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Why Shares of Boot Barn Are Falling Today

By Lou Whiteman – Feb 5, 2020 at 2:01PM

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A slight miss to earnings slows this retailer's momentum.

What happened

Shares of Boot Barn Holdings (BOOT -2.94%) fell nearly 10% on Wednesday following the retailer's quarterly earnings release. The results weren't terrible, but Boot Barn came into earnings priced for perfection.

So what

After markets closed Tuesday, Boot Barn reported fiscal third-quarter earnings of $0.81 per share on revenue of $284 million, compared to analyst expectations for $0.82 per share in earnings on sales of $282 million. Net sales increased 11.8% in the quarter, and same-store sales were up 6.7%. The company also grew its e-commerce sales 11% year over year.

The interior of a retail mall.

Image source: Getty Images.

The company said it expects fiscal fourth-quarter earnings of $0.36 to $0.38 per share, compared to the $0.39 consensus, and full-year fiscal 2020 earnings of $1.67 to $1.75 per share compared to the consensus estimate for $1.82.

The earnings result and forecast were short of expectations, but they were only a penny off and showing strong growth in a difficult retail environment. The issue might be that shares of Boot Barn, a company focused on western apparel and heavy-duty work wear, were up 162% in 2019. After such a strong run, investors tend to be more prone to run for the exits at the first sign of trouble.

Now what

Boot Barn expects to open or acquire 25 stores during the current fiscal year and upped the full-year same-store sales growth guidance to 7% from 6.5%. This is a company that continues to perform well.

Even after Wednesday's decline, shares of Boot Barn aren't on the clearance rack, trading at a fairly rich 24 times earnings. But if the sell-off continues, Boot Barn could be worth a look.

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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