What happened

Shares of Boot Barn Holdings (BOOT 0.74%) were pulling back after the Western-themed apparel and footwear retailer posted disappointing results in its fourth-quarter earnings report, as it missed estimates on the top line and offered weak guidance.

As of 1:24 p.m. ET, the stock was down 11.6%.

So what

Lapping the boom in the quarter a year ago when comparable sales jumped 33.3%, same-store sales in the fourth quarter fell 5.5%. However, revenue still rose 11% thanks to new store growth, reaching $425.7 million, which missed the analyst consensus at $441.2 million.

The company added 12 new stores in the quarter and 45 during fiscal 2023, bringing its grand total to 345.

Further down the income statement, gross margin fell 220 basis points to 36.6% due in part to higher freight expense and deleveraging from the decline in comparable sales.

Operating income was essentially flat at $62.7 million, and adjusted earnings per share rose from $1.47 to $1.51, which topped expectations at $1.43.

CEO Jim Conroy said:

We experienced double-digit total sales growth while expanding product margin for the seventh consecutive year. While our e-commerce business faced top-line sales pressure, our stores achieved positive same-store sales growth for the year as they cycled a remarkable 57% comp store growth in fiscal 2022.

Now what

Looking ahead, the company called for revenue of $1.69 billion to $1.723 billion in fiscal 2024, representing 2% to 4% growth, and it expects a same-store sales decline of 4.5% to 6.5%. By comparison, analysts had expected $1.8 billion. On the bottom line, it predicted earnings per share of $4.70 to $5.00, which was below estimates at $5.80 and represents a decline from $5.62 in fiscal 2023.

First-quarter guidance was also below the consensus. 

Despite the weaker-than-expected forecast, the company still expects to open 52 new stores this year, making it one of the few apparel retailers aggressively expanding its brick-and-mortar footprint. That should also give investors confidence that management expects same-store sales to return to growth.

Boot Barn stock still looks reasonably priced, but the sell-off is understandable, given the forecast for declining sales and profits.