Teresa Rivas

Some boots are made for rallying. And that's just what they'll do.

Shares of Boot Barn are higher on Monday, after the Western apparel retailer released preliminary fiscal third-quarter results after the close on Friday. It's the latest company benefiting from Americans' love of distinctive footwear.

The key holiday period included same-stores sales growth of 8.6% -- combining an 8.2% gain for bricks-and-mortar locations, and 11.1% e-commerce increase -- a country mile ahead of the average 4.7% analyst estimate. Boot Barn also appointed a new chief digital officer, Jonathan Kosoff effective Jan. 27; he previously held the same position at retailer Tilly's.

Sales came in at $608 million, also easily ahead of consensus and near the high end of management's guidance. The company opened 13 new stores in the quarter, bringing its total to 438.

"We're encouraged by the strong beat across the board...[and] the pickup in momentum," wrote TD Cowen analyst Max Rakhlenko. He has a Buy rating on Boot Barn stock, and a $185 price target, and expects consensus estimates will move higher on the news. "Net-net, we're bullish on the beat and think the company is now at a stable point and can return to consistent comps growth demonstrated prior to the pandemic."

Boot Barn stock has more than doubled in the past year, and hit a record high in October. As Barron's noted in 2023, Boot Barn is benefiting not only from the fashion cycle -- Yellowstone chic is still popular -- but from its exclusive brands, expanding store footprint, and increasing profitability.

The shares took a hit in the fall when its popular and longtime CEO Jim Conroy left to take the corner office at discounter Ross Stores. That said, Kosoff's appointment could mean more leadership stability, argues Baird analyst Jonathan Komp: "This may further represent a signal interim CEO John Hazen (former Chief Digital Officer) could become permanent CEO, in our view." He kept an Outperform rating on the shares, and lifted his price target to $180 from $167, citing the company's strong execution as a driver of margin expansion.

At 24 times forward earnings, the stock is pricier than its five-year average. However, Komp isn't the only analyst who thinks the premium is justified. William Blair analyst Dylan Carden argues that the current valuation is warranted, given the company's store growth potential, sustainable same-store sales, and improving margins.

Likewise Boot Barn's preliminary results highlighted "the performance of its ladies' and men's western businesses, which were up low double digits and high single digits, respectively," he writes, which should "give Boot Barn better credibility in addressing longstanding concerns regarding the sustainability of current store volumes while dispelling fashion risk perception that has been an overhang over the last three years."

In other words, Boot Barn doesn't look like it's bitten off more than the company can chew with the rapid expansion, particularly as some items -- such as cowboy boots -- tend to exist outside of trends.

In fact, footwear is one area where Americans haven't been willing to forsake function for form. While fashions has continued to evolve since the pandemic, comfortable shoes -- regardless of their curb appeal -- have remained a mainstay.

At first glance, cowboy boots and Ugg boots may not seem like they have much in common, but both have carved out a profitable niche that's proven enduring. Now they're walking on easy street.

Write to Teresa Rivas at teresa.rivas@barrons.com

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January 13, 2025 12:22 ET (17:22 GMT)

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