Following a less-than-stellar fiscal second-quarter performance, Boot Barn Holdings, Inc. (BOOT) disclosed its preliminary results for the third quarter of the fiscal year 2024 (ended December 30, 2023) on January 5, 2024.  

As the company gears up to officially report its third-quarter results on January 31, 2024, this article aims to provide insights into BOOT's fundamentals based on its preliminary third-quarter outcomes. Let’s understand in detail.

For the third quarter of fiscal 2024, BOOT projects its net sales to reach $520.40 million, indicating a modest 1.1% year-over-year growth. This falls slightly below the Wall Street consensus revenue estimate of $526.97 million for the same period, suggesting a 2.4% year-over-year increase.

Moreover, despite the addition of 11 new stores in the third quarter, totaling 37 new stores year-to-date and reaching a total store count of 382, the company foresees a 9.7% year-over-year drop in its same-store sales.

Additionally, both retail store same-store sales and e-commerce same-store sales are expected to decrease by 9.4% and 11.3%, respectively. Furthermore, the company projects earnings per share to be at or surpass $1.79 for the same quarter.

On the other hand, in spite of the underwhelming third-quarter earnings snapshot, BOOT’s President and Chief Executive Officer, Jim Conroy, continues to be optimistic about the company’s prospects. Conroy noted that despite a reduction in comparable store sales, the average store revenue continues to surpass pre-pandemic levels, showcasing the resilience of the company's approach.

Meanwhile, in terms of price performance, BOOT’s shares plunged 16.5% over the past six months and 10.9% over the past three months to close the last trading session at $71.97.

Here are the factors that could affect BOOT’s performance in the near term:

Mixed Financials

For the fiscal 2024 second quarter, which ended on September 30, 2023, BOOT’s net sales increased 6.5% year-over-year to $374.46 million. However, its income from operations declined 12.6% from the year-ago value to $38.58 million. Moreover, the company’s net income and EPS came in at $27.68 million and $0.90, down 13.6% and 16% from the prior-year quarter, respectively.

Negative Analyst Estimates

The consensus revenue estimate of $404.14 million for the fiscal fourth quarter (ending March 2024) represents a 5.1% year-over-year decline. Meanwhile, the consensus EPS estimate of $1.15 for the same period reflects a 24.5% year-over-year plunge.

Stretched Valuation

In terms of forward EV/Sales, BOOT’s 1.52x is 22.4% higher than the industry average of 1.24x. Likewise, the stock’s forward non-GAAP PEG multiple of 4.27 is 163.3% higher than the industry average of 1.62. Furthermore, its forward Price/Sales ratio of 1.29x is 43.7% higher than the 0.90x industry average.

POWR Ratings Exhibit Bleak Prospects

BOOT’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall rating of D, translating to a Sell in our proprietary rating system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. BOOT has a C grade for Growth, justified by the mixed financial result in its last reported quarter. Moreover, BOOT’s D grade for Stability is consistent with its 60-month beta of 2.25. In the Fashion & Luxury industry, BOOT is ranked #53 out of the 62 stocks.   

Beyond what we’ve stated above, we have also rated the stock for Value, Momentum, Sentiment, and Quality. Get all ratings of BOOT here.

Bottom Line

BOOT's Fundamentals exhibit weakness, evidenced in its lackluster third-quarter preliminary results, mixed financial performance in the second quarter, negative projections from analysts, and an elevated valuation. These factors collectively cast a cautious shadow on the outlook for the stock’s future performance. Thus, avoiding investment in BOOT may be prudent for investors now.  

How Does Boot Barn Holdings, Inc. (BOOT) Stack Up Against Its Peers?   

While BOOT has an overall grade of D, equating to a Sell rating, you may also check out these other stocks within the Fashion & Luxury industry: Weyco Group, Inc. (WEYS), J.Jill, Inc. (JILL), and H & M Hennes & Mauritz AB (publ) (HNNMY), with A (Strong Buy) and B (Buy) ratings. For exploring more Fashion & Luxury stocks, click here.    

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BOOT shares were trading at $74.08 per share on Wednesday afternoon, up $2.11 (+2.93%). Year-to-date, BOOT has declined -3.49%, versus a -0.02% rise in the benchmark S&P 500 index during the same period.

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