

I would: Nice thing is that with the <unk>.

I would: Merchandise margin growth that we've seen 650 basis points over the last six years and another guide this year at 110 basis points, it's really.

Steven Emanuel Zaccone: It's really, you know, allowing our margin to continue to be strong and the EBIT margin to have a really nice Great, thanks for all the detail. Thank you. Your next question comes from Maks Rakhlenko from TD Cohen. Please go ahead.

I would: Allowing our margin to continue to be strong and the EBIT margin two to happen.

I would: Really nice.

I would: Leverage point for a company that's growing units at 15%.

Speaker Change: Great. Thanks for all the detail.

Speaker Change #101: Thanks, David.

Speaker Change: Your next question comes from Max <unk> from TD Cowen. Please go ahead.

Operator: Your next question comes from Maks Rakhlenko from TD Cohen. Please go ahead.

Max: Great. Thanks, a lot guys. So first can you remind us how youre thinking about the new store comp waterfall and then is historically the chain was able to comp.

Speaker Change #102: At a high single digit rate, what do you think the normalized gulfport rate deeper business.

Max <unk>: On the on the new store waterfall it'll be interesting to see what happens now with the business starting to inflect positively what we had seen in the most recent years couple of years is new stores when they turned com.

Maksim Rakhlenko: On the new store waterfall, it'll be interesting to see what happens now with the business starting to inflect positively. What we have seen in the most recent years, a couple of years, is that new stores, when they turned calm, their one-year comp was sort of in line with the rest of the business. I see no reason to believe that, over time, we shouldn't be able to get back to a new store waterfall, sort of a more traditional waterfall. Let's do it.

Max <unk>: Their one year comp was sort of in line with the rest of the business.

Max <unk>: I see no reason to believe that over time, we shouldnt be able to get back to a new store waterfall sort of a more traditional waterfall.

Max: The.

Max: The only other thing that sort of.

James G. Conroy: The only other thing that sort of is in the mix there is that our new stores are opening at so much higher volumes than they did when we had a really strong waterfall. As you know, we used to open stores for $1.7 million. Now they're north of $3 million.

Max: Is in the mix there is our new stores are opening had so much higher volumes than they had when we had a really strong waterfall.

Max: As you know we used to open stores and $1 $7 million now, they're north of $3 million.

James G. Conroy: But I expect that over time, we'll get that new store waterfall back. I don't think that'll be in the next couple of quarters, though. In terms of the underlying comp performance of the business, if you go back to our long-term algorithm, we would always say low to mid single-digit comps. I think that's where the business should ultimately settle in.

Max: But I expect that over time, we'll get that new store waterfall back I don't think that'll be in the next couple of quarters, though.

Max: In terms of the underlying comp performance of the business.

Max: If you go back to our long term algorithm, we would always say low to mid single digit comps I think that's where the business should ultimately settle in at.

Max: We are a victim of course, two posting a 53, 7% a few years ago.

James G. Conroy: We are a victim, of course, to posting 53.7% a few years ago. And when we look at that step function change, and Sal, and then realize that we gave back almost nothing the year after that, just a small piece the next year. We're pretty encouraged that we've held on to sort of a... Once-in-a-lifetime comp. But I think over time, we'll get back to that low to mid-single-digit comp growth. And based on what we're seeing right now, I think it could come sooner rather than later. We're clearly not guiding that for this year, but perhaps as we get into the next fiscal year.

Max: And when we look at that step function change in sales.

Max: And then realize that we gave back almost nothing in the year after that and just a small piece in the next year, we're pretty encouraged that we've held on to sort of.

Max: Once in a lifetime comp.

Max: But I think over time, we'll get back to that low to mid single digit comp growth.

Max: And basically we're seeing right now because they can could come sooner rather than later, we're clearly not guiding that for this year, but perhaps as we get into the next fiscal year.

Max: Yeah.

Speaker Change #107: Right. That's great. Thanks, a lot and then just given the conservatism in the comp guide is there a rule of thumb that we should consider for potential margin upside if comps do outperform expectations.

Max <unk>: Yes, I think Max it's using the leverage points that I just provided.

Jim Watkins: Yeah, I think, Maks, just using the leverage points that I just provided should give you the best indicator of that. You can also look at the low and the high end of the range and see, you know, kind of how we've got that modeled in there from an EBIT margin perspective. Again, if you're just looking at gross margin, you know, we'll get an improvement in gross margin year over year just by beating the high end of the comp guide range, and then you kind of work through the leverage points on your way down from there.

Max: That should get you that.

Max: Best.

Max: Indicator that you can also look at the low and the high end of the range and see.

Max: Kind of how we've got that modeled in there from a EBIT margin perspective.

Max: Again, if you just look at gross margin.

Max: We will get.

Max: And improvement on gross margin year over year just by.

Max: Beating the high end of the comp guide range, and then kind of work through the leverage points on your way down from there.

Speaker Change #106: Great. Thanks, a lot guys and best of luck.

Speaker Change #108: Thanks, Max Thanks Max.

Speaker Change #119: Your next question comes from Dylan Carden from William Blair. Please go ahead.

Operator: Your next question comes from Dylan Carden of William Blair. Please go ahead. Okay, great. Thanks.

Speaker Change #114: Okay, great. Thanks.

Jim Watkins: Jim W. I think we've talked in the past about private label penetration, maybe getting to where it seems to decline before it starts to grow. I'm wondering if that's still the case as we look at the first couple of quarters.

Dylan Douglas Carden: Okay, great. Thanks. First, just a really simple one.

Dylan Douglas Carden: First just a rough number one.

James M. Watkins: Ken W.

Speaker Change #105: I think we've talked in the past.

James M. Watkins: Private label penetration may be gaming or <unk>.

Speaker Change #105: Decline before it starts to grow in the morning.

Max: Okay.

Speaker Change #112: Good quarter.

Speaker Change #116: I'm looking at this first one.

Dylan Douglas Carden: Yeah, the exclusive ramp penetration will be back to growth. I think I said on the last quarter call that it would be a one-quarter situation where the exclusive ramp penetration would be negative. This quarter, we're planning that to be up 50 to 80 basis points, and the following quarter will be less than the 110 basis points of exclusive ramp penetration we guided for the year. And then, as we get into Q3 and Q4, we're going to really see that ramp back up again north of the 110 basis points for the rest of the year.

Speaker Change #111: Yeah, the exclusive brand penetration.

Speaker Change #104: We'll be back to growth I think I said on the last quarter call it would be a one quarter.

Speaker Change #104: Situations, where the exclusive brand penetration would be negative this quarter, we're planning that to be up 50 to 80 basis points. The following quarter will be.

Speaker Change #104: Less than the 110 basis points of exclusive brand penetration, we guided for the year and then as we get into Q3 and Q4.

Speaker Change #117: And I really see that ramp back up again, north of 110 basis points for the rest of the year.

Speaker Change #117: Great.

James G. Conroy: And then they kind of ask the question, where... [inaudible] All of it. Does it make sense that the business is inflecting here? I mean, if you look at new customer file repurchase trends or, you know, the latest business, how much of that have you lost relative to peak? You know, what might be happening in some of your end markets. I mean, are there other more tangible drivers? If you need to unwind, also, you know, be on the phone, make sure it's turned on.

Speaker Change #110: And then they kind of ask a question.

Speaker Change #110: The positive news around let's call it.

Speaker Change #110: The business is.

Speaker Change #115: Let's see here.

Speaker Change #110: Look at new customer file purchase.

Speaker Change #110: Trends or.

Speaker Change #110: How much of that loss.

Speaker Change #110: What might be happening from your end markets.

Speaker Change #110: Other more tangible drivers.

Speaker Change #110: Online.

Speaker Change #110: Sure.

James G. Conroy: And I guess one embedded question to that is, if you look at or think about New Story Waterfall, are you starting to see that? sort of flat year one in some of these newer stores that might portend being able to accomplish the entire fleet at that.

Speaker Change #110: Okay.

Speaker Change #122: And I guess one is that a question to that is if you look at what we think about new store waterfall.

Speaker Change #122: Starting to see that.

Speaker Change #118: Last year, one in some of these newer stores that Mike.

Speaker Change #110: More deals.

Speaker Change #110: Okay.

James G. Conroy: Yeah, I think the drivers, I think there's a couple of macro drivers, right? I think inflation, while persistent, is a little bit less of a shock to the system for our customers, and they're sort of back and shopping again. I think many of our functional industries and customers are buying functional products are starting to return. And because we're seeing some improvement in some of those businesses. We've done some things also, I think, from an assortment perspective that have helped drive additional sales. I'll give you an example. Wee.

Speaker Change #110: Yes.

Speaker Change #123: Thank the drivers I think there's a couple of macro drivers right I think inflation, while persistent is a little bit less of a shock to the system for a customer and they're sort of back in and shop.

Speaker Change #110: Shopping again, I think many of our functional industries and functional.

Speaker Change #110: Yeah.

Speaker Change #110: Customers are buying functional product are starting to return.

Speaker Change #110: And because we're seeing some improvement in some of those businesses.

Speaker Change #110: We are.

Speaker Change #110: We've done some things also I think from an assortment perspective that has helped.

Speaker Change #110: Drive additional sales so I give you an example.

Speaker Change #110: We.

James G. Conroy: Over the last few years, in an inflationary environment, we've continued to pass cost increases through in terms of our retail price. And when we did that, we started vacating some more affordable price points in men's cowboy boots and ladies' cowboy boots, as two examples. I think the merchant team has done a really nice job of filling in some of those price points, and we're starting to see some nice momentum in sort of the more moderately priced goods where we had sort of inflated our way out of some of those price bands.

Speaker Change #110: Over the last few years in a an.

Speaker Change #110: An inflationary environment, we've continued to pass cost increases through.

Speaker Change #110: In terms of our retail pricing and when we did that we started vacating some more affordable price points in men's cowboy boots, ladies cowboy boots as two examples I think the merchant team has done a really nice job of filling in some of those price points.

Speaker Change #110: And we're starting to see some nice momentum in sort of a more moderately priced goods.

Speaker Change #110: Where we had sort of inflated our way out of some of those price bands.

Speaker Change #110: So hopefully that answers your question, it's nice to see.

James G. Conroy: So hopefully that answers your question. It's nice to see sort of all of the categories strengthening, both channels strengthening, and having sales. The sequential improvement in sales being driven by a sequential improvement in transactions at an average store. Thanks, y'all.

Speaker Change #110: Sort of all of the categories strengthening both channels strengthening.

Speaker Change #110: And having the sales.

Speaker Change #110: The sequential improvement in sales being driven by a sequential improvement.

Speaker Change #110: Transactions on an average store.

Speaker Change #125: Thank you Brian.

Bill: Thanks Bill.

Speaker Change #125: Yes.

Speaker Change #127: Your next question comes from Jonathan Spitzer from BT AG. Please go ahead.

Operator: Your next question.

Jonathan Robert Komp: Hi, Thanks for taking my question. So I was just starting up.

Speaker Change #120: And this year, what's the split between new markets and legacy markets and maybe give us an update on somehow.

Speaker Change #124: From the New York stores are performing on some of the newer markets that you've opened thank you.

Speaker Change #129: Sure, it's a little hard to say new markets versus existing markets. Because we are now in almost every state at least in the 48 contiguous states.

James G. Conroy: Sure, it's a little hard to say new markets versus existing markets because we're now in almost every state, at least in the 48 contiguous states. The new store, so let me give you a number that might guide you.

James G. Conroy: I would say two-thirds of the stores that we're opening are in markets where we have some presence, and maybe one-third of the stores are in either brand new markets, which there are fewer and fewer of, or markets that are very underpenetrated. In terms of the new store performance, It's a... It just continues to be a very good news story. We underwrite.

Speaker Change #124: The new store. So let me give you a number that that might guide you I would say.

Speaker Change #124: Two thirds of the stores that we're opening are in markets, where we have some presence and maybe one third of the stores are in either brand new markets, which there is fewer and fewer of or markets that are very underpenetrated.

Speaker Change #124: In terms of the new store performance.

Speaker Change #124: It's a.

Speaker Change #124: It just continues to be a very good news story.

James G. Conroy: On average, we underwrite new stores to do about $2 million in sales. And at $2 million, they achieve the return on invested capital threshold that we hope for. And they're doing more than $3 million.

Speaker Change #124: We underwrite.

Speaker Change #124: On average, we underwrite new stores to do about $2 million in sales and a 2 million. They achieve the return on invested capital threshold that we hoped for.

Speaker Change #124: And they are doing more than 3 million and that is pretty consistent across the country.

Speaker Change #124: In in all sorts of markets, including markets that you wouldn't necessarily think are traditional western markets.

Speaker Change #131: Great and maybe just on the E Commerce business. It was nice to see that that 10 crews.

James G. Conroy: And that is pretty consistent across the country, in all sorts of markets, including markets that you wouldn't necessarily think are traditional Western markets. Great, and maybe just on the e-commerce business, it was nice to see that start to improve. I know it's been a longer haul than expected there.

Speaker Change #133: A longer haul than expected there or just maybe give your thoughts on what's been driving that is that just kind of the broader improvement that you've seen the business or is there anything different that you're doing on the marketing side.

James G. Conroy: Just maybe see your thoughts on what's been driving that. Is that just kind of a broader improvement that you've seen in the business, or is there anything different that you're doing on the marketing side? I think there are a couple of things that the Let's just focus on the boot barn dot com business because that's the bigger piece of the business. It's very much a traffic story or traffic on bootbarn.com continues to build quite nicely, and we attribute that to the brand building, the marketing team, in general, and the presence of new stores in new markets. So I'll give you a real number.

Speaker Change #128: I think it's a couple of things.

Speaker Change #128: Let's just focus on the boot barn dot com business, because that's the bigger piece of the business.

Speaker Change #128: It's very much a traffic story our traffic.

Speaker Change #128: On <unk> Dot com continues to build quite nicely.

Speaker Change #128: We attribute that to.

Speaker Change #128: The brand building the marketing team in.

Speaker Change #128: In general the presence of new stores in new markets.

Speaker Change #128: So I'll give you I'll give you a real number in in the first quarter to date the traffic to the site is up 20%.

James G. Conroy: In the first quarter, quarter to the day, the traffic to the site is up 20%. So conversion is down slightly, but our revenue is up nicely there. And from a marketing standpoint, we have a pretty consistent approach to our digital spend. We are somewhat algorithmic, and we set a return on ad spend target, and we spend up to that point. When the cost per click increases, we spend a little bit less. We still maintain our ROAS target.

Speaker Change #128: So conversion is down slightly so our revenue is up nicely there.

Speaker Change #128: From a marketing standpoint.

Speaker Change #128: We have.

Speaker Change #128: A pretty consistent approach to our digital spend.

Speaker Change #128: We are somewhat algorithmic and we set a return on AD spend target and we spend up to that point when the cost per click increases we spend a little bit less we still maintain our ROE as target and when the cost per click comes down.

James G. Conroy: And when the cost per click comes down, the reverse happens. We get some more sales. We've been able to be a little bit more efficient with our pay-per-click recently. We're using some new tools, typically or mostly through Google, and they seem to be working nicely.

Speaker Change #128: Reverse happens we get some more sales.

Speaker Change #128: We've been able to be a little bit more efficient with our pay per click recently.

Speaker Change #128: We're using some new tools.

Speaker Change #128: Typically or mostly through Google and they seem to be working nicely and so it's nice to see that part of the business increasing.

James G. Conroy: So it's nice to see that part of the business increasing. A reminder though, bootbarn.com isn't really driven by paid traffic. It's a smaller piece of the business. So the bootbarn.com sequential improvement is just a very organic positive and healthy growth driven by more customers coming to the site.

Speaker Change #128: A reminder, though.

Speaker Change #128: Boot barn dot com.

Speaker Change #128: Isn't really driven by paid traffic, it's a smaller piece of the business. So the boot barn dot com sequential improvement is just a very organic.

Speaker Change #128: Positive and healthy growth driven by more customers coming to the site.

Speaker Change #131: Great. Thanks, so much for the color.

Speaker Change #135: Thanks, Sidney Thank you.

Operator: Your next question comes from Jay Sole from UBS. Please go ahead.

Speaker Change #130: Your next question comes from Jay sole from UBS. Please go ahead.

Jay Daniel Sole: Great, thanks so much. Jim, I'm sort of curious about the competitive landscape from sort of the smaller independent mom-and-pop type retail stores out there. I think there's a perception that maybe some of those closed during the pandemic, maybe they reopened. Is that true, and have you seen them, you know, be sustainable, or are they starting to sort of lose some share again?

Jay Daniel Sole: Great. Thanks, so much Jim I'm sort of curious what you see in the competitive landscape from sort of the smaller independent mom and pop type retail stores out there I think there's a perception that maybe some of those closed during the pandemic maybe they reopened.

Jim: That is true and have you seen them.

Annabelle: Annabelle or are they starting to sort of lose some share again. Thanks.

Speaker Change #137: Sure Good question.

James G. Conroy: Sure, good question. We just continue to take share from the mom and pops, so there are fewer now than there were pre-pandemic. It's hard to give you an exact count, but we do know that there have been more closures than openings.

Speaker Change #137: Yeah.

Speaker Change #134: We just continue to take share from the mom and Pops. So there's fewer now than there were pre pandemic. It's hard to give you an exact count, but we do know that there's been more closings than openings.

James G. Conroy: There was a time when their supply chains were struggling more than ours, so we probably had some opportunistic growth there. And now I think they're back to sort of a normal business.

Speaker Change #134: There was a time when their supply chains, we're struggling more than ours, we probably had some opportunistic growth there and now I think they're back to sort of our normal business.

Speaker Change #134: Over time, we will continue to build our market share and take it.

James G. Conroy: Over time, we will continue to build our market share and take it from within the industry and from the mom and pop part of the business. We, of course, have other competitors out there, right? We've got big players like Tractor Supply. We've got online players, et cetera. We've got the whole Farm and Ranch channel.

Speaker Change #134: From within the industry and from.

Speaker Change #134: The mom and pop.

Speaker Change #134: Part of the business we of course have other competitors out there right. We've got big players like tractor supply, we've got online players et cetera.

Speaker Change #134: We've got the whole farm and ranch channel, but where we operate and there's one direct competitor of meaningful size based in Texas, That's a very strong company.

James G. Conroy: But where we operate, there's one direct competitor of meaningful size based in Texas. That's a very strong company. And we go head to head with them in many of our markets. But after that, we're typically going up against an operator that has one or two stores, and they just don't have the professional management team, the systems, etc. to operate effectively against us.

Speaker Change #134: And we.

Speaker Change #134: Go head to head with them and in many of our markets.

Speaker Change #134: But after that we're typically going up against the operator that has.

Speaker Change #134: One or two stores and they just don't have the professional management team the systems et cetera to operate effectively against us.

Jay Daniel Sole: And I think if you were to look at our sales growth over the last few years and compare it to the industry's sales growth, you'd see that we've taken sort of an enormous amount of share; we've doubled our business in the last few years, and the industry certainly hasn't doubled. Okay, that's helpful. Thank you so much.

Speaker Change #134: I think if you were to look at our sales growth over the last few years.

Speaker Change #134: And compare it to the industry sales growth you'd see that we've taken sort of an enormous amount of share we've doubled the business in the last few years in the industry certainly hasnt doubled.

Speaker Change #139: Got it okay. That's helpful. Thank you so much.

Speaker Change #140: Youre welcome.

Speaker Change #142: Your next question comes from Jonathan Komp from Baird. Please go ahead.

Operator: Your next question comes from Jonathan Komp from Baird. Please go ahead. Yeah, I get it.

Jonathan Robert Komp: Yes, hi, good afternoon. Thank you.

Jonathan Robert Komp: Yeah, good afternoon. Thank you. Um, Jim, can I just follow up?

Jim: Jim can I just follow up there has been some scrutiny by some about.

James G. Conroy: There's been some scrutiny by some about your store growth strategy, maybe the predictability of your stores, the amount of CapEx that you're spending. Could you maybe just address sort of the consistency or degree of variability you see in the average store performance? You know, if you break that down by types of markets or other indicators that you watch, both maybe on the returns and also on the CapEx side.

Jonathan Robert Komp: So your store growth strategy, maybe the predictability of your stores.

Speaker Change #141: The amount of Capex that you're spending could you maybe just address sort of the consistency or degree of variability you see.

Jonathan Robert Komp: And the average store performance, if you break that down by types of markets or other other indicators that you watch both maybe on the returns.

Jonathan Robert Komp: Also on the Capex side.

Jonathan Robert Komp: Sure.

Jonathan Robert Komp:

James G. Conroy: So we've called out a 60% return on invested capital for a new store, right? And that's also covering the cost of inventory. That's, I don't know, we think that's a pretty good number. It's certainly higher than our cost of capital. It is extremely consistent.

Speaker Change #143: So we've called out a 60% return on invested capital for new store right and Thats also covering the cost of inventory.

Speaker Change #144: I don't know, we think that's a pretty good number it's certainly higher than our cost of capital.

James G. Conroy: I wouldn't say every single store achieves 60%, but the vast majority do. We also have some crazy, very unique metrics in the world of retail, where every single store in the company is contributing to EBITDA positively, which is just remarkable, right? So if you were just gambling,

Speaker Change #144: It is extremely consistent I wouldn't say every single store achieved 60% of it.

Speaker Change #144: But the vast majority do.

Speaker Change #144: We also have some just.

Speaker Change #144: Crazy.

Speaker Change #144: Very unique metrics in the world of retail.

Speaker Change #144: There every single store in the company.

Speaker Change #144: Is EBITDA positive contributing.

Speaker Change #144: Which is just remarkable right. So if you were if you were just gambling.

James G. Conroy: You would open as many stores as you possibly could because the likelihood of success is extremely high and the likelihood of failure is extremely low. But, you know, we have a whole operation and a field team that needs to manage these businesses, these new stores, we've got buyers that need to fill them with inventory, we've got supply chain challenges, etc. So we can't just open 300 stores overnight. But if we could, we would.

Speaker Change #144: You would open as many stores as you, possibly could because the likelihood of success is extremely high and the likelihood of failure is extremely low.

Speaker Change #145: Yeah, we have a whole operation and our field team that needs to manage these businesses. These new stores, we've got buyers that need development inventory, we've got supply chain challenges et cetera. So we can't just opened 300 stores overnight, but if we could we would.

Speaker Change #145: If we had it.

James G. Conroy: And if we had an investment opportunity that would give us a better than 60% return on cash, we would probably divert some cash to it. I haven't seen one of those in a long time, so we're going to continue to open up our stores. When we look at it by state, we see incredible returns in tried and true states like Texas and California. And, similarly, we see great returns in states like New York and New Jersey. Um, that you wouldn't necessarily think are Western, but the stores are doing extremely well.

Speaker Change #145: And investment opportunity that would give us better than 60% return on cash, we probably divert some cash to it.

Jonathan Robert Komp: Yeah, that's really helpful. Thanks for sharing the additional color.

Speaker Change #145: I haven't seen one of those and in a long time, so we're going to continue to open up our stores.

Speaker Change #145: When we look at it by state we see we see.

Speaker Change #145: Incredible returns in tried and true states like Texas and California.

Speaker Change #145: And similarly, we see great returns in states like New York and New Jersey.

Speaker Change #145: That you wouldn't necessarily think are our western but the stores are doing extremely well.

Speaker Change #146: Yes, that's really helpful. Thanks for sharing the additional color and then.

Jim Watkins: And then, really, for Jim, a broader question, what do you think about the right margin structure for the business? I know two years ago, you had a great all that was, you know, a function of a unique environment. But if you think about the fiscal 2025 guidance in context of ultimately the operating margin potential for the entire business, what's your current thinking on that opportunity?

Speaker Change #147: For either Jim or a.

Speaker Change #148: A broader question, how you think about the right margin structure for that business I know two years ago you had.

Speaker Change #149: High level that was a function of a unique environment, but.

Jim: If you think about the fiscal 2025 guidance in context.

Jim: Ultimately the operating margin potential for the entire business, what's your what's your current thinking.

Jim: On that opportunity.

Jim: Yeah.

Jim Watkins: Yeah, I continue to think that we'll get back up to, you know, 12 to 14% was a range that was put out there a couple years ago. We've been, you know, again, going back to Fiscal 18-19. Our target was to get to 10% for the benefit of everyone on the call. We got to fiscal 21, and we were just about at 10 percent. We had the year in fiscal 22 where we were able to exceed 17 percent, and then we came down to that 11 to 14 percent range since.

Speaker Change #150: I continue to think that we will get back up to.

Speaker Change #150: 12% to 14% with a range that was put out there a couple of years ago. We've been you know again going back to.

Speaker Change #150: Fiscal 18, 19, our target was to get to 10% for the benefit of everyone on the call and as we.

Speaker Change #150: Got to fiscal 'twenty, one we were just about at 10% we had the year in fiscal 'twenty, two where we are.

Speaker Change #150: We're able to exceed 17%.

Speaker Change #150: And then we came down to that.

Speaker Change #150: That 11% to 14% range sets.

Jim Watkins: Our expectation is that as we return to positive comps and we continue to grow, EBIT margin will march right back past the 12 to 14% and back up to 15% over the course of the next five years or so.

Speaker Change #150: Our expectation is that as we returned to positive comps and will continue to grow.

Speaker Change #150: EBIT margin that will March right back.

Speaker Change #150: Past, the 12% to 14% and back up to 15% over the course of the next five years or so.

Speaker Change #150: Yeah.

Jonathan Robert Komp: That's really helpful. Thanks again.

Speaker Change #151: That's really helpful. Thanks again.

Speaker Change #152: Thanks, Tom Thanks, Jim.

Operator: Thanks, John. Thanks, Jan.

Operator: Your next question comes from Jeremy Hamblin from Craighalem Capital Group. Please go ahead.

Speaker Change #153: Your next question comes from Jeremy Hamblin from Craig Hallum Capital Group. Please go ahead.

Jeremy Scott Hamblin: Thanks, and congrats on the improved results.

Jeremy Scott Hamblin: Thanks, and congrats on the improved results. I wanted to just quickly touch on sourcing for a second and, you know, get a sense of, you know, with your exclusive brands continuing to penetrate and industry conditions improving a bit, with your comps improving, you know, just first to get a sense of what you are seeing from some of your suppliers in terms of pricing. And then secondly, as it relates to your sourcing in general, and, you know, the noise around the potential for tariffs, you know, to increase on a go forward basis in 2025, obviously, hypothetically, what type of exposure do you have at this point in China?

Jeremy Scott Hamblin: I wanted to just quickly touch on sourcing for second and get a sense of with your with your exclusive brands continuing to penetrate.

Speaker Change #155: And industry conditions, improving a bit with your comps improving yeah, just first to get a sense from what you're seeing.

Speaker Change #155: From some of your suppliers in terms of.

Speaker Change #155: Pricing.

Speaker Change #155: And then secondly, as it relates to your sourcing in general.

Speaker Change #155: And the noise around potential for tariffs.

You know to increase on a go forward basis in 2025.

Speaker Change #155: Obviously hypothetically.

Speaker Change #156: What type of exposure do you have at this point in China, and how does that compare to.

Speaker Change #156: Let's say 2018, when the tariffs really ramped up for the first time.

Speaker Change #157: Okay, Great question, Jeremy on the first piece.

James G. Conroy: Okay, great question, Jeremy. On the first piece, many of our big vendors have really stepped up with us recently and are passing along some of their efficiencies. So whether that be the reversal in freight rates, inbound freight rates that had spiked up and are now back down, they've done a nice job of passing that along. We also have the ability to buy in quantity and receive discounts from many of our big vendors. So what we'll do is we'll look at products that have a very low fashion risk, which is a great deal of our merchandise, and we will buy vendor-direct containers, which is a lower cost to serve for our vendors, so they'll pass along a nice discount to us.

Speaker Change #157: Many of our big vendors have really stepped up with us recently and are passing along some of their efficiencies so whether that be.

Speaker Change #157: Yeah.

Speaker Change #157: The reversal in freight rates inbound freight rates that had spiked up and are now back down.

Speaker Change #157: <unk> done a nice job of passing that along we also have the ability to buy in quantity discounts from many of our big vendors. So what we'll do is we'll look at product that has very low fashion risk, which is a great deal of our merchandize and we will buy.

Speaker Change #157: Vendor direct containers.

Speaker Change #157: Which is.

Lower cost to serve for our vendors. So therefore, they'll pass along a nice discount to us.

James G. Conroy: And then some of the input costs are going down for them, and we're benefiting from that to some degree. I always wished it was more, but to some degree, we're getting some of that passed through to us as well.

And then some of the input costs are going down for them and we're benefiting from that to some degree.

Speaker Change #157: I always wish there was more but to some degree we're getting some of that pass through to us as well. So when we look at the I am you an hour on order both from third party vendors and from our exclusive brand vendors, we see an improved I M U.

James G. Conroy: So when we look at the IMU in our on-order, both from third-party vendors and from our exclusive brand vendors, we see an improved IMU, kind of inbound. And as those goods get received and then turned through our average cost methodology of how we account for our inventory, we know that improved markup is coming. On the second part of your question...

Speaker Change #157: Kind of inbound.

Speaker Change #157: And as those goods get received and then turn through the they are average cost.

Speaker Change #157: Phonology of how we account for our inventory we know that it improved markup is is coming.

Speaker Change #157: On the second part of your question.

James G. Conroy: In terms of our exposure to tariff or potential tariff countries, The Exclusive Brand Team has done a really nice job of diversifying our risk, and while historically we would say 50% of our inventory comes from China, when we look at the on order, it's closer to 40; it's actually a little bit under 40. So they have done a really nice job of stepping down our exposure to China over the last few years.

Speaker Change #157: In terms of our exposure to.

Speaker Change #157: Paris or potential tariff countries.

Speaker Change #157: We do exclusive brand team has done a really nice job of diversifying our risk and while historically, we would say 50% of our inventory comes from China. When we look at the on order it's closer to 40, it's actually a little bit under 40. So.

Speaker Change #157: They have done a really nice job of stepping down our exposure to China over the last few years.

Speaker Change #157: And.

James G. Conroy: Of course, we'd prefer to operate in an environment without tariffs, but if it were to go in that direction, we think we can manage through it. We've done that once before. Perhaps we're even strengthened competitively given the other levers that we have within our supply chain and with our ability to shift into exclusive brands, etc. So I think that answers both of your questions, but if not, come back. No, I think it does not.

Speaker Change #157: Of course, we prefer to operate in an environment without tariffs, but if it were to go in that direction. Yeah. We think we can manage through it we've done that once before.

Speaker Change #157: Perhaps we're even strengthened competitively given the other levers that we have within our supply chain and with our ability to shift into exclusive brands et cetera.

Speaker Change #157: I think that answers both of your questions, but if not come back to me.

Jeremy Scott Hamblin: No, I think it does. Thanks and congratulations, and good luck this year.

No I think that does it.

Speaker Change #158: Thanks, and congrats and good luck this year.

Jeremy Scott Hamblin: Thanks, very much thanks Jeremy.

Speaker Change #159: Your next question comes from niche.

Operator: Your next question comes from Mitch Kummetz from CPART Research. Please go ahead.

Speaker Change #160: From Seaport Research. Please go ahead.

Speaker Change #161: Yes, thanks for taking my questions.

Mitchel John Kummetz: Yes, thanks for taking my questions. First question, I was hoping to just get a little bit more color on the comparisons because you did mention that some of your conservatism around same-store sales is the Tupper comparisons. I'm looking at slide 16, which is the store comp, and I can see that May is a tough one year, and it's particularly a tough two years. Can you tell us, so you're running a plus one in stores for the first two weeks? Can you tell us what those two weeks were up against, you know, last year and on a two-year basis?

First question I was hoping to just get a little bit more color on the compares because.

Speaker Change #161: You did mention that some of your conservatism around same store sales is the tougher compares.

Speaker Change #162: Im looking at slide 16, which is the store comp and I can see that may is a tough one year.

Speaker Change #162: Particularly a tough two year.

Speaker Change #163: Can you tell us so you're running a plus one one in stores for the first two weeks can you tell us what those two weeks were up against last year and on a two year basis.

Speaker Change #164: I can tell you for last year I don't know if I know it off the top of my head on a two year basis. The month of May last year was pretty consistent from week to week to week.

Jim Watkins: I can tell you for last year; I don't know if I can remember it off the top of my head on a two-year basis, but the month of May last year was pretty consistent from week to week to week.

Speaker Change #163: Okay.

Speaker Change #163: Okay.

Jim Watkins: Okay, you don't, Jim, you don't know what it was on a two-year, or what it was two years ago? I'm sorry, the, the, uh, the week.

Speaker Change #165: Okay. Jim you don't know, what's going to work on severe or what it was two years ago.

Speaker Change #166: I'm sorry, the AR the weekly cadence of the business up to week 52 years ago has escaped my memory.

Jim Watkins: The weekly cadence of the business of two years ago has escaped my memory. Let me see if we can pull it for you. I know we have a follow-up call with you. If it's helpful, maybe we can provide it there.

Speaker Change #167: I know we have a follow up call with you. If it's helpful. Maybe we can provide you there.

Jim Watkins: I can tell you that you called it out, though. You're right. On a one-year basis, June and July are more difficult on a two-year basis. At least on a consolidated basis, May is our most difficult comparison on a two-year basis. Yeah, I don't want to read too much into that and say that business is going to just continue to get even better from where it is today, but we are having our strongest month on a two-year basis right now.

Speaker Change #168: I can tell you you called it out there youre right on a one year basis.

Speaker Change #168: June and July are more difficult on a two year basis.

At least on a consolidated basis may use our most difficult comparison on a two year basis.

Speaker Change #169: Yes, I don't want to read too much into that and say that business is going to just continue to get even better from where it is today, but we are cycling our strongest month on a two year basis right now.

Mitchel John Kummetz: And then my second question, I'm just trying to preempt the emails I might be getting here, but, you know, you guys have obviously shown some nice sequential comp acceleration. One way to potentially do that is to just buy comp with promotions. The merchandise margin guide for the quarter would suggest that you guys are not doing that, but I just want to hear it from you that that is not necessarily contributing to the comp acceleration.

Speaker Change #170: And then my second question.

Speaker Change #170: Trying to preempt the emails I might be getting here, but.

Speaker Change #171: You know you guys have obviously shown some nice sequential comp acceleration.

Speaker Change #172: One way to potentially do that is to just bicarb with promotions. The the merch margin guide on the quarter would suggest that you guys are not doing that but I just wanted to hear it from you that that is not contributing necessarily to the comp acceleration.

Speaker Change #173: Yes, I think Thats, a very fair statement, we are not buying our comp.

James G. Conroy: Yeah, I think that's a very fair statement. We are not buying our comp. Our margin rate quarter today is up year over year. So it's, we haven't really changed our promotional posture. I think it's a very fair question. I know you get that all the time, but I think you could ask us that question for the next five years, and the answer will be exactly the same, which is that we don't really change our promotional posture from year to year.

Speaker Change #174: Our margin rate quarter to date is up.

Speaker Change #174: Year over year.

Speaker Change #174: Yeah.

Speaker Change #174: So it's we haven't really changed our promotional posture I think it's a very fair question and I know you get that all the time, but I think you can ask us that question for the next five years and the answer will be exactly the same which is we don't really change our promotional posture from year to year, we occasionally ebb and flow a little bit more or less into.

James G. Conroy: We occasionally ebb and flow a little bit more or less into moving through some clearance, but clearance is a very small part of our business. But by and large, our promotional posture is at least big picture every year for the last 12 years.

Speaker Change #174: Moving through some clearance clearance is a very small part of our business.

Speaker Change #174: But by and large our promotional posture is almost exactly the same at least big picture every year for the last 12 years I've been CEO of this company.

Jim Watkins: Coming back to you, on the two-week, two-year-ago... May number, it was plus seven.

Speaker Change #175: And then just coming back to you.

Speaker Change #175: On the the two week two year ago.

Speaker Change #175: Main number it was plus 17.

Mitchel John Kummetz: Okay, plus 17 is the compare on a two-year for the first two weeks. All right, that's very helpful. Thank you.

Speaker Change #176: Okay, plus 17 is the compare on a two year for the first two weeks alright, that's very helpful. Thank you.

Speaker Change #177: Of course, thanks Mitch.

Operator: Of course. Thanks, Mitch. Thanks, Mitch.

Your next question comes from Corey Carlo from Jefferies. Please go ahead.

Operator: Your next question comes from Corey Tarlowe from Jeffrey's. Please go ahead.

Hi, good afternoon.

Corey Tarlowe: Hi, good afternoon.

Corey Tarlowe: I was wondering if you could talk a little bit about what you've seen in the.

James G. Conroy: I was wondering if you could talk a little bit about what you've seen in the oil markets and in your core functional business, Jim. I think you mentioned in response to an earlier question that, and you can correct me if I'm wrong, but you said your core business is doing a little bit better. So, could you just remind us what you're seeing, how big that is as a percentage of your business? And clearly, that's not a product that you'd have to be marking down either, so it should be potentially beneficial from a margin standpoint as well.

Speaker Change #179: Oil markets and in your core functional business, Jim I think you mentioned in response to an earlier question that and correct me if I'm wrong, but I think you said your functional business is doing a little bit better. So could you just remind us what you're seeing how big that is as a percentage of your business and clearly that's not product that you would have to be marking down.

Speaker Change #179: Either so it should be potentially beneficial from a margin standpoint as well.

Jim: Yes, so it's a very good question.

James G. Conroy: Yeah, so it's a very good question. What Work Boots has gotten sequentially better, in the spirit of full transparency, Work Boots' quarter to date is down about 1.5%, so it's not completely turning positive yet. And you're right to call out that that piece of our business has virtually no significant markdown exposure. We do have a significant profitable business in men's Western wear, both boots and apparel. So men's Western denim has been a very strong business for us for several months now and has accelerated even further to kind of mid-single digits for the current quarter, high single digits, almost double digits in May. And a good portion of our men's western denim business is exactly what you're describing, very functional in nature. Similarly, men's cowboy boots turned positive in April and strengthened slightly in May.

Speaker Change #180: Work boots has gotten sequentially better.

Speaker Change #180: In the spirit of full transparency work boots quarter to date is down about one 5%. So it's not completely turning positive yet.

Speaker Change #181: And youre right to call out that piece of our business has.

Speaker Change #181: Virtually no significant markdown exposure.

Speaker Change #181: We do have a significant functional business in mens western both boots and apparel. So men's western denim has been a very strong business for us for <unk>.

Speaker Change #181: For several months now and has accelerated even further to kind of mid single digits for the current quarter high single digits almost double digits in may and a good portion of our mens western denim business is exactly what you're describing.

Speaker Change #181: Very functional in nature. Similarly men's cowboy boots has turned positive in April strengthened slightly in may so that business is sort of a mid single digit comp now and a good portion of that business is functional in nature as well. So it's it's nice to see those businesses sort of lead the charge.

James G. Conroy: So that business is sort of a mid-single digit comp now, and a good portion of that business is functional in nature as well. So it's nice to see those businesses sort of lead the charge in terms of turning positive. We're also seeing, and it's a little bit too early to declare victory on this, but we are also seeing our ladies' business, while still in terms of pulling the overall countdown. So those businesses. Not all of it is fashion, but the ladies' business tends to be split between function and fashion, and those businesses have improved sequentially but are still slightly negative.

Speaker Change #181: <unk> in terms of turning positive.

Speaker Change #181: We're also seeing in.

Speaker Change #181: It's a little bit too early to declare victory on this but we also see our seeing our ladies business, while still comp eroding.

Speaker Change #181: Not dragging as much.

Speaker Change #181: In terms of pulling the overall comp down so those businesses not all of it is fashion, but the ladies business tends to be split between function and fashion and those businesses have improved sequentially, but are still slightly negative.

Speaker Change #181: Yeah.

James G. Conroy: Great. That's very helpful. I was just curious as well about the newer exclusive brands that you've launched. I believe there were... 4 of them, maybe within the last 18 months or so. How are those trending, and are there any new developments that you could share around those?

Speaker Change #182: Great that's very helpful.

Speaker Change #183: I was just curious as well on.

Speaker Change #184: On the newer exclusive brands that you've launched I believe there were.

Speaker Change #185: Four of them, maybe within the last 18 months or so how are those trending and are there any new developments that you could share around those.

Speaker Change #186: So the exclusive brand portfolio across the board is doing quite well.

James G. Conroy: So the exclusive brand portfolio across the board is doing quite well. So our number one brand in the company right now is Cody James, just nudging out a fantastic brand called Ariat, who's our number two brand now. And if we look at our top eight brands, half of them are exclusive brands, and half of them are third-party brands. Getting to the heart of your specific question, the new brands have been, overall, I'd say, pretty good, and they've sort of met or exceeded our expectations.

Speaker Change #186: Our number one brand in the company right now is Cody James.

Speaker Change #186: Just nudging out.

Speaker Change #186: Fantastic brand called area, who is our number two brand name.

Speaker Change #186: And if we look at our top.

Speaker Change #186: <unk> brands half of them are exclusive brands and half of them are third party brands.

Speaker Change #186: Getting to the heart of your specific question the new brands have been overall.

Speaker Change #186: Say pretty good and they've sort of met or exceeded our expectations. We're tweaking some of the styling for some of it but we don't foresee any significant downside risk and we do expect those to sort of grow and and continue to build around their footprint.

James G. Conroy: We're tweaking some of the styling for some of them, but we don't foresee any significant downside risk, and we do expect them to sort of grow and continue to build around their footprint over the next few years where they started. So I'll give you one example.

Speaker Change #186: Over the next few years of where they started so I'll give you. One example, we have a brand called ranked 45, which is.

James G. Conroy: We have a brand called Rank 45, which is very strongly targeting a rodeo customer and a slightly younger rodeo customer. And that brand has really started to build on the men's side quite nicely. We have a great spokesperson there who's a rodeo athlete named Rocker Steiner. And that is sort of as core of a customer as we can get. And it's nice to be able to put a brand out there that's going after a core Western consumer and a younger consumer and a rodeo athlete and have it do so well. So we're pretty encouraged by the new brand launch. Great

Speaker Change #186: Very strongly targeting a rodeo customer and a slightly younger radio customer and that brand has really started to build.

Speaker Change #186: On the mens side quite nicely, we have a great spokesperson there who's a rodeo athlete named Brocker Steiner and that is sort of as core of a customers. We can get and it's nice to be able to put our brand out there that's going after a core western consumer.

Speaker Change #186: A younger consumer and a rodeo athlete and have it do so well so we're pretty encouraged by the new brand launches.

Corey Tarlowe: Great. Thank you so much and best of luck.

Speaker Change #188: Great. Thank you so much and best of luck.

Speaker Change #187: Okay great.

Operator: Your next question comes from Sam Poser from Williams Trading. Please go ahead. I'm actually going to end.

Speaker Change #189: Your next question comes from Sam Poser from Williams trading. Please go ahead.

Samuel Marc Poser: Good afternoon. Thanks for taking my question. I just have a question. In the fashion businesses, can you talk a little bit about how the difference or how the management of those businesses is evolving from the management of the core, or if they are?

Speaker Change #190: Good afternoon, Thanks for taking my questions.

Samuel Marc Poser: I was just a question of in the in.

Speaker Change #205: In the fashion businesses can you talk a little bit about how.

Speaker Change #192: The difference or how the management of those business businesses are evolving from the management of the core or if they are.

Speaker Change #192: Sure.

James G. Conroy: They are managed quite differently, right? So when we, if I use the complete extreme ends of the spectrum, and look at ladies' cowboy boots, which are certainly the fashionable side of that, or the fashionable side of ladies' western apparel, and I compare that to men's denim or work boots. The fashion pieces turn faster, we manage inventory much more tightly, we are even more regional in our assortment there, and we operate with a tremendous amount of agility there. Which is why, in the most recent fiscal year, despite the fact that we've seen sort of very significant negative same-store sales in our ladies' businesses, we still continue to build a merchandise market.

Speaker Change #193: They they are managed quite differently right. So when we if I use complete.

Speaker Change #193: The extreme ends of the spectrum.

Speaker Change #193: And I look at it.

Speaker Change #193: Ladies cowboy boots, and certainly the fashionable side of that or the fashionable side of ladies' western apparel.

Speaker Change #193: And I compare that to men's denim or work boots.

Speaker Change #193: The fashion pieces turned faster, we manage inventory much more tightly.

Speaker Change #193: We are even more regional in our assortment there.

Speaker Change #193: And we operate with a tremendous amount of agility, there which is why.

Speaker Change #193: In the most recent fiscal year. Despite the fact that we've seen sort of very significant negative same store sales in our ladies business as we still continued to build our merchandise margin. So.

James G. Conroy: So hats off to the team that manages the fashionable piece of the business, still a much smaller part of our overall company, and able to manage and fuel an upcycle, right? They compiled up 100% a few years ago, and on the downside, not a road merchandise margin. So they've done a really good job. And on the basic side, the more staple or commodity side of the business, we have a philosophy of having what we want to be in stock by size in our stores.

Speaker Change #193: Hats off to the team that manages that.

Speaker Change #193: National piece of the business is still the much smaller part of our overall company.

Speaker Change #193: And and able to manage and fuel in up cycle right. They were they comped up 100% a few years ago and on the downside not erode merchandize margins. So they've done a really good job and on the on the basic side, the more staple or commodity side of the business we have a philosophy.

James G. Conroy: So if you go into our stores, you'll see a lot of full shelves. And that is an intention. It's very intentional. And that's the goal there: to never disappoint a customer because the cost of a lost sale far exceeds the cost of a potential markdown on some of these very basic products.

Speaker Change #193: We want to be in stock by size in our stores. So if you go to a search you'll see a lot of full shelves.

Speaker Change #193: And that is an intention is very intentional and that's the goal there is to never disappoint, a customer because the cost of our la Salle far exceeds the cost of a potential markdown on some of these very basic oriented product.

Speaker Change #193: Thanks.

Samuel Marc Poser: Thanks. I have two more things. One, what are you doing, I guess, what are you doing, you added a lot of customers to your, to the loyalty file, comps are still negative, though we're seeing some improvement. What are you really doing to make sure that you're improving the way you get to those customers and keep them coming back more frequently? And secondly, you mentioned that there are eight top brands. I wonder if you could read them off to us? Okay.

Speaker Change #193: More things one.

Speaker Change #194: What are you doing I guess, what are you doing you added a lot of customers to your to the to the loyalty file comps are still negative. So we're seeing some improvement what do you. What are you doing really to make sure that you are improving the way you get to those customers and keep them.

Speaker Change #193:

Speaker Change #195: So keep them coming back more frequently and then secondly, you mentioned that there were a tough brands I Wonder if you could read them off to us.

Speaker Change #193: Okay.

James G. Conroy: Okay, sure. On the first piece... The, you know, we have a very, I don't need the sheet of paper, but on the first piece, we continue to sort of tailor our customer communication by customer segment, right? So, if you are introduced to Boot Barn, and if you're a work customer, you'll hear about us in our work businesses. It may not be the exact industry that you work in, but you'll hear more from us about the work side of And if you're a younger, more fashionable customer. On the ladies' side, you'll hear from us about more ladies' fashion and country music festivals, et cetera.

Speaker Change #196: Okay sure.

Speaker Change #193: <unk>.

Speaker Change #193: On the first piece.

James G. Conroy: In terms of the top eight vendors, that is a very specific question, Sam, but I'll see if I can get to it. I am not going to read them specifically in order, although I don't think the order is necessarily a big surprise. So, Cody James and Cheyenne, Idlewind, and Hawks are the four biggest exclusive brands, and the four biggest third-party brands are Ariad and Wrangler, the two biggest. The other two are Twisted X and Justin. So those are the top eight.

Speaker Change #197: Yes, we have a very underneath.

Speaker Change #197: The sheet of paper.

Speaker Change #197: On the first piece, we continue to sort of tailor our customer communication by customer segment right. So if you are introduced to boot barn.

Speaker Change #197: And you're a work customer youll hear about us on our work businesses may not be the exact industry that you work in but you'll hear more from us about the work side of the business and if you're a younger more fashionable customer.

Speaker Change #197: On the ladies side, you'll you'll hear from us about where leading fashion and country music festivals et cetera.

Speaker Change #197: In terms of that.

Speaker Change #198: [laughter] vendors, there's a very specific question, Sam, but I'll I'll see if I can get through it I'm not going to read them specifically in order auto although I don't think the orders necessarily a big surprise so Cody.

Cody: Cody James and Cheyenne idle wind and Hawks are the four biggest exclusive brands and the four biggest third party brands area and Wrangler are the two biggest the other two are twisted acts and Justin.

Cody: So those are the top eight.

Okay.

Speaker Change #200: Thank you.

Tim: Thanks, Tim.

Speaker Change #202: And there are no further questions at this time I will turn the call back over to Jim Conroy for closing remarks.

Operator: And there are no further questions at this time. I will turn the call back over to Jim Conroy for closing remarks.

James G. Conroy: Very good. Thank you, everyone, for joining the call today. We look forward to speaking with you all on our first quarter earnings. Take care. Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you. Thank you for watching!

James G. Conroy: Very good. Thank you everyone for joining the call today, we look forward to speaking with you all on our first quarter earnings take care.

Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.

Speaker Change #204: Ladies and gentlemen. This concludes today's conference call you may now disconnect. Thank you.

Speaker Change #204: [noise].

Speaker Change #204: Yeah.

Speaker Change #204: Oh.

Speaker Change #204: Okay.

Speaker Change #204: Yeah.

Speaker Change #204: Okay.

Speaker Change #204: Yes.