Q1 2026 Boot Barn Holdings Inc Earnings Call
Got it.
I would now like to turn the conference over to your host Mr. Mark Dovish, Senior Vice President of Investor Relations and finance.
Please go ahead.
Thank you good afternoon, everyone. Thank you for joining us today to discuss boot barn first quarter fiscal 2026 earnings results with me on today's call are John Hayes, Chief Executive Officer, and Jim Watkins Chief Financial Officer.
A copy of today's press release, a long with a supplemental financial presentation is available on the Investor Relations section of boot barns website at boot barn Dot com.
Hi.
Shortly after we end this call a recording of the call will be available as a replay for 30 days on the Investor Relations section of the company's website.
I would like to remind you that certain statements. We will make during this call 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 state.
John Hazen: Good day, everyone, and welcome to the Boot Barn Holdings Inc. first quarter 2026 earnings conference call. As a reminder, this call is being recorded. I would now like to turn the conference over to your host, Mr. Mark Dedovesh, Senior Vice President of Invest Relations and Finance. Please go ahead.
Good day, everyone, and welcome to the Bond Holdings Inc. First Quarter 2026 earnings conference call.
As a reminder, this call is being recorded.
For a more thorough discussion of the risks and uncertainties associated with the forward looking statements to be made during this conference call and webcast. We refer you to the disclaimer regarding forward looking statements that is included in our first quarter fiscal 2026 earnings release as well as our filings with the SEC referenced in that disclaimer, we do not undertake.
I would now like to turn the conference over to your host, Mr. Mark Dedovesh, Senior Vice President of Investor Relations and Finance. Please go ahead.
Mark Dedovesh: Thank you. Good afternoon, everyone. Thank you for joining us today to discuss Boot Barn's first quarter fiscal 2026 earnings results. With me on today's call are John Hazen, 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. I would like to remind you that certain statements we will make during this call 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.
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 John Haines.
Thank you. Good afternoon, everyone. Thank you for joining us today to discuss Boot Barn's first quarter fiscal 2026 earnings results. With me on today's call are John Hazen, Chief Executive Officer, and Jim Watkins, Chief Financial Officer.
Chief Executive Officer John.
The 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.
Thank you Mark and good afternoon. Thank you everyone for joining us on this call I will review, our first quarter fiscal 'twenty six results.
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.
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 up the call for questions.
Mark Dedovesh: Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made during this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements that is included in our first quarter fiscal 2026 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 turn the call over to John Hazen, Boot Barn's Chief Executive Officer. John? Thank you, Mark. And.
We are very pleased with our start to fiscal 'twenty six as first quarter results significantly increased compared to the prior year and exceeded our expectations first quarter revenue increased 19% to $504 million in consolidated same store sales increased nine 4%.
I would like to remind you that certain statements, we will make during this call are forward-looking statements, these forward-looking statements, reflect Bern's, judgment and Analysis, only as of today. And actual results May differ materially from current expectations, based on a number of factors affecting Boop, Barn's business accordingly, you should not Place undue Reliance on these forward-looking statements.
In addition to strong sales growth merchandise margin rate increased to 180 basis points compared to the prior year period.
The strength in sales and margin combined with solid expense control resulted in earnings per diluted share of $1 74 during the quarter, which equates to 38% growth compared to the prior year period of $1 26.
For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements, to be made during this conference call and webcast. We refer you to the disclaimer regarding forward-looking statements that is included in our first quarter, fiscal 2026 earnings release, as well as our filings with the SEC reference to 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 turn the call over to John Hazen. Who runs chief executive officer John.
Ashley Owens: Good afternoon.
Mark Dedovesh: Thank you, everyone, for joining us. On this call, I will review our first quarter fiscal 26 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 up the call for questions. We are very pleased with our start to fiscal 26 as first quarter results significantly increased compared to the prior year and exceeded our expectations. First quarter revenue increased 19% to $504 million, and consolidated same-store sales increased 9.4%. In addition to strong sales growth, merchandise margin rate increased 180 basis points compared to the prior year period.
The team's ability to deliver strong top and bottom line results reflect the execution of our four strategic initiatives, which I'll now spend some time discussing.
Thank you, Mark and good afternoon. Thank you everyone for joining us on this call. I will review our first quarter of fiscal 26 results.
Let's begin with new store growth, we opened 14 stores in the first quarter ending the period with 473 stores across 49 states.
Discussed the progress we have made across each of our four strategic initiatives and provide an update on current business.
Our new stores continued to exceed expectations across all geographies and are projected to generate approximately $3 $2 million in annual revenue and payback in less than two years.
Following my remarks, Jim Watkins will review our financial performance in more detail. Then we will open up the call for questions.
We are on track to open 65 to 70, new stores this year in both legacy and new markets.
We are very pleased with our start to fiscal 26. As first quarter results, significantly increase compared to the prior year and exceeded our expectations.
In addition to strong revenue in their first year of operation New stores are also helping drive same store sales growth once they turn com <unk>.
First quarter revenue increased 19% to $504 million, and consolidated same-store sales increased 9.4%.
New stores opened over the last six years currently comprise approximately 40% of our comp store count and have outperformed stores opened prior to 2019 by approximately 350 basis points over the last year, resulting in more than 100 basis point tailwind to consolidated comps.
In addition to strong sales, growth merchandise margin rate increased 180 basis points compared to the prior year period.
Mark Dedovesh: The strength in sales and margin, combined with solid expense control, resulted in earnings per diluted share of $1.74 during the quarter, which equates to 38% growth compared to the prior year period of $1.26. The team's ability to deliver strong top and bottom line results reflects the execution of our four strategic initiatives, which I'll now spend some time discussing. Let's begin with new store growth. We opened 14 stores in the first quarter, ending the period with 473 stores across 49 states. Our new stores continue to exceed expectations across all geographies and are projected to generate approximately $3.2 million in annual revenue and payback in less than two years. We are on track to open 65 to 70 new stores this year in both legacy and new markets.
The strength in sales and margin combined with solid expense control, resulted in earnings per diluted, share of a 1.74 during a quarter which equates to 38% growth compared to the prior year period of a $1.26.
We are very pleased that our new stores are continuing to attract new customers and grow sales after their initial opening which couples nicely with our sales and customer growth and legacy stores.
The team's ability to deliver strong top and bottom line results reflects the execution of our four strategic initiatives, which I'll now spend some time discussing.
This underscores the growth potential of our new store initiative as we believe we have the market potential to double our store count in the U S alone over the next several years.
Let's begin with new store growth. We opened 14 stores in the first quarter, ending the period with 473 stores across 49 states.
Moving to our second initiative same store sales first quarter consolidated same store sales grew nine 4% with brick and mortar same store sales increasing nine 5%.
Our new stores continue to exceed expectations across all geographies and are projected to generate approximately $3.2 million in annual revenue and pay back in less than 2 years.
We are on track to open 65 to 70 new stores this year in both Legacy and new markets.
Mark Dedovesh: In addition to strong revenue in their first year of operation, new stores are also helping drive same-store sales growth once they turn comp. New stores opened over the last six years currently comprise approximately 40% of our comp store count and have outperformed stores opened prior to 2019 by approximately 350 basis points over the last year, resulting in more than a 100 basis point tailwind to consolidated comps. We are very pleased that our new stores are continuing to attract new customers and grow sales after their initial opening, which couples nicely with our sales and customer growth in legacy stores. This underscores the growth potential of our new store initiative, as we believe we have the market potential to double our store count in the US alone over the next several years. Moving to our second initiative, same-store sales.
The store comp growth was driven by an eight 5% increase in transactions and a 1% increase in units per transaction and flat average unit retail.
In addition to strong Revenue in their first year of operation, new stores are also helping Drive same store sales growth once they turn calm.
From a merchandising perspective, we saw broad based growth across all major merchandise categories in the first quarter led by the combined ladies western boots, and apparel businesses, which comped positive in mid teens.
New stores opened over the last six years currently comprise approximately 40% of our comp store count and have outperformed stores opened prior to 2019 by approximately 350 basis points over the last year.
This was followed by the combined mens western boots, and apparel businesses, which comped positive high single digits, our denim business, which is included in the figures just mentioned comp positive high teens.
Resulting in more than a 100-basis-point tailwind to consolidated comps.
Our work boots business Comped low single digit positive and our work apparel business comp high single digit positive. We are extremely pleased to see the broad based growth across categories continued through the first quarter.
New stores are continuing to attract new customers and grow sales after their initial opening, which couples nicely with our sales and customer growth, and legacy stores.
This underscore is the growth potential of our new store initiative. As we believe we have the market potential to double our store account in the us alone over the next several years.
Okay.
From a store operations perspective, I am proud of the team's performance delivering strong results and best in class customer service during an especially busy quarter and the first quarter. The team was able to opened 14, new stores navigate the complexity of several large scale remodels and worked through labor intensive re ticketing on third party goods.
Mark Dedovesh: First quarter consolidated same-store sales grew 9.4%, with brick-and-mortar same-store sales increasing 9.5%. Store comp growth was driven by an 8.5% increase in transactions and a 1% increase in units per transaction and flat average unit retail. From a merchandising perspective, we saw broad-based growth across all major merchandise categories in the first quarter, led by the combined ladies' western boots and apparel businesses, which comped positive mid-teens. This was followed by the combined men's western boots and apparel businesses, which comped positive high single digits. Our denim business, which is included in the figures just mentioned, comped positive high teens. Our work boots business comped low single digit positive, and our work apparel business comped high single digit positive. We are extremely pleased to see the broad-based growth across categories continue through the first quarter.
Moving to our second initiative, same store sales. For the first quarter, consolidated same store sales grew 9.4%, with brick-and-mortar same store sales increasing 9.5%.
Store comp growth was driven by an 8.5% increase in transactions and a 1% increase in units per transaction, with flat average unit retail.
I would like to extend a heartfelt. Thank you to the entire field organization for their hard work and dedication.
Moving to our third initiative omni channel in the first quarter E. Commerce comp sales grew nine 3% and boot barn Dot com, which is approximately 75% of our online sales comp low double digit positive.
From a merchandising perspective, we saw broad-based growth across all major merchandise categories in the first quarter, led by the combined ladies' western boots and apparel businesses, which comp positive mid-teens.
This was followed by the combined men's western boots in apparel businesses, which comped positively with a high single-digit growth.
We are very pleased with the momentum in our online business and the continued innovation from our Omnichannel team. The team is actively advancing its AI initiatives, including the rollout of our new AI powered search functionality on our websites.
Our denim business, which is included in the figures, just mentioned comp positive, high teens.
<unk> Leverages AI to enhance product copy support store associates through our Cassity assistant develop multimedia training modules and power the new search experience.
Our work boots business comp low single digit positive, and our work apparel business. Comped High single-digit positive. We are extremely pleased to see the broad-based growth across categories. Continue through the first quarter.
Mark Dedovesh: From a store operations perspective, I am proud of the team's performance, delivering strong results and best-in-class customer service during an especially busy quarter. In the first quarter, the team was able to open 14 new stores, navigate the complexity of several large-scale remodels, and work through labor-intensive reticketing on third-party goods. I would like to extend a heartfelt thank you to the entire field organization for their hard work and dedication. Moving to our third initiative, omnichannel. In the first quarter, e-commerce comp sales grew 9.3%, and bootbarn.com, which is approximately 75% of our online sales, comped low double-digit POC. We are very pleased with the momentum in our online business and the continued innovation from our omnichannel team. The team is actively advancing its AI initiatives, including the rollout of our new AI-powered search functionality on our websites.
In addition to improving our technical abilities to team's focus on being a store's first organization continues to generate benefits more than half of our online orders are being fulfilled by the stores, which helps increase merchandize margin and provides the customer with a broader assortment of merchandise to shop.
From a store operations perspective, I am proud of the team's performance, delivering strong results and best-in-class customer service during an especially busy quarter. In the first quarter, the team was able to open 14 new stores, navigate the complexity of several large-scale remodels, and work through labor-intensive rigging on third-party goods.
The online pickup in store and ship to store are both reached record levels, which will drive increased traffic to our stores helped to reduce shipping costs and improved customer loyalty as we encourage them to shop, both in store and online.
I would like to extend a heartfelt. Thank you to the entire field Organization for their hard work and dedication.
Now to our fourth strategic initiative merchandise margin expansion and exclusive brands during the first quarter merchandise margin increased 180 basis points compared to the prior year period remarkably merchandize margin rate has increased approximately 630 basis points over the last six years or over 100 basis points per year.
Moving to our third initiative, Omni Channel, in the first quarter, e-commerce comp sales grew 9.3%. Bern.com, which is approximately 75% of our online sales, comped low double digits in product.
Mark Dedovesh: Boot Barn now leverages AI to enhance product copy, support store associates through our Cassidy assistant, develop multimedia training modules, and power the new search experience. In addition to improving our technical abilities, the team's focus on being a store's first organization continues to generate benefits. More than half of our online orders are being fulfilled by the stores, which helps increase merchandise margin and provides the customer with a broader assortment of merchandise to shop. Buy online, pick up in-store, and ship to store have both reached record levels, which will drive increased traffic to our stores, help to reduce shipping costs, and improve customer loyalty as we encourage them to shop both in-store and online. Now to our fourth strategic initiative, merchandise margin expansion and exclusive brands. During the first quarter, merchandise margin increased 180 basis points compared to the prior year period.
We are very pleased with the momentum in our online business and the continued innovation from our Omni-Channel team. The team is actively advancing its AI initiatives, including the rollout of our new AI-powered search functionality on our website.
On average.
First quarter exclusive brand penetration increased 250 basis points to 46% of sales I am proud of the team's commitment to drive sales growth, while increasing merchandize margin and growing exclusive brands.
Uber now, leverages ai to enhance product copy, support store associates through our Cassidy, assistant develop multimedia training modules and power, the new search experience
From a marketing perspective, we are using the creative teams outstanding content to further support our own exclusive brands, starting with our leading brand Hawks in the first quarter, we launched a new website and marketing campaign for <unk> that focuses on work boots and clothing for blue collar workers across industries. We are encouraged by the early returns and the pause.
In addition to improving our technical abilities, teams focus on being a store's. First, organization continues to generate benefits; more than half of our online orders are being fulfilled by the stores, which helps increase merchandise margin and provides the customer with a broader assortment of merchandise to shop.
Ive results give us confidence to move forward with our strategy to market our exclusive brands correctly, and we expect to launch a direct marketing campaign later in this year to support our leading men's brand Cody James.
Buy online, pick up in store, and ship to store are both reaching record levels, which will drive increased traffic to our stores, help to reduce shipping costs, and improve customer loyalty as we encourage them to shop, both in-store and online.
I'd now like to provide a recap on our pricing strategy as it relates to tariffs, which remains consistent with what we shared on our call in mid May.
Mark Dedovesh: Remarkably, merchandise margin rate has increased approximately 630 basis points over the last six years, or over 100 basis points per year on average. First quarter exclusive brand penetration increased 250 basis points to 40.6% of sales. I am proud of the team's commitment to drive sales growth while increasing merchandise margin and growing exclusive brands. From a marketing perspective, we are using the creative team's outstanding content to further support our own exclusive brands, starting with our leading work brand, Hawks. In the first quarter, we launched a new website and marketing campaign for Hawks that focuses on work boots and clothing for blue-collar workers across industries.
We have received third party cost increases from our vendor partners and our field organization has begun re ticketing these items to reflect the new MSRP.
Now to our fourth strategic initiative merchandise margin expansion, and exclusive Brands during the first quarter, merchandise, margin increased 180 basis points compared to the prior year period, remarkably merchandise margin rate has increased approximately. 600 630 basis points over the last 6 years or over 100 basis points per year on average.
We expect a re ticketing of third party items to be completed by the end of August resulting in maintaining merchandize margin rate.
First quarter exclusive brand penetration increased by 250 basis points to 40.6% of sales.
I am proud of the team's commitment to drive sales growth while increasing merchandise margin and growing exclusive brands.
For exclusive brands, we are planning on hold we plan to hold off on price increases until the fall in order to engage price elasticity. We will then review exclusive brands by individual style to determine if we should raise or hold price on certain items, which could result in giving up margin rate in order to maintain or gain market share.
from a marketing perspective, we are using the creative teams outstanding content to further support our own exclusive brands, starting with our leading work brand Hawks
Mark Dedovesh: We are encouraged by the early returns, and the positive results give us confidence to move forward with our strategy to market our exclusive brands directly, and we expect to launch a direct marketing campaign later this year to support our leading men's brand, Cody James. I'd now like to provide a recap on our pricing strategy as it relates to tariffs, which remains consistent with what we shared on our call in mid-May. We have received third-party cost increases from our vendor partners, and our field organization has begun reticketing these items to reflect the new MSRP. We expect the reticketing of third-party items to be completed by the end of August, resulting in maintaining merchandise margin rate. For exclusive brands, we are planning on hold. We plan to hold off on price increases until the fall in order to gauge price elasticity.
Now turning to current business, we're four weeks into the second quarter of fiscal 'twenty six and we've continued to see broad based growth as consolidated same store sales increased 11, 7% driven by an 11% increase in transactions and a 1% increase in average unit retail while we are pleased with the start to our.
In the first quarter, we launched a new website and marketing campaign for Hawks that focuses on work, boots, and clothing for blue-collar workers across industries. We are encouraged by the early returns and the positive results give us confidence to move forward with our strategy to market our exclusive brands directly. We expect to launch a direct marketing campaign later this year to support our leading men's brand, Cody.
Second quarter, we are mindful that July was the softest month of the second quarter last year, we remain cautious of overall consumer sentiment and macro uncertainty and we will continue to manage our business prudently.
I'd now like to provide a recap on our pricing strategy as it relates to tariffs, which remains consistent with what we shared on our call in mid-May.
We have received third-party cost increases from our vendor partners and our field organization has begun retaining these items to reflect the new MSRP.
I'd like now to turn the call over to Jim.
Thank you John.
In the first quarter net sales increased 19% to $504 million.
We expect the riing of third party items to be completed by the end of August resulting in maintaining merchandise, margin rate,
The increase in net sales was the result of the incremental sales from new stores and the increase in consolidated same store sales.
Mark Dedovesh: We will then review exclusive brands by individual style to determine if we should raise or hold price on certain items, which could result in giving up margin rate in order to maintain or gain market share. Now turning to current business, we are four weeks into the second quarter of fiscal 26, and we have continued to see broad-based growth as consolidated same-store sales increased 11.7%, driven by an 11% increase in transactions and a 1% increase in average unit retail. While we are pleased with the start to our second quarter, we are mindful that July was the softest month of the second quarter last year. We remain cautious of overall consumer sentiments and macro uncertainty, and we'll continue to manage our business prudently. I would like now to turn the call over to Jim.
The nine 4% increase in same store sales is comprised of a nine 5% increase in retail store same store sale and a nine 3% increase in E Commerce same store sales.
For exclusive Brands, we are planning on hold, we plan to hold off on price increases in the fall in order to gauge price elasticity. We will then review exclusive Brands by individual style to determine if we should raise or hold price on certain items.
Which could result in giving up Margin rate in order to maintain or gain market share.
Gross profit increased 26% to $197 million compared.
Compared to gross profit of $157 million in the prior year period.
Second quarter of fiscal 2026, and we have continued to see broad-based growth as consolidated same-store sales increased 11.7%.
Gross profit rate increased 210 basis points to 39, 1% when compared to the prior year period. As a result of a 180 basis point increase in merchandise margin rate and 30 basis points of leverage in buying occupancy and distribution center costs.
Driven by an 11% increase in transactions and a 1% increase in average unit retail.
While we are pleased with the start to our second quarter, we are mindful that July was the softest month of the second quarter last year.
The increase in merchandise margin rate was primarily the result of better buying economies of scale lower freight expense and growth in exclusive brand penetration.
Jim Watkins: Thank you, John. In the first quarter, net sales increased 19% to $504 million. The increase in net sales was the result of the incremental sales from new stores and the increase in consolidated same-store sales. The 9.4% increase in same-store sales is comprised of a 9.5% increase in retail store same-store sales and a 9.3% increase in e-commerce same-store sales. Gross profit increased 26% to $197 million compared to gross profit of $157 million in the prior year period. Gross profit rate increased 210 basis points to 39.1% when compared to the prior year period as a result of a 180 basis point increase in merchandise margin rate and 30 basis points of leverage in buying occupancy and distribution center costs. The increase in merchandise margin rate was primarily the result of better buying economies of scale, lower freight expense, and growth in exclusive brand penetration.
We remain cautious of overall consumer sentiments and macro uncertainty, and we will continue to manage our business prudently. I would now like to turn the call over to Jim.
Thank you, John.
The leverage in buying occupancy and distribution center costs was driven by lower incentive based compensation and lower distribution center labor costs in the current year period, partially offset by the occupancy cost of new stores.
In the first quarter, net sales increased 19% to $504 million. The increase in net sales was the result of incremental sales from new stores and the increase in consolidated same-store sales.
SG&A expenses for the quarter were $127 million or 25, 1% of sales compared to $107 million or 25, 2% of sales in the prior year period.
The 9.4% increase in the same-store sales is comprised of a 9.5% increase in retail store same-store sales and a 9.3% increase in e-commerce same-store sales.
SG&A expenses as a percentage of net sales decreased by 10 basis points, primarily as a result of lower incentive based compensation in the current year period, partially offset by higher marketing expenses due to timing.
Growth profit increased 26% to $197 million compared to growth profit of $157 million in the prior year period.
Income from operations was $71 million or 14.0% of sales in the quarter compared to $50 million or 11, 9% of sales in the prior year period.
Growth profit rate increased 210 basis points to 39.1% when compared to the prior year period. This was a result of a 180 basis point increase in merchandise margin rate and 30 basis points of leverage in buying occupancy and distribution center costs.
Net income per diluted share increased 38% to $1 74, which compares to $1 26 per diluted share in the prior year period.
Jim Watkins: The leverage in buying occupancy and distribution center costs was driven by lower incentive-based compensation and lower distribution center labor costs in the current year period, partially offset by the occupancy cost of new stores. SG&A expenses for the quarter were $127 million, or 25.1% of sales, compared to $107 million, or 25.2% of sales in the prior year period. SG&A expenses as a percentage of net sales decreased by 10 basis points, primarily as a result of lower incentive-based compensation in the current year period, partially offset by higher marketing expenses due to timing. Income from operations was $71 million, or 14.0% of sales in the quarter, compared to $50 million, or 11.9% of sales in the prior year period. Net income per diluted share increased 38% to $1.74, which compares to $1.26 per diluted share in the prior year period. Turning to the balance sheet.
The increase in merchandise margin rate was primarily the result of better buying economies of scale, lower freight expense, and growth in exclusive brand penetration.
Turning to the balance sheet.
On a consolidated basis inventory increased 23% over the prior year period to $774 million an increase.
The Leverage in buying occupancy and distribution. Center costs was driven by lower incentive based compensation, and lower Distribution Center. Labor costs in the current year period. Partially offset by the occupancy cost of new stores.
Creased approximately two 7% on a same store basis.
Total inventory increased as a result of adding 15% new stores and growth in exclusive brands.
Sgna expenses for the quarter, were 127, million or 25.1% of sales, compared to 107 million or 25.2% of sales in the prior year period.
We feel good about the health of our inventory and our markdowns as a percentage of inventory are below last year and below historical levels.
During the quarter, we purchased approximately 78000 shares of our common stock for an aggregate purchase price of $12 5 million as part of our authorized $200 million share repurchase program.
SG&A expenses, the percentage of net sales decreased by 10 basis points, primarily as a result of lower incentive-based compensation in the current year period, partially offset.
Getting expenses due to timing.
We finished the quarter with $95 million in cash and zero drawn on our $250 million revolving line of credit.
Income from operations was $71 million, or 14.0% of sales, in the quarter compared to $50 million, or 11.9% of sales, in the prior year period.
Now turning to our raised outlook for fiscal 'twenty six.
We are increasing full year guidance due to our first quarter results and the strong start to our second quarter.
Net income per diluted share increased 38% to $1.74, which compares to $1.26.
Jim Watkins: On a consolidated basis, inventory increased 23% over the prior year period to $774 million and increased approximately 2.7% on a same-store basis. Total inventory increased as a result of adding 15% new stores and growth in exclusive brands. We feel good about the health of our inventory, and our markdowns as a percentage of inventory are below last year and below historical levels. During the quarter, we purchased approximately 78,000 shares of our common stock for an aggregate purchase price of $12.5 million as part of our authorized $200 million share repurchase program. We finished the quarter with $95 million in cash and zero drawn on our $250 million revolving line of credit. Now turning to our raised outlook for fiscal 26. We are increasing full-year guidance due to our first quarter results and the strong start to our second quarter.
Turning to the balance sheet.
We are maintaining our original guidance for the second half of the fiscal year, which assumes that the uncertainty around tariffs and the resulting impact on consumer spend will result in flat comps in the second half of the year and unmitigated tariff expenses will increase our cost of goods sold resulting in a merchandise margin decline in the second half of.
On a Consolidated basis. Inventory increased 23% over the prior year period to 774 million and increased approximately 2.7% on the same store basis.
Total inventory increased as a result of adding 15%, new stores, growth, and exclusive brands.
Fiscal year.
The supplemental financial presentation that we released today outlines the low and high end of our guidance range for both the full year and second quarter.
We feel good about the health of our inventory, in our markdowns, as a percentage of inventory are below last year, and Below historical levels.
Will only be speaking to the high end of the range for both periods in my following remarks.
For the full year, we expect total sales to be $2, one $8 billion representing.
during the quarter, we purchased approximately 78,000 shares of our common stock for an aggregate purchase price of 12.5 million as part of our authorized 200 million share repurchase program
Representing growth of 14% over fiscal 'twenty five.
We expect same store sales to increase three 5% with a retail store same store sales increase of 3.0% and E. Commerce same store sales growth of eight 5%.
We finished the quarter with 95 million in cash and zero drawn on our 250 million revolving line of credit.
Now, turning to our raised outlook for fiscal 26.
We expect merchandise margin to be $1, one zero or $1 billion.
Jim Watkins: We are maintaining our original guidance for the second half of the fiscal year, which assumes that the uncertainty around tariffs and the resulting impact on consumer spend will result in flat comps in the second half of the year, and unmitigated tariff expenses will increase our cost of goods sold, resulting in a merchandise margin decline in the second half of the fiscal year. The supplemental financial presentation that we released today outlines the low and high end of our guidance range for both the full year and second quarter. I will only be speaking to the high end of the range for both periods in my following remarks. For the full year, we expect total sales to be $2.18 billion, representing growth of 14% over fiscal 25.
We are increasing full-year guidance due to our first-quarter results and the strong start to our second quarter.
Were approximately 53% of sales a 20 basis point increase over the prior year period, which includes exclusive brand penetration growth of 160 basis points.
We expect gross profit to be $812 million or approximately 37, 2% of sales.
We anticipate 50 basis points of deleverage in buying occupancy and distribution center costs due to the occupancy of new stores and 50 basis points of leverage in SG&A.
We are maintaining our original guidance for the second half of the fiscal year which assumes that the uncertainty around tariffs and the resulting impact on consumer spend will result in flat comps in the second half of the year and unmitigated tariff expenses will increase our cost of goods sold resulting in a merchandise margin decline in the second half of the fiscal year.
The supplemental Financial presentation that we released today. Outlines the low and high end of our guidance range for both the full year and second quarter.
Our income from operations is expected to be $277 million or 12, 7% of sales we.
I will only be speaking to the high end of the range for both periods in my following remarks.
We expect net income for fiscal 'twenty, six to be $206 million and earnings per diluted share to be $6 70.
Jim Watkins: We expect same-store sales to increase 3.5%, with a retail store same-store sales increase of 3.0% and e-commerce same-store sales growth of 8.5%. We expect merchandise margin to be $1.10 billion, or approximately 50.3% of sales, a 20 basis point increase over the prior year period, which includes exclusive brand penetration growth of 160 basis points. We expect gross profit to be $812 million, or approximately 37.2% of sales. We anticipate 50 basis points of deleverage in buying occupancy and distribution center costs due to the occupancy of new stores and 50 basis points of leverage in SG&A. Our income from operations is expected to be $277 million, or 12.7% of sales. We expect net income for fiscal 26 to be $206 million and earnings per diluted share to be $6.70. We plan to grow new units by 15%, adding between 65 and 70 new stores during fiscal 26.
For the full year, we expect total sales to be 2.18 billion. Representing growth of 14% over fiscal 25.
We plan to grow new units by 15%, adding between 65% 70, new stores during fiscal 'twenty six.
We expect our capital expenditures to be between $115 million to $120 million, which is net of estimated tenant allowances of $35 million.
We expect same-store sales to increase 3.5%, with a retail store same-store sales increase of 3.0% and e-commerce same-store sales growth of 8.5%.
And for the balance of the year, we expect our effective tax rate to be 26%.
Over the prior year period, which includes exclusive brand penetration growth of 160 basis points.
As we look to the second quarter of fiscal 'twenty six we expect total sales at the high end of our guidance range to be $495 million and a.
We expect gross profit to be $812 million, or approximately 37.2% of sales.
Holiday that same store sales increase of six 5%.
We expect merchandise margin to be $249 million or approximately 53% of sales a 70 basis point increase over the prior year period, which includes a 250 basis point increase in exclusive brand penetration.
We anticipate 50 basis points of deleveraging occupancy and distribution center costs due to the occupancy of new stores, and 50 basis points of leverage in SG&A.
Our income from operations is expected to be $277 million, or 12.7% of sales.
We expect gross profit to be $178 million or approximately $36 zero percent of sales, which includes 60 basis points of deleverage in buying occupancy and distribution center costs.
We expect net income for fiscal 2026 to be $206 million and earnings per diluted share to be $6.70.
Jim Watkins: We expect our capital expenditures to be between $115 million to $120 million, which is net of estimated tenant allowances of $35 million. And for the balance of the year, we expect our effective tax rate to be 26%. As we look to the second quarter of fiscal 26, we expect total sales at the high end of our guidance range to be $495 million and a consolidated same-store sales increase of 6.5%. We expect merchandise margin to be $249 million, or approximately 50.3% of sales, a 70 basis point increase over the prior year period, which includes a 250 basis point increase in exclusive brand penetration. We expect a gross profit to be $178 million, or approximately 36.0% of sales, which includes 60 basis points of deleverage in buying occupancy and distribution center costs.
We plan to grow new units by 15%, adding between 65 and 70 new stores during fiscal 2026.
Our income from operations is expected to be $53 million or 10, 7% of sales a 130 basis point increase over the prior year period.
We expect earnings per diluted share to increased 34% to $1 27.
We expect our capital expenditures to be between $115 million and $120 million, which is net of estimated tenant allowances of $35 million.
And for the balance of the year, we expect our effective tax rate to be 26%.
Now I would like to turn the call back to John for some closing remarks.
Jim We are very pleased with our first quarter results and the positive momentum that has continued into the current quarter.
We continue to be confident in our ability to execute on our four strategic initiatives and drive growth in the current fiscal year and over the long term.
As we look to the second quarter of fiscal 2026, we expect wholesale at the high end of our guidance range to be $495 million and a consolidated same-store sales increase of 6.5%.
I'd now like to open the call for questions.
Operator.
Thank you.
We will now begin the question and answer session.
We expect a merchandise margin to be 249 million or approximately 50.3% of sales, a 70 basis. Point increase over the prior year period, which includes a 250 basis point increase in exclusive brand penetration,
Ask a question you May press Star then one on you touched on.
If youre using a speakerphone please pick up your handset before pressing the keys.
Anytime Youre question has been addressed and you would like to withdraw your question. Please press Star then two at.
Jim Watkins: Our income from operations is expected to be $53 million, or 10.7% of sales, a 130 basis point increase over the prior year period. We expect earnings per diluted share to increase 34% to $1.27. Now I would like to turn the call back to John for some closing remarks.
we expect a gross profit to be 178 million or approximately 36.0% of sales which includes 60 basis points of de-lever and buying occupancy and distribution, center costs
At this time, we will pause momentarily to assemble our roster and that as a reminder, please restrict yourself to one question and one follow up.
Our income from operations is expected to be 53 million or 10.7% of sales. A 130 basis, point increase over the prior year period.
The first question comes from the line of Matthew Boss with JP Morgan. Please go ahead.
We expect earnings for diluted, share to increase 34% to a dollar 27.
Mark Dedovesh: Thank you, Jim. We are very pleased with our first quarter results and the positive momentum that has continued into the current quarter. We continue to be confident in our ability to execute on our four strategic initiatives and drive growth in the current fiscal year and over the long term. I would now like to open the call for questions. Operator?
Now, I would like to turn the call back to John for some closing remarks.
Great and congrats on a nice quarter.
Thanks, Matt.
So John could you speak to drivers of demand strength in the first quarter and elaborate on the acceleration in July notably the double digit transactions and then if you could just walk through the bridge math to flat comps in the back half of the year.
Thank you, Jim. We are very pleased with our first quarter results, which are in the positive. Momentum has continued into the current quarter.
We continue to be confident in our ability to execute on our 4, strategic initiatives and drive growth in the current fiscal year and over the long term.
I would now like to open the call for questions.
Operator.
Yes, absolutely.
Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your headset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble a roster, and as a reminder, please restrict yourself to one question and one follow-up. The first question comes from the line of Matthew Boss with JP Morgan. Please go ahead.
Yeah as you said, Matt we went from.
Thank you. We will now begin the question and answer session.
The transactions went from eight 3% in Q1 to double digit in July so almost all of that comp growth in July was driven by transactions AUR was up one in July is as some of those price increases have started.
To ask a question, you may press star, then 1 on your touchtone phone.
if you are using a speaker phone, please pick up your handset before. Pressing the keys.
if at any time your question has been addressed and you would like to withdraw your question, please press star then 2
The performance was really broad based.
With strength across all of our regions, we saw positive comp trends.
At this time, we will pause momentarily to assemble our roster. And as a reminder, please restrict yourself to 1 question and 1 follow-up.
Throughout July across all major merchandise categories.
But the one worth calling out is denim.
Matthew Boss: Great, and congrats on the next quarter.
The first question comes from the line of Matthew Boss with JP Morgan. Please go ahead.
We continue to believe that denim is going to be we're going to be a denim destination. It is a standout category for us, especially on the women's side.
Great, and congrats on the next quarter.
Mark Dedovesh: Thanks, Matt.
Matthew Boss: So, John, could you speak to drivers of demand strength in the first quarter and elaborate on the acceleration in July, notably the double-digit transactions? And then if you could just walk through the bridge math to flat comps in the back half of the year.
Across both third party brands that we carry and our own exclusive brands and we delivered double digit growth in both men's and women's denim during the quarter, but that transaction growth.
So John could you speak to drivers of demand strength in the first quarter and elaborate on the acceleration in July, notably that double digit transactions and then if you could just walk through the bridge math to Flat comps in the back, half of the year.
Mark Dedovesh: Yeah, absolutely. Yeah, as you said, Matt, we went from the transactions went from 8.3% in Q1 to double-digit in July. So almost all of that comp growth in July was driven by transactions. AUR was up one in July as some of those price increases have started. The performance was really broad-based. It was strength across all of our regions. We saw positive comp trends throughout July across all major merchandise categories. But the one worth calling out is denim. We continue to believe that denim is going to be, we're going to be a denim destination. It's a standout category for us, especially on the women's sides, across both third-party brands that we carry and our own exclusive brands. And we delivered double-digit growth in both men's and women's denim during the quarter.
Yeah, absolutely.
Um, yeah.
I'd have to give credit to our team.
Both from a store operations side and how they convert those customers in store as well as the marketing team that continues to lean into cultural moments that really resonate with our customer.
Yeah, we went from, um, the transactions went from 8.3% in Q1 to double digits in July, so, uh, almost all of that.
Looking to the back half of the year as we said on our first call we had applied a haircut to Q3.
Comp growth in July was driven by transactions. Aur was up 1 in July as as some of those price increases have started, um, the poor.
Three in Q4 to those flat comps.
We still believe given all the noise around the macro environment that there will be.
Could be some softening of consumer demand during that time.
Broad-based. Uh, it was strengths across all of our regions. We saw positive comps throughout July, across all major merchandise categories.
That flat comp in Q3, and Q4 is not a result of solely mid single digit price increases on our third party brands, but rather the macro environment continued to be somewhat at risk.
Great and then maybe Jim as a follow up could you speak to what you saw on markdown levels relative to a year ago in the first quarter and then here in July and what's embedded in your merchandise margin outlook as it relates to promotional activity and pricing in this in the second quarter and back half of the year.
Mark Dedovesh: But that transaction growth, I have to give credit to our team, both from a store operations side and how they convert those customers in-store, as well as the marketing team that continues to lean into cultural moments that really resonate with our customer. Looking to the back half of the year, as we said on our first call, we had applied a haircut to Q3 and Q4 to those flat comps. And we still believe, given all the noise around the macro environment, that there will be, could be some softening of consumer demand during that time. That flat comp in Q3 and Q4 is not a result of solely mid-single-digit price increases on our third-party brands, but rather the macro environment continued to be somewhat at risk.
Sure.
Yes, the <unk>.
Downs have continued to be low.
Uh, but the 1 worth calling out, is denim. Um, we continue to believe that denim is going to be, we're going to be a denim destination. It's a standout category for us, especially on the women's side, um, across both third-party, uh, brands that we carry and our own exclusive Brands. And, and we delivered double-digit growth in both men's and women's denim during the quarter. Uh, but, but that transaction growth, I, I, I have to give credit to our team, uh, both from a store operation side and and how they, uh, convert those customers in store, as well as the marketing team that continues to lean into cultural moments that really resonate with our customer.
Pretty low or very low I should say when compared to last year and also historical levels pre COVID-19.
They are very low and so we're expecting that to continue with us the markdowns to be low we feel that our inventory is in a very healthy position. It's fresh we've got the inventory that we want as we head into.
The back half of the year and in this upcoming quarter.
Great Best of luck.
comps and we still believe given all the noise around the macro environment that there will be, uh, could be some softening of consumer demand during that time, um, that that flat comp in Q3 and Q4 is not a result of solely, mid single digit price increases on our third-party Brands but rather the macro environment continued to be somewhat at risk
Thank you thank you Matt.
Matthew Boss: Great. And then maybe Jim as a follow-up, could you speak to what you saw on markdown levels relative to a year ago in the first quarter and then here in July? And what's embedded in your merchandise margin outlook as it relates to promotional activity and pricing in the second quarter and back half of the year?
Thank you <unk>.
Question comes from the line of Peter Keith with Piper Sandler. Please go ahead.
Hi, Thank you good afternoon nice results guys.
John You had mentioned around Hawks that youre, starting to do some marketing and branding around Hawks, and I know I think you did some marketing with Cody James.
Great. And then maybe Jim is a follow-up. Could you speak to what you saw on markdown levels relative to a year ago and in the first quarter? And then here in July and what's embedded in your merchandise, margin Outlook as it relates to promotional activity and pricing in this. In the second quarter and back half of the year.
Jim Watkins: Sure. The markdowns have continued to be low, pretty low, or very low, I should say, when compared to last year, and also historical levels pre-COVID, they're very low. And so we're expecting that to continue with us, the markdowns to be low. We feel that our inventory is in a very healthy position. It's fresh. We've got the inventory that we want as we head into the back half of the year and this most upcoming quarter.
Sure.
Excellent concert activity earlier in the year.
I'm wondering if this is a new initiative around exclusive brand marketing and could that sort of.
Early indicator of distribution of these brands outside of boot barn overtime.
Yes, Peter it's.
Lynn.
When I took the permanent role we kind of talked about the adjustments adjustments I was going to make under the four strategic initiatives, which were the sourcing initiative, our exclusive brands and reinvigorating the work business and the one that we've made the most progress on thus far is the exclusive brands piece, it's easier to move quickly on some of these marketing initiatives.
Yeah, the mark the markdowns uh, have continued to be low, um, pretty low or or very low. I should say, when compared, to last year and also, uh, historical levels. Preco, uh, they're very low and so we're expecting that to to continue with us. The markdowns to be low. We feel that our inventory is in a very healthy position. It's fresh. We've got the, the inventory that we want as we head into, uh, the back half of the year. And and, and this most upcoming quarter
Matthew Boss: Great. Best of luck.
Great, best of luck.
Mark Dedovesh: Thank you.
Jim Watkins: Thanks, Matt.
Operator: Thank you. Next question comes from the line of Peter Keith with Piper Sandler. Please go ahead.
Thank you. Thanks Matt.
We've been very pleased with the early results around Hawks, and our ability to advertise the brand using meadows tools to target blue collar customers, we werent, otherwise be able to target and find and it's been a pretty material spend over the quarter that resulted.
Thank you. Next question comes from the line of Peter Kitt with Piper Sandler. Please go ahead.
Mark Dedovesh: Hey, thank you. Good afternoon. Nice results, guys. You know, John, you had mentioned around Hawks that you're starting to do some marketing and branding around Hawks. And I know, I think you did some marketing with Cody James at some contract activity earlier in the year. So I'm wondering if this is a new initiative around exclusive brand marketing, and could that sort of be an early indicator of distribution of these brands outside of Boot Barn over time?
Millions of impressions and over 1 million sessions as well to the Hawk site that we launched a bilingual site in both English and Spanish.
Hey, thank you. Good afternoon, nice results, guys. Um, you know, John, you had mentioned, uh, around Hawks that you're starting to do some marketing and branding around Hawks, and I know I think you did some marketing with Cody James, um, at some concert activity earlier in the year.
Cody James at at the Morgan Wall and festival in Gulf Shores, Alabama was a great success without a lot of coverage again millions of impressions and reals.
So, I'm wondering if this is a new initiative around exclusive brand marketing, and could that sort of be an early indicator of the distribution of these brands outside of Boot Barn and, over time?
Jim Watkins: Yeah, Peter, it's when I took the permanent role, we kind of talked about the adjustments I was going to make under the four strategic initiatives, which were the sourcing initiative, our exclusive brands, and reinvigorating the work business. And the one that we've made the most progress on thus far is the exclusive brands piece. It's easier to move quickly on some of these marketing initiatives. We've been very pleased with the early results around Hawks and our ability to advertise the brand using Meta's tools to target blue-collar customers we wouldn't otherwise be able to target and find. And it's been a pretty material spend over the quarter that's resulted in millions of impressions and over a million sessions as well to the Hawk site that we launched, a bilingual site in both English and Spanish.
Views around that concert and it was the first time, we sponsored a stage at a concert with one of our exclusive brands. So so that was exciting as well we're going to.
I have directed the team too to take Cody, James and mimic or copy paste, what we have done with Hawks and launch a dedicated site for coty as well and.
And implement many of the same marketing techniques that we used with meadows tools, along with some other initiatives specifically for Cody James So I am very encouraged by the early results.
Yeah, Peter it's um when um, when I took the permanent role we, we kind of talked about the adjustments adjustments. I was going to make under the 4 strategies, which were the sourcing initiative, our exclusive Brands and and reinvigorating, the work business and and the 1 that we've made the most progress on thus far is the exclusive Brands piece. It's, uh, easier to move quickly on some of these marketing initiatives. We've been very pleased with, uh, with the early results, uh, around Hawks and our ability to advertise the brand using Meadows tools to Target Blue Collar customers. We weren't otherwise be able to Target and find and, and it's been a pretty, uh, material spend over the quarter. That's, that's resulted in millions of
There are no plans currently to sell the brands at wholesale to other companies and other retailers not to say it couldn't happen one day, but.
Jim Watkins: Cody James at the Morgan Wallen Festival in Gulf Shores, Alabama, was a great success. We got a lot of coverage, again, millions of impressions and reels views around that concert. And it was the first time we sponsored a stage at a concert with one of our exclusive brands. So that was exciting as well. We're going to, I've directed the team to take Cody James and mimic or copy-paste what we have done with Hawks and launch a dedicated site for Cody as well and implement many of the same marketing techniques that we used with Meta's tools, along with some other initiatives specifically for Cody James. So I'm very encouraged by the early results. There are no plans currently to sell the brands at wholesale to other companies and other retailers.
of Impressions and, uh, over a million sessions as well to, uh, the hawk site that we launched a bilingual sight in both English and Spanish,
But for now we're going to focus on driving these brands at boot barn.
Okay very good.
On the tariff related price increases are the <unk>.
Supplier price increases.
The same as what you updated us three months ago.
China in various tariffs and moved around quite a bit is it still kind of at that mid single digit level and then.
It's probably early but any read on.
Product where prices have gone up if theres been any demand shifts.
Yes. It is still that mid single digit price increase we're roughly halfway through the ticket the re tickets in stores, we will be completed by the end of August and so all the third party price increases will be completed as I said at the end of August and we're going to hold lower for longer.
On exclusive brands.
And see what that price elasticity looks like it's too early to see if there has been we havent seen any.
Jim Watkins: Not to say it couldn't happen one day, but for now, we're going to focus on driving these brands at Boot Barn.
Uh Cody James at uh at the Morgan Wallen Festival in Gulf Shores, Alabama was a great success. We got a lot of coverage again millions of Impressions uh and reels uh uh views around that concert and it was the first time we sponsored a stage at a concert with 1 of our exclusive Brands. So so that was exciting as well. We're going to, um, I I've directed the team to to take Cody James and mimic or copy paste. What we have done with Hawks and launch a, uh, dedicated site for Kodi as well. And, uh, and Implement many of the same marketing techniques that we used with meta's tools along with some other initiatives, specifically, for Cody James. So I I'm very uh, encouraged by the early results. Um, there are no plans currently to sell the brands at a wholesale to, uh, other companies and other retailers. Not to say it couldn't happen 1 day.
Today. Um, but for now we're going to focus on driving these brands at bar.
Mark Dedovesh: Okay, very good. And on the tariff-related price increases, are the supplier price increases kind of the same as when you updated us three months ago? I think China and various tariffs have moved around quite a bit. Is it still kind of at that mid-single-digit level? And then it's probably early, but any read on products where prices have gone up if there's been any demand shifts?
Slowdown in any particular brand because of price increases you can see the July we had was quite nice and.
Well in exclusive brands performed nicely in Q1 that was prior to any of the price increases. So it's still too early to see the impact of those price increases.
okay, very good and um, on uh the uh, the Tariff related price increases are the um, supplier price increases
Okay very good thank you and good luck.
Thanks Peter.
kind of the same as when you updated us. Uh, 3 months ago I I I think you know, China and various terrorists have moved around quite a bit, is it still kind of at that mid single digit level and then?
Thank you next question comes from the line of Stephens have gone with Citigroup. Please go ahead.
Jim Watkins: Yeah, it is still that mid-single-digit price increase. We're roughly halfway through the retickets in stores. We will be completed by the end of August. And so all the third-party price increases will be completed, as I said, at the end of August. And we're going to hold lower for longer on exclusive brands and see what that price elasticity looks like. It's too early to see if there's been, we haven't seen any slowdown in any particular brand because of price increases. You can see that the July we had was quite nice. And while exclusive brands performed nicely in Q1, that was prior to any of the price increases. So it's still too early to see the impact of those price increases.
It's probably early, but any read on product where prices have gone up? If there's been any, uh, demand shifts?
Great. Good afternoon, Thanks for taking my question.
I wanted to stick on the existing brand.
<unk> for a moment, so could you talk a little bit more about the strategy for that lower for longer pricing.
Take it month by month to measure elasticity, and then just bigger picture right how much bigger can exclusive brand penetration base. It seems like year, where theres a lot of disruption from tariffs could we start to see exclusive brand penetration stay about this 40% threshold for some time.
Yes.
It was above 40% for Q1, and we expect it to stay in that range throughout the rest and slightly higher than that for the for the remainder of this fiscal year. We've said publicly that we'd like to get I'd like to get exclusive brands to 50% penetration.
Uh and see what that price elasticity looks like it is. It's too early to see if there's been. We haven't seen any uh, slowdown in any particular brand because of price increases you you can see the the July we had was quite nice and um, while while in exclusive Brands performed nicely in, in q1, that was prior to any of the price increases. So it's still too early to see the impact of those price increases.
Mark Dedovesh: Okay, very good. Thank you and good luck.
Okay, very good. Thank you. And good luck.
<unk>. The next five to six years, so 1% to 200 basis points of improvement a year.
Jim Watkins: Thanks, Peter.
Operator: Thank you. Next question comes from the line of Steven Zicon with Citigroup. Please go ahead.
Thanks Peter.
There may be a larger increase this year with some of the lower for longer strategy that we are testing.
Max Rakhlenko: Great, good afternoon. Thanks very much for taking my question. I want to stick on the exclusive brand questions for a moment. So could you talk a little bit more about the strategy for that lower for longer pricing? You know, will you kind of take it month by month to measure elasticity? And then just bigger picture, right? How much bigger can exclusive brand penetration be? It seems like a year where there's a lot of disruption from tariffs. You know, could we start to see exclusive brand penetration stay above this 40% threshold for some time?
Thank you. Next question, comes from the line of Steven Zakon City Group. Please go ahead.
That that window is October pre holiday or those re tickets or price increases on exclusive brands would have to happen post holiday. So if you think of the windows, where we either hold or increase prices on some items or many items on the exclusive brand side.
Really October our Gen four January or the two windows for those price increases.
Okay understood and then I guess the follow up I had just as we think maybe Jim on the cost side of the business focusing on SG&A has anything changed in your thinking around the year in terms of hurdle rate for SG&A for the balance of the year.
Hey good afternoon. Thanks very much for taking my question. Um, I want to stick on the existing brand um, questions for a moment. So could you talk a little bit more about the strategy for that lower for longer pricing? You know, when you kind of take it month by month, to measure elasticity, and then, just bigger picture, right? How much bigger can exclusive brand penetration be? Seems like a year where there's a lot of disruption from tariffs. You know. Could we start to see exclusive brand penetration stay above this? 40% threshold for some time.
Jim Watkins: Yeah, it was above 40% for Q1, and we expect it to stay in that range throughout the rest and slightly higher than that for the remainder of this fiscal year. We've said publicly that we'd like to get, I'd like to get exclusive brands to 50% penetration over the next five to six years, so one to 200 basis points of improvement a year. There may be a larger increase this year with some of the lower for longer strategy that we are testing. That window is October pre-holiday, or those retickets or price increases on exclusive brands would have to happen post-holiday. So if you think of the windows where we either hold or increase prices on some items or many items on the exclusive brand side, it's really October or January are the two windows for those price increases.
Yeah, it's um, it was above 40.
No the hurdle rates still remain where they were when we guided in a couple of months ago.
Yes.
Just a reminder.
That we could leverage this year SG&A at a flat comp and so we've got some leverage model then for the year and at the at the margin side of things on the EBIT, we expect to leverage data at a 3% comp for the year and maybe that comes down just slightly because the.
Merchandize margin guide for the year has gone up just slightly.
Okay. Thanks for the detail best of luck guys.
Thanks, Steve.
Thank you next question comes from the line of Jay Italy with UBS. Please go ahead.
30% for q1 and we expect it to stay in that range throughout the rest and and a slightly higher than that. For the, for the remainder of this fiscal year, we've said publicly that we'd like to get I'd like to get exclusive Brands to 50% penetration um over the next 5 to 6 years. So 1 to 200 basis points of improvement a year. Uh there may be a a larger increase this year, with some of the lower for longer strategy that we are testing. Um, that that window is October preh holiday or or those Rhett tickets, or price increases on exclusive Brands would have to happen, post holidays. So if you think of the windows where we either hold or increase prices on some items or many items on the exclusive brand side, uh it's really October or Jan or January are the 2 windows for those price increases.
Max Rakhlenko: Okay, understood. And then I guess the follow-up I have just as we think maybe Jim on the cost side of the business, you know, focusing on SG&A, has anything changed in your thinking around the year in terms of hurdle rate for SG&A through the balance of the year?
Terrific. Thank you.
It's an interesting stat you gave on the prepared remarks about how the newer stores are comping better as they mature in I guess.
Consumers in those local markets get more aware of them I think you talked about the stores open the last six years, but do you see any nuances between say stores opened late last year and year before versus stores that are open maybe 456 years ago. If you do can you talk about those thank you.
Okay, understood and then, I guess the follow-up I had just, as we think maybe Jim on the Cog side of the business. You know, focusing on sgna has anything changed in your thinking, around the year, in terms of hurdle rate for sgna through the, through the balance of the year.
Jim Watkins: No, the hurdle rates still remain where they were when we guided them a couple of months ago. You know, just a reminder that we could leverage this year SG&A at a flat comp. And so we've got some leverage modeled in for the year. And at the margin side of things on the EBIT, we expect to leverage that at a 3% comp for the year. Maybe that comes down just slightly because the merchandise margin guide for the year has gone up just slightly.
Sure we haven't seen significant differences between the different class years, and kind of talked about that a little bit on the most recent call or the last call about how the.
The early opened stores in that six year period, where are out performing the stores and the more recent periods.
They continue to gain momentum.
Max Rakhlenko: Okay, thanks for the detail. Best of luck, guys.
Uh, no. The, the hurdle rate still remain where they were when we guided them, a couple months ago. Um, you know, just just a reminder, um, that we, we could leverage this year, sgna at a, at a flat comp. And so we've got some leverage modeled in for, for the year and at the, at the margin side of things on on the ebit. Uh, we expect to leverage data to 3% comp for the year. Um, maybe that comes down just slightly because uh, the merchandise margin guide for the year, has gone up. Just slightly.
Okay, thanks for the details. Best of luck, guys.
As they age and as we look at each of those class years, it's very consistent.
Jim Watkins: Thanks, Steve.
Operator: Thank you. Next question comes from the line of Jay Asoli with UBS. Please go ahead.
Thanks Steve.
Aviary in improving and really driving.
Thank you. Next question comes from the line of J.S. But the UBS. Please go ahead.
Mark Dedovesh: Oh, terrific. Thank you. You know, it was an interesting stat you gave on the prepared marks about how the newer stores are comping better as they mature, and I guess the consumers in those local markets get more aware of them. I think you talked about stores opened the last six years, but do you see any nuances between, say, stores opened like last year or the year before versus stores that are opened maybe four or five, six years ago? And if you do, can you talk about those? Thank you.
Comp waterfall, but then also looking at those legacy stores and seeing that.
<unk>.
Those older stores are still adding good volume despite all of the new stores that we're adding.
Got it and then I guess, just thinking about what the productivity per store should be given just a huge growth during the post COVID-19 period, and then sort of normalization and then now where we are today I mean do you.
Feel like it's sort of smoothed out where you're seeing consistent trends and if so what should the average store I can mature store deliver in terms of sales per store in a given year.
Oh, terrific. Thank you. Um, you know, it was an interesting stat you gave on the prepared marks about how the newer stores are comping better as they mature. I guess the consumers in those local markets get more aware of them. I think you talked about the stores that opened in the last 6 years, but do you see any nuances between, say, stores opened last year or the year before versus stores that have been open maybe 4, 5, or 6 years ago? If you do, can you talk about those? Thank you.
Jim Watkins: Sure. We haven't seen significant differences between the different class years, and kind of talked about that a little bit on the most recent call or the last call about how the early open stores in that six-year period were outperforming the stores in the more recent periods. And so they continue to gain momentum as they age. And as we look at each of those class years, it's very consistent behavior in improving and really driving comp waterfall, but then also looking at those legacy stores and seeing that those older stores are still adding good volume despite all the new stores that we're adding.
Yes, we havent put a target number out there we've talked about it in the past the new stores opened at 75% of a mature store and so if you do the math you get to roughly.
Three to $3 $2 million as the sales volume in year, one for a new store, it's roughly $4 2 million.
For a more mature store or a legacy store, but we plan on growing the comps in those legacy stores.
we we haven't seen significant differences between the the different class years and kind of talked about that a little bit on, on the most recent call uh, or the last call about how the the, you know the the early open stores in that 6 year period were are out uh performing the stores in the more recent periods and so that that they continue to to gain momentum um as they age and as we look at each of those class years, it's it's very consistent, uh, behavior in in improving and and really driving
Into the future and so that number will continue to go up and the way we're thinking about the business.
waterfall. But then also looking at those Legacy stores and seeing that, um, the those older stores are still adding good volume. Uh, despite all the new stores that we're adding,
Mark Dedovesh: Got it. And I guess just thinking about what the productivity per store should be, given just the huge growth during the post-COVID period and then sort of normalization and then now where we are today. I mean, do you feel like it's sort of smoothed out to where you're seeing consistent trends? And if so, what should the average store, like a mature store, deliver in terms of sales per store in a given year?
Understood very helpful. Thank you so much.
Thanks, Sean Jay Thank you.
Next question comes from the line of Max <unk> with CD Cowen. Please go ahead.
Hey, guys nice job on all the momentum. So first question is on exclusive brands can you walk us through the journey.
Got it. And I think it's just thinking about what the productivity per store should be given, just a huge growth during the postcovid and then sort of normalization. And then, now where we are today, I mean, do you feel like it's sort of smoothed out to where you're seeing consistent Trends? And if so, what should the average store like a mature store, deliver in terms of sales per store in a given year?
Jim Watkins: Yeah, we haven't put a target number out there. We've talked about it in the past that the new stores open at 75% of a mature store. And so if you do the math, you'd get to roughly, you know, if a $3.2 million is the sales volume in year one for a new store, it's roughly $4.2 million for a more mature store or a legacy store. But we plan on growing the comps in those legacy stores into the future. And so that number will continue to go up in the way we're thinking about the business.
We're thinking about where project product margins can go over time I think previous comments make it sound like you think that the opportunity to drive upside is quite large and I think that you have a new VP of sourcing. So just curious how we should think about that on a multiyear basis.
Yes.
The new head of sourcing has onboard.
Jennifer started a few months back she has been amazing and a great add to the team and she is in the process of hiring a full sourcing team here at 10% to 12 folks that we're going to be hiring.
The sourcing team that being said the gains from sourcing are going to be.
Mark Dedovesh: Understood. Very helpful. Thank you so much.
To roughly, you know, if a 3-2 3.2 million dollars is the sales volume in year, 1 for a new store, it's roughly 4.2 million of a um, for a, a more mature store or a legacy store. But we we plan on on growing the comps in those Legacy stores uh into the future and and and so that number will continue to go up. And and the way we're thinking about the business
Into mid 27% and for a full year, it's going to be fiscal 'twenty eight by the time, we see the gains on the sourcing side.
Jim Watkins: Thanks, Joel.
Understood. Very helpful. Thank you so much.
Operator: Thank you. Next question comes from the line of Max Raklenko with CD Coven. Please go ahead.
We do think it's going to be.
Thanks, Sean. Jake, thank you. Next question comes from the line of Max drenko with CD coven. Please go back.
Max Rakhlenko: Hey guys, nice job on all the momentum. So first question is on exclusive brands. Can you walk us through the journey of how you're thinking about where product margins can go over time? I think previous comments make it sound like you think that the opportunity to drive upside is quite large. And I think that you do have a new VP of sourcing. So just curious how we should think about that on a multi-year basis.
Over 100, or 200 bps, we think theres an opportunity there, but we are but that is could be multi year to get there.
He is meeting with all the factories. The team is going through re costing exercises with many of the factories. So we're not ready to guide nor commit to what those sourcing margin gains will be but we still believe that there is opportunity there and that's why we're building out this team.
Hey guys, uh, nice job on all the momentum. So first question is on exclusive Brands. Can you walk us through the Journey of how you're thinking about where product product margins? Can go over time, I think previous comments, make it sound like you think that the opportunity to drive upside is quite large and I think that you do have a new uh VP of sourcing. So just curious how we should think about that on a multi-year basis.
Mark Dedovesh: Yeah, the new head of sourcing is on board. Jennifer started a few months back. She's been amazing and a great add to the team. And she's in the process of hiring a full sourcing team here, 10 to 12 folks that we're going to be hiring on the sourcing team. That being said, the gains from sourcing are going to be into mid-27, and for a full year, it's going to be fiscal 28 by the time we see the gains on the sourcing side. We do think it's going to be, you know, over 100 or 200 BIFs. We think there's an opportunity there, but that is, you know, could be multi-year to get there. She's meeting with all the factories. The team is going through recosting exercises with many of the factories.
Got it that's helpful and then on the work side. So with that now is looking positive on both sides of that business. Do you think that you can maintain that and do you think some of the challenges are now behind or is it more about just easier compares and then how would you decide to what.
That's what happened to that business as it used to be pretty steady pre pandemic.
Yeah, the um the new head of sourcing is on board. Uh uh Jennifer started uh a few months back. She's been amazing in a great. Add to the team and she's in the process of, of hiring a full sourcing team here 10 to 12 folks that we're going to be hiring uh, on the sourcing team. That being said, the gains from sourcing are going to be into mid 26.
Yes, if we look at all the way back to Q1 of last year were a negative one in work boots and in this particular quarter, we were plus one in work boots.
7. And, and for a full year it's going to be fiscal 28. By the time, we see the gains on the sourcing side, um, we do think it's going to be, you know,
It has been very steady admittedly Q4 of last year was the toughest comp had a negative three one but in general.
Its a steady business I'm not ready to declare victory on work boots by any means yet it is still comping well below the rest of the business. It traditionally does it doesn't go up or down as much as some of the other merchandise categories, but I still think there's work to be done on no pun intended on the work boot side.
Mark Dedovesh: So we're not ready to guide nor commit to what those sourcing margin gains will be, but we still believe that there is opportunity there, and that's why we're building out this team.
Over uh, 100 or 200 bips. We think there's an opportunity there, but we are, but that is, you know, could be multi-year to get there. Um, she's meeting with all the factories. Uh, the team is going through reconing exercises with many of the factories. So we're not ready to to guide nor commit to what those sourcing margins will be, but we still believe that there is opportunity there and that's why we're be building out this team.
Max Rakhlenko: Got it. That's helpful. And then on the work side, so with that now flipping positive on both sides of that business, do you think that you can maintain that? And do you think some of the challenges are now behind, or is it more about just easier compares? And then how would you dissect what happened to that business as it used to be pretty steady pre-pandemic?
<unk> and <unk>.
Again early days of the Hawks initiative, the Cody James and marketing will be around the work the western and the 1978, so there'll be another hit of boot barn work marketing coming as we get into September.
And I hope to have another good update for you guys next quarter, but I don't I don't think its going to there is nothing to indicate that it's going to fall off but I'm not ready to declare victory that we've gotten work boots back to where they should be in a low single digit comp for the quarter.
Got it, that's helpful. And then on the work side. So with that now, flipping positive on both sides of that business. Do you think that you can maintain that and do you think some of the challenges are now behind? Or is it more about just easier Compares and then how do you uh dissect what uh or dissect? What happened to that business is it used to be pretty steady, pretty pandemic.
Jim Watkins: Yeah, if we look at all the way back to Q1 of last year, we were a negative one in work boots, and in this particular quarter, we were a plus one in work boots. It has been very steady. Admittedly, Q4 of last year was the toughest comp at a negative three one, but in general, it's a steady business. I'm not ready to declare victory on work boots by any means yet. It is still comping, you know, well below the rest of the business. It traditionally does. It doesn't go up or down as much as some of the other merchandise categories. But I still think there's work to be done on, no pun intended, on the work boot side. And again, early days of the Hawks initiative, the Cody James marketing will be around the work, the Western, and the 1978.
Awesome.
Thanks, a lot guys maintain the momentum.
Thank you Max.
Thank you next question comes from the line of Janine Stichter with BTG. Please go ahead.
Hi, Thanks for taking my questions.
Yeah, if we look at all the way back to q1 of last year, we were in negative 1 and work boots and and in this particular quarter we were a plus 1 in work boots. Um it it has been very steady admittedly Q4 of last year was the toughest comp at a negative -31 but in general it it it's a steady business. I I'm not ready to declare Victory on work boots by any means yet it it is still comping, you know, well, below the rest of the business. It traditionally does. It doesn't go up or down.
First for John This morning.
Any thoughts on the competitive landscape.
We're initially going through all this half.
Hey, Mike Burwell.
And all of the functions are going to be independent of the market I'm curious anecdotally. What you are seeing in the broader market and if you still see a share gain opportunity from some of the volatility.
Jim Watkins: So there'll be another hit of Boot Barn work marketing coming as we get into September. And hope to have another good update for you guys next quarter. But I don't think it's going to, there's nothing to indicate that it's going to fall off, but I'm not ready to declare victory that we've gotten work boots back to where they should be in a low single-digit comp for the quarter.
Yes, I think.
We're not uniquely disadvantaged and as we look at what's happening with tariffs in the market everyone. We'll be facing into the same MSRP increases and I think our exclusive brands and the inventory position that we are in heading into our Q3 or the holiday season puts us puts us in a nice play.
As much as some of the other merchandise categories. Um, but I, I still think there's work to be done on, no pun intended, on the work boot side and um, again early days of the Hawks initiative, the Cody James marketing will be around the work, the Western and the 1978. So there'll be another, uh, hit of Boop, Barn work marketing coming as we get into September. Uh, and uh, hope to have another good update for you guys next quarter. But I, I don't, I, I don't think it's going to. There's nothing to indicate that it's going to fall off, but I'm not ready to declare victory, that that we've gotten work boots back, uh, to where they should be in a low single digit, uh, comp, uh, for the quarter.
Max Rakhlenko: Awesome. Well, thanks a lot, guys, maintaining the momentum.
Relative to the competition again this this industry.
Awesome. Well uh, thanks a lot, guys. Uh, maintain the momentum.
Great things about it is it's very rational from a promotional standpoint, and I respect all of our competitors greatly.
Mark Dedovesh: Thank you, Max.
Jim Watkins: Thanks.
Operator: Thank you. Next question comes from the line of Janine Sticktor with BTIG. Please go ahead.
Thank you Max. Thanks.
But you do see some of the smaller mom and Pops.
Thank you. Next question, comes from the line of Janine's. Tech tour with PT. Please go ahead.
Janine Stichter: Hi, thanks for taking my questions. Question first for John. I just want to hear your thoughts on the competitive landscape. I know when we were initially going through all this tariff volatility, it seemed like there was going to be a lot of disruption to some of the independents in the market. I'm curious anecdotally what you're seeing in the broader market and if you still see a share gain opportunity from some of this volatility.
Regress and take less risk when they run into these disruptive situations. So I do think we are in a better position than most if not all as we head into the holiday season, given our exclusive brands and given how we've approached the last few months.
Hi, thanks for taking my questions. Um, question first for John, I'm just want to hear your thoughts on the competitive landscape. I know when we were initially going through all this tariff volatility, it seemed like there was going to be a lot of Destruction with some of, the Independents in the market. Um, curious anecdotally. What you're seeing in the broader market, and if you still see a sharing opportunity from some of the volatility,
Jim Watkins: Yeah, I think, you know, we're not uniquely disadvantaged as we look at what's happening with tariffs in the market. Everyone will be facing into the same MSRP increases. And I think our exclusive brands and the inventory position that we are in heading into our Q3 or the holiday season puts us in a nice place relative to the competition. Again, this industry, one of the great things about it is it's very rational from a promotional standpoint. And I respect all of our competitors greatly. But you do see some of the smaller mom-and-pops kind of regress and take less risk when they run into these disruptive situations. So I do think we are in a better position than most, if not all, as we head into the holiday season, given our exclusive brands and given how we've approached the last few months.
Okay, Great and then maybe for Jim on the gross margin just want to clarify windows tariffs inventory actually gross margin I'm wondering if we have a period here in Q2, when you have ticket increases that youre not yet flowing through at a high.
Your cash guidance.
Yes, that's a correct assumption so as the price increases go into.
A place on the cost side of things, we're purchasing those those goods.
Yeah, I think um you know we're not uniquely disadvantaged as we look at what's happening with tariffs in the market, everyone will be facing into the same MSRP increases and uh I think our exclusive Brands and the inventory position that we are in heading into rq3 or the holiday season. Uh puts us puts us in a nice place relative to the competition. Again this this industry uh 1 1 of the great things about it is it's very rational from a promotional standpoint and
We will have goods that are in the store that are still purchased at the lower price and so as we are raising the MSRP that we've been given by the third party vendors that come along with those cost increases there is a period of time that.
Um, but uh, you do see some of the smaller Mom and Pops kind of, uh, regress and take less risk when they run into these disruptive situations. So,
Kind of in the middle of the second quarter here, where we will have a little bit better of a margin opportunity and youre seeing that in our in our guide.
For the quarter as we've got our merchandise margin up 70 basis points that stays with us.
I do think we are in a better position than most if not all as we head into the holiday season, given our exclusive Brands and given how we've approached uh the last few months.
Janine Stichter: Great. And then maybe for Jim on the gross margin, I just want to clarify when does tariff inventory actually start to hit the gross margin? I'm wondering if we have a period here in Q2 when you have ticket increases, but you're not yet flowing through the higher tariff side.
To a lesser degree in the third quarter, but a little bit as we head into the third quarter.
Perfect. That's helpful. Thanks, so much.
Thanks Janine thank.
Great. And then maybe for Jim on the growth margin, just want to clarify when does tariffs uh, inventory actually start to hit the growth margin. I'm wondering if we have a period here in Q2 when you um, have ticket increases but you're, you're not yet flowing through the higher tariffs Goods.
Jim Watkins: Yeah, that's a correct assumption. So as the price increases go into place on the cost side of things, we're purchasing those goods, but we'll have goods that are in the store that are still purchased at the lower price. And so as we're raising the MSRP that we've been given by the third-party vendors that come along with those cost increases, there is a period of time that kind of in the middle of the second quarter here where we will have a little bit better of a margin opportunity. And you're seeing that in our guide for the quarter as we've got our merchandise margin up 70 basis points. That stays with us maybe to a lesser degree in the third quarter, but a little bit as we head into the third quarter.
Thank you next question comes from the line of Jonathan Komp with Baird. Please go ahead.
Yeah, so that's a correct assumption. So as as the price increases go into
Yes, hi, good afternoon, I wanted to ask about inventory it looks like.
Quarter end, there was up <unk>, 3% on a comp store basis, and just given that.
You're guiding to flat comps in the back half is there risk that you could actually run two lean or run out of good that you made based on.
How are you aligning your buying plants.
That's a great question, John and we feel very good about the inventory flow that we've got if you think about.
Uh, place on on, on the cost side of things. We're, we're purchasing those those goods, but we'll have Goods that are in the, in the store that are still purchased at the, at the lower price. And so, as we're raising the, the MSRP that we've been given by the, the third party vendors that that come along with those cost increases, there is a period of time that, um,
The positive comps that we've got guided here in the second quarter.
You are right normally you would see a little bit higher inventory headed into that period, but we've looked at the inventory that we've got the inventory thats in transit and on order and feel that we've got.
Kind of in the middle of this, the second quarter here, where we will have a little bit better of a margin opportunity and you're seeing that in our, in our guide, uh, for the quarter as we've, we've got our merchandise margin up, 70 basis, points that stays with us. Uh, maybe to a lesser degree in the in the third quarter, but a little bit as we head into the the third quarter.
Janine Stichter: Perfect. That's helpful. Thanks so much.
Enough inventory to handle the guide that we've put out there, but also some upside if we needed to.
Perfect. That's helpful. Thanks so much.
Jim Watkins: Thanks, Janine.
Operator: Thank you. Next question comes from the line of Jonathan Komp with BED. Please go ahead.
Thanks Janine.
Yes, if we have the good fortune of beating the guide that we put out there we think that will be in a good spot.
Jim Watkins: Yeah, hi, good afternoon. I want to ask about inventory. It looks like the quarter end was up less than 3% on a comp store basis. And just given that you're guiding to flat comps in the back half, is there a risk that you could actually run too lean or run out of goods that you need based on how you're aligning your buying plans? It's a great question, John. We feel very good about the inventory flow that we've got. If you think about the positive comps that we've got guided here in the second quarter, you're right. Normally, you would see a little bit higher inventory headed into that period.
Thank you. Next question, comes from the line of Jonathan comp with bed. Please go ahead.
Okay. That's very helpful and then John maybe a bigger picture question.
Yeah. Hi, good afternoon. I want to ask about inventory. It looks like Q1 2026 Boot Barn Holdings Inc. is up less than 3% on a comp store basis, and, and just given that,
Youre clearly putting your own stamp on.
Four strategic priorities just as you approach in a few months one year.
You're, you're guiding to Flat comps in the back half is is there a risk that that you could actually run to lean or run out of goods that you need based on?
Your interim leadership and permanent leadership are there any.
Uh, how are you aligning your buying plans?
New entirely kind of entirely new initiatives or new priorities that you are considering or just any other thoughts you have on sort of next frontier of growth opportunities. Thank you.
Yes, absolutely.
<unk>.
Jim Watkins: But we've looked at the inventory that we've got, the inventory that's in transit and on order, and feel that we've got enough inventory to handle the guide that we've put out there, but also some upside if we needed to, you know, if we have the good fortune of beating the guide that we put out there, we think that we'll be in a good spot. Okay, that's very helpful. And then, John, maybe a bigger picture question. You're clearly putting your own stamp on the four strategic priorities. Just as you approach in a few months, you know, one year, you know, your interim leadership and permanent leadership, are there any new entirely, you know, kind of entirely new initiatives or new priorities that you're considering or just any other thoughts you have on sort of next frontier of growth opportunities? Thank you.
I am comfortable with the big three adjustments that we're making now the sourcing the exclusive brand marketing and really treating those brands truly as real brands and then reinvigorating the work both how we merchandise it work boots in stores, how we talk about work in general.
Uh, it's a great question, John, we we feel very good about the inventory flow that we that we've got. If, if you think about um the positive comps that we've got guided here in the second quarter. Uh, you're right normally you would you would see a little bit higher inventory headed into that, that period. But we've, we've looked at the inventory that we've got the, the inventory that's in transit. And on order and feel that we've got, uh, enough inventory to handle the the guide that we've put out there. But also some upside if we needed to
And approach the blue color.
To um, you know, if we have the Good Fortune of beating, uh the the guy that we put out there, we think that we'll be in a good spot.
Customer and the tradesmen so.
I catch.
Catch myself I think often about different things that we might want to do over time, but but it's a lot harder to maintain simplicity and focus than a complexity traps. So I'm sticking with these three for the foreseeable future and yes. There is other things that I think about.
Okay, that's very helpful. And then John, maybe a bigger picture question. Um, you're clearly putting your your own stamp on on the forge. Strategic priorities. Just as you approach in a few months, you know, 1 1 year. Um, you know, your your interim leadership and permanent leadership. Are there any
Perhaps as we go into next year, but I think sourcing the marketing piece and work our enough adjustments for the team at this point in time.
Can't argue with that thank you.
Mark Dedovesh: Yeah, absolutely. No, I'm comfortable with the big three adjustments that we are making now: the sourcing, the exclusive brand marketing, and really treating those brands truly as real brands, and then reinvigorating the work, both how we merchandise the work boots in stores, how we talk about work in general, and approach the blue-collar customer and the tradesmen. So I catch myself, I think, often about different things that we might want to do over time, but it's a lot harder to maintain simplicity and focus than a complexity trap. So I'm sticking with these three for the foreseeable future. And yes, there's other things that I'd think about perhaps as we go into next year, but I think sourcing, the marketing piece, and work are enough adjustments for the team at this point in time.
Uh, you know, new entirely, you know, kind of entirely new initiative or new priorities that you're considering, or just any other thoughts, you have on sort of next Frontier of of growth opportunities. Thank you.
Take care thanks again.
Thanks, John.
Thank you next question comes from the line of Chris not done with Bank of America. Please go ahead.
Thanks, guys. So just looking at the <unk> Guide can you just remind us what drove the inflection last August in your business and just whether you're comfortable with the category mix, that's driving the momentum as it relates to fashion product versus your core product.
Yes, so as we went.
Yeah, absolutely. No, I I, um, I'm comfortable with the big 3 adjustments that we are making. Now, the sourcing, the exclusive brand marketing, and really treating those Brands truly as as real Brands and then reinvigorating the work both, uh, how we merchandise, the work boots in stores. Uh, how we talk about work in general. Um, uh, and and approach, uh, the blue collar, uh, customer and the Tradesmen. So,
Went back to go back to last year, we saw a kind of a steady increase as we as we started the year end.
It really if you look at in May at things turned positive in May and then June was positive again July was general softness in retail and if you go back and look at our last year transcript we talked about.
Some toughness in the business from Hurricanes, and some hot weather out west and different things and then the business.
I I I I catch myself, I think often about different things that we might want to do over time, but but it's a lot harder uh, to maintain Simplicity and focus than than a complexity trap. So I'm sticking with these 3 for the foreseeable future and and yes, there's other things that I think about um, perhaps as we go into next year, but I think sourcing the marketing piece and work are are enough adjustments for the team at this point in time.
Jim Watkins: Totally. Can't argue with that. Thank you. Take care. Thanks again.
Strengthened.
Mark Dedovesh: Thanks. Thanks, John.
Certainly can't argue with that. Uh, thank you. Take care. Thanks again.
In August and we were seeing some broad based.
Operator: Thank you. Next question comes from the line of Chris Nardon with Bank of America. Please go ahead.
Thanks, thank you, John.
Category growth as we look back a year ago in August and so.
Mark Dedovesh: Thanks, guys. So just looking at the 2Q guide, can you just remind us what drove the inflection last August in your business and just whether you're comfortable with the category mix that's driving the momentum as it relates to fashion products versus your core product?
Thank you. Next question, comes from the line of Chris nadon with Bank of America. Please go ahead.
Since August the business has been in that mid to high single digit range really for 12 months now we had a couple of exceptions February being the most notable.
And so as we head into the month of August we've got the business guided.
Thanks guys. So just looking at the 2q guide, can you just remind us what? Drove the inflection Labs August in your business, just whether you're comfortable with the category. Mix that's driving the momentum as it relates to fasting product versus your core product.
Jim Watkins: Yeah, so as we went back to go back to last year, we saw a.Kind
We think accordingly, it's more in that mid single digit or low to mid single digit comp range for August and September to reflect some of the stronger comps that we had.
Jim Watkins: of a steady increase as we started the year. And really, if you look at May, things turned positive in May. And then June was positive again. July was general softness in retail. And if you go back and look at our last year transcript, we talked about some toughness in the business from hurricanes and some hot weather out West and different things. And then the business strengthened in August. And we were seeing some broad-based category growth as we look back a year ago in August. And so since August, the business has been in that mid to high single-digit range really for 12 months now. We had a couple of exceptions, February being the most notable.
Is, we went back to, to go back to last year, we saw a kind of a steady increase as we, as we started the year. And, um,
Beginning a year ago.
But we like where the business is positioned we think the consumer.
Is pretty healthy they're shopping with us well.
And I think we can carry this momentum at least for the next couple of months and then John talked earlier about how we're thinking about the back half of the year.
Beyond that and with some of the pressure of the tariffs and consumer sentiment may may pose for us.
It really, if you look at May things turned positive in May and then we um, June was positive again, July was General softness in in retail and and if you go back and and look at our last year, transcript we talked about um, some toughness in the business from hurricanes and some hot weather out west and different things. And then the business, uh, strengthened in in August and we were seeing some broad-based uh,
As we look at and I'll just add in as we look at the fashion side of the business as you mentioned it the penetration of women's apparel is up slightly versus Q1 of last year, but that's entirely driven by our denim business and I do believe we're becoming a a jeans destination.
Jim Watkins: And so as we head into the month of August, we've got the business guided, we think accordingly, it's more in that mid-single-digit or low to mid-single-digit comp range for August and September to reflect some of the stronger comps that we had beginning a year ago. But we like where the business is positioned. We think the consumer is pretty healthy. They're shopping with us well and think we can carry this momentum at least for the next couple of months. And then John talked earlier about how we're thinking about the back half of the year beyond that and with some of the pressure that tariffs and consumer sentiment may pose for us.
And so it's not anything kind of truly fashion or apparel that.
Driven outside of genes or denim that is driving that business.
Got it that's very clear and I was just going to follow up.
Was curious how big your denim business is today, and then is that pretty well rounded across mens womens different styles. If you can just elaborate on the denim strength that'd be really helpful.
Uh, category growth. As we look back a year ago in August and so uh, since August the the business has been in that mid to high single digit range, really, for 12 months now, we had a couple exceptions, um, you know, February being the most notable. Um, and so as we head into the month of August, we we've got the the business guided. Um, we think accordingly it's it's more in that mid single digit or or low to mid single digit comp range for for August and September to to reflect some of the stronger comps that we had uh beginning a year ago. Uh, but we like where the business is is positioned. We think the consumer uh is is pretty healthy their shopping with this well and and think we can carry this momentum at least for the next couple of months. And then, you know, John talked earlier about how we're thinking
Yes, the denim business, sorry, as we look at the penetration of denim.
Back half of the year, um, beyond that. And with some of the pressure that that tariffs and consumer sentiment may may pose for us
It's roughly half the men's apparel business and.
John Hazen: And I'll just add in that as we look at the fashion side of the business, as you mentioned, the penetration of women's apparel is up slightly versus Q1 of last year, but that's entirely driven by our denim business. And I do believe we're becoming a jeans destination. And so it's not anything kind of truly fashion or apparel driven outside of jeans or denim that is driving that business.
As we look at and I'll just add in as we look at, you know, the fashion.
And less than that on the women's side.
I don't think we share the total penetration of denim typically here, but it's call it half of the men's apparel business and slightly less than that on the women's side.
You still there Chris.
This is COPD.
As you mentioned it, you know, the, the penetration of women's apparel is up slightly versus q1 of last year but that's entirely driven by our denim business and and I, I do believe we're becoming a a jeans destination. Uh, and uh, and so it's not, uh, anything kind of truly fashion or apparel that, uh, driven outside of jeans or denim that is driving that business.
Jim Watkins: Yeah, got it. That's very clear. And I was just going to follow up. I was curious how big your denim business is today. And then is that pretty well-rounded across men, women, different styles? If you can just elaborate on the denim strength, that'd be really helpful.
<unk> done with your questions, Yes, all set thank you.
Thank you thank you Chris.
Next question comes from the line of Jeremy Hamblin with Craig Hallum Capital Group. Please go ahead.
Thanks, and congrats on the strength of the business.
Yeah, got it. That's very clear and I was just looking to follow up. Um I was curious how big your denim business is today and then is that pretty well-rounded across men's women different styles. If you can just elaborate on the denim strength that would be really helpful.
I wanted to come to the store openings.
John Hazen: Yeah, the denim business, as we look at the penetration of denim, it's roughly half the men's apparel business and less than that on the women's side. I don't think we share the total penetration of denim typically here, but it's call it half of the men's apparel business and slightly less than that on the women's side. You still there, Chris?
You've seen some of the best.
Kind of new unit productivity.
<unk> 14 in the quarter wanted to get a sense for the cadence of the 60.
<unk> 65 to 70 guidance for the remainder of the year.
Do you expect that to be evenly split or any color you might be able to share on that here for the last three quarters.
Yeah, the denim business as sorry as we look at the penetration of denim, um, it's roughly half the men's apparel business and, uh, and and less than that on, uh, the women's side. Um, I don't think we share the total penetration of denim typically here, but it's call it half of the men's apparel business and slightly less than that on the women's side.
Yes, absolutely we yes. So we opened 14 stores in Q1, we plan on opening 16 in Q2, which would get us to 30 and the remaining of the stores. The remaining stores will open over the back half and we haven't mapped out exactly how many in Q3 and Q4, so call. It 35% to 40 stores will open in the back half of the year.
Operator: Yep. This is Siyabeda. Mr. Nardon, are you done with the questions?
Jim Watkins: Yes, all set. Thank you.
Operator: Thank you.
You still there Chris? Yep, this is C beta Mr. Nardon are you done with the questions? Yes. All said. Thank you.
Jim Watkins: Thank you, Chris.
Operator: Next question comes from the line of Jeremy Hamblin with Craig Hullum Capital Group. Please go ahead.
Thank you. Thank you, Chris.
Great.
Digging in a little bit deeper on where youre opening the new stores in that.
Jim Watkins: Thanks. And congrats on the strength of the business. I wanted to come to the store openings. You've seen some of the best kind of new unit productivity open 14 in the quarter. Wanted to get a sense for the cadence of the 65 to 70 guidance for the remainder of the year. Do you expect that to be evenly split or any color you might be able to share on that here for the last three quarters?
Next question, comes from the line of Jeremy. Hamlin with Craig column Capital group, please go ahead.
Kind of outsized.
You're getting a 3.2 mill.
Is this going to inform how you were thinking about where to put stores in FY 'twenty seven and beyond.
And have you considered at all even potentially taking a slightly higher unit growth.
Opportunity given.
How well the business is performing.
Yes, great Great question Jeremy.
John Hazen: Yeah, absolutely. Yeah, so we opened 14 stores in Q1. We plan on opening 16 in Q2, which would get us to 30. And the remaining of the stores, the remaining stores will open over the back half. And we haven't mapped out exactly how many in Q3 and Q4. So call it that 35 to 40 stores will open in the back half of the year.
Thanks and, uh, congrats on the the, uh, strength of the business. Um, I wanted to come to the store openings. Um, you know, you've seen some of the best um, kind of new unit productivity open 14 in the quarter. Wanted to get a sense for the Cadence of the, you know, 65 to 70 guidance. For the remainder of the year. Um, do you expect that to be evenly split or any color? You might be able to share on on that here for the last 3 quarters?
We're thrilled with how well the new units are opening I think the 15% growth.
Our new unit openings that we've been doing the last three or four years now.
It seems to be working pretty well for us as you know that number contained that results in a higher number of stores, we have to open each year and so I don't I don't see us expanding that beyond what we've already got stated they're at the 15% new units.
Yeah, absolutely we yeah so we opened 14 stores in q1. We plan on opening 16 in Q2 which would get us to 30 and the remaining of the stores. The remaining stores will open uh, over the back half and we we we haven't mapped out exactly how many in Q3 and Q4. So call it the 35 to 40 stores will open in the back half of the year.
Jim Watkins: Great. And just dig in a little bit deeper on where you're opening the new stores and that kind of outsized AUV you're getting at 3.2 mil. Is this going to inform how you're thinking about where to put stores in FY27 and beyond? And have you considered at all even potentially taking a slightly higher unit growth opportunity given how well the business is performing?
To make sure that we're getting the right locations were being patient and not trying to rush those new units.
And then also operationally and making sure that we're not <unk>.
Taxing the field team too much.
The distribution center.
Folks and this we're doing it prudently so I think that that probably stays where it is for right now.
Great and just, um, digging in a little bit deeper on on, where you're opening the new stores and, and and that, you know, kind of outsized. Um, auv, you're getting at 3.2 mil. Um, is this going to inform how you're thinking about, where to put stores? You know, in FY 27 and Beyond and have you considered at all, even potentially taking a slightly higher unit growth, um, opportunity given. Um, you know how well the business is performing.
John Hazen: Yeah, great question, Jeremy. We're thrilled with how well the new units are opening. I think the 15% growth or new unit openings that we've been doing the last three or four years now seems to be working pretty well for us. As you know, that number results in a higher number of stores we have to open each year. And so I don't see us expanding that beyond what we've already got stated there, the 15% new units, just to make sure that we're getting the right locations, we're being patient and not trying to rush those new units. And then also operationally making sure that we're not taxing the field team too much, the distribution center folks, and just we're doing it prudently. So I think that that probably stays where it is for right now and doesn't expand beyond 15%.
It doesn't expand beyond 15%.
But just to clarify as you look into FY 'twenty seven and beyond you still feel comfortable with that roughly 15% unit growth even as the base gets larger.
Yes, I think I think we're comfortable with that is something that we're always looking at we haven't guided next year, yet and so we can't give you an exact number of the stores that we're going to put out there, but the 15% is something that we've stated and we've done that for four years and feel good about right now.
Great. Thanks for taking the questions and best wishes.
Thank you Jeremy Thank you.
Thank you next question comes from the line of Sam Poser with Williams trading. Please go ahead.
Thank you for taking my questions guys.
Thrilled with how? Well, the the new units are are opening. I think the 15% uh, growth or new new unit openings that that we've been doing the last, you know, 3 or 4 years now. Um, it seems to be working pretty well for us. Uh, as you know, that that number that results in, in a higher number of stores, we have to open each year. And so I I don't I don't see us expanding that, uh, beyond what we've already got stated that the 15% new units just to to make sure that we're getting the right locations were being patient and not trying to, to rush those new units. Um, and then also operationally making sure that we're not uh taxing the, the field team too much, uh, the Distribution Center. Um,
One <unk>.
How much.
Have you narrowed the assortment.
Within the stores and if so how much is it.
As a narrow and deeper assortments may be helping you or how do you see that driving sales and margins going forward.
Jim Watkins: But just to clarify, as you look into FY27 and beyond, you still feel comfortable with that roughly 15% unit growth even as the base gets larger?
Folks and, and, and just we're doing it. Prudently. So, I I think that that probably stays where, where it is for for right now, um, and doesn't expand Beyond 15%.
Hey, Sam Yes, I think we have gone deeper for sure in denim.
but just to clarify as you look into FY, 27 and Beyond, you still feel comfortable uh, with that roughly 15% unit growth even as the base gets larger,
I've been in many stores over the last several months and I've heard from store partners and managers across the country.
John Hazen: Yeah, I think we're comfortable with that. It's something that we're always looking at. We haven't guided next year yet. And so we can't give you an exact number of the stores that we're going to put out there. But the 15% is something that we've stated and we've done now for four years and feel good about for right now.
How much happier they are with the depths of our denim inventory and people can come in and buy make multi unit purchases in the same size at once which they struggled within the past.
So I think the place that that has happened. The most really is denim I think we're pretty steady state as we look at men's and women's apparel, we do have our tried and true our top styles that drive a disproportionate amount of business that we're always focusing on that top 3% of styles that drive almost four.
Yeah, I think I think we're, we're, we're comfortable with that. It's something that we're always looking at, we haven't guided next year yet. And, and, and so, we can't give you an exact number of the stores that we're going to put out there. But but the 15% is something that we've we've stated, and we've done now for 4 years and and feel good about for right now.
Jim Watkins: Great. Thanks for taking the questions and best wishes.
Great. Thanks for the uh, taking the questions and best wishes.
John Hazen: Thank you, Jeremy.
Jim Watkins: Thank you.
Operator: Thank you. Next question comes from the line of Sam Poser with Williams Trading. Please go ahead.
Thank you, Jeremy. Thank you.
Jim Watkins: Thank you for taking my questions, guys. One, how much have you narrowed the assortment within the stores? And if so, how much is a narrow and deeper assortment maybe helping you? Or how do you foresee that driving sales and margins going forward?
Thank you. Next question, comes from the line of Samosa with William's trading. Please go ahead.
Uh thank you for taking my question guys. Um 1. How how much?
50% of the business, depending on the quarter. So we.
Have you narrowed the assortment?
We're always focusing on those tried and true but I think the biggest difference is on the denim side and how well inventory. We are both in third party denim and in our own exclusive brands.
Within the stores. And if so how much is it, you know, is a narrow and deeper assortment maybe helping you or how do you foresee that driving sales and margins going forward?
John Hazen: Hey, Sam. Yeah, I think we have gone deeper for sure in denim. I've been in many stores over the last several months, and I've heard from store partners and managers across the country how much happier they are with the depth of our denim inventory. And people can come in and buy multi-unit purchases in the same size at once, which they struggled with in the past. So I think the place that that has happened the most really is denim. I think we're pretty steady state as we look at men's and women's apparel. We do have our tried and true, our top styles that drive a disproportionate amount of business that we're always focusing on the top 3% of styles that drive almost the 40, 50% of the business depending on the quarter.
Thank you and then.
Within the flat comps in the back half of the year.
Is that flat in Q3, and Q4 or do you foresee.
Hum how would you slow that.
Yes, we havent flat in both Q3 and Q4. He stated we stated on the last call that if not for tariffs and macro uncertainty those would have been plus threes, Inc. Q4, and given everything that's going on in the macro environment, we are holding that guidance.
Hey, Sam. Yeah, I think we, we have gone deeper for sure in denim. Uh, we I've been in many stores over the last several months, and I've heard from store partners and managers across the country, uh, how much happier they are with the depth of our denim, inventory, and people can come in and buy make multi-unit purchases in the same size at once, which they struggled with in the past. Uh, so I think the place that that has happened, the most really is, is denim. I think we're pretty steady state, as we look at men's and women's apparel. Um, we do have our tried and true our top.
And we will update it as we get to the next call.
Thank you guys continued success.
Thanks Sam.
John Hazen: So we are always focusing on those tried and trues, but I think the biggest difference is on the denim side and how well inventoried we are both in third-party denim and in our own exclusive brands.
Thank you. Our next question comes from the line of Cory <unk> with Jefferies. Please go ahead.
Great. Thanks, and good afternoon, I just wanted to ask on price increases.
Is there perhaps like a timeline that you could give in terms of.
Styles that drive a disproportionate amount of business and we're always focusing on that top. 3% of styles, uh, that drive almost uh 40 50% of the business depending on the quarter. So we um we we are always focusing on those tried Andrus but I think the biggest difference is on the denim side and and how well inventory, we are both in third-party Denim and in our own exclusive brands.
Jim Watkins: Thank you. And then within the flat comps in the back half of the year, is that flat in Q3 and Q4? Or do you foresee how would you flow that?
When youre expecting to see these price increases come through and then just on the exclusive brand penetration has that changed at all as you've tweaked.
Thank you. And then can you clarify whether the flat comps in the back half of the year are flat in Q3 and Q4, or do you foresee any changes?
<unk> tweaked the pricing across the other brands that you sell in your store.
John Hazen: Yeah, we have it flat in both Q3 and Q4. We stated on the last call that if not for tariffs and macro uncertainty, those would have been plus threes in Q3. And given everything that's going on and the macro environment, we are holding that guidance and we'll update it as we get to the next call.
Um, you know how how would you flow that?
Yeah. So so as we said a little bit earlier I'll just walk through that timeline. One more time, we have received price increases from many third party partners or vendors.
Started to re ticket those items in stores, we're about halfway done with the re ticketing process and the re ticketing will be complete by the end of August so the price increases which are mid single digit that we've received from third party vendors will be done end of August we are holding lower for longer on our exclusive brands and we really.
Yeah, we have it flat in both Q3 and Q4 be stated. Uh, we stated on the last call that, you know. If if not for tariffs and macro uncertainty, those would have been plus 3 using 3 Q4 and given everything that's going on. And and the macro environment, we we are holding that guidance and uh, we'll update it as we get to the next call.
Jim Watkins: Thank you, guys. Continued success.
John Hazen: Thanks, Sam.
Thank you guys. Continue to success.
Thanks Sam.
Operator: Thank you. Next question comes from the line of Corey Tadloff with Jeffries. Please go ahead.
Thank you. Next question, comes from the line of Corey Tarlov with Jeffries. Please go ahead.
We have two windows, where we can increase price on exclusive brands as well to preserve rate and those windows are October and then into January post holiday. Obviously, you can't do in November and December So we're going to see how exclusive brand penetration performed against third party vendors over the course of September.
Mark Dedovesh: Great, thanks. And good afternoon. I just wanted to ask on price increases. Is there perhaps like a timeline that you could give in terms of when you're expecting to see these price increases come through? And then just on the exclusive brand penetration, has that changed at all as you've tweaked the pricing across the other brands that you sell in your store?
Great. Thanks and good afternoon. I just wanted to ask on price increases. Um, is there perhaps like a a timeline that you could give in terms of
And probably the first week or two of October and make the call style by style on what we what.
When you're expecting to see these price increases come through and then just on the exclusive brand penetration has that changed at all? As you've
tweaked the price, the other brands that you sell in your store,
John Hazen: Yeah, so as we said a little bit earlier, I'll just walk through that timeline one more time. We have received price increases from many third-party partners or vendors. We've started to reticket those items in stores. We're about halfway done with the reticketing process. And the reticketing will be complete by the end of August. So the price increases, which are mid-single digit that we've received from third-party vendors, will be done end of August. We are holding lower for longer on our exclusive brands. And we really have two windows where we can increase price on exclusive brands as well to preserve rate. And those windows are October and then into January post-holiday. You obviously can't do it in November or December.
What we keep lower and maintain pricing on versus what we increased prices on to preserve margin rate.
Understood. It just no color as of yet based on.
No it's still early days.
With half of these items roughly half of the styles being re ticketed and that was really completed within a week or two of where we are right now I think at the time of this call. It is still too early and haven't seen any change we had nice EV penetration throughout.
Q1, so the penetration we talked about was not driven by some dislocation between pricing of <unk> and third party brands.
Understood. Thank you so much really appreciate that.
John Hazen: So we're going to see how exclusive brand penetration performs against third-party vendors over the course of September and probably the first week or two of October and make the call style by style on what we keep lower and maintain pricing on versus what we increase prices on to preserve margin rate.
Thank you Corey.
Thank you next question comes from the line of Ashley Ovens with Keybanc capital markets. Please go ahead.
Okay, great. Thanks for taking my question. So just follow up on the exclusive brands questions from the queue.
At all how you plan to communicate our market some of that pricing differential to consumers over the next couple of months what levers you have in place to drive incremental sales through exclusive brands by choosing to hold those prices and if it could carry on.
Lower for longer on our exclusive Brands and we really have 2 Windows where we can increase price on exclusive Brands as well to preserve rate and those windows are October and then into January post holiday of obviously you can't do it in November or December. So we're going to see how exclusive brand penetration performs against third-party vendors, over the course of September and probably the first week or 2 of October and make the call Style by Style on what we uh, what we keep lower and maintain pricing on versus what we increase prices on to preserve margin rate.
Mark Dedovesh: Understood. It's just no color as of yet based on reaction.
Understood it just no color as of yet based on.
John Hazen: No, no, it's still early days with half of these items, roughly half of the styles being reticketed. And that was really completed within a week or two of where we are right now at the time of this call. It's still too early and haven't seen any change. We had nice EV penetration throughout Q1. So the penetration we talked about was not driven by some dislocation between pricing of EV and third-party brands.
Other patch.
<unk>.
Yes.
Generally don't talk about price.
We've never been a very promotional retail are very full price business and I am personally.
Especially from some past experience in that in other positions I've had at other companies I am very careful about being promotional or talking about pricing because it's hard to walk back from that so we know that many of our customers come to boot barn, dot com and the browser product than boot barn dot com before going into stores.
Mark Dedovesh: Understood. Thank you so much. Really appreciate the help.
Reaction. No, no. It's still early days with with with, you know, with half of these items uh roughly half of the Styles being Reed and and that was really completed within, you know, a week or 2 of where we are right now at the, at the time of this call. It's still too early, um, and haven't seen any change. We had nice EV penetration throughout, uh, q1. So, uh, the, the penetration we talked about was not driven by some dislocation between pricing of EB and third-party brands.
Understood, thank you so much, really appreciate the help.
Jim Watkins: Thank you, Corey.
John Hazen: Thanks.
Operator: Thank you. Next question comes from the line of Ashley Ovens with KeyBank Capital Markets. Please go ahead.
And as you filter and look at different products and different price buckets, there'll be able to see that price differential there, but I don't see a world, where we're going to be.
Thank you, Corey. Thanks. Thank you. Next question. Comes from the line of Ashley Owens with
Keybanc Capital markets, please go ahead.
Ashley Owens: Hey, great. Thanks for taking my question. So to follow up on the exclusive brands questions a bit, would be curious at all how you plan to communicate or market some of that pricing differential to consumers over the next couple of months, what levers you have in place to drive incremental sales to exclusive brands by choosing to hold those prices and if it could carry on further past January since.
Screaming at from the rooftop and putting it in E. Mails that we're still pre tariff pricing like you see in the automotive industry and things of that sort. So I don't think were going to take the approach that you perhaps have seen.
In other businesses that being said a lot of these prices, especially on the boots side of things.
Great. Thanks for taking my question. So, a follow-up on the exclusive brands questions. I would be curious to know how you plan to communicate or market some of that pricing differential to consumers over the next couple of months. What levers do you have in place to drive incremental sales to exclusive brands by choosing to hold those prices, and could this carry on further past January? Thanks.
John Hazen: Yeah, we generally don't talk about price. We've never been a very promotional retailer, a very full-priced business. And I'm personally, especially from some past experience in other positions I've had at other companies, I'm very careful about being promotional or talking about pricing because it's hard to walk back from that. So we know that many of our customers come to bootbarn.com and they browse the product on bootbarn.com before going into stores. And as you filter and look at different products and different price buckets, they'll be able to see that price differential there. But I don't see a world where we're going to be screaming it from the rooftop and putting it in emails that we're still pre-tariff pricing like you see in the automotive industry and things of that sort.
There are.
Psychological price barriers that have been breached with some of these mid single digit price increases where now we have a booth that is under $200 and other boots are now above $200. So I think that will work in our favor.
I don't think were going to have kind of a pre.
Pre tariff pricing marketing campaign in any way around this and we'll let the consumer choose and they'll they'll see the pricing whether they'd be in stores or they're doing their research at home on boot barn dot com before coming in.
Okay got you and then just as a follow up.
Performing really well in denim.
It seems like some other brands in apparel are really trying to capitalize on this and some of the denim tailwind. We've seen this over the past week, just any plans to lean into additional marketing that.
John Hazen: So I don't think we're going to take the approach that you perhaps have seen in other businesses. That being said, a lot of these prices, especially on the boots side of things, there are psychological price barriers that have been breached with some of these mid-single-digit price increases where now we have a boot that's under $200 and other boots are now above $200. So I think that will work in our favor. But I don't think we're going to have kind of a pre-tariff pricing marketing campaign in any way around this. And we'll let the consumer choose. And they'll see the pricing whether they be in stores or they're doing their research at home on bootbarn.com before coming in.
We're doing things in store, so we're focusing on fit guides and talking about denim in stores and making sure. Our partners are educated on the different fits and the different rises, especially on the women's side.
Yeah, we we generally don't talk about price um and we've never been a very promotional retailer, very full price business and I I I'm personally um, especially from some past experience and and at in other uh positions I've had at other companies. I'm very careful about being promotional or talking about pricing because it's hard to walk back from that. So we know that many of our customers come to Boop barn.com and they browse the product on Boop, barn.com before going into stores and as you filter and look at different products and different price buckets. They'll be able to see that price differential there. But I, I don't see your world where we're going to be, um, screaming at from the rooftop and putting it in emails that, you know, we're still pretty tariff pricing, like you see in the automotive industry and and things of that sort. So I don't think we're going to take the approach.
That you perhaps have seen, um, in other businesses, um, that being said, a lot of these prices, um, especially on, on the, the boots side of things.
So denim guy is that each store partner will have are going out as we speak I think they've landed in all stores over the last week or so.
And they look great. So we're going to be educating partners on denim.
And our denim continues to be very much our boot cut silhouette as you would imagine given our business and given the footwear the boots that we sell and so it really comes down to the rise the stretch that different types of cuts that continues to sell very well for us I don't think were going to have any real kind of <unk>.
There are, you know, psychological price barriers that have been breached with some of these mid single digit price increases where now, we have a boot, that's under $200. Another boots are now above $200. So I think that will work in our favor but uh, I I don't think we're going to have kind of a pretty tariff pricing um marketing campaign in any way around this and and we'll let the consumer choose and and they'll they'll see the pricing whether they be in stores or they're doing their research at home on bootbarn.com before coming in.
Ashley Owens: Okay, gotcha. And then just as a follow-up, we know you're performing really well in denim. It's been seen by some other brands in apparel are really trying to capitalize in on this in some of the denim tailwinds. We've seen this over the past week. Just any plans to lean into additional marketing there?
Denim or gene campaign.
Like others have seen over the last couple of weeks with American Eagle and some others I think we'll continue to market.
Boot barn is in our broad assortment of product that includes denim, but no large dedicated denim campaign in the works right now.
I think, gotcha. And then, just as a follow up, you know, we know you're performing really well in denim. Um, it's been seen by some other brands in apparel are really trying to capitalize in, on this. Um, in some of the denim Tailwind we've seen this over the past week, just any plans to lean into additional marketing there.
John Hazen: We're doing things in stores. So we're focusing on fit guides and talking about denim in stores and making sure our partners are educated on the different fits and the different rises, especially on the women's side. So denim guides that each store partner will have are going out as we speak. I think they landed in all stores over the last week or so. And they look great. So we're going to be educating partners on denim. And our denim continues to be very much our boot cut silhouette, as you would imagine, given our business and given the footwear or the boots that we sell. And so it really comes down to the rise, the stretch, the different types of boot cuts that continue to sell very well for us.
Okay, Great I appreciate the color. Thank you.
Thank you next question comes from the line of Jeff <unk> with Stephens Inc. Please go ahead.
Good afternoon, Thanks for squeezing me in.
Congrats on a great quarter.
John or.
Jim I was just wondering.
What is typically the spread between.
Uh, we're doing things in store. So, so we're focusing on fit guides and talking about denim in stores and, and making sure our partners are educated on the different fits and the different Rises, especially on the women's side. Um, so so denim guys that each store partner will have our our going out as we speak. I think they landed in all stores over the last week or so, uh, and they look great. So we're going to be educating Partners on denim. Um, and, uh, our denim continues to be very much our
Exclusive brand and the National third party brands and how much will it widen here in this interim period.
And.
Im curious because your research indicate like just how much.
This exclusive brand adoption.
John Hazen: I don't think we're going to have any real kind of denim or jean campaign like others have seen over the last couple of weeks with American Eagle and some others. I think we'll continue to market who Boot Barn is and our broad assortment of product that includes denim, but no large dedicated denim campaign in the works right now.
Kind of revolve around price or <unk>.
Once you try it.
A lot of repeat customer interest because it seems like you are running an interesting little test tube here with pricing.
Yes, the <unk>.
<unk> between exclusive brands and third party brands and we've said this publicly for several quarters is generally a 1000 basis points.
Boot cut silhouette as you would imagine giving our business and giving the Footwear or the boots that we sell. And, uh, and so, it really comes down to the rise, the stretch, the different types of boot Cuts. Uh, that continue to sell very well for us. I, I don't think we're going to do have any real kind of denim or Gene campaign. Uh, like like others have seen over the last couple of weeks with American Eagle and some others I think we'll continue to Market, uh, hoop Barn is and our our broad assortment of product that includes denim, but no large uh, dedicated denim campaign in the works right now.
Ashley Owens: Okay, great. I appreciate the color. Thank you.
As what we've seen up to up until now the honest answer is we don't know how much price and especially a psychological price barriers are going to play into the customer's choice.
Okay, great. I appreciate the color. Thank you.
Operator: Thank you. Next question comes from the line of Jeff Lick with Steve Link. Please go ahead.
Just like with Stephanie, please, go ahead.
Jim Watkins: Good afternoon. Thanks for squeezing me in. And congrats on a great quarter. John or Jim, I was just wondering, what is typically the spread between exclusive brands and the national third-party brands? And how much will it widen here in this interim period? And I'm curious, does your research indicate just how much does exclusive brand adoption kind of revolve around price and/or once you try it, you get a lot of repeat customers? Because it seems like you're running an interesting little test tube here with pricing.
And that's why we're running this kind of large scale elasticity test, we have the opportunity to stay lower for longer and.
EV penetration why we want to get to 50% over the next five to six years of 100 to 200 basis points increase per year, it's been our experience that sometimes that isn't a straight line kind of growth and there has been step function jumps in the past and let's see if this can be one of them and we.
Uh, good afternoon. Thanks for squeezing me in and uh congrats on the great quarter. Um John or uh Jim I was just wondering what is typically the spread between uh exclusive Brands and the national third-party Brands and you know how much will it widen here in this interim period. Uh and do I'm curious as you research indicate like just how much
does exclusive brand adoption, you know, kind of revolve around price or Andor
We don't know how the customer will react to holding these prices. If everything else is has gone up and people seem to absorb inflation quite well as they had have overall the last four or five years.
John Hazen: Yeah, the spread between exclusive brands and third-party brands, and we've said this publicly for several quarters, is generally 1,000 basis points is what we've seen up until now. The honest answer is we don't know how much price and especially the psychological price barriers are going to play into the customer's choice. And that's why we're running this kind of large-scale elasticity test. We have the opportunity to stay lower for longer. And EV penetration, while we want to get to 50% over the next five to six years, 100 to 200 basis points increase per year, it's been our experience that sometimes that isn't a straight line kind of growth. And there has been step function jumps in the past. And let's see if this can be one of them. And we don't know how the customer will react to holding these prices.
You know, once you try it you get a lot of repeat customers because it seems like you're running an interesting little uh test tube here with the pricing.
It may not be a factor, but if a boots starts with the two in our starts with a 199, 9% or 189.
It may make a difference, but that's why we're running this test and that's why we're going to decide style by style, where we hold and where we increase price to preserve margin rate.
I'm just curious did you have kind of detailed conversations with different vendors about hey, This thing is kind of what youre going to be what we're doing.
And did any vendors so you know what.
Our.
Keep price the same I don't want to go through that question I don't want to lose share.
Now the vendors have been look they are dealing with a very difficult situation, a very fluid dynamic situation and it's very with all especially today on tariff day Eve I suppose it's almost impossible for them to do this style by style they've many of the vendor.
Yeah, the the spread between exclusive Brands and third-party Brands and we've said this publicly for several quarters is generally a thousand basis points. Um, is is what we've seen up in 2 up. Until now the honest answer is, we don't know, uh, how much price and and especially the psychological price barriers are going to play into the customer's Choice. Uh, and that's why we're running this kind of large scale, elasticity test. We we have the opportunity to stay lower for longer and um, you know, EV penetration while we want to get to 50% over the next 5 to 6 years 100 to 200 basis points, increase per year. It, it's been our experience that sometimes that isn't a straight line kind of growth and there, there has been
John Hazen: If everything else has gone up and people seem to absorb inflation quite well as they have overall the last four or five years, it may not be a factor. But if a boot starts with a 2 and ours starts with a 199 or a 189, it may make a difference. But that's why we're running this test. And that's why we're going to decide style by style where we hold and where we increase price to preserve margin rate.
There's have have put these mid single digit price increases across the board to kind of insulate them against these these increased costs and tariffs and.
And so they had to do it across the board and that.
Theyre not going product by product or style by style and so for them to back off of that across the entire industry I think it would be difficult for them to do but we said it on the last call and I think most of them are aware that we're taking this tactic they've listened to the call, but we haven't had any.
Jim Watkins: I'm just curious, did you have kind of detailed conversations with different vendors about, hey, this is kind of what you're going to be what we're doing? And did any vendor say, you know what? I'll keep the price the same. I don't want to go through that test. I don't want to lose share.
Step function, uh, jumps in the past, and, and let's see if this can be 1 of them. And we, we don't know how the customer will react to holding these prices. If everything else is has gone up and, and people seem to absorb inflation, quite well as they had have, overall, the last 4 or 5 years. Uh, it may not be a factor, uh, but if a boot start starts with a 2 and our starts with a 1999 or a 189, uh, it may make a difference. Um, but that's why we're running this test and that's why we're going to decide Style by style, where we hold and where we increase, uh, price to preserve, uh, margin rate.
I'm just curious. Did you have kind of detailed conversations with different vendors about? Hey, this is kind of what you're going to be what we're doing and did any vendors. Say, you know what,
Any of them come back and say Hey, we're going to rewind. Some of those price increases are a syndrome that has not happened.
I'll uh,
Price, the same. I don't want to go through that test. I don't want to lose here.
John Hazen: No, the vendors have been, look, they're dealing with a very difficult situation, a very fluid, a very dynamic situation. And it's very, with all, especially today on Tariff Day Eve, I suppose, it's almost impossible for them to do this style by style. Many of the vendors have put these mid-single-digit price increases across the board to kind of insulate them against these increased costs and tariffs. And so they had to do it across the board. And they couldn't, you know, they're not going product by product or style by style. And so for them to back off of that across the entire industry, I think would be difficult for them to do. But we said it on the last call. And I think most of them are aware that we're taking this tact if they've listened to the call.
Well great. Thanks, again for taking my question and congrats on the quarter.
Thank you Jeff Thanks, Thank you.
The conference has now concluded.
Thank you for attending today's presentation you may now disconnect.
No, the the vendors have been look. They they're dealing with a very difficult situation. A very fluid, a very Dynamic situation and it's, it's very with all especially today on on tariff, uh, day Eve. I suppose it's it's almost impossible for them to do this style, by style. They they've many of the vendors have have put these mid single digit price increases across the board, to kind of insulate them against these, these increased costs and tariffs. And, uh, and so they, they, um, they had to do it across the board and they couldn't, you know, they're they're not.
John Hazen: But we haven't had any of them come back and say, hey, we're going to rewind some of those price increases or rescind them. That has not happened.
Ing product by product or Style by style. And so for them, to back off of that across the entire industry, I think would be difficult for them to do, but we, we set it on the last call and, and uh, I think most of them are aware that that we're taking this tactic if they've listened to the call. Um, but we haven't had any um, any of them come back and say, hey, we're going to rewind some of those price increases or resend them, um, that has not happened.
Jim Watkins: Well, great. Thanks again for taking my question and congrats on the quarter.
Well, great. Thanks again for taking my question and congrats on the quarter.
John Hazen: Thank you, Jeff. Thanks.
Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Thank you. Jeff thanks.
Has now concluded.
Thank you for attending today's presentation. You may now disconnect.