Boot-Barn-2020-Annual-Report.Pdf
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Dear Shareholders, I couldn’t be more proud of the performance of Boot Barn and our team of more than 3,000 employees across the country in Fiscal 2020. That said, it is important to acknowledge the global health crisis that impacted the company in the last month of our fiscal year and has had such a profound and deleterious impact on the lives of so many people. When COVID-19 began to spread, the entire Boot Barn team moved with haste to ensure that we would be able to continue to safely provide essential merchandise to our core customers that were continuing to shop with us for products necessary to perform their jobs. We immediately transformed our physical stores and e-commerce sites to meet their specific needs. We remain committed to supporting America’s workers, farmers, ranchers, first responders, and communities we serve during this difficult time. I would personally like to thank all the Boot Barn associates who have demonstrated tremendous leadership in developing innovative and safe ways to continue to serve our customers. It is a testament to the powerful culture across the entire organization and I am grateful to be a part of it. From a business perspective, Fiscal 2020 proved to be another year of strong growth at Boot Barn. Despite the COVID-19 health crisis that negatively impacted our business during the final weeks of the fiscal year, our financial results exceeded the earnings per share guidance that we provided for the business at the beginning of the year. We achieved same store sales growth of 5.0%, cycling 10% same store sales growth in the prior year. The combination of strong sales and merchandise margin, coupled with a focus on profitability, drove a 40-basis point increase in operating profit margin to 8.7%, and 25% EPS growth on a tax adjusted basis. We continued the transformation of the Boot Barn brand which has enabled us to further increase the size of our customer database and drive top line sales while reducing our promotional posture. Despite recent turmoil, we have maintained our focus on executing against the four strategic initiatives as we build a national lifestyle retail brand, including: 1. Driving same-store sales growth Our 5% same-store sales growth for the year reflects broad-based growth across nearly all merchandise categories and geographic regions. A healthy macro-economic environment and contributions from the entire Boot Barn team drove a 4.5% same store sales increase in our retail stores. Our year-over-year sales growth in work boots and women’s and men’s western apparel were especially strong. When the COVID-19 crisis began in March, we expanded assortments in key areas, remerchandised the stores and the site to prioritize essential products, offered advantageous pricing, and developed multiple safe ways to shop and buy critical items. We have expanded our focus on the work boots category, adding a broader assortment to capture additional industries and end uses. We have also expanded our assortment of product for first responders and health care workers, including both industry-specific footwear as well as scrubs in many of our stores. As we manage through this health crisis and period of depressed business, I am pleased with the focus of the organization on meeting the needs of our customers while managing expenses prudently. 2. Strengthening our omni-channel leadership Same store sales in our e-commerce business increased 7.4% for the year. Our continued focus on improvement in e-commerce profitability helped drive a significant increase in e-commerce operating profit during the fiscal year. We have made significant improvements to bootbarn.com over the past 12 months, such as same day order processing in our distribution center, Buy Online Pickup in Store, and curbside pick-up. These improvements have proven to be worthwhile investments, particularly as COVID-19 kept many of our customers home. We have also spent considerable time rebranding and transforming the sheplers.com site. Historically, sheplers.com has been the deep discount site that would attract much of its traffic from pay-per-click advertising and then convert that traffic with promotional pricing. We recently repositioned that business from a deep discount site to a site that celebrates the iconic heritage of a Western brand that is more than 100 years old. We have revamped the branding, upgraded the creative look and feel substantially, and dramatically changed the promotional posture of the site. 3. Increasing the penetration of our exclusive brand portfolio and expanding our merchandise margin We are extremely proud of the outsized growth we have experienced in this portion of our business. Sales of our exclusive brands represented 22% of total sales in Fiscal 2020, an improvement on the prior year of 600 basis points, well ahead of our historical annual growth of 200-300 basis points. We have invested in our design and development team, grown our legacy brands, and launched new brands. Sales of our exclusive brands have significantly improved our company-wide merchandise margin, which increased 90 basis points in Fiscal 2020. We have seen great success in each of our six major exclusive brands, including Cody James and Shyanne, two of the top five selling brands in the company. While we will continue to invest in our exclusive brands, we have slowed the growth of these exclusive brands in the near-term due to the uncertain environment. Once visibility into the business returns, we expect to quickly refocus our efforts on producing our high-quality exclusive brands that supplement the assortment from our third-party brands. 4. Expanding our store base Adding new stores in attractive markets continues to be an important growth driver for sales and market share for Boot Barn. During this past year, we added 20 stores, including the acquisition of one store in Des Moines, Iowa, and ended the year with 259 stores. We continue to believe that we can expand to 500 stores nationwide as we enhance our leading position in the western and work industry. Prior to the uncertainty created by the COVID-19 crisis, each group of stores opened during the past few years was projected to meet or exceed our new store payback hurdle of three years. Fiscal 2020 was a great year for Boot Barn. While the environment may be difficult in the short term, we are confident in our ability to navigate through these challenging times and return to solid growth over the longer term. I am humbled by the perseverance, loyalty and resolve of the entire organization, as we have faced into adversity over the past few months. I am extremely optimistic about the opportunities that lie ahead of us and the ability of our people to come together and succeed. Sincerely, Jim UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ☒ ACT OF 1934 For the fiscal year ended March 28, 2020 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ☐ EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-36711 BOOT BARN HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware 90-0776290 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 15345 Barranca Pkwy Irvine, CA 92618 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (949) 453-4400 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of each exchange on which registered Common Stock, $0.0001 par value BOOT New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company ☒ ☐ ☐ ☐ ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of the end of its most recently completed second fiscal quarter was approximately $838.7 million.