BOOT - Earnings call transcript Q3 2018 | Boot Barn Holdings, Inc.

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Operator

Greetings and welcome to the Boot Barn Holdings Third Quarter Fiscal Year 2018 Earnings Conference Call.

As a reminder, this conference is being recorded.

Now I would like to turn the conference over to your host, Mr. Jim Watkins, Vice President, Investor Relations for Boot Barn. Mr. begin. may you Watkins,

Jim Watkins

days President a afternoon Boot as you these Investor XXXX remind company's you Officer. Barn's XX statements judgment on of Jim recording With Good Barn's forward-looking are we make after section Greg to website. as statements Officer; today release certain of presentation we Chief Hackman, earnings joining to will these me Conroy, reflect are be Boot statements. end call for call, discuss the in and third today's of a today's Financial the that Chief a everyone. the you. in Executive on like and and for I you and should Thank statements undue us results. today would expectations, and this Thank may is Investor not Relations Barn's Accordingly, call actual forward-looking the number current from available quarter Shortly on differ A at of business. section forward-looking bootbarn.com. copy of place of will analysis Relations on Boot only press materially available replay based Barn's website factors Boot this affecting results fiscal reliance

new to President Conroy, alter as call not update that included now you thorough refer or referenced any SEC do Jim? For Executive our to any be a information, and the obligation third forward-looking the our made Jim statements, as filings and regarding of over statements otherwise. events, in discussion well or in Officer. a we the earnings I'll uncertainties the forward-looking release, disclaimer Barn's with more statements future to turn whether and Boot quarter Chief call on undertake result risks the associated of is that We to webcast, as with fiscal this XXXX forward-looking disclaimer. conference

Jim Conroy

Jim. Thanks

in results X.X% business. XX% by modest same-store performance margin driven quarter our included and pleased strong sales, are exceeded sales which e-commerce earnings grew third increase merchandize same-store very with sales our total that and a our retail financial We solid Net in growth guidance.

Our growth We Texas. strength improved in product geography with almost and across major significantly category in was country. every performance same-store sales virtually the performance broadbased every in

along our solid expected combination XX Importantly, range. margin e-commerce penetration we above points growth in a $X.XX prior of clearance demand. pressure of expanded Hurricane mid-single continued margins priced to with as play digit achieve $X.XX merchandize selling, and the related losses initial our compared in expense high-end the to benefit full us healthy from control insurance Harvey more the basis incurred holiday same-store earnings, the higher and The than and settlements than of from sales growth brand from allowed to guidance incurred exclusive offset year, less

Before Greg which over results drive our financial have on detail, four would and expect strategic to in results provide reviews the update been initiatives increased I yielding the positive more an continue long-term. like profitability growth will that we to

we helped from was sales in our business. stores by quarter. strong assortment system were priced the implemented the led believe driving instrumental demand of gains offering Texas posting we especially good new peak we State entire that the and standpoint, which across commercial by broader in which growth same-store Sales a a company ladies across an saw oil. Houston positive experienced holiday helped apparel growth driven From sales in assortment strong hurricane serve apparel merchandizing we to men's managing quarter, quarter, product to From our and environment, our selling. growth. a We being and and store labor up recently traffic Meanwhile, customers improvement store in a allowed in virtually growth very Let's has the at of in is stores western the accounts an we the labor consumer every work retail benefiting continued product major scheduling recovery apparel operational Growth with solid recovery merchandizing category have in West with high and more are with during believe fueled along across Texas. store acceleration more by better execution full digits efficiently only periods. standpoint, busy during the single wear trends boots, begin healthier with solid sales Texas. work associates of the strong. sales for Work third during our the up Not our that our combination in

our CRM marketing our meet enhanced better are can that so Finally, from customer, needs. analytics understand their us helping perspective, a we

we our part As heightened sizing merchandize providing of and Hispanic in-store that, on appropriate signage. servicing our ensuring customers have focus language by Spanish

mix media broaden We us introduced aesthetic to creative to our base. customer to also recently changes our and allow our both

our us national scale and have Lastly, areas purchase efficiencies a physical enables our the country do of spend sales, which more radio marketing we on also and to our a in particularly size currently us advertising where allow some store presence. online in to not of drives now level, drive

our strengthening Moving to our leadership. next omni-channel initiative

sites in their three are positioned respective marketplace Our customer all e-commerce target base. the well countryoutfitter.com and to bootbarn.com, sheplers.com

system of current access held now migration selection on we all platforms. Wichita, the our expanded the these of which in from the Kansas customers to of year, the fiscal same e-commerce can in our As half inventory completed center a digital first performance means reminder, the sites

center sales, in well management system. During new our warehouse a handling fulfillment the as as installing and conveyors by material care product third implemented quarter, we automation new Wichita

improve efficiency implemented holiday are the our automation enhancements e-commerce that was maximum working peak While efficiencies we confident now at season. business, the newly in will these during

to challenges order we shipping our the expedited As with customer meet In and e-commerce system. some workforce paid fulfilling customers. our expanded of our we service a experienced for result, automated to orders standard, our

our in the to rate transitory and labor these quarter. While nature costs pressuring margin unanticipated led in increased gross higher freight

buy January, necessary can we As had positive chance of to the we outpost. branded achieve to to are going opportunities our to customers shop to The earlier we we benefits. new pickup introduction capabilities the have the our has which explore continue a expected and automated our online more so to that additional response and versatility reevaluate positive had system with refinements, online, physical can note, will online we've make On store continue feature strengthen stores. this how a working quickly entered omni-channel the our functionality been and and forward

merchandize strategic of penetration initiative, the to exclusive and margins. brand third Now our portfolio increasing expanding our our

which Boot Barn this grow further piece but towards differentiates our also competitors, merchandize our meaningfully business, not We our only of important expanding to margin. from continue contributes

more than basis represented quarter, the of and total During points year-over-year penetration brand our third our approximately XXX increased sales. XX% exclusive

this quality a We developing our of new developed To continue new brand. to focus exclusive to third-party Boots Exotic offering brand a expanding El brings Zero assortment. high product which Dorado we called rolled boot on to our complement Boots, styles out state-of-the-art by our technology line new recently of and end, exclusive launched Gravity, James Cody platform

our and to invest business. to into look continuing fiscal this of we are we part in important quarter the XXXX, As fourth

fueled brand This are We all ladies in are been assortment be of our team. by new addition Lambert in collaboration also partnership. her new with exclusive with fall official new created exciting stores has forward and looking Miranda in the launch and called Miranda to line This XXXX. we and to our the will Idyllwind is thrilled an

base. Finally, store our fourth initiative expanding our

truly store our opportunities that We coast coast. is continue believe evolve current concept national physical we as to States double into a there the a presence count Barn to with the United to in from Boot

business returning unit our to target growth compelling store further and have XX% with stores annual fiscal new of Given we XXXX. the strength will of the be pipeline new long-term and for to payback, began

Now turning business. to current

month of seen our strength trend our We improving continued with retail business January sales throughout e-commerce in in sales in an same-store strength have and stores. the

January in I encouraging to which would call the country. into healthy outperformed Greg in chain to the again like head rodeo the Our season. turn geographies performance sales across Texas virtually Sales now, average And Hackman. all we as is over was

Greg Hackman

was expense company's sales, increases rate operating compensation net sales, new year, These stores sales on to seven buying The resulted profit was result percent a in gain Sales Thank less past Jim. cost The million higher same-store were the decrease million X.X% increased of the increase The of other by million a merchandize from offset as third we occupancy in sales sales Harvey partially driven four quarter afternoon settlements XX% rate increased XX site Outfitter In of prior penetration. net in Gross priced $XXX occupancy a increase fixed as you, brand by a and $XX.X Country net freight. last cost insurance exclusive margin acquired of the full leveraging as profit sales pretax primarily third partially expense sales from in growth period. resulted stores from demand. net costs. fulfillment incentive the compared sales million QX losses quarter, $X quarter. The percent on Year-over-year from million. for quarter more gross sales in basis million compared opened $XX.X the to meet year the higher of margin increased Hurricane XX net the Good Operating basis from contributions in by driven net over that point XX.X% to holiday $XX.X XX% clearance sales, February. everyone. expense cost period. the suffered the related and the $XX.X the center in rate leverage from XX.X% the XX.X% labor offset to of decreased to point Woods gross or higher sales. e-commerce expense in acquired prior Boots occupancy point increased second and was in of of sales higher margin in improvement increased basis or by offset XX by e-commerce and sales a year buying selling, from improvement or merchandize XX.X% and was from or to

income per of diluted net Net or of for in prior to year was the a Our the quarter million period. $X.X the $X.XX $XX.X net of income impact in $XX.X third share the $X.XX compared guidance the year quarter in million tax when to federal $XX.X the $X.XX share, year to was to excluding expense million was compared prior sales third million XX.X% was the period XX.X% per share in fiscal Interest period. or change our compared of $X.XX $X.XX. the XXXX from compared in sales $X.X million to diluted of quarter for in income law, or the prior operations

sheet. to Turning balance the

basis consolidated inventory exclusive brands warehouses drive million also margin. improve Our sales in be and average XX% inventory the broad support inventory inventories accounted basis Stores full an of to store of The a portion per growth ago. fees, to at months and store warehouses was during selection to new $XXX our was year on to our purchase a a our to ship year-over-year reduce program, last drop comp opened increased a year. flat to from container acquired better increase XX in available last product effort resulted compared all compared in our primarily shipped for to On inventory.

entering inventory levels. appropriate first and current at the is Our quarter

of $XXX of million million cash XXXX, revolving outstanding, including drawn X.Xx. total of our a had debt credit net we As zero $XXX debt leverage of our and facility. December had We on ratio XX, was $XX million

$XXX,XXX grow and operations the $XXX secondary tax is expected Turning expected includes be estimated is X.X% net which offering million for to million between of we $X.X to guidance, was between be million. sales on as based $XXX.X rate to to Net to a to million same-store to X% $X.X fourth be an income to $X.X and which Income costs. sales blended expect million quarter million from quarter. $X.X X%

XX, exercises XXXX. is related secondary tax QX closed from rate Our estimated that resulting $X.X benefit the stock to XX.X% effective tax option on to be an expected offering primarily of million January reduced by

to of from We now rate million expected quarter. reform. now cost. to offering average shares revaluation an weighted $X.XX million, aforementioned fiscal was XX.X our to XXXX pursuant income primarily is now and resulting it an $XX.X a based contemplated from tax estimated stock be expect secondary benefit With not year the secondary full income tax X, January million guidance diluted deferred the per million benefit on to an to to exercises in net tax to which annual million $X.X be This includes $X.X $XXX,XXX the also the range outlook. tax $XX.X which of income expect share for the respect $X.XX $XX.X outstanding outlook terms million range in option updated tax from million our in we related to of liabilities offering diluted fourth includes includes in of Net $XX.X operations estimated in for to the from

to coming help shares rate We've our questions a for would earnings share current shares which full of Our a the received net million to I share and on count from $X.XX take for outstanding. from year the outlook X, tax $XX.X XXXX standpoint. lot diluted $X.XX reform tax per based year. income on $X.XX November million guidance weighted to of compared the to range modeling a translates on company's its you average average like the and momentum fiscal for fiscal estimated the weighted XX.X diluted a to impact year of $X.XX in assumed of

As most under XXXX tax you XX, federal in the state law. XX% you corporate recent are will is changes tax year rate local year, fiscal next which our ended full from in March our know and new corporate we XX%. year be the estimate effective lowered the to tax XX% law of When rate taxes,

back share we a effective benefit the like third earnings. the quarter tax ultimately our million share XX%. in $X.XX of tax our provided Combining $X.XX re-measured $X.XX the earnings. now year's During re-measurement of per the rate quarter the the our The tax Jim. turn benefit the the rate $X.XX diluted of in to earnings or to approximately earnings the $X.XX reporting. rate also XX.X% benefit deferred over share liability $X.X change from the I approximately the This quarter of benefit from per XXXX, was ended tax December taxes brings the third and lower to call quarter would XX, GAAP deferred $X.XX per under tax to to per to next

Jim Conroy

Greg. you, Thank

pleased We Boot for QX EPS impacted continue changes that benefit Barn forward. positively tax going are the earnings will QX and have certainly and to

We by business. fundamentals are course of even more of improving the the encouraged

State and top-line seen seeing to a well boot a in in particular perspective as to X,XXX like the in major earnings our with Texas. to At strength are drive delivering sequential would western personal category a take performance. I my growth we your call the the a moment western every merchandize open across improvement margin country also work our significant as Boot of coupled across the business. geographic nearly associates with to merchandize for like with questions. growth from express to apparel appreciation than Brian? well positioned This going at strength to forward. and dedication take would solid incredible growth center such store We up Barn us We've largest in solid has working hard and point, in for country those this support more their

Operator

our take now question with We'll JPMorgan. Instructions] first Boss [Operator you. Thank from Matthew

Matthew Boss

on guys. Congrats a nice quarter Thanks.

Jim Conroy

Thanks Matt.

Greg Hackman

Matt. Thanks

Matthew Boss

to much a if markets math single XQ single-digit amounting accelerated that is we the broke went pre-oil -- low-to-mid and that's that down basically the non-oil Texas -- the through. period with gas high comp this and is which So pretty gas we

it I guess is have that you So, in fair quarter for to embed into return guide from your level X January, conservatism? consideration e-commerce is comp question fourth say January seen and mentioned my then X in Texas a the to growth of taking you the what to

Jim Conroy

from on you the this So, the perspective. me components in can let through you apply and walk conservatism

portion a quarter in And bit are from the than third you had First, and a as our to business right, Texas is been of it strong QX in quarter in becomes portion in bit. a it is business fourth becomes of accelerated bigger the third stores went it the bigger the than our little the fourth candidly business third quarter. the QX every as quarter we businesses, retail quarter our

when at in to as numbers. strength look we will every in change we department every As third at like be just just third see lap approach certainly cycling like quarter and merchandize in mid-February the e-commerce Sheplers, the platform we soft geography the we've we nearly the quarter January, continued

what while from XX week of percent a XX% month or momentum said large So, calling of Having we've is you everybody XX% a remind quarter, is point and into that uniquely XX quarter January way having small third to are from the that wanted weeks coming is uniquely a the We're got quarter. the very month, a just the have lot fourth a into of that, sales of March XX-ish the perspective. to while we weeks nice four quarter out. we four only

So, plus and of of of on amount the quarter. want of that with last, put out the in we're business on we quarter ourselves realize we're third to to month don't get a entirely actualize the the -- for projection ahead January a month January left fair

So little that's the provided, feel we're number the trying about. we guidance a would conservative we feel out kind just it's about a I we good put number good fact, of say, that to

Matthew Boss

Yes.

unit think your more threat. we stores things other picture from I year? prudent. and next what And and growth two a it's differentiating stores, to think reasonable just larger on e-commerce as And larger the guess about the on just than I Amazon return one is mortar then the brick picture keeps that the question, XX% target

Jim Conroy

Sure.

and category a feel that our and first to business they a is loyal in-store extremely it on the to few to want are and make is they what brand, stores $XXX the complicated. in are on, they going spend piece, online on They the the side, environment touch that they store of come product cowboy fit us, appropriately lifestyle sure So things, the importantly want any are is important to our and we customers differentiates try a or western the different boots. from $XXX but pretty the fit to pair on particularly to want extremely

the their they store, to and literally have they on the they morning, the minute. On the side, work boots their report come following to once because customer times to job their of need site, the and that job come into and often work and need go in failed kind them or product way the site

So there on side. is an immediate component work need the

ourselves for nature from years And at our how for do is shopping The being by as we still honest yet product more as differentiate category, in-store they of in believe favors and they of it do do. we its experience, prices category Amazon competitor years. business us the So, relates online an that are fact online competitive we the category course. do more our to for carried Amazon our biggest than in in business we than answer

our In saddle terms specify filling a fiscal our give of of call we next we XX% probably the second kind back the of XXXX, question, will growth XXXX the fiscal and more XXXX unit the pipeline in and detail around this. now. piece back guidance you little bit But, we're in your are

will getting our we of XX% what close that just kind be we that units forward, certainly Does think us to year kind algorithm. back next I earnings to of So, help? for modeling or going fiscal the original at the new are

Matthew Boss

Thanks helps Yes. a a lot. lot. That

Jim Conroy

Thanks Matt.

Operator

from Piper we'll Keith now next with And Jaffray. our Peter take question

Jim Conroy

Peter. Hi,

Unidentified Analyst

for question. on taking today, my thanks [indiscernible] actually for it's guys Hi, Peter

it do was know Thanks. EBIT the see it you time to growth that to little and but ICR, get has again building over now I comp So what at discussed are where a back? drivers come there margins, bit

Greg Hackman

Yes.

Sheplers bit. things a a press have used was drivers XX% grew future, and year low step X in and EBIT see back to sales points so some drivers we and over when other we mid be and as penetration alluded call new our earnings pause the I talked continue took in a bit rate XXX little we or comp, for of basis are we three We The points to a -- Jim back plus as with that about single closer that same-store to roughly little to which XXX while public with describe it think we or went are brand it QX. year-over-year a X XX% basis increased units, a a years private ago, to

EBIT algorithm for key we and to those beyond. about metrics and all XX% QX So, both and forget in to that to get get place year rate positioned and next earnings how are that we're

Unidentified Analyst

love Great. quarter. this I

Greg Hackman

Thanks [indiscernible].

Operator

take Komp Baird. now will Jonathan with our next from We question

Jonathan Komp

know Yes. impacts, the Hi. could that tax wanted I for this Thanks with reconcile guys. and I excluding just any guidance a to changed I updates? range gave of full how does to start earlier pre-release earnings $X.XX off wondered, you year Greg, $X.XX you the month with related the at all if question.

Greg Hackman

- kind as changed terms QX of a we've bit, for little range we've finalized full range our tightened just It's year. number of the the year and tightened one the in sales also

We some are up earnings to due picking rate. tax

QX, going about benefit stock the in option by For to example exercises. reduction expense we're $X.X of tax result a as of million

So that adds roughly our $X.XX to EPS.

the In $XXX,XXX we're are cost the outlook of that early cost. shared drivers in change January. the that the Those EPS in January $X.XXrelated secondary by roughly to was that primary we with of about hurt actually that of you a in occurred probably addition,

Jonathan Komp

Okay.

to tax $X.XX go right? apples up $X.XX to of excluding to apples changes, would that the $X.XX law tax $X.XX range So is that the in to changes,

Greg Hackman

Yes.

that's I right, think yes.

Jonathan Komp

had quarter to assumptions your, any even And given a into quarter Okay. weeks operating fourth embedded now? few for changes just the the other the that you further

Greg Hackman

$X.XX from We again hurt to penny offering. we to about $X.XX to and range. good basically $X.XX January secondary We range, narrowed feel do the income it that the includes $X.XX just that of tightened in and really up tax help $X.XX expense and performed $X.XX from we how $X.XX the a

Jonathan Komp

drag go margin was stab in you've had at if e-commerce with Okay. you you integration, wondering you I'm much a quarter the the quarter? the taken the to and to look the and want I this, thought then it about sure gross impact could when how I'm Great. the ask you back at And quantify sales disruptions

Greg Hackman

I X.X through mean we quite one have to think X.X. is, Yes, we and have way a and the to expected didn't about think, X comp we to had plus did guided that on it X we I the flow

around I one sales of kind is which that to high-end our to is we better the way roughly a about the numbers worth and flow through it And fulfillment guess $X so on see costs through, of million and sales dealing it up easy increased equates range, come $X kind So, flow through. to point that Wichita. increased did of in million with really of between frame same-store of labor freight and the invested getting we're that in difficulty

Jonathan Komp

of sort kind fourth guess the trying merchandize it I are also thinking quarter margin the of getting trend understand Okay. to for about quarter? you I'm the underlying and during

Greg Hackman

Yes.

the freight So I'll merchandize to see for around to than the I'm expect again points me margin the on you sure we the the of that's to shared continue part help thus that in basis of to and merchandize mean that get margin enough we've we points XX I numbers quarter. have increased information QX. the full expansion to say expand we is not there first. answer year XX that in and net Other the I, fulfillment center. second see expect basis expanded to on

Jim Conroy

is right? X we freight gross piece is the one markup percentage crystal of but private freight X hits associated points there did expenses Essentially thing XX is be to all improved clear. margin, the points say increased the And, have So this, points, percentage merchandize XX that labor and bps Jon the Wichita hits think margin. I everybody but and realizes with just brands

hit but but a least prior the piece the of fulfillment think so you in cost, we front frame -- dollars say think help So, said center. me, in freight freight can if could you've that point profit, I margin I two say hit merchandize but Wichita you, we thirds Well basis had the pretax specific it improvement freight of was from number DC loss to for line the don't up I of margin hurt the merchandize if safe on had it's have to said that XX guess I you. third if of or at that of profit, in we million most

Jonathan Komp

great. rate up one mentioned -- the you XX% but And next kind also pretty side expenses then, or piece, will the much be coming then what in just the cash the much both soon how are your here. Okay, if higher facing of operating allow the side the wondering thinking from for may with question, year. about lower related through you consumer And take bottom-line I'm also that to bigger reinvested tax to you kind to any do home of of How you'd two other angles also to and pay that flow of it how incremental related that? picture

Greg Hackman

Right.

XX% thinking would Having and on, pressure So, wage the $X do close full new pressure unit growth accelerate or see employment. to we the the think its growth, to pay I based we wage is, -- down use pretty to invest to some said that, the debt. unit cash effect we some roughly we're it store and million way expect just guess of about cash right now if you help will it or

have in may the we're business to back of invest piece that way we people. we to total impact a into But good to that the So don't again, wages. happy retain is. of that do know But what

we're say thinking down get right debt we board. on I'd that unit need now the and investment right but in to growth, people about -- pay of So invest where terms

income to more is think disposable benefit they do it. a customer, seen take bigger our home going when from on see what they of our terms customer In spend pay and we've based I have we to tend

for be So good it our business. I think will

Jonathan Komp

guys. you, Thank Okay.

Greg Hackman

Thanks.

Operator

with next our take now Jefferies. Randy will We question from Konik

Randy Konik

the give a you the want XXX to ask And it your might Can how drivers those major to in operating back give some beyond down from us drivers. X% Thanks I can could granularity basis drivers below different year We're of from how perhaps lot. keep gave points this Greg, peak, margin year. I in bit Yes. about what peak? opportunity. guess the and us I perspective around sitting about be that perspective the go margin little good go to to guess X.X% operating ranking more a down were to of you some different

Just trying importance drivers we perspective about -- the the to should term? different the -- be us give medium thinking over we to of the how on some expand operating investors margins give

Greg Hackman

good question. Randy,

I'll that I and think its two things weigh also to Jim can in. point

one three opportunity that we the really was than is, brand years private bigger thing probably think it I we ago important. thought as think is and

XX points improvement algorithm points to So percentage as our I be points X X in expect private quarter will penetration year-on-year of increased or that XXX and develop points percentage or brand continue penetration develop evaporate team assumed that product. -- more last and and saw basis it we basis we an had we of

do think area expand. I going we're that's So where to an

that the we what Sheplers the gap. in business is thing bought past we was was it help XX% e-commerce. narrow other The the improve business we've e-commerce bought, contribution in is, investments to step took really a stores below and EBIT frankly, made that in stores. we that business backwards and And And when bought XX% that e-commerce some we year

business improve efficiency for of the we whether and pay do Wichita made future. how were how think QX we investments the that which front-end scalability at to in in in or We e-commerce So it's in the the expect e-commerce of peak run didn't we we the unfortunately volumes. driving about top-line themselves when

those you've think of So will us both are and back Jim claw that. I help got don't I some if new know other thoughts. of things

Jim Conroy

the rate. that pieces to leverage Those to are do if able into the have quarter clearly augment been The comp higher can most continue ones. recent two we'll January. big margin we and than EBIT We last point

to see on can fixed bottom-line. more et forward just continue cost So expenses getting drop the that if and we'll that do going cetera to continue leverage we overhead to rate will

Randy Konik

was Understood. probably Hispanic the the I remarks going -- from and to around what's that very we further reach focused on the energy around the customer. was thing with And touched your think on one in you into when packet but it ICR maniacally impactful complex, on opportunity presentation

opportunity you're some bigger so sizes. a bit adding just additional so it Can can the more revenue to and good to really to signage further more kind hear and again that more engage medium want little on you see just engage flush demographic. that touched what like term? opportunity seems we in customer guess of customer about You with real over that expect further my a drive out And with

Jim Conroy

Great Sure. question.

and Going and didn't. reverse back stores XXX and to did pen basic to get all indexed We Hispanic and each a to of that sort out went the the their belong figure stores customers which to back which demographics store tick over premise.

a and ensure floor it our on change. are mix degree the We the associates sales Spanish that was we've the called and grouping And that brand the certain styles signage that emphasis dual we some of language. or all have that we sizing a more more mean to you've on assortment a that script are stores So focused getting that is and the point percentage store selected speakers of are and to means what in particular customer. out

pieces very it. a the sort basic it's So good of of

that sponsorship Beyond for to by advertising more reach to starting in that to Spanish by opportunities a started look getting bit radio that community out we've community.

there's pieces of a different number of So it. kind to

If we broader of the of of of the through customers. creative, composition some changed to mail the swap representing our our recent we've our demographics go our direct you our e-mail make sure and of more are in models would kind that

of lot kind momentum little that piece that have a it's a of think -- added up to of business. nice So things in I our

Randy Konik

reaching is I local the through the thinking in you at obviously, leveraging advertising channel different of question distribution. United of e-commerce rate incremental a on Have around the mediums geography different flow way incremental how last perhaps to I'm change marketing advertising, cost are looked this are My some ad impact just water media guess of spend. of out that national national of that some get States. strategies helpful. of response cetera? done But, customer you've et you of advertising and you swap how the around those benefit, kind and national versus really about now -- from your thinking consumers more That's to about trying sense

Jim Conroy

Yes.

So base. really how customer we now We've segmented it's our refreshing. augmented

new move the we've that already one customer and an that and tranches customer of couple mix. of had ago shifted years other media mix two our of marketing of out our least some ago. our of customers go we the some to these and tried to And to And of new both from customers in broadcast once strategically. that explicitly last new us year what one customers how us we've feel into upgraded three as the and So doing what new customers bring number we shopped changed and And creative an we television. after So one sorry the standpoint, is of customers and quarter-to-quarter in from encouraging years e-mail mail looking customers because store base. we've to we've got awareness mix customers the we gone those dollars seen Conversely media who a are is, and things or we've of the if composition the and in really radio that's sequentially done improvement had improvement direct have from shopped brand a we've about right? Barn brand, mostly Boot at dollars we're can -- modernized changed see what's seen segmented or of been with think portion those the very improved our media

we've the in new in to growth through they're messaging combination see lapsed creative So our a Boot seen new and to creative something we've healthy customized with and for also really a really, them. Barn returning brand. of to And bringing tailored able so coupled customers either more some segmenting improvement or those been of customers back better getting much an

to of it's know excited team nice between or So our the it still nice that some art behind internally starting but creativity analytics we're and it's behind we're momentum. build see team. the to science our the the And CRM days, creative because a marriage and you that early the starting math or behind

Randy Konik

is. seems it It like Yes.

thanks So, for the help. Appreciate it.

Jim Conroy

Thanks Randy.

Greg Hackman

Thanks Randy.

Operator

next And question Citigroup. from Paul we will now with Lejuez take our

Paul Lejuez

guys. Hey

you gross looking through package weren't if you EBIT we'll margin talk little missed Just given the sure talk flow not you Maybe about margin start in I'm bit can lines? did why about have? XQ on a just fourth better front quarter, you sales getting but versus more there. that SG&A it, the I to better the

Greg Hackman

question not on I'm of is sure leverage related your or not. to that last year

year As sales earned weeks extra $XX year that This and a we had million we XX XX a XXth $X.XX and of lose week in in weeks, that well. of share as that million, last business right? So have about we week only $XX reminder QX. during

So you I have for to year, adjust that. think last

Paul Lejuez

Yes. to apples an for be EBIT On expand? to Greg looking margins you so apples basis would

Greg Hackman

Yes.

Just Pardon answer one yes. me, the second. is

Sorry.

Paul Lejuez

Got you. Okay.

is, that back growth in less to Thanks. and break rate. you to kind going maybe pretty about versus How's between your you're I seeing about as that accelerating of in to deeply store already that think then those some XX% markets talk developed? some a penetrated what that you markets? think you're versus can your down newer markets second those are of existing performance of And store piece new that newer

Jim Conroy

three totality in our hurdle. markets year both newest payback with performance in good of tranches The stores pretty we're meeting our is and

we'll forward, market anything that versus think about states different or markets we of are versus about three new markets it As brand types continue to developing. those either completely do entrenched going

probably those. I doing to about going a third think be we're of in each

of and California opportunity add markets. most and the stores So to we of sort mature in plenty built have out Texas

populated. opportunity densely in have presence, to aren't states but fill have yet that We some

So stores, at call we Pennsylvania as number it into those to states at nearly look decent e-commerce look the southeast. starting to from where and and the markets well. states zero there's climb then, mostly start a And mid-Atlantic have or or of the Virginia we and those a know have we following in will up states but southeast the zero or Ohio

going we bets healthy bit. expense to customer what we're because leverages new in structure. where want field marketing to see a start markets know a and spread So like further We our our markets existing we leadership base into based little filling e-com. both we expand on But our in to structure we have it of also

of balance little there. bit a a it's So

Paul Lejuez

the away? expenses further any some in there do e-commerce that as are And of expect that that that the are fourth experienced impacting result of carrying And pressures to over? you. a go you is any so if, Got quarter when you XQ, of

Greg Hackman

meaningful Paul, Nothing nothing that would Yes. register.

Paul Lejuez

luck. Got Good you. Thank you guys.

Greg Hackman

you. Thank

Jim Conroy

Thanks Paul.

Operator

Fargo. now take next Nikic will with And our from question we Tom Wells

Tom Nikic

occurred of new back of used some I us I in as a And update give there you you sort of you the metric that expanded it's didn't sort probably help versus stores. question past metric. opportunity business goes? existing. Hi, Paul's comparable markets via everybody. far know new the But any Thanks your understand what mention as us I for that pay in markets give, that in you can And that given about little guess expansion for taking on you my question. This is Is any to states used percentage you e-com and have bit. to to not still could think

We will helpful. it Thanks. find probably

Greg Hackman

-- e-commerce outside dollars New one a that Pennsylvania, And source phase states stores, our stores in now Illinois number no than XX is, we But, XX think all all Chicago exception, business of and store have if particular top and There's Mills quote small get our no in them. there's up Mall, store, the we of of states states about of a store. of -- to in one Gurnee e-commerce the used changing have terms Ohio we e-commerce. for very yet. York, to where are in other way the what many how We those percentage of top don't ranked four it

the start to and us be assortment entering we'll about some ago felt and little a learn than different the And It from quickly. years slow quickly of to territory, country. then kind away and we it's expansion. fertile few But, our up more of bit new the We has ground expand that leadership piece get that feel to for for slightly when those a good started and were into we we need potentially mid-Atlantic a that's then way parts field to. as more little that start it's slowly careful, and and expand. we'll grow into So states of southeast other we to a expanded further

how way to connects learned will from it expansion about store what back the or and how progress that's So to the think we've proceed e-commerce.

Tom Nikic

spending it. Got reaccelerate as you year CapEx would also should flows on the budget of the remind your just growth as cash total against next FY'XX? And us Thanks. CapEx what or you the for be Can presumably planning store also what you business on higher. guess you're I move

Greg Hackman

to about even easiest in et million cetera expect cash the for $XX and add at free going or of after it still flow. CapEx generate between to we new still we're $XX stores year. XX And free this XX you if stores $X million cash CapEx to investments think guess that's way $XXX,XXX I flow is, as generate of million,

stores So we're to build that. have borrow to anything or to going not like

units until I the next this to way about call we're terms it think guidance think call. on going that's of new give because not to in

Tom Nikic

luck of Got it. All in much. right. Thanks Best very QX.

Greg Hackman

Thanks.

Jim Conroy

Tom. Thanks

Operator

from Kummetz our next now Mitch We Pivotal will with take question Research.

Mitch Kummetz

Yes. do a Thanks taking this quickly. we handful but I've for I think can got my questions.

is give you any around digital, color you was how know positive say can e-com stores you more that comp, that. stores I much there or were? better guys said On the mean I the outperform

Greg Hackman

X.X. include Country were didn't in consolidator and We stores business were We if have comment digits We you growth specifically. e-commerce Outfitter. our did that say did high single

between what kind And I is the the on. consolidated and about trying really much now so channels mean crossover focus it, there's thinking way it's we're we're to of so that's brands number

Mitch Kummetz

stores, you said were maybe press oil that And the release? implied was better you'd I North Texas you see sort when Got anything Wyoming in you press saying on can't on Dakota that today, in I Colorado, on or think this is and with the think remember if pre-announced I call that it sort I the it. stores And of said then, patch, line I than average. of the release, the think even didn't

Greg Hackman

the question. Good the the balance that Texas with you've line three country. is essentially in out of are other called states outperforming

states improved improved. Importantly as improved, three Texas of the and though states from into rest went those QX, QX we the

bit little more region just a sequentially, it a in So a it business essentially our every sequential runaway and wasn't Texas that sequential of bit Texas. than in improvement of improvement was little improved

Mitch Kummetz

quantify way the in we it about in inconsequential, Harvey quarter so of does the shouldn't to Is become business the impact less QX. even meaningful that it? on Any talk

Greg Hackman

and And new and boots. an helps it's new need example then impacted called it. Well, to [ph] work insurance Houston million by we to out when there's business right? And you we if happened, about the the said [work] if guys we've market that it in do -- As benefit Houston business you go Western, back that both the go Harvey $X out meeting the rebuilding Boots QX then the sales. it actually back properties our clothing called is side. that's was in and Since and families rebuilding that and western on

is, Texas So Texas than than average. it Houston better Houston. is about think Houston And what better better west I than is is Texas company guess I average,

Mitch Kummetz

on an is X somewhere, X, in X Okay. one X if it's the Maybe I gave but updated know that preannounced still year. you you looking in the I on X Greg. dots. will see a know I on all guide, X two And fourth the housekeeping, saying connect comp the comp that didn't ICR, release to comp here I quick quarter. to were a those the you're for to when you that number?

Greg Hackman

Year-to-date, given excuse in to right? that be It'll we're year-to-date. at date QX, X.X range me, quarter

there reporting and days we're pulling For out are ICR number all four the into close. it and we we together the were

bit year in this think range to little the we terms tightens about and range you put for on how of we broad year. think of a enough a So the

Mitch Kummetz

tax $X.XX? then, a I give think a Got I kind again, there can Is on some just the the release. rate in that quarter, its the or of back like rate terms sort $X.XX tax you to us guess it. forma I into saw press of of a And number don't pro in

Jim Conroy

For the third quarter?

Greg Hackman

was It XX.

Mitch Kummetz

third the quarter. On

Greg Hackman

sorry. Mitch -- Tom XX% About

Mitch Kummetz

right, All all right. Thanks Paul. That's guys.

Greg Hackman

Thanks Mitch.

Operator

Company. question take with now Oliver will and from we Cowen our next Chen And

Oliver Chen

and Jim Greg. Thanks, Hi. Nice quarter.

tail and be? of the that. also on web. A the that as they experienced, there that make digital resolved as you around wanted your some it Regarding of And timing with the online issues online longer of business long are some considerations the owning prior the and with all a you What get physical are from in what's chain good and basis digital should sure that supply and some the integration integration outpost think you thoughts then, plus where happen? you which fulfillment to term what's the with innovation happening there's or lot about you

Greg Hackman

Okay. Good question.

e-commerce resolved? But work process the many big holiday current massive simply season. not of ones of pieces, on there peak I on is had massive in they not, say business some So impact all some we're a the resolved first are the because in are would if others.

maximum can and and product January we center move the through still than less customer efficiency expectations pretty meet So easily. fulfillment be in

last and In calendar -- was terms a effort. of year longer term and focus, it's been of XXXX investment lot of time money

those platform the in we essentially demandware we just to got to brought three pieces URL all all Country connected and of changed all acquired over which et First, over, the We the over warehouse have and the got we we Outfitter then been had for brands. and points demandware Barn built Sheplers Boot to integration got we -- cetera.

inventory we engine sharing on stand kind the a encouraged. one all standpoint. quite where calendar platform from we're or really our one So marketing rocky was now for while road of and XXXX can a coordinate and team search it we We're one

to shipped vendor, one to an good not also transitory fees the better pay part us to getting have still want it ourselves can boots that ship We of long a associated from ship et them strategy intend So from drop some along of online the the them the product tail. or while demand two about for from feel We and And find players. our warehouse and the from way. other had rather in often from of or that's funds can the from pair package notwithstanding grow by a than we short-term we belt some fee it's experience economic customer we it standpoint, that we gives the drop profitability standpoint believe of differentiator it. if and cetera. we vendor better It a assuming opportunities

we next those components as as you better next we'll and over out place. proceed get peak few the be months, and December. in well and positioned that demand of are just I November called we still get prepared for All holiday into think better and And

Oliver Chen

growth. another exclusive And you. brand seems Thank relevant your topic is which

guardrails What job you're and has risk You've and these building innovate interesting kind here formulating done marketing your brands realize measured good some making a equity really continue grow some look these of strategy you'd been are penetration? and pivoting as long-term is this to and a also attractive emotionally. brand to of to taking and brands you well the as using sure and the as

Greg Hackman

some Now, guidelines. we foundational things brands it's brand development question. really those a We've developed great done where in the have of

and their page own social following have brands. James those teams while assigned mean a Cody Page. And pages. focused They have specifically We to the be we are I have exclusive and Shyanne on a new,

starting brands. manufacturer a is to as brands. kind are real in we of be how managing business. long-term if this So we're wholesaler to plan as we don't think those or view I of honest, our but were and medium kind the those That's And of

them to of presence presence and of see Boot presence to go but James. couple we Cody to you a If the of to many we be rodeo, sponsor, not see at we there's a Barn for want a which country a around year thousand that only rodeo able want a and for Shyanne

some So again, very and the market we're those done. in And manner. of emulating bringing a really to have kind world class what brands just sophisticated professional of

Oliver Chen

comp because guidelines Also inventory your sales underlying versus And are What's spread Thank impressive. store margin store low? versus the then terms done we thinking we about think our inventory question sales? last been a I'm any level job when versus is also of should markdowns inventory the merchandise Okay. that. trends, in you've merchandise absolute going is comp of forward. sales about you. great model dynamic in But, your on, there And margin has the with

Greg Hackman

there. different two in is There pieces

is the to they think at And promotions are product in full all is a point and all majority is our of sell inherent we one vast portion thing the only business I clearing. price. the making

quarter, on recent stores same-store high retail we single-digit at our look average flat If the sales growth inventory you on had in retail most our in a stores.

[which some some exclusive things on So of [ph], together had increase, side. would a again, stores those challenges were just if that had Unfortunately plus put margin merchandise new to your of really two it strip simply improvement we and the tab] offset out. was we brand nice

our over I our drive the percentage pretty we pleased. the Now if single-digit getting continue don't think sales couple further how reducing on and even perspective were the of long-term it. a from inventory of I we deeply we that years. to an terms to And frankly, to clearance can fourth we've in we forward, last laid been comps. more think algorithm we invest out clearance And inventory or need efficient that amounts of of to low inventory going mid we comp. have move anything quarter. of mean And to We've product market where significant think more as

our And job calendar a so of merchants XXXX XXXX. cleaning nice are up and well us for some done or fiscal of kind [indiscernible] inventory really have

Oliver Chen

That's regards. you. very Thank helpful. Best

Greg Hackman

much. so you Thank

Operator

the Mr. to our like back remarks. further the concludes I are in no And And Jim conference questions or session. gentlemen, closing turn Conroy over additional and that any would this to there for question-and-answer Ladies at queue. time,

Jim Conroy

you Take for Thank call the forward with in to May. look joining all in speaking our earnings on We you call. care. quarter everyone fourth

Operator

And ladies thank participation. you We call. concludes for gentlemen, conference that and today's your

Boot Barn (BOOT) 31 Jan 182018 Q3 Earnings call transcript