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Boot Barn Holdings, inc (NYSE:BOOT)
Q2 2021 Earnings Call
Aug 4, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day ladies and gentlemen and welcome to the Boot Barn Holdings, inc. First quarter 2020 earnings call. [Operator instructions]

I would now like to turn the conference over to your host, Mr. Jim Watkins, Senior Vice President of finance and Investor Relations. Mr. Watkins, please go ahead.

Jim Watkins -- Senior Vice President, Finance and Investor Relations

Thank you. Good afternoon, everyone. Thank you for joining us today to discuss Boot Barn first quarter fiscal 2022 earnings results. With me on today's call are Jim Conroy, President and Chief Executive Officer, and Greg Hackman, Chief Operating Officer and Chief Financial Officer. A copy of today's press release is available on the investor relations section of Amazon's website at DuPont calm. Shortly after we end this call, the recording of the call will be available as a replay for 30 days on the investor relations section of the company's website. We'd like to remind you that certain statements we will make in this presentation are forward looking statements. These forward looking statements reflect the current judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting the board's business. Accordingly, you should not place undue reliance on these forward looking statements. For more thorough discussion of the risks and uncertainties associated with the forward looking statements to be made during this conference call and webcast, we refer you to the disclaimer regarding forward looking statements that is included in our first quarter fiscal 2022 earnings release, as well as the filings with the SEC referencing that disclaimer. We do not undertake any obligation to update or alter any forward looking statements whether as a result of new information, future events or otherwise.

I will now turn the call over to Jim Conroy, Vice President and Chief Executive Officer Jim?

James G. Conroy -- President and Chief Executive Officer

Thank you, gentlemen, good afternoon. Thank you everyone for joining us. On today's call, I'll review the first quarter of fiscal 2022 results, highlight each of our key strategic initiatives and provide an update on current business. Following my remarks, Greg will review our financial performance in more detail, and then we will open the call up for questions given the impact COVID had on our performance in early fiscal 2021. We believe that a comparison of our first quarter results to the same period two years ago provides the most helpful view into the underlying strength of the business. During the first quarter, our business performed very well across the board. we generated strong total store generated strong total sales growth on a two year basis of 65% with retail stores of 66% and e commerce of 56%. While we believe there are macro tail winds at play this superb execution by the entire team in securing merchandise, expanding our customer base and staffing the stores to meet the additional demand has resulted in another exceptional quarter. Compared with two years ago, merchandise margin increased 220 basis points fueled primarily by better full price selling growth and exclusive brand penetration and a less promotional stance online. I'm very pleased with the continued momentum in our business.

The overall strength in our top line and margin rate drove record earnings of $1.35 per diluted share, compared to 33 cents in the same period two years ago. When adjusting for the tax benefit in bulk years, we grew earnings per diluted share approximately 300% to $1.26 compared to 32 cents in the same period two years ago. Before I provide an update on each of our four strategic initiatives, I would like to take a minute and reflect back on the broader strategy for blue barn over the past few years. With so much recent focus on the impact of COVID we felt it was time to remind everyone of their broader growth strategy for blue barn and our positioning. Historically, blue barn had focused heavily on the western customer and lead with our signature category of boots. We were then and continue to be the leading player serving this quite sizable market. approximately four years ago, we embarked on a three pronged strategy to expand our addressable market, which included the following components. First, we sought to expand the brand's reach. We focused intently on growing the work segment as well as adding new segments including the more fashion forward wonder West category, and more recently just country which encapsulates a much larger share of the US population. This expansion strategy has introduced new customers from market segments. There are not too far removed from boo Barnes core Western customer. We also shifted our media next to marketing channels intended to broadcast to a larger population, such as television, radio and digital to drive awareness of the farm We've this work contributed to expanding the customer reach of the barn as evidenced by our continuous growth in customers on a constant basis over this period of time.

The second piece of the strategy was to contemporize, the blue font brand, we made transformative changes to the creative aesthetic of our brand and our marketing communications. We shifted the focus away from product and price promotion, we focus exclusively on building the strength of the Groupon brand. So resonate with both its legacy Western customers, as well as the broader cross section of the population that we're seeking to add, that may have some affinity for our merchandise, but don't identify as purely a Western lifestyle customer. We broadened our merchandise assortment, remodeled many stores, and upgraded in store merchandising significantly. Today we have successfully transformed from what many thought was simply a footwear retailer to a true lifestyle brand. Upgrading and modernizing the brand has played a critical role in enabling us to become more relevant to more customers that are immediately adjacent to our original core customer that may have been unlikely to shop in a pure Western retail store. As for the final piece of the strategy, in order to ensure that we would be relevant to all of our customers both existing and new, we created an extremely well defined customer segmentation strategy. We speak to our more than 4 million active customers with email, direct mail and digital communications that are tailored to them based on their demographics, and purchase history. This enables us to speak to each customer group and their language and with relevant merchants offerings. This was a critical piece of the puzzle as we needed to ensure we were not at risk of alienating our core Western customer in our desire to expand the addressable market. Fortunately, we have successfully achieved both objectives, adding new customers or remaining highly relevant to our original Western customer. As we analyze and evaluate our recent business, we recognize there are some external macro factors providing a tailwind to grow.

That said, we believe that the successful execution of this three pronged growth strategy has enabled us to generate outsized growth in same store sales, and to enter markets with new stores that are not traditionally Western. Further as concerts, rodeos and events begin to take hold, we are confident that our strategy will position as well to capture more share from an even larger and broader addressable market. With this recap of our growth strategy serving as context, I will now provide an update on each of our four strategic initiatives, beginning with driving same store sales growth. During the first quarter, we saw a very healthy sales growth across our stores business, as discussed on our last earnings call. Total Sales in our retail stores during April and the first half of may were very strong growing 65% when compared to the same period two years ago. Total Sales in our stores maintained this strong growth throughout the remainder of the quarter, and finished the quarter of 66% when compared to the same period two years ago. From a geographic standpoint, the growth was broad based with every store district posting solid double digit, same store sales growth as compared to the first quarter two years ago. Well, each of our three regions were extremely strong, the growth in our West Region outpaced the growth in the north and the south.

From a merchandise perspective, on a two year basis, we saw a broad based growth across our major merchandise categories with double digit growth in work boots, men's and ladies Western apparel, men's and ladies Western boots, hats, and non flame resistant work apparel. fr work apparel was the only category that declined when compared to the same period two years ago. Our customers are increasingly outside working, participating in recreational activities and returning to outdoor events and are looking to be born to get appropriately outfitted. For a marketing perspective, our creative team continues to enhance our brand aesthetic across all media and communication channels. Our marketing strategy has proven to be successful and drawing new customers. And we believe the addition of these customers will continue to help us continue to drive sales growth and increased traffic while furthering our brand awareness across the country. from an operational perspective, our store associates along with our field leadership team leadership team, were able to ensure that our stores were adequately staffed in order to handle the increased number of transactions during the quarter. In fact, Groupon has relatively low turnover at the store manager level has enabled us to rise to the challenge of the surge in sales and maintain our standard for customers. service. I am proud of the store operations team for providing the necessary training and support to our store associates to both meet the growing demand in stores and efficiently fulfill omni channel orders such as buy online pick up in store, and in store fulfillment.

Our field team has continued to provide excellent service to our customers. And I'm grateful for their ongoing commitment to growing the blue foreign brand. There's been a great deal of dialogue surrounding supply chain challenges across the retail landscape resulting in difficulty in securing merchandise and increased freight cost. While we have seen some of these issues as well, we have managed to mitigate the impact of the bit on the business and significantly. We've now improved our inventory position to flat on a concert basis relative to last year, which was the result of a tremendous amount of hard work by the merchandising and supply chain teams, particularly in light of the extremely strong sales we've been experiencing. And while freight costs continue to increase, our ability to leverage our store base for e commerce orders has dampened the impact of increasing inbound freight costs. Moving to our second initiative strengthening our omni channel leadership compared with the first quarter two years ago, total e-commerce sales grew 56% and our efforts to increase the profitability of this channel continue to be effective, with EBIT showing significant growth on a two year basis. The groupon.com business continues to be our best performing site, with total total sales growth of more than 100% compared to the same period two years ago. While not as strong as the groupon.com business, the balance of our e commerce sales also is exhibited strong double digit growth compared to the same periods two years ago. underpinning our recent performance of the omni channel initiatives we have implemented over the past two years including buy online pick up in store, buy online curbside pickup, same day delivery, and buy online and return in store.

During the first quarter, we invested further in our in store fulfillment initiative and have seen strong customer reception to this offering. Making the stores inventory available to our e commerce customers has had a meaningful impact on our e commerce growth. This new ability to ship online orders from our stores has had an added benefit of increasing the exclusive brand penetration online and in further to our ability to expand merchandise margin. We believe our omni channel initiatives are driving increased traffic to our stores, helping to reduce shipping costs and improving loyalty of our customers as we encourage them to shop, blue bar and both in store and online. Now to our third strategic initiative exclusive brands. Our exclusive brands performed incredibly well during the first quarter increase up to 26.3% of net sales, a gain of approximately 650 basis points compared to the same period two years ago. We are very pleased with the accelerated growth in this portion of the business and the performance of each of our exclusive product lines. Cody James Cheyenne hawks, and idle wind fueled by Miranda Lambert continue to be in our top 10 selling brands in the store. We are proud of this achievement and brand recognition we have built over the years with our exclusive merchandise. Given the supply chain issues across retail today. We are also fortunate that we've been able to rely on our exclusive brand supply chain to meet the surge in demand. Finally, our fourth initiative expanding our store base. During the first quarter we opened three new stores bring our total store count to 276 stores across 36 states. Our new store openings continue to perform very well and are expected to pay back within our targeted three year period or better.

We expect to open 27 stores in the current fiscal year as originally planned. I'm really pleased with the work our real estate team is doing and I'm very encouraged about the new store pipeline for the balance of this year, as well as for the beginning of next fiscal year. Based on our current momentum, we expect to be well positioned to grow 10% new units or more in our next fiscal year. And now I'd like to provide an update on current business. Our second quarter has continued the strength that we have seen during the last several months with stores and e commerce generating strong sales when compared to the same period two years ago. Total Sales in the first five weeks of our second quarter increased approximately 65% consolidated same store sales through the first five weeks of our second quarter increased 52.4% and compared to the same period two years ago. To recap the tone of the business, we have seen consistent strength in demand with nearly every week over the past 20 weeks exceeding 60% growth in sales versus two years ago, coupled with solid growth and merchandise margin.

I'd like to now turn the call over to Greg Hackman.

Greg Hackman -- Executive Vice President, Chief Operating Officer and Chief Financial Officer

Thank you, Jim. Good afternoon, everyone. In the first quarter net sales increased 64.9% to $306 million dollars compared to the two year ago period. consolidated consolidated same store sales increased 52.3% with retail store sales, up 51.7% and e commerce same store sales up 55.8%. Increase in net sales was primarily a result of the increase in same store sales and the incremental sales from new stores opened over the past 24 months. Gross Profit increased 87.3% to $116.4 million, or 38% of sales compare the gross profit of $62.2 million or 33.5% of sales in the two year ago period. The 450 basis point increase in gross profit rate resulted from a 220 basis point increase in merchandise margin rate and 230 basis points of leverage in buying an occupancy costs. Merchandise margin rate increases primarily a result of better full price selling and growth and exclusive brand penetration. operating expense for the quarter was $62.8 million, or 20.5% of sales compared to $46.1 million, or 24.8% of sales in the two year ago period. operating expense increased primarily as a result of higher store payroll and overhead in addition to an increase in incentive based compensation. operating expense as a percentage of sales decreased 430 basis points primarily as a result of excess leverage on higher sales. income from operations was $53.6 million dollars or 17.5% of sales in the quarter, compared to $16.1 million, or 8.6% of sales in the two year period. net income was $40.6 million, or $1.35 per diluted share, compared to $9.7 million or 33 cents per diluted share in the two year ago period. Excluding the nine cent tax benefit in the current year period and the one cent tax benefit in the two year ago period net income per diluted share in the current year period was $1.26 compared to 32 cents in the two year ago period. Turning to the balance sheet, inventory was flat on a comp store basis compared to last year and down 2% compared to the same period two years ago. On a consolidated basis inventory increased 13.5% over the prior year period to $297 million.

This increase was primarily driven by inventory held at both our Wichita and Fontana distribution centers and inventory for new stores added in the past 12 months. During the first quarter we prepaid $61.5 million on our term loan, resulting in a total of $15 million of debt outstanding with zero drawn on a $165 million line of credit. We have $49.6 million of cash on hand at the end of the quarter. Subsequent to the end of the quarter we expanded our revolving line of credit to $180 million. While we are pleased with the underlying strength of the business, given given the limited visibility into the macro economic environment, we will continue to only provide select full year fiscal 2022 guidance at this time. We reiterate our previously provided guidance to grow new units 10% continue to expect capital expenditures to be in the range of 33 to $36 million and estimate our four year effective tax rate to be 26%. Additionally, we now expect explicit brand penetration growth of 350 basis points in fiscal 2022 which represents an increase from our prior outlook of 250 basis points.

Now I'd like to turn the call back to Jim for some closing remarks.

James G. Conroy -- President and Chief Executive Officer

Thanks Greg. I am very pleased with this strong start to fiscal 2022 and it is exciting to see the organization Continue to deliver on our four strategic priorities. I'm truly honored to work with such an incredible team. Now I would like to open the call to take your questions.

Questions and Answers:

Operator

Thank you so much. [Operator instructions] And our first question today will come from Matthew Boss with JP Morgan.

Matthew Boss -- JP Morgan -- Analyst

Great, thanks, and congrats on the really nice quarter again, guys. So, Jim, on the consistency of the top line momentum that you walk to the row, July holdings 65%, above fiscal 20. Are you seeing return trips from new customers that you acquire during the pandemic? I guess I'm trying to think, you know, on the other side of this crisis, where do you see the largest sustainable market share opportunity, if we think maybe by category in terms of you know, where you're benefiting, but what's sustainable? Where's the model substantially better on the other side?

James G. Conroy -- President and Chief Executive Officer

I think where we have seen a step function change has been in the expansion of our addressable market. And we have, we have taken share, we believe from the industry from the mom and pop Western retailers. And I think we've also increased just the sheer number of people that now view boot barn as an alternative for shopping for for their merchandise, their apparel, and footwear, etc. And I think that is going to be with us going forward. We've seen such an influx of new customers, with no drop off in our legacy customers, that I think we we are now just operating in a bigger customer market. And I think that's kind of here to stay. I think the you know, one of the things we'll be focusing on going forward is how do we now with even more customers, how do we also focus on improving? Quickly frequency, so if we can have additional customers, and all customers shopping more frequently? Can those two work together to drive even more sales growth going forward?

Matthew Boss -- JP Morgan -- Analyst

Great, and then maybe a follow up on on the margin front? As we think about gross margin, first quarter, comes in 450 basis points above your pre pandemic base, I guess you know, how best to think about the progression of gross margin maybe just puts in takes as we think about the second quarter, bad calf and just overall gross margin opportunity. Do you think the model is over earning today? Anything we have to give back? Or you know how best to just think about long term gross margin based on what you're seeing today?

Greg Hackman -- Executive Vice President, Chief Operating Officer and Chief Financial Officer

Sure, Matt, it's Greg. You know, from our puts and takes perspective, we've seen nice merchandise margin improvement, what I would describe as on a pure market basis, right. So we've continued to be less promotional, we've our inventories are much cleaner. So we have less clearance. And so I expect that to continue for the foreseeable future. We felt some freight pressure in q1 and I expect that to continue and it might even be a bigger drag or headwind to gross profit. Having said that, you know, I do have confidence that we'll be able to offset that, you know, we won't go backwards in terms of merchandise margin that the the IMU and the other things we're doing will continue to offset that freight headwind in terms of, you know, kind of buying occupancy and DC cost leverage some leverage in in the distribution center. And in the end in the buying line. And in occupancy, we're seeing, you know, nice leverage at a at the growth that we're having, obviously, if that growth slows, I think we'll get less leverage out of the occupancy line. And and that's especially true as we continue to progress with adding new stores throughout the year. Having said that, we still would expect to see some nice leverage. So those are kind of the puts in Texas, I think about gross profit.

Matthew Boss -- JP Morgan -- Analyst

Great, congrats again, best of luck.

Operator

Thank you And next we'll hear from Max Rakhlenko with Cowen and Company.

Max Rakhlenko -- Cowen & Company -- Analyst

Great, thanks a lot, guys, and congrats on a really nice quarter. So when we think about the massive quarter to date trends, what do you tribute that to is, your momentum is significantly above many industry peers, obviously, the consumer is in a really strong shape. And there's a lot of pent up demand. But it looks as though the market share that you're taking is really outsized compared to others out there.

Greg Hackman -- Executive Vice President, Chief Operating Officer and Chief Financial Officer

Well, we appreciate the commentary. Thank you. I think there's a few things going on. And we always start with the macro, there certainly is pent up demand. And there's there's a lot of money flowing through the economy. That said, I think we have just been able to pull a number of things together, we've we've expanded the view of Groupon to include additional customer segments, we've gone after them aggressively. At the same time, the consumer trend was helping us right people are getting outside more often. They're looking for products that we carry to go hiking in or go camping and or just to go to some of the concepts and rodeos that are now just starting back up. So I think it's been the the overused expression, perhaps of the virtuous cycle of we've upgraded our branding, we've expanded the merchandise assortment. We took market share, we believe last year because we were able to keep our stores open as an essential retailer. And we just have kind of been able to hold on to those new customers and not relinquish them back. So I think it's it's all those things working well in concert, right? merchandising, marketing's do operations, or sending more customers to our stores through our e commerce channel. And as those things work together, we've seen sort of a synergistic effect.

Max Rakhlenko -- Cowen & Company -- Analyst

Goddess that's very helpful and your income, you previously commented on improving the exclusive brand penetration online. How big of an opportunity do you think that is? And is there a world where that mix gets pretty close to what you have in stores? Or will it always trail? The in store? exclusive brand mix? Thank you.

Greg Hackman -- Executive Vice President, Chief Operating Officer and Chief Financial Officer

Sure. So I think we're on record in the past of saying that historically, exclusive brand has penetrated roughly 30% in stores and roughly 10% online. As soon as we opened up in store fulfillment, the exclusive brand penetration online nearly doubled. So it's meaningful. Now if you're thinking about e commerce as percentage of our business, and exclusive brands growing by eight or 10 points of penetration online, and then you multiply that I'm ordering it, when you put it all together, it's not a massive grower have merchandise margin percent or dollars, but it does, it does add a bit to the rate that we can achieve. And the second part of the question, I don't think we'll get online penetration to the point where the stores are simply because we offer a lot more product, a broader assortment, and in some cases, more brands online than we do in the stores. And nor do we have the ability to as easily sort of showcase the features and functions of exclusive brands, as we do in the stores using fixturing or special merchandising or the service associates as brand ambassadors, etc. But that said it's not it's nice that that gap has closed considerably on what amounted to be a relatively simple change. Technically, it took some time, but you know, we didn't have to move mountains or invest millions of dollars in capital to make that happen.

Max Rakhlenko -- Cowen & Company -- Analyst

Great, thanks a lot. Best regards.

Greg Hackman -- Executive Vice President, Chief Operating Officer and Chief Financial Officer

Thank you.

Operator

Thank you. And our next question will come from Jonathan Komp with Baird.

Jonathan Komp -- Baird -- Analyst

Yeah, great. Thank you first, maybe, Jim, one clarification, if I could, I think you said you have more than 4 million customers in your active file. Can you maybe just comment on what that's looked like in the past and how that's grown over time.

James G. Conroy -- President and Chief Executive Officer

I can't admit, we've seen really more growth over the last few years that the best way to think about it in our view is to look at the growth in customers on a theme store basis. And if you exclude the period of time that was impacted by COVID, you know, we've had really significant or a really nice consistent track record of adding, call it mid single digit growth in customers on constant basis for four years or so. I think if you're trying to anchor into that 4 million number, I think I have these numbers, right. In fiscal plenty. I think we had about 4.2 million total customers in fiscal 21, with 4.7 million total customers. But for for me, and the way I try to view it, I always anchor back to how many customers we have on same store console basis, and how much of our increase in same store sales is due to the influx of new people into the building.

Jonathan Komp -- Baird -- Analyst

Okay, great. And then maybe a broader question on the demand you're seeing, I think if we go back to April, or may, there was a view that a lot of the strength at the time was driven by the macro picture. And I'm curious what you make now to see the consistency and the weekly performance. You know, what, what your senses that's driving that? Are you are you seeing as we move further beyond the the stimulus in March, are you seeing the fashion trends pick up stronger? Are you seeing things like the Cheyenne frontier days or other events start to impact your business? Or are any more color on your thoughts there?

James G. Conroy -- President and Chief Executive Officer

Sure. Well, you're right. I mean, we, we weren't exactly sure what to expect. And there was certainly a thesis that was logical that the business couldn't have maintained the same 65%. And we've been, we've been very pleasantly surprised that it's continued to grow as it has underlying it, there are a couple of things that make us feel pretty positive about the outlook going forward. Number one, it is not being held by oil, oil markets, right. In fact, you know, places like West Texas are still a lag or a drag on our same store sales. So we've been able to post these numbers despite a softness in some of those markets, or at least a relative softness. And despite the fact that fr workato was negative. On a more positive note, we've started to see emerging over the last few weeks, and even stronger ladies apparel business, and the over indexed growth in ladies, Western boots. And if you went back through the last few years of our earnings calls, we had been talking about softness and a downtrending.

Ladies cowboy boot business for quite some time. And now everything is growing essentially. But ladies boots is rolling at a higher rate than the rest of the company, which does lead us to believe that you know, as concerts and rodeo start to come back online. We are extremely well positioned in those categories to maximize growth. You mentioned Cheyenne frontier days. You know, it's it's a relatively big event. It's not nearly the same driver of demand as the Texas rodeos that hit our fourth quarter. If we do view the event as a bellwether for sort of the health of our customer. In our sort of pop up store that we put up during the event, we hit record sales this year, versus any other year up 50 plus percent versus two years ago. And that, again, it's not very meaningful in our total sales for the quarter for the month. But if it is a view into the underlying consumer trend, it's it was an extremely strong read. So that coupled with the fact that Garth Brooks and George trade are touring again. There's a lot of reasons to feel bullish about the business going forward.

Jonathan Komp -- Baird -- Analyst

Yeah, great. And just lastly, if I could, Greg, if I look back in your model at EBIT margin percent, typically first and second quarter Pretty similar, and then you see a step up. And the seasonally higher third quarter. Any thoughts or factors we should consider thinking about this year? And that's it for me. Thanks.

Greg Hackman -- Executive Vice President, Chief Operating Officer and Chief Financial Officer

Yeah, good question, john, to, you know, typically does look like q1 in terms of volume. So part of what drives operating margin in q2 is what happens to the sales, as we've just described, it's been incredibly consistent. If I think about unique things to q2, the things I'd call out is we're trying to add more hours back into the stores. Jim touched on this in his prepared remarks that that the stores team was doing a really great job of providing great customer service and, and the sales line is very healthy. So I think, you know, we're not losing sales, having said that, we have a sales flex model that we use to try to add back hours, and we haven't been able to use all those hours. So we're trying very hard to continue to higher up so that we can provide outstanding customer service to our customers. That's one thing. The second thing is we've gotten really nice leverage in marketing, especially in q1 as the sales continued. At a high level, we're trying to return to our 3% of sales, historic spend in stores, I don't think we'll get that done in q2, but we're working toward investing some marketing dollars. smaller things, we've got a physical inventory in in two, two. We have some other things going on. But on balance, I would say, you know, given the sales line, you can see a somewhat similar profile that said, you know, we're not, we're not targeting a 17 and a half percent EBIT rate in q2.

Jonathan Komp -- Baird -- Analyst

Okay, thank you.

Operator

Thank you. And next we'll hear from Stevens Akoni with Citi group.

Stevens Akoni -- Citi Group -- Analyst

Great, thank you for taking my question. Congrats on the momentum in the business guys. Question about inflation trends more broadly, in retail, you referenced higher freight costs that you're seeing in the business? Presumably you're taking price up on products? Have you seen any pushback from the consumer in response to price increases? And I guess more broadly, what have you noticed in the competitive environment in terms of pricing?

Greg Hackman -- Executive Vice President, Chief Operating Officer and Chief Financial Officer

Stevens, it's Greg, we have seen a handful of our vendors raise price in the first quarter. And as you just described, we we passed that price increase along for the customer with our normal markup, right. So we maintained our IMU and increased the price, the retail price to the consumer. And as we've looked at the demand for that product, you know, in terms of units coming into and coming out of the price change, we don't really see a change in the demand. So it reinforces our belief that that our consumer, you know, can tolerate a price increase, they typically need the product or want the product, and we'll accept the price increase. So as we look further out, we've heard from other vendors that there might be price increases this fall or beginning of next year. And, and again, I think that what we've seen in the first quarter gives us confidence that we can continue to pass along the price increase to the consumer and not feel a hurt on the demand line, if you will, or in sales. You know, as it relates to exclusive brands, the teams have done a really nice job of mitigating most of those price pressures, we, you know, we do see some increased freight on our end product, and we'll selectively increase pricing probably on some of that product. Again, given the backdrop of what we saw on the q1.

Stevens Akoni -- Citi Group -- Analyst

Great, thanks for that. And then I just wanted to follow up on could you could you speak a little bit more to trends you're seeing in oil and gas regions? I know you cited fr comp negative in the first quarter. Have you seen any improvements there thus far in the second quarter, just given the price of oil, I assume, right reactivities probably.

Greg Hackman -- Executive Vice President, Chief Operating Officer and Chief Financial Officer

We've seen a little bit of a sequential improvement in FSR in the second quarter. But it's still a little bit of a drag on our top line. sales growth. You know, maybe this is too rosy of you, but we just view that as as future possibilities for ongoing growth is So, we expect that the oil patch will continue to strengthen to your point about recounts is growing each month, slightly. And you know that business will likely be more of a driver going forward than a drag. But, you know, despite the fact that we've seen a little bit of softness in those markets, now for several months, our sales line has been extremely strong. Perhaps this will finally unhitch us from the reputation that our business ends in falls on the strength of your own market. But we'll see. Yeah, thanks for that.

Stevens Akoni -- Citi Group -- Analyst

Okay. Take care, guys. Thanks.

Operator

Thank you. And next we'll take a question from Janine Stichter with Jefferies.

Janine Stichter -- Jefferies -- Analyst

Hey, congrats on the the incredible mentum want to ask about your your store account potential, I think you spoke into the 500 plus stores in the past, now that you're getting these new customers who are kind of outside of your core Western customer, how do you think about the potential for maybe greater number of stores? And then maybe speak to what you're seeing in some of your new markets? Thank you.

Greg Hackman -- Executive Vice President, Chief Operating Officer and Chief Financial Officer

Sure. I think when we get to the end of the year, and we lay out guidance for the next fiscal year, we'll we'll try to quantify that and do some of the analysis that we had done several years ago to come up with the size of the addressable market, and the number of stores that we think we can build. What would that say? qualitatively? I'd say we're feeling pretty bullish on both the size of the TAM, as well as the total number of stores that we can build across the country. And now roping in the second part of your question, we've seen, we've seen very good results in our new stores opening. We've seen great openings for brand new stores in brand new foreign markets, even those that opened in the height of the pandemic. We've also seen brand new stores opening in what we would have considered pretty mature markets, doing extremely well, as well. So we've opened store a store in Weatherford, Texas, and the salya, California, we've opened a couple of stores in Phoenix, which we probably would have thought was mature a few years ago.

And we continue to develop that market with additional stores. And I think when you kind of cobble all of that together, that leads you to the conclusion that we will again try to defend through analytics, that our 500 store store count is going to prove to be conservative. And I think as we've expanded our target customer outside of a pure Western customer to include a really vibrant work business, the Wonder West customer, that just country customer, we've often talked about the market being $20 billion of total addressable market. I think that number is also understated. So we're sitting here with a very strong business and great momentum and and feel just extremely positive about the future prospects, given what we've some of the changes we've made, how they're taking hold and the momentum that we're starting to see.

Janine Stichter -- Jefferies -- Analyst

Great, thanks to the color that mentioned the follow up on the inventory of flat versus on a per store basis, understanding that there's constraints on how much you can get optimally, how do you plan your inventory? I know it's challenging with the business tracking up 60%. But if you had if you had your way, how would you be planning your inventory levels and and maybe speak to any of the constraints, you're seeing any particular categories that are more challenging than others? Thank you.

James G. Conroy -- President and Chief Executive Officer

So I think if we look at our current inventory levels, we're we're at least a total, our total basis, we're in pretty decent shape. Frankly, we'd probably like to have a little bit more inventory. I mean, our business has just been so strong. And in certain pockets of a store. You'll see certain areas that are a little bit late ladies apparel is one of them. Maybe cowboy boots is another and both of those businesses are really growing quite nicely. So given the current trend, we'd love to have our inventory levels be up a little bit more, not just flat. One thing that's helped us a little if I'm honest, is we call out flat inventory on a cost basis your year. We have much less clearance merchandise than we did last year. So our Warframes inventory is actually up slightly year over year on a cost basis. That said, We'd still love to add some product in in some key categories. buy more on the lady side than on the men's side. And, you know, we're continuing to hustle to bring that product in. We've had, we've had mixed results from our vendors. Some vendors, we made some some kind of bulk purchases in we talked about this on the last call and inventory data ourselves. Others are flowing goods nicely. And candidly, the best supplier that we have right now is our exclusive brands. So while we want all of our vendor partners to participate in the growth, when there is a void, or sort of euphemistically an open slot on booth shelf, we're able to get our own product or our exclusive brands product on that in the stores, and fortunately, that supply chain has continued to work extremely well, all things considered during the pandemic, and during all the other supply chain challenges.

So, you know, hats off to the team that's managing exclusive brands for continuing to flow goods. We're fortunate that as a company, structurally, we, we only turn roughly twice a year, so we're not at a big risk of running out of product anytime soon. But on balance, we'd love to have some more merchandise.

Janine Stichter -- Jefferies -- Analyst

Thanks very much.

Operator

Thank you. Thank you. And next we'll hear from Dylan Carton was William Butler.

Dylan Carton -- William Butler -- Analyst

Awesome, thank you. I'm just curious. The handful of ones here, I guess, first, maybe starting with the frequency you mentioned, and that the ultimate goal here is to not only grow the customer base, but in grow frequency. I mean, are you seeing that already as some of these sort of new customers, new brand customers? I guess maybe sort of an embedded question there is of the customers you acquired in the last year, you know how many are kind of coming back to the brand, or even shopping sort of across different categories.

James G. Conroy -- President and Chief Executive Officer

So that there, we do believe we're capturing and retaining and seeing them again, I can't give you a great statistic to defend that. We also are seeing them shop across the different pieces of the business for sure. So we're we're seeing some of our legacy customers now working to Groupon to buy your men, they only looked at us as a as a Western cowboy boot store. But now they're looking to buy hiking boots, and they're coming into the store, they're looking to buy jeans and a T shirt and a cow and a baseball hat. And we're we're able to meet those needs. We're starting to bring in merchandise statements a little bit more frequently, we're tweaking some of our marketing to try to get the people that would only shop with us twice a year to come a bit more frequently. So we'll we'll be able to recap that for everybody with some more statistics once we see some somewhat of a more normalized view of the business over, you know, a few quarters, and that this sort of gyration of a COVID time period, followed by a very, very strong sales growth period. But our belief is we've undoubtedly increased customer count. And we think frequency is starting to kick up. And that's sort of a new focus to, to really see if we can be getting that customer in the store more frequently and expanding the share of wallet for for all of our customers.

Dylan Carton -- William Butler -- Analyst

Great. I'm curious, the new store format, you're kind of trialing out in California? Is it too early days to kind of speak to that or what the strategy might be there if there's maybe some markets that get unlocked to you that you otherwise thought were inaccessible with your you know, your legacy offering? And kind of as a follow on question would be, you know, your confidence level and hitting that kind of 10% store growth this year, even I think mentioned that it could be above that, you know, going back to 2017 that's been a target but not necessarily a reality. I'm just kind of curious what you're seeing in the real estate market or acquisition market that might sort of drive some of that commentary.

James G. Conroy -- President and Chief Executive Officer

So the second part, I think our level of confidence for this year is pretty strong and 85% confident 95% so we've laid out I think the cadence I think and said we three five and seven and then the balancing cue fam. So Fibonacci sequence in there somehow but the the I think the level of competence there is is pretty high on the first part of the question relative to the store that we build near our office out here. You're we're we're stopping short of calling that a new prototype and some ambass departure from what we've been doing in the past, it is aesthetically more pleasing. It doesn't scream Western quite as much as a store that was opened five or 10 years ago. But I will tell you that if you went to some of the stores that we've been opening on the East Coast, and actually any of the new stores, they are a little bit more elevated in their looking feel. And a little bit less pure Western. And and that is just part of the overall strategy of kind of opening the aperture slightly, this is not a massive strategic change.

This is not getting away from what's made Groupon so successful for so many years now. But can we maintain the loyalty from our core Western customer, which I think we've been able to demonstrate we can, and yet still make the store inviting and comfortable for people that may not be working on a ranch and wearing a cowboy hat every day. And it seems that we've been able to do that, and the store that you're alluding to the one that's out here near the corporate office of the store Support Center, it's just, you know, a little bit more elevated than some of the other new stores. And we'll take elements of that, and continue to kind of migrate what a new store looks like. But I wouldn't, we don't want to signal that this is a completely different looking deal. And then something that is a massive change in strategy, because it's not.

Dylan Carton -- William Butler -- Analyst

No, that's interesting. And so I guess, as you're going into these new markets, and you're seeing these sort of better than historic performance in these new even during the pandemic, you kind of some of that related to these efforts to kind of, I guess, are these new markets different than your legacy markets, and that that has been a benefit as you sort of pick and choose which elements that to put in these stores.

James G. Conroy -- President and Chief Executive Officer

Now, I would say so if we've looked at I'll just give you real examples, we opened the store in Weatherford in the salary of Weatherford, Texas or salya, California, Erie, Pennsylvania, those three stores look roughly similar to each other. Slightly more elevated and different than a store those opened 10 years ago, but still not quite the store that you're alluding to, here in Orange County. So there, we haven't tried to come up with something that's massively different to the east coast. But by downplaying a little bit the pure Western customer, we've made it a little bit more accessible to a broader group of customers. Now, by the way, that said, one of the things we've referenced in on past calls is those new markets, Pennsylvania, Ohio, etc, are still heavily skewed in their sales toward Western every bit as much as Colorado or Arizona. So it's not like we're selling a whole different set of product, we're still selling cowboy boots and cowboy hats. But it looks like we're also getting perhaps a broader sort of swath of the of the population or the market and in the surrounding areas.

Dylan Carton -- William Butler -- Analyst

That's great. Thanks. Appreciate it. Thank you.

Operator

Thank you. And our next question will come from Sam Poser with Williams Trading.

Sam Poser -- Williams Trading -- Analyst

Thank you very much for taking my questions. I have a question for you guys. Do you want the easy one or the hard one first, and the hard ones not about inventory levels? are both going to be about inventory. Neither one is about inventory actually. Okay. All right. So your cop that What? How many stores were closed? What is your new store productivity? How many stores were closed last year in like what stores are comping against what stores? Because I think this cut the street numbers for your cop. Just you're we're not this isn't an apples to apples number that the street had, nor myself for that matter. So what's the store productivity and if you just looked at if all stores were open last year, how would you know just including the zeros stores? What would the comp be? If that makes sense?

James G. Conroy -- President and Chief Executive Officer

Sam, it's great. We haven't quoted a one year number really anywhere there, there will be a one year number that's shown in our 10k when we put it on file, because that's how the SEC requires us to report. But everything we've described to you, whether it's the plus 65, total sales, or the plus 52%, same store sales that's on a two year basis. So that's compared to two years ago, and excludes all the noise around store closings during the COVID. Period. And I apologize, we do say we're on page two of the press release, we do talk about a one year comparison. But frankly, none of our comments really talked to that one year comparison, because it's a bit of a fooler because of COVID, COVID, closures etc. So we thought I understood that like...

Sam Poser -- Williams Trading -- Analyst

I get it, but I but the question is, what's that 78% number? If it was all apples to apples? That's the question, what's the real? What's that number, because when the street was at 90, whatever percent cop you came out of the 78. Regardless, the all this being correct, there, compare his 100, comparing it, nobody is mad, he can't match the numbers to the 78. All we're trying to do is match the numbers, we completely understand how strong businesses and all that it's just the number, we just know what it is.

James G. Conroy -- President and Chief Executive Officer

I guess you'd have to look at our q1 filings from last year. And then you'd look at total sales, and then you'd use the store's penetration to come up with a total sales number in q1 for stores. And you've got the total sales for q1 this year. That's not necessarily on a cost basis, but we open 15 stores over the past year, and you can back into a number in terms of new store productivity, we model it 1,000,007 and it's probably, you know, 10% higher than that, or maybe 20% higher than that it's not 50% higher than that.

Sam Poser -- Williams Trading -- Analyst

So this way, so a new stuff. So in this store, an existing store did $100. And in q1, a new store, does what 5080 388?

James G. Conroy -- President and Chief Executive Officer

Call it 80 or 85%, probably.

Sam Poser -- Williams Trading -- Analyst

Okay. All right, I'll drop that now to you. No, no inventory. Now. The other question is about, about sort of a follow up on a whole bunch of other questions. You talked about the women's Western and women's apparel being very good. Are you this is are you is this more of the fashion women coming in now to buy Western? Both boobs and other? And is she bringing people with her coming back to buy stuff for others in the family? What are you learning about her? Given that it's one part of your business? I'd like your inventory is pretty low because of high demand.

James G. Conroy -- President and Chief Executive Officer

Yeah, I think on the first part, I think pent up demand, concerts and events are finally restarting our business over the last 20 weeks or so it's been very strong, but it really hasn't yet been driven by concepts and videos. I think that's all I had road. Mostly ahead of us. I think when they get dressed up for concerts, they want a new pair of cowboy boots and they want a new outfit. I can't tell you if they're ever not great data on Yeah. Are they are they buying for other training or people in federal

Greg Hackman -- Executive Vice President, Chief Operating Officer and Chief Financial Officer

We're seeing I mean, we're hearing from from fashion brands that Western is having a little moment and and there's mostly fashion brands could care less about a rodeo. So the question are you and it sounds like you're seeing the same thing with without the rodeo spring it on so to speak.

James G. Conroy -- President and Chief Executive Officer

Yeah, very clever pun there. I think so. I mean look, I think is topical. I would not want to leave the impression that our business is so strong because of some sort of trend that we're seeing in some of these other brands including some couture brands, I mean our businesses strong from work boots to men's Western to cowboy boots, men's and ladies. cowboy hats, just about everything is very solid, strong double digit growth. And what we're calling out is a particularly in the ladies boot side. That is one that is over indexed in the last few weeks, not in the quarter and has been one that for the last Last several quarters or few years, even ladies boots has never been that remarkable. For us anyway from a growth perspective.

Sam Poser -- Williams Trading -- Analyst

Okay, all right. Well, thank you guys very much continued success.

James G. Conroy -- President and Chief Executive Officer

Thanks, Sam.

Operator

Thank you so much. Our next question will come from Peter Keith with Piper Sandler.

Peter Keith -- Piper Sandler -- Analyst

Hey, good afternoon, Bobby premier on for theater, messenger says, looks like a pretty large infrastructure bill, getting close to be passed in Congress wonder if you could discuss how previous infrastructure programs have impacted demand trends and know what you might expect this time around?

James G. Conroy -- President and Chief Executive Officer

Clearly, any increase in employment, blue collar employment and infrastructure is a good or a great thing for us. I can't quantify for you what that would look like. We're not banking on that as part of our future growth, but it would just be a potential, another tailwind to top line growth. You know, it does tend to drive the workweek business work, apparel, business, denim both work in western. So it would be it would just be another great add to the business that's been experiencing some really strong growth anyway.

Peter Keith -- Piper Sandler -- Analyst

Great, thanks for the caller. And just one quick other one to delta variant becoming more pronounced in some parts of countries? Is that any impact on store traffic in any of your markets?

James G. Conroy -- President and Chief Executive Officer

I'm sorry that there was something weird with the audio when you asked that question. Could you repeat it for us, please.

Peter Keith -- Piper Sandler -- Analyst

With with the Delta variant becoming more pronounced in some parts of the country, has this had any impact on Star traffic in any of your markets?

Greg Hackman -- Executive Vice President, Chief Operating Officer and Chief Financial Officer

It's, of course, unfortunate to see some of this recent surge, our business has just been unbelievably consistent across the country, regardless of market regardless of delta variant. And yeah, we like everybody hope that this goes away pretty fast, or at least gets mitigated. But it hasn't had an impact on the business. The business has just been phenomenal.

Peter Keith -- Piper Sandler -- Analyst

Alright, great. Thanks.

Operator

Thank you. And next, we'll hear from Mitch Kummetz with Pivotal Research.

Mitch Kummetz -- Pivotal Research -- Analyst

Yes, thanks for taking my questions. I'm. So I'm curious. on the product side, you guys have made a lot of comments there. I think you said two years everything's up. But far, you've talked about ladies boots, when you think it's sort of big picture work versus Western? Can you say which currently is growing faster on a two year basis?

James G. Conroy -- President and Chief Executive Officer

Yes, we can Western now is growing a little bit faster. As you well know, you follow this for a long time and know the company extremely well, over the last few years work has been very more so the pendulum has swung back a little bit. If we were to look at sort of a pie chart, and it's it's the segments of the pie is growing or shrinking, is going to be indistinguishable. I mean, they're they're growing. These are illustrative numbers, ones growing 70%, one during 55. Right, it's not going to make a meaningful difference on the percentage of the business. Bringing, but now Western is a bit stronger than work.

Mitch Kummetz -- Pivotal Research -- Analyst

Okay. And then Jim, you talked about new customers and your prepared remarks. And you talked about I think one of the ways you're bringing in new customers is with product. So I just went back and glanced at the 10k. And so the split there. I think it was two thirds Western and then the other third, his work slash other. I'm curious, I got maybe a few questions here. I'm curious, how big is the other piece? Is it as much as maybe 5%. Now, is it still smaller than that? And when I think about other are the main categories and other like outerwear, hiking boots, ball caps? Or are there other pieces? And then when you think about growing this other category, in particular to attract new customers? Are you Is it really just driving more sales through those existing categories? Are there other things that you think you can still add to the to the to the mix?

Jim Watkins -- Senior Vice President, Finance and Investor Relations

So I would say, quote unquote, other and the statistic that you're alluding to, of course, is a pretty Catch up, broad based, you know brushstroke, if you will a view of the business, I would say other could be 10, or maybe 12% of the business, and it includes everything from baseball hats to hiking boots, you know, some of the the product or bringing on the lady side, you know, we're going to categorize it as Western buy, it might be, you know, almost mainstream, in terms of its fashion aesthetic. I think the other thing that we're doing there is we're trying to refresh the sales floor more frequently, in certain key categories. We're bringing in a merchandise statement in ladies apparel, to make a statement that may only last for three or four months, and then it goes away. We're also just starting to bring in some some more exciting merchandise, to some stores that may otherwise have not had it in the past, because the store might be an average store volume, and focus more on basics, that, when we talked about in store for filming, we can now bring some more sizzle product further into the store base. Because even if that store can't turn it quickly enough to sort of command that that product, were able to move it ultimately with our e commerce channel. So all of those things we believe will help add to the insurer experience, add more excitement to the store. And, you know, perhaps not only increase customer count, but increase frequency because there's a reason to come back more quickly than you otherwise would have.

Mitch Kummetz -- Pivotal Research -- Analyst

Okay, thanks. Appreciate the color. Pretty much.

Operator

Thank you. And our next question comes from Jay Sole with UBS.

Jay Sole -- UBS -- Analyst

Great, thanks so much for taking my questions. I just want to go back to one of the questions from a few moments ago, you know, total revenue was up 107%. And same store sales growth was up 79. That's a good 2800 basis point difference, can you just maybe just walk us through from get to 79 to 107? What the different components of the business that drove the sales growth to 107 were obviously new stores is a piece probably not all 20 100 basis points of the difference between sampler sales and total revenue. So if you just give us an idea that would be that'd be helpful.

Greg Hackman -- Executive Vice President, Chief Operating Officer and Chief Financial Officer

Okay, it's Greg, from a definitional perspective, if a store is closed for five days or more, it falls out of our comp calculation for the entire period for the entire month. And so last year, in the height of COVID, we had a number of stores that were closed throughout the first quarter. And so they would be they would have had zero sales or fewer sales last year, in q1 or in that month that they fell out of the comp base. And they'd have 30 days or sorry, 28 days worth of sales this year, for example, in the month of May. They could have been closed for 14 days last year in May, and they were open for 28 days this year in May, those don't count as comp sales in the first quarter for that month that they fell out of the of the calculation.

Jay Sole -- UBS -- Analyst

Got it. So it sounds like that piece is the biggest part of the difference between the total revenue and the same store sales growth. So maybe the new store is accounted for, you know, 700 pips of the growth but probably this, you know, pulling some stories out of the cost base because of the closures and whatnot because of COVID like really accounts for the majority of the difference.

Greg Hackman -- Executive Vice President, Chief Operating Officer and Chief Financial Officer

That's correct.

Jay Sole -- UBS -- Analyst

Got it. And then my other question is just on. Its You know, it sounds like obviously shipping costs are going up. You know, Jimmy talked a lot about you know, the omni channel initiatives are, are you passing on some of that shipping to the consumer and when they order something online? And is that increased driving people into the store like so in other words, are you seeing a correlation between you know, the impact of rising shipping costs across the landscape and you know, the traffic that comes into the store?

Greg Hackman -- Executive Vice President, Chief Operating Officer and Chief Financial Officer

The honest answer is we we haven't passed along. freight costs particularly online to the customer regular But first of all, a huge portion of our online purchases ship for free. We have done is said if you buy online and you ship it to our store, even if that shipment didn't meet the threshold for free shipping, because we do still charge for shipping under certain thresholds. And if it's not boots, if you're willing to ship it to a local store and go and pick it up, then you'll get it for free. So we've actually sort of encouraged a customer to if they want to avoid the shipping costs, which hasn't changed to ship it to a local store and go in and pick up the product. And perhaps the objective of that is self evident.

But the goal, of course, is now they're walking into the store to pick something up, and they're surrounded by product. And it's probably the least expensive new customer acquisition that a store could have. You know, most of the free increase costs that we've been experiencing, and I think probably most people have been experiencing is really inbound. And it's, you know, containers coming from China, etc. Your way in my remarks, a couple of them together and said, Yeah, we're seeing a little bit of inbound free cost increase. But a lot of the other things that we're doing is helped dampen that a bit, including some of the things we're doing from an omni channel standpoint. So it was a little bit of an apple and orange, but it's what one of the the underlying goals is to look for an offset to the inbound freight cost.

Jay Sole -- UBS -- Analyst

Got it understood, very helpful. Thank you.

Operator

Thank you. And our last question today will come from Jerry Hamblin with Craig-Hallum.

Jerry Hamblin -- Craig-Hallum -- Analyst

Thanks, guys, and Congrats. I wanted to just see, because I think the response there was a bit muffled on the store cadence openings, just to see if we could clarify that again, I heard the 2027 new stores plan for the year. But you know, it looks like you're, you're tracking pretty nicely already on those openings. And it sounds like you're very confident on the total. Could you just clarify, you know, Greg, the the cadence of those openings?

James G. Conroy -- President and Chief Executive Officer

Jeremy, we think that that the store opening cadence is roughly, the three stores happened in q1, we think we'll get six or seven stores opened in q2, seven stores opened in q3 and the balance, either 10 or 11. stores will happen in q4.

Jerry Hamblin -- Craig-Hallum -- Analyst

Got it. And then we're gonna come back to the exclusive brands, which you guys have had so much success with. It's been a couple of years since the last time you really launched, you know, a new exclusive brand. wanted to just get a sense if given the success that you're seeing, given potential partnership opportunities, like you had, obviously with idle wind success, is that something that's potentially fiscal year 22 initiative? You know, Jim, are you going down that path of looking at, you know, maybe expanding the number of exclusive brands you have?

James G. Conroy -- President and Chief Executive Officer

So it's a great question it, the answer is yes, I wouldn't call it a current fiscal year initiative. There will be some of the new products and the new brands coming out before the end of the year. But any meaningful impact on the business will roll into next year, it's going to be a q3 or q4, before the product starts to come in. And just to give sort of some sense of what our sort of positioning will be, it harkens directly back to our segmentation, where we've added an explicit segment around a more country customer that's not hardcore Western. So we'll have a brand for that customer in both men's and ladies. And then on the western side, where we're looking to kind of further segment that a little bit.

So we'll probably add quite a few brands actually, on Western. And I think when we're when we're all done, we'll we'll outline maybe on a future call, sort of a portfolio of brands and how they're positioned by the goal here is to you know, continue to map back the brands that we offer in the store, either third party brands or Our own brands that map that back to how we're segmenting our customer base, attracting new customers and trying to take care of demand of current customers. So long winded answer to Yes, you should expect some new brands coming. Once they're more fully developed will will shine a light on them and kind of walk you guys all through them. And it should help us continue to grow that part of our business as we look to our fiscal 23. Business.

Jerry Hamblin -- Craig-Hallum -- Analyst

Great, thanks for that last one quick hitter on the debt. Is that something that you're looking to pay off here in the next 12 months? Is that and then potentially do we start looking at other other uses for capital allocation besides store openings and m&a?

Greg Hackman -- Executive Vice President, Chief Operating Officer and Chief Financial Officer

Jeremy, good question. We've what we've said is we you know, we want to first use our free cash flow to open stores and then to pay down our debt. So you know, consistent with that we're opportunistically paying down some of that term loans, added a little bit of capacity under the abl. And I think we'll continue to chip away at that.

Jerry Hamblin -- Craig-Hallum -- Analyst

Great, thanks. Great job, guys. Thank you very much.

Operator

Thank you, everyone. That concludes today's question and answer session. Mr. Conroy. At this time, I'll turn the conference back over to you for any additional or closing remarks.

James G. Conroy -- President and Chief Executive Officer

And thank you everyone for joining the call today. We're thrilled to speak with you on our second quarter earnings call. Take care.

Operator

[Operator Closing Remarks]

Duration: 77 minutes

Call participants:

Jim Watkins -- Senior Vice President, Finance and Investor Relations

James G. Conroy -- President and Chief Executive Officer

Greg Hackman -- Executive Vice President, Chief Operating Officer and Chief Financial Officer

Matthew Boss -- JP Morgan -- Analyst

Max Rakhlenko -- Cowen & Company -- Analyst

Jonathan Komp -- Baird -- Analyst

Stevens Akoni -- Citi Group -- Analyst

Janine Stichter -- Jefferies -- Analyst

Dylan Carton -- William Butler -- Analyst

Sam Poser -- Williams Trading -- Analyst

Peter Keith -- Piper Sandler -- Analyst

Mitch Kummetz -- Pivotal Research -- Analyst

Jay Sole -- UBS -- Analyst

Jerry Hamblin -- Craig-Hallum -- Analyst

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