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DATE

Thursday, May 14, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — John Hazen
• Chief Financial Officer — Jim Watkins

TAKEAWAYS

• Revenue -- $2.25 billion for the fiscal year, up 18%, with Q4 revenue of $539 million, up 19%.
• Same-Store Sales -- Annual consolidated same-store sales grew 7.2%; Q4 grew 6.1%; quarter-to-date in Q1 fiscal 2027 up 5%.
• Earnings Per Diluted Share -- $7.35 for the full year (up 25%), and $1.45 for Q4 (up 19%).
• New Store Openings -- 80 new stores opened in fiscal year; 25 in Q4, including 10 accelerated from early fiscal 2027.
• Merchandise Margin -- Expanded 80 basis points for the year; annual margin rate reached approximately 50.9% of sales.
• Exclusive Brand Penetration -- Increased by 220 basis points to 40.8% for the year and by 90 basis points in Q4.
• E-Commerce Comp Sales -- Rose 14.1% in Q4, with double-digit growth on bootbarn.com; new brand websites launched for Cheyenne and CLEO & WOLF.
• Loyalty Database -- 12.5% growth year over year, reaching 10.8 million total active customers.
• Inventory -- Ended the quarter at $845 million, up 13% year over year, with same-store inventory down slightly.
• Share Repurchases -- Repurchased approximately 287,000 shares for $50 million in fiscal year under a $200 million authorization.
• Fiscal 2027 Guidance (High End) -- Projecting $2.6 billion in sales (up 16%), same-store sales growth of 4%, exclusive brand penetration reaching 41.3%, and EPS of $8.64 (up 18%).
• Store Growth Outlook -- Planning 70 new stores in fiscal 2027; 13% growth rate expected.
• SG&A Expenses -- Q4 SG&A was $139 million, or 25.7% of sales, a 50 basis point improvement over prior year.
• Q1 Fiscal 2027 Sales Guidance -- High-end projection of $584 million and 4% consolidated same-store sales growth.
• Work Boots Performance -- Category delivered four consecutive quarters of accelerating same-store sales growth, ending with mid-single-digit comp growth in Q4.

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RISKS

• Jim Watkins stated, "While new stores opened within the past 5 years are ramping as expected. The inclusion of these newer locations and our comp base has reduced the proportion of fully mature locations in our sales base and increased occupancy costs as a percentage of sales."
• Company expects gross profit rate to deleverage by 20 basis points year over year, and buying, occupancy, and distribution costs are guided to leverage only at 10% same-store sales growth due to expansion and investment timing.
• Guidance excludes a potential $18 million IEEPA tariff refund that is "actively pursuing," representing a possible headwind if not received.
• First quarter fiscal 2027 earnings per share expected to be $1.71, slightly below prior year’s $1.74, with the statement, "We expect our first quarter fiscal '27 earnings to come in below last year, primarily due to an extremely strong first quarter in the prior year that creates a difficult comparison."

SUMMARY

Boot Barn Holdings (BOOT 1.89%) reported record annual sales, earnings, and store openings, while emphasizing the expansion of exclusive brands and the deployment of new e-commerce platforms. The company provided high-end guidance for fiscal 2027, including double-digit sales and earnings growth, higher exclusive brand penetration, and a disciplined pace for new store openings after accelerating part of the pipeline into fiscal 2026. Management explicitly referenced broad-based performance in both core product lines and channels, while highlighting that newer locations are impacting occupancy and margin dynamics. The company cited specific marketing events and digital initiatives as drivers for incremental customer acquisition and brand awareness.

• Hazen stated "majority of our top-selling styles in the stores have been in our assortment for more than 5 years," underscoring product longevity supporting repeat purchasing behavior.
• Work boots made up roughly 15% of sales, with a 200-300 basis point exclusive brand penetration drag in that category, impacting overall rate trends.
• Approximately 70% of new online customers for Cody James and hawx.com had not previously shopped any Boot Barn channel and some converted to Boot Barn customers.
• Boot Barn became the official boot retailer for Stagecoach and sponsored a festival stage, using both event marketing and Amazon’s streaming to broaden reach.
• SG&A projected to achieve 40 basis points of leverage in fiscal 2027, with expected annual marketing spend at 3% of sales, in line with historical levels.
• New stores averaged $3.2 million in their first full year, with payback under two years; recent store cohorts contributed 150 basis points to consolidated same-store sales.
• Watkins noted, "our business is more diversified than it used to be out of the oil and gas market," describing reduced dependency on energy-driven demand.
• Management expects that exclusive brand penetration could reach 50% of sales over several years, despite near-term variability due to successful third-party brands in select categories.
• Freight and fuel cost pressures were cited, but management highlighted negotiation-driven rebates and rate improvements "the negotiations that we've taken with some of our logistics partners, and that's really allowing us already to offset some of the surcharges that we're seeing as we get better discounts with our providers, even as the the core or the gross cost goes up, we're able to offset that. And so that's been a nice benefit to us right now." elevated expenses.

INDUSTRY GLOSSARY

• Exclusive Brand (EB): A private-label product line owned and developed exclusively by Boot Barn Holdings, Inc., designed to build margin and customer loyalty.
• IEEPA Tariff Refund: A potential refund related to Section 301 tariffs imposed under the International Emergency Economic Powers Act; recovery status still pending.
• USMCA: United States-Mexico-Canada Agreement, a regional trade agreement cited for tariff mitigation and sourcing strategies.
• AGOA: African Growth and Opportunity Act, a trade preference agreement referenced in the context of alternative sourcing and tariff management.

Full Conference Call Transcript

John Hazen, Chief Executive Officer; and Jim Watkins, Chief Financial Officer. A copy of today's press release along with a supplemental financial presentation is available on the Investor Relations 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 Investor Relations section of the company's website. I would like to remind that certain statements we will make during this call are forward-looking statements. These forward-looking statements reflect Boot Barn's judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting Boot Barn's business.

Accordingly, you should not place undue reliance on these forward-looking statements. For a 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 fourth quarter and fiscal 2026 earnings release as well as our filings with the SEC referenced in 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 John Hazen, Boot Barn's Chief Executive Officer. John?

John Hazen: Thank you, Mark, and good afternoon. Thank you, everyone, for joining us. On this call, I will review our fourth quarter and fiscal '26 results, provide an update on current business and discuss the progress we have made across each of our 4 strategic initiatives. Following my remarks, Jim Watkins will review our financial performance in more detail, and then we will open up the call for questions. Looking back on my first year as CEO, I'm extremely proud of our team's accomplishments.

Over the past year, the team has not only executed on our 4 strategic initiatives, but also exceeded the expectations on the 3 additional priorities I introduced: building the sourcing organization; marketing exclusive brands and stand-alone brands; and reinvigorating our work boots business. I would like to spend some time discussing each of these priorities. First, our sourcing organization ramped up throughout fiscal '26 is now fully built out. While we expect the run rate benefits of this team to begin to be realized late in fiscal '27 and during fiscal '28, the timing of this investment proved especially advantages. As the tariff landscape evolved, the team's mitigation efforts and factory negotiations helped drive margin expansion over the past year.

Second, we refined our opening approach to better position our exclusive brands as a stand-alone brands, resulting in sales penetration growth that exceeded our initial expectations. Over the past year, as part of these efforts, we have launched 4 dedicated brand websites of Cody James, Hawx, Cheyenne and CLEO & WOLF. These sites are in addition to the legacy [indiscernible] site we have had for many years. I am very pleased with the strength of our brand storytelling and the new customer acquisition these sites have generated. Finally, our working business exited this year with 4 consecutive quarters of accelerating comp sales growth and has maintained the momentum at the start of fiscal '27.

This performance reflects the impact of several initiatives, including enhancements to our in-store merchandising, increased marketing focus on the work category and targeted investments in key third-party brands to ensure we offer the right assortment for our work customers. Now turning to full year results. I am very pleased with our fiscal '26 results, which reflect strong performance across key metrics, broad-based strength across the business and unprecedented sales and earnings for the company. For the full year, revenue increased 18% to $2.25 billion, driven by continued momentum across the business. We opened a record 80 new store delivered same-store sales growth of 7.2%.

Merchandise margin expanded by 80 basis points, contributing to a remarkable 660 basis point expansion over the past 6 years. Earnings per diluted share grew 25% to $7.35, an increase of $1.47 compared to the prior year. Turning to our fourth quarter results, total revenue increased 19%, driven by the opening of 25 new stores during the period and consolidated same-store sales growth of 6.1%. While we had originally estimated 15 store openings in the fourth quarter, we were able to accelerate the opening of 10 stores that had initially been scheduled to open in early fiscal '27. Earnings per diluted share in the fourth quarter increased 19% compared to the prior year period to $1.45.

I am extremely proud of the team's accomplishments over the past year, and I'm excited about the opportunities ahead as we continue to drive growth in the business. Now turning to current business. Through the first 6 weeks of the fiscal first quarter, we have continued to see broad-based strength in same-store sales across all channels. On a consolidated basis, quarter-to-date same-store sales are up 5%, cycling high single-digit growth in the prior year period and we feel very good about the underlying momentum of the business and our start to the quarter. I will now spend some time discussing each of our 4 strategic initiatives. Let's begin with new store growth.

Our new store engine continues to deliver strong results across all regions of the country. Over the past 5 years, we have opened 267 stores, which doubled our store count at 539 locations at fiscal year-end. The 267 stores comprised half of the chain and contributed more than $750 million in incremental revenue to fiscal '26, exceeding our expectations on average for sales, earnings and payback. As a reminder, these stores on average are on track to generate approximately $3.2 million in annual sales in their first full year of operations and to pay back their initial investment in less than 2 years.

In addition to driving incremental sales and earnings, new store sales, new stores also helped drive same-store sales growth once they enter the comp base. Stores opened within the past 5 years, which as a reminder, have not yet reached sales maturity, added approximately 150 basis points to consolidated same-store sales in fiscal '26. Looking ahead, our new store pipeline remains strong, and we believe we are well positioned to continue expanding the Boot Barn brand for years to come as we progress towards our long-term target of 1,200 stores across the United States. Moving to our second initiative, same-store sales. Fourth quarter consolidated same-store sales increased 6.1% with brick-and-mortar same-store sales increasing 5.2%.

Store comp growth was driven by a low single-digit increase in transaction count and to a lesser extent, growth in average unit retail. From a merchandising perspective, we delivered broad-based growth across most major merchandise categories. Men's Western boots increased mid-single digits and ladies Western boots increased low single digits. While men's and ladies apparel increased double digits, led by low-teens growth in denim. Notably, the majority of our top-selling styles in the stores have been in our assortment for more than 5 years, underscoring the durability and consistency of our core offering. Our work boots business delivered mid-single-digit comp growth during the quarter, which, as I mentioned earlier, marks the fourth consecutive quarter of growth in this category.

From a marketing standpoint, the team continues to effectively balance advertising spend across channels to drive traffic to both our stores and e-commerce sites and expand overall brand awareness. In April, for the first time, Boot Barn served as the official boot retailer for Stagecoach, the world's largest country music festival. We hosted events at our local stores and onsite at Stagecoach and sponsored one of the festival's music stages. We are very pleased with this partnership and believe it will help drive incremental customer acquisition going forward. For fiscal '26, our customer loyalty database grew 12.5% year-over-year, reaching 10.8 million total active customers.

From an operations perspective, our field team continued to deliver best-in-class customer service while driving strong sales performance. This was particularly notable given the demand of this past quarter, including holiday recovery, heavy new store openings, rodeo season and our annual physical inventory. I would like to thank our field organization and the entire Boot Barn team for their continued partnership and outstanding performance. Moving to our third initiatives omnichannel. In the fourth quarter, e-commerce comp sales increased 14.1%, driven by double-digit growth on bootbarn.com. During the quarter, we launched dedicated websites for 2 of our women's exclusive brands: Cheyenne, our leading women's brand; and CLEO & WOLF, our country lifestyle brand.

We are pleased with the early results of these new launches as well as the enhanced storytelling capabilities the platforms provide, allowing us to continue to position and market out exclusive brands as stand-alone brands. From an AI perspective, the digital team continues to identify opportunities to increase -- to drive incremental traffic across online and in-store channels, leveraging AI to enhance the customer experience and further elevate the brand. AI is also being used to augment existing capabilities, improve efficiency and enable greater focus on higher-value work. Now to our fourth strategic initiative, merchandise margin expansion and exclusive brands.

For the full year, our merchandise margin increased by 80 basis points, significantly outperforming the expectations we originally had at the beginning of the year. Exclusive brand penetration increased 220 basis points for the full year to 40.8%, with fourth quarter penetration up 90 basis points. Over the past 6 years, exclusive brand penetration has grown by an impressive 1,900 basis points. Looking ahead to fiscal '27, we believe we have multiple drivers of ongoing merchandise margin growth in addition to our ability to further increase exclusive brand penetration.

We expect fiscal '27 exclusive brand penetration to reach 41.3%, reflecting an increase year-over-year of approximately 50 basis points as we lap strong growth from prior years and continue to drive growth in our work boots category with third-party vendors. We remain confident in our ability to expand exclusive brands towards our long-term target of 50% of total sales. I would like to now turn the call over to Jim.

Jim Watkins: Thank you, John. I'm very proud of Boot Barn's performance in fiscal '26. As our commitment to our 4 strategic initiatives, drove sales that exceeded $2.2 billion and delivered 25% earnings per share growth of $7.35. I am confident these strategies will continue to support both near- and long-term growth. Turning to the fourth quarter. Net sales increased 19% to $539 million. Consolidated same-store sales grew 6.1%, driven by a 5.2% increase in retail store comps and a 14.1% increase in e-commerce comps. Fourth quarter merchandise margin decreased 30 basis points, which outperformed our guidance.

Merchandise margin was driven by better-than-expected product margin expansion of 40 basis point [indiscernible], offset by a 70 basis point headwind from cycling low shrink and low freight expense in the prior year period. Buying, occupancy and distribution center costs deleveraged by 50 basis points, primarily as a result of new store occupancy costs, resulting in a gross profit decline during the quarter of 80 basis points. SG&A expenses for the quarter were $139 million or 25.7% of sales, which was a 50 basis point improvement over last year, but slightly higher than expectations.

Income from operations was $57 million or 10.6% of sales and earnings per diluted share increased 19% to $1.45 compared to $1.22 in the prior year period. Turning to the balance sheet. On a consolidated basis, inventory increased 13% year-over-year to $845 million and slightly decreased on a same-store basis. The increase in total inventory reflects the growth needed to support new stores, exclusive brands and inventory purchased at a volume discount. Overall, we feel good about the health of our inventory, and markdowns as a percentage of inventory remained below historical levels. During the quarter, we repurchased more than 68,000 shares of our common stock for an aggregate cost of $12.5 million under our $200 million share repurchase authorization.

This brings total repurchases in fiscal '26 to $50 million for approximately 287,000 shares. We ended the quarter with $141 million in cash and 0 drawn on our $250 million revolving line of credit. Turning to our outlook for fiscal '27. In establishing our sales guidance for fiscal '27, we utilized sales trends from February through April and applied the historical seasonality of our business to arrive at our sales forecast for the year. We also analyzed purchasing behavior across income segments and have not observed any meaningful divergence among low, middle and high-income customers at Boot Barn.

Our guidance reflects the trends we have seen from our customers over the past several months and does not consider potential impacts from changes in the macroeconomic environment. Additionally, our outlook excludes the potential recovery of approximately $18 million in IEEPA tariff refund that we are actively pursuing. The supplemental financial presentation we released today outlines both the low and high end of our guidance ranges for the full year and the first quarter. In my following remarks, I will focus on the high end of those ranges. For the full year, at the high end of our guidance, we expect total sales of $2.6 billion, representing 16% growth over fiscal '26.

We expect same-store sales to increase 4%, including a 3% increase in retail store comps and 13% growth in e-commerce comps. Merchandise margin rate is expected to be approximately 51.4% of sales, reflecting a 50 basis point increase year-over-year. We expect the growth in merchandise margins to be driven by buying economies of scale, moderated promotional activity, supply chain efficiencies and an increase in exclusive brand penetration. We expect gross profit rate to deleverage by 20 basis points year-over-year to approximately 37.9% of sales. We expect to achieve 40 basis points of SG&A leverage. We also expect income from operations of $353 million for 13.5% of sales, an increase of 20 basis points over last year.

Net income is projected to be $265 million with growth in earnings per diluted share of 18% to $8.64. Capital expenditures are expected to total $130 million, and we anticipate an effective tax rate of 25.7% for the year. We plan to open 70 new stores in fiscal '27 compared to our original plan of 80 stores as we accelerated the opening of 10 stores into fiscal '26. Store growth in fiscal '26 actualized at 17%, and we anticipate 13% growth in fiscal '27, resulting in a 2-year average growth rate of 15%.

From a timing perspective, in addition to the 10 stores that were accelerated into the fourth quarter, we now expect to open approximately 25 stores in the first quarter of fiscal '27 with the remaining 45 stores anticipated to open relatively evenly throughout the balance of the year. Turning to our leverage points for fiscal '27. We expect to leverage income from operations at 3% consolidated same-store sales growth. We expect to leverage selling, general and administrative expenses at 2% same-store sales growth. As outlined in our supplemental financial presentation on Slide 9, our accelerated store growth over the past several years, combined with our planned fiscal 2027 openings continues to put pressure on occupancy costs.

While new stores opened within the past 5 years are ramping as expected. The inclusion of these newer locations and our comp base has reduced the proportion of fully mature locations in our sales base and increased occupancy costs as a percentage of sales. Importantly, average occupancy cost per store has remained relatively consistent, and we expect continued maturation of newer cohorts to support same-store sales growth and margin performance over time. In fiscal '27, we plan to open 2 high-traffic, high-visibility stores that we expect will generate outsized sales volumes relative to our typical new store model.

These locations also carry higher preopening costs, including noncash incremental straight-line rent expense due to earlier than average possession dates and longer build-out periods. As a result, we will incur several additional months of occupancy expense at elevated costs with one of these stores not expected to open until later in the fiscal year. Additionally, we are annualizing the investment in our sourcing organization which ramped up during fiscal 2026. As John mentioned earlier, we have already realized many benefits from this investment, including tariff mitigation and improved factory negotiations and expect to see the sales from higher-margin products begin to materialize towards the end of fiscal '27 and into fiscal '28.

Finally, we continue to invest in our distribution centers to support ongoing growth. This year, we're annualizing the extension of our legacy California distribution center lease that was executed midway through last year and are continuing to deploy capital across all 3 distribution centers to enhance capacity and efficiency. These investments support new store expansion, growth in exclusive brands and margin opportunities through volume-driven purchasing and inventory optimization. As a result of the continued addition of new stores to our sales base, and these focused investments, we anticipate a higher hurdle rate this year on buying, occupancy and distribution center costs with expected leverage at 10% same-store sales growth.

While these initiatives create near-term pressure on buying occupancy and distribution center costs, we believe they will position the business to drive further sales growth and margin expansion over the years to come. Although we anticipate ongoing pressure on occupancy rate as we invest toward our long-term target of 1,200 stores across the U.S., we expect to offset this pressure through merchandise margin expansion and SG&A leverage consistent with recent years. Now turning to our first quarter guidance. We expect total sales at the high end of our guidance range to be $584 million and a consolidated same-store sales increase of 4%.

We expect merchandise margin of approximately 51.5% of sales, representing a 60 basis point decline year-over-year, but a 120 basis point increase on a 2-year stacked basis. This guidance reflects 10 basis points of product margin growth as we lap 100 basis points of product margin expansion in the prior year period, offset by a 70 basis point increase in freight expense as we cycle low freight costs last year. Our outlook assumes current freight rates that while higher year-over-year are consistent with the fourth quarter. We expect the year-over-year freight pressure to moderate as the year progresses and anticipate a 10 basis point decrease in freight expense for the full year.

While we have seen increases in container cost and increased fuel surcharges for domestic shipments, assuming the freight rates and fuel surcharges, they are roughly in line with where they are today, we expect this pressure to be more than offset by improvements in our supply chain and logistics pricing. We expect gross profit of approximately 37.3% of sales, including 120 basis points of deleverage in buying, occupancy and distribution center costs for the first quarter. SG&A for the first quarter is expected to be approximately 25.5% of sales, representing 40 basis points of deleverage year-over-year.

This increase is largely driven by the timing of marketing expenses which are more heavily weighted towards the first quarter of this year, primarily as a result of our new Stagecoach sponsorship and related events. For the full year, marketing spend is expected to remain in line with our historical level of approximately 3% of sales. In addition, SG&A reflects incremental expenses associated with store growth, including 26 grand opening events this year in the first quarter compared to 18 last year as well as preopening store labor for 25 new stores this year versus 14 in the prior year.

We expect income from operations of $69 million or 11.9% of sales and earnings per diluted share of $1.71 compared to $1.74 last year. We expect our first quarter fiscal '27 earnings to come in below last year, primarily due to an extremely strong first quarter in the prior year that creates a difficult comparison. Looking ahead, second quarter fiscal '27 earnings are expected to be in line with first quarter fiscal '27, resulting in strong year-over-year growth given last year's second quarter was comparatively smaller than the first quarter versus typical historical cadence.

Overall, we are confident in our fiscal '27 guidance, our solid start to the first quarter and the ability of our team to execute on our financial plan. Now I would like to turn the call back to John for some closing remarks.

John Hazen: Thank you, Jim. I am very pleased with our performance in fiscal '26 and the start of fiscal '27. Our team continues to execute at a high level, and I believe we are well positioned for another year of growth. I want to thank our entire team across the country with our hard work, dedication and unwavering commitment to serving our customers and building the Boot Barn brand. I would now like to open the call for questions.

Operator: [Operator Instructions] The first question comes from Matthew Boss with JPMorgan.

Matthew Boss: Congrats on another nice quarter. So John, on first quarter to date, running 5% comps, can you elaborate on the consistency of demand that you're seeing whether it's across categories or regions despite May facing your toughest compare of the quarter and the first quarter facing your toughest compare of the year.

John Hazen: Yes, absolutely. Looking at the first 6 weeks of Q1, we're very happy with how broad-based the comps and the growth has been. We're seeing across most major merchandise categories, notably work boots are trending up in the high single digits. We're seeing nice performance in denim, men's Western boots as well and women's apparel. The one -- to your point, the one soft spot is women's boots is a little softer going up against such strong comps in Q1 of last year in the mid-teens. But other than that, if we look at it by geography and all other major merchandising categories, it is broad-based.

Matthew Boss: And then just a follow-up. So John, as we think about 7.2% comps this year, I mean, that's actually consistent with 7%-plus pre-pandemic performance. Could you speak to the durability of the top line drivers that you think you have remaining and the outperformance relative to the 2% to 4% historical target. If you could just walk through maybe the structural expansion of the total addressable market that you've seen?

John Hazen: Yes, absolutely. We've proven over and over again, of course, that we can comp the comp, and we have exceeded that, to your point, I think there's a couple of things going on. One is the resiliency of our customers and the product that they're buying that they need to buy each and every quarter. And we continue to be a need-based business. And as we said in the prepared remarks, which is kind of new news is the majority of what we sell of our top sellers are products that have been in the line and in the stores for more than 5 years. Beyond that, we've become more of a denim destination as we've said in the past.

I think if you walk into a Boot Barn for the first time, and I hear this on a regular basis when I'm in the stores and doing store visits across the country, people say, "Hey, I've only just recently discovered Boot Barn. I can shop here on a regular basis. It's not only for that need base customer," and I think we're taking denim market share from some of the mainstream players who have struggled over the years, and we can service those customers who perhaps aren't part of that need-based segment, but instead have found us and realize we can be more of a lifestyle or general retailer to them.

Operator: The next question comes from Max Rakhlenko from TD Cowen.

Maksim Rakhlenko: Great. So just first question is, can you elaborate a little bit further on how we should think about the freight headwind throughout the year? You gave us the 1Q some of the guidance. But just the rest of the quarters, what's a good way to think about it, especially if any of the costs were to increase from here? And then just remind us how you capitalize some of the freight expenses.

Jim Watkins: Sure. so while we're not going to provide the freight numbers as we get throughout the year, the freight in the first quarter -- if you go back to last year, we had really nice freight benefit in the first quarter, and then we had a freight headwind in the second quarter. As we lap that, we would expect to see in the second quarter a freight tailwind, assuming all things being normal in this freight environment. And so -- and then as we get into the back half of the year, that should be flattish to get us to a 10 basis point improvement on freight year-over-year.

As you think about how we capitalize freight, we turn our inventory roughly twice a year. And so as we incur freight expenses, we capitalize those and extend some over a 6-month period. And so if there were to be elevated freight costs that were to come in over the next 6 months, we would see those go through our P&L in the back half of the year. And so that's roughly how we manage it now.

Maksim Rakhlenko: Got it. That's helpful. And then I think one of the lessons that we learned last year is that maybe your customer shows less elasticity to you guys taking price. So does that give you more optionality this year as you look to potentially offset some of the transportation or other price increases that we're seeing? And then within that, you did take less price on EBs than national brands. So just curious if there's an opportunity this year to catch up on that?

Jim Watkins: I think let me just keep on the freight for just a quick second, and John can jump in on talking about our pricing strategy for the year. But the -- some of the things that are allowing us to offset some of the increases that we've seen already are the negotiations that we've taken with some of our logistics partners, and that's really allowing us already to offset some of the surcharges that we're seeing as we get better discounts with our providers, even as the core or the gross cost goes up, we're able to offset that. And so that's been a nice benefit to us right now.

If you look at container costs, well, they've been elevated over the last couple of months, they're still relatively low compared to what some of the spikes we've seen over the last 3 or 4 years. And so it would have to get pretty outsized on the container cost for us to feel that in the material way this fiscal year. I don't want to forecast what's going to happen with freight and fuel costs, but we did want to convey that we've got kind of the current run rate model then for the balance of the year? And anything that kind of accelerates from here or elevated from here is not contemplated in the back half of the year.

Maksim Rakhlenko: Thanks, Jim. And then if we look at our pricing strategy on third party as well as exclusive brands, the best way to put it is we're back to kind of normal business and normal cadence of business and price increases. We got through the holiday season. We completed our price increases on our exclusive brands. We continue to see nice performance with exclusive brands. And every summer, we see some price increases from some of our third-party vendors. And it's really business as usual at this point. i.e., to tariffs struck down to 10%, deemed unlawful but still in place. We're kind of running business right now business as usual from a pricing standpoint.

Operator: The next question comes from Steven Zaccone with Citi.

Steven Zaccone: Great. Congrats on a nice quarter and nice year. I wanted to follow up there, just thinking about same-store sales. Could you help us just understand in the quarter-to-date performance, what is the transaction versus ticket? And then to follow up on the earlier question, how do you think about the outlook for transaction versus ticket this year? Obviously, your transaction compares are tougher in the first half. So how do we think about that over the of cadence of the year?

Jim Watkins: Sure. As we look at it for the first weeks of the fiscal year, it really is how we believe it's going to play out for the remainder of the year. We're up roughly 3% in AUR for the first 6 weeks. And from an ADC standpoint, we're up roughly -- or transactions rather, excuse me, were up roughly 1%. And so we think we'll be 0% to 1% on the transaction side and 2% to 3% on the AUR side.

Steven Zaccone: Okay. And then you mentioned opening 2 stores that are high visibility, high traffic kind of curious where they're going to be. And then in terms of the 70 store openings this year, can you just help us understand, how you think about new markets versus existing markets in that store opening plan?

Jim Watkins: Absolutely. So one of the stores, the bigger or more expensive one is in on the strip in Las Vegas. And the second one is in the market in Southern California. As far as the 70 stores that we're planning opening this year, we often struggle as we think about a new market versus an existing market and number of stores that are going to be 40 miles plus away from an existing store is the majority of the 70. There are some that will open that are in closer proximity, particularly in bigger metropolitan markets that can be 10 miles apart or even closer, there are -- yes, several of those that we'll plan on opening this year.

Operator: The next question comes from Peter Keith with Piper Sandler.

Peter Keith: Congrats on the continued momentum here. With the subject of gas prices, there was a time years ago where Boot Barn actually might do better in a period of higher oil prices. I was wondering kind of where you stand today and how you think about the impact of higher oil prices, higher gas prices if these stay sustained. And specifically, anything you're seeing in Texas as maybe one market that's potentially seeing a lift?

Jim Watkins: Sure. I think generally speaking, if you're thinking about this from the input cost of things, clearly higher freight or higher fuel prices lead to higher freight costs, and that's something that puts some pressure on the model and often requires increases in pricing. If you're asking the question around our consumer, which I think those were the discussions we had -- we've had with Peter over the last 10-plus years, our business is more diversified than it used to be out of the oil and gas market.

There is a thought that there is a -- as we drill more in the U.S. or we do more fracking in the U.S. and we bring more of that oil production and refinery here into the U.S. that there could be a benefit our core customer and some of the markets that -- while we're less penetrated than we used to be, we overpenetrate compared to many other retailers. And so there is the potential that, that could be a benefit to certain folks.

As far as what we're seeing right now, there's not anything that we're seeing in our business by geography that would lead us to believe that there's an impact that's helping us right now in those markets.

Peter Keith: Okay. Helpful. And then maybe for John, so congrats on the Stagecoach presence. I know some of the online feedback was that you guys were one of the stronger brands at that festival. Should we about that as a Q1 impact to sales? Or do you think that branding was positioned that there is more of a sustained benefit over time?

John Hazen: Thanks, Peter. Yes, that was a nice review of the brand that kind of own Stagecoach. That was really nice to see. We -- I was at Stagecoach. I spent 2 days, 1 day at our stores at stores, 1 day at the event, and 1 day watching the streaming side of it, which I -- was the part that I was most excited about. I thought we did an incredible job in Southern California and for the folks who come in from Arizona and Nevada to come to Stagecoach. Our store event was great. Our on-site event at Stagecoach had lineups every single day. It looked amazing. But the best part was the Mustang stage presented by Boot Barn.

It was a new stage for Stagecoach, had bands -- some kind of retro bands on their Diplo, Counting Crows, Bush, Third Eye Blind. And it was streamed by Amazon. And so it was that amplification that we saw in the number of folks watching the Stagecoach festival far beyond Southern California, turning it into a national or even argue a global event that most excited me. So I think this is going to be over the long term, more and more folks across the country and the world, recognizing the brand name. And we're already working on how we're going to be louder on that Mustang next year in partnership with the [ ABG ].

Operator: The next question comes from Janine Stichter with Jefferies.

Janine Hoffman Stichter: It's Janine Stichter with BTIG, and I was hoping you could talk a little bit about the exclusive brand strategy over 40%. How you see that evolving? It definitely seems like you've made some big investments behind the private brands, but at the same time, often seen you add some new third-party brands. So if you could just weigh in there on how you're thinking about that. And then just on the guidance, I wanted to clarify, typically, I think you take the prior 6 to 8 weeks or so of volume and then kind of run rate that through the year, macro you've...

John Hazen: Yes. I'll take the first part, Janine, and then I'll pass it to Jim to talk to kind of how we came up with sales. On the exclusive brand side, it has always been a little lumpy. Again, we had guided 100 basis points last fiscal year, penetration going from 38.6% to 39.6%, and we nicely exceeded that by 120 basis points. We are marketing those exclusive brand sites and seeing some nice business come through those sites. So I'm still very optimistic about the growth and our march forward 50% exclusive brand penetration over the next several years.

That being said, we are having some success with some third-party brands, especially in the workspace that is putting some pressure on the overall expensive brand rate. So that's why it's a little lower this year than we have seen, but we are fully confident that we will get to 50% exclusive brand growth over the next several years.

Jim Watkins: And Janine, on your guidance question, you got cut off or something happened. Do you mind repeating that, please?

Janine Hoffman Stichter: Sure. I was just asking about -- typically, you have the formula where you take the last, however, many 6 to 8 weeks of store volumes and run rate it through annually. And I think last year, you gave a bit of a haircut due to macro? How are you thinking about the macro embedded in that, the formula this year?

Jim Watkins: Yes. So we did take a similar approach. We took February, March and April and extrapolated that over the balance of the year. What we did different when compared to last year is we did not take a haircut from that guidance. And so the guidance that is laid out there is the guidance as the math works out in that extrapolation.

Operator: The next question comes from Jonathan Komp with Baird.

Alexander Conway: This is Alex Conway on for Jon. I just wanted to ask, when you -- I know you mentioned not having seen really consumers across any income cohort pullback. When you kind of look at March and April, the comps, especially for the in-store just pulling back a little bit from February and January and starting to see that come back here in May. Anything stand out that is necessarily driving that change?

John Hazen: No. When we look at the comps in store, we look at it by cohort, we're not seeing anything in one income bracket and one geography and one occupation that stands out. There's no kind of "K-shaped economy impact" happening to our business. But we are up against some strong comps from last year. And so we're quite happy with the comps we're seeing in store and online, and we're sitting at a plus 5% right now. We've guided the year at a plus 4%. So we feel good where the business is. We just know we're up against some of the toughest comps of last year.

Alexander Conway: Great. That's super helpful. And then just one more kind of on the sourcing side? I know you mentioned you should start to see some benefits in the second half of this year. Just beyond just the tariff offsets, what are you really kind of sharpening there to get those benefits? And then is there any potential of product cost increases given the current oil environment?

John Hazen: We've asked that question of the sourcing team very recently and nothing dramatic happening on the raw material side right now. That's worth calling out. When we look at how we're going to attack sourcing and our mix across the globe as we enter the next phase of tariffs, we are trying to leverage USMCA. So we've started to move certain products, more products to Mexico, we're essentially duty free. We're also looking at other duty-fee countries that are part of other agreements, such as AGOA in the Africa region and multi-sourcing products that we may have always had in a particular Asian country and then sourcing it in alternative countries.

So it's always a very fluid situation, but we -- and I meet with the sourcing team once a week, we feel great about how they are bobbing and weaving, so to speak through the tariff environment. Jonathan, does that answer your question?

Operator: The next question comes from Jay Sole with UBS.

Jay Sole: John, I want to follow up, if possible, on the exclusive brands. You talked about 50% penetration, but I'm interested in sort of the stand-alone opportunity given that the stores and the websites that you have and what you've learned over the last 90 days, that might inform your vision for the stand-alone side of what the exclusive brands could be and where you might take those going forward?

John Hazen: Yes. There's nothing planned for this fiscal year is going to be kind of business as usual outside of these sites. I think these exclusive brand sites will grow some nice business, and we'll continue to market them both in traditional digital methods such as Google PPC as well as Tiktok, and we are seeding influencers with thousands SKUs from our exclusive brands. So we're going to continue to push exclusive brand marketing as you would at any other stand-alone brand throughout the year. So that has a lot of momentum and energy behind it.

Well, we're not planning for this year, but I think about, and I've said this before often is, at some point, distributors internationally and whether it be in Canada or Australia or something I would consider. Would we ever take a particular category and wholesale it to a particular retailer? Possibly. So I do think there are other growth drivers. Our commercial accounts business would be another place where we could skew towards exclusive brand. So I think there are other growth levers beyond the marketing, the exclusive brand sites, making the brands more recognizable, more coveted. We're doing all those things this year.

As I look forward to the next couple of fiscal years, I think some of those other growth levers will start to come into play, but they're not in fiscal '27.

Jay Sole: Got it. If I can just follow up on one. Do you need to add extra infrastructure in terms of supply chain capabilities or IT capabilities to be able to maybe do some of those things, not this year, but next year, whether it's distributors or international or some of the other ways that maybe you could drive the exclusive brands?

John Hazen: Yes. I've had experience architecting these deals in a past life. And the way we've always done it and we will do it here is you'd have 1 customer in each country, the distributor and the orders would peel off at the source. And so we won't store it here, we won't ship it from here, and it would go directly to that distributor. So it is very, very light in the way I've done in the past life from a footprint and resource standpoint.

Operator: The next question comes from Chris Nardone with Bank of America.

Christopher Nardone: We just have a few margin follow-up questions. First, on gross margin. Can you just elaborate on the sustainability of this 10% buying occupancy leverage point beyond this year as you hold this level of unit growth? And then on SG&A, it looks like you're getting about 20 basis points of leverage for each point of comp. If you continue to flow through better comps than what you're initially expecting, is there a good rule of thumb on how we can think about the incremental SG&A leverage as we also try to think about incentive comp potentially moving around?

Jim Watkins: Yes. No problem. On the second question on just the flow-through of a beat to our guidance, we typically model in a 35% flow through to income from operations or EBIT on the beat. I think your math on the SG&A leverage also gets you probably to a pretty similar spot as you model that forward. As to the 10% same-store sales required to leverage buying occupancy and distribution center costs. As we get into next year, I would expect that to go down because I'm not anticipating having some of these other one-time or special investments that we talked through, particularly those 2 stores and the cycling of the lease amendment in our Southern California distribution center.

And so I would expect that to go back down a couple of points.

Christopher Nardone: Okay. Got it. And then just a quick follow-up on the digital comps. Can you just remind us how much these new exclusive brand websites you've launched over the last several months have contributed to that digital comp and just remind us of the cadence of how we should think about lapping each launch throughout the fiscal year?

John Hazen: Yes. We had mentioned on one of the last calls that -- and we had 2 sites at that point that they were contributing 1/3 of the e-commerce growth. It's a little cloudier right now. We are testing several different initiatives around the different sites. Some of them are much bigger. Cody is much, much bigger than CLEO & WOLF as an example. So it's still undetermined how much of it will be part of the growth for e-commerce.

Operator: The next question comes from Corey Tarlowe with Jefferies.

Corey Tarlowe: Yes. John, you made a comment about work boots and third parties? Or I guess could you just clarify what it is that you meant around kind of that comment or that dynamic? Just curious there.

John Hazen: Yes. We have seen some great sell-through from some of our 30 brands that we have bought. We're retailers. So we're going to provide what a customer wants to buy and sell them what they want from a product standpoint. And we have seen some nice sell-through from several. This isn't one brand, several work boot brands on the Lace-Up side as well as on the Pull-On side. And so there's a little bit of rebalancing as part of this work reinvigoration that's happening as we bring in some of these fast selling third-party brands.

And of course, when we do that, we're going to take a little bit of a hit on our exclusive brands on the work boot side. So that work boot brand EB penetration or exclusive brand penetration will be a bit of a drag on the overall exclusive brand penetration this year.

Corey Tarlowe: Okay. Got it. And then is there any way to kind of size up how that plays into the expectation for this year where you guided, the exclusive brand penetration? And then just to clarify, Jim, I think you made a comment as well, basically, it sounds like freight actually is getting to the full year, it's like a 10 basis point improvement, but one would think that in an environment where freight costs are more elevated, but there would be, I guess, an incremental negative. And I recognize that you're lapping higher cost. Is that simply all that is? I'm just curious how that is working out in the math.

Jim Watkins: Yes. On the free and it's really a function of some of the negotiations with our logistics partners that we've been able to work out and getting our rates down, higher discount, maybe a better way to explain a higher rebates, better rate as we have increased in volume with those suppliers. And so the improvements that we've seen in negotiations are helping to offset or even more than offset some of the rising costs that we're seeing.

And again, to be very clear, we're not assuming rates to exceed what we're seeing today, which they are elevated from what we had a year ago, but in an environment when those continue to rise and get significant or they don't go back down, they're prolonged at this point. The 10 basis points could be something less than 10.

John Hazen: And then back to your first question on work boots and the impact of those third-party brands and a growth of 50 basis points. We're comfortable with the growth of 50 basis points of EB penetration for this fiscal year, it contemplates the rebalancing of the work boots. As a reminder, work boots make up roughly 15% of our sales. And so that implies that there's going to be a decrease by 200 to 300 basis points of EB penetration on the work boot side. But the rest of the business, we're very pleased with how exclusive brands are progressing.

Jim Watkins: And this isn't something that's new to this year, Corey. Every year, we'll have some fluctuations in different categories on exclusive brand penetration. So usually, they're going up. Sometimes they're going down, they're rebalancing as we cater to what the customer wants. And so not something that we're concerned about. But as we look at the long-term growth of the exclusive brands, it's something that we've seen in the past as well.

Operator: The next question comes from Sam Poser with Williams Trading.

Samuel Poser: I got 3. They're pretty simple. One, can you just give us the breakdown of the store the store and the e-com year-to-date comps, just the 2. Number two, is -- what regions -- somebody asked earlier about new markets. But could you talk about regions that you're focusing on with the new store openings? And then lastly, what I view as the most important question. You've done a great job of narrowing your assortment in apparel. I'm hearing from -- talk to some of your vendors that you're working on the same thing in footwear, getting more focused on key items. Where are you on that journey? How is it helping?

How long will it take to get where you're going?

Jim Watkins: Sure. So in the release, Sam, we've got the e-comm and the retail store comps broken out by months. So in April, retail comps were up 3.8%. E-commerce was up 18.3%. And in the most recent 2-week period, they're both up about 5%. And as far as the regions, I'd love to give you the road map, Sam. But unfortunately, on this public call, particularly, it's a little hard for competitive reasons for us to lay out where we're planning on going with the stores. And so we'll have to refrain from sharing that right now.

John Hazen: And then Sam, on the third question, you're correct. We had really last holiday season kind of leaned into that depth in denim and apparel. If I think about where we are on boots, we're having -- I've got some great examples of where that has also occurred on some very, very popular boot styles in everything from work boots to women's to men's Western. If I had to put it in an inning, we're probably in the fifth or sixth inning of that focus in boots. It takes a little longer for the vendors or our own factories to be fair to go as deep as we are able to do in denim for example, overseas.

So I think there's still opportunity on the boot side. But I think what we did with the merchandising teams in denim over the last 12 months kind of open our eyes to those opportunities in boots as well, and I hear them talk about it weekly in our merchandising meetings how they're doubling down and having more than one size run of a particular style. And we know, this was going to work, let's have 2 or 3 size run in a particular store. So that philosophy has trickled through into the boot world from what we started on the soft goods with the denim.

Samuel Poser: And is that helping your conversion rates as you can see it, do you think? Or I mean -- and if you do that better, that should theoretically improve your conversion rates and increase your inventory churn as the old stuff goes away. Is that fair?

John Hazen: That's absolutely fair. We're still -- the conversion, we still have stores that are not comp from a conversion standpoint. So it's a little muddy. And when you look at conversion for one particular category, albeit a big one with boots, here the denominator, of course, is all the traffic. But yes, you're absolutely right.

Operator: The next question comes from John Keypour with Goldman Sachs.

Jonathan Keypour: I have a couple of questions. The first is just, the cadence of the comp through the year. Just looking at 2-year stacks on a monthly basis, it seems like there's been acceleration in April and May, at least and a little bit before that, too. So I'm just wondering where the conservatism for the 2% to 4% in the quarter and the 2% to 4% in the year. I understand like July obviously is going to be a pretty meaty comp, but May was almost in line with July, and it still did a 5%. So I'm just wondering why the temperance on the 4 at the high end. And I've got some follow-ups.

Jim Watkins: Yes. The cadence throughout the year, the way we planned it is pretty consistent quarter-to-quarter. And you're right, we've got a plus 5% that we're sitting on here for the first 6 weeks, and we're guiding at the high end of the range for the first quarter at 4%. What would -- I'll share with you that the second half of May, so the second 2 weeks of May last year, we're at plus 14%. And so we have a tougher part of the comps ahead of us as we look through these next 2 weeks. And as you can see, as you pointed out, pretty strong comps as we get to the year.

So we're not afraid to comp the comp. We've done this in the past. I think it will be a pretty even comp. At least that's how we're modeling it for the year.

Jonathan Keypour: Got it. And then presumably, the 2 high-traffic stores you mentioned opening this year, right? There's going to be some elevated costs around that. Just wondering how we can think about the cadence of those costs layering in? It seems like 1Q is going to bear some of that brunt, but I'm not sure exactly. So any clarity there?

Jim Watkins: Yes. Both of those stores are taking more of that expense in this first quarter. One of those stores will open within the quarter and the bigger of those will open later this year. And so I think it's relevant to call out on the full year that it put some pressure on it. I think for modeling the buying and occupancy throughout the year, there are a lot of other things that weigh into the deleverage in each of those quarters more than those 2 stores.

Jonathan Keypour: Okay. And then -- all right, that makes sense. The last one is just on tariffs. I'm not sure if you guys were explicit. I assume that at the moment, you guys -- the guidance is factoring in 10%, just not sure in the back half of the year, are you expecting that through whatever mechanism it jumps back up to the pre-SCOTUS ruling tariffs?

Jim Watkins: It's really a plan of the 10% that's in there for right now. And then we will adapt to whatever tariff environment comes at us similar to what we did last year, if we need to raise prices because we're seeing price increases, and that's something we'll do. My expectation is that barring some significant changes in the tariff environment that the pricing will stay pretty well in check for this year, at least those are the early reads we're getting from our vendors.

Operator: The next question comes from Jeff Lick from Stephens.

Jeffrey Lick: John, on the last call, you talked about how sales like Cody James and hawx.com, the third-party environment or the direct environments, you were seeing customers that you had never seen before. And I was just curious if you could give an update if that's still happening? And then have you had any success converting them into regular Boot Barn store customers?

John Hazen: Yes. Yes and yes, we are still seeing many of -- the majority of customers. Roughly 70% of them are customers who have never shopped with us in-store, on bootbarn.com or any of our other channels. So they are net new customers to the brand, and we're seeing many of those then shop at Boot Barn. When you order product from us, we don't hide the fact that the packaging says Boot Barn, Sheplers, Country Outfitters. We let people know that this is coming from Boot Barn. We don't try and shield that and create unique packaging for each of the sites.

And so I think the awareness to Boot Barn is coming to those customers and how they're getting their packages delivered to them. I don't have the number right in front of me of how many of them convert to Boot Barn our customers, but we are absolutely seeing it happen.

Jeffrey Lick: And then just from a digital perspective, what's kind of been the preferred or the most effective mechanisms you've been using to drive that kind of methodical marketing?

John Hazen: For the exclusive brands, it has been social. It's been Meta and Tiktok and it is their -- it's the algorithm, right? They have an uncanny ability to target folks and find new customers for you. That's why we kind of plow those marketing dollars into those companies. And the other piece of it, if you think about Meta and TikTok is the one place where a customer doesn't mind being interrupted by product discovery or an ad for a new product. We're even on YouTube, you could argue that it is disruptive to the experience they're having and that really isn't true when you're on TikTok or Instagram.

And so the combination of the medium and how people use it, and how good the algorithm is at helping find new customers for us. That's where we're putting a large chunk of the marketing dollars for exclusive brands.

Operator: The next question comes from Jeremy Hamblin with Craig-Hallum.

Unknown Analyst: This is Will on for Jeremy. Just wondering if you're able to quantify the total weather impact you saw in Q4 inclusive of the February storms. And then if there's anything to note on the Easter shift, if that was a benefit at all to Q4?

Jim Watkins: We did not quantify the total weather impact on Q4. We had some discussion on our last call, just early reads, but not something that we reported on for the full quarter. And on the Easter impact, there was no real shift that we could see -- I'd say, shift we can see. We see the Easter shift and what happens around that, but that was all contained within the quarter. But the thing that often gets a little hard to read through different spring breaks across the country as people are off for different times depending on where that falls in the year, Easter or around the Easter or not. But nothing we're calling out.

Operator: This concludes our question-and-answer session and the Boot Barn Holdings Inc. Fourth Quarter 2026 Earnings Call. Thank you for attending today's presentation. You may now disconnect. Thank you.