Boot Barn Holdings, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended April 1, 2023. Although the request references “2022 Q4,” this filing is an annual report covering FY2023, a 53-week year; FY2022 was 52 weeks. Filed May 18, 2023. Boot Barn operates western- and work-wear retail stores and e-commerce channels; it had 345 stores in 43 states at year-end.
Financial performance
| Metric | FY2023 | FY2022 | Change / context |
|---|---|---|---|
| Net sales | $1,657.6 million | $1,488.3 million | Up 11.4%; growth reflected new stores and the additional fiscal week. |
| Same-store sales | Down 0.1% | Up 53.7% | Excluding e-commerce, same-store sales rose 1.8%; e-commerce same-store sales fell 10.2%. |
| Gross profit / margin | $610.6 million / 36.8% | $575.1 million / 38.6% | Gross profit rose 6.2%, but margin declined 180 basis points. |
| Operating income / margin | $231.8 million / 14.0% | $258.3 million / 17.4% | Operating income declined 10.3%. |
| Net income | $170.6 million | $192.5 million | Down 11.4%; diluted EPS was $5.62 versus $6.33. |
| Operating cash flow | $88.9 million | $88.9 million | Inventory increased $115.2 million during FY2023. |
| Capital expenditures | $124.5 million | $60.4 million | Included store construction, Kansas City distribution-center investment, and technology and facility improvements. |
Liquidity, debt and balance sheet
- Cash and cash equivalents were $18.2 million at year-end, compared with $20.7 million a year earlier. The company had $66.0 million drawn on its $250 million revolving facility and $184.0 million of remaining availability; the facility matures July 11, 2027.
- The revolving facility bears variable interest tied to SOFR or a base rate. The company reported a 4.3% weighted-average revolver rate for FY2023 and was in compliance with its covenant at year-end.
- Inventory was $589.5 million, up from $474.3 million. Total lease liabilities were $381.7 million; contractual operating-lease payments totaled $447.6 million before imputed interest.
Changes, outlook and risks
- Cost and margin pressure: Gross margin fell mainly due to 110 basis points of deleverage in buying, occupancy and distribution costs and a 70-basis-point decline in merchandise margin. Higher freight was a 100-basis-point merchandise-margin headwind; greater exclusive-brand penetration added 30 basis points. SG&A rose 19.6% to $378.8 million, driven by store payroll and expenses, marketing, and the extra week.
- Expansion: Boot Barn opened 45 stores and closed none in FY2023. Management believes the domestic store base could eventually reach approximately 900 and expects it can grow at least 10% annually over the next several years. These are plans and estimates, not a guarantee of openings or results.
- Near-term investment: Management estimated FY2024 capital expenditures of approximately $90–$95 million, net of landlord allowances, and expected to fund them from operating cash flow. It stated that cash flow and credit availability should cover anticipated needs for at least 12 months.
- Business risks: Key exposures include consumer spending and regional economic conditions, competition, inflation and freight/labor costs, inventory forecasting, foreign sourcing and supply disruption, supplier concentration, store-opening execution, weather and seasonality, cybersecurity, and variable-rate borrowing. The third fiscal quarter has historically generated the largest share of sales; FY2023 e-commerce was 12.8% of sales, down from 15.5%.
- Contingencies and unusual items: The filing describes employment litigation with a recorded estimated loss deemed immaterial; a court approved its settlement after year-end. A separate Sheplers e-commerce pricing case was settled for an immaterial amount and paid. No goodwill or indefinite-lived intangible impairment was recorded. The auditor issued unqualified opinions on the financial statements and internal controls; inventory valuation was identified as a critical audit matter.
- The company does not anticipate cash dividends in the foreseeable future. The filing cites the planned retirement of the COO later in 2023 as a management-transition risk.
Important facts for investors to verify
- How much FY2023 sales growth came from the extra week and store openings, and whether comparable-store trends improve, particularly online.
- Whether elevated inventory converts to sales without markdowns and whether freight, occupancy, and store labor costs stabilize enough to support margins.
- Whether operating cash flow can fund the FY2024 capital-spending plan while supporting rapid store expansion and lease obligations.
- Current revolver utilization, borrowing cost and availability under the borrowing base, alongside variable-rate and covenant exposure.
- Execution and returns from new stores and the Kansas City distribution investment; progress on the COO transition and resolution of the employment settlement.