Shares for Boot Barn dropped 13.5% on Thursday morning after the company lowered its guidance for fiscal 2023 in light of recent macroeconomic uncertainty and the “deceleration” in its business.
The western footwear retailer, which reported results for Q1 of 2023, ended fiscal 2022 in May on a high note and achieved $1 billion in sales for the first time.
In light of recent results, the Irvine, Calif.-based footwear brand said it now expects total sales for fiscal 2023 to be between $1.68 billion and $1.70 billion, representing growth of 12.9% to 14.2% over the prior year. This is down from its original guidance of total sales reaching $1.74 billion for the year.
The revised guidance is reasonable given the uncertain macro environment, according to Williams Trading analyst Sam Poser. In a note on Thursday, Poser said that the sales trend of the past four weeks are a “blip, in our view,” and sales in week four of fiscal July are beginning to recover. The recent weak results were likely a result of inflation and a drop in the women’s business, which had been growing recently, Poser said.
“The performance related western and work businesses continue to hold up well,” Poser said.
It wasn’t all bad news. The western retailer reported a 19.4% net sales increase in the first quarter of 2023 to $365.9 million. Same store sales also increased 10% compared to the prior-year period, comprised of an increase in retail same store sales of 10.1% and an increase in e-commerce same store sales of 9.3%.
And despite the slowdowns in Q1, Poser still described Boot Barn as “the best growth story” in his coverage and “perhaps in all retail.”
By category, president and CEO James Conroy said on Wednesday’s quarterly call that ladies apparel and boots, work apparel, cowboy hats, ball caps and belts were the company’s strongest performing categories in Q1. Conroy also noted that men’s western apparel, kid’s apparel and accessories also saw “healthy” growth.
Men’s western boots, on the other hand, were a headwind for Boot Barn in the quarter, reporting negative comps versus the prior year, as were its stores in the southern region of the U.S. lagging the chain average in sales for the quarter.
As for its stores, Conroy said Boot Barn opened 11 new stores in Q1, bringing the total count to 311 stores across 38 states. He added that there are more planned openings this year in new markets including New York, New Jersey and Maryland.
As for current business, Conroy noted that consolidated same-store sales are slightly positive in the first four weeks of Q1 compared to the same time last year. “While we have seen a deceleration in discretionary purchases, our more functional businesses remain strong,” the CEO said. “It is encouraging that we’ve been able to grow on top of the tremendous growth in the business in fiscal ’22.”