Boot Barn Q3 2026 Earnings Report

Boot Barn EPS Results

• Actual EPS: $2.79
• Consensus EPS: $2.79
• Beat/Miss: Met Expectations
• One Year Ago EPS: $2.43

Boot Barn Revenue Results

• Actual Revenue: $705.64 million
• Expected Revenue: $700.71 million
• Beat/Miss: Beat by +$4.93 million
• YoY Revenue Growth: +16.00%

Boot Barn Announcement Details

• Quarter: Q3 2026
• Date: 2/4/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, February 4, 2026
• Conference Call Time: 4:30PM ET

Boot Barn (NYSE:BOOT) is a specialty retailer focused on Western and workwear products. The company sells a broad selection of footwear, clothing, accessories and related merchandise designed for customers interested in Western lifestyles, outdoor activities and occupational work.

Its product offerings include cowboy boots, work boots, jeans, shirts, jackets, hats, belts, jewelry and safety equipment. Boot Barn carries recognized third-party brands such as Ariat, Justin, Wrangler and Carhartt, along with private-label brands including Cody James, Shyanne, Hawx and Moonshine Spirit.

Founded in 1978 in Orange County, California, Boot Barn has expanded from a single store into a multichannel retailer operating physical stores and an e-commerce platform. The company primarily serves customers throughout the United States, with merchandise available through its stores and online operations.

Boot Barn Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong Q3 results: Revenue grew 16% to $706 million, consolidated same-store sales rose 5.7%, and diluted EPS was $2.79, driven by broad-based strength across categories and channels.
• Positive Sentiment: Merchandise margin expansion: Merchandise margin increased ~110 bps (exclusive brands +240 bps) from buying scale and supply‑chain efficiencies, and the company plans selective exclusive‑brand price increases in Q4 to sustain margins.
• Positive Sentiment: Accelerating store growth: Opened a record 25 stores in Q3 (514 total); new stores average ~$3.2M in first‑year sales with <2‑year payback, 15 planned in Q4 (70 for the fiscal year) and a strong pipeline for FY27 toward a 1,200‑store target.
• Positive Sentiment: Raised full‑year guidance: Management raised FY2026 outlook to $2.25 billion in sales (+18%), same‑store sales +7%, and EPS of $7.35, reflecting confidence in the business momentum.
• Negative Sentiment: Near‑term headwinds: Q4 guidance contemplates a ~60 bps y/y merchandise‑margin decline due to normalized shrink and freight, inventory is up 17% to $805 million, and recent winter storms reduced revenue by roughly $5 million that is unlikely to be fully recovered.

Presentation

[John Hazen, CEO at Boot Barn Holdings Inc]

Good day, everyone, and welcome to the Boot Barn Holdings, Inc. third quarter fiscal 2026 earnings conference call. As a reminder, this call is being recorded. Now, I'd like to turn the conference over to your host, Mr. Mark Dedovesh, Senior Vice President of Investor Relations and Finance. Please go ahead, sir.

[Mark Dedovesh, SVP of Investor Relations and Finance at Boot Barn Holdings Inc]

Thank you. Good afternoon, everyone. Thank you for joining us today to discuss Boot Barn's third quarter fiscal 2026 earnings results. With me on today's call are 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 you 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.

[Mark Dedovesh, SVP of Investor Relations and Finance at Boot Barn Holdings Inc]

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 webcast, we refer you to the disclaimer regarding forward-looking statements that is included in our third quarter 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, CEO at Boot Barn Holdings Inc]

Thank you, Mark, and good afternoon. Thank you everyone for joining us. On this call, I will review our third quarter fiscal 2026 results, provide an update on current business, and discuss the progress we have made across each of our four strategic initiatives. Following my remarks, Jim Watkins will review our financial performance in more detail, and then we will open the call for questions. We are very pleased with our third quarter results, which reflect broad-based strength across all major merchandise categories, in stores and online, and across all geographies. During the quarter, revenue increased 16% compared to the prior year to $706 million, including consolidated same-store sales growth, 5.7%. In addition to strong sales growth, merchandise margin rate increased 110 basis points compared to the prior year period.

[John Hazen, CEO at Boot Barn Holdings Inc]

The strength in sales and margin, combined with solid expense control, resulted in earnings per diluted share of $2.79 during the quarter. I am very proud of the entire team's ability to execute on our four strategic initiatives, which drove very strong results. Now turning to current business. Through the first five weeks of our fiscal fourth quarter, we have continued to see broad-based strength in same-store sales, despite the negative impact of recent winter storms. On a consolidated basis, quarter-to-date same-store sales increased 5.7%, which we estimate was negatively impacted by approximately $5 million of reduced revenue due to the storm closures resulting from the recent winter storms. Prior to the winter storms, for the first 26 days of the fiscal quarter, consolidated quarter-to-date comps increased approximately 9.1%, driven by growth in transactions.

[John Hazen, CEO at Boot Barn Holdings Inc]

We feel very good about the underlying tone of the business and the start to our fourth quarter. I will now spend some time discussing each of our four strategic initiatives. Let's begin with new store growth. We opened a record 25 stores in the third quarter, ending the period with 514 stores. I am very pleased that our new store engine over the past several years has consistently exceeded our sales, earnings, and payback expectations throughout all regions of the country, and these strong results have continued with the stores open during the past 12 months. As a reminder, new stores on average are on pace to generate approximately $3.2 million in annual sales in their first full year of operation and pay back their initial investment in less than two years.

[John Hazen, CEO at Boot Barn Holdings Inc]

Looking forward, we have planned 15 store openings in the fourth quarter, which would bring the fiscal year total to 70 new stores. As we look towards fiscal 2027, the pipeline remains very strong, and we estimate 20 projected openings in the first quarter, which will begin in April. Given the consistent strength of our new store openings, we believe that we are well positioned to continue expanding the Boot Barn brand for years to come as we head towards our target of 1,200 stores in the United States. Moving to our second initiative, same-store sales. Third quarter consolidated same-store sales grew 5.7%, with brick-and-mortar same-store sales increasing 3.7%. Store comp growth was driven by low single-digit increases in both basket and transactions. From a merchandising perspective, we saw broad-based growth across all major merchandise categories.

[John Hazen, CEO at Boot Barn Holdings Inc]

Our men's and ladies' Western boots businesses comped positive high single digits, and our men's and ladies' apparel businesses slightly outperformed the chain average, led by mid-teen same-store sales growth in denim. Our work boots business also comped positive mid-single digits during the quarter. From an operations perspective, I am very proud of the field team's dedication and hard work, which resulted in another strong holiday season. The field team continues to provide best-in-class customer service and drive record sales volume, while hiring and training seasonal staff, managing inventory flow, and opening new stores. I would like to thank the field and the entire Boot Barn team for their partnership and execution. Moving to our third initiative, omnichannel. In the third quarter, online comp sales grew 19.6%.

[John Hazen, CEO at Boot Barn Holdings Inc]

We are very pleased with the growth in our online channel, particularly the positive results from our new initiative to develop exclusive brand sites. As a reminder, one of our goals beginning this year was to market exclusive brands separately from the Boot Barn brand. Earlier this year, we launched websites for Cody James and Hawx and are very pleased with the initial results on both rollouts, which have primarily attracted new customers....Looking forward, we are planning to launch standalone websites for more of our brands, including Shyanne, our leading ladies brand, and Cleo + Wolf, our ladies country lifestyle brand. Now to our fourth strategic initiative, merchandise margin expansion and exclusive brands.

[John Hazen, CEO at Boot Barn Holdings Inc]

During the third quarter, merchandise margin increased by 110 basis points compared to the prior year period, driven by buying economies of scale, supply chain efficiencies, and 240 basis points of growth in exclusive brands. I am proud of the team's ability to grow merchandise margin and exclusive brand penetration while staying committed to full price selling model, particularly during the holiday season. I would now like to provide an update on our pricing strategy related to exclusive brand products. We will be increasing exclusive brand ticket prices on some products during the fourth quarter. We are pricing our goods in a manner that will allow us to continue to drive growth in merchandise margin rate.

[John Hazen, CEO at Boot Barn Holdings Inc]

Our team has continued to diligently work with our factory partners to mitigate the impact of tariffs through cost concessions, which have allowed us to maintain pricing on some goods. New exclusive brand product that we have added to the assortment has already been priced accordingly at the factory level, given the fluid environment we are operating in. The team continues to be flexible and looks for ways to drive growth in merchandise margin. I would like to now turn the call over to Jim.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Thank you, John. In the third quarter, net sales increased 16% to $706 million. The increase in net sales was the result of the incremental sales from new stores and the increase in consolidated same-store sales. The 5.7% increase in same-store sales is comprised of a 3.7% increase in retail store same-store sales and a 19.6% increase in e-commerce same-store sales. Gross profit increased 18% to $281 million, compared to gross profit of $239 million in the prior year period.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Gross profit rate increased 60 basis points to 39.9% when compared to the prior year period, as a result of a 110 basis point increase in merchandise margin rate, partially offset by 50 basis points of deleverage in buying, occupancy, and distribution center costs. The increase in merchandise margin rate was primarily the result of buying economies of scale, supply chain efficiencies, and growth in exclusive brand penetration. The deleverage in buying, occupancy, and distribution center costs was driven by the occupancy costs of new stores. SG&A expenses for the quarter were $166 million, or 23.6% of sales, compared to $139 million, or 22.9% of sales, in the prior year period.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Income from operations was $115 million, or 16.3% of sales in the quarter, compared to $99 million or 16.4% of sales in the prior year period. Included in SG&A and income from operations in the prior year period was a net benefit of $6.7 million related to the company's former CEO's resignation. Excluding this benefit in the prior year period, this year's SG&A expense as a percentage of net sales leveraged 40 basis points, and income from operations as a percentage of net sales leveraged by 100 basis points. Net income per diluted share in the third quarter increased to $2.79, compared to $2.43 per diluted share in the prior year period.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Included in net income per diluted share in the prior year period was an estimated $0.22 benefit related to the former CEO's resignation. Excluding this benefit in the prior year period, EPS increased by 26%. Turning to the balance sheet. On a consolidated basis, inventory increased 17% over the prior year period to $805 million and increased approximately 4% on a same-store basis. Total inventory increased as a result of adding 15% new stores, growth in comp store inventory, and growth in exclusive brands. We feel good about the health of our inventory, and our markdowns as a percentage of inventory are below historical levels. During the quarter, we purchased approximately 67,000 shares of our common stock for an aggregate purchase price of $12.5 million as part of our authorized $200 million share repurchase program.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

We finished the quarter with $200 million in cash and zero drawn on our $250 million revolving line of credit. I would now like to provide an update on our fourth quarter guidance, which is outlined in our supplemental financial presentation. As the presentation lays out the low and high end of our guidance range, I will only speak to the high end of the range in my following remarks. For the fourth quarter, we expect total sales at the high end of our guidance range to be $535 million and a consolidated same-store sales increase of 5%. We expect merchandise margin to be approximately 50.5% of sales, a 60 basis point decrease from the prior year period.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Included in our fourth quarter guidance is 20 basis points of expected growth in merchandise margin, offset by a combined 80 basis points increase in shrink and freight expense compared to the prior year period. As a reminder, we are up against extremely strong merchandise margin expansion last year of 210 basis points, which was helped by very favorable shrink and freight. Our guidance for the fourth quarter of this year contemplates more normalized shrink levels and embeds the current run rate for freight expense, which, while higher than the prior year period, is lower than historical levels and in line with the third quarter.... We expect gross profit to be approximately 36.1% of sales, which includes 50 basis points of deleverage in buying occupancy and distribution center costs.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Our income from operations is expected to be $59 million, or 11.1% of sales. We expect earnings per diluted share to be $1.45. Based on our year-to-date performance and fourth quarter outlook, we are raising our full year guidance. For the full fiscal year, we now expect total sales to be $2.25 billion, representing growth of 18% over fiscal 2025. We expect same-store sales to increase 7%, with a retail store same-store sales increase of 6% and e-commerce same-store sales growth of 15%. We expect merchandise margin to be approximately 50.8% of sales, a 70 basis point increase over the prior year period. This margin increase includes exclusive brand penetration growth of 240 basis points. We expect a gross profit to be approximately 38% of sales.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Our income from operations is expected to be $301 million, or 13.4% of sales. We expect net income for fiscal 2026 to be $226 million, and earnings per diluted share to be $7.35. Now, I would like to turn the call back to John for some closing remarks.

[John Hazen, CEO at Boot Barn Holdings Inc]

Thank you, Jim. I'm very pleased with our third quarter and year-to-date results, and I believe we are well positioned for a strong finish to our fiscal year. I would like to thank the entire team across the country for their dedication to Boot Barn and our customers. Now, I would like to open the call for questions.

[Operator]

We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. As this call is scheduled for one hour, please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. The first question comes from Matthew Boss with J.P. Morgan. Please go ahead.

[Matthew Boss, Equity Research Analyst at JPMorgan]

Thanks, and congrats on another nice quarter.

[John Hazen, CEO at Boot Barn Holdings Inc]

Thanks, Matt.

[Matthew Boss, Equity Research Analyst at JPMorgan]

John, on the 9% comp for the first 26 days of January, but before the storms, could you elaborate on the drivers of acceleration that you had seen relative to the third quarter? Was the sequential improvement broad-based, or any specific category call outs? And what did you embed for the remainder of the quarter to get to the 3%-5% guide?

[John Hazen, CEO at Boot Barn Holdings Inc]

Yeah. Thanks, Matt. Great question. When we look at those first weeks of January and the 9.1 comp, it was broad-based across most major merchandise categories. The one category worth calling out was the work business. The work apparel business was a little softer, given some of the warmer weather we saw in January. And as we came into the winter storms or Winter Storm Fern, we saw the needs-based business, both on the work boot and the work apparel side, pick up from their incoming trend as we had the first five weeks of business that got us to that 5.7, despite the closures on the Saturday and Sunday, the end of fiscal January and beginning of fiscal February.

[John Hazen, CEO at Boot Barn Holdings Inc]

But outside of the work business, which is driven by outerwear and some warm weather, it was broad-based acceleration across all major merchandise categories. When we look at the remaining of the quarter and getting to that 3-5 guide, you know, we looked at the March business, as a reminder, is close to half the quarter's business, a five-week month combined with Houston Rodeo. And the tough comps get a little bit tougher in that March timeframe. And we use that along with our typical forecasting to get to that 3%-5% comp, despite starting with a nice January up 9.1.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

That implies, Matt, that the February and March combined comp is a 4.5% consolidated, so 3.6% in stores and 13% e-com.

[Matthew Boss, Equity Research Analyst at JPMorgan]

Great. Then maybe a follow-up, John, just take a step back. FY 2026, now the second consecutive year of mid- to high-single-digit comps. Could you speak to your level of overall visibility today as you plan the business? Are there any structural constraints that you see to sustaining this kind of momentum? Anything changing from a productivity perspective as you look at the box by category? Just kind of thinking ahead relative to the last two years that we've seen.

[John Hazen, CEO at Boot Barn Holdings Inc]

Yeah. No, Matt, if we look back historically, we can comp in that low to mid single digit range, and we have done it many of the last 10 years. We feel great about the new store productivity. We feel great about the new store pipeline, the broadness of the performance across all major merchandise categories. So structurally, there's nothing that gives us concern in comping the comp.

[Matthew Boss, Equity Research Analyst at JPMorgan]

Great. Best of luck.

[John Hazen, CEO at Boot Barn Holdings Inc]

Thanks, Matt.

[Operator]

The next question comes from Steven Zaccone with Citi. Please go ahead.

[Steven Zaccone, Senior Analyst of Equity Research and Retail/ Broadlines and Hardlines at Citi]

Great. Good afternoon. Thanks very much for taking my question. I wanted to ask on the merchandise margin outlook for the fourth quarter. Could you just elaborate on it a little bit more detail? Because it sounded like supply chain came in better than expected in the third quarter. So, you know, as it's outlook for 4Q, the freight impact kind of unchanged versus how you were speaking to it previously? And then on the product margin being up 20 basis points ex freight and shrink, how much of that is due to brand penetration? And you just like talk through buying economies of scale. Thanks.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

No problem, Steve. You know, as a reminder, we're for the fourth quarter, merchandise margin, we're up against 210 basis points of expansion last year. So tougher comps are part of that. Your first part of your question was on the shrink and the freight. I guess, more specifically, we're expecting 40 basis points of a headwind on the shrink side of things. It was abnormally low last year versus what we were accruing for. This year, we're expecting that to be more in line with what we've got accrued when we do our full physical inventory counts here over the next couple of months. As far as the freight goes, yes, we have had...

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Overall, this year, we're expecting the freight expense to be better than it was last year as a rate. As we talked about, I think it was on the last call, that it's a little bit lumpy throughout the year, where we've seen, I think it was the first quarter was really good freight. The second quarter was a headwind, and this quarter was the third quarter was positive again, and the fourth quarter, we're expecting that to be down. I think that normalizes a little bit more as we get into next year. We had some, you know, a lot of fluid activity with tariffs and bringing product in sooner and later, and we've also been negotiating with transportation, you know, partners and getting some of those rates down.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

So that's helped us in some of those quarters. And so, that's really been, you know, the story of freight. The, the fourth quarter freight is really kind of in line with our Q3. It's just the prior year comparison that's, that's a little challenging. And then on the product margin, the exclusive brand penetration, we're expecting that to be about half of the, the 20 basis points of product margin expansion, and the other half coming from, from, you know, buying economies of scale and, and getting better, better discounts in, in pricing.

[Steven Zaccone, Senior Analyst of Equity Research and Retail/ Broadlines and Hardlines at Citi]

Okay, thanks for that detail. And then you gave a commentary about openings of, I think, 20 in the first quarter. How should we think about level of openings for fiscal 2027? I know, preliminary at this point, but how should we think about that overall?

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Yeah, it's a great question. Yes, the pipeline is very strong for the first quarter, with about 20 lined up in the first quarter. The timing of the rest of the stores and the ultimate number, as we roll out the rest of the year, we feel confident that we'll be able to open within our 12%-15% new unit range. But as far as how that flows out, it's still a little early for us to tell.

[Steven Zaccone, Senior Analyst of Equity Research and Retail/ Broadlines and Hardlines at Citi]

Okay, fair enough. Thanks a lot. Thanks again.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Thank you, Steve.

[Operator]

The next question comes from Peter Keith with Piper Sandler. Please go ahead.

[Alexia Morgan, Assistant Vice President of Equity Research at Piper Sandler]

Hi, this is Alexia Morgan on for Peter Keith. Thanks for taking our question. We were wondering, with the strength of work boots in the quarter, and the success of some of those new strategies you've talked about to reinvigorate that category, are you reevaluating where you think the category can go long term? And then similarly, are there other categories that you think could be optimized in a similar way?

[John Hazen, CEO at Boot Barn Holdings Inc]

Yeah, great question. I've been very pleased with the performance of work boots thus far. Again, a mid-single digit comp, when the entire business in the quarter was 5.7. So we think the marketing, the remerchandising of work boots, getting some better choices for the consumer in from various brands, are all helping that performance. All that being said, the work business tends to not comp up as quickly or comp down as quickly as some of the other business. It's a very needs-based, kind of, stable business. Blue-collar employment has been stable, so I don't see any outsized growth coming.

[John Hazen, CEO at Boot Barn Holdings Inc]

I think we are reinvigorating it, and it's growing from where it was, but it always is a little more stable than what we see in the rest of the business. In terms of other merchandise categories that we're looking at, we're always looking at places where we can improve. You know, I'm not gonna share some of these on this call, but there's a couple of major merchandise categories I feel strongly there's opportunity in, and but for competitive reasons, I'll keep those to myself for right now.

[Alexia Morgan, Assistant Vice President of Equity Research at Piper Sandler]

Okay, thank you. And then one more. We were wondering, the sales impacted by the winter storm, are those stores kind of up and running again? Is trend back to normal there? And then when you've seen storm impact in the past, are sales typically made up, or is... Like, is it delayed or more eliminated? Thank you.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Yeah, the sales impact of the storms, the first of those two winter storms that went across the country, Fern, were more impactful to the business. The second one hurt us in the Northeast last week. Business seems to be, you know, back to normal and recovering. As far as, you know, a snapback or people going back into the stores and recovering those sales, that's not something we typically will gain back after a storm.

[Alexia Morgan, Assistant Vice President of Equity Research at Piper Sandler]

... Thank you.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Thanks, Cynthia.

[Operator]

The next question comes from Dylan Carden with William Blair. Please go ahead.

[Dylan Carden, Research Analyst at William Blair]

Thanks. Jim, you've kind of addressed this, but the upside to gross margin relative to the initial outlook for the last three quarters, is that just some of the volatility in shipping, tariff mitigation, uncertainty? And, you know, should we kind of limit expectations for that kind of upside go forward? And a related question, kind of as the leverage point on occupancy has kind of crept up here as you've accelerated your store growth, I think there's some sort of growing anxiety around kind of margin and how you kind of keep improving profitability. Any broader, kind of longer term outlooks of leverage points and, you know, merchandise margin opportunities would be appreciated. Thanks.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

No problem, Dylan. As far as the upside to the gross margin, you're right, it's been a really nice year for us, particularly on the merchandise margin, with the full year looking to come in at the high end of the range, at 70 basis points better than last year. When we first guided back in May, in the middle of all of the tariff news and things coming forward, we had guided merch margin, you know, down 30 to flat. So it's been a really nice pickup for us throughout the year, and I think that's come from a variety of things. As we've seen exclusive brands continue to do really well and outgrow what we thought was gonna be 100 basis points of expansion this year.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

We saw the benefit of the hard work that the merchant team and the planning teams had done around buying the right product and getting that into the stores and in front of our customers and selling that. And so that's provided some upside on, you know, what we call buying economies of scale and some of those vendor discounts. And so it has been a nice year. And then the freight, we had some renegotiated transportation contracts that also provided some upside. So it has been a really nice year, and it's kind of culminated here with seven years. The last seven years, we've had over 740 basis points.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

I think 740 is the number, basis points of merch margin expansion. So you're, you're right, the track record has, has been great. As we look to next year, we're, we're planning to continue to grow merchandise margin. Obviously, we're not guiding how much the, that we're going to, to guide for next year, but, typically, we, we would say that it's gonna be somewhere in that, you know, 25-40 basis point range is, is our starting point. But we'll, we'll get back to you on, man, what, what that number looks like. But we're, we're not out of ideas.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

I mean, John's talked about, you know, sourcing opportunities and, you know, we're, we're always looking at things around supply chain, logistics, you know, as we, as, as we continue to, to grow sales at a, at a fast clip, that allows us to go back and get better, discounts from our vendors or our factories. So, we're pretty optimistic looking forward on, on the margin opportunity. As far as the leverage points go, you know, we, we, we do have a leverage point, for buying and occupancy. I think that's maybe where the question's, focused. Buying occupancy and distribution center costs, we need a +7 to, to leverage that, and, and that's really just a function of growing 15% new units, as, as we've talked about in the past.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

This year, that's gonna be a little bit higher because of the, you know, we've got those 20 stores we're talking about opening in Q1, and those are going to open earlier in Q1 than what we originally anticipated. And so that puts a little more pressure on the current year. But, you know, the leverage point, I expect that to continue to be somewhere in that 7% range as we get into next year, but we'll give you an update on that. You know, what's been nice through all of this is, you know, I know the leverage point's high, it maybe makes some people nervous, but, but we've, we're able to...

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Looks like we're on track to grow our earnings, you know, per share 25% this year, expand our EBIT margin 90 basis points at the high end of the guide. So we're feeling pretty good about where things are. And, you know, this is all generating some really nice profitability for us.

[Dylan Carden, Research Analyst at William Blair]

Really appreciate it. Thank you.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Thanks, Dylan.

[Operator]

The next question comes from Janine Stichter with BTIG. Please go ahead.

[Janine Stichter, Managing Director and Consumer Retail and Lifestyle Brands Analyst at BTIG]

Hi, thanks for taking my question. I was hoping you could elaborate a bit on the pricing strategy for exclusive brands. It sounds like you're taking those prices throughout Q4, but it seems that you've done some adjustments to speak on what you're seeing. And then, maybe just speak to what the rollout looks like in terms of raising prices throughout Q4. Thank you.

[John Hazen, CEO at Boot Barn Holdings Inc]

Yeah, great question. As we talked about the last couple of calls, we had held lower for longer on exclusive brands. We had gotten to the holiday season, we knew we were gonna take price increases. We didn't want to disrupt the store team during the holidays, so we had the room, as you saw, in the margin growth during Q3, to hold until post-holiday. We get to the January timeframe, and now we're going style by style, and looking at where we can take a price increase that covers the margin rate for that product, or maybe a little bit more if we decide to hold on another particular product. So this is a style-by-style conversation. If you look at the price increases-

[John Hazen, CEO at Boot Barn Holdings Inc]

... you know, as well as the concessions from our factory and new product that we're bringing in from those factories, you know, these, these are rough numbers, of course, but you could say it's a third, a third, a third of where we will see either we don't need to have a price increase because of concessions. We're gonna do the price increases at the source, at the factory, since it's new inbound product, or these are products that are already on the ground here, and we need to, you know, quote-unquote, catch up and re-tag those products, either in our DC, or in our stores. And that is underway today. So, the re-tags, which is a piece that has to happen here, is happening as we speak.

[John Hazen, CEO at Boot Barn Holdings Inc]

We had a slug of products that were repriced in January, and we will continue to do another group in February and the remainder in March.

[Janine Stichter, Managing Director and Consumer Retail and Lifestyle Brands Analyst at BTIG]

Great. And then you mentioned the concessions you got during the peak of tariffs from your suppliers. Is there anything we should be aware of as we think about starting to lap some of those initial concessions? I'm just thinking of things that might not repeat next year.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

I think it's a great question, right? As the tariffs rolled out throughout the year, initially, it was a big wave, and we went back and were able to get some concessions. But as things have normalized throughout the year, we've gotten to a pretty good steady state with many of our factory partners, and those concessions are pretty kind of run rate at this point. Our focus as we look into next year is working on expanding our merchandise margin rate. And so working with our good partners, moving some product around to other countries that have lower rates. The latest update on India tariffs going to 18% is a positive for us as well.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

So we, we think that, as we head into next year, we're, we're in a pretty good place with, with our partners, and, and we'll continue to, you know, challenge them and, and, and work on, on improving pricing. But we, we feel pretty good about where we are today.

[Janine Stichter, Managing Director and Consumer Retail and Lifestyle Brands Analyst at BTIG]

Great. Thanks so much.

[John Hazen, CEO at Boot Barn Holdings Inc]

Thanks, Janine.

[Operator]

The next question comes from Jay Sole with UBS. Please go ahead.

[Jay Sole, Managing Director at UBS]

Great. Thank you so much. My question is about the exclusive brand websites. John, you touched on it a little bit in the open prepared remarks. Can you just tell us a little bit more about how your thoughts and your plans have developed for these websites in the last 90 days and what you see going forward?

[John Hazen, CEO at Boot Barn Holdings Inc]

Sure. As a reminder, we launched codyjames.com and hawxwork.com, the first two exclusive brand sites that we had launched. The goal of these sites always was storytelling. It's the place we can, you know, really tell the Cody or the Hawx story to the consumer. It's difficult to do, given the way people shop on bootbarn.com. You know, they may look for a particular category of product or they're refining by size, and they don't land on those storytelling pages, even if we had built them on bootbarn.com. Having a dedicated site, and if you go to codyjames.com, you can see the difference in how the brand is represented there and the storytelling that's happening with the videos on the homepage. We can really drive home the ethos of those brands on those sites.

[John Hazen, CEO at Boot Barn Holdings Inc]

That was the purpose. We want people to want the brands, know the brands, and then realize the best place to buy those brands is inside a Boot Barn store and not online. What has been a nice side effect is the amount of sales that we've seen on those sites. You know, we didn't expect. Again, this is a percent of a percent of our business. It's, you know, a piece of the online growth, to be sure. It was not something that was expected. The bigger surprise was most of those customers are net new to Boot Barn. This isn't a transference that's happening from, you know, Sheplers.com or bootbarn.com or the stores.

[John Hazen, CEO at Boot Barn Holdings Inc]

These are people that are discovering Hawx and Cody through the social marketing that we're doing for those sites. So it's been encouraging, and encouraging enough that we are, you know, all in on having similar sites for Cleo + Wolf, Shyanne, and Rank 45, which is our more rodeo-inspired brand.

[Jay Sole, Managing Director at UBS]

Got it. Maybe if I can ask a separate question. You know, in the slide deck, you know, you're showing the, new store productivity, and the payback time on the new stores. I think it looks like based on the deck, it's the year one net sales of a new store, like $3.2 million. You know, that maybe that's called 80% new store productivity or a little bit less than that. Can you just talk about, what-- how fast those stores are ramping up to maturity? Yeah, that's the question.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Sure. Yeah, the new stores open, if they're opening at 3.2, and as you mentioned, around 75% of what a mature store is, the path to get them up to, call it $4.2 million is around five or six years. The waterfall has been pretty healthy. We talked about the stores that we've opened over the last few years are resulting in about 100 basis point tailwind to the consolidated comps, and that's because this first comp year of a new store is comping roughly in line with chain average, maybe slightly better. But then that second comp year, we're seeing roughly a five-point improvement over the chain average, which helps obviously get their volumes up.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Then after that second comp year, they continue to outperform the chain at about, you know, three or 4-5 points better. So that, that gets them up there. I think that takes about 5 or 6 years to get them up to that chain average.

[Jay Sole, Managing Director at UBS]

Got it. Okay, thank you so much.

[John Hazen, CEO at Boot Barn Holdings Inc]

No problem, Jay.

[Operator]

The next question comes from Jonathan Komp with Baird. Please go ahead.

[Jonathan Komp, Senior Research Analyst at Baird]

Yeah. Hi, good afternoon. Thank you. John, I want to follow up just the quarter-to-date acceleration you saw, you know, underlying prior to the storms. I know you mentioned it being broad-based, but any other thoughts on the drivers of the, you know, the strength there? And as you think about the business today, could you talk about, you know, just segmenting out, you know, what you're seeing across your exclusive brands versus existing third-party brands, but then also, you know, new brands as well?

[John Hazen, CEO at Boot Barn Holdings Inc]

Yeah, absolutely. When, when we look at the, the acceleration in January and then, over the, the, the five weeks of quarter to date, it is mostly transaction driven. So, so there is, a bit of basket over the five weeks, and, and if you just look at that, the, pre-storm time frame, it was, it was transaction driven. It, it's balanced. We, we look at our third-party brands. They are performing well. Our exclusive brands are, are performing well. Again, it's a, a small month, in the quarter. March is almost half of the quarter, as a reminder. And, so, so it's been a nice start. It has been broad based.

[John Hazen, CEO at Boot Barn Holdings Inc]

Nothing really else to call out around men's and women's Western boots or men's and women's Western apparel, either by brand or exclusive brand versus third party. It has been very steady across kind of all those different ways you could slice the business.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Oh, sorry. I had to jump in. John, I mean, the +9 is a big number, and as we look back over the last 12 months, you know, the holiday shopper, which is our December shopper, does behave a little bit differently than they behave the rest of the year so the +9 isn't too far out of the range of what we were seeing if you look at our chart on page 9 of what we've been seeing in that monthly call over the last 12 months.

[Jonathan Komp, Senior Research Analyst at Baird]

Okay, great. And then, just to follow up, John, I'm curious on, on the new units, are there any anecdotes you could call out that give you confidence today, looking forward to the, the long run target? And then just, just more broadly on the algorithm, I think pretty consistently in the past, you talked about, you know, really a 20% EPS growth algorithm. Is that still the construct or the framework that, that exists here today? Thank you.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Yes, John, I'll take that one. The 20% EPS is still there. When we went public, we had a 10% unit growth in our long-term algorithm that got us to 20% EPS growth. As we've shifted that to 15% new unit growth and then 12%-15%, that does bring down the EPS slightly. And so maybe it's an 18% EPS growth on that run just because of the number of new stores that we're bringing into the that still need to comp up. So that's the math behind it. And then around the unit growth, anecdotally, the new stores perform very much like existing stores.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

We're not seeing big swings in the merchandise mix. We've said this before, I think, on the public call. You see it even skew a little more Western, perhaps in non-legacy markets outside Arizona, Texas, California, given there's not as many independent retailers, and/or as much competition. So when we open stores in Florida, Jersey City, the Northeast, Huntington Beach recently opened, the stores, the business, the composition of it looks very similar to our legacy stores.

[Jonathan Komp, Senior Research Analyst at Baird]

That's great. Thanks again.

[John Hazen, CEO at Boot Barn Holdings Inc]

Thanks, John.

[Operator]

The next question comes from Max Rakhlenko with TD Cowen. Please go ahead.

[Max Rakhlenko, Managing Director at TD Cowen]

Great. Thanks a lot, guys. So first, on exclusive brands, I think previously the strategy was to maintain similar price points, compared to the national brands. So given some of the changes to pricing on both sides, as well as the customer reactions, how are you thinking about the price points between the two ahead? Could EVs potentially be priced a little bit lower, or do you think that that's going to normalize over time?

[Jim Watkins, CFO at Boot Barn Holdings Inc]

It appears that, Go ahead, sir.

[John Hazen, CEO at Boot Barn Holdings Inc]

Go ahead.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Yeah, it seemed like you got cut off there.

[John Hazen, CEO at Boot Barn Holdings Inc]

No worries. Yeah, I believe it will normalize over time. The one place I've told the team I want to be very careful is if we're breaking through a psychological price point, right? If we've got to take a low single digit price increase on a boot that's gonna break it through $200, and it's sitting at $195 or something along those lines right now, I would rather hold on that and try and preserve and grow that merchandise margin rate with a price increase on a few, you know, accessories or other goods that where those price increases could be easily absorbed. Those are one-off cases, but that's why we're doing this style by style.

[John Hazen, CEO at Boot Barn Holdings Inc]

But I think overall it will normalize, but if there's places where we can be opportunistic and hold on psychological price points, the team is doing that.

[Max Rakhlenko, Managing Director at TD Cowen]

Got it. That's helpful. And then your comps, just broadly, are obviously very nicely outpacing the industry. So, you know, curious, where do you think you're taking the most share from? And specifically, any comments on the farm and ranch channel, and separately, DTC, as some of your vendors are going more direct?

[John Hazen, CEO at Boot Barn Holdings Inc]

... Yeah, the D2C, we are 90% stores, right? So the D2C guys, they do a nice job, and they can spend a little more on, or take a lower ROAS, I should say, on some of their advertising from a digital perspective, so they have a little bit of an advantage there. At the same time, they're, you know, they're promoting Western to the world, so, you know, they're not a big concern. When I think of the market share and our ability to continue to kinda excel from a comp standpoint, I put much of the credit on the team.

[John Hazen, CEO at Boot Barn Holdings Inc]

When I think of the execution from the depth of inventory, the availability from a sizing standpoint, the field team and the customer service that we offer, I think those are the pieces that make a difference versus everybody else. And the everybody else is independent retailers, it's the Western competitors, and I think it's also general retailers. When you think of us becoming a bit more of a denim destination, I think we're taking market share from you know, traditional department stores, where perhaps people bought their Wrangler or their Levi's or their bootcut jean at those stores and have discovered our customer service, our assortment, and our depth of inventory versus some of those other stores that I've seen recently in channel checks that I've done myself.

[Max Rakhlenko, Managing Director at TD Cowen]

Awesome. Thanks a lot. Appreciate the color.

[Operator]

The next question comes from Chris Nardone with Bank of America. Please go ahead.

[Chris Nardone, Analyst at Bank of America]

Thanks, guys. We have a quick follow-up on the leverage point discussion. We're just wondering, do you still feel comfortable with the roughly 1.5% leverage point in SG&A as we look out into next year? And then are there any major cost line items that are seeing more inflation than normal that we should be thinking about?

[John Hazen, CEO at Boot Barn Holdings Inc]

Yes, Chris. The leverage points at 1%-1.5% for SG&A, that is right in the range of where we would expect to see that going into next year. As we look at costs that are seeing outsized inflation, I can't think of anything, any line item that is tracking higher than in an outsized way as we move into next year. I think the SG&A line should look much more normalized than what it was this year compared to last year, with some of the one-time things we had last year with, you know, some legal fees and the reversal of some incentive comp from, you know, some management change.

[Chris Nardone, Analyst at Bank of America]

Okay. Very clear. And then on the apparel side, outside of denim, are there any specific categories that are gaining momentum, either within the third party or private label brands? And is there any way that we can gain comfort that the majority of the momentum in this business is still driven by your core Western customer, rather than maybe a more fashion or less sticky customer? Are there any anecdotes or facts you can share to give us some confidence on that front?

[John Hazen, CEO at Boot Barn Holdings Inc]

Yeah, you know, I look at the product that sells every week in our stores. I look at our top 50 products across all the major merchandise categories, and it is very much a traditional Western silhouette when it comes to both the tops and the bottoms. Again, we've tried some more contemporary collaborations with different brands that the consumer has self-selected out of. Nothing crazy, nothing on the fashion side, but things that were a little more contemporary and really didn't, you know, really didn't work in some of those tests. So every week, as I look at the boots that are selling, you know, some of these boots have we've been selling the same style for 15 or 20 years.

[John Hazen, CEO at Boot Barn Holdings Inc]

And a lot of broad square cowboy boots, it's not a fashion R-toe roper boot, which is kind of that entry-level cowboy boot on the men's side, at least. The women's boots are all very much, you know, brown brown leather boots, and there might be one or two fashion boots in there that have, you know, bedazzling, or they're white boots that perhaps someone picked up for a wedding. But by and large, it is traditional Western styles that have been selling for years. So we're not seeing anything in the mix of what is performing that would tell us it's someone coming in, you know, to get ready for a concert or an event or are new to Western.

[Chris Nardone, Analyst at Bank of America]

Okay. Thanks, guys. Good luck.

[John Hazen, CEO at Boot Barn Holdings Inc]

Thank you.

[Operator]

The next question comes from Jeremy Hamblin with Craig-Hallum. Please go ahead.

[Jeremy Hamblin, Analyst at Craig-Hallum Capital Group]

Thanks, and I'll add my congratulations on the strong results. Want to come back to the initiatives and in particular the e-com developments here of your exclusive brands. So just first, in terms of what you've done so far with Hawx, Cody James, what type of impact are you seeing online for those brands on bootbarn.com versus what you're seeing with the Hawx or the Cody James you know websites? What are the costs associated with that? And you know, in terms of just the timing of rolling out the next few you know, are they gonna be kind of all rolled out in a similar timeframe? You know, just want to see if you could get some color on that.

[John Hazen, CEO at Boot Barn Holdings Inc]

Sure. As a reminder, you know, if you look at the mix of our e-commerce business, we have bootbarn.com. It's our digital flagship, by far our largest e-commerce site. And then we have other places that we sell, Country Outfitter, Sheplers, Amazon are some of the other channels that we sold on for years. When we look at that bootbarn.com business, which is the majority of our e-commerce business, it continues to perform incredibly well. The customers buying on Cody and Hawx are net new customers. For the most part, these are not people that are transferring over from stores or from bootbarn.com.

[John Hazen, CEO at Boot Barn Holdings Inc]

We're quite confident, given how we look at the customer profiles and bump them up against our B Rewarded program, our 10.6 million B Rewarded customers, and seeing that they don't exist in those databases, that we're gaining net new customers. The marketing strategy for those sites are also very different from what we do with Boot Barn.

[John Hazen, CEO at Boot Barn Holdings Inc]

We are driving awareness of those brands via social, where much of the digital marketing we do for Boot Barn is more, Google advertising and all the different tools that you know the Google and Microsoft offer to target people who are already typing in, "I want to find a white cowboy boot," or, "I wanna find a Western yoke shirt." These sites are about brand awareness via social versus targeting people who have already told the search engine that they have intent. So different way to market them. Again, more about storytelling, drive customers into stores, and from everything we see, they are new customers to Boot Barn overall. On the cost side, sorry, on the cost of the sites, one of the...

[John Hazen, CEO at Boot Barn Holdings Inc]

To the second question, one of the nice things we've done here, and anybody can, you know, see this if you visit bootbarn.com or these sites. These sites are built on Shopify, and it's just much quicker and easier, and there's not a heavy lift from a development or a CapEx standpoint to do this. And so that's, you know, a page from the playbook of many, if not all, of the B2C players in any industry at this point. And so for, you know, if the question behind the question is, is this a big CapEx investment on these sites? It's not. We are nimble. They are quick to stand up. We're gonna launch Shyanne and Cleo here in Q4, and Rank will likely be in Q1.

[Jeremy Hamblin, Analyst at Craig-Hallum Capital Group]

Got it. Helpful. And then just one more. In terms of, you know, traffic counters and what you're learning from conversion rates, how that's tying into some of the storytelling you're doing, and some of the marketing initiatives that you've had. Any learnings that you can share with us from that?

[John Hazen, CEO at Boot Barn Holdings Inc]

Nothing, nothing material right now. We're just about to hit comp traffic counter, so we'll have comp conversion rates. You know, I look at our top-performing stores from a conversion rate standpoint on a regular basis. I'm looking for that positive deviance to kind of tease out what they're doing better than everybody else, the ones with material traffic, of course. And we're gonna use it in this coming fiscal year, use those traffic counters for some of the new digital marketing initiatives. One of the adjustments I've made is the amount of digital marketing dollars we're gonna spend against driving folks or with the goal of driving folks or customers into Boot Barn stores, versus just buying on bootbarn.com or any of the other sites.

[John Hazen, CEO at Boot Barn Holdings Inc]

We'll have more to share on that as we get into next fiscal year.

[Jeremy Hamblin, Analyst at Craig-Hallum Capital Group]

Great. Thanks for taking the questions.

[John Hazen, CEO at Boot Barn Holdings Inc]

Thanks, Jeremy.

[Operator]

The next question comes from Ashley Owens with KeyBanc Capital Markets. Please go ahead.

[Ashley Owens, Analyst at KeyBanc Capital Markets]

Great. Thanks. Maybe just to start to follow up on some of the, you know, our own brands websites here. But as you prepare to launch, you know, Shyanne, Cleo and Wolf, just how should we think about the incremental TAM expansion as you get from reaching new female customers who may not be shopping at Boot Barn stores yet?

[John Hazen, CEO at Boot Barn Holdings Inc]

You know, I think it's gaining market share more than the expansion of the TAM. We up the TAM from $40 billion to $58 billion, and we're gonna do $2.25 billion this year. So when you think of the opportunity, it is more gaining market share than an expansion of the TAM. And it will make it easier for us to tell stories from a Meta and TikTok and further up the funnel standpoint, when we talk about these brands. So, can we gain more market share? I believe we can. That's part of the reason we're building these sites, but it's market share versus expanding the TAM further.

[John Hazen, CEO at Boot Barn Holdings Inc]

I think it's gaining those country lifestyle women's customers, in the case Cleo + Wolf and Shyanne.

[Ashley Owens, Analyst at KeyBanc Capital Markets]

Okay, got it. And then just to follow up a little bit on the gross margin for the fourth quarter, could you just walk us through the clean bridge there, you know, as you lap some of the unusually favorable shrinks from last year? And then also, I think you mentioned some of the lumpiness in freight, where you expect those to kind of settle as we normalize into next year.

[Ashley Owens, Analyst at KeyBanc Capital Markets]

And then another one, just on pricing, as you move to that style-by-style approach for the price increases in the fourth quarter, just how you're thinking about AUR, given some of the third-party price increases that we've already seen been taken in the market, just what you've seen so far in terms of elasticity, particularly where third-party price moves may be going, you know, already taking place in some of the areas that you have overlap in, and then just any specific categories outside of, you know, I think the 195 boot price you mentioned, that you're more mindful of as you implement these changes? Thanks.

[John Hazen, CEO at Boot Barn Holdings Inc]

Yes. So I'll jump in and just start with the AUR question. As we get into the fourth quarter, we expect that to be in that 2%-3% increase for the fourth quarter. And that-

[Jim Watkins, CFO at Boot Barn Holdings Inc]

... contemplates all the price increases, exclusive brands, and third-party goods. And then as we look into next year, we'll give you an update on that more as we move in, you know, get further along. But we typically see kind of a low single-digit AUR increase, and maybe that'll be slightly higher as we move into next year, just given what we've seen with price increases over the last year. And then, as far as the margin bridge, I'd really think about it as a one-quarter blip as far as the shrink and the freight.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

As we move into next year, those should both normalize, and then we'll be back to growing product margin with maybe a slight benefit next year with freight, just given some of the renegotiated contracts that we've had and some of the favorability there, assuming that all the transportation costs and rates stay similar more globally.

[Ashley Owens, Analyst at KeyBanc Capital Markets]

Great. Appreciate the color. Thank you.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Thanks, Ashley.

[Operator]

The next question comes from Jon Keypour with Goldman Sachs. Please go ahead.

[Jon Keypour, VP of Sell-Side Equity Research at Goldman Sachs]

Hey, thank you, guys, for spotting me in. Appreciate it. Just a question about the composition of the 4Q same-store sales guide. It looks like a little bit of a decel online. I just wanna get a sense of why that might be the case, despite the new sites being up and running and given the strength in 3Q. It also looks like, you know, the kind of other side of the coin is that retail is looking a bit better than I expected, despite even the storm impact.

[Jon Keypour, VP of Sell-Side Equity Research at Goldman Sachs]

So I guess on the retail side, what gives you the clarity for, to, you know, behind that guide, and, and kind of like, what have you seen in terms of same-store sales recovery in retail since the storm is mostly abated? And, I think, is how much of the, the confidence there is, is hinging on, the March activation, maybe around, around the Houston Rodeo.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

So I think it's a little too soon to talk about the recovery. I mean, the second of these storms hit this last weekend and we had some store closures on Sunday, and so just a couple of days. So I think what's really giving us the confidence to guide the way we have, both on e-commerce and in stores, is looking at the broader trend coming into, you know, February and March. We look back at what we saw in October, November, December, January, the sales volumes that we've seen, and then we go back into historical seasonality and see how things flow out from a sales perspective based off of what we've seen in the last four months.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

So nothing that we've seen over the last couple of weeks makes us nervous about the way we've guided that. But as far as the Houston Rodeo goes, there is a little bit of a shift between February and March if you're looking at our slides. And so some of last year's March strength really kind of moved over from February. There are also other things happening in March that make it a bigger volume month. It's, you know, spring is starting, people are out there shopping more. And so even outside of the Texas markets, where they do kick off the rodeo season, we do see some nice volume there.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

So we're seeing a broad base across the country, and that's given us the confidence to guide where we've been there. You know, as far as the new exclusive brand sites, there's no—there's not really any marketing slated for those in the—over the next couple of months. It'd be a next year thing. And as a reminder, we look at a 3% marketing spend, and so it would really come from within that budget, moving things and reallocating spend around within that budget.

[Jon Keypour, VP of Sell-Side Equity Research at Goldman Sachs]

Great. Just and then a very, very small follow-up. Oh, sorry, go ahead.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

No, I couldn't remember if I'd covered all of the pieces of the question, so please follow up-

[Jon Keypour, VP of Sell-Side Equity Research at Goldman Sachs]

You did.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

With the follow-up.

[Jon Keypour, VP of Sell-Side Equity Research at Goldman Sachs]

Sure. The last one is just kind of bookkeeping, but, you guys mentioned that there would be buying and occupancy costs from 1Q 2027 landing in 4Q, and you guided for 50 basis points of deleverage in 4Q. So that's inclusive of the pull forward. So is that... That's correct, right? So it seems like the actual kind of-

[Jim Watkins, CFO at Boot Barn Holdings Inc]

That's correct.

[Jon Keypour, VP of Sell-Side Equity Research at Goldman Sachs]

-organic. So the organic buying and occupancy deleverage is actually sequentially better than it was in 3Q.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Yeah. Yeah, the— Right. It's a little bit skewed in the fourth quarter because, compared to last year in the fourth quarter, we have more stores opening at the start of the next year than we had a year ago. And we— The way the bookkeeping works is we record a couple of months of pre-opening rent while we're getting the store built out, set up, stocked, and before we start ringing sales.

[Jon Keypour, VP of Sell-Side Equity Research at Goldman Sachs]

Okay, great.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

It's a good news story that we have more occupancy expense. It just pressures us a little bit now in the fourth quarter, but then as we move forward, that's a positive.

[Jon Keypour, VP of Sell-Side Equity Research at Goldman Sachs]

Right. It implies that the actual kind of, without the pull forward from Q1, it actually is sequentially better in Q4 than it was in Q3. That's sort of what I'm trying to get at. Like, it does actually kind of improve on an apples-to-apples kind of basis. Is that right?

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Yeah, that's right.

[Jon Keypour, VP of Sell-Side Equity Research at Goldman Sachs]

Okay.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Yes.

[Jon Keypour, VP of Sell-Side Equity Research at Goldman Sachs]

Great. Thank you. Perfect.

[Jim Watkins, CFO at Boot Barn Holdings Inc]

Thank you, John.

[Operator]

This concludes our question-and-answer session and the Boot Barn Holdings, Inc. third quarter 2026 earnings call. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Jim Watkins, CFO
• John Hazen, CEO
• Mark Dedovesh, SVP of Investor Relations and Finance

Analysts

• Alexia Morgan, Assistant Vice President of Equity Research at Piper Sandler
• Ashley Owens, Analyst at KeyBanc Capital Markets
• Chris Nardone, Analyst at Bank of America
• Dylan Carden, Research Analyst at William Blair
• Janine Stichter, Managing Director and Consumer Retail and Lifestyle Brands Analyst at BTIG
• Jay Sole, Managing Director at UBS
• Jeremy Hamblin, Analyst at Craig-Hallum Capital Group
• Jon Keypour, VP of Sell-Side Equity Research at Goldman Sachs
• Jonathan Komp, Senior Research Analyst at Baird
• Matthew Boss, Equity Research Analyst at JPMorgan
• Max Rakhlenko, Managing Director at TD Cowen
• Steven Zaccone, Senior Analyst of Equity Research and Retail/ Broadlines and Hardlines at Citi