Boot Barn Holdings, Inc. · NYSE:BOOT
Boot Barn — ICR Conference 2019
36 slides from Boot Barn's conference presentation, Jan 14, 2019
Slide 1: ICR Conference January 2019
ICR Conference January 2019 1
Slide 2: Important Information
IMPORTANT INFORMATION Forward‐Looking Statements This presentation contains forward‐looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this presentation are forward‐looking statements. You can identify forward‐looking s
Slide 3: Boot Barn Is a Compelling Investment Story
BOOT BARN IS A COMPELLING INVESTMENT STORY NATIONAL LEADER IN STRONG OMNI‐CHANNEL GROWTH AND PROFIT ATTRACTIVE NICHE BRAND PRESENCE ENHANCEMENT OPPORTUNITIES • Leader and authority in the • Healthy same store sales • Proven ability to drive growth western and work industry growth in stores and onlin
Slide 4: Agenda
AGENDA BOOT BARN STORY STRATEGIC INITIATIVES 1 DRIVE SAME STORE SALES GROWTH 2 CONTINUE OMNI‐CHANNEL LEADERSHIP 3 BUILD OUT EXCLUSIVE BRAND PORTFOLIO 4 EXPAND OUR STORE BASE INVESTMENT THESIS 4
Slide 5: A New Perspective on America
A NEW PERSPECTIVE ON AMERICA Urban 4% Special Use 9% Pasture/Range Forest Cropland 35% 28% 21% Miscellaneous 3% ~85% of U.S. 1Source: https://www.bloomberg.com/graphics/2018‐us‐land‐use/ 5
Slide 6: A True American Lifestyle
A TRUE AMERICAN LIFESTYLE Top 3 vehicles sold in 2018 were pick‐up trucks1 Country music popularity continues to rise2 Hundreds of rodeos held in the U.S. Popular spectator sport 1 Fox News 1/4/2019, “The 10 best‐selling vehicles in the United States in 2018 were mostly trucks and SUVs”; 2 Forbes.co
Slide 7: Large $20 Billion Industry Provides Growth Opportunity
LARGE $20 BILLION INDUSTRY1 PROVIDES GROWTH OPPORTUNITY ~$20 BILLION MARKET OPPORTUNITY ATTRACTIVE DYNAMICS • Highly fragmented Western • Less fashion driven than Wear traditional apparel Work 40% Wear 60% • Purchases are often non‐discretionary DRIVERS OF WESTERN WEAR GROWTH DRIVERS OF WORK WEAR GR
Slide 8: Diversified Sales Mix Mitigates Risk
DIVERSIFIED SALES MIX MITIGATES RISK Western: 70% of Sales2 PRODUCT MIX1 Footwear 53% Apparel 32% Hats, Accessories & Other 15% END USER1 Men 63% Work and Other: 30% of Sales2 Women 24% Unisex 8% Kids 5% CHANNEL1 Stores 83% E‐commerce 17% 1 Fiscal year ended March 31, 2018. 2As of March 31, 2018, we
Slide 9: Everyday Merchandise with Limited Fashion Risk
EVERYDAY MERCHANDISE WITH LIMITED FASHION RISK BOOTS DENIM WESTERN SHIRTS COWBOY HATS BELTS WESTERN RUGGED FOOTWEAR OUTERWEAR FLAME RESISTANT PANTS SHIRTS WORK & OTHER • Low fashion quotient minimizes markdown exposure • Vast majority of our merchandise sales are at full price1 ¹Excludes sheplers.co
Slide 10: Boot Barn Has a History of Growth
BOOT BARN HAS A HISTORY OF GROWTH NET SALES ($MM) ~$755 $678 $619 $569 $403 $346 $233 1 2 FY13 FY14 FY15 FY16 FY17 FY18 TTM Q3 FY19 ADJUSTED EBIT ($MM) ~$63 $49 $46 $39 $41 $32 $23 1 2 FY13 FY14 FY15 FY16 FY17 FY18 TTM Q3 FY19 Note: Fiscal year ends March. FY13 includes 29 stores acquired from RCC w
Slide 11: We Have Delivered Another Strong Quarter (Q3)
WE HAVE DELIVERED ANOTHER STRONG QUARTER (Q3) PRELIMINARY Q3 PRIOR YEAR METRICS FY 2019 RESULTS Q3 FY 2018 RESULTS Net sales growth +13.0% +12.7% Same store sales growth +9.2% +5.2% (Stores High Single Digits E‐commerce Double Digits) Net income per diluted share ~$0.66 $0.461 ¹Net income per dilute
Slide 12: Strategic Initiatives
STRATEGIC INITIATIVES 1 DRIVE SAME STORE SALES GROWTH 2 CONTINUE OMNI‐CHANNEL LEADERSHIP 3 BUILD OUT EXCLUSIVE BRAND PORTFOLIO 4 EXPAND OUR STORE BASE 12 12
Slide 13: Merchandising Segmentation
SEGMENTATION DRIVES MARKETING & MERCHANDISING EXECUTION SEGMENTATION MARKETING MERCHANDISING 13
Slide 14: Shifting Media Mix Appears to Be Effective
SHIFTING MEDIA MIX APPEARS TO BE EFFECTIVE 14
Slide 15: Adding New and Re-engaging Lapsed Customers
ADDING NEW AND RE‐ENGAGING LAPSED CUSTOMERS 1 Number of Customers Purchasing (YOY % Change) 9.0% 7.0% 7.0% 5.0% 4.0% 0.0% ‐4.0% ‐6.0% Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 1Represents the year‐over‐year growth in customers purchasing from Boot Barn (in comparable stores) during the respect
Slide 16: Enhanced In-Store Experience Should Drive Conversion
ENHANCED IN‐STORE EXPERIENCE SHOULD DRIVE CONVERSION ENDLESS AISLE CAPABILITY BOOT SELECTOR • We Have It Promise (WHIP) • Creates in‐store experience • In‐store service with online offering • Trains store associates • Access to e‐commerce DC and vendor • Provides brand and product information DC for
Slide 17: Strong SSS Growth While Reducing Promotions
STRONG SSS GROWTH WHILE REDUCING PROMOTIONS Same Store Sales Growth (Consolidated) 12.1% 11.6% 11.3% 9.2% Average SSS growth of 8.1% over the last 36 quarters 5.2% 1.8% 1.3% Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 17
Slide 18: Strategic Initiatives
STRATEGIC INITIATIVES 1 DRIVE SAME STORE SALES GROWTH 2 CONTINUE OMNI‐CHANNEL LEADERSHIP 3 BUILD OUT EXCLUSIVE BRAND PORTFOLIO 4 EXPAND OUR STORE BASE 18 18
Slide 19: Three Distinct Brands Online
THREE DISTINCT BRANDS ONLINE 19
Slide 20: Improving Online & In-Store Integration
IMPROVING ONLINE & IN‐STORE INTEGRATION BUY ONLINE PICK UP IN STORE SEAMLESS E‐COMMERCE RETURNS IN STORE • Current functionality ships online • Provides competitive advantage inventory to store for pickup • Roughly 2/3rds of bootbarn.com returns • Soon to offer product in local store came to store d
Slide 21: Profitability Initiative Driving Improved E-Commerce EBIT
PROFITABILITY INITIATIVE DRIVING IMPROVED E‐COMMERCE EBIT 1 Eliminating unprofitable and low‐margin items/channels 2 Improving marketing return on investment (ROAS) 3 Increasing the penetration of exclusive brands online 4 Lowering drop ship fees from our vendors 5 Reducing costs & centralizing e‐co
Slide 22: Strategic Initiatives
STRATEGIC INITIATIVES 1 DRIVE SAME STORE SALES GROWTH 2 CONTINUE OMNI‐CHANNEL LEADERSHIP 3 BUILD OUT EXCLUSIVE BRAND PORTFOLIO 4 EXPAND OUR STORE BASE 22
Slide 23: Exclusive Brands Positioned Strategically
EXCLUSIVE BRANDS POSITIONED STRATEGICALLY MEN’S LADIES WORK LEGACY CUSTOMER EXPANDED CUSTOMER BASE 23
Slide 24: Penetration of Exclusive Brands Continues to Grow
PENETRATION OF EXCLUSIVE BRANDS CONTINUES TO GROW EXCLUSIVE BRAND SALES PENETRATION1 (% of sales) 15.3% 2.6% FY2012 TTM Q3 FY19 EXCLUSIVE BRAND OPPORTUNITIES • Growth penetration of ~2.5% annually • Margin enhancement (900 ‐ 1,000 bps) 1 Represents total company exclusive brand penetration. 24
Slide 25: Exclusive Brands Are Leading Brands in the Store
EXCLUSIVE BRANDS ARE LEADING BRANDS IN THE STORE TOP 5 brands Western Work / Other 1 2 3 4 5 = Exclusive brands 25
Slide 26: Strategic Initiatives
STRATEGIC INITIATIVES 1 DRIVE SAME STORE SALES GROWTH 2 CONTINUE OMNI‐CHANNEL LEADERSHIP 3 BUILD OUT EXCLUSIVE BRAND PORTFOLIO 4 EXPAND OUR STORE BASE 26 26
Slide 27: Opportunity Exists to Double Store Count
OPPORTUNITY EXISTS TO DOUBLE STORE COUNT HISTORICAL STORE BASE COMPELLING NEW STORE ECONOMICS GOALS 17.5% CAGR 241 Store Size (sq. ft.) 10,000 219 226 208 169 Year 1 Net Sales $1.7mm 152 Net Cash Investment $0.8mm 117 86 Cash on Cash Return (Yr. 1) ~30% Payback Period ~3 Years 1 New stores/Tuck‐ins
Slide 28: Reach of E-Commerce Supports Store Expansion
REACH OF E‐COMMERCE SUPPORTS STORE EXPANSION STORES E-COMMERCE1 More FY12 TODAY • 86 stores • 234 stores • 8 states • 31 states Less 1Represents e‐commerce sales dollars by state for the fiscal year ended March 31, 2018. 28
Slide 29: Tuck-In Acquisitions Adding Outsized Sales Per Store
TUCK‐IN ACQUISITIONS ADDING OUTSIZED SALES PER STORE U.S. WESTERN WEAR CHAINS (ESTIMATED STORE COUNT)1 234 National Tuck‐In Acquisitions: Average unit volume more than > 2.5x as many stores as closest twice new store target Regional 81 (Mostly Texas) competitor Woods Boots • 4 stores in West Texas 9
Slide 30: Investment Thesis
INVESTMENT THESIS 30
Slide 31: Boot Barn at ICR 2015 Versus ICR 2019
BOOT BARN AT ICR 2015 VERSUS ICR 2019 SAME STORE SALES 3 12.1% 11.6% 11.3% 8.9% 9.2% 7.7% 7.3% 7.2% Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '18 Q1 '19 Q2 '19 Q3 '19 STORE COUNT 3 NET SALES 3 ADJUSTED EBIT 3 (in millions) (in millions) 234 $755 ~$63 166 $388 $39 1 1 2 2 Q3 FY15 Q3 FY19 TTM Q3 FY15 TTM Q3 FY19
Slide 32: Investor Concerns
INVESTOR CONCERNS “Oil exposure could impact SSS” “China tariffs could impact margin” Retail Industry Sales Comparison1 % of Business Impacted – Direct Responsibility Exclusive brands (non‐China) Exclusive brands (China sourced) < 10% of Sales Third party brands “Shift to e‐commerce could erode EBIT
Slide 33: Boot Barn Story Continues to Improve
BOOT BARN STORY CONTINUES TO IMPROVE Same Store Sales Growth • Driven by customer count and transactions • Revenue growth with reduced promotions • Store 2 year stack accelerating Omni Channel Leadership • World class omni capability is complete • DTC supply chain fully functioning • Significant imp
Slide 34: Appendix
APPENDIX 34
Slide 35: Adjusted EBITDA and Adjusted EBIT Reconciliation
ADJUSTED EBITDA AND ADJUSTED EBIT RECONCILIATION 1All TTM Q3 Fiscal 2019 results are preliminary and contain an estimate of results for the thirteen weeks ended December 29, 2018. 2The fiscal 2017 column has been adjusted to reflect management’s estimated 52‐week results as fiscal 2017 was a 53‐week
Slide 36: Net Debt Leverage Ratio Reconciliation
NET DEBT LEVERAGE RATIO RECONCILIATION 1For purposes of calculating the Consolidated Net Debt Leverage Ratio in accordance with our respective debt agreement, Fiscal 2017 has not been adjusted to reflect management’s estimate of the impact of the 53rd week. (a) Represents non‐cash compensation expen