Boot Barn Holdings, Inc. (NYSE:BOOT) Q2 2019 Earnings Conference Call Transcript

Oct 25, 2018 • 04:30 pm ET

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Boot Barn Holdings, Inc. (NYSE:BOOT) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, everyone, and welcome to the Boot Barn Holdings Incorporated Second Quarter Fiscal Year 2019 Earnings Call. As a reminder, this call is being recorded.

Now, I would like to turn the conference over to your host, Mr. Jim Watkins, VP, IR. Mr. Watkins, please go ahead.

Executive
Jim Watkins

Thank you. Good afternoon, everyone. Thank you for joining us today to discuss Boot Barn's second quarter fiscal 2019 earnings results. With me on today's call are Jim Conroy, President and CEO; and Greg Hackman, CFO. A copy of today's press release is available on the IR 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 IR section of the Company's website.

(Forward-Looking Cautionary Statement)

I will now turn the call over to Jim Conroy, Boot Barn's President and CEO. Jim?

Executive
Jim Conroy

Thank you, Jim, and good afternoon. Thank you for joining us. On today's call, I'll be providing a review of our second quarter results and an update of our key strategic initiatives. Greg will then review our financial performance in more detail. Following Greg, we will open the call up for your questions.

We are very pleased with the sustained momentum our business is experiencing across the country. The improvements we have made in merchandising, marketing and omni-channel, along with a healthy macroeconomic environment, helped fuel second quarter results that exceeded our expectations.

Beginning with our top line, consolidated same-store sales increased 11.3%, which includes double-digit gains both in our retail stores and online. A combination of strong sales growth and merchandise margin expansion enabled us to grow operating income by more than 50%. This represents a 130 basis points year-over-year improvement in operating profit margin. We are very encouraged by these results and believe they reflect the successful execution of our four strategic growth initiatives.

Let me take a moment to review and provide an update of each of them, starting with driving same-store sales growth. We are very pleased with the 11.3% same-store sales growth we achieved in the second quarter. Comps in our retail stores have now been positive for six consecutive quarters. Sales growth was driven almost entirely by an increase in transactions with a slight increase in ticket size. We have seen widespread growth across most of the country with Texas again delivering outsized results. Once again, every major product category posted positive results for the quarter, with particular strength in work apparel and work boots, followed by ladies' and men's Western apparel and modest growth in Western boots. The growth in work boots and work apparel was driven in part by the ongoing success of our commercial accounts business.

From a marketing perspective, we continue to focus our efforts on reaching our three distinct customer segments, Western, Work and Wonderwest. We've upgraded the creative in our direct mail, e-mail and broadcast marketing. We are also continuing to refine our media mix with a tailored message and