Boot Barn Holdings, Inc.

Good day, everyone, and welcome to the Boot Barn Holdings Inc. Fourth Quarter 2026 Earnings Conference Call. As a reminder, this call is being recorded. Now, I would like to turn 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 Buparn's fourth quarter and 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 Buparn's website at buparn.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. 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 statement 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 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 Haven, Groupon'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 26 results, provide an update on current business, and discuss the progress we have made across each of our four strategic initiatives. Following my remarks, Jim Watkins will review our financial performance in more detail, and then we will open up the call for questions. Looking back on my first year as CEO, I'm extremely proud of our team's accomplishments. Over the past year, our team has not only executed on our core strategic initiatives, but also exceeded the expectations on the three additional priorities I introduced. Building a sourcing organization, marketing exclusive brands as standalone brands, and reinvigorating our work-week business. I would like to spend some time discussing each of these priorities. First, our sourcing organization ramped up throughout fiscal 26 and is now fully built out. While we expect the run rate benefits of this team to begin to be realized late in fiscal 27 and during fiscal 28, the timing of this investment proved especially advantageous. As the tariff landscape evolved, the team's mitigation efforts and factory negotiations helped drive margin expansion over the past year. Second, we refined our marketing approach to better position our exclusive brands as standalone brands, resulting in sales penetration and growth that exceeded our initial expectations. Over the past year, as part of these efforts, we have launched four dedicated brand websites for Cody James, Hawks, Cheyenne, and Theo & Wolf. These sites are in addition to the legacy Idlewind site we have had for many years. I am very pleased with the strength of our brand storytelling and the new customer acquisition these sites have generated. Finally, our work group business exited this year with four consecutive quarters of accelerating comp sales growth and has maintained the momentum since the start of fiscal 27. This performance reflects the impact of several initiatives, including enhancements to our in-store merchandising, increased marketing focus on the work category, and targeted investments in key third-party brands to ensure we offer the right assortment for our work customers. Now turning to full year results. I am very pleased with our fiscal 26 results, which reflect strong performance across key metrics, broad-based strength across the business, and unprecedented sales and earnings for the company. For the full year, revenue increased 18% to $2.25 billion, driven by continued momentum across the business. We opened a record 80 new stores and delivered same-store sales growth of 7.2%. Merchandise margin expanded by 80 basis points, contributing to a remarkable 660 basis point expansion over the past six years. Earnings for diluted share grew 25% to $7.35, an increase of $1.47 compared to the prior year. Turning to our fourth quarter results, total revenue increased 19% driven by the opening of 25 new stores during the period and consolidated same-store sales growth of 6.1%. While we had originally estimated 15 store openings in the fourth quarter, we were able to accelerate the opening of 10 stores that had initially been scheduled to open in early fiscal 27. Earnings for diluted share in the fourth quarter increased 19% compared to the prior year period to $1.45. I am extremely proud of the team's accomplishments over the past year, and I'm excited about the opportunities ahead as we continue to drive growth in the business. Now turning to current business. Through the first six weeks of the fiscal first quarter, we have continued to see broad-based strength in same-store sales across all channels. On a consolidated basis, quarter-to-date same-store sales are up 5%, cycling high single-digit growth in the prior year period, and we feel very good about the underlying momentum of the business in our start to the quarter. I will now spend some time discussing each of our four strategic initiatives.

Let's begin with new store growth.

Our new store engine continues to deliver strong results across all regions of the country. Over the past five years, we have opened 267 stores, which doubled our store count to 539 locations at fiscal year end. The 267 stores comprise half of the chain and contributed more than $750 million in incremental revenue to fiscal 26, exceeding our expectations on average for sales, earnings, and payback. As a reminder, these stores on average are on track to generate approximately $3.2 million in annual sales in their first full year of operation and to pay back their initial investment in less than two years. In addition to driving incremental sales and earnings, new stores also help drive same-store sales growth once they enter the comp base. Stores opened within the past five years, which as a reminder, have not yet reached sales maturity, added approximately 150 basis points to consolidate the same-store sales from fiscal 2006. Looking ahead, our new store pipeline remains strong, and we believe we are well-positioned to continue expanding the Bborn brand for years to come as we progress towards our long-term target of 1,200 stores across the United States. Moving to our second initiative, same-store sales. Fourth quarter consolidated same-store sales increased 6.1%, with brick-and-mortar same-store sales increasing 5.2%. Store comp growth was driven by a low single-digit increase in transaction count and, to a lesser extent, growth in average unit resales. From a merchandising perspective, we delivered broad-gauge growth across most major merchandise categories. Men's western boots increased mid-single digits, and ladies' western boots increased low single digits, while men's and ladies' apparel increased double digits, led by low teens' growth in denim. Notably, the majority of our top-selling styles in the stores have been in our assortment for more than five years, underscoring the durability and consistency of our core offering. Our work group business delivered mid-single digit comp growth during the quarter, which as I mentioned earlier, marks the fourth consecutive quarter of growth in its category. From a marketing standpoint, the team continues to effectively balance advertising spend across channels, drive traffic to both our stores and e-commerce sites, and expand overall brand awareness. In April, for the first time, Group Barn served as the official boot retailer for Stagecoach, the world's largest country music festival. We hosted events at our local stores and on-site at Stagecoach and sponsored one of the festival's music stages. We are very pleased with this partnership and believe it will help drive incremental customer acquisition going forward. For fiscal 26, our customer loyalty database grew 12.5% year-over-year, reaching 10.8 million total active customers. From an operations perspective, our field team continues to deliver best-in-class customer service while driving strong sales performance. This was particularly notable given the demands of this past quarter, including holiday recovery, heavy new store openings, rodeo season, and our annual physical inventory. I would like to thank our field organization and the entire Groupon team for their continued partnership and outstanding performance. Moving to our third initiative, Omnichannel. In the fourth quarter, e-commerce comp sales increased 14.1% driven by double-digit growth on foodbrand.com. During the quarter, we launched dedicated websites for two of our women's exclusive brands, Cheyenne, our leading women's brand, and Clio and Wolf, our country lifestyle brand. We are pleased with the early results of these new launches, as well as the enhanced storytelling capabilities the platforms provide, allowing us to continue to position and market our exclusive brands as standalone brands. From an AI perspective, the digital team continues to identify opportunities to drive incremental traffic across online and in-store channels, leveraging AI to enhance the customer experience and further elevate the brand. AI is also being used to augment existing capabilities, improve efficiency, and enable greater focus on higher value work. Now to our fourth strategic initiative, merchandise margin expansion and extensive brands. For the full year, merchandise margin increased by 80 basis points, significantly outperforming the expectations we originally had at the beginning of the year. Exclusive brand penetration increased 220 basis points for the full year to 40.8%, with four-quarter penetration of 90 basis points. Over the past six years, exclusive brand penetration has grown by an impressive 1,900 basis points. Looking ahead to fiscal 27, we believe we have multiple drivers of ongoing merchandise margin growth in addition to our ability to further increase exclusive brand penetration. We expect fiscal 27 exclusive brand penetration to reach 41.3%, reflecting an increase year-over-year of approximately 50 basis points as we last strong growth from prior years and continue to drive growth in our work leads category with third-party vendors. we've remained confident in our ability to expand to brands towards our long-term target of 50% of total sales. I would like to now turn the call over to Jim.

Thank you, John.

I'm very proud of Boot Barn's performance in fiscal 26, as our commitment to our four strategic initiatives drove sales that exceeded $2.2 billion and delivered 25% earnings per share growth of $7.35. I am confident these strategies will continue to support both near and long-term growth. Turning to the fourth quarter, net sales increased 19% to $539 million. Consolidated same-store sales grew 6.1%, driven by a 5.2% increase in retail store comps and a 14.1% increase in e-commerce comps.

Fourth quarter merchandise margin decreased 30 basis points, which outperformed our guidance.

Merchandise margin was driven by better-than-expected product margin expansion of 40 basis points, offset by a 70 basis point headwind from cycling low shrink and low freight expense in the prior year period. Buying, occupancy, and distribution center costs deleveraged by 50 basis points, primarily as a result of new store occupancy costs, resulting in a gross profit decline during the quarter of 80 basis points. SG&A expenses for the quarter were $139 million, or 25.7% of sales, which was a 50 basis point improvement over last year, but slightly higher than expectations. Income from operations was $57 million, or 10.6% of sales, and earnings for diluted share increased 19% to $1.45 compared to $1.22 in the prior year period. Turning to the balance sheet, on a consolidated basis, inventory increased 13% year-over-year to $845 million and slightly decreased on a same-store basis. The increase in total inventory reflects the growth needed to support new stores, exclusive brands, and inventory purchased at a volume discount. Overall, we feel good about the health of our inventory, and markdowns as a percentage of inventory remain below historical levels. During the quarter, we repurchased more than 68,000 shares of our common stock for an aggregate cost of $12.5 million under our $200 million share repurchase authorization. This brings total repurchases in fiscal 26 to $50 million for approximately 287,000 shares. We ended the quarter with $141 million in cash and zero drawn on our $250 million revolving line of credit.

Turning to our outlook for fiscal 27.

In establishing our sales guidance for fiscal 27, we utilized sales trends from February through April and applied the historical seasonality of our business to arrive at our sales forecast for the year. We also analyzed purchasing behavior across income segments and have not observed any meaningful divergence among low, middle, and high-income customers at Bootmark. Our guidance reflects the trends we have seen from our customers over the past several months and does not consider potential impacts from changes in the macroeconomic environment. Additionally, our outlook excludes the potential recovery of approximately $18 million in IEPA tariff refunds that we're actively pursuing. The supplemental financial presentation we released today outlines both the low and high end of our guidance ranges for the full year and the first quarter.

In my following remarks, I will focus on the high end of those ranges.

For the full year, at the high end of our guidance, we expect total sales of $2.6 billion, representing 16% growth over fiscal 26. We expect same-store sales to increase 4%, including a 3% increase in retail store comps and 13% growth in e-commerce comps. Merchandise margin rate is expected to be approximately 51.4% of sales, reflecting a 50 basis point increase year over year. We expect the growth in merchandise margin to be driven by buying economies of scale, moderated promotional activity, supply chain efficiencies, and an increase in exclusive brand penetration. We expect gross profit rate to deleverage by 20 basis points year-over-year to approximately 37.9% of sales. We expect to achieve 40 basis points of SG&A leverage. We also expect income from operations of $353 million for 13.5% of sales, an increase of 20 basis points over last year. Net income is projected to be $265 million with growth and earnings for diluted share of 18% to $8.64. Capital expenditures are expected to total $130 million, and we anticipate an effective tax rate of 25.7% for the year. We plan to open 70 new stores in fiscal 27 compared to our original plan of 80 stores, as we accelerated the opening of 10 stores into fiscal 26. Store growth in fiscal 26 actualized at 17%, and we anticipate 13% growth in fiscal 27, resulting in a two-year average growth rate of 15%. From a timing perspective, in addition to the 10 stores that were accelerated into the fourth quarter, we now expect to open approximately 25 stores in the first quarter of fiscal 27, with the remaining 45 stores anticipated to open relatively evenly throughout the balance of the year. Turning to our leverage points for fiscal 27, we expect to leverage income from operations at 3% consolidated same-store sales growth. We expect to leverage selling, general, and administrative expenses at 2% same-store sales growth. As outlined in our supplemental financial presentation on slide 9, our accelerated store growth over the past several years, combined with our planned fiscal 2027 openings, continues to put pressure on occupancy costs. While new stores opened within the past five years are ramping as expected, the inclusion of these newer locations in our comp store base has reduced the proportion of fully mature locations in our sales base and increased occupancy costs as a percentage of sales. Importantly, average occupancy costs per store has remained relatively consistent. and we expect continued maturation of newer cohorts to support same-store sales growth and margin performance over time. In fiscal 27, we plan to open two high-traffic, high-visibility stores that we expect will generate outsized sales volumes relative to our typical new-store model. These locations also carry higher pre-opening costs, including non-cash, incremental, straight-line rent expense due to earlier than average possession dates and longer build-out periods. As a result, we will incur several additional months of occupancy expense at elevated costs, with one of these stores not expected to open until later in the fiscal year. Additionally, we are annualizing the investment in our sourcing organization, which ramped during fiscal 2026. As John mentioned earlier, we have already realized many benefits from this investment, including tariff mitigation and improved factory negotiations, and expect to see the sales from higher margin products begin to materialize towards the end of fiscal 27 and into fiscal 28. Finally, we continue to invest in our distribution centers to support ongoing growth. This year, we're annualizing the extension of our legacy California distribution center lease that was executed midway through last year and are continuing to deploy capital across all three distribution centers to enhance capacity and efficiency. These investments support new store expansion, growth in exclusive brands, and margin opportunities through volume-driven purchasing and inventory optimization. As a result of the continued addition of new stores to our sales base and these focused investments, we anticipate a higher hurdle rate this year on buying occupancy and distribution center costs with expected leverage at 10% same-store sales growth. While these initiatives create near-term pressure on buying occupancy and distribution center costs, we believe they will position the business to drive further sales growth and margin expansion over the years to come. Although we anticipate ongoing pressure on occupancy rate as we invest toward our long-term target of 1,200 stores across the U.S., we expect to offset this pressure through merchandise margin expansion and SG&A leverage consistent with recent years. Now turning to our first quarter guidance. We expect total sales at the high end of our guidance range to be $584 million and a consolidated same-store sales increase of 4%. We expect merchandise margin of approximately 51.5% of sales, representing a 60 basis point decline year over year, but a 120 basis point increase on a two-year stacked basis. This guidance reflects 10 basis points of product margin growth as we lap 100 basis points of product margin expansion in the prior year period, offset by a 70 basis point increase in freight expense as we cycle low freight costs last year. Our outlook assumes current freight rates that while higher year-over-year are consistent with the fourth quarter. We expect the year-over-year freight pressure to moderate as the year progresses and anticipate a 10 basis point decrease in freight expense for the full year. While we have seen increases in container costs and increased fuel surcharges for domestic shipments, Assuming that freight rates and fuel surcharges stay roughly in line with where they are today, we expect this pressure to be more than offset by improvements in our supply chain and logistics pricing. We expect gross profit of approximately 37.3% of sales, including 120 basis points of deleverage in buying, occupancy, and distribution center costs for the first quarter. SG&A for the first quarter is expected to be approximately 25.5% of sales, representing 40 basis points of deleverage year over year. This increase is largely driven by the timing of marketing expenses, which are more heavily weighted towards the first quarter this year, primarily as a result of our new stage coach sponsorship and related events. For the full year, marketing spend is expected to remain in line with our historical level of approximately 3% of sales. In addition, SG&A reflects incremental expenses associated with store growth, including 26 grand opening events this year in the first quarter compared to 18 last year, as well as pre-opening store labor for 25 new stores this year versus 14 in the prior year. We expect income from operations of $69 million, or 11.9% of sales, and earnings for diluted share of $1.71 compared to $1.74 last year. We expect our first quarter fiscal 27 earnings to come in below last year, primarily due to an extremely strong first quarter in the prior year that creates a difficult comparison. Looking ahead, second quarter fiscal 27 earnings are expected to be in line with first quarter fiscal 27, resulting in strong year-over-year growth given last year's second quarter was comparatively smaller than the first quarter versus typical historical cadence. Overall, we are confident in our fiscal 27 guidance, our solid start to the first quarter, and the ability of our team to execute on our financial plan. Now I would like to turn the call back to John for some closing remarks. Thank you, Jim.

I am very pleased with our performance in fiscal 26 and the start of fiscal 27. Our team continues to execute at a high level, and I believe we are well positioned for another year of growth. I want to thank our entire team across the country for their hard work, dedication, and unwavering commitment to serving our customers and building the Boot Barn brand. I would now like to open the call for questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time a question has been addressed and you would like to withdraw your question, please press star then 2. As this call is scheduled for one hour, please limit yourselves to one question and one follow-up. At this time, we will pause momentarily to ask a question.

The first question comes from Matthew Boss with J.P. Morgan.

Thanks, and congrats on another nice quarter.

Thanks, Matt.

So, John, on first quarter to date running 5% comps, can you elaborate on the consistency of demand that you're seeing, whether it's across categories or regions, despite May facing your toughest compare of the quarter and the first quarter facing your toughest compare of the year?

Yeah, absolutely. Looking at the first six weeks of Q1, we're very happy with how broad-based the comps and the growth has been. We're seeing across most major merchandise categories, notably work boots are trending up in the high single digits. We're seeing nice performance in denim, men's western boots as well, and women's apparel. The one, to your point, the one soft spot is women's boots is a little softer going up against such strong comps in Q1 of last year in the mid-teens. But other than that, if we looked at it by geography and all other major merchandising categories, it is broad-based.

And then just to follow up, so John, as we think about 7.2% comps this year, I mean, that's actually consistent with 7% plus. pre-pandemic performance, could you speak to the durability of the top-line drivers that you think you have remaining and the outperformance relative to the 2% to 4% historical target? If you could just walk through maybe the structural expansion of the total addressable market that you've seen.

Yeah, absolutely. We've proven over and over again, of course, that we can comp the comp, and we have exceeded that, to your point. I think there's a couple of things going on. One is the resiliency of our customers and the product that they're buying that they need to buy each and every quarter. And we continue to be a needs-based business. And as we said in the prepared remarks, which is kind of new news, is the majority of what we sell, of our top sellers, are products that have been in the line and in stores for more than five years. Beyond that, we've become more of a denim destination, as we've said in the past. I think if you walk into a boot barn for the first time, and I hear this on a regular basis when I'm in the stores and doing store visits across the country, People say, hey, I've only just recently discovered Boot Barn. I can shop here on a regular basis. It's not only for that need-based customer. And I think we're taking denim market share from some of the mainstream players who have struggled over the years. And we can service those customers who perhaps aren't part of that need-based segment, but instead have found us and realized we can be more of a lifestyle or general retailer to them.

It's great color. Best of luck. Thanks, Matt. The next question comes from Max with TD Carbon.

Great. Thanks a lot, guys. So, just first question is, can you elaborate a little bit further on how we should think about the freight headwind throughout the year? You gave us the one cue, some of the guidance. Just the rest of the quarters, what's a good way to think about it, especially if any of the costs were to increase from here? And then just remind us how you capitalize some of the freight expenses.

Sure.

So while we're not going to provide the freight numbers as we get throughout the year, the freight in the first quarter, if you go back to last year, We had really nice freight benefit in the first quarter, and then we had a freight headwind in the second quarter. As we blast that, we would expect to see in the second quarter a freight tailwind, assuming all things being normal in this freight environment. And then as we get into the back half of the year, that should be flattish tailwind. to get us to a 10 basis point improvement on freight year over year. As you think about how we capitalize freight, we turn our inventory roughly twice a year. And so as we incur freight expenses, we capitalize those and expense them over a six-month period. And so if there were to be elevated freight costs that were to come in over the next six months, we would see those go through our P&L in the back half of the year. So that's roughly how we manage it, Max.

Got it. That's helpful. And then I think one of the lessons that we learned last year is that it may be your customer shows less elasticity, to you guys taking price. So does that give you more optionality this year as you look to potentially offset some of the transportation or other price increases that we're seeing? And then within that, you did take less price on EVs than national brands. So just curious if there's an opportunity this year to catch up on that.

Let me just keep on the freight for just a quick second, and then John can jump in on talking about our pricing strategy for the year. Some of the things that are allowing us to offset some of the increases that we've seen already are the negotiations that we've taken with some of our logistics partners. And that's really allowing us already to offset some of the surcharges that we're seeing as we get better discounts with our providers, even as the core or the gross cost goes up, we're able to offset that. And so that's been a nice benefit to us right now. If you look at container costs, well, they've been elevated over the last couple of months. They're still relatively low compared to some of the spikes we've seen over the last three or four years. And so it would have to get pretty outsized on the container costs for us to feel that in a material way this fiscal year. I don't want to forecast what's going to happen with freight and fuel costs, but we did want to convey that we've got kind of the current run rate modeled in for the balance of the year and anything that kind of accelerates from here or elevates from here is not contemplated in the back half of the year.

Thanks, Jim.

And then if we look at our pricing strategy on third-party as well as exclusive brands, the best way to put it is we're back to kind of normal business and normal cadence of business and price increases. We got through the holiday season. We completed our price increases on our exclusive brands. We continue to see nice performance with exclusive brands. And, you know, every summer we see some price increases from some of our third-party vendors. And it's really business as usual at this point. You know, IEPA tariffs struck down to 10%, deemed unlawful but still in place. We're kind of running the business right now, business as usual from a pricing standpoint.

Got it. Thanks a lot, guys. Best regards.

Thanks, Max.

The next question comes from Steven McCuddy with Citi.

Great. Thanks very much for taking my question. Congrats on that nice quarter and nice year. I wanted to follow up there just thinking about things or sales. Could you help us just understand in the quarter the performance what is the transaction versus ticket? And then to follow up on the earlier question, how do you think about the outlook for transaction versus ticket this year? Obviously the transaction compared to tougher on the first half. So how do we think about that over the cadence of the year?

Sure. As we look at it for the first six weeks of the fiscal year, it really is how we believe it's going to play out for the remainder of the year. We're up roughly three in AUR for the first six weeks. And from an ADT standpoint, we're up roughly one. And so we think we'll be zero to one on the transaction side and two to three on the AUR side.

Okay, thanks. And then you mentioned opening two stores that are high visibility, high traffic. Kind of curious where they're going to be. And then in terms of the 70 store openings this year, can you just help us understand how you think about new markets versus existing markets in that store opening?

Absolutely. So one of the stores that... Bigger and more expensive one is on the strip in Las Vegas, and the second one is in a market in Southern California. As far as the 70 stores that we're planning on opening this year, we often struggle as we think about a new market versus an existing market. The number of stores that are going to be 40 miles plus away from an existing store is the majority of the 70. There are some that will open that are in closer proximity, particularly in bigger metropolitan markets that can be 10 miles apart or even closer.

There are several of those that will plan an opening this year. Okay, thanks for the detail. Thanks a lot. Thank you. The next question comes from Peter Keat with Piper Sandler.

Oh, thank you guys. Thanks for the congrats on the continued momentum here. With the subject of gas prices, there was a time years ago where food barn actually might do better in a period of higher oil prices. I was wondering kind of where you stand today and how you think about the impact of higher oil prices, higher gas prices, if these stay sustained. And specifically, anything you're seeing in Texas as maybe one market that's potentially seeing a lift?

Sure.

I think generally speaking, if you're thinking about this from the input cost of things, clearly higher freight or higher fuel prices lead to higher freight costs, and that's something that puts some pressure on the model and often requires increases in pricing. If you're asking the question around our consumer, which I think those were the discussions we had, we've had, Peter, over the last 10 plus years, Our business is more diversified than it used to be out of the oil and gas markets. There is the thought that as we drill more in the U.S. or we do more fracking in the U.S. and we bring more of that oil production and refinery here into the U.S. that there could be a benefit to our core customer and some of the markets that what we're less penetrated than we used to be we over penetrate compared to many other retailers and so there's the potential that that could be a benefit to certain folks as far as what we're seeing right now there's not there's not anything that we're seeing in our business by geography that would lead us to believe that there there's an impact that's helping us right now in those markets okay helpful and then uh maybe for uh

For John, so congrats on the stagecoach presence. I know some of the online feedback was that you guys were one of the stronger brands at that festival. Should we think about that as a Q1 impact to sales, or do you think that branding was positioned that there is more of a sustained benefit over time?

Thanks, Peter. Yeah, that was a nice review of the brands that kind of own Stagecoach. That was really nice to see. I was at Stagecoach. I spent two days, one day at our stores, one day at the event, and one day watching the streaming side of it, which was the part that I was most excited about. I thought we did an incredible job in Southern California and for the folks who come in from Arizona and Nevada to come to Stagecoach. Our store event was great. Our on-site event at Stagecoach had lineups every single day. It looked amazing. But the best part was the Mustang stage presented by Boot Barn. It was a new stage for Stagecoach, had bands, some kind of retro bands on there, Diplo, Counting Crows, Bush, Third Eye Blind. And it was streamed by Amazon. And so it was that amplification that we saw in the number of folks watching the Stagecoach Festival far beyond Southern California, turning it into a national or even argue a global event, that most excited me. So I think this is going to be over the long term, more and more folks across the country and the world recognizing the brand name. And we're already working on how we're going to be louder on that Mustang stage next year in partnership with ADG.

Okay. Sounds great. Thank you very much.

Thanks, Peter.

The next question comes from Janine Stritcher with Jefferies.

Hi, Janine Stritcher with BTIG. I was hoping you could talk a little bit about the exclusive brand strategy, you know, over 40%. How you see that evolving definitely seems like you've made some big investments behind the private brands, but at the same time, I've seen you add some new third-party brands. So if you could just lay in there on how you're thinking about that. And then just on the guidance, wanted to clarify, you know, typically I think you take the prior six to eight weeks or so of volume and then kind of run rate that through the year. Macro, you get

Yeah, I'll take the first part, Jean, and then I'll pass it to Jim to talk through kind of how we came up with sales. On the exclusive brand side, you know, it has always been a little lumpy. Again, we had guided 100 basis points last fiscal year, penetration going from 38.6 to 39.6, and we nicely exceeded that by 120 basis points. We are marketing those exclusive brand sites and seeing some nice business come through those sites. So I'm still very optimistic about the growth and our march towards 50% exclusive brand penetration over the next several years. That being said, we are having some success with some third-party brands, especially in the workspace, that is putting some pressure on the overall exclusive brand rate. So that's why it's a little lower this year than we have seen. But we are fully confident that we will get to 50% exclusive brand growth over the next several years.

And, Jeanine, on your guidance question, you got to cut it off or something happened. Do you mind repeating that, please?

Sure. I was just asking about, you know, typically you have the formula where you take the last, however many, six to eight weeks of store volumes and then run rate it through annually. And I think last year you gave a bit of a haircut due to macro. How are you thinking about the macro embedded in that formula this year?

Yeah, so... We did take a similar approach.

We took February, March, and April and extrapolated that over the balance of the year. What we did different compared to last year is we did not take a haircut from that guidance. And so the guidance that is laid out there is the guidance as the math works out in that extrapolation.

Thank you. You're welcome. The next question comes from Jonathan Komp at Baird.

Yeah, good afternoon. This is Alex Conway on for John. I just wanted to ask, I know you mentioned not having seen really consumers across any income cohort pull back. When you kind of look at March and April, the comps, especially for the in-store, just pulling back a little bit from February and January and starting to see that come back here in May. Anything stand out as necessarily driving that change?

No, when we look at the comps in store and we look at it by cohort, we're not seeing anything in one income bracket and one geography and one occupation that stands out. There's no kind of quote-unquote K-shaped economy impact happening to our business. But we are having some strong comps from last year. And so, you know, we're, you know, We're quite happy with the comps we're seeing in-store and online, and we're sitting at a plus five right now, and we've guided the year at a plus four. So we feel good where the business is. We just know we're up against some of the toughest comps of last year.

Great. Thank you. That's super helpful. And then just one more kind of on... the sourcing side. I know you mentioned you should start to see some benefits in the second half of this year. Just beyond just the tariff offsets, what are you really kind of sharpening there to get those benefits? And then is there any potential of product cost increases given the current oil environment?

We've asked that question of the sourcing team very recently, and nothing dramatic happening on the raw materials side right now that's worth calling out. When we look at how we're going to attack sourcing and our mix across the globe as we enter the next phase of tariffs, we are trying to leverage USMCA. We've started to move certain products, more products to Mexico. We're essentially duty-free. We're also looking at other duty-free countries that are part of other agreements, such as AGOA in the Africa region. and multi-sourcing products that we may have always had in a particular Asian country and then sourcing it in alternative countries. So it's always a very fluid situation, but we, and I meet with the sourcing team once a week, we feel great about how they are bobbing and weaving, so to speak, through the tariff environment.

Jonathan, does that answer your question? Yes. Thank you again. Thank you. Thank you, Alex.

The next question comes from Jason with UBS.

Super. Thank you so much. John, I want to follow up, if possible, on the exclusive brands. You talked about 50% penetration, but I'm interested in sort of the standalone opportunity, given the stores and the websites that you have and what you've learned over the last 90 days that might inform your vision for the standalone side of what the exclusive brands could be and where you might take those going forward.

Yeah, there's nothing – for this fiscal year is going to be kind of business as usual outside of these sites. I think these brand sites are some nice business and we'll continue to market them both in traditional digital methods such as Google PPC as well as TikTok. And we are seeding influencers with thousands of of SKUs from our exclusive brand. So we're going to continue to push exclusive brand marketing as you would at any other standalone brand throughout the year. So that has a lot of momentum and energy behind it. Well, we're not planning for this year, but I think about it, and I've said this before often, is at some point, you know, distributors internationally, and whether it be Canada or Australia or something, I would consider, would we ever take a particular category and wholesale it to a particular retailer? Possibly. So I do think there are other growth drivers. Our commercial accounts business would be another place where we could – skew towards exclusive brands. So I think there are other growth levers beyond the marketing, the exclusive brand sites, making the brands more recognizable, more coveted. We're doing all those things this year. As I look forward to the next couple of fiscal years, I think some of those other growth levers will start to come into play, but they're not in fiscal 2017.

Got it. If I can just follow up on one, do you need to add extra infrastructure in terms of supply chain capabilities or IT capabilities to be able to maybe do some of those things, not this year, but next year, whether it's distributors or international or some of the other ways that maybe you could drive the exclusive brands?

Yeah, I've had experience architecting these deals in a past life, and the way we've always done it and we would do it here is you'd have one customer in each country, the distributor, and the orders would peel off at the source. And so we wouldn't store it here, we wouldn't ship it from here, and it would go directly to that distributor. So it is very, very light in the way I've done this in my past life from a footprint and resource standpoint.

Got it. Okay. Thank you so much. The next question comes from Chris Nardone with Bank of America.

Thanks, guys. Good afternoon. We just have a few margin follow-up questions. First, on gross margins, can you just elaborate on the sustainability of this 10% buying and occupancy leverage point beyond this year as you hold this level of unit growth? And then on SG&A, it looks like you're getting about 20 basis points of leverage for each point of comp. If you continue to flow through better comps than what you're initially expecting, is there a good rule of thumb on how we can think about the incremental SG&A leverage as we also try to think about incentive comp potentially moving around? Thank you very much.

Yeah, no problem. On the second question, on just the flow through of a beat to our guidance, We typically model in a 35% flow through to income from operations or EBIT on the beat. I think your math on the SG&A leverage also gets you probably to a pretty similar spot as you model that forward. As to the 10% same-store sales required to leverage buying occupancy and distribution center costs, As we get into next year, I would expect that to go down because I'm not anticipating having some of these other one-time or special investments that we talked through, particularly those two stores and the cycling of the lease amendment in our Southern California distribution center. And so I would expect that to go back down a couple points.

Okay, got it. And then just a quick follow-up on the digital comps. Can you just remind us how much these new exclusive brand websites you've launched over the last several months have contributed to that digital comp? And just remind us of the cadence of how we should think about lapping each launch throughout the fiscal year.

Yeah, we had mentioned on one of the last calls that, and we had two sites at that point, that they were contributing about a third of the e-commerce growth. It's a little cloudier right now. We are testing several different paid initiatives around the different sites. Some of them are much bigger. You know, Kodi is much, much bigger than a Clio and Wolf as an example. So it's still undetermined how much of it will be part of the growth for e-commerce.

Okay. Thanks, guys. Good luck. Thanks, Chris. The next question comes from Corey Tarloi with Jefferies.

Yeah, thanks. John, you made a comment about work boots and third parties, or I guess, could you just clarify what it is that you meant around kind of that comment or that dynamic? Just curious there.

Yeah, we have seen... some great sell through from some of our third party brands that, that we have bought. You know, we're retailers. So we're, we're going to provide what a customer wants to buy and sell them what they want from a product standpoint. And we have seen some nice sell through from several, this isn't, you know, one brand, several working brands, on the lace-up side as well as on the pull-on side. And so there's a little bit of rebalancing as part of this work booth reinvigoration that's happening as we bring in some of these fast-selling third-party brands. And, of course, when we do that, we're going to take a little bit of a hit on our exclusive brands on the work boot side. So that work boot brand EV penetration or exclusive brand penetration will be a bit of a drag on the overall exclusive brand penetration this year.

Okay, got it. And is there any way to kind of size up how that plays into the expectation for this year where you guided the exclusive brand penetration. And then just to clarify, Jim, I think you made a comment as well. Basically, it sounds like freight actually is getting to the full year. It's like a 10 basis point improvement. But one would think that in an environment where freight costs are more elevated that there would be, I guess, an incremental negative. And I recognize that you're lapping higher costs. Is that simply all that is? I'm just curious how that is working out in the math.

On the freight, it's really a function of some of the negotiations with our logistics partners that we've been able to work out in getting our rates down. Higher discounts may be a better way to explain it. Higher rebates, better rates as we have increased in volume with those suppliers. And so those improvements that we've seen in negotiations are helping to offset or even more than offset some of the rising costs that we're seeing. And again, to be very clear, we're not assuming Rates that exceed what we're seeing today, which they are elevated from what we had a year ago, but in an environment where those continue to rise and get significant or they don't go back down, they're prolonged at this point, the 10 basis points could be something less than 10.

And then back to your first question on work boots and the impact of those third-party brands and the growth of 50 basis points. We're comfortable with the growth of 50 basis points of EV penetration for this fiscal year. It contemplates the rebalancing of the work boots. As a reminder, work boots make up roughly 15% of our sales. And so that implies that there's going to be a decrease by, you know, 200 to 300 basis points of EV penetration on the workweek side. But the rest of the business, we're very pleased with how Azusa brands are progressing.

And this isn't something that's new to this year, Corey. Every year we'll have some fluctuations in different categories on exclusive brand penetration. Usually they're going up. Sometimes they're going down. They're rebalancing as we cater to what the customer wants. And so not something that we're concerned about, but as we look at the long-term growth of the exclusive brands, it's something that we've seen in the past as well.

That's very helpful. Thanks so much, and best of luck. Thanks, Corey.

The next question comes from Sam Poser with Williams Trading.

Thank you for taking my questions. I got three. They're pretty simple. One, can you just give us the breakdown of the store and the e-comp, year-to-date comps, just the two? Number two is what regions... Somebody asked earlier about new markets, but could you talk about regions that you're focusing on with the new store openings? And then lastly, what I view as the most important question, you've done a great job of narrowing your assortment and apparel. I'm hearing from some of your vendors that you're working on the same thing at Footwear, getting more focused in key items. Where are you on that journey? How is it helping? How long will it take to get where you're going?

Sure.

So in the release, Sam, we've got the e-com and the retail store comps broken out by month. So in April, retail comps were up 3.8%. E-commerce was up 18.3%. And in the most recent two-week period, they're both up about 5%. And as far as the regions, I'd love to give you the roadmap, Sam, but unfortunately on this public call particularly, it's a little hard for competitive reasons for us to lay out where we're planning on going with the stores. And so we'll have to refrain from sharing that right now.

And then, Sam, on the third question, you're correct. We had really, last holiday season, kind of leaned into that depth in denim and apparel. If I think about where we are on boots, we're having, I've got some, you know, great examples of wear that has also occurred on some very, very popular boot styles in, you know, everything from work boots to women's to men's westerns. If I had to put it in an inning, we're probably in the fifth or sixth inning of that focus in boots. It takes a little longer for the vendors or our own factories, to be fair, to go as deep as we are able to do in Denim, for example, overseas. So I think there's still opportunity on the boot side, but I think what we did with the merchandising teams in Denim over the last 12 months kind of open their eyes to those opportunities in boots as well. And I hear them talk about it weekly in our merchandising meetings, how they're doubling down and having, you know, more than one size run of a particular style. And, you know, we know that this one's going to work. Let's have two or three size runs in a particular store. So that philosophy has trickled through into the boot world from what we started on the soft goods, the denim products.

And is that helping your conversion rates as you can see it, do you think? Or, I mean, and if you do that better, that should theoretically improve your conversion rates and increase your inventory turn as the old stuff goes away. Is that fair?

That's absolutely fair. The conversion, we still have stores that are not comp from a conversion standpoint, so it's a little muddy. And when you look at conversion for one particular category, albeit a big one with boots, the denominator, of course, is all the traffic. But yes, you're absolutely right.

Thanks very much. Thanks, Sam.

The next question comes from John Keepout with Goldman Sachs.

Hey guys, thank you for fitting me in. I appreciate it. I have a couple questions. The first is just the cadence of the comp through the year. Just looking at two-year stacks on a monthly basis, it seems like there's been acceleration in April and May at least, and a little bit before that too. So I'm just wondering where that conservatism for the two to four in the quarter and the two to four in the year. I understand like July obviously is going to be a pretty meaty comp, but May was, you know, almost in line with July and it still did a five. So I'm just wondering why the temperance on the four at the high end. And I've got some follow-ups.

Sure. Yeah, the cadence throughout the year, the way we've planned it is pretty consistent quarter to quarter. And you're right, we've got a plus five that we're sitting on here for the first six weeks. And we're guiding at the height of the range for the first quarter of four. I'll share with you that the second half of May, so the second two weeks of May last year, We're a plus 14, and so we have the tougher part of the comps ahead of us as we look through these next two weeks. And then, as you can see, as you pointed out, pretty strong comps as we get through the year. So we're not afraid to comp the comp. We've done it in the past. I think it will be a pretty even comp. At least that's how we're modeling it for the year.

Got it. And then presumably the two high-traffic stores you mentioned opening this year, right, there's going to be some elevated costs around that. I'm just wondering how we can think about the cadence of those costs layering in. It seems like 1Q is going to bear some of that brunt, but I'm not sure exactly. So any clarity there?

Yes, both those stores are bearable.

taking more of that expense in this first quarter, one of those stores will open within the quarter and the bigger of those will open later this year. And so I think it's relevant to call out on a full year that it puts some pressure on it. I think for modeling the buying and occupancy throughout the year, there are a lot of other things that weigh into the deleverage in each of those quarters more than those two stores.

Okay. And then, all right, that makes sense. The last one is just on tariffs. I'm not sure if you guys were explicit. I assume that at the moment, you guys, the guidance is factoring in 10%. Just not sure in the back half of the year, are you expecting that through whatever mechanism it jumps back up to the pre-SCOTUS ruling tariffs?

No, it's really a plan of the 10% that's in there for right now. And then we will adapt to whatever tariff environment comes at us, similar to what we did last year. If we need to raise prices because we're seeing price increases, then that's something we'll do. My expectation is that, barring some significant changes in the tariff environment, that the pricing will stay pretty well in check for this year. Those are the early reads we're getting from our vendors.

Okay. Thank you, guys. Appreciate it. Thank you. Thanks, John. The next question comes from Jeff Lick, Rich Defense.

Thanks very much for taking my question. John, in the last call, you talked about how sales like Cody James and Hawks.com, the third-party environments, the direct environments, you were seeing customers that you had never seen before. I was just curious if you could give an update if that's still happening and then Have you had any success converting them into regular Boot Barn store customers?

Yeah, yes and yes. We are still seeing many of the majority of those customers, roughly 70% of them are customers who have never shopped with us in stores on bootbarn.com or any of our other channels. So they are net new customers. to the brand, and we're seeing many of those then shop at Boot Barn. When you order a product from us, we don't hide the fact that the packaging says Boot Barn, shufflers, country outfitters. We let people know that this is coming from Boot Barn. We don't try and shield that and create unique packaging for each of the sites. And so I think the awareness to Boot Barn is coming to those customers and how they're getting their packages delivered to them. I don't have the number right in front of me of how many of them convert to Blue Barn customers, but we are absolutely seeing it happen.

And then just from a digital perspective, what's kind of been the preferred or the most effective mechanism you've been using to drive that kind of methodical marketing?

For the exclusive brands, it has been social. It's been meta and TikTok and it's the algorithm, right? They have an uncanny ability to target folks and find new customers for you. That's why we kind of plow those marketing dollars into those companies. And the other piece of it, if you think about Meta and TikTok, is the one place where a customer doesn't mind being interrupted by product discovery or an ad for a new product, where even on YouTube, you could argue that it is disruptive to the experience they're having. And that really isn't true when you're on TikTok or Instagram. And so the combination of the medium and how people use it and how good the algorithm is at helping find new customers for us, that's where we're putting a large chunk of the marketing dollars for exclusive brands.

Great, thanks for squeezing me in and continued success. Thanks, Trevor. The next question comes from Jeremy Hamblin with Craig Hallam.

Hey, this is Will on for Jeremy. Thanks for taking my question. I'm just wondering if you're able to quantify the total weather impact you saw in Q4 inclusive of the February storms, and then if there's anything to note on the Easter shift, if that was a benefit at all to Q4.

We did not quantify the total weather impact on Q4.

We had some discussion on our last call, just early reads, but not something that we reported on for the full quarter. And on the Easter impact, there was no real shift that we could We could see, I say, shifts we can see. We can see the Easter shift and what happens around that, but that was all contained within the quarter. The thing that often gets a little hard to read through different spring breaks across the country is people are off at different times, depending on where that falls in the year, Easter or around Easter or not.

But nothing worth calling out. Got it. Thanks. Best of luck. Thank you, Will. Thank you.

This concludes our question and answer session and the Boot Barn Holdings Inc. Fourth Quarter 2026 Earnings Call. Thank you for attending today's presentation. You may now disconnect. Thank you.