Boot Barn Holdings, Inc.

the conference over to your host, Mr. Mark Dadovish, Senior Vice President of Investor Relations and Finance. Please go ahead, sir.

Thank you. Good afternoon, everyone. Thank you for joining us today to discuss Boot Barn's fourth quarter and fiscal 2025 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 judgments and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting Boot Barn's business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with 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 fourth quarter and fiscal 2025 earnings release, as well as our filings with the SEC reference 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, the Department's Chief Executive Officer. John?

Thank you, Mark, and good afternoon. Thank you everyone for joining us. On this call, I will review our fourth quarter and fiscal 2025 results, discuss the progress we have made across each of our four strategic initiatives, and provide an update on current business. Following my remarks, Jim Watkins will review our financial performance in more detail, and then we will open the call for questions. We are very pleased with fiscal 2025's results across all metrics. Our full-year fiscal 25 revenue increased to a record level of $1.9 billion, which equates to $1 billion of sales growth over the last four fiscal years, driven by the 186 stores opened during that period and our strong same-store sales growth. During fiscal 25, we opened 60 new stores across all geographies, and we expanded our footprint into four new states. During the year, our merchandise margin expanded 130 basis points, representing 500 basis points of growth compared to four years ago. For the year, we grew earnings per diluted share by 23% to $5.88, an increase of $1.08 over the prior year. I am very proud of the team's accomplishments over the past year and their ability to execute at a high level. Turning to our fourth quarter results, total revenue increased 17% and we opened a record 21 new stores. Consolidated same-store sales increased 6%. Same-store sales in both the stores and e-commerce channel were strong, with stores increasing 5.5% and e-commerce increasing 9.8%. From a margin perspective, fourth quarter merchandise margin expanded 210 basis points. The strength in sales and margin combined with solid expense control resulted in earnings per diluted share of $1.22 during the quarter, which was within our guidance range and compares to 96 cents of earnings per diluted share in the prior year period. Turning to current business, we are now six weeks into the first quarter of fiscal 26, and we have continued to see broad-based growth as consolidated same-store sales have increased 9%, driven by increased transactions and full-price selling. While we are pleased to see the strong trend of the business continue into fiscal 26, we recognize the ongoing uncertainty with respect to tariffs. I am confident that our team is well prepared to navigate this uncertainty, and I believe the team's strong background and institutional knowledge will be a distinct advantage within our industry. Slide 16 of the supplemental investor presentation that we released today explains our tariff mitigation strategy in detail. In terms of our third-party vendor strategy, we are approaching this with a mix of discipline and agility. While we are prepared to work through the uncertainty with our third-party vendors, we also see a chance to be opportunistic, both in terms of market share gains and deeper penetration of our exclusive brands. Many of our third-party vendors have notified us of price increases which will go into effect this summer. We currently expect to raise retail prices at the same level to maintain merchandise margin rate. For exclusive brands, we have been partnering with our factories to manage pricing by reducing costs and resourcing production to countries with lower tariffs. We have been reviewing each individual style by cost, making decisions line by line to determine whether or not we should cancel an order, order more, hold pricing, or raise pricing, all in an effort to maintain the momentum of our exclusive brands. While our goal is to maintain merchandise margin rate on exclusive brand products, we do expect to hold price on certain items, giving up some margin rate in order to maintain or gain market share. As our inventory turns less than two times per year and we had accelerated some receipts ahead of tariffs, we expect the incremental cost of the tariffs to be approximately $8 million and the impact to the second half of fiscal 26, which is explained on slide 17 of our supplemental presentation. Looking at our exclusive brand sourcing, over the last several years, the team has been focused on reducing risk across our supply chain by diversifying our countries of production. Over five years ago, Chinese factories produced more than half of our exclusive brand product. Thanks to our team's ongoing diversification efforts, as of fiscal 25, this number was reduced to 24%. We have accelerated these efforts even further in fiscal 26, resulting in an estimated 12% penetration of goods produced in China for the year, and we are estimating that China will only produce approximately 5% of exclusive brand goods in the second half of fiscal 26 and in fiscal 27. I am confident that our team is equipped to navigate the current challenges facing the retail industry, and I believe the company's foundation is solid and we are structured for future growth. I will now spend some time discussing each of our four strategic initiatives. Let's begin with new store growth. Fiscal 25 marks the third consecutive year that we have opened up 15% new units, and our new store engine continues to meet our sales, earnings, and payback expectations across all geographies. We opened 60 new stores in fiscal 25 and ended the year with 459 stores. The new stores opened in fiscal 25 are projected to generate $3.2 million of revenue and payback in less than two years. We expanded our national footprint into four new states in fiscal 25, ending the fiscal year with a physical presence in 49 states. We believe our new stores not only generate tremendous returns, but also increase brand awareness as we expand our footprint across the country and elevate Boot Barn to a household name. Looking forward to fiscal 26, we are planning to open 15% new units, which equates to 65 to 70 new stores. We expect to open these stores in both legacy and new markets, Given the consistent performance of our new store openings across all geographies, we believe that 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. Fourth quarter consolidated same store sales grew 6% with brick and mortar same store sales increasing 5.5%. Store comp growth was driven by a 6% increase in transactions and an approximately flat basket. From a merchandising perspective, we saw broad-based growth across most merchandise categories in the fourth 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 and apparel businesses, which comp positive high single digits. Our denim business, which is included in the figures just mentioned, comp positive mid-teens. Our work boots business comped low single-digit negative, and our work apparel business comped high single-digit positive. We are extremely pleased to see the widespread growth across categories continue into the fourth quarter. Our customer loyalty database grew 14% year over year, reaching 9.6 million total active customers as of the end of fiscal 25. This growth represents more than a million customers being added to the program each year for the past four fiscal years. We continue to harness the power of this information to assist with planning our media spending, tailoring our customer communications, and modifying our merchandise assortment by store based on local demographics. From a store operations perspective, I am very proud of our field organization's performance throughout the fourth quarter. Visiting more than 40 stores over the last six months, I have seen the team's dedication firsthand, and I have been consistently impressed by their enthusiasm and dedication to our customers and to Boot Barn. Witnessing their hard work and connection to the customer, It's truly an inspiration to me, and I am confident we will continue to grow the brand by following their example. We will continue to be a stores-first organization, and we will invest in the store experience for our customers. This includes investments, remodels, design, and technology. One of the initiatives that I'm especially excited about is the introduction of traffic counters to our stores. We believe the addition of traffic counters will allow us to focus more on converting traffic into sales and providing the best customer service in the industry. Moving to our third initiative, Omnichannel. E-commerce comp sales grew 9.8% in the fourth quarter and the online business had positive comps in all four quarters of fiscal 25. Our digital flagship, BootBarn.com, makes up approximately 75% of our online sales and comped low double-digit positive for the fiscal year. We believe this is a reflection of the strength of our brand as we continue to increase our national awareness through marketing and new store openings. We also believe the online business benefits from our store growth as we see online demand increase almost immediately when a new store opens in the market. Now to our fourth strategic initiative, merchandise margin expansion and exclusive brands. During the fourth quarter, merchandise margin increased 210 basis points compared to the prior year period, and for the full year, fiscal 25 merchandise margin increased 130 basis points compared to the prior year period. Over the last four fiscal years, merchandise margin has increased 500 basis points with approximately one-third of that growth driven by exclusive brands and the remaining two-thirds due to increased full price selling, buying economies of scale, and supply chain efficiencies. Exclusive brand penetration increased 190 points in the fourth quarter and 90 basis points for the full year. Fiscal 25 exclusive brand penetration of 38.6 equates to 1,500 basis points of exclusive brand growth over the last four fiscal years. I am pleased with the team's ability to balance expanding exclusive brands while driving growth within our third-party partners. For fiscal 26, we expect to grow exclusive brand penetration 100 basis points, and we expect merchandise margin rate to be flat. Given the uncertain tariff environment, we have attempted to reflect the appropriate impact on the first and second half of fiscal 26. We expect merchandise margin growth in the first half of the year as we sell through untariffed goods in stores and online. As we move to the second half of fiscal 26, we expect to see merchandise margin pressure as we begin to sell tariffed goods. Our strategy is to maintain merchandise margin rate, but we may not raise prices on certain items, give up some margin rate in order to maintain or gain market share. We are confident in the team's ability to design and develop compelling product assortments to drive the business forward, and we believe we can expand merchandise margin in the future through multiple growth levers. I would like to now turn the call over to Jim.