Please ensure Javascript is enabled for purposes of website accessibility

Why Boot Barn Holdings Stock Fell 27% in February

By Jeremy Bowman - Mar 6, 2020 at 7:22PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the retailer sold off on a disappointing earnings report.

What happened

Shares of Boot Barn Holdings (BOOT -1.48%) tumbled last month after the western-themed retailer delivered a disappointing third-quarter earnings report. According to S&P Global Market Intelligence, the stock finished the month down 27%.

As you can see from the chart below, the stock sank early in the month after the report came out.

^SPX Chart

^SPX data by YCharts.

So what

Boot Barn stock fell 10% on Feb. 5 and continued to slide after the retailer posted a disappointing earnings result and offered weak guidance in the third-quarter earnings report. Same-store sales in the quarter rose 6.7%, the 11th straight quarter of positive growth in the category, showing that the model continues to generate traffic. Overall, revenue rose 11.8% to $284 million, which matched estimates. 

A pair of cowboy boots in a dark wood space

Image source: Getty Images.

Margins continued to expand within the business, and adjusted earnings per share increased from $0.66 to $0.81, though that missed estimates of $0.85. 

CEO Jim Conroy was pleased with the quarter, saying, "We continue to experience nice gains in the business due to effective marketing, compelling merchandise assortments, and great selling and service in the stores."

Boot Barn's fourth-quarter earnings guidance also missed the mark slightly. For the current quarter, the company expects comparable sales of 5% and earnings per share of $0.36-$0.38, which was below the consensus at $0.40. Even so, it raised its full-year earnings-per-share guidance from $1.67-$1.75 to $1.81-$1.83.

Now what

Boot Barn stock has also slipped on coronavirus concerns as the stock is down about 16.7% since the sell-off began two weeks ago as retail stocks have been hit hard by the news. Like other retailers, Boot Barn imports a significant percentage of its merchandise from China, so the company could be sensitive to any supply-chain disruptions. 

However, as a growing, niche brand, Boot Barn is in a much stronger position than a lot of brick-and-mortar retailers. The stock is now down more than a third from where it was before the earnings report came out. With a price-to-earnings ratio of just 15 and appealing growth prospects, Boot Barn is starting to look like a value play.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Boot Barn Holdings, Inc. Stock Quote
Boot Barn Holdings, Inc.
$67.89 (-1.48%) $-1.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.