Boot Barn Holdings Stock Prediction

Originally posted on https://financhill.com/blog/investing/boot-barn-holdings-stock-prediction

No matter how uncertain the economy is, one thing stays the same: consumers need footwear for work and leisure activities. That puts Boot Barn Holdings [NYSE: BOOT] in a great position to show strong results, despite ups and downs in the market.

The retail chain was founded in 1978, and it caters to a very specific niche – men, women, and children who are passionate about western-style apparel. Boot Barn sells heavy-duty footwear for heavy-duty work, along with western-themed boots, clothing, and accessories. It is a leader in the western lifestyle space, currently operating 234 stores in 31 states.

The retail chain was founded in 1978, and it caters to a very specific niche – men, women, and children who are passionate about western-style apparel.

Boot Barn [NYSE: BOOT] sells heavy-duty footwear for heavy-duty work, along with western-themed boots, clothing, and accessories. It is a leader in the western lifestyle space, currently operating 234 stores in 31 states.

Boot Barn [NYSE: BOOT] has embraced the digital economy with a strong e-commerce presence through two sites: www.bootbarn.com and www.sheplers.com.

This is critical to the success of any retail business in today’s mobile-centric world. After all, a failure to adapt to the digital economy has decimated some of the most respected retailers in the United States.

In the past year, brick-and-mortar giants like Toys R Us, Sears, and David’s Bridal all declared bankruptcy. Those that have survived put their focus into expanding web-based sales with competitive features like free shipping, faster shipping, and easier returns. Boot Barn [NYSE: BOOT] jumped on-board the digital wave, ensuring its continued relevance as consumer expectations continue to change.

Investing in retail companies comes with a long list of benefits, but there is also substantial risk. The question is, will Boot Barn Holdings return value for shareholders?

Boot Barn Holdings [NYSE: BOOT] reported impressive results in its most recent earnings call, including a 13% year-over-year net sales increase and a 9.2% increase in same-store sales.

A year ago, adjusted earnings per share came it at $0.46. For 3Q 2019, that figure rose to $0.66 per diluted share.

These figures are all-the-more impressive, because they exceeded the company’s own expectations. In October, business leaders predicted same-store sales growth of between five percent and seven percent, and earnings per share between $0.56 to $0.60.

The biggest driver of these promising results is the company’s focus on growth. Sales increased in nearly every product category and every geographic region, indicating a strong demand for western lifestyle brands.

Merchandise margins improved in the most recent quarter, and consumers are embracing all Boot Barn channels. Sales through e-commerce saw double-digit growth, and Boot Barn has indicated it remains committed to improving digital channels to meet the expectations of its consumer base.

Boot Barn faces the same sorts of pressures that impact all retail businesses, so there are risks that investors must consider before buying shares.

While consumers will continue to purchase needed footwear no matter what happens in the larger market, an economic downturn may limit the company’s ability to grow and expand its sales.

The political climate may impact Boot Barn, along with other retailers, as new laws are passed to improve conditions for the US workforce.

Changes in federal and state labor regulations are likely to have substantial impact on Boot Barn’s future profitability.

One of the biggest concerns on the horizon for retailers is talk of an increased minimum wage. A sudden increase in labor costs will have an immediate impact on profits, and it could be some time before the shareholders see the earnings they expected.

Though Boot Barn is a leader in western-themed apparel, competition is always a risk for retailers. The growth of e-commerce has reduced barriers to entry, and there is always concern that another company will offer similar products differentiated in a way that Boot Barn can’t match.

Fortunately, Boot Barn’s strong brick-and-mortar presence protects against some of that risk. Though online start-ups may compete on price, they cannot offer the same in-person experience that inspires so much loyalty in Boot Barn customers.

All signs indicate that Boot Barn Holdings [NYSE: BOOT] has a bright future, but the retail sector simply isn’t right for every investor. Though retailers typically weather economic ups and downs, there may be some bumpy months during periods of economic uncertainty. Investors with short-term goals may be better off in alternative industries.

On the other hand, those that plan to hold stock long-term can find a lot to love about Boot Barn. Business is growing briskly, and the company enjoys a loyal consumer base that comes back again and again to buy.

Same-store sales are going up, and the e-commerce side of the business is thriving. These are all indications that Boot Barn can flex and adapt to changes in consumer taste.