2 0 2 1 A N N U A L R E P O R T
IDYLLWIND
CODY JAMES
MOONSHINE SPIRIT
SHYANNE
CODY JAMES WORK
HAWX
Dear Shareholders,
I would like to begin by reflecting on the past year and the challenges we all encountered as a result of
COVID-19. Over the past 16 months, the world has faced unprecedented times, and many have suffered greatly
due to the global health pandemic. I am personally grateful for our healthcare professionals, doctors and scientists
who have worked tirelessly to take care of the sick and develop and distribute effective vaccines. I would also like
to thank all those within the Boot Barn organization who have demonstrated tremendous leadership as they
continue to serve our customers. While there is still uncertainty in the external environment, I am more confident
than ever in the resiliency of Boot Barn and the long-term potential that Boot Barn holds as the market leader in
the western and work industry.
While this was a year of great challenges, it was also a year of great accomplishment for Boot Barn.
Despite the impact from COVID-19 and subsequent macro-economic headwinds, we were able to achieve very
strong results. Consolidated same store sales grew 3%, cycling 5% same store sales growth in fiscal 2020 and 10%
growth in the prior year. Our continued focus on full-price selling and commitment to profitability drove
consolidated operating profit growth of 100 basis points during fiscal 2021, to 9.7% from 8.7% in fiscal 2020.
Earnings per diluted share grew 23% on a tax adjusted basis. We are extremely pleased with the earnings power
demonstrated by the business given the myriad of challenges over the last year.
We are continuing to build a national lifestyle retail brand by focusing on the execution of each of Boot
Barn’s four strategic initiatives, including:
1. Driving same-store sales growth
Same store sales growth in our stores improved significantly as the year progressed. Decreased traffic in
our stores resulting from customers staying at home in response to the COVID-19 crisis and temporary store
closures led to a same store sales decline in our retail stores during the first half of the year of more than 17%. A
strong holiday quarter, a much-improved macroeconomic environment, and contributions from our field team
drove significant increases in our retail store same store sales in the second half of the year, which culminated in a retail
store same store sales decline of only 1% for the year. The improvement in sales as the year progressed was broad-based
and across nearly all merchandise categories and geographic regions. During the year we also created the Just Country
segment. As part of this initiative, we augmented our assortment of hiking boots, outerwear, casual footwear and
apparel. We believe that this work, coupled with advantageous consumer trends towards being outdoors and
dressing more casually, has enabled us to further increase sales and capture a broader group of customers that will
serve us well for ongoing growth in the future.
2. Strengthening our omni-channel leadership
Same store sales in our e-commerce business increased 23.6% for the year. Our continued focus on
improvement in e-commerce profitability helped drive a significant increase in e-commerce EBIT during the fiscal
year. Several omni-channel initiatives we implemented over the past two years, including buy online pick-up in
store, buy online curbside pickup, in-store fulfillment, same day delivery and buy online return in store, were well
received by our customers. We continue to develop faster and more effective ways to deliver e-commerce orders
to our customers, further enhancing customer service and mitigating freight costs. Additionally, we are using many
of these new capabilities to drive increased traffic to the stores which is helping us to both drive incremental store
sales as well as grow the percent of our customers that shop across both channels. These capabilities should serve
us well going forward as they drive customer loyalty and strengthen our competitive position against pure e-
commerce players. As we look to fiscal 2022, our focus will remain on augmenting our omni-channel service
offerings while continuing to build the profitability of that channel.
3. Increasing the penetration of our exclusive brand portfolio and expanding our merchandise margin
We are extremely proud of the outsized growth we have experienced in this portion of our business. Our
fiscal 2021 exclusive brand penetration grew approximately 170 basis points over the prior year, to 23.7%. We are
very pleased with our penetration growth despite the challenges we have faced as a result of COVID-19.
The high-quality nature of our exclusive product is evidenced by their representation as top selling brands
in our stores. Cody James, Shyanne, Idyllwind, and Hawx were each in our top 10 selling brands in the store during
the year. As we look to fiscal 2022, we have already seen nice improvement in the supply chain. As a result, we
expect exclusive brand penetration to return to approximately 250 basis points of growth in fiscal 2022.
4. Expanding our store base
Adding new stores in attractive markets continues to be an important growth driver for sales and market
share for Boot Barn. During this past year, we added 15 stores, bringing our total store count to 273 stores across
36 states. We are pleased with our new store performance during fiscal 2021, given the difficult environment and
uncertainty with how new stores would perform during the pandemic. New stores opened this past year have
exceeded our sales plans and are expected to payback within our targeted 3-year period or better.
While fiscal 2021 proved to be a challenging year, I am proud of the resiliency of this organization and the
overall strength of the Boot Barn model. We have proven our ability to navigate as a company through difficult
times, and I believe we will continue to fortify our leadership position in the western and work industry. I am
looking forward to fiscal 2022 and the opportunities we have to continue to build the business.
Sincerely,
Jim
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 27, 2021
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001 - 36711
BOOT BARN HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
90 - 0776290
(I.R.S. Employer
Identification No.)
15345 Barranca Pkwy
Irvine, CA 92618
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (949) 453 - 4400
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.0001 par value
Trading Symbol
BOOT
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well - known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non - accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b - 2 of the Exchange Act.
Large accelerated filer ☒
Accelerated filer ☐
Non - accelerated filer ☐
Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm
that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b - 2 of the Act). Yes ☐ No ☒
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of the end of its most recently completed
second fiscal quarter was approximately $593.2 million. Shares held by each officer, director and person owning more than 10% of the outstanding
voting and non-voting stock have been excluded from this calculation because such persons may be deemed to be affiliates of the registrant. This
determination of potential affiliate status is not necessarily a conclusive determination for other purposes. Shares held include shares of which certain
of such persons disclaim beneficial ownership.
The number of outstanding shares of the registrant’s common stock, $0.0001 par value, as of May 10, 2021 was 29,251,626.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement for the 2021 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A within
120 days after the end of the 2021 fiscal year, are incorporated by reference into Part III of this Form 10 - K.
TABLE OF CONTENTS
Page
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Selected Consolidated Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Consolidated Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Exhibits and Financial Statement Schedules
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Fiscal Year
We operate on a fiscal calendar that results in a 52- or 53 - week fiscal year ending on the last Saturday of
March unless April 1st is a Saturday, in which case the fiscal year ends on April 1st. In a 52 - week fiscal year, each
quarter includes thirteen weeks of operations; in a 53 - week fiscal year, the first, second and third quarters each include
thirteen weeks of operations and the fourth quarter includes fourteen weeks of operations. The data presented contains
references to fiscal 2021, fiscal 2020, and fiscal 2019, which represent our fiscal years ended March 27, 2021, March 28,
2020 and March 30, 2019, respectively. Fiscal 2021, 2020 and 2019 were each 52 - week periods.
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Item 1. Business.
Our Company
PART I
We are the largest lifestyle retail chain devoted to western and work - related footwear, apparel and accessories
in the United States. With 273 stores in 36 states as of March 27, 2021, we have more than three times as many stores as
our nearest direct competitor that sells primarily western and work wear, and believe we have the potential to grow our
domestic store base to 500 stores. Our stores, which are typically freestanding or located in strip centers, average 10,500
selling square feet and feature a comprehensive assortment of brands and styles, coupled with attentive, knowledgeable
store associates. We target a broad and growing demographic, ranging from passionate western and country enthusiasts
to workers seeking dependable, high - quality footwear and apparel. We strive to offer an authentic, one - stop shopping
experience that fulfills the everyday lifestyle needs of our customers and, as a result, many of our customers make
purchases in both the western and work wear sections of our stores. Our store environment, product offering and
marketing materials represent the aesthetics of the true American West, country music and rugged, outdoor work. These
threads are woven together in our motto, “Be True”, which communicates the genuine and enduring spirit of the Boot
Barn brand.
Our product offering is anchored by an extensive selection of western and work boots and is complemented by a
wide assortment of coordinating apparel and accessories. Many of the items that we offer are basics or necessities for our
customers’ daily lives and typically represent enduring styles that are not meaningfully impacted by changing fashion
trends. Accordingly, approximately 75% of our store inventory is kept in stock through automated replenishment
programs. Our boot selection, which comprises approximately one - third of each store’s selling square footage space, is
merchandised on self - service fixtures with western boots arranged by size and work boots arranged by style and
function. This allows us to display the full breadth of our inventory and deliver a convenient shopping experience. We
also carry market - leading assortments of denim, western shirts, cowboy hats, belts and belt buckles, western - style
jewelry and accessories. Our western assortment includes many of the industry’s most sought - after brands, such as Ariat,
Cinch, Cody James, Corral, Dan Post, Durango, El Dorado, Idyllwind, Justin, Laredo, Lucchese, Miss Me, Montana
Silversmiths, Moonshine Spirit, Shyanne, Stetson, Tony Lama, Twisted X, Resistol and Wrangler. Our work assortment
includes rugged footwear, outerwear, overalls, denim and shirts for the most physically demanding jobs where durability,
performance and protection matter, including safety - toe boots and flame - resistant and high - visibility clothing. Among
the top work brands sold in our stores are Carhartt, Cody James Work, Dickies, Georgia Boot, Hawx, Thorogood,
Timberland Pro and Wolverine. Our merchandise is also available on our e - commerce websites.
Boot Barn was founded in 1978 and, over the past 43 years, has grown both organically and through successful
strategic acquisitions of competing chains. We have rebranded and remerchandised the acquired chains under the Boot
Barn banner. We believe that our business model and scale provide us with competitive advantages that have contributed
to our consistent and strong financial performance, generating sufficient cash flow to support national growth.
Acquisitions
G.&L. Clothing, Inc.
On August 26, 2019, Boot Barn, Inc. completed the acquisition of G.&L. Clothing, Inc. (“G.&L. Clothing”), an
individually-owned retailer operating one store in Des Moines, Iowa. As part of the transaction, Boot Barn, Inc.
purchased the inventory, entered into new leases with the store’s landlord and offered employment to the G.&L. Clothing
team. The primary reason for the acquisition of G.&L. Clothing was to further expand the Company’s retail operations in
Iowa. The cash consideration paid for the acquisition was $3.7 million.
Drysdales, Inc.
On July 3, 2018, Boot Barn, Inc. completed the acquisition of assets from Drysdales, Inc. (“Drysdales”), a
retailer with two stores in Tulsa, Oklahoma. As part of the transaction, Boot Barn, Inc. purchased the inventory, entered
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into new leases with the stores’ landlord, offered employment to the Drysdales team at both store locations and assumed
certain customer credits. The primary reason for the acquisition of Drysdales was to further expand the Company’s retail
operations in Oklahoma. The cash consideration paid was $3.8 million.
Lone Star Western & Casual LLC
On April 24, 2018, Boot Barn, Inc. completed the acquisition of Lone Star Western & Casual LLC (“Lone
Star”), an individually owned retail company with three stores in Waxahachie, Corsicana and Athens, Texas. As part of
the transaction, Boot Barn, Inc. purchased the inventory, entered into new leases with the stores’ landlord and offered
employment to the Lone Star team at all three store locations. The primary reason for the acquisition of Lone Star was to
further expand the Company’s retail operations in Texas. The cash consideration paid for the acquisition was
$4.4 million.
Woods Boots Asset Acquisition
On September 11, 2017, we acquired assets from Wood’s Boots, a four-store family-owned retailer with stores
in Midland and Odessa, Texas. As part of the transaction, we purchased the inventory, entered into new leases with the
stores’ landlord, offered employment to the Wood’s Boots team at all four store locations and assumed certain customer
credits. Based on the fair value analysis of the net assets acquired and liabilities assumed, the inventory was valued at
$2.8 million, and the customer credits were valued at less than $0.1 million.
Country Outfitter Asset Acquisition
On February 16, 2017, we acquired all rights and interest in the www.countryoutfitter.com website and
tradename, along with the associated social media platforms. We additionally purchased a customer email list and
assumed Country Outfitter’s merchandise credits. The Country Outfitter e-commerce website sells primarily country and
western fashion merchandise. The Country Outfitter assets were purchased for $1.8 million of cash and assumed
liabilities. The Company operates www.countryoutfitter.com as a website separate from its other e-commerce sites.
Sheplers Acquisition
On June 29, 2015, we acquired Sheplers, Inc. and Sheplers Holding Corporation (collectively with Sheplers,
Inc. “Sheplers”), a western lifestyle company with 25 retail locations across the United States and an e-commerce
business. We refer to the acquisition as the “Sheplers Acquisition”. We financed the Sheplers Acquisition with
borrowings under a senior secured asset-based revolving credit facility for which Wells Fargo Bank, National
Association is agent (the “June 2015 Wells Fargo Revolver”), and a syndicated senior secured term loan for which GCI
Capital Markets LLC is agent (the “2015 Golub Term Loan”). Through the Sheplers Acquisition, we added eight new
markets, expanded both our Texas (Dallas and San Antonio) and Denver markets, and greatly increased our omni-
channel capabilities as Sheplers had a leading e-commerce platform (“Sheplers e-commerce”). We rebranded 19 of the
25 retail stores acquired through the Sheplers Acquisition, and closed the remaining six stores during fiscal 2016.
Our Competitive Strengths
We believe the following strengths differentiate us from our competitors and provide a solid foundation for
future growth:
Powerful lifestyle brand. The Boot Barn brand is built on western lifestyle values that are core to American
culture. Our deep understanding of this lifestyle enables us to create long - lasting relationships with our customers who
embody these ideals. Our brand is highly visible through our sponsorship of local and national rodeos, stock shows,
concerts and country music artists. We sell our products through pop - up shops at several of the largest events that we
sponsor. We believe these grassroots marketing efforts make our brand synonymous with the western lifestyle, validate
our brand’s authenticity and establish Boot Barn as the trusted specialty retailer for all of our customers’ everyday needs.
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Strong e-commerce positioning. We offer a compelling shopping experience to our customers, including 273
brick-and-mortar stores combined with our e-commerce websites consisting primarily of bootbarn.com, sheplers.com
and countryoutfitter.com. Bootbarn.com and sheplers.com offer a compelling every-day low price shopping experience
catered towards a lifestyle customer with western roots and a strong work influence. Countryoutfitter.com has a curated
assortment appealing to a more fashion-based country lifestyle customer. Each of our e-commerce sites has distinct
brand positioning and provides a differentiated shopping experience to our customers.
Fast growing specialty retailer of western and work wear in the U.S. Our broad geographic footprint, which
currently spans 36 states, provides us with significant economies of scale, enhanced supplier relationships, the ability to
recruit and retain high quality store associates and the ability to reinvest in our business at levels that we believe exceed
those of our competition.
Loyal customer base. Our customers come to us for many aspects of their everyday footwear and clothing
needs because of the breadth and availability of our product offering. Our customer loyalty program, B Rewarded,
enhances our connection and relationship with our customers. Our loyalty program has grown rapidly since its inception
in fiscal 2011 and as of March 27, 2021 includes approximately 4.7 million members who have purchased merchandise
from us in the last three fiscal years. The majority of our sales are made to these customers. We leverage this database,
which provides useful information about our customers, to enhance our marketing activities across our stores and e-
commerce websites, refine our merchandising and planning efforts and assist in our selection of sites for new stores.
Differentiated shopping experience. We deliver a one - stop shopping experience that engages our customers
and, we believe, fulfills their lifestyle needs. Our stores are designed to create an inviting and engaging experience and
include prominent storefront signage, a simple and easy - to - shop layout and a large and conveniently arranged
self - service selection of boots. We offer significant inventory breadth and depth across a range of boots, apparel and
accessories. Additionally, all of our stores are equipped with touch screen devices that allow our customers to access
millions of additional boots, apparel and other items from our e-commerce warehouse inventory as well as the inventory
at most of our larger third-party vendors, purchase these items in store, and, in most cases, receive free shipping. We also
have touch screen devices that allow customers to browse our in-store assortment and select an item that meets their
functional requirements and preferences. In fiscal 2021, we continued to enhance customer service with our omni-
channel initiatives, including buy online pick up in-store, buy online pick up curbside, buy online return in store, buy
online ship from store, and same day delivery. We believe that our strong, long - lasting supplier relationships enhance
our ability to provide a compelling merchandise assortment with a strong in - stock position both in - store and online. Our
knowledgeable store associates are passionate about our merchandise and deliver a high level of service to our
customers. These elements help promote customer loyalty and drive repeat visits.
Compelling merchandise assortment and strategy. We believe we offer a diverse merchandise assortment
that features the most sought - after western and work wear brands, well - regarded niche brands and exclusive private
brands across a range of merchandise categories including boots, apparel and accessories. We have a core assortment of
styles that serves as a foundation for our merchandising strategy and we augment and tailor that assortment by region to
cater to local preferences.
Portfolio of exclusive private brands. We have leveraged our scale, merchandising experience and customer
knowledge to launch a portfolio of private brands exclusive to us, which primarily include Shyanne, Cody James,
Moonshine Spirit, Idyllwind, Hawx, Cody James Work, and El Dorado. Our private brands are currently available in
stores, on bootbarn.com, sheplers.com and countryoutfitter.com and offer high - quality western and work boots as well as
apparel and accessories for men, ladies and kids. Each of our private brands, which address product and price segments
that we believe are underserved by third - party brands, offers exclusive products to our customers and has historically
achieved better merchandise margins than the third-party brands that we carry. Customer receptivity and demand for our
private brands have been strong, demonstrated by the increasing penetration of private brands and sales momentum
across our store base and e-commerce websites.
Versatile store model with compelling unit economics. We have successfully opened and currently operate
stores that generate strong cash flow, consistent store - level financial results and an attractive return on investment across
a variety of geographies, markets, store sizes and location types. We operate stores in markets characterized as
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agribusiness centers and ranch regions, and in other various geographies throughout the United States. Our stores are
also successful in small, rural towns, suburban and major metropolitan areas.
Our new store model requires an average net cash investment of approximately $0.8 million and targets an
average payback period of three years. Our lean operating structure, coupled with our strong supplier relationships, has
allowed us to grow with minimal supply chain investments as most of our products ship directly from our suppliers to
our stores. We believe that our proven retail model and attractive unit economics support our ability to grow our store
footprint in both new and existing markets across the U.S.
Highly experienced management team and passionate organization. Our senior management team has
extensive experience across all key retail disciplines and has been instrumental in developing a robust and scalable
infrastructure to support our growth. In addition to playing an important role in developing our long - term growth
initiatives, our senior management team embraces the genuine and enduring qualities of the western and work lifestyle
and has created a positive culture of enthusiasm and entrepreneurial spirit which is shared by team members throughout
our entire organization.
Our Growth Strategies
We are pursuing several strategies to continue our profitable growth, including:
Continuing omni-channel leadership. Our growing national footprint, social media following and broader
marketing efforts drive traffic to our stores and e - commerce websites. We operate our e-commerce websites as an
alternative to shopping in the stores, which allows us to reach customers outside our geographic footprint. We continue
to make investments in both online and in-store advertising, aimed at increasing traffic to our e - commerce websites,
which reached more than 69 million total visits in fiscal 2021 compared to more than 63 million total visits in fiscal
2020, and increasing the amount of merchandise purchased by customers who visit our websites, while improving the
shopping experience for our customers. Additionally, all of our stores are equipped with touch screen devices that allow
our customers to access millions of additional boots, apparel and other items from our e-commerce warehouse inventory
as well as the inventory at most of our larger third-party vendors, purchase these items in store, and, in most cases,
receive free shipping. We also have touch screen devices that allow customers to browse our in-store assortment and
select an item that meets their functional requirements and preferences. In fiscal 2021, we continued to enhance customer
service with our omni-channel initiatives, including buy online pick up in-store, buy online pick up curbside, buy online
return in store, buy online ship from store, and same day delivery. We have also made investments in our e-commerce
infrastructure, including adding automation to our warehouses to support expanding e-commerce growth. Our e-
commerce sales as a portion of total consolidated net sales were 18.6% and 15.9% in fiscal 2021 and fiscal 2020,
respectively.
Driving same store sales growth. We believe that we can continue to grow our same store sales by increasing
our brand awareness, driving additional traffic to our stores and e-commerce websites and increasing the amount of
merchandise purchased by customers while visiting both our stores and e-commerce channels. Our management team
has several initiatives in place to accelerate growth, enhance our store associates’ selling skills, drive store - level
productivity and increase customer engagement through our loyalty program.
Building our private brand portfolio. We believe we can achieve gross margin enhancement by increasing
the penetration of our private brand sales. As of March 27, 2021, our private brands primarily include Shyanne, Cody
James, Moonshine Spirit, Idyllwind, Hawx, Cody James Work, and El Dorado, and are sold in our stores and on our
e-commerce websites. Each of our private brands, which address product and price segments that we believe are
underserved by third - party brands, offers high quality exclusive products to our customers and has historically achieved
better merchandise margins than the third-party brands that we carry.
Expanding our store base. Driven by our compelling store economics, we believe that there is a significant
opportunity to expand our store base in the U.S. During fiscal 2021, we opened 15 new stores with no acquisitions. We
typically rebrand acquired stores within twelve months from the date of acquisition. Based on an extensive analysis, we
believe that we have the potential to grow our domestic store base of 273 stores as of March 27, 2021 to approximately
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500 stores over time. Over the long-term we plan to target store openings in new and existing markets and in adjacent
and underserved markets that we believe will be receptive to our concept. Over the past several years, we have made
investments in personnel, information technology, warehouse infrastructure and e - commerce platforms to support the
expansion of our operations.
Leveraging our economies of scale. We believe that we have a variety of opportunities to increase the
profitability of our business over time. Our ability to leverage our infrastructure and drive store - level productivity due to
economies of scale is expected to be a primary driver of our improvement in profitability. We intend to continually refine
our merchandise mix and increase the penetration of our private brands to help differentiate us from our competitors and
achieve higher merchandise margins. We also expect to capitalize on additional economies of scale in purchasing and
sourcing as we grow our geographic footprint and online presence.
Enhancing brand awareness. We intend to enhance our brand awareness and customer loyalty in a number of
ways, such as continuing to grow our store base and our online and social media initiatives. We use broadcast media
such as radio, television and outdoor advertisements to reach customers in new and existing markets. We also maintain
our strong market position through our grassroots marketing efforts, including sponsorship of rodeos, stock shows and
other western industry events, as well as our association with country music, including partnerships with Miranda
Lambert and Brad Paisley and up - and - coming country musicians. We have an effective social media strategy with high
customer engagement, as evidenced by our strong following on Facebook and Instagram.
Our Market Opportunity
We participate in the large, growing and highly fragmented western and work wear markets of the broader
apparel and footwear industry. We offer a variety of boots, apparel and accessories that are basics or necessities for our
customers’ daily lives. Many of our customers are employed in the agriculture, oil and gas, manufacturing and
construction industries, and are often country and western enthusiasts. We believe that growth in the western wear
market has been and will continue to be driven by the growth of western events, such as rodeos, the popularity of country
music and the continued strength and endurance of the western lifestyle. As a result of the coronavirus (“COVID - 19”)
pandemic, public and private sector policies and initiatives intended to reduce the transmission of COVID - 19, such as
the imposition of travel restrictions, mandates from federal, state and local authorities to avoid large gatherings of
people, quarantine or “shelter-in-place”, and the promotion of social distancing significantly impacted events around the
country. As a result of these initiatives, many large public events including rodeos, concerts and country music festivals
were cancelled or otherwise postponed. We believe additional cancellations and postponements will negatively impact
near-term growth in the western wear market. We believe that growth in the work wear market has been and will
continue to be driven by increasing activity in construction and manufacturing. Additionally, government regulations for
workplace safety have driven and, we believe, will continue to drive, sales in specific categories, such as safety - toe boots
and flame - resistant and high - visibility clothing for various industrial and outdoor occupations. The COVID - 19 global
pandemic resulted in an economic slowdown impacting many industries and both public and private sector jobs. As a
result of this pressure, the global demand for oil was significantly impacted and drove the price of oil down. We believe
these factors could negatively impact near-term growth in the work wear market.
Our Sales Channels
During fiscal 2021, we continued to enhance our omni-channel capabilities. Our current omni-channel presence
consists of both brick-and-mortar stores as well as an e-commerce platform, consisting primarily of bootbarn.com,
sheplers.com and countryoutfitter.com.
Our stores
As a lifestyle retail concept, our stores offer a broad array of merchandise to outfit an entire family, while
working during the week, relaxing on the weekend, or dressing up for an evening out. Our stores are easy to navigate
with clear sight lines to all major product categories. Our preferred store layout has ladies’ and children’s apparel on one
side of the store and men’s western and men’s work apparel on the other side. Our basic denim is usually merchandised
on shelving placed on the exterior walls, while our premium - priced, more stylized denim and clothing are prominently
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displayed on floor fixtures and mannequins. We utilize the space in the front of the store for accessories such as hats,
belts, jewelry, handbags, home merchandise, gifts and various impulse purchase items.
Boots, our signature category, anchor the rear of the store with an expansive assortment displayed on fixtures up
to six shelves in height. We offer virtually all of our boots in pairs out on the sales floor. To reflect the typical purchasing
decision process of each of our customer segments, we arrange all western boots by size and all work boots by function
and brand. While our knowledgeable and friendly store associates are readily available to assist our customers, the store
design facilitates a self - service shopping experience.
Our stores are generally located in or near high visibility, power and large neighborhood shopping centers with
trade areas of five or more miles. Our stores average 10,500 selling square feet and feature a comprehensive assortment
of brands and styles, coupled with attentive, knowledgeable store associates. Our stores are designed and managed to
drive profitability and, we believe, create a compelling customer shopping experience.
During fiscal 2021, we opened 15 new stores. As of March 27, 2021, our retail footprint included 273 stores in
36 states across the U.S. Two of our stores are operated under the “American Worker” name. Our American Worker
stores primarily feature work - related footwear, apparel and accessories. We do not currently intend to open additional
American Worker stores.
7
The following table shows the number of stores in each of the 36 states in which we operated as of March 27,
2021.
State
Alabama
Arkansas
Arizona
California
Colorado
Florida
Georgia
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Mexico
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
South Dakota
Tennessee
Texas
Utah
Virginia
Washington
Wisconsin
Wyoming
Total
E-commerce
Number of
stores
2
1
14
53
13
8
3
3
1
4
6
4
3
6
3
1
2
4
2
11
7
6
6
2
8
4
4
3
2
10
58
2
3
4
1
9
273
Our e - commerce websites are an integral part of our brand and allow us to further build awareness in our
current markets and reach customers not served by our current geographic footprint. During fiscal 2021, we had more
than 69 million total visits to our websites and we sold merchandise to customers in all 50 states. Approximately 3.3% of
our total e - commerce revenue for fiscal 2021 was generated from customers outside of the United States. Such
foreign - source revenue constituted approximately 0.6% of our overall net sales in fiscal 2021.
Our growing national footprint and broader marketing efforts drive traffic to our bootbarn.com website, which
in turn also drives traffic to our stores. We believe that many customers, especially those shopping for boots, browse
online at bootbarn.com and then visit our stores to make their purchases to ensure a proper fit. As a multi - channel
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retailer, we are implementing technology initiatives that integrate in - store and e - commerce platforms into one seamless
customer experience. As an example, we have implemented in-store touch screen devices to expand the product offering
available to our in-store customers, including additional styles, colors and sizes not carried in the store. In fiscal 2021,
we continued to enhance customer service with our omni-channel initiatives, including buy online pick up in-store, buy
online pick up curbside, buy online return in store, buy online ship from store, and same day delivery.
Our e-commerce businesses are every-day low price models. For all of our e-commerce brands, we
communicate information on current promotions and upcoming events on our e - commerce websites, which helps drive
purchases online and traffic to our stores. We continue to improve follow - up email communication related to order
confirmations, as well as offer boot care and other accessories associated with boot purchases.
Store expansion opportunities and site selection
We have substantial experience in opening stores in new and existing geographic markets. During the last three
fiscal years, we have successfully added, on a net basis, 47 new stores through a combination of organic growth and
strategic acquisitions. We evaluate potential new locations in light of a variety of criteria, including local demographics
and population, the area’s industrial base, the existing competitive landscape, occupancy costs, store visibility, traffic,
environmental considerations, co - tenancy and accessibility. We also consider a region’s total store potential to help
ensure efficiencies in store management and media spending. Most of our stores are in high - traffic and highly visible
locations and many have freeway signage. Stores located in metropolitan areas are typically established in high - density
neighborhoods, and stores located in rural areas are typically established near highways or major thoroughfares.
Based on an extensive internal analysis of our current customer base, store performance drivers and competitor
penetration, we believe that the U.S. market supports the ability to grow our current domestic store base to
approximately 500 stores. We utilized multiple methods for measuring market size, including a review of demographic
and psychographic factors on a state - by - state basis. We supplemented that data by analyzing our share of the geographic
markets in which we currently operate and extrapolating that share to new geographic markets. Based on our market
analysis, we have created a regional and state - by - state development plan to strategically extend our store portfolio.
Careful consideration was given to operational constraints and merchandising differences in new and existing markets,
while balancing the relevant risks associated with opening stores in those markets.
Over the past several years, we have invested in construction and real estate resources, information technology
and warehouse infrastructure to support the expansion of our operations. In addition, we have developed a model for new
stores that assumes a leased 8,000 to 12,000 square foot space, requires an average net cash investment of approximately
$0.8 million and targets an average payback period of three years. We believe that under this model we can grow our
store base by approximately 10% annually over the next several years without substantially modifying our current
resources and infrastructure.
Store Management and Training
We have a strong culture focused on providing superior customer service. We believe that our store associates
and managers form the foundation of the Boot Barn brand. We recruit people who are welcoming, friendly and
service - oriented, and who often live the western lifestyle or have a genuine affinity for it. We have a positive culture of
enthusiasm and entrepreneurial spirit throughout the Company, which is particularly strong in our stores. Given the
lifestyle nature of the Boot Barn brand, we have developed a natural connection between our customers and our store
associates.
Given the importance of both fit and function in selling much of our product, we utilize a well - developed sales,
service and product training program. We provide over 20 hours of training for new store associates, as well as ongoing
product, sales and leadership training. Additionally, we provide home office and supplier - led workshops on products,
selling skills and leadership at our annual three - day store manager meeting. Our store management training programs
emphasize building skills that lead to effective store management and overall leadership. Our store managers are
responsible for hiring and staffing our stores and are empowered with the sales, customer service and operational tools
necessary to monitor employee and store performance. We believe that our continued investments in training our
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employees help drive loyalty from our store associates and, in turn, our customers. We are committed to providing the
right merchandise solution for each of our customers based on the ultimate end use of our products. Our goal is to train
each of our store associates to be able to guide a customer throughout a store and provide helpful knowledge on product
fit, functions and features across our departments. Rather than rely heavily on sales commissions and supplier - specific
incentive programs, we utilize a system under which the vast majority of our store associates’ compensation is based on
an hourly wage. We believe that this produces a team - oriented culture, creates a less pressured selling environment and
helps ensure that our store associates are focused on the specific needs of our customers.
Merchandising
Strategy
We seek to establish our stores as a one - stop destination for western and work - related footwear, apparel and
accessories. Our merchandising strategy is to offer a core assortment of products, brands and styles by store, department
and price point. We augment and tailor this assortment by region to cater to local preferences such as toe profiles for
western boots, styling for western apparel, and functions and features for work apparel and work boots depending on
climate and the local industries served. In addition, we actively maintain a balance between third party brands and our
own brands that, we believe, offers our customers a compelling mix between selection, product and value.
Our business is moderately seasonal and as a result our revenues fluctuate from quarter to quarter. The third
quarter of our fiscal year, which includes the Christmas shopping season, has historically produced higher sales and
disproportionately higher operating results than the other quarters of our fiscal year. Historically, neither the western nor
the work component of our business has been meaningfully impacted by fashion trends or seasonality. We believe that
many of our customers are driven primarily by utility and brand, and our best - selling styles tend to be items that carry
over from year to year with only minor updates. In fiscal 2021, fiscal 2020 and fiscal 2019 we generated approximately
34%, 34% and 33% of our net sales during our third fiscal quarter, respectively.
We have a minimal amount of seasonal merchandise that could necessitate significant markdowns. This allows
us to implement automated replenishment systems for approximately 75% of our store merchandise, meaning that, as
sales are captured in a store’s point of sale system, recommended purchase orders are systematically generated for
approval by our merchandising group, ensuring our strong in - stock inventory position. As a result, demand and margins
for the majority of our products are fairly predictable, which reduces our inventory risk. Unfavorable economic
conditions, including those caused by COVID - 19, could leave us with either excess inventory or a shortage of inventory
and increased pressure on our margins. For more information about the risks, uncertainties, and other factors that could
affect our future results, please see Item 1A, Risk Factors, of this Annual Report on Form 10 - K.
Our products
During fiscal 2021, our products contributed to overall sales in the following manner:
• Gender—Men’s merchandise accounted for approximately 65% of our sales with the balance being ladies,
kids and unisex merchandise.
•
Styling—Western styles comprised approximately two thirds of our sales, with work - related and other
styles making up the balance.
• Product category—Boots accounted for just over half of our sales, with apparel comprising an additional
32% and the balance consisting of hats, gifts, accessories and home merchandise.
Throughout our long history we have maintained collaborative relationships with our key suppliers. These
relationships, coupled with our scale, have allowed us to carry a wide selection of popular and niche brands, including
Ariat, Carhartt Workwear, Cinch, Corral, Dan Post, Georgia Boot, Justin Boots, Keen, Lucchese, Rocky, Stetson,
Timberland, Tony Lama, Twisted X, Wolverine and Wrangler. In many cases, we are one of the largest accounts of our
suppliers and have become important as the largest specialty retailer of western and work wear in the U.S. As a result,
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we have several advantages relative to our competitors, including increased buying power and access to first - to - market
or limited-edition products. This provides us with competitive differentiation and the ability to generate higher
merchandise margins.
Our scale has also allowed us to introduce our own proprietary western wear brands, Shyanne and Cody James,
which offer high - quality western boots, shirts, jackets and hats for women and men, respectively. We also have an
exclusive license agreement with country music star Brad Paisley, who designs a collection of boots, apparel and
accessories for us, under the brand name Moonshine Spirit, that reflect his lifestyle and personality. In fiscal 2019 we
entered into a new partnership with country music artist Miranda Lambert, to develop a lifestyle brand, Idyllwind,
inspired by her music and creative talents, which includes boots, apparel and accessories. In fiscal 2020 we developed
two additional private brands, Hawx and Cody James Work. These brands offer high quality work wear and work boots
to our customers. We created these brands to address segments that we believe are underserved by third - party brands.
We have a dedicated product development team that designs and sources merchandise from suppliers around the world.
These product assortments are exclusive to Boot Barn and are merchandised and marketed as if they were third - party
brands both in our stores and on our e-commerce websites. In fiscal 2021, sales from our private brand products
accounted for approximately 23.7% of our consolidated sales including our stores and e-commerce websites. These
private brands differentiate us from our competitors and have historically produced higher incremental merchandise
margins than the third - party brands that we carry.
Planning and allocation
We believe that we have assembled a talented and experienced team in both the buying and merchandise
planning functions. The experience of our team is critical to understanding the technical requirements of our
merchandise based on region and use, such as the appropriate safety toe regulations for work boots in a particular
industry. The team is constantly managing our replenishment model to ensure a high in - stock position by stock keeping
unit, or SKU, on a store - by - store basis. Our merchandising team optimizes the product selection, mix and depth across
our stores by analyzing demand on a market - by - market basis, continuously reviewing our sell - through results,
communicating with our suppliers about local market preferences and new products, shopping our competitors’ stores,
and immersing themselves in trade and western lifestyle events including rodeos, country music concerts and other
industry - specific activities. Our merchandising team also makes frequent visits to our stores and partners with our
regional, district and store managers to refine the merchandise assortment by region. Our team has demonstrated the
ability to effectively manage merchandising, pricing and promotional strategies across our store base.
To keep the product assortment fresh, we reposition a small portion of our merchandise on the sales floor every
month. To drive traffic to our stores and create in - store energy and excitement, we execute a promotional calendar that
showcases select brands or merchandise categories throughout the year and rotates on a monthly cadence. Our
promotional activity also enables us to consistently engage with our customers both online and in - store, as well as
through our various marketing media. Our ability to optimize the price for each merchandise category on a
market - by - market basis, helps us to maximize profitability while remaining price competitive.
Marketing and Advertising
Our marketing strategy is designed to build brand awareness, acquire new customers, enhance customer loyalty
and drive in - store and online transactions. We customize our marketing mix for each of our markets and purposes. For
example, during store grand openings we engage in additional local community outreach and advertise in local print
media in select markets. We primarily use the following forms of media:
Pay-per-click—We use pay-per-click advertising to reach online shoppers whose behavior indicates an interest
in our products. This marketing medium allows us the opportunity to grow our business and acquire new customers.
Radio and television—We purchase spots on both national and regional radio stations, primarily country music
channels, to draw customers to nearby locations. We also maintain relationships with several country music artists in
order to capitalize on the popularity of country music, using our stores and marketing communications to promote their
album sales or concerts. In return, these country music artists often make in - store appearances or mention us on social
11
media and occasionally give private performances. We also purchase television spots to create awareness in new markets
and occasionally help support grand openings of new stores.
Direct mail—We conduct several direct mail campaigns, and during fiscal 2021, we sent out approximately 3.3
million mailers, ranging in size from postcards to catalogs of approximately 50 pages.
E - mail—We e - mail our e - commerce customers and members of our B Rewarded loyalty program as part of our
cross - channel effort to drive traffic to our stores and websites. We sent more than one billion e - mails in fiscal 2021.
Social media—We also have a marketing strategy that has produced a fast - growing social media presence, as
evidenced by our strong following on Facebook and Instagram. Our posts celebrate country and western life and humor,
and routinely get thousands of likes, hundreds of shares and dozens of comments each.
Event sponsorship—We typically sponsor community - based western events each year within the regional
footprint of our store locations. Houston Livestock Show and Rodeo, a well-known 20 - day celebration of western
heritage, is one of our most prominent sponsorships and attracts more than two million visitors to Houston, Texas, where
we operate eighteen stores in the area. We also sponsor the San Antonio Stock Show and Rodeo, an 18 - day event with
more than two million attendees. Other prominent sponsorships include Cheyenne Frontier Days, the largest outdoor
rodeo in the U.S., the Professional Rodeo Cowboys Association and related National Finals Rodeo in Las Vegas,
Nevada, Professional Bull Riders and the National High School Rodeo Association, which supports rodeos for
competitors in high school and junior high school. At more prominent events, we often set up pop-up shops as large as
9,000 square feet, which allow participants to purchase our merchandise. As a result of the COVID - 19 pandemic, public
and private sector policies and initiatives intended to reduce the transmission of COVID - 19, such as the imposition of
travel restrictions, mandates from federal, state and local authorities to avoid large gatherings of people, quarantine or
“shelter-in-place”, and the promotion of social distancing significantly impacted events around the country. As a result of
these initiatives, many large public events including rodeos, concerts and country music festivals were cancelled or
otherwise postponed. We believe additional event cancellations and postponements could negatively impact sales in the
near-term.
Distribution
Our suppliers ship most of our in - store merchandise directly to our stores and a portion of our e - commerce
merchandise to our e - commerce customers. The remaining units are either shipped from our distribution center located
in Fontana, California, or from the distribution center in Wichita, Kansas, that we acquired as a result of the Sheplers
Acquisition. Our distribution center in California distributes our private brand and volume discount purchases to our
stores, and supplies inventory for sponsored events and new store openings. Our Wichita, Kansas distribution center
fulfills our e-commerce orders. In accordance with our automated replenishment programs, third - party suppliers
typically deliver merchandise to our stores daily, ensuring in - stock merchandise availability and a steady flow of new
inventory for our customers.
Competition
The retail industry for western and work wear is highly fragmented and characterized by primarily regional
competitors. We estimate that there are thousands of independent specialty stores scattered across the country. We
believe that we compete primarily with smaller regional chains and independents on the basis of product quality, brand
recognition, price, customer service and the ability to identify and satisfy consumer demand. In addition, as we expand
our e-commerce sales presence, we are competing to an increasing degree with online retailers and the e-commerce
offerings of traditional competitors. We also compete with farm supply stores and, to a lesser degree, mass merchants,
some of which are significantly larger than us, but most of which realize only a small percentage of their total revenues
from the sale of western and work wear. We have more than three times as many stores as our nearest direct competitor
that sells primarily western and work wear and we believe that our nationally recognized lifestyle brand, economies of
scale, breadth and depth of inventory across a variety of categories, strong in - stock position, portfolio of authentic
private brands, enhanced supplier partnerships, exclusive offerings and ability to recruit and retain high quality store
associates favorably differentiate us from our competitors.
12
Information technology
We have made significant investments to create a scalable information technology platform to support growth
in our retail and e - commerce sales without further near - term investments in our information technology infrastructure.
We use an Enterprise Resource Planning system (“Aptos Retail”) for integrated point - of - sale, merchandising, planning,
sales audit, customer relationship management, inventory control, loss prevention, purchase order management and
business intelligence. We operate Aptos Retail on a software - as - a - service platform. This approach allows us to regularly
upgrade to the most recent software release with minimal operational disruption, nominal systems infrastructure
investment and a relatively small in - house information technology department. Aptos Retail also interfaces with our
accounting system.
We have also invested in an information technology platform for our e-commerce websites. At the end of fiscal
2017, we upgraded our e-commerce platform. This upgrade of our e-commerce platform acts as the foundation for our
digital store fronts.
Intellectual property
We regard our trademarks as having value and as being important to our marketing efforts. We have registered
our trademarks in the U.S., including our brand name “Boot Barn” and our private label brands. We have a registered
trademark for the “Sheplers” and “Country Outfitter” brand names. We have foreign trademark protection in China and
Hong Kong where we have registered our Boot Barn trademarks. We also own the domain name for our primary e-
commerce websites, www.bootbarn.com, www.sheplers.com and www.countryoutfitter.com. Our policy is to pursue
registration of our trademarks and to rigorously defend their infringement by third parties.
Our employees
As of March 27, 2021, we employed approximately 1,500 full - time and 3,400 part - time employees, of which
approximately 600 were employed at our Store Support Center and distribution centers and approximately 4,300 were
employed at our stores. The number of employees, especially part - time employees, fluctuates depending upon our
seasonal needs. None of our employees are represented by a labor union and we consider our relationship with our
employees to be good. We have never experienced a strike or significant work stoppage.
Regulation and legislation
We are subject to labor and employment laws, laws governing truth - in - advertising, privacy laws, safety
regulations and other laws at the federal, state and local level, including consumer protection regulations, such as the
Consumer Product Safety Improvement Act of 2008, that regulate retailers and govern the promotion and sale of
merchandise and the operation of stores and warehouse facilities. We monitor changes in these laws and believe that we
are in material compliance with all applicable laws.
We source many of our private brand products from outside the U.S. The U.S. Foreign Corrupt Practices Act
and other similar anti - bribery and anti - kickback laws and regulations generally prohibit companies and their
intermediaries from making improper payments to non - U.S. officials for the purpose of obtaining or retaining business.
Our policies and our supplier compliance agreements mandate compliance with applicable law, including these laws and
regulations.
Available Information
Our internet address is www.bootbarn.com and the investor relations section of our website is located at
investor.bootbarn.com, where we make available, free of charge, our annual reports on Form 10 - K, quarterly reports on
Form 10 - Q and current reports on Form 8 - K and amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as well as proxy statements, as soon as reasonably practicable
after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”).
13
Information on our website should not be considered part of this Annual Report on Form 10 - K unless specifically
incorporated by reference herein.
Cautionary Note Regarding Forward - Looking Statements
This annual report contains forward - looking statements that are subject to risks and uncertainties. All
statements other than statements of historical or current fact included in this annual report are forward - looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward - looking statements refer to our current
expectations and projections relating to, by way of example and without limitation, our financial condition, liquidity,
profitability, results of operations, margins, plans, objectives, strategies, future performance, business and industry. You
can identify forward - looking statements by the fact that they do not relate strictly to historical or current facts. These
statements may include words such as “anticipate”, “estimate”, “expect”, “project”, “plan”, “intend”, “believe”, “may”,
“might”, “will”, “could”, “should”, “can have”, “likely” and other words and terms of similar meaning in connection
with any discussion of the timing or nature of future operating or financial performance or other events, but not all
forward - looking statements contain these identifying words. For example, all statements we make relating to our
estimated and projected earnings, revenues, costs, expenditures, cash flows, growth rates and financial results, our plans
and objectives for future operations, growth or initiatives, strategies or the expected outcome or impact of pending or
threatened litigation are forward - looking statements. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, the factors set forth in Item 1A. Risk Factors – “Summary of Risk Factors” below.
We derive many of our forward - looking statements from our current operating budgets and forecasts, which are
based upon detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very
difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our
actual results. For these reasons, we caution readers not to place undue reliance on these forward - looking statements.
See “Risk Factors” for a more complete discussion of the risks and uncertainties mentioned above and for a
discussion of other risks and uncertainties. It is not possible for our management to predict all risks, nor can we assess
the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any forward - looking statements we may make. In addition, the
ongoing COVID - 19 pandemic may also exacerbate other risks discussed herein, any of which could, individually or in
the aggregate, have a material effect on us. Additional impacts from the COVID - 19 pandemic may arise that we are not
aware of currently. All forward - looking statements attributable to us are expressly qualified in their entirety by these
cautionary statements as well as others made in this annual report and in our other SEC filings and public
communications. You should evaluate all forward - looking statements made by us in the context of these risks and
uncertainties.
We caution you that the risks and uncertainties identified by us may not be all of the factors that are important
to you. Furthermore, the forward - looking statements included in this annual report are made only as of the date hereof.
Our forward - looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint
ventures or investments that we may make. We undertake no obligation to publicly update or revise any forward - looking
statement as a result of new information, future events or otherwise, except as otherwise required by law.
Item 1A. Risk Factors
Summary of Risk Factors
Below is a summary of the principal factors that make an investment in our common stock speculative or risky. This
summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor
summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully
considered, together with other information in this Form 10 - K and our other filings with the SEC.
14
Risks Related to our Business
• The ongoing COVID - 19 pandemic may continue to adversely affect our business operations, growth
strategies, store traffic, employee availability, financial condition, liquidity and cash flow for an extended
period of time.
• Our sales could be severely impacted by decreases in consumer spending due to declines in consumer
confidence, local economic conditions in our markets or changes in consumer preferences.
• Our business largely depends on a strong brand image, and if we are unable to maintain and enhance our
brand image, particularly in markets where we have newly acquired stores and in new markets where we
have limited brand recognition, we may be unable to increase or maintain our level of sales.
• We face intense competition in our industry and we may be unable to compete effectively.
• Most of our merchandise is produced in foreign countries, making the price and availability of our
merchandise susceptible to international trade risks and other international conditions, including the
impacts of COVID - 19.
• Our failure to adapt to new challenges that arise when expanding into new geographic markets could
adversely affect our ability to profitably operate those stores and maintain our brand image.
• Our continued growth depends upon successfully opening new stores as well as integrating any acquired
stores, and our failure to successfully open new stores or integrate acquired stores could negatively affect
our business and stock price.
• As we expand our business, we may be unable to generate significant amounts of cash from operations.
• Any significant change in our distribution model could initially have an adverse impact on our cash flows
•
and results of operations.
If we fail to maintain good relationships with our suppliers or if our suppliers are unable or unwilling to
provide us with sufficient quantities of merchandise at acceptable prices, our business and operations may
be adversely affected.
• Our efforts to improve and expand our exclusive product offerings may be unsuccessful, and implementing
these efforts may divert our operational, managerial, financial and administrative resources, which could
harm our competitive position and reduce our revenue and profitability.
• We purchase merchandise based on sales projections and our purchase of too much or too little inventory
may adversely affect our overall profitability.
• A rise in the cost of fabric, raw materials, labor or transportation could increase our cost of merchandise
•
and cause our results of operations and margins to decline.
If our suppliers and manufacturers fail to use acceptable labor or other practices, our reputation may be
harmed, which could negatively impact our business.
If we lose key management personnel, our operations could be negatively impacted.
If we cannot attract, train and retain qualified employees, our business could be adversely affected.
•
•
• Higher wage and benefit costs could adversely affect our business.
• The concentration of our stores and operations in certain geographic locations subjects us to regional
economic conditions and natural disasters that could adversely affect our business.
• We could be required to collect additional sales taxes or be subject to other tax liabilities that may increase
the costs our clients would have to pay for our products and adversely affect our operating results.
• The adoption of new tax legislation could affect our financial performance.
• Our leverage may reduce our cash flow available to grow our business.
• Our borrowings under the June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan are at variable
rates, exposing us to interest rate risk, including increases in interest rates resulting from changes in the
determination of the London Interbank Offered Rate.
• The June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan contain restrictions and limitations
that could significantly impact our ability to operate our business.
• We are required to make significant lease payments for our stores, Store Support Center and distribution
center, which may strain our cash flow.
• New accounting guidance or changes in the interpretation or application of existing accounting guidance
could adversely affect our financial performance.
15
• We may be unable to maintain same store sales or net sales per square foot, which may cause our results of
operations to decline.
• Any inability to balance our private brand merchandise with the third-party branded merchandise that we
sell may have an adverse effect on our net sales and gross profit.
• We are subject to payment-related risks that could increase our operating costs, expose us to fraud or theft,
•
subject us to potential liability and potentially disrupt our business.
If our management information systems fail to operate or are unable to support our growth, our operations
could be disrupted.
• We rely on UPS and the United States Postal Service to deliver our e-commerce merchandise to our
customers and our business could be negatively impacted by disruptions in the operations of these third-
party service providers.
• Use of social media may adversely impact our reputation or subject us to fines or other penalties.
• Our e-commerce businesses subject us to numerous risks that could have an adverse effect on our results of
operations.
• Our sales can significantly fluctuate based upon shopping seasons, which may cause our results of
operations to fluctuate disproportionately on a quarterly basis.
• We buy and stock merchandise based upon seasonal weather patterns and therefore unseasonable or
extreme weather could negatively impact our sales, financial condition and results of operations.
If we fail to obtain and retain high-visibility sponsorship or endorsement arrangements with celebrities, or
if the reputation of any of the celebrities that we partner with is impaired, our business may suffer.
•
• Our management information systems and databases could be disrupted by system security failures, cyber
threats or by the failure of, or lack of access to, our Enterprise Resource Planning system. These disruptions
could negatively impact our sales, increase our expenses, subject us to liability and/or harm our reputation.
• Our failure to maintain adequate internal controls over our financial and management systems may cause
errors in our financial reporting. These errors may cause a loss of investor confidence and result in a
decline in the price of our common stock.
•
If we are unable to protect our intellectual property rights, our financial results may be negatively impacted.
• We may be subject to liability if we, or our suppliers, infringe upon the intellectual property rights of third
parties.
Issues with merchandise safety could damage our reputation, sales and financial results.
• Litigation costs and the outcome of litigation could have a material adverse effect on our business.
•
• Union attempts to organize our employees could negatively affect our business.
• Violations of or changes in laws, including employment laws and laws related to our merchandise, could
make conducting our business more expensive or change the way we do business.
• We may engage in strategic transactions that could negatively impact our liquidity, increase our expenses
and present significant distractions to our management.
• Terrorism or civil unrest could negatively affect our business.
•
If our goodwill, intangible assets or long-lived assets become impaired, we may be required to record a
significant charge to earnings.
Risks Related To Ownership of Our Common Stock
• The market price and trading volume of our common stock have been and may continue to be volatile,
which could result in rapid and substantial losses for our stockholders, and you may lose all or part of your
investment.
• Anti - takeover provisions in our corporate organizational documents and current credit facility and under
Delaware law may delay, deter or prevent a takeover of us and the replacement or removal of our
management, even if such a change of control would benefit our stockholders.
If securities or industry analysts do not publish research and reports or publish inaccurate or unfavorable
research and reports about our business, the price and trading volume of our common stock could decline.
•
• We do not currently intend to pay cash dividends on our common stock, which may make our common
stock less desirable to investors and decrease its value.
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Risk Factors
You should carefully consider the risks and uncertainties described below, together with all of the other
information in this annual report, including our consolidated financial statements, and related notes included elsewhere
in this annual report. If any of the following risks were realized, our business, financial condition, results of operations
and prospects could be materially and adversely affected. In that event, the price of our common stock could decline, and
you could lose part or all of your investment.
Risks Related To Our Business
The ongoing COVID - 19 pandemic may continue to adversely affect our business operations, growth strategies, store
traffic, employee availability, financial condition, liquidity and cash flow for an extended period of time.
The ongoing COVID - 19 pandemic, has adversely affected our business and may continue to adversely affect
our business for an indefinite period until the impact of the pandemic subsides. Since first being reported, COVID - 19 has
spread to numerous countries around the world, including the U.S. Measures taken by governmental authorities to reduce
the transmission of COVID - 19, including stay-at-home orders and business closures, as well as lack of subsequent
economic stimulus initiatives, have resulted in wide-scale unemployment and financial hardship for a large portion of the
U.S. population, and these impacts, among others, have created significant uncertainties. These uncertainties include, but
are not limited to, the potential adverse effect of the pandemic on the economy, our supply chain partners, our employees
and customers, customer sentiment in general, and traffic within our stores and on our e-commerce sites. As a result of
the economic slowdown caused by COVID - 19, many industries and public and private sector jobs have been and may
continue to be impacted, including but not limited to those in the construction, domestic manufacturing, energy, food and
agriculture, transportation and warehouse sectors. Consumer fear about becoming ill with the virus and recommendations
and/or mandates from federal, state and local authorities to avoid large gatherings of people or self-quarantine may
continue or may increase, which has already affected, and may continue to affect, traffic to our stores. If as a result of the
pandemic, we are unable to continue to provide employees with appropriate compensation and protective measures, we
may be unable to retain or attract employees to perform necessary functions within our stores and engage with our
customers. In addition, if we are required to transition certain or all our employees to a remote work environment in an
effort to mitigate the spread of COVID - 19, our failure to provide appropriate technological resources and maintain
adequate safeguards around our remote work environment could result in loss of productivity and usage errors by our
employees or the loss or compromise of confidential customer, employee or company data. In addition, the remote work
environment may increase certain risks to our business, including phishing and other cybersecurity attacks.
Although our operations have generally stabilized since the onset of the pandemic, there can be no assurances
that the spread of COVID - 19 will not strain our supply chain, store operations and merchandising functions in the future.
This could create difficulties and delays in obtaining products from our distributors, delivering products to our stores and
adequately staffing our stores and distribution centers. If we are unable to continue to source, transport and stock
products in our stores or to maintain adequate staffing levels in our stores and distribution centers due to disruptions
caused by the COVID - 19 pandemic, we will be unable to maintain inventory levels and continue to operate our stores at
levels to meet customer demand. Further, if we do not identify and source appropriate products in response to our
customers’ evolving needs during the COVID - 19 pandemic, we may lose existing customers and fail to attract new
customers, which could cause our sales to decrease, resulting in a material adverse effect on our business, financial
condition, results of operations and cash flows.
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Except for temporary store closures due to COVID - 19, all of our stores remained open as of March 27, 2021.
We have experienced instances of our employees contracting COVID - 19, and in response we follow CDC and other
health authority guidelines to report positive test results and reduce further transmission. Although our stores currently
remain open, any widespread transmission of COVID - 19 among our employees within a particular store or geographical
area might necessitate that we temporarily close certain stores, which may negatively affect our business and financial
condition, as well as the perception of our company. Additionally, any widespread transmission of COVID - 19 among
the employees in our distribution centers might necessitate the temporary closure of our facilities, resulting in product
delivery delays and other logistical constraints. Further, if individuals believe they have contracted COVID - 19 in our
stores or believe that we have not taken appropriate precautionary measures to reduce the transmission of COVID - 19, we
may be subject to costly and time-consuming litigation.
Continued impacts of the pandemic could have a material adverse effect on our near-term and long-term
business operations, store traffic, employee availability, financial condition, liquidity and cash flow, and may require
significant actions in response, including but not limited to, additional employee furloughs and/or layoffs, reduced store
hours or additional store closings, expense reductions, discounting of pricing of our products, all in an effort to mitigate
the impacts of the pandemic. The full extent to which the COVID - 19 pandemic impacts our business and financial
condition will largely depend on future developments, which are highly uncertain and cannot be predicted, including new
information which may emerge concerning the severity of the pandemic, the impacts of new variants of the virus, the
timing, distribution, efficacy and public acceptance of vaccines and other treatments for COVID - 19 and the actions
necessary to contain COVID - 19.
Our sales could be severely impacted by decreases in consumer spending due to declines in consumer confidence,
local economic conditions in our markets or changes in consumer preferences.
We depend upon consumers feeling confident about spending discretionary income on our products to drive our
sales. Consumer spending may be adversely impacted by economic conditions, such as consumer confidence in future
economic conditions, interest and tax rates, inflation, employment levels, salary and wage levels, the availability of
consumer credit, the level of housing, energy and food costs, general business conditions and other challenges affecting
the global economy including the ongoing COVID - 19 pandemic. These risks may be exacerbated for retailers like us
who focus on specialty footwear, apparel and accessories. Our financial performance is particularly susceptible to
economic and other conditions in California, Texas and other states where we have a significant number of stores. Many
of our stores operate in geographic areas where the local economies depend to a significant degree on oil and other
commodity extraction, and many of our customers are employed in these industries. As a result of the economic
slowdown caused by COVID - 19, the global demand for oil was significantly impacted and the price of oil was driven
down significantly from previous levels. Our financial performance is accordingly susceptible to economic and other
conditions relating to output and employment in these areas. Our financial performance also is impacted by conditions in
the construction sector, domestic manufacturing and the transportation and warehouse sectors, the growth of which we
believe is an important driver of our work wear business. In addition, our financial performance may be negatively
affected if the popularity of the western and country lifestyle subsides, or if there is a general trend in consumer
preferences away from boots and other western or country products in favor of another general category of footwear or
attire. If this were to occur or if periods of decreased consumer spending persist, our sales could decrease, which could
have a material adverse effect on our business, financial condition, results of operations and prospects. In addition,
difficult economic conditions may exacerbate some of the other risks described in this Item 1A. Risk Factors, including
those risks associated with increased competition, decreases in store traffic, brand reputation, the interruption of the
production and flow of merchandise, the ability to achieve our growth strategies, and the ability to improve and expand
our exclusive product offering. These risks could be exacerbated individually or collectively.
Our business largely depends on a strong brand image, and if we are unable to maintain and enhance our brand
image, particularly in markets where we have newly acquired stores and in new markets where we have limited brand
recognition, we may be unable to increase or maintain our level of sales.
We believe that our brand image and brand awareness have contributed significantly to the success of our
business. We also believe that maintaining and enhancing our brand image, particularly in markets where we have newly
acquired stores and in new markets where we have limited brand recognition, is important to maintaining and expanding
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our customer base. Our ability to successfully integrate newly acquired and newly opened stores into their surrounding
communities, to expand into new markets or to maintain the strength and distinctiveness of our brand image in our
existing markets will be adversely impacted if we fail to connect with our target customers. Our efforts to rebrand newly
acquired stores could result in reduced sales and profitability of such stores. Maintaining and enhancing our brand image
may require us to make substantial investments in areas such as merchandising, marketing, store operations, community
relations, store graphics and employee training, which could adversely affect our cash flow and which may ultimately be
unsuccessful. Furthermore, our brand image could be jeopardized if we fail to maintain high standards for merchandise
quality, if we fail to comply with local laws and regulations or if we experience negative publicity or other negative
events that affect our image and reputation. Some of these risks may be beyond our ability to control, such as the effects
of negative publicity regarding our suppliers. Failure to successfully market and maintain our brand image in new and
existing markets could harm our business, results of operations and financial condition.
We face intense competition in our industry and we may be unable to compete effectively.
The retail industry for western and work wear is highly fragmented and characterized by primarily regional
competitors. We estimate that there are thousands of independent specialty stores scattered across the country. We
believe that we compete primarily with smaller regional chains and independent stores on the basis of product quality,
brand recognition, price, customer service and the ability to identify and satisfy consumer demand. In addition, as we
expand our e-commerce sales presence and as a result of consumers’ growing desire to shop online (including as a result
of the COVID - 19 pandemic), we are competing to an increasing degree with online retailers and the e-commerce
offerings of traditional competitors. There can be no assurance that our e-commerce expansion initiatives will be
successful. We also compete with farm supply stores and, to a lesser degree, mass merchants. Competition with some or
all of these retailers could require us to lower our prices or risk losing customers. In addition, significant or unusual
promotional activities by our competitors may force us to respond in-kind and adversely impact our operating cash flow
and gross profit. As a result of these factors, current and future competition could have a material adverse effect on our
financial condition and results of operations.
Many of the mass merchants and online retailers that sell some western or work wear products have greater
financial, marketing and other resources than we currently do, and in the case of online retailers, lower overhead and
overall cost structure. Therefore, these competitors may be able to devote greater resources to the marketing and sale of
these products, generate national brand recognition or adopt more aggressive pricing policies than we can, which would
put us at a competitive disadvantage if they decide to expand their offerings of these product lines. Moreover, we do not
possess exclusive rights to many of the elements that comprise our in-store experience and product offerings. Our
competitors may seek to emulate facets of our business strategy, including our in-store experience, which could result in
a reduction of some competitive advantages or special appeal that we might possess. In addition, most of our suppliers
sell products to us on a non-exclusive basis. As a result, our current and future competitors may be able to duplicate or
improve on some or all of the in-store and e-commerce product offerings that we believe are important in differentiating
our stores, our e-commerce offerings and our customers’ shopping experience. If our competitors were to duplicate or
improve on some or all of our in-store experience, or our in-store and e-commerce product offerings, our competitive
position and our business could suffer.
Most of our merchandise is produced in foreign countries, making the price and availability of our merchandise
susceptible to international trade risks and other international conditions, including the impacts of COVID - 19.
The majority of our private brand products are manufactured in foreign countries, including Mexico and China.
In addition, we purchase most of our third-party branded merchandise from domestic suppliers that have a large portion
of their merchandise made in foreign countries.
The countries, specifically Mexico and China, in which our merchandise currently is manufactured or may be
manufactured in the future could become subject to trade restrictions imposed by the U.S., including increased tariffs or
quotas, embargoes and customs restrictions, which could increase the cost or reduce the supply of products available to
us and have a material adverse effect on our business, financial condition and results of operations. Recently, uncertainty
has increased regarding tax and trade policies, border adjustments, tariffs and government regulations affecting trade
between the U.S. and other countries, such as Mexico and China. Such tariffs on imports from foreign countries, as well
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as changes in tax and trade policies such as a border adjustment tax or disallowance of certain tax deductions for
imported merchandise, if enacted, could materially increase our manufacturing costs, the costs of our imported
merchandise or our income tax expense, which would have a material adverse effect on our financial condition and
results of operations. Any tariffs by China or other foreign countries on imports of our products could also adversely
affect our international e-commerce sales. Any increase in our manufacturing costs, the cost of our merchandise or
limitation on the amount of merchandise we are able to purchase, or any decrease in our international e-commerce sales,
could have a material adverse effect on our financial condition and results of operations.
Additionally, public health issues affecting China, Mexico or another foreign country from which a large
portion of our third-party and private brand merchandise is purchased and imported, including the ongoing COVID - 19
pandemic, may result in the temporary closure of our suppliers’ facilities or shipping ports, resulting in product delivery
delays. For example, COVID - 19 has led to work and travel restrictions in and out of China and other countries around
the world as well as temporary closures or production and logistical constraints due to workforce availability of certain
factories in China. These travel restrictions, factory closures and production and logistical constraints may result in,
among other things, delayed shipments and increased shipping costs. These impacts on our supply chain could have a
material adverse effect on our financial condition and results of operations.
Our failure to adapt to new challenges that arise when expanding into new geographic markets could adversely affect
our ability to profitably operate those stores and maintain our brand image.
Our expansion into new geographic markets could result in competitive, merchandising, distribution and other
challenges that are different from those we encounter in the geographic markets in which we currently operate. In
addition, to the extent that our store count increases, we may face risks associated with market saturation of our product
offerings and locations. Our suppliers may also restrict their sales to us in new markets to the extent they are already
saturating that market with their products through other retailers or their own stores. There can be no assurance that any
newly opened stores will be received as well as, or achieve net sales or profitability levels comparable to those of, our
existing stores in the time periods estimated by us, or at all. If our stores fail to achieve, or are unable to sustain,
acceptable net sales and profitability levels, our business may be materially harmed, we may incur significant costs
associated with closing those stores and our brand image may be negatively impacted.
Our continued growth depends upon successfully opening new stores as well as integrating any acquired stores, and
our failure to successfully open new stores or integrate acquired stores could negatively affect our business and stock
price.
We have grown our store count rapidly in recent years, both organically and through strategic acquisitions of
competing chains. Our ability to successfully open and operate new and acquired stores is subject to a variety of risks
and uncertainties, such as:
•
•
•
•
•
•
identifying suitable store locations, the availability of which is beyond our control;
obtaining acceptable lease terms;
sourcing sufficient levels of inventory;
selecting the appropriate merchandise to appeal to our customers;
hiring, training and retaining store employees;
assimilating new store employees into our corporate culture;
• marketing the new stores’ locations and product offerings effectively;
•
avoiding construction delays and cost overruns in connection with the build out of new stores;
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•
avoiding other costs in opening new stores, such as rebranding acquired locations and environmental
liabilities;
• managing and expanding our infrastructure to accommodate growth; and
•
integrating the new and acquired stores with our existing buying, distribution and other support
operations.
Our failure to successfully address these challenges could have a material adverse effect on our financial
condition and results of operations. We opened or acquired 15 stores in fiscal 2021, 20 stores in fiscal 2020, and 17
stores in fiscal 2019. We plan to continue to open or acquire new stores in the coming years; however, there can be no
assurance that we will open or acquire new stores in fiscal 2022 or thereafter, or that any such stores will be profitable.
The expansion of our store base will place increased demands on our operational, managerial and administrative
resources. These increased demands could cause us to operate our existing business less effectively, which in turn could
cause the financial performance of our existing stores to deteriorate. In addition, we plan to open some new stores within
existing markets. Some of these new stores may open close enough to our existing stores that a segment of customers
will stop shopping at our existing stores and instead shop at the new stores, causing sales and profitability at those
existing stores to decline. If this were to occur with a number of our stores, this could have a material adverse effect on
our financial condition and results of operations.
In addition to opening new stores, we may acquire and rebrand stores. Acquiring and integrating stores involves
additional risks that could adversely affect our growth and results of operations. Newly acquired stores may be
unprofitable and we may incur significant costs and expenses in connection with any acquisition including systems
integration and costs relating to remerchandising and rebranding the acquired stores. Integrating newly acquired chains
or individual stores may divert our senior management’s attention from our core business. Our ability to integrate newly
acquired stores will depend on the successful expansion of our existing financial controls, distribution model,
information systems, management and human resources and on attracting, training and retaining qualified employees.
As we expand our business, we may be unable to generate significant amounts of cash from operations.
As we expand our business, we will need significant amounts of cash from operations to pay our existing and
future lease obligations, build out new store space, purchase inventory, pay personnel, and, if necessary, further invest in
our infrastructure and facilities. We primarily rely on cash flow generated from existing stores and our e-commerce
businesses to fund our current operations and our growth. It typically takes several months and a significant amount of
cash to open a new store. For example, our new store model requires an average net cash investment of approximately
$0.8 million. If we continue to open a large number of stores relatively close in time, the cost of these store openings and
the cost of continuing operations could reduce our cash position. An increase in our net cash outflow for new stores
could adversely affect our operations by reducing the amount of cash available to address other aspects of our business.
We cannot assure you that any new stores that we open will become profitable in the anticipated time frame, or
at all. Not all of our stores are currently profitable. We cannot assure you that our existing stores, which may be currently
profitable, will not cease to be profitable in the future.
If our business does not generate sufficient cash flow from operations to fund these activities, and sufficient
funds are not otherwise available from our current credit facility or future credit facilities, we may need additional equity
or debt financing. If such financing is not available to us on satisfactory terms, our ability to operate and expand our
business or to respond to competitive pressures would be limited and we could be required to delay, curtail or eliminate
planned store openings. Moreover, if we raise additional capital by issuing equity securities or securities convertible into
equity securities, your ownership may be diluted. Any debt financing we may incur may impose covenants that restrict
our operations, and will require interest payments that would create additional cash demands and financial risk for us.
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Any significant change in our distribution model could initially have an adverse impact on our cash flows and results
of operations.
Our suppliers ship most of our in - store merchandise directly to our stores and a portion of our e - commerce
merchandise to our e - commerce customers. In the future, as part of our long-term strategic planning, we may change our
distribution model to increase the amount of merchandise that we self-distribute through a centralized distribution center.
Changing our distribution model to increase distributions from a centralized distribution center to our stores and
customers would initially involve significant capital expenditures, which would increase our borrowings and interest
expense or temporarily reduce the rate at which we open new stores. In addition, if we are unable to successfully
integrate a new distribution model into our operations in a timely manner, our supply chain could experience significant
disruptions, which could reduce our sales and adversely impact our results of operations.
If we fail to maintain good relationships with our suppliers or if our suppliers are unable or unwilling to provide us
with sufficient quantities of merchandise at acceptable prices, our business and operations may be adversely affected.
Our business is largely dependent on continued good relationships with our suppliers, including suppliers for
our third-party branded products and manufacturers for our private brand products. During fiscal 2021, merchandise
purchased from our top three suppliers accounted for approximately 21%, 6% and 6% of our sales, respectively. We
operate on a purchase order basis for our private brand and third-party branded merchandise and do not have long-term
written agreements with our suppliers. Accordingly, our suppliers can refuse to sell us merchandise, limit the type or
quantity of merchandise that they sell to us, enter into exclusivity arrangements with our competitors or raise prices at
any time, which could have an adverse impact on our business. Deterioration in our relationships with our suppliers
could have a material adverse impact on our business, and there can be no assurance that we will be able to acquire
desired merchandise in sufficient quantities on terms acceptable to us in the future. Also, some of our suppliers sell
products directly from their own retail stores or e-commerce websites, and therefore directly compete with us. These
suppliers may decide at some point in the future to discontinue supplying their merchandise to us, supply us less
desirable merchandise or raise prices on the products they do sell us. If we lose key suppliers and are unable to find
alternative suppliers to provide us with substitute merchandise for lost products, our business may be adversely affected.
Our efforts to improve and expand our exclusive product offerings may be unsuccessful, and implementing these
efforts may divert our operational, managerial, financial and administrative resources, which could harm our
competitive position and reduce our revenue and profitability.
We seek to grow our business by improving and expanding our exclusive product offerings, which includes
introducing new brands and growing and expanding our existing brands. The principal risks to our ability to successfully
improve and expand our product offering are that:
•
•
•
•
introduction of new products may be delayed, which may allow our competitors to introduce similar
products in a more timely fashion, which could hinder our ability to be viewed as the exclusive provider of
certain western and work apparel brands and items;
the third - party suppliers of our exclusive product offerings may not maintain adequate controls with respect
to product specifications and quality, which may lead to costly corrective action and damage to our brand
image;
if our expanded exclusive product offerings fail to maintain and enhance our distinctive brand identity, our
brand image may be diminished and our sales may decrease; and
these efforts may divert our management’s attention from other aspects of our business and place a strain
on our operational, managerial, financial and administrative resources, as well as our information systems.
In addition, our ability to successfully improve and expand our exclusive product offerings may be affected by
economic and competitive conditions, changes in consumer spending patterns and changes in consumer preferences,
including those resulting from the COVID - 19 pandemic. These efforts could be abandoned, cost more than anticipated
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and divert resources from other areas of our business, any of which could impact our competitive position and reduce our
revenue and profitability.
We purchase merchandise based on sales projections and our purchase of too much or too little inventory may
adversely affect our overall profitability.
We must actively manage our purchase of inventory. We generally order our seasonal and private brand
merchandise several months in advance of it being received and offered for sale. If there is a significant decrease in
demand for these products, including from the impact of COVID - 19, or if we fail to accurately predict consumer
demand, including by disproportionately increasing the penetration of our private brand merchandise, we may be forced
to rely on markdowns or promotional sales to dispose of excess inventory. This could have an adverse effect on our
margins and operating income. Conversely, if we fail to purchase a sufficient quantity of merchandise, we may not have
an adequate supply of products to meet consumer demand, thereby causing us to lose sales or adversely affecting our
customer relationships. Any failure on our part to anticipate, identify and respond effectively to changing consumer
demand and consumer shopping preferences could adversely affect our results of operations.
A rise in the cost of fabric, raw materials, labor or transportation could increase our cost of merchandise and cause
our results of operations and margins to decline.
Fluctuations in the price, availability and quality of fabrics and raw materials, such as cotton and leather, that
our suppliers use to manufacture our products, as well as the cost of labor and transportation, could have adverse impacts
on our cost of merchandise and our ability to meet our customers’ demands. In particular, because key components of
our products are cotton and leather, any increases in the cost of cotton or leather may significantly affect the cost of our
products and could have an adverse impact on our cost of merchandise. We may be unable to pass all or any of these
higher costs on to our customers, which could have a material adverse effect on our profitability.
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If our suppliers and manufacturers fail to use acceptable labor or other practices, our reputation may be harmed,
which could negatively impact our business.
We purchase merchandise from independent third-party suppliers and manufacturers. If any of these suppliers
have practices that are not legal or accepted in the U.S., consumers may develop a negative view of us, our brand image
could be damaged and we could become the subject of boycotts by our customers or interest groups. Further, if the
suppliers violate labor or other laws of their own country, these violations could cause disruptions or delays in their
shipments of merchandise. For example, much of our merchandise is manufactured in China and Mexico, which have
different labor practices than the U.S. We do not independently investigate whether our suppliers are operating in
compliance with all applicable laws and therefore we rely upon the suppliers’ representations set forth in our purchase
orders and supplier agreements concerning the suppliers’ compliance with such laws. In addition, regulatory
developments regarding the use of “conflict minerals,” certain minerals originating from the Democratic Republic of
Congo and adjoining countries, could affect the sourcing and availability of raw materials used by suppliers and subject
us to costs associated with the regulations, including for the diligence pertaining to the presence of any conflict minerals
used in our products, possible changes to products, processes or sources of our inputs, and reporting requirements. If our
goods are manufactured using illegal or unacceptable labor practices in these countries, or other countries from which
our suppliers source the products we purchase, our ability to supply merchandise for our stores without interruption, our
brand image and, consequently, our sales may be adversely affected.
If we lose key management personnel, our operations could be negatively impacted.
We depend upon the leadership and experience of our executive management team. If we are unable to retain
existing management personnel who are critical to our success, it could result in harm to our supplier and employee
relationships, the loss of key information, expertise or know-how and unanticipated recruitment and training costs. The
loss of the services of any of our key management personnel could have a material adverse effect on our business and
prospects, and could be viewed negatively by investors and analysts, which could cause the price of our common stock
to decline. We may be unable to find qualified individuals to replace key management personnel on a timely basis,
without incurring increased costs or at all. We do not maintain key person life insurance covering any employee. If we
lose the services of any of our key management personnel or we are unable to attract additional qualified personnel, we
may be unable to successfully manage our business.
If we cannot attract, train and retain qualified employees, our business could be adversely affected.
Our success depends upon the quality of the employees we hire. We recruit people who are welcoming, friendly
and service-oriented, and who often live the western lifestyle or have a genuine affinity for it. Employees in many
positions must have knowledge of our merchandise and the skill necessary to excel in a customer service environment.
The turnover rate in the retail industry is typically high and finding qualified candidates to fill positions may be difficult.
Our planned growth will require us to hire and train even more personnel. If we cannot attract, train and retain corporate
employees, district managers, store managers and store associates with the qualifications we deem necessary, our ability
to effectively operate and expand may be adversely affected. In addition, we rely on temporary and seasonal personnel to
staff our distribution center. We cannot guarantee that we will be able to find adequate temporary or seasonal personnel
to staff our operations when needed, which may strain our existing personnel and negatively impact our operations.
Higher wage and benefit costs could adversely affect our business.
Changes in federal and state minimum wage laws and other laws relating to employee benefits could cause us to
incur additional wage and benefit costs. For example, the federal government has considered raising the national
minimum wage, and various states and local jurisdictions have sought to increase retail employee wages by raising
minimum wage rates or scheduling future increases in such rates, which may also cause wage rates above the minimum
to increase in those markets. Increased labor costs brought about by changes in minimum wage laws, other regulations or
prevailing market conditions would increase our expenses and have an adverse impact on our profitability, or could
negatively impact the quality of our workforce if we fail to increase our wages competitively.
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The concentration of our stores and operations in certain geographic locations subjects us to regional economic
conditions and natural disasters that could adversely affect our business.
Our Store Support Center and distribution centers are located in California and Kansas. If we encounter any
disruptions to our operations at these locations or if they were to shut down for any reason, including due to fire, tornado,
earthquake or other natural disaster, then we may be prevented from effectively operating our stores and our e-commerce
businesses. Additionally, a widespread transmission of COVID - 19 among the employees in our distribution centers
might necessitate the temporary closure of our facilities, resulting in product delivery delays and other logistical
constraints. Furthermore, the risk of disruption or shutdown at our buildings in California are greater than they might be
if they were located in another region, as southern California is prone to natural disasters such as earthquakes and
wildfires. Any disruption or shutdown at our locations could significantly impact our operations and have a material
adverse effect on our financial condition and results of operations.
In addition, of the 273 stores that we operated as of March 27, 2021, 125 of these stores were located in
Arizona, California and Texas. The geographic concentration of our stores may expose us to economic downturns or
natural disasters in those states where our stores are located. For example, our stores located in North Dakota, Wyoming,
Colorado, Texas and surrounding areas are likely to be adversely impacted by an economic downturn affecting the oil,
gas, and commodities industries. Any similar events in states where our stores are concentrated could have a material
adverse effect on our financial condition and results of operations.
We could be required to collect additional sales taxes or be subject to other tax liabilities that may increase the costs
our clients would have to pay for our products and adversely affect our operating results.
An increasing number of states have considered or adopted laws that attempt to impose tax collection
obligations on out-of-state retailers. In South Dakota v. Wayfair, Inc. et al (“Wayfair”), a case challenging existing law
that online sellers are not required to collect sales and use tax unless they have a physical presence in the buyer’s state,
the Supreme Court decided that states may adopt laws requiring sellers to collect sales and use tax, even in states where
the seller has no physical presence. As a result of Wayfair, states or the federal government may adopt, or begin to
enforce, laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions. A successful assertion by
one or more states requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction
in which we currently do collect some taxes, could result in substantial tax liabilities, including taxes on past sales, as
well as penalties and interest. The imposition by state governments of sales tax collection obligations on out-of-state
retailers could also create additional administrative burdens for us, put us at a competitive disadvantage if they do not
impose similar obligations on our competitors and decrease our future sales, which could have a material adverse impact
on our business and operating results.
The adoption of new tax legislation could affect our financial performance.
We are subject to income and other taxes in the United States. Our effective tax rate in the future could be
adversely affected by changes in the valuation of deferred tax assets and liabilities and changes in tax laws. More
generally, it is possible that U.S. federal income or other tax laws or the interpretation of tax laws will change. For
example, the Biden Administration has proposed an increase in the U.S. corporate income tax rate and a minimum
corporate tax based on book income. It is difficult to predict whether and when there will be tax law changes having a
material adverse effect on our business, financial condition, results of operations and cash flows.
Our leverage may reduce our cash flow available to grow our business.
As of March 27, 2021, we had an aggregate of $111.5 million of total outstanding indebtedness. Our obligations
to pay principal and interest under the June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan will reduce our
available cash flow, limiting our flexibility to respond to changing business and economic conditions and increasing any
additional borrowing costs.
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Our borrowings under the June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan are at variable rates,
exposing us to interest rate risk, including increases in interest rates resulting from changes in the determination of
the London Interbank Offered Rate (“LIBOR”).
The June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan provide for variable interest rates. As a
result, if interest rates increase, our debt service obligations under the current credit facilities could increase even though
the amount borrowed remained the same, which would adversely impact our net income.
The variable interest rates under the June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan may be
determined, at the Company’s option, based upon LIBOR or a base rate, in each case, plus an applicable margin. On
July 27, 2017, the United Kingdom's Financial Conduct Authority, which regulates LIBOR, announced that it intends to
phase out LIBOR by the end of 2021. It is unclear whether LIBOR will cease to exist or if new methods of calculating
LIBOR will be established such that it continues to exist after 2021. The U.S. Federal Reserve, in conjunction with the
Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is
considering replacing U.S. dollar LIBOR with a new index calculated by short term repurchase agreements, backed by
Treasury securities.
Any changes to the determination of LIBOR or replacement thereof may result in an increase in LIBOR and, in
turn, an increase in the variable interest rates based upon LIBOR under the June 2015 Wells Fargo Revolver and the
2015 Golub Term Loan, or cause us to elect to apply the base rate to the borrowings thereunder, which base rate may be
higher than applicable interest rates prior to any such changes.
The June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan contain restrictions and limitations that could
significantly impact our ability to operate our business.
The June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan contain covenants that, among other
things, may, under certain circumstances, place limitations on the dollar amounts paid or other actions relating to:
•
•
•
•
•
•
payments in respect of, or redemptions or acquisitions of, debt or equity issued by Boot Barn or its
subsidiaries, including the payment of dividends on our common stock;
incurring additional indebtedness;
incurring guarantee obligations;
paying dividends;
creating liens on assets;
entering into sale and leaseback transactions;
• making investments, loans or advances;
•
•
•
entering into hedging transactions;
engaging in mergers, consolidations or sales of all or substantially all of their respective assets; and
engaging in certain transactions with affiliates.
In addition, the Company is required to satisfy certain financial ratios as set forth in these agreements. Our
ability to satisfy these financial ratios will depend on our ongoing financial and operating performance, which in turn
will be subject to economic conditions and to financial, market and competitive factors, many of which are beyond our
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control. Our ability to comply with these ratios in future periods will also depend on our ability to successfully
implement our overall business strategy and realize contemplated synergies.
Various risks, uncertainties and events beyond our control could affect our ability to comply with the covenants
contained in our current credit facilities. Failure to comply with any of these covenants could result in a default under the
June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan and under other agreements containing cross-default
provisions. A default would permit lenders to accelerate the maturity of the debt under these agreements and to foreclose
upon any collateral securing the debt. Under these circumstances, we might not have sufficient funds or other resources
to satisfy all of our obligations. In addition, the limitations imposed by financing agreements on our ability to incur
additional debt and to take other actions might significantly impair our ability to obtain other financing.
We are required to make significant lease payments for our stores, Store Support Center and distribution center,
which may strain our cash flow.
We do not own any real estate. Instead, we lease all of our retail store locations as well as our Store Support
Center and distribution centers. The store leases generally have a base lease term of five or 10 years, with one or more
renewal periods of five years, on average, exercisable at our option. Many of our leases have early cancelation clauses
which permit us to terminate the lease if certain sales thresholds are not met in certain periods of time. Our costs under
these leases are a significant amount of our expenses and are growing rapidly as we expand the number of locations and
the cost of leasing existing locations rises. In fiscal 2021, our total lease expense was $50.3 million, and we expect this
amount to continue to increase as we open more stores. We are required to pay additional rent under many of our lease
agreements based upon achieving certain sales thresholds for each store location. We are generally responsible for the
payment of property taxes and insurance, utilities and common area maintenance fees. Many of our lease agreements
also contain provisions which increase the rent payments on a set time schedule, causing the cash rent paid for a location
to escalate over the term of the lease. In addition, rent costs could escalate when multi-year leases are renewed at the
expiration of their lease term. These costs are significant, recurring and increasing, which places a consistent strain on
our cash flow.
We depend on cash flows from operations to pay our lease expenses and to fulfill our other cash needs. If our
business does not generate sufficient cash flows from operating activities, and sufficient funds are not otherwise
available to us from borrowings under our current credit facility, future credit facilities or from other sources, we may be
unable to service our operating lease expenses, grow our business, respond to competitive challenges or fund our other
liquidity and capital needs, which would harm our business.
Additional sites that we lease are likely to be subject to similar long-term leases. If an existing or future store is
not profitable, and we decide to close it, we may nonetheless be committed to perform our obligations under the
applicable lease including, among other things, paying the base rent for the balance of the lease term. We may fail to
identify suitable store locations, the availability of which is beyond our control, to replace such closed stores. In addition,
as our leases expire, we may fail to negotiate renewals, either on commercially acceptable terms or at all, which could
cause us to close stores in desirable locations. Of the store leases that will reach their termination date during fiscal 2022,
twenty-one of those leases do not contain an option to automatically extend the lease term. If we are unable to enter into
new leases or renew existing leases on terms acceptable to us or be released from our obligations under leases for stores
that we close, our business, profitability and results of operations may be harmed.
New accounting guidance or changes in the interpretation or application of existing accounting guidance could
adversely affect our financial performance.
The implementation of new accounting standards could require certain systems, internal processes and controls
and other changes that could increase our operating costs and result in changes to our financial statements. For example,
the implementation of accounting standards related to leases, as issued by the Financial Accounting Standards Board,
required us to make significant changes to our lease management and other accounting systems, and resulted in a
material impact to our consolidated financial statements.
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U.S. generally accepted accounting principles and related accounting pronouncements, implementation
guidelines and interpretations with regard to a wide range of matters that are relevant to our business involve many
subjective assumptions, estimates and judgments by our management. Changes in these rules or their interpretation or in
underlying management assumptions, estimates or judgments could significantly change our reported or expected
financial performance. The outcome of such changes could include litigation or regulatory actions which could adversely
affect our financial condition and results of operations.
We may be unable to maintain same store sales or net sales per square foot, which may cause our results of
operations to decline.
The investing public may use same store sales or net sales per square foot projections or results, over a certain
period of time, such as on a quarterly or yearly basis, as an indicator of our profitability growth. See Item 7,
Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion of “same
store sales”. Our same store sales can vary significantly from period to period for a variety of reasons, such as the age of
stores, temporary store closures, changing economic factors, including those caused by the COVID - 19 pandemic,
unseasonable weather, pricing, the timing of the release of new merchandise and promotional events and increased
competition. These factors could cause same store sales or net sales per square foot to decline period to period or fail to
grow at expected rates, which could adversely affect our results of operations and cause the price of our common stock
to be volatile during such periods.
Any inability to balance our private brand merchandise with the third-party branded merchandise that we sell may
have an adverse effect on our net sales and gross profit.
In fiscal 2021, sales from our private brand products accounted for approximately 23.7% of our consolidated
sales including our stores and e-commerce websites. As of March 27, 2021, two of our five top selling brands in the store
were private brand merchandise. Our private brand merchandise has historically had a higher gross margin than the third-
party branded merchandise that we offer. As a result, we intend to attempt to increase the penetration of our private
brands in the future. However, carrying our private brands limits the amount of third-party branded merchandise we can
carry and, therefore, there is a risk that our customers’ perception that we offer many major brands will decline or that
our suppliers of third-party branded merchandise may decide to discontinue supplying, or reduce the supply of, their
merchandise. If this occurs, it could have a material adverse effect on net sales and profitability.
We are subject to payment-related risks that could increase our operating costs, expose us to fraud or theft, subject us
to potential liability and potentially disrupt our business.
We accept payments using a variety of methods, including cash, checks, credit and debit cards, including our
private-label credit card and third-party credit and debit cards, gift cards, and pay-over-time and we may offer new
payment options over time. Acceptance of these payment methods subjects us to rules, regulations, contractual
obligations and compliance requirements, including payment network rules and operating guidelines, data security
standards and certification requirements, and rules governing electronic funds transfers. These requirements may change
over time or be reinterpreted, making compliance more difficult or costly.
For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may
increase over time and raise our operating costs. We rely on third parties to provide payment processing services,
including the processing of credit cards, debit cards, and other forms of electronic payment. If these companies become
unable to provide these services to us, or if their systems are compromised, it could potentially disrupt our business. The
payment methods that we offer also subject us to potential fraud and theft by criminals, who are becoming increasingly
more sophisticated, seeking to obtain unauthorized access to or exploit weaknesses that may exist in the payment
systems. If we fail to comply with applicable rules or requirements for the payment methods we accept, or if payment-
related data is compromised due to a breach or misuse of data, we may be liable for costs incurred by payment card
issuing banks and other third parties or subject to fines and higher transaction fees, or our ability to accept or facilitate
certain types of payments may be impaired. In addition, our customers could lose confidence in certain payment types,
which may result in a shift to other payment types or potential changes to our payment systems that may result in higher
costs. As a result, our business and results of operations could be adversely affected.
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If our management information systems fail to operate or are unable to support our growth, our operations could be
disrupted.
We rely upon our management information systems in almost every aspect of our daily business operations. For
example, our management information systems serve an integral part in enabling us to order merchandise, process
merchandise at our distribution center and retail stores, perform and track sales transactions, manage personnel, pay
suppliers and employees, operate our e-commerce businesses and report financial and accounting information to
management. In addition, we rely on our management information systems to enable us to leverage our costs as we grow.
If our management information systems fail to operate or are unable to support our growth, our store operations and e-
commerce businesses could be severely disrupted, and we could be required to make significant additional expenditures
to remediate any such failure.
We rely on UPS and the United States Postal Service to deliver our e-commerce merchandise to our customers and
our business could be negatively impacted by disruptions in the operations of these third-party service providers.
We rely on UPS and the United States Postal Service to deliver our e-commerce merchandise to our customers.
Relying on these third-party delivery services puts us at risk from disruptions in their operations, such as employee
strikes, inclement weather, shutdowns or other delays as a result of the COVID - 19 pandemic and their inability to meet
our shipping demands. If we are forced to use other delivery services, our costs could increase and we may be unable to
meet shipment deadlines. Moreover, we may be unable to obtain terms as favorable as those received from the
transportation providers we currently use, which would further increase our costs. In addition, if our products are not
delivered to our customers on time, our customers may cancel their orders or we may lose business from these customers
in the future. These circumstances may negatively impact our financial condition and results of operations.
Use of social media may adversely impact our reputation or subject us to fines or other penalties.
The use of social media platforms, including blogs, social media websites and other forms of internet-based
communication, which allow individuals access to a broad audience of consumers and other interested persons, has
become commonplace. Negative commentary regarding us or the brands that we sell may be posted on social media
platforms or similar devices at any time and may harm our reputation or business. Consumers value readily available
information concerning retailers and their goods and services and often act on such information without further
investigation and without regard to its accuracy. The harm may be immediate without affording us an opportunity for
redress or correction. In addition, social media platforms provide users with access to such a broad audience that
collective action against our stores, such as boycotts, can be more easily organized. If such actions were organized, we
could suffer reputational damage as well as physical damage to our stores and merchandise.
We also use social media platforms as marketing tools. For example, we maintain Facebook, Instagram, and
Twitter accounts. As laws and regulations rapidly evolve to govern the use of these platforms and devices, the failure by
us, our employees or third parties acting at our direction to abide by applicable laws and regulations in the use of these
platforms and devices could adversely impact our business, financial condition and results of operations or subject us to
fines or other penalties.
Our e-commerce businesses subject us to numerous risks that could have an adverse effect on our results of
operations.
Our e-commerce businesses and their continued growth subject us to certain risks that could have an adverse
effect on our results of operations, including:
•
•
•
diversion of traffic from our stores;
increased e-commerce competition;
liability for online content;
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•
•
government regulation of the Internet; and
risks related to the computer systems that operate our e-commerce websites and related support
systems, including computer viruses, electronic data theft and similar disruptions.
Our sales could be adversely affected by any disruption or downtime caused by the integration of new software
or software upgrades. In addition, any data loss caused by such integration or upgrade could have a material adverse
effect on our financial condition and results of operations.
As we expand our e-commerce operations, we face the risk of increased losses from credit card fraud. We do
not carry insurance against the risk of credit card fraud, so under current credit card practices, we may be liable for
fraudulent credit card transactions even though the associated financial institution has approved payment of the orders. If
we are unable to deter or control credit card fraud, or if credit card companies require more burdensome terms or refuse
to accept credit card charges from us, our net income could be reduced. A breach of our e-commerce security measures
could also reduce demand for our services.
A breach of our e-commerce security measures could expose us to potential liabilities and could also reduce
demand for our services. In April 2019 an unknown party attempted to access data on one of our e-commerce sites. We
investigated the incident and concluded that the attempt was unsuccessful and no personally identifiable information or
customer data was accessed or exposed. However, there can be no assurance that future similar attempts would not be
successful. In addition, to the extent the threat of such attempted attacks and the sophistication thereof grows, we may be
required to devote additional resources to preventative measures.
Our e-commerce operations may also subject us to taxation in jurisdictions where we currently do not collect
sales and other similar taxes. See “--We could be required to collect additional sales taxes or be subject to other tax
liabilities that may increase the costs our clients would have to pay for our products and adversely affect our operating
results” above.
In addition, we rely upon email distributions to advertise our stores and e-commerce businesses and use various
data-mining techniques to effectively target these emails. Spam filters or other blocking applications designed to enable
consumers to limit incoming email from advertisers may inhibit our ability to effectively reach large audiences of
existing and potential customers via email. This may adversely affect our ability to generate new business and acquire
new customers.
Our sales can significantly fluctuate based upon shopping seasons, which may cause our results of operations to
fluctuate disproportionately on a quarterly basis.
Because of a traditionally higher level of sales during the Christmas shopping season, our sales are typically
higher in the third fiscal quarter than they are in the other fiscal quarters. We also incur significant additional costs and
expenses during our third fiscal quarter due to increased staffing levels and higher purchase volumes. Accordingly, the
results of a single fiscal quarter should not be relied on as an indication of our annual results or future performance. In
addition, any factors that harm our third fiscal quarter results of operations could have a disproportionate effect on our
results of operations for the entire fiscal year.
We buy and stock merchandise based upon seasonal weather patterns and therefore unseasonable or extreme weather
could negatively impact our sales, financial condition and results of operations.
We buy and stock merchandise for sale based upon expected seasonal weather patterns. If we encounter
unseasonable weather, such as warmer winters or cooler summers than would be considered typical, these weather
variations could cause some of our merchandise to be inconsistent with what consumers wish to purchase, causing our
sales to decline. In addition, weather conditions affect the demand for our products, which in turn has an impact on
prices. In past years, weather conditions, including unseasonably warm weather in winter months, and extreme weather
conditions, including snow and ice storms, flood and wind damage, hurricanes, tornadoes, extreme rain and droughts,
have affected our sales and results of operations both positively and negatively. Furthermore, extended unseasonable
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weather conditions, particularly in California or Texas, will likely have a greater impact on our sales because of our store
concentration in those regions. Our strategy is to remain flexible and to react to unseasonable and extreme weather
conditions by adjusting our merchandise assortments and redirecting inventories to stores affected by the weather
conditions. Should such a strategy not be effective, unseasonable or extreme weather may have a material adverse effect
on our financial condition and results of operations.
If we fail to obtain and retain high-visibility sponsorship or endorsement arrangements with celebrities, or if the
reputation of any of the celebrities that we partner with is impaired, our business may suffer.
A principal component of our marketing program is to partner with well-known country music artists and other
celebrities for sponsorship and endorsement arrangements. Although we have partnered with several well-known
celebrities in this manner, some of these persons may not continue their endorsements, may not continue to succeed in
their fields or may engage in activities which could bring disrepute on themselves and, in turn, on us and our brand
image and products. We also may not be able to attract and partner with new celebrities that may emerge in the future.
Competition for endorsers is significant and adverse publicity regarding us or our industry could make it more difficult
to attract and retain endorsers. Any of these failures by us or the celebrities that we partner with could adversely affect
our business and revenues.
Our management information systems and databases could be disrupted by system security failures, cyber threats or
by the failure of, or lack of access to, our Enterprise Resource Planning system. These disruptions could negatively
impact our sales, increase our expenses, subject us to liability and/or harm our reputation.
Hackers, computer programmers and internal users may be able to penetrate our network security and create
system disruptions, cause shutdowns and misappropriate our confidential information or that of our employees and third
parties, including our customers. Therefore, we could incur significant expenses addressing problems created by security
breaches to our network. This risk is heightened because we collect and store customer information for marketing
purposes, as well as debit and credit card information. We must, and do, take precautions to secure customer information
and prevent unauthorized access to our database of confidential information. However, if unauthorized parties, including
external hackers or computer programmers, gain access to our database, they may be able to steal this confidential
information. Our failure to secure this information could result in costly litigation, adverse publicity or regulatory action,
or result in customers discontinuing the use of debit or credit cards in our stores, or customers not shopping in our stores
or on our e-commerce websites altogether. These consequences could have a material adverse effect on our financial
condition and results of operations. In addition, sophisticated hardware and operating system software and applications
that we procure from third parties may contain defects in design or manufacture that could unexpectedly interfere with
our operations. The cost to alleviate security risks and defects in software and hardware and to address any problems that
occur could negatively impact our sales, distribution and other critical functions, as well as our financial results.
In recent years, there has been increasing regulatory enforcement and litigation activity in the area of privacy,
data protection and information security in various states in which we operate. On June 28, 2018, the California governor
signed into law the comprehensive California Consumer Privacy Act of 2018 (the “CCPA”), which became effective on
January 1, 2020. The CCPA requires certain companies to satisfy new requirements regarding the handling of personal
and sensitive data, including its use, protection and the ability of California residents whose data is stored to know
specifically what data types each company has collected on them and, if they so choose, the right to demand that such
companies delete their data. Failure to comply with the CCPA requirements could result in civil penalties. The CCPA
also provides a private right of action that allows consumers to seek, either individually or as a class, statutory or actual
damages and injunctive and other relief, if their sensitive personal information is subject to unauthorized access and
exfiltration, theft or disclosure as a result of a business's failure to implement and maintain required reasonable security
procedures. New legislation or regulation such as the CCPA, including any potential comprehensive federal privacy
legislation, as well as any associated inquiries or investigations or any other government actions, could be costly to
comply with, result in negative publicity, increase our operating costs, require significant management time and
attention, and subject us to remedies that may harm our business, including fines or demands or orders that we modify or
cease existing business practices.
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We operate Aptos Retail on a software-as-a-service platform, and we use this system for integrated point-of-
sale, merchandising, planning, sales audit, customer relationship management, inventory control, loss prevention,
purchase order management and business intelligence. Accordingly, we depend on this system, and the third-party
provider of this service, for many aspects of our operations. If this service provider or this system fails, or if we are
unable to continue to have access to this system on commercially reasonable terms, or at all, our operations would be
severely disrupted until an equivalent system could be identified, licensed or developed, and integrated into our
operations. This disruption would have a material adverse effect on our business.
Our failure to maintain adequate internal controls over our financial and management systems may cause errors in
our financial reporting. These errors may cause a loss of investor confidence and result in a decline in the price of
our common stock.
Our public company reporting obligations and our anticipated growth may place additional burdens on our
financial and management systems, internal controls and employees. As a public company, we are required to maintain
internal control over financial reporting. Pursuant to Section 404 of the Sarbanes-Oxley Act, we are required to file a
report by management on the effectiveness of our internal control over financial reporting.
Maintaining internal controls is time consuming and costly. If we identify any material weaknesses or
deficiencies that aggregate to a material weakness in our internal controls, we will have to implement appropriate
changes to these controls, which may require specific compliance training for our directors, officers and employees,
require the hiring of additional finance, accounting, legal and other personnel, entail substantial costs to modify our
existing accounting systems and take a significant period of time to complete. Such changes may not, however, be
effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent
inability to produce accurate financial statements on a timely basis, could increase our operating costs and could
materially impair our ability to operate our business. If we are unable to maintain effective internal control over financial
reporting, including because of an inability to remediate any such material weakness, if our management is unable to
report that our internal control over financial reporting is effective when required, investors may lose confidence in the
accuracy and completeness of our financial reports and the market price of our common stock could be negatively
affected. As a result, our failure to maintain effective internal controls could result in us being subject to regulatory
action and a loss of investor confidence in the reliability of our financial statements, both of which in turn could cause
the market value of our common stock to decline and affect our ability to raise capital.
If we are unable to protect our intellectual property rights, our financial results may be negatively impacted.
Our success depends in large part on our brand image. Our name, logo, domain name and our private brands
and other intellectual property are valuable assets that differentiate us from our competitors. We currently rely on a
combination of copyright, trademark, trade dress and unfair competition laws to establish and protect our intellectual
property rights, but the steps taken by us to protect our proprietary rights may be inadequate to prevent infringement of
our trademarks and proprietary rights by others, including imitation and misappropriation of our brand. Additional
obstacles may arise as we expand our product lines and geographic scope. Moreover, litigation may be necessary to
protect or enforce these intellectual property rights, which could result in substantial costs and diversion of our resources,
causing a material adverse effect on our business, financial condition, results of operations or cash flows. The
unauthorized use or misappropriation of our intellectual property or our failure to protect our intellectual property rights
could damage our brand image and the goodwill we have created, which could cause our sales to decline.
We have not registered any of our intellectual property outside of the U.S. with the exception of the Boot Barn
tradenames which are registered in China and Hong Kong. We cannot prohibit other companies from using our other
trademarks in foreign countries. Use of these other trademarks in foreign countries could negatively impact our identity
in the U.S. and cause our sales to decline.
We may be subject to liability if we, or our suppliers, infringe upon the intellectual property rights of third parties.
We may be subject to claims that our activities or the products that we sell infringe upon the intellectual
property rights of others. Any such claims can be time consuming and costly to defend, and may divert our
32
management’s attention and resources, even if the claims are meritless. If we were to be found liable for any such
infringement, we could be required to enter into costly settlements or license agreements and could be subject to
injunctions preventing further infringement. Such infringement claims could harm our brand image. In addition, any
payments that we are required to make and any injunction with which we are required to comply as a result of such
infringement actions could adversely affect our financial results.
We purchase merchandise from suppliers that may be subject to design copyrights or design patents, or
otherwise may incorporate protected intellectual property. We are not involved in the manufacture of any of the
merchandise we purchase from our suppliers for sale to our customers, and we do not independently investigate whether
these suppliers legally hold intellectual property rights to merchandise that they are manufacturing or distributing. As a
result, we rely upon the suppliers’ representations set forth in our purchase orders and supplier agreements concerning
their right to sell us the products that we purchase from them. If a third party claims to have licensing rights with respect
to merchandise we purchased from a supplier, or if we acquire unlicensed merchandise, we could be obligated to remove
such merchandise from our stores, incur costs associated with destruction of such merchandise if the distributor or
supplier is unwilling or unable to reimburse us and be subject to liability under various civil and criminal causes of
action, including actions to recover unpaid royalties and other damages and injunctions. Any of these results could harm
our brand image and have a material adverse effect on our business and growth.
Litigation costs and the outcome of litigation could have a material adverse effect on our business.
Our business is characterized by a high volume of customer traffic and by transactions involving a wide variety
of product selections, each of which exposes us to a high risk of consumer litigation. From time to time we may be
subject to litigation claims through the ordinary course of our business operations regarding, but not limited to,
employment matters, compliance with the Americans with Disabilities Act of 1990, footwear, apparel and accessory
safety standards, security of customer and employee personal information, contractual relations with suppliers, marketing
and infringement of trademarks and other intellectual property rights. Additionally, as a result of COVID - 19, we may
have increased litigation exposure if an employee or customer believes they contracted the COVID - 19 virus in one of
our stores. Litigation to defend ourselves against claims by third parties, or to enforce any rights that we may have
against third parties, may be necessary, which could result in substantial costs and diversion of our resources, causing a
material adverse effect on our business, financial condition, results of operations or cash flows.
Issues with merchandise safety could damage our reputation, sales and financial results.
Various governmental authorities in the jurisdictions where we do business regulate the safety of the
merchandise we sell to consumers. Regulations and standards in this area, including those related to the U.S. Consumer
Product Safety Improvement Act of 2008, state regulations like California's Proposition 65, and similar legislation,
impose restrictions and requirements on the merchandise we sell in our stores and through e-commerce. These
regulations change from time to time as new federal, state or local regulations are enacted. If we or our vendors are
unable to comply with regulatory requirements on a timely basis or at all, significant fines or penalties could be incurred
or we could have to curtail some aspects of our sales or operations, which could have a material adverse effect on our
business, financial condition, results of operations or cash flows.
We rely on our vendors to provide quality merchandise that complies with applicable product safety laws and
other applicable laws, but they may not comply with their obligations to do so. Although our arrangements with our
vendors frequently provide for indemnification for product liabilities, the vendors may fail to honor those obligations to
an extent we consider sufficient or at all. Issues with the safety of merchandise or customer concerns about such issues,
regardless of our fault, could cause damage to our reputation and could result in lost sales, uninsured product liability
claims or losses, merchandise recalls and increased costs, and regulatory, civil or criminal fines or penalties, any of
which could have a material adverse effect on our business, financial condition, results of operations or cash flows.
Union attempts to organize our employees could negatively affect our business.
Currently, none of our employees are represented by a union. However, if some or all of our workforce were to
unionize and the terms of the collective bargaining agreement were significantly different from our current compensation
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arrangements, it could increase our costs and adversely impact our profitability. Moreover, participation in labor unions
could put us at increased risk of labor strikes and disruption of our operations. Responding to unionization attempts may
distract management and our workforce. Any of these changes could adversely affect our business, financial condition,
results of operations or cash flows.
Violations of or changes in laws, including employment laws and laws related to our merchandise, could make
conducting our business more expensive or change the way we do business.
We are subject to numerous regulations, including labor and employment, customs, truth-in-advertising,
consumer protection, environmental and occupational safety requirements and zoning and occupancy laws and
ordinances that regulate retailers generally, that govern the importation, promotion and sale of merchandise and/or that
regulate the operation of stores and warehouse facilities. If these regulations were violated by our management,
employees or suppliers, the costs of certain goods could increase, or we could experience delays in shipments of our
goods, be subject to fines or penalties or suffer reputational harm, which could reduce demand for our merchandise and
hurt our business and results of operations.
Similarly, changes in laws could make operating our business more expensive or require us to change the way
we do business. In addition, changes in product safety or other consumer protection laws could lead to increased costs
for certain merchandise, or additional labor costs associated with readying merchandise for sale. It may be difficult for us
to foresee regulatory changes impacting our business and our actions needed to respond to changes in the law could be
costly and may negatively impact our operations.
We may engage in strategic transactions that could negatively impact our liquidity, increase our expenses and present
significant distractions to our management.
We have made strategic acquisitions in the past and may in the future consider strategic transactions and
business arrangements, including, but not limited to, acquisitions, asset purchases, partnerships, joint ventures,
restructurings, divestitures and investments. The success of such a transaction is based on our ability to make accurate
assumptions regarding the valuation, operations, growth potential, integration and other factors relating to the respective
business. Acquisitions may result in difficulties in assimilating acquired companies and may result in the diversion of
our capital and our management’s attention from other business issues and opportunities. We may be unable to
successfully integrate operations that we acquire, including their personnel, financial systems, distribution, operations
and general operating procedures. Any such transaction may require us to incur non-recurring or other charges, may
increase our near and long-term expenditures and may pose significant integration challenges or disrupt our management
or business, which could harm our operations and financial results.
Terrorism or civil unrest could negatively affect our business.
Terrorist attacks, threats of terrorist attacks or civil unrest involving public areas could cause people to avoid
visiting some areas where our stores are located. Further, armed conflicts or acts of war throughout the world may create
uncertainty, causing consumers to spend less on discretionary purchases, including on footwear, apparel and accessories,
or disrupt our ability to obtain merchandise for our stores. Such decreases in consumer spending or disruptions in our
ability to obtain merchandise would likely decrease our sales and materially adversely affect our financial condition and
results of operations.
If our goodwill, intangible assets or long-lived assets become impaired, we may be required to record a significant
charge to earnings.
We have a significant amount of goodwill and indefinite-lived intangible assets. Our goodwill balance as of
March 27, 2021 was $197.5 million as a result of recent acquisitions. Our intangible asset balance as of March 27, 2021
was $60.9 million. We test goodwill and intangible assets for impairment at least annually or more frequently if
indicators of impairment exist. Long-lived assets are tested for impairment only if indicators of impairment exist, such as
significant negative industry or general economic trends (including the impact of COVID - 19). Goodwill, intangible
assets and long-lived assets are considered to be impaired when the net book value of the asset exceeds its estimated fair
34
value. An impairment of a significant portion of our goodwill, intangible assets or long-lived assets could materially
adversely affect our financial condition and results of operations.
Risks Related To Ownership of Our Common Stock
The market price and trading volume of our common stock have been and may continue to be volatile, which could
result in rapid and substantial losses for our stockholders, and you may lose all or part of your investment.
The market for specialty retail stocks can be highly volatile. Since our IPO in October 2014 through May 10,
2021, our common stock has traded as high as $75.65 and as low as $5.20. An active, liquid and orderly market for our
common stock may not be sustained, which could depress the trading price of our common stock or cause it to be highly
volatile or subject to wide fluctuations. The market price of our common stock has and may continue to fluctuate or may
decline significantly in the future and you could lose all or part of your investment. Some of the factors that could
negatively affect our share price or result in fluctuations in the price or trading volume of our common stock include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
variations in our quarterly or annual financial results and operating performance and the performance of our
competitors;
publication of research reports or recommendations by securities or industry analysts about us, our
competitors or our industry, or a lack of such securities analyst coverage;
our failure or our competitors’ failure to meet analysts’ projections or guidance;
downgrades by any securities analysts who follow our common stock;
our levels of same store sales;
sales or anticipated sales of large blocks of our common stock;
changes to our management team;
regulatory developments negatively affecting our industry;
changes in stock market valuations of our competitors;
the development and sustainability of an active trading market for our common stock;
the public’s response to press releases or other public announcements by us or third parties, including our
filings with the SEC;
the performance and successful integration of any new stores that we open or acquire;
actions by competitors;
announcements by us or our competitors of new product offerings or significant acquisitions;
short selling of our common stock by investors;
limited “public float” in the hands of a small number of persons whose sales or lack of sales of our
common stock could result in positive or negative pricing pressure on the market price for our common
stock;
35
•
•
fluctuations in the stock markets generally and in the market for shares in the retail sector particularly; and
changes in general market and economic conditions, including as a result of the widespread impact of the
COVID - 19 pandemic.
Further, securities class action litigation has often been initiated against companies following periods of
volatility in their stock price. This type of litigation, should it materialize, could result in substantial costs and divert our
management’s attention and resources, and could also require us to make substantial payments to satisfy judgments or to
settle litigation. The threat or filing of class action litigation could cause the price of our common stock to decline.
Anti - takeover provisions in our corporate organizational documents and current credit facility and under Delaware
law may delay, deter or prevent a takeover of us and the replacement or removal of our management, even if such a
change of control would benefit our stockholders.
The anti - takeover provisions under Delaware law, as well as the provisions contained in our corporate
organizational documents, may make an acquisition of us more difficult. For example:
•
•
•
•
•
•
•
•
our amended and restated certificate of incorporation includes a provision authorizing our board of
directors to issue blank check preferred stock without stockholder approval, which, if issued, would
increase the number of outstanding shares of our capital stock and make it more difficult for a stockholder
to acquire us;
our amended and restated bylaws provide that director vacancies and newly created directorships can only
be filled by an affirmative vote of a majority of directors then in office;
our amended and restated bylaws require advance notice of stockholder proposals and director
nominations;
our amended and restated certificate of incorporation provides that our board of directors may adopt,
amend, add to, modify or repeal our amended and restated bylaws without stockholder approval;
our amended and restated bylaws do not permit our stockholders to act by written consent without a
meeting unless that action is taken with regard to a matter that has been approved by our board of directors
or requires the approval only of certain classes or series of our stock;
our amended and restated certificate of incorporation contains a requirement that, to the fullest extent
permitted by law, certain proceedings against or involving us or our directors, officers or employees must
be brought exclusively in the Court of Chancery of the State of Delaware unless we consent in writing to an
alternative forum;
our amended and restated bylaws do not permit our stockholders to call special meetings; and
the General Corporation Law of the State of Delaware, or the DGCL, may prevent any stockholder or
group of stockholders owning at least 15% of our common stock from completing a merger or acquisition
of us.
Our debt instruments also contain provisions that could have the effect of making it more difficult or less
attractive for a third party to acquire control of us. Our current credit facility provides that a change of control constitutes
an event of default under such credit facility and would permit the lenders to declare the indebtedness incurred
thereunder to be immediately due and payable. Our future credit facilities may contain similar provisions. The need to
repay all such indebtedness may deter potential third parties from acquiring us.
36
Under these various provisions in our amended and restated certificate of incorporation, amended and restated
bylaws and current credit facility, a takeover attempt or third - party acquisition of us, including a takeover attempt that
may result in a premium over the market price for shares of our common stock, could be delayed, deterred or prevented.
In addition, these provisions may prevent the market price of our common stock from increasing in response to actual or
rumored takeover attempts and may also prevent changes in our management. As a result, these anti - takeover and
change of control provisions may limit the price that investors are willing to pay in the future for shares of our common
stock.
If securities or industry analysts do not publish research and reports or publish inaccurate or unfavorable research
and reports about our business, the price and trading volume of our common stock could decline.
The trading market for our common stock is influenced by the research and reports that securities or industry
analysts publish about us or our business. If securities or industry analyst coverage of one or more of the analysts who
covers us downgrades our common stock or publishes inaccurate or unfavorable research about our business, the price of
our common stock would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports
on us regularly, demand for our common stock could decrease, which could cause the price of our common stock and
trading volume to decline.
We do not currently intend to pay cash dividends on our common stock, which may make our common stock less
desirable to investors and decrease its value.
We intend to retain all of our available funds for use in the operation and expansion of our business and do not
anticipate paying any cash dividends on our common stock for the foreseeable future. Any future determination to pay
cash dividends on our common stock will be at the discretion of our board of directors and will depend upon many
factors, including our financial condition, results of operations and liquidity, legal requirements and restrictions that may
be imposed by the terms of our current credit facility and in any future financing instruments. Therefore, you may only
receive a return on your investment in our common stock if the market price increases above the price at which you
purchased it, which may never occur.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our Store Support Center, e-commerce operations and distribution centers are located in California and Kansas.
As of March 27, 2021, our Store Support Center is located in Irvine, California, where we currently occupy an 84,580
square foot building. The existing lease will expire August 31, 2022, and contains an option to renew for five years
beyond the current lease term.
During fiscal 2021, we expanded our Fontana, California distribution center by acquiring the remaining 199,226
square feet of the building, increasing our overall square footage to 398,471. Our existing lease expires May 31, 2026,
and contains one option to renew, for an additional period of five years. This location holds inventory to support our
private brand initiatives, bulk purchasing programs, event sales, and new store openings.
In Wichita, Kansas, we lease a 133,428 square foot distribution center to support our e-commerce business and
30,000 square feet of office space. This lease expires August 31, 2035 and contains four additional options to renew,
each for a period of five years. We also lease an additional freestanding building in Wichita, Kansas, totaling 21,275
square feet. The building is being used as office and distribution center space to support our e-commerce business. The
lease expires September 30, 2023 and does not contain an option to renew.
Most of our stores are occupied under operating leases. The store leases generally have a base lease term of five
or 10 years, with one or more renewal periods of five years, on average, exercisable at our option. Of the store leases that
will reach their termination date during fiscal 2022, twenty-one of those leases do not contain an option to automatically
37
extend the lease term. We are generally responsible for the payment of property taxes and insurance, utilities and
common area maintenance fees.
Item 3. Legal Proceedings
We are involved, from time to time, in litigation that is incidental to our business. We have reviewed these
matters to determine if reserves are required for losses that are probable and reasonable to estimate in accordance with
FASB ASC Topic 450, Contingencies. We evaluate such reserves, if any, based upon several criteria, including the
merits of each claim, settlement discussions and advice from outside legal counsel, as well as indemnification of
amounts expended by our insurers or others, if any.
On May 8, 2019, Sheplers, Inc., a wholly-owned subsidiary of the Company, was named as defendant in a
class-action complaint filed in the Superior Court of California, County of Los Angeles. Among other things, the
complaint generally alleges deceptive pricing on merchandise sold in Sheplers’ e-commerce site. The estimated cost of
the matter has been accrued as of March 27, 2021.
During the normal course of our business, we have made certain indemnifications and commitments under
which we may be required to make payments for certain transactions. These indemnifications include those given to
various lessors in connection with facility leases for certain claims arising from such facility leases, and indemnifications
to our directors and officers to the maximum extent permitted under the laws of the State of Delaware. The majority of
these indemnifications and commitments do not provide for any limitation of the maximum potential future payments we
could be obligated to make, and their duration may be indefinite. We have not recorded any liability for these
indemnifications and commitments in the consolidated balance sheets as the impact is expected to be immaterial.
Item 4. Mine Safety Disclosures
Not applicable.
38
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Our common stock has been listed on the New York Stock Exchange under the symbol “BOOT” since
October 30, 2014, the day after our initial public offering. As of May 10, 2021, we had 2 stockholders of record. The
number of stockholders of record is based upon the actual number of stockholders registered at such date and does not
include holders of shares in “street names” or persons, partnerships, associations, corporations or other entities identified
in security position listings maintained by depositories.
Dividends
Since our common stock began trading, we have not declared any cash dividends, and we do not anticipate
declaring any cash dividends in the foreseeable future. The agreements governing our indebtedness contain restrictions
on dividends.
Securities Authorized for Issuance Under Equity Compensation Plans
The information required by this Item is incorporated herein by reference to the Company’s Proxy Statement for
the 2021 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after the close of the
fiscal year ended March 27, 2021 (the “2021 Proxy Statement”).
Stock Performance Graph
The graph set forth below compares the cumulative stockholder return on our common stock between
March 26, 2016 and March 27, 2021 to the cumulative return of (i) the NYSE Composite Total Return index and (ii) an
index of peer and comparable companies as determined by the Company (“Peer Group”). The companies currently
comprising the Peer Group are: The Buckle, Inc.; Caleres, Inc.; DBI, Inc. (formerly DSW, Inc.); Foot Locker, Inc.;
Genesco, Inc.; Tractor Supply Co.; Wolverine World Wide, Inc.; and Zumiez, Inc. Cabela’s Inc. and Finish Line, Inc.
which had previously been part of the Peer Group, were acquired in 2017 and 2018, respectively, and are no longer
public companies. As a result, Cabela’s Inc. and Finish Line, Inc. have been removed from the Peer Group Index and
Stock Performance Graph beginning in the fiscal 2019 and fiscal 2020 periods presented, respectively. This graph
assumes an initial investment of $100 on October 30, 2014 in our common stock, the NYSE Composite Total Return
index and the Peer Group, and assumes the reinvestment of dividends, if any. The graph also assumes that the initial
price of our common stock, the NYSE composite Total Return index and the Peer Group on October 30, 2014 were the
closing prices on that trading day.
39
Comparison of Cumulative Total Return
Assumes Initial Investment of $100
March 2016 - March 2021
March 26,
Boot Barn Holdings, Inc.
NYSE Composite—Total Return
Peer Group
2016
53.52
97.53
109.27
April 1,
2017
56.68
114.09
109.84
March 31,
March 30,
March 28, March 27,
2018
101.60
126.75
100.19
2019
168.71
132.51
135.57
2020
76.62
109.07
95.40
2021
362.75
171.84
225.54
Item 6. Selected Consolidated Financial Data
The following tables present our selected consolidated financial and other data as of and for the periods
indicated. We have derived the selected consolidated statement of operations data for the fiscal years ended March 27,
2021, March 28, 2020, and March 30, 2019, and the selected consolidated balance sheet data as of March 27, 2021, and
March 28, 2020 from the audited consolidated financial statements included in Item 8 of this report. The selected
consolidated balance sheet data as of March 30, 2019, March, 31, 2018 and April 1, 2017, and the selected consolidated
statement of operations data for the fiscal years ended March 31, 2018 and April 1, 2017, are derived from audited
consolidated financial statements that are not included elsewhere in this report. The historical results presented below are
not necessarily indicative of the results that may be expected for any future period.
40
You should read the following selected consolidated financial and other data in conjunction with the
consolidated financial statements and accompanying notes and the information under “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” appearing elsewhere in this report.
Fiscal Year Ended(1)
(in thousands, except per share and
selected store data)
Consolidated Statement of Operations Data:
Net sales
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Income from operations
Interest expense
Other income/(loss), net
Income before income taxes
Income tax expense
Net income
Net income per share:
Basic shares
Diluted shares
Weighted average shares outstanding:
Basic shares
Diluted shares
Other Financial Data (unaudited):
EBITDA(2)
Adjusted EBITDA(2)
Adjusted EBIT(2)
Capital expenditures
Selected Store Data (unaudited):
Same Store Sales growth
Stores operating at end of period
Total retail store square footage, end of
period (in thousands)
Average store square footage, end of period
Average net sales per store (in thousands)(3)
(in thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents
Working capital(4)
Total assets
Total debt, net
Stockholders’ equity
March 27, March 28, March 30,
2020
2021
2019
March 31,
2018
April 1,
2017
$ 893,491
598,612
294,879
208,553
86,326
9,442
366
77,250
17,864
$ 59,386
$ 845,575
569,084
276,491
202,823
73,668
13,310
(45)
60,313
12,364
$ 47,949
$ 776,854
525,420
251,434
187,112
64,322
16,331
5
47,996
8,974
$ 39,022
$ 677,949
470,034
207,915
161,660
46,255
15,076
—
31,179
2,300
$ 28,879
$ 629,816
439,930
189,886
152,068
37,818
14,699
—
23,119
8,922
$ 14,197
$
$
2.05
2.01
$
$
1.68
1.64
$
$
1.39
1.35
$
$
1.08
1.05
$
$
0.54
0.53
28,930
29,477
28,583
29,220
28,092
28,813
26,744
27,528
26,459
26,939
$ 110,840
$ 119,276
$ 95,128
$ 28,424
$ 95,006
$ 100,550
$ 79,167
$ 37,195
$ 83,229
$ 87,323
$ 68,421
$ 27,525
$ 63,383
$ 66,030
$ 48,902
$ 24,418
$ 54,528
$ 59,167
$ 42,457
$ 22,293
3.1 %
273
5.0 %
259
10.0 %
240
5.2 %
226
0.3 %
219
2,854
10,455
2,602
$
2,722
10,508
2,684
$
2,539
10,580
2,646
$
2,377
10,517
2,438
2,297
10,486
2,330
$
$
March 27, March 28, March 30, March 31, April 1,
2021
2020
2019
2018
2017
$ 73,148 $ 69,563 $ 16,614 $
132,363
924,711
238,922
321,693
79,652
933,581
109,781
394,891
108,786
636,075
174,264
264,164
102,119
587,941
204,206
214,606
9,016 $
8,035
102,803
565,581
225,853
179,909
(1) We operate on a fiscal calendar that results in a 52- or 53 - week fiscal year ending on the last Saturday of March unless
April 1st is a Saturday, in which case the fiscal year ends on April 1st. In a 52 - week fiscal year, each quarter
41
includes thirteen weeks of operations; in a 53 - week fiscal year, the first, second and third quarters each include
thirteen weeks of operations and the fourth quarter includes fourteen weeks of operations. The data presented
contains references to fiscal 2021, fiscal 2020, fiscal 2019, fiscal 2018, and fiscal 2017, which represent our fiscal
years ended March 27, 2021, March 28, 2020, March 30, 2019, March 31, 2018 and April 1, 2017, respectively.
Fiscal 2021, 2020, 2019 and 2018, were each 52 - week periods, and fiscal 2017 was a 53 - week period.
(2) EBITDA, Adjusted EBITDA and Adjusted EBIT are financial measures that are not calculated in accordance with
GAAP. We define EBITDA as net income adjusted to exclude income tax expense, net interest expense and
depreciation and intangible asset amortization. We define Adjusted EBITDA as EBITDA adjusted to exclude certain
non-cash expenses, such as stock - based compensation and the non - cash accrual for future award redemptions, and
other costs and expenses that are not directly related to our operations, including loss on disposal of assets and
contract termination costs, store impairment charges, gain/(loss) on adjustment of right-of-use assets and lease
liabilities and secondary offering costs. Similar to Adjusted EBITDA, Adjusted EBIT excludes the aforementioned
adjustments while maintaining the impact of depreciation and amortization on our financial results. We include
EBITDA, Adjusted EBITDA and Adjusted EBIT in this report because they are important financial measures used
by our management, board of directors and lenders to assess our operating performance. See “Item 7—
Management’s Discussion and Analysis of Financial Condition and Results of Operations—How We Assess the
Performance of Our Business—EBITDA, Adjusted EBITDA and Adjusted EBIT” for more information about
management’s use of these measures and why we consider them to be important. EBITDA, Adjusted EBITDA and
Adjusted EBIT should not be considered in isolation or as alternatives to net income or any other measure of
financial performance calculated and presented in accordance with GAAP. Given that EBITDA, Adjusted EBITDA
and Adjusted EBIT are measures not deemed to be in accordance with GAAP and are susceptible to varying
calculations, our EBITDA, Adjusted EBITDA and Adjusted EBIT may not be comparable to similarly titled
measures of other companies, including companies in our industry, because other companies may calculate
EBITDA, Adjusted EBITDA and Adjusted EBIT in a different manner than we calculate these measures. The
following table presents a reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBIT to our net income, the
most directly comparable financial measure calculated and presented in accordance with GAAP, for each of the
periods indicated:
42
(in thousands)
EBITDA Reconciliation (Unaudited):
Net income
Income tax expense
Interest expense
Depreciation and intangible asset amortization
EBITDA
Non-cash stock-based compensation(a)
Non-cash accrual for future award redemptions(b)
Loss on disposal of assets and contract termination
costs(c)
Gain/(loss) on adjustment of right-of-use assets and
lease liabilities(d)
Store impairment charge(e)
Secondary offering costs(f)
Adjusted EBITDA
Depreciation and intangible asset amortization
Adjusted EBIT
Fiscal Year Ended(1)
March 27, March 28, March 30, March 31, April 1,
2019
2021
2020
2017
2018
$ 59,386 $ 47,949 $ 39,022 $ 28,879 $ 14,197
17,864
8,922
14,699
9,442
16,710
24,148
54,528
110,840
3,023
7,158
85
512
12,364
13,310
21,383
95,006
4,908
214
8,974
16,331
18,902
83,229
2,873
567
2,300
15,076
17,128
63,383
2,248
(230)
87
417
23
252
367
295
384
—
(186)
191
—
—
1,164
—
$ 119,276 $ 100,550 $ 87,323 $ 66,030 $ 59,167
(24,148)
(16,710)
(18,902)
$ 95,128 $ 79,167 $ 68,421 $ 48,902 $ 42,457
—
455
176
—
83
294
(21,383)
(17,128)
(a) Represents non - cash compensation expenses related to stock options, restricted stock awards, restricted stock units
and performance share units granted to certain of our employees and directors.
(b) Represents the non - cash accrual for future award redemptions in connection with our customer loyalty program.
(c) Represents loss on disposal of assets and contract termination costs from store closures and unused office and
warehouse space.
(d) Represents gain/(loss) on adjustment of right-of-use assets and lease liabilities.
(e) Represents store impairment charges recorded in order to reduce the carrying amount of the assets to their estimated
fair values.
(f) Represents professional fees and expenses incurred in connection with secondary offerings conducted in
January 2018 and May 2018.
(3) Average net sales per store is calculated by dividing net sales for the applicable period by the number of stores
operating at the end of the period. For the purpose of calculating net sales per store, e - commerce sales and certain
other revenues are excluded from net sales.
(4) Working capital is calculated as current assets, excluding cash and cash equivalents, minus current liabilities,
excluding the current portion of debt under our credit facilities.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion in conjunction with the consolidated financial statements and the
accompanying notes included elsewhere in this annual report, as well as the information presented under “Selected
Consolidated Financial Data”. The statements in the following discussion and analysis regarding expectations about
our future performance, liquidity and capital resources and any other non - historical statements in this discussion and
analysis are forward - looking statements. These forward - looking statements are subject to numerous risks and
uncertainties, including, but not limited to, those described under “Risk Factors” and “Forward - Looking Statements”
43
elsewhere in this annual report. Our actual results could differ materially from those contained in or implied by any
forward - looking statements.
Overview
We are the largest lifestyle retail chain devoted to western and work - related footwear, apparel and accessories
in the U.S. As of March 27, 2021, we operated 273 stores in 36 states, as well as an e-commerce channel, consisting
primarily of bootbarn.com, sheplers.com and countryoutfitter.com. Our stores feature a comprehensive assortment of
brands and styles, coupled with attentive, knowledgeable store associates. Our product offering is anchored by an
extensive selection of western and work boots and is complemented by a wide assortment of coordinating apparel and
accessories. Many of the items that we offer are basics or necessities for our customers’ daily lives and typically
represent enduring styles that are not meaningfully impacted by changing fashion trends.
We strive to offer an authentic, one - stop shopping experience that fulfills the everyday lifestyle needs of our
customers, and as a result, many of our customers make purchases in both the western and work wear sections of our
stores. We target a broad and growing demographic, ranging from passionate western and country enthusiasts, to
workers seeking dependable, high - quality footwear and clothing. Our broad geographic footprint, which comprises more
than three times as many stores as our nearest direct competitor that sells primarily western and work wear, provides us
with significant economies of scale, enhanced supplier relationships, the ability to recruit and retain high quality store
associates and the ability to reinvest in our business at levels that we believe exceed those of our competition.
For a discussion of factors that affect the comparability of our results of operations, see “Item 1—Business—
Acquisitions.”
Growth Strategies and Outlook
Over the long-term we plan to continue to expand our business, increase our sales growth and profitability and
enhance our competitive position by executing the following strategies:
•
•
•
•
•
•
continuing omni-channel leadership;
driving same store sales growth;
building our private brand portfolio;
expanding our store base;
enhancing brand awareness; and
increasing profitability.
Since the founding of Boot Barn in 1978, we have grown both organically and through successful strategic
acquisitions of competing chains. We have rebranded and remerchandised the acquired chains under the Boot Barn
banner, resulting in sales increases over their original concepts. We believe that our business model and scale provide us
with competitive advantages that have contributed to our consistent financial performance, generating sufficient cash
flow to support national growth.
The major global health pandemic caused by COVID - 19 and resulting economic impacts have had and will
continue to have an impact on our operations, future growth strategies and outlook. Our business and opportunities for
growth depend on consumer discretionary spending, and as such, our results are particularly sensitive to economic
conditions and consumer confidence. The extent to which COVID - 19 impacts our operations will depend on future
developments, which remain uncertain. For further discussion of the uncertainties and business risks associated with
COVID - 19, see Item 1A, Risk Factors.
44
How We Assess the Performance of Our Business
In assessing the performance of our business, we consider a variety of performance and financial measures. The
key indicators we use to evaluate the financial condition and operating performance of our business are net sales and
gross profit. In addition, we also review other important metrics, such as same store sales, new store openings, selling,
general and administrative (“SG&A”) expenses, EBITDA, Adjusted EBITDA and Adjusted EBIT. See “Item 6, Selected
Consolidated Financial Data” for our definition of EBITDA, Adjusted EBITDA and Adjusted EBIT, and for a
reconciliation of our EBITDA, Adjusted EBITDA and Adjusted EBIT to net income, the most directly comparable
financial measure calculated and presented in accordance with GAAP. See “EBITDA, Adjusted EBITDA and Adjusted
EBIT” below for further discussion of why we present EBITDA, Adjusted EBITDA and Adjusted EBIT.
Net sales
Net sales reflect revenue from the sale of our merchandise at retail locations, as well as sales of merchandise
through our e - commerce websites. We recognize revenue upon the purchase of merchandise by customers at our stores
and upon delivery of the product in the case of our e - commerce websites. Net sales also include shipping and handling
fees for e - commerce shipments that have been delivered to our customers. Net sales are net of returns on sales during the
period as well as an estimate of returns and award redemptions expected in the future stemming from current period
sales. Revenue from the sale of gift cards is deferred until the gift cards are used to purchase merchandise.
Our business is moderately seasonal and as a result our revenues fluctuate from quarter to quarter. In addition,
our revenues in any given quarter can be affected by a number of factors including the timing of holidays and weather
patterns. The third quarter of our fiscal year, which includes the Christmas shopping season, has historically produced
higher sales and disproportionately higher operating results than the other quarters of our fiscal year. In fiscal 2021,
fiscal 2020 and fiscal 2019 we generated approximately 34%, 34% and 33% of our net sales during our third fiscal
quarter, respectively. In addition, neither the western nor the work component of our business has been meaningfully
impacted by fashion trends or seasonality historically. We believe that many of our customers are driven primarily by
utility and brand, and our best - selling styles.
Same store sales
The term “same store sales” generally refers to net sales from stores that have been open at least 13 full fiscal
months as of the end of the current reporting period, although we include or exclude stores from our calculation of same
store sales in accordance with the following additional criteria:
•
•
•
•
•
stores that are closed for five or fewer consecutive days in any fiscal month are included in same store
sales;
stores that are closed temporarily, but for more than five consecutive days in any fiscal month, are excluded
from same store sales beginning in the fiscal month in which the temporary closure begins (and for the
comparable periods of the prior or subsequent fiscal periods for comparative purposes); until the first full
month of operation once the store re - opens;
stores that are closed temporarily and relocated within their respective trade areas are included in same
store sales;
stores that are permanently closed are excluded from same store sales beginning in the month preceding
closure (and for the comparable periods of the prior or subsequent fiscal periods for comparative purposes);
and
acquired stores are added to same store sales beginning on the later of (a) the applicable acquisition date
and (b) the first day of the first fiscal month after the store has been open for at least 13 full fiscal months
regardless of whether the store has been operated under our management or predecessor management.
45
If the criteria described with respect to acquired stores above are met, then all net sales of an acquired store,
excluding those net sales before our acquisition of that store, are included for the period presented. However, when an
acquired store is included for the period presented, the net sales of such acquired store for periods before its acquisition
are included (to the extent relevant) for purposes of calculating “same stores sales growth” and illustrating the
comparison between the applicable periods. Pre - acquisition net sales numbers are derived from the books and records of
the acquired company, as prepared prior to the acquisition, and have not been independently verified by us. Beginning on
their respective dates of acquisition, sales from the acquired Wood’s Boots stores, Lone Star stores, Drysdales stores and
G.&L. Clothing store have been included in same store sales.
In addition to retail store sales, same store sales also includes e - commerce sales, e - commerce shipping and
handling revenue and actual retail store or e - commerce sales returns. We exclude gift card escheatment, provision for
sales returns and future loyalty award redemptions from sales in our calculation of net sales per store. Sales as a result of
an e-commerce asset acquisition, such as Country Outfitter, are excluded from same store sales until the 13th full fiscal
month subsequent to the Company’s acquisition of such assets.
Measuring the change in year - over - year same store sales allows us to evaluate how our store base is
performing. Numerous factors affect our same store sales, including:
•
•
•
•
•
•
•
national and regional economic trends;
our ability to identify and respond effectively to regional consumer preferences;
changes in our product mix;
changes in pricing;
competition;
changes in the timing of promotional and advertising efforts;
holidays or seasonal periods; and
• weather.
Opening new stores is an important part of our growth strategy. We opened or acquired 15, 20, and 17 stores in
fiscal 2021, 2020, and 2019. Included in these added stores are 15, 19, and 12 new stores in fiscal 2021, 2020, and 2019,
and 0, 1, and 5 acquired stores in fiscal 2021, 2020, and 2019, respectively. We also closed one store, one store, and
three stores in fiscal 2021, 2020, and 2019, respectively. We anticipate that a percentage of our net sales in the near
future will come from stores not included in our same store sales calculation. Accordingly, same store sales are only one
measure we use to assess the success of our business and growth strategy. Some of our competitors and other retailers
may calculate “same” or “comparable” store sales differently than we do. As a result, data in this annual report regarding
our same store sales may not be comparable to similar data made available by other retailers.
New store openings
New store openings reflect the number of stores, excluding acquired stores, that are opened during a particular
reporting period. In connection with opening new stores, we incur pre - opening costs. Pre - opening costs consist of costs
incurred prior to opening a new store and primarily consist of manager and other employee payroll, travel and training
costs, marketing expenses, initial opening supplies and costs of transporting initial inventory and certain fixtures to store
locations, as well as occupancy costs incurred from the time that we take possession of a store site to the opening of that
store. Occupancy costs are included in cost of goods sold and the other pre - opening costs are included in SG&A
expenses. All of these costs are expensed as incurred.
46
New stores often open with a period of high sales levels, which subsequently decrease to normalized sales
volumes. In addition, we experience typical inefficiencies in the form of higher labor, advertising and other direct
operating expenses, and as a result, store - level profit margins at our new stores are generally lower during the start - up
period of operation. The number and timing of store openings have had, and are expected to continue to have, a
significant impact on our results of operations. In assessing the performance of a new store, we review its actual sales
against the sales that we projected that store to achieve at the time we initially approved its opening. We also review the
actual number of stores opened in a fiscal year against the number of store openings that we included in our budget at the
beginning of that fiscal year.
Gross profit
Gross profit is equal to our net sales less our cost of goods sold. Cost of goods sold includes the cost of
merchandise, obsolescence and shrinkage provisions, store and warehouse occupancy costs (including rent, depreciation
and utilities), inbound and outbound freight, supplier allowances, occupancy - related taxes, compensation costs for
merchandise purchasing and warehouse personnel, and other inventory acquisition - related costs. These costs are
significant and can be expected to continue to increase as we grow. The components of our reported cost of goods sold
may not be comparable to those of other retail companies, including our competitors.
Our gross profit generally follows changes in net sales. We regularly analyze the components of gross profit, as
well as gross profit as a percentage of net sales. Specifically, we examine the initial markup on purchases, markdowns
and reserves, shrinkage, buying costs, distribution costs and occupancy costs. Any inability to obtain acceptable levels of
initial markups, or a significant increase in our use of markdowns or in inventory shrinkage, or a significant increase in
freight and other inventory acquisition costs could have an adverse impact on our gross profit and results of operations.
Gross profit is also impacted by shifts in the proportion of sales of our private brand products compared to
third - party brand products, as well as by sales mix shifts within and between brands and between major product
categories such as footwear, apparel or accessories.
Selling, general and administrative expenses
Our selling, general and administrative (“SG&A”) expenses are composed of labor and related expenses, other
operating expenses, and general and administrative expenses not included in cost of goods sold. Specifically, our SG&A
expenses include the following:
• Labor and related expenses—Labor and related expenses include all store - level salaries and hourly labor
costs, including salaries, wages, benefits and performance incentives, labor taxes and other indirect labor
costs.
• Other operating expenses—Other operating expenses include all operating costs, including those for
advertising, pay-per-click, marketing campaigns, operating supplies, utilities, and repairs and maintenance,
as well as credit card fees and costs of third - party services.
• General and administrative expenses—General and administrative expenses comprise expenses associated
with corporate and administrative functions that support the development and operations of our stores,
including compensation and benefits, travel expenses, corporate occupancy costs, stock compensation
costs, legal and professional fees, insurance and other related corporate costs.
The components of our SG&A expenses may not be comparable to those of our competitors and other retailers.
We expect our selling, general and administrative expenses will increase in future periods as a result of incremental
share - based compensation, legal, accounting and other compliance - related expenses and increases resulting from growth
in the number of our stores.
47
EBITDA, Adjusted EBITDA and Adjusted EBIT
EBITDA, Adjusted EBITDA and Adjusted EBIT are important financial measures used by our management,
board of directors and lenders to assess our operating performance. We use EBITDA, Adjusted EBITDA and Adjusted
EBIT as key performance measures because we believe that they facilitate operating performance comparisons from
period to period by excluding potential differences primarily caused by the impact of variations from period to period in
tax positions, interest expense and depreciation and amortization, as well as, in the case of Adjusted EBITDA, excluding
certain non - cash expenses, such as stock - based compensation and the non - cash accrual for future award redemptions,
and other costs and expenses that are not directly related to our operations, including loss on disposal of assets and
contract termination costs, store impairment charges, gain/(loss) on adjustment of right-of-use assets and lease liabilities,
and secondary offering costs. Similar to Adjusted EBITDA, Adjusted EBIT excludes the aforementioned adjustments
while maintaining the impact of depreciation and amortization on our financial results. See “Item 6, Selected
Consolidated Financial Data” for a reconciliation of our EBITDA, Adjusted EBITDA and Adjusted EBIT to net income,
the most directly comparable financial measure calculated and presented in accordance with GAAP. Because EBITDA,
Adjusted EBITDA and Adjusted EBIT facilitate internal comparisons of our historical operating performance on a more
consistent basis, we also use EBITDA, Adjusted EBITDA and Adjusted EBIT for business planning purposes, in
calculating covenant compliance for our credit facilities, in determining incentive compensation for members of our
management and in evaluating acquisition opportunities. In addition, we believe that EBITDA, Adjusted EBITDA and
Adjusted EBIT and similar measures are widely used by investors, securities analysts, ratings agencies and other parties
in evaluating companies in our industry as a measure of financial performance and debt - service capabilities. Given that
EBITDA, Adjusted EBITDA and Adjusted EBIT are measures not deemed to be in accordance with GAAP and are
susceptible to varying calculations, our EBITDA, Adjusted EBITDA and Adjusted EBIT may not be comparable to
similarly titled measures of other companies, including companies in our industry, because other companies may
calculate EBITDA, Adjusted EBITDA and Adjusted EBIT in a different manner than we calculate these measures.
Fiscal Year
We operate on a fiscal calendar which results in a 52- or 53 - week fiscal year ending on the last Saturday of
March unless April 1st is a Saturday, in which case the fiscal year ends on April 1st. In a 52 - week fiscal year, each
quarter includes thirteen weeks of operations; in a 53 - week fiscal year, the first, second and third quarters each include
thirteen weeks of operations and the fourth quarter includes fourteen weeks of operations. For ease of reference, we
identify our fiscal years by reference to the calendar year in which the fiscal year ends.
Results of Operations
The following table summarizes key components of our results of operations for the periods indicated, both in
dollars and as a percentage of our net sales. The following discussion contains references to fiscal 2021, fiscal 2020, and
48
fiscal 2019, which represent our fiscal years ended March 27, 2021, March 28, 2020 and March 30, 2019. Fiscal 2021,
2020 and 2019 were all 52 - week periods.
(dollars in thousands)
Consolidated Statements of Operations Data:
Net sales
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Income from operations
Interest expense
Other income/(loss), net
Income before income taxes
Income tax expense
Net income
Percentage of Net Sales(1):
Net sales
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Income from operations
Interest expense
Other income/(loss), net
Income before income taxes
Income tax expense
Net income
(1) Percentages may not total 100% due to rounding.
Fiscal 2021 compared to Fiscal 2020
Fiscal Year Ended
March 27,
2021
March 28,
March 30,
2020
2019
$ 893,491
598,612
294,879
208,553
86,326
9,442
366
77,250
17,864
59,386
$
$ 845,575
569,084
276,491
202,823
73,668
13,310
(45)
60,313
12,364
47,949
$
$ 776,854
525,420
251,434
187,112
64,322
16,331
5
47,996
8,974
39,022
$
100.0 %
67.0 %
33.0 %
23.3 %
9.7 %
1.1 %
— %
8.6 %
2.0 %
6.6 %
100.0 %
67.3 %
32.7 %
24.0 %
8.7 %
1.6 %
— %
7.1 %
1.5 %
5.7 %
100.0 %
67.6 %
32.4 %
24.1 %
8.3 %
2.1 %
— %
6.2 %
1.2 %
5.0 %
Net sales. Net sales in fiscal 2021 increased by $47.9 million, or 5.7%, to $893.5 million compared to
$845.6 million in fiscal 2020. Consolidated same store sales increased 3.1%. Excluding the impact of the 23.6% increase
in e-commerce same store sales, same store sales decreased by 1.1%. The decrease in retail store sales was primarily due
to decreased traffic in our stores in the first half of our fiscal year that resulted from customers staying at home in
response to the COVID - 19 crisis and temporary store closures. Net sales increased primarily due to incremental sales
from new stores opened over the past twelve months and the increase in same store sales during fiscal 2021.
Gross profit. Gross profit increased by $18.4 million, or 6.7%, to $294.9 million in fiscal 2021 from
$276.5 million in fiscal 2020. As a percentage of net sales, gross profit was 33.0% and 32.7% for fiscal 2021 and fiscal
2020, respectively. Gross profit increased primarily due to higher sales and an increase in merchandise margin rate. As a
percentage of net sales, consolidated gross profit increased primarily as a result of a 90 basis point increase in
merchandise margin rate, partially offset by 60 basis points of deleverage in buying and occupancy costs. The higher
merchandise margin was driven primarily by better full-price selling, lower shrink and increased exclusive brand
penetration.
Selling, general and administrative expenses. SG&A expenses increased by $5.7 million, or 2.8%, to $208.6
million in fiscal 2021 from $202.8 million in fiscal 2020. As a percentage of net sales, SG&A expenses were 23.3% for
fiscal 2021 compared to 24.0% for fiscal 2020. SG&A expenses increased primarily as a result of higher store labor and
increased incentive-based compensation, partially offset by reduced marketing spend. SG&A expenses as a percentage of
net sales decreased by 70 basis points primarily as a result of expense leverage on higher sales.
49
Income from operations. Income from operations increased by $12.7 million, or 17.2%, to $86.3 million for
fiscal 2021 from $73.7 million for fiscal 2020. As a percentage of net sales, income from operations was 9.7% and 8.7%
for fiscal 2021 and fiscal 2020, respectively. The change in income from operations was attributable to the factors noted
above.
Interest expense. Interest expense decreased by $3.9 million, or 29.1%, to $9.4 million in fiscal 2021 from
$13.3 million in fiscal 2020. The decrease in interest expense was primarily the result of lower average interest rates
associated with the debt as compared to fiscal 2020 and a lower average debt balance during the current year.
Income tax expense. Income tax expense was $17.9 million in fiscal 2021 compared to $12.4 million in fiscal
2020. Our effective tax rate was 23.1% and 20.5% for fiscal 2021 and fiscal 2020, respectively. The effective tax rate for
fiscal 2021 is higher than fiscal 2020 primarily due to an increase in the disallowed executive compensation deduction,
the reversal in fiscal 2020 of a prior-year valuation allowance, and a higher state tax rate in fiscal 2021 compared to
fiscal 2020.
Net income. Net income increased by $11.4 million, or 23.9%, to $59.4 million in fiscal 2021 from net income
of $47.9 million in fiscal 2020. The change in net income was attributable to the factors noted above.
Adjusted EBITDA and Adjusted EBIT. Adjusted EBITDA increased by $18.7 million, or 18.6%, to $119.3
million for fiscal 2021 from $100.6 million for fiscal 2020. Adjusted EBIT increased by $16.0 million, or 20.2%, to
$95.1 million for fiscal 2021 from $79.2 million for fiscal 2020. The increase in Adjusted EBITDA and Adjusted EBIT
was primarily a result of the year-over-year increase in income from operations driven by an increase in gross profit.
We have omitted discussion of our fiscal 2020 results where it would be redundant of information previously
disclosed. For a comparison of our fiscal 2020 versus fiscal 2019 results, please see the discussion previously included in
Part II, Item 7 of our fiscal 2020 Annual Report on Form 10 - K filed with the SEC on May 22, 2020.
Liquidity and Capital Resources
We rely on cash flows from operating activities and our credit facility as our primary sources of liquidity. Our
primary cash needs are for inventories, operating expenses, occupancy expenses, capital expenditures associated with
opening new stores and remodeling or refurbishing existing stores, improvements to our distribution facilities, marketing
and information technology expenditures, debt service and taxes. We have also used cash for acquisitions, the
subsequent rebranding and integration of the stores acquired in those acquisitions and costs to consolidate the corporate
offices. In addition to cash and cash equivalents, the most significant components of our working capital are accounts
receivable, inventories, accounts payable and accrued expenses and other current liabilities. We believe that cash flows
from operating activities and the availability of cash under our credit facilities or other financing arrangements will be
sufficient to cover working capital requirements, anticipated capital expenditures and other anticipated cash needs for at
least the next 12 months.
Our liquidity is moderately seasonal. Our cash requirements generally increase in our third fiscal quarter as we
incur additional marketing expenses and increase our inventory in advance of the Christmas shopping season. Our cash
flows from operations increased in fiscal 2021, primarily as a result of a $58.6 million decrease in cash paid for
inventories year-over-year and a $44.9 million increase in cash provided by accounts payable and accrued expenses and
other current liabilities in fiscal 2021 compared to fiscal 2020, due to the timing of payments.
As of the end of fiscal 2021, we did not have any material capital expenditure commitments. As of March 27,
2021, we had a total of $111.5 million of debt outstanding, including a zero balance drawn on our $165.0 million
revolving credit facility. We had $165.0 million of remaining availability under our revolving credit facility and $73.1
million of cash on hand as of March 27, 2021. Our primary ongoing sources of liquidity include funds provided by
operations and borrowings under our revolving credit facility. We expect our cash from operations will continue to be
sufficient to support our operations and anticipated capital expenditures for the foreseeable future. We estimate that our
capital expenditures in fiscal 2022 will be between $33.0 million to $36.0 million, net of landlord tenant allowances, and
we anticipate that we will use cash flows from operations to fund these expenditures.
50
Current Credit Facility
June 2015 Wells Fargo Revolver and Golub Term Loan
On June 29, 2015, we, as guarantor, and our wholly-owned primary operating subsidiary, Boot Barn, Inc.,
refinanced a previous Wells Fargo credit facility with the $125 million syndicated senior secured asset-based revolving
credit facility for which Wells Fargo Bank, National Association (“June 2015 Wells Fargo Revolver”), is agent, and the
$200 million syndicated senior secured term loan for which GCI Capital Markets LLC (“2015 Golub Term Loan”) is
agent. The borrowing base of the June 2015 Wells Fargo Revolver is calculated on a monthly basis and is based on the
amount of eligible credit card receivables, commercial accounts, inventory, and available reserves. Borrowings under the
credit agreements were initially used to pay costs and expenses related to the Sheplers Acquisition and the closing of
such credit agreements, and may be used for working capital and other general corporate purposes.
Borrowings under the June 2015 Wells Fargo Revolver bear interest at per annum rates equal to, at our option,
either (i) LIBOR plus an applicable margin for LIBOR loans, or (ii) the base rate plus an applicable margin for base rate
loans. The base rate is calculated as the highest of (a) the federal funds rate plus 0.5%, (b) the Wells Fargo prime rate and
(c) one-month LIBOR plus 1.0%. The applicable margin is calculated based on a pricing grid that in each case is linked
to quarterly average excess availability. For LIBOR loans, the applicable margin ranges from 1.00% to 1.25%, and for
base rate loans it ranges from 0.00% to 0.25%. We also pay a commitment fee of 0.25% per annum of the actual daily
amount of the unutilized revolving loans. The interest on the June 2015 Wells Fargo Revolver is payable in quarterly
installments ending on the maturity date. On May 26, 2017, the Company entered into an amendment to the June 2015
Wells Fargo Revolver (the “2017 Wells Amendment”), increasing the aggregate revolving credit facility to $135.0
million and extending the maturity date to the earlier of May 26, 2022 or 90 days prior to the maturity of the 2015 Golub
Term Loan, which was then scheduled to mature on June 29, 2021. On June 6, 2019, the Company entered into
Amendment No. 3 to the Credit Agreement (the “2019 Wells Amendment”), further increasing the aggregate revolving
credit facility to $165.0 million and extending the maturity date to the earlier of June 6, 2024 or 90 days prior to the
maturity of the 2015 Golub Term Loan, which is currently scheduled to mature on June 29, 2023. The 2019 Wells
Amendment further made changes to the 2015 Wells Fargo Revolver in connection with the transition away from
LIBOR as the benchmark rate. The amount outstanding under the June 2015 Wells Fargo Revolver as of March 27, 2021
and March 28, 2020 was zero and $129.9 million, respectively. Total interest expense incurred in the fiscal year ended
March 27, 2021 on the June 2015 Wells Fargo Revolver was $1.5 million and the weighted average interest rate for the
fiscal year ended March 27, 2021 was 1.6%. Total interest expense incurred in the fiscal year ended March 28, 2020 on
the June 2015 Wells Fargo Revolver was $3.1 million, and the weighted average interest rate for the fiscal year ended
March 28, 2020 was 3.3%. Total interest expense incurred in the fiscal year ended March 30, 2019 on the June 2015
Wells Fargo Revolver was $1.8 million, and the weighted average interest rate for the fiscal year ended March 30, 2019
was 3.4%.
Borrowings under the 2015 Golub Term Loan bear interest at per annum rates equal to, at our option, either
(a) LIBOR plus an applicable margin for LIBOR loans with a LIBOR floor of 1.0%, or (b) the base rate plus an
applicable margin for base rate loans. The base rate is calculated as the greater of (i) the higher of (x) the prime rate and
(y) the federal funds rate plus 0.5% and (ii) the sum of one-month LIBOR plus 1.00%. The applicable margin is 4.5% for
LIBOR loans and 3.5% for base rate loans. The principal and interest on the 2015 Golub Term Loan is payable in
quarterly installments ending on the maturity date, which was originally June 29, 2021 but is now June 29, 2023.
Quarterly principal payments of $500,000 are due for each quarter; however, on June 2, 2017, the Company prepaid
$10.0 million on the 2015 Golub Term Loan, which included all of the required quarterly principal payments until the
maturity date of the loan. On May 15, 2018, the Company made an additional $10.0 million prepayment on the 2015
Golub Term Loan. On June 6, 2019, the Company entered into the Third Amendment to the 2015 Golub Term Loan (the
“2019 Golub Amendment”) which extended the maturity date to June 29, 2023. At the time of the Third Amendment, the
company also prepaid $65.0 million of the term loan facility, reducing the outstanding principal balance to $111.5
million. The 2019 Golub Amendment further made changes to the 2015 Golub Term Loan in connection with the
transition away from LIBOR as the benchmark rate. Subsequent to March 27, 2021, on April 26, 2021, the Company
made a $41.5 million voluntary prepayment on the term loan facility, reducing the outstanding principal balance to $70.0
million. Total interest expense incurred in the fiscal year ended March 27, 2021 on the 2015 Golub Term Loan was $6.3
million and the weighted average interest rate for the fiscal year ended March 27, 2021 was 5.7%. Total interest expense
51
incurred in the fiscal year ended March 28, 2020 on the 2015 Golub Term Loan was $8.5 million, and the weighted
average interest rate for the fiscal year ended March 28, 2020 was 6.8%. Total interest expense incurred in the fiscal year
ended March 30, 2019 on the 2015 Golub Term Loan was $12.5 million, and the weighted average interest rate for the
fiscal year ended March 30, 2019 was 7.0%.
All obligations under each of the 2015 Golub Term Loan and the June 2015 Wells Fargo Revolver are
unconditionally guaranteed by us and each of our direct and indirect domestic subsidiaries (other than certain immaterial
subsidiaries) which are not named as borrowers under the 2015 Golub Term Loan or the June 2015 Wells Fargo
Revolver, as applicable.
The priority with respect to collateral under each of the 2015 Golub Term Loan and the June 2015 Wells Fargo
Revolver is subject to the terms of an intercreditor agreement among the lenders under the 2015 Golub Term Loan and
the June 2015 Wells Fargo Revolver.
Each of the June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan contains customary provisions
relating to mandatory prepayments, restricted payments, voluntary payments, affirmative and negative covenants, and
events of default. In addition, the terms of the June 2015 Wells Fargo Revolver require the Company to maintain, on a
consolidated basis, a Consolidated Fixed Charge Coverage Ratio of at least 1.00:1.00 during such times as a covenant
trigger event shall exist. On May 26, 2017, the Company entered into an amendment to the 2015 Golub Term Loan (the
“2017 Golub Amendment”). The 2017 Golub Amendment changed the maximum Consolidated Total Net Leverage
Ratio requirements to 4.00:1.00 as of December 29, 2018 and for all subsequent periods. The June 2015 Wells Fargo
Revolver and 2015 Golub Term Loan also require the Company to pay additional interest of 2.0% per annum upon
triggering certain specified events of default set forth therein. For financial accounting purposes, the requirement for the
Company to pay a higher interest rate upon an event of default is an embedded derivative. As of March 27, 2021, the fair
value of these embedded derivatives was estimated and was not significant.
As of March 27, 2021, we were in compliance with the June 2015 Wells Fargo Revolver and the 2015 Golub
Term Loan covenants.
Cash Position and Cash Flow
Cash and cash equivalents were $73.1 million as of March 27, 2021 compared to $69.6 million as of March 28,
2020.
The following table presents summary cash flow information for the periods indicated:
March 27,
2021
Fiscal Year Ended
March 28, March 30,
2020
(In thousands)
2019
Net cash provided by/(used in):
Operating activities
Investing activities
Financing activities
Net increase in cash
Operating activities
(28,424)
(123,913)
$ 155,922 $ 25,317 $ 63,260
(31,765)
(40,166)
(23,897)
67,798
7,598
3,585 $ 52,949 $
$
Cash provided by operating activities consists primarily of net income adjusted for non - cash items including
depreciation, amortization and stock - based compensation, plus the effect on cash of changes during the year in our assets
and liabilities.
Net cash provided by operating activities was $155.9 million for the fiscal year ended March 27, 2021. The
significant components of cash flows provided by operating activities were net income of $59.4 million, the add-back of
52
non-cash depreciation and amortization expense of $24.1 million, stock-based compensation expense of $7.2 million,
and amortization of debt issuance fees and debt discount of $0.9 million. Inventories decreased $13.0 million as a result
of a reduction in purchases due to the COVID - 19 crisis. Accounts payable and accrued expenses and other current
liabilities increased by $37.4 million due to the timing of payments.
Net cash provided by operating activities was $25.3 million for the fiscal year ended March 28, 2020. The
significant components of cash flows provided by operating activities were net income of $47.9 million, the add-back of
non-cash depreciation and amortization expense of $21.4 million, stock-based compensation expense of $4.9 million,
and amortization of debt issuance fees and debt discount of $0.9 million. The above was partially offset by an increase in
inventories of $45.6 million due to the growth of the company and other changes in working capital.
Investing activities
Cash used in investing activities consists primarily of purchases of property and equipment but also includes
funds used to effect business combinations and asset acquisitions made by the Company.
Net cash used in investing activities was $28.4 million for fiscal 2021, which was primarily attributable to
capital expenditures related to store construction, improvements to our e-commerce information technology
infrastructure, and improvements to our distribution facilities.
Net cash used in investing activities was $40.2 million for fiscal 2020, which was primarily attributable to $37.2
million in capital expenditures related to store construction, improvements to our e-commerce information technology
infrastructure, and improvements to our distribution facilities and $3.7 million for the acquisition of G.&L. Clothing.
Financing activities
Cash used in financing activities consists primarily of repayments on our term loan and credit facility.
Net cash used in financing activities was $123.9 million for fiscal 2021. We reduced our line of credit
borrowings by $129.9 million and repaid $0.7 million on our debt and capital lease obligations during the period. We
also received $7.4 million from the exercise of stock options.
Net cash used in financing activities was $67.8 million for fiscal 2020. We reduced our line of credit
borrowings by $129.9 million and repaid $65.6 million on our debt and capital lease obligations during the period. We
also received $5.2 million from the exercise of stock options.
Other obligations
Contractual obligations. We enter into long - term contractual obligations and commitments in the normal course
of business, primarily non - cancelable finance and operating leases.
As of March 27, 2021, our contractual cash obligations over the next several periods are set forth below.
(In thousands)
Finance lease obligations
Operating lease obligations
Debt and line of credit
Interest expense on debt
Total
$
Total
21,275
247,621
111,500
14,623
$ 395,019
$
Less Than 1
Year
1,550
48,559
—
6,545
$ 56,654
Payments Due by Period
1 - 2
Years
2,931
81,553
111,500
8,078
$ 204,062
3 - 5
Years
4,230
77,482
—
—
$ 81,712
$
$
More Than
5 Years
$ 12,564
40,027
—
—
$ 52,591
Finance lease obligations primarily relate to the acquisition of two retail stores, two office buildings, one
distribution center facility and land as part of the Sheplers Acquisition. During fiscal 2020, we amended the lease,
53
extending the lease expiration through fiscal 2036. The remaining finance lease obligations relate to property and
equipment leases that expire at various dates through fiscal 2024.
We lease our stores, facilities and certain other equipment under non-cancelable operating leases. These
operating leases expire at various dates through fiscal 2034, and contain various provisions for rental adjustments,
including, in certain cases, adjustments based on increases in the Consumer Price Index. They also generally contain
renewal provisions for varying periods. Our future operating lease obligations would change if we were to exercise these
renewal provisions or if we were willing to enter into additional operating leases.
Debt consists of $111.5 million outstanding under our 2015 Golub Term Loan and zero outstanding under our
June 2015 Wells Fargo Revolver as of March 27, 2021. Our 2015 Golub Term Loan provides for regularly scheduled
principal payments that began on September 25, 2015. On June 2, 2017, the Company prepaid $10.0 million on the 2015
Golub Term Loan, which included all of the required quarterly principal payments until the maturity date of the loan. On
May 15, 2018 and June 6, 2019, the Company made additional prepayments on the 2015 Golub Term Loan of $10.0
million and $65.0 million, respectively. Payments with respect to the June 2015 Wells Fargo Revolver are due the earlier
of June 6, 2024 or 90 days prior to the maturity of the 2015 Golub Term Loan, which is currently scheduled to mature on
June 29, 2023.
Interest expense on debt consists of scheduled interest payments under our 2015 Golub Term Loan and
June 2015 Wells Fargo Revolver. The interest expense relating to our 2015 Golub Term Loan was calculated using a
5.5% interest rate applied to the term loan balance of $111.5 million as of March 27, 2021 and for each period thereafter.
The interest rate used represents the interest rate on the 2015 Golub Term Loan on the last day of fiscal 2021. The
interest expense relating to our June 2015 Wells Fargo Revolver was determined using an interest rate of 0.25% applied
to the unutilized portion of the $165.0 million revolving line of credit on March 27, 2021, the last day of the fiscal year.
Off - balance sheet arrangements. We are not a party to any off - balance sheet arrangements, except for purchase
obligations.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires the appropriate application of certain
accounting policies, some of which require us to make estimates and assumptions about future events and their impact on
amounts reported in our financial statements. Since future events and their impact cannot be determined with absolute
certainty, our actual results will inevitably differ from our estimates.
We believe that the application of our accounting policies, and the estimates inherently required therein, are
reasonable. Our accounting policies and estimates are re-evaluated on an ongoing basis and adjustments are made when
facts and circumstances dictate a change.
The policies and estimates discussed below involve the selection or application of alternative accounting
policies that are material to our financial statements. With respect to critical accounting policies, even a relatively minor
variance between actual and expected experience can potentially have a materially favorable or unfavorable impact on
subsequent results of operations. However, our historical results for the periods presented in our financial statements
have not been materially impacted by such variances. Our accounting policies are more fully described in Note 2 to our
consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10 - K. Management has
discussed the development and selection of these critical accounting policies and estimates with our board of directors.
We have certain accounting policies that require more significant management judgment and estimates than
others. These include our accounting policies with respect to revenue recognition, inventories, goodwill, intangible and
long - lived assets, leases, stock - based compensation and income taxes, which are more fully described below.
Revenue recognition
Sales are recognized at the time of purchase by customers at our retail store locations. Sales are recorded net of
taxes collected from customers. Transfer of control takes place at the point at which the customer receives and pays for
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the merchandise at the register. For e - commerce sales, revenue is recognized when control transfers to the customer,
which generally occurs upon delivery of the product. On average, customers receive goods within approximately five
days of being ordered. The estimate of the transit times for these shipments is based on shipping terms and historical
delivery times. Shipping and handling fees billed to customers for online sales are included in net sales and the related
shipping and handling costs are classified as cost of goods sold in the consolidated statements of operations.
We reserve for projected merchandise returns based upon historical experience and various other assumptions
that we believe to be reasonable. Customers can return merchandise purchased in - store within 30 days of the original
purchase date, return merchandise purchased at bootbarn.com and countryoutfitter.com within 60 days of the original
purchase date, and return sheplers.com merchandise within 90 days of the original purchase date. Merchandise returns
are often resalable merchandise and the purchase price is generally refunded by issuing the same tender used in the
original purchase. Merchandise exchanges of the same product and price are not considered merchandise returns and,
therefore, are not included in the population when calculating our sales returns reserve. We record the impact of
adjustments to our sales returns reserve quarterly within total net sales. Should the returns rate as a percentage of net
sales significantly change in future periods, it could have a material impact on our results of operations.
We maintain a customer loyalty program at the stores and bootbarn.com. Under the program, customers
accumulate points based on purchase activity. For customers to maintain their active point balance, they must make a
qualifying purchase of merchandise at least once in a 365 - day period. Once a loyalty program member achieves a certain
point level, the member earns awards that may be redeemed for credits on merchandise purchases. To redeem awards,
the member must make a qualifying purchase of merchandise within 60 days of the date the award was granted.
Unredeemed awards and accumulated partial points are accrued as unearned revenue until redemption or expiration and,
upon redemption and expiration, as an adjustment to net sales using the relative standalone selling price method. If actual
redemptions ultimately differ from accrued redemption levels, or if we further modify the terms of the program in a way
that affects expected redemption value and levels, we could record adjustments to the unearned revenue accrual, which
would affect net sales.
We recognize the sales from gift cards, gift certificates and store credits as they are redeemed for merchandise.
Prior to redemption, we maintain an unearned revenue liability for gift cards, gift certificates and store credits until we
are released from such liability, including potential obligations arising under state escheatment laws. Our gift cards, gift
certificates and store credits do not have expiration dates, and unredeemed gift cards, gift certificates and store credits are
subject to state escheatment laws. Amounts remaining after escheatment are recognized in net sales in the period
escheatment occurs and the liability is considered to be extinguished.
Leases
Operating and finance lease liabilities are recognized at the lease commencement date based on the present
value of the fixed lease payments using the Company's incremental borrowing rates for its population of leases. Related
operating and finance lease right-of-use assets are recognized based on the initial present value of the fixed lease
payments, reduced by cash payments received from landlords as lease incentives, plus any prepaid rent and other direct
costs from executing the leases. Amortization of both operating and finance lease right-of-use assets is performed on a
straight-line basis and recorded as part of rent expense in selling, general and administrative expenses on the
consolidated statements of operations. The interest expense amortization component of the finance lease liabilities is
recorded within interest expense on the consolidated statements of operations.
Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes
lease expense for these leases on a straight-line basis over the lease term. Variable lease payments are recognized as
lease expense as they are incurred.
Inventories
Inventories, which consist primarily of general consumer merchandise held for sale, are valued at the lower of
cost or net realizable value. Cost is determined using the weighted-average cost method (which approximates the first-in,
first-out method) and includes the cost of merchandise and import related costs, including freight, duty and agent
commissions.
55
During each accounting period, we record adjustments to our inventories, which are reflected in cost of goods
sold, if the cost of specific inventory items on hand exceeds the amount that we expect to realize from the ultimate sale
or disposal of the inventory. A periodic review of inventory is performed in order to determine if inventory is properly
stated at the lower of cost or net realizable value. This adjustment calculation requires us to make assumptions and
estimates, which are based on factors such as average selling cycle and seasonality of merchandise, the historical rate at
which merchandise has sold below cost during the average selling cycle, and the value and nature of merchandise
currently priced below original cost. A provision is recorded to reduce the cost of inventories to the estimated net
realizable values, if appropriate.
To the extent that management’s estimates differ from actual results, additional markdowns may be required
that could reduce our gross profit, operating income and the carrying value of inventories.
We also record an inventory shrinkage reserve calculated as a percentage of net sales for estimated merchandise
losses for the period between the last physical inventory count and the balance sheet date. These estimates are based on
historical percentages and can be affected by changes in merchandise mix and changes in shrinkage trends. We perform
periodic physical inventory counts for our entire chain of stores and our distribution center and adjust the inventory
shrinkage reserve accordingly. If actual physical inventory losses differ significantly from the estimate, our results of
operations could be adversely impacted. The inventory shrinkage reserve reduces the value of total inventory and is a
component of inventories on the consolidated balance sheets.
Goodwill, intangible and long - lived assets
Goodwill and indefinite-lived intangible assets. Goodwill is recorded as the difference, if any, between the
aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets.
Intangible assets with indefinite lives include the Boot Barn trademark that was acquired as part of the recapitalization
with Freeman Spogli & Co. on December 12, 2011, the Sheplers trademark acquired as part of the Sheplers Acquisition,
the cost to register the Boot Barn trademark in Hong Kong, and the www.countryoutfitter.com website trademark we
acquired as part of our asset acquisition in February of fiscal 2017. We test goodwill and indefinite-lived intangible
assets for impairment at least annually on the first day of the fourth quarter or more frequently if indicators of
impairment exist, in accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 350, Goodwill
and Other. This guidance provides us the option to first assess qualitative factors such as macroeconomic conditions,
industry and market considerations, cost factors, overall financial performance and other relevant entity-specific events
to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.
GAAP has established guidance for reporting information about a company’s operating segments, including
disclosures related to a company’s products and services, geographic areas and major customers. We monitor and review
our segment reporting structure in accordance with authoritative guidance to determine whether any changes have
occurred that would impact our reportable segments. Our retail stores and e-commerce websites represent two operating
segments. Given the similar qualitative and economic characteristics of the two operating segments, our retail stores and
e-commerce websites were aggregated into one reporting segment in accordance with guidance under Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting
(“ASC 280”). As a result of this, our operations represent two reporting units, retail stores and e-commerce, for the
purpose of our goodwill impairment analysis.
If, based on a review of qualitative factors it is more likely than not that the fair value of a reporting unit is less
than its carrying value, we proceed to compare the fair value of the reporting unit with its carrying amount. We evaluate
the fair value of the reporting unit by using market-based analysis to review market capitalization and by reviewing a
discounted cash flow analysis using management’s assumptions. We determine the fair value of our reporting unit using
the income approach and market approach to valuation, as well as other generally accepted valuation methodologies. If
the carrying amount of the reporting unit exceeds the reporting unit’s fair value, we recognize an impairment loss equal
to the difference between the carrying amount and the estimated fair value of the reporting unit.
Definite - lived intangible assets and long - lived assets. Definite - lived intangible assets consist of certain
trademarks and customer lists. Definite - lived intangible assets are recorded at their fair value as of the acquisition date
with amortization computed utilizing the straight - line method over the assets’ estimated useful lives, with the exception
56
of customer lists, which are amortized based on the estimated attrition rate. The period of amortization for customer lists
is five years and for definite-lived trademarks is three years.
Long - lived assets consist of leasehold improvements, machinery and equipment, furniture and fixtures,
software and vehicles. Long - lived assets are subject to depreciation and amortization. We assess potential impairment of
our definite - lived intangible assets and long - lived assets whenever events or changes in circumstances indicate that the
asset’s carrying value may not be recoverable. Factors that are considered important that could trigger an impairment
review include a current - period operating or cash flow loss combined with a history of operating or cash flow losses and
a projection or forecast that demonstrates continuing losses or insufficient income associated with the use of a long - lived
asset or asset group. Other factors include a significant change in the manner of the use of the asset or a significant
negative industry or economic trend. This evaluation is performed based on estimated undiscounted future cash flows
from operating activities compared with the carrying value of the related assets. If the undiscounted future cash flows are
less than the carrying value, an impairment loss is recognized, measured by the difference between the carrying value
and the estimated fair value of the assets, with such estimated fair values determined using the best information available
and in accordance with FASB ASC Topic 820, Fair Value Measurements (“ASC 820”).
We do not believe there is a reasonable likelihood that there will be a material change in the estimates or
assumptions we use to calculate long - lived asset impairment losses. However, if actual results are not consistent with our
estimates and assumptions, our operating results could be adversely affected by additional impairment charges.
Stock - based compensation
We account for employee stock options, restricted stock awards, restricted stock units and performance share
units in accordance with relevant authoritative literature. Stock options are granted with exercise prices equal to or
greater than the market value, as reported on the New York Stock Exchange (or on any other national securities
exchange on which our common stock is then listed) on the date of grant as authorized by our board of directors. Stock
options granted have vesting provisions of either four or five years. Stock option grants are generally subject to forfeiture
if employment terminates prior to vesting. We have selected the Black - Scholes option pricing model for estimating the
grant date fair value of stock option awards granted. We have considered the retirement and forfeiture provisions of the
options and utilized the simplified method to estimate the expected life of the options. We base the risk - free interest rate
on the yield of a zero - coupon U.S. Treasury security with a maturity equal to the expected life of the option from the
date of the grant. Stock volatility for each grant is measured using the weighted average of historical daily price changes
of our stock and our competitors’ common stock over the most recent period equal to the expected option term of the
awards. In determining the appropriateness of the public entities included in the volatility assumption, we considered a
number of factors, including the entity’s life cycle stage, growth profile, size, financial leverage and products offered.
The fair value of stock options granted with both service and market vesting conditions is estimated using a Monte Carlo
simulation model. Stock - based compensation cost is measured at the grant date based on the value of the award and is
recognized as expense over the requisite service period based on the number of years for which the requisite service is
expected to be rendered. Forfeitures are recognized as incurred.
The fair value of our restricted stock awards, restricted stock units and performance share units is the closing
price of our common stock on the grant date.
Income taxes
We account for income taxes in accordance with FASB ASC Topic 740, Income Taxes (“ASC 740”), which
requires the asset and liability approach for financial accounting and reporting of income taxes. Deferred tax assets and
liabilities are attributable to differences between financial statement and income tax reporting. Deferred tax assets, net of
any valuation allowances, represent the future tax return consequences of those differences and for operating loss and tax
credit carryforwards, which will be deductible when the assets are recovered. Deferred tax assets are reduced by a
valuation allowance if it is deemed more likely than not that some or all of the deferred tax assets will not be realized. In
assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of
the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary differences become deductible. We
57
consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in
making this assessment.
We account for uncertain tax positions in accordance with ASC 740, which clarifies the accounting for
uncertainty in income taxes recognized in an enterprise’s financial statements. It prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting
in interim periods, disclosure and transition. Such changes in recognition or measurement might result in the recognition
of a tax benefit or an additional charge to the tax provision in the period.
We recognize interest and penalties related to unrecognized tax benefits within the income tax expense line in
the accompanying statement of operations. See Note 13 to our consolidated financial statements included in Part II,
Item 8 of this Annual Report on Form 10 - K for further information regarding our tax disclosures.
Recent Accounting Pronouncements
In January 2021, the FASB issued ASU No. 2021 - 01, Reference Rate Reform (Topic 848), which clarifies some
of its guidance around reference rate reform activities as global market participants undertake efforts to transition from
using or referencing the London Interbank Offered Rate (LIBOR) and other interbank offered rates to using or
referencing alternative reference rates. The amendments in this ASU if elected by an entity, are effective immediately.
Unlike other topics, the provisions of this update are only available until December 31, 2022, by which time the
reference rate replacement activity is expected to be completed. The Company does not expect the revised standard to
have an impact on its consolidated financial statements.
Recently Adopted Accounting Pronouncements
In January 2017, the FASB issued ASU No. 2017 - 04, Intangibles — Goodwill and Other: Simplifying the Test
for Goodwill Impairment (“ASU 2017 - 04”), which simplifies the accounting for goodwill impairment by eliminating
step two from the goodwill impairment test. Under this new guidance, if the carrying amount of a reporting unit exceeds
its estimated fair value, an impairment charge shall be recognized in an amount equal to that excess, limited to the total
amount of goodwill allocated to that reporting unit. The amendments in ASU 2017 - 04 are effective prospectively for
fiscal years and interim periods within those years beginning after December 15, 2019. The standard became effective
for the Company beginning March 29, 2020, the first day of its fiscal 2021 year. The revised standard did not have a
material impact on the consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risks
Interest rate risk
We are subject to interest rate risk in connection with borrowings under our credit facilities, which bear interest
at variable rates. As of March 27, 2021, we had a zero balance drawn under our revolving credit facility and
$111.5 million under our term loan facility. The impact of a 1.0% rate change on the outstanding balance as of March 27,
2021 would be approximately $1.1 million.
Foreign exchange rate risk
We currently purchase all of our merchandise through domestic and international suppliers on a U.S.
dollar - denominated basis. We do not hedge using any derivative instruments and historically have not been impacted by
changes in exchange rates.
Impact of inflation
Our results of operations and financial condition are presented based on historical cost. While it is difficult to
accurately measure the impact of inflation due to the imprecise nature of the estimates required, we believe that the
effects of inflation, if any, on our results of operations and financial condition have been immaterial.
58
Item 8. Consolidated Financial Statements and Supplementary Data
Boot Barn Holdings, Inc. and Subsidiaries
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of March 27, 2021 and March 28, 2020
Consolidated Statements of Operations for the Fiscal Years Ended March 27, 2021, March 28, 2020 and March 30,
60
62
2019
Consolidated Statements of Stockholders’ Equity for the Fiscal Years Ended March 27, 2021, March 28, 2020
and March 30, 2019
Consolidated Statements of Cash Flows for the Fiscal Years Ended March 27, 2021, March 28, 2020 and
March 30, 2019
Notes to Consolidated Financial Statements
63
64
65
66
59
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of
Boot Barn Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Boot Barn Holdings, Inc. and subsidiaries (the
"Company") as of March 27, 2021 and March 28, 2020, the related consolidated statements of operations, stockholders'
equity, and cash flows, for each of the three years in the period ended March 27, 2021, and the related notes (collectively
referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects,
the financial position of the Company as of March 27, 2021 and March 28, 2020, and the results of its operations and its
cash flows for each of the three years in the period ended March 27, 2021, in conformity with accounting principles
generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of March 27, 2021, based on criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission and our report dated May 13, 2021, expressed an unqualified opinion on the Company's
internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or
disclosures that is material to the financial statements and (2) involved our especially challenging, subjective, or complex
judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Inventories – Refer to Note 2 to the financial statements
Critical Audit Matter Description
The Company’s inventories consist primarily of purchased merchandise and are valued at the lower of cost or net
realizable value. Cost is determined using the weighted-average cost method (which approximates the first-in, first-out
method) and includes the cost of merchandise and import related costs, including freight, duty and agent commissions. A
60
periodic review of inventory is performed in order to determine if inventory is properly stated at the lower of cost or net
realizable value. This adjustment calculation requires the Company to make assumptions and estimates, which are based
on factors such as average selling cycle and seasonality of merchandise, the historical rate at which merchandise has sold
below cost during the average selling cycle, and the value and nature of merchandise currently priced below original
cost. A provision is recorded to reduce the cost of inventories to the estimated net realizable values, if appropriate.
Given the judgments made by management to estimate the net realizable value of inventory, such as estimating
foreseeable demand, auditing the adjustment to inventory for obsolescence involved a higher degree of auditor judgment
and the involvement of more senior members of the engagement team in executing, supervising, and reviewing the
results of the procedures.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the valuation of inventories included the following, among others:
• We tested the effectiveness of controls over the inventory valuation reserve process, including controls over the
inputs, such as the historical rate at which merchandise has sold below cost during the average selling cycle and
the value of merchandise currently priced below original cost, that are used in management’s estimate.
• We evaluated the appropriateness and consistency of management’s methods and assumptions used in
developing its estimate of the inventory valuation reserve.
• We evaluated the appropriateness, completeness, and accuracy of the specific inputs supporting management’s
estimate, including the age of on-hand inventory levels, historic inventory trends, and projected future demand.
• We tested the mathematical accuracy of the Company’s inventory valuation reserve calculation.
• We performed a review of the reserve rate used in the prior year inventory reserve calculation to current year
sales of aged inventory in order to evaluate management’s ability to accurately estimate the inventory valuation
reserve.
/s/ Deloitte & Touche LLP
Costa Mesa, California
May 13, 2021
We have served as the Company's auditor since 2012.
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Boot Barn Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except per share data)
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net
Inventories
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Right-of-use assets, net
Goodwill
Intangible assets, net
Other assets
Total assets
Liabilities and stockholders’ equity
Current liabilities:
Line of credit
Accounts payable
Accrued expenses and other current liabilities
Short-term lease liabilities
Total current liabilities
Deferred taxes
Long-term portion of notes payable, net
Long-term lease liabilities
Other liabilities
Total liabilities
Commitments and contingencies (Note 10)
March 27, March 28,
2021
2020
$ 73,148 $
12,771
275,760
12,777
374,456
110,444
186,827
197,502
60,885
3,467
69,563
12,087
288,717
14,284
384,651
109,603
170,243
197,502
60,974
1,738
$ 933,581 $ 924,711
$
104,641
77,615
39,400
221,656
21,993
109,781
181,836
3,424
538,690
— $ 129,900
95,334
52,612
34,779
312,625
19,801
109,022
160,935
635
603,018
Stockholders’ equity:
Common stock, $0.0001 par value; March 27, 2021 - 100,000 shares authorized, 29,348
shares issued; March 28, 2020 - 100,000 shares authorized, 28,880 shares issued
Preferred stock, $0.0001 par value; 10,000 shares authorized, no shares issued or
outstanding
Additional paid-in capital
Retained earnings
Less: Common stock held in treasury, at cost, 96 and 71 shares at March 27, 2021 and
March 28, 2020, respectively
Total stockholders’ equity
Total liabilities and stockholders’ equity
3
3
—
183,815
213,027
—
169,249
153,641
(1,954)
(1,200)
321,693
394,891
$ 933,581 $ 924,711
The accompanying notes are an integral part of these consolidated financial statements.
62
Boot Barn Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
Fiscal Year Ended
March 27, March 28, March 30,
2020
2019
2021
Net sales
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Income from operations
Interest expense
Other income/(loss), net
Income before income taxes
Income tax expense
Net income
Earnings per share:
Basic shares
Diluted shares
Weighted average shares outstanding:
Basic shares
Diluted shares
$ 893,491 $ 845,575 $ 776,854
525,420
569,084
598,612
251,434
276,491
294,879
187,112
202,823
208,553
64,322
73,668
86,326
16,331
13,310
9,442
(45)
5
366
47,996
60,313
77,250
17,864
8,974
12,364
$ 59,386 $ 47,949 $ 39,022
$
$
2.05 $
2.01 $
1.68 $
1.64 $
1.39
1.35
28,930
29,477
28,583
29,220
28,092
28,813
The accompanying notes are an integral part of these consolidated financial statements.
63
Boot Barn Holdings, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity
(In thousands)
Additional
Paid-In
Shares Amount Capital
Common Stock
Retained
Earnings
Treasury Shares
Shares Amount
Total
Balance at March 31, 2018
Net income
Issuance of common stock
related to stock-based
compensation
Tax withholding for net
share settlement
Stock-based compensation
expense
Balance at March 30, 2019
Net income
Issuance of common stock
related to stock-based
compensation
Tax withholding for net
share settlement
Stock-based compensation
expense
Balance at March 28, 2020
Net income
Issuance of common stock
related to stock-based
compensation
Tax withholding for net
share settlement
Stock-based compensation
expense
Balance at March 27, 2021
27,331 $
—
3 $ 148,127 $ 66,670
39,022
—
—
(31)
—
$ (194)
—
$ 214,606
39,022
1,068
—
8,137
—
—
—
—
—
—
—
8,137
(20)
(474)
(474)
—
28,399 $
—
2,873
—
—
3 $ 159,137 $ 105,692
47,949
—
—
—
(51)
—
—
$ (668)
—
2,873
$ 264,164
47,949
481
—
5,204
—
—
—
—
—
—
—
5,204
(20)
(532)
(532)
—
28,880 $
—
4,908
—
—
3 $ 169,249 $ 153,641
59,386
—
—
—
(71)
—
—
$ (1,200)
—
4,908
$ 321,693
59,386
468
—
7,408
—
—
—
—
—
—
—
7,408
(25)
(754)
(754)
—
29,348 $
—
—
3 $ 183,815 $ 213,027
7,158
—
(96)
—
$ (1,954)
7,158
$ 394,891
The accompanying notes are an integral part of these consolidated financial statements.
64
Boot Barn Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation
Stock-based compensation
Amortization of intangible assets
Amortization of right-of-use assets
Amortization of debt issuance fees and debt discount
Loss on disposal of property and equipment
Gain/(loss) on adjustment of right-of-use assets and lease liabilities
Damaged asset write-off
Store impairment charges
Accretion of above market leases
Deferred taxes
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable, net
Inventories
Prepaid expenses and other current assets
Other assets
Accounts payable
Accrued expenses and other current liabilities
Other liabilities
Operating leases
Net cash provided by operating activities
Cash flows from investing activities
Purchases of property and equipment
Insurance recoveries for property and equipment
Acquisition of business, net of cash acquired
Net cash used in investing activities
Cash flows from financing activities
(Payments)/borrowings on line of credit - net
Repayments on debt and finance lease obligations
Debt issuance fees paid
Tax withholding payments for net share settlement
Proceeds from the exercise of stock options
Net cash (used in)/provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Supplemental disclosures of cash flow information:
Cash paid for income taxes
Cash paid for interest
Supplemental disclosure of non-cash activities:
Unpaid purchases of property and equipment
Equipment acquired through capital lease
March 27,
Fiscal Year Ended
March 28, March 30,
2021
2020
2019
$
59,386 $ 47,949 $ 39,022
24,059
7,158
89
34,231
884
87
295
—
384
—
2,192
21,211
4,908
172
31,091
946
417
(186)
—
191
—
2,599
18,256
2,873
646
—
1,235
23
—
312
455
(28)
4,172
8,050
12,957
1,382
(1,729)
12,360
25,003
2,789
(33,655)
(3,706)
(27,702)
4,179
(254)
14,191
6,882
2,704
—
$ 155,922 $ 25,317 $ 63,260
5,721
(45,622)
(2,351)
(548)
(13,810)
6,310
(3,611)
(30,070)
(28,424)
—
—
(27,525)
184
(4,424)
$ (28,424) $ (40,166) $ (31,765)
(37,195)
717
(3,688)
129,900
(65,553)
(1,221)
(532)
5,204
(129,900)
(667)
—
(754)
7,408
(21,006)
(10,554)
—
(474)
8,137
$ (123,913) $ 67,798 $ (23,897)
7,598
52,949
3,585
9,016
16,614
69,563
73,148 $ 69,563 $ 16,614
$
$
$
11,458 $ 13,391 $
649
8,795 $ 11,958 $ 14,947
$
$
2,642 $
— $
6,066 $ 1,877
171
— $
The accompanying notes are an integral part of these consolidated financial statements.
65
1. Business Operations
Boot Barn Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Boot Barn Holdings, Inc. (the “Company”) was formed on November 17, 2011, and is incorporated in the State
of Delaware. The equity of the Company consists of 100,000,000 authorized shares and 29,251,626 and 28,809,620
outstanding shares of common stock as of March 27, 2021 and March 28, 2020, respectively. The shares of common
stock have voting rights of one vote per share.
The Company operates specialty retail stores that sell western and work boots and related apparel and
accessories. The Company operates retail locations throughout the U.S. and sells its merchandise via the Internet. The
Company operated a total of 273 stores in 36 states as of March 27, 2021, 259 stores in 35 states as of March 28, 2020
and 240 stores in 33 states as of March 30, 2019. As of the fiscal year ending March 27, 2021, all stores operate under
the Boot Barn name, with the exception of two stores which operate under the “American Worker” name.
In December 2019, a novel strain of coronavirus (“COVID - 19”) was reported in Wuhan, China. Since first
being reported, COVID - 19 spread to numerous countries around the world, including the U.S., resulting in the World
Health Organization declaring the outbreak a global pandemic on March 11, 2020. COVID - 19 has had and will continue
to have a significant impact on economic conditions and consumer confidence. There remains significant uncertainty
around the duration and impact of the COVID - 19 pandemic on the U.S. economy and consumer confidence. These and
other effects make it more challenging for us to estimate the future performance of our business, particularly over the
near-to-medium term.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s consolidated financial statements, prepared in accordance with accounting principles generally
accepted in the United States (“GAAP”), include the accounts of the Company and each of its subsidiaries, including
Boot Barn Holdings, Inc., Boot Barn, Inc., RCC Western Stores, Inc. (“RCC”), Baskins Acquisition Holdings, LLC
(“Baskins”), Sheplers, Inc. and Sheplers Holding Corporation (collectively with Sheplers, Inc. “Sheplers”). All
intercompany accounts and transactions among the Company and its subsidiaries have been eliminated in consolidation.
The vast majority of the Company’s identifiable assets are in the United States.
Fiscal Year
The Company reports its results of operations and cash flows on a 52- or 53 - week basis, and its fiscal year ends
on the last Saturday of March unless April 1st is a Saturday, in which case the fiscal year ends on April 1st. The years
ended March 27, 2021 (“fiscal 2021”), March 28, 2020 (“fiscal 2020”) and March 30, 2019 (“fiscal 2019”) each
consisted of 52 weeks.
Comprehensive Income
The Company does not have any components of other comprehensive income recorded within its consolidated
financial statements and, therefore, does not separately present a statement of comprehensive income in its consolidated
financial statements.
Segment Reporting
GAAP has established guidance for reporting information about a company’s operating segments, including
disclosures related to a company’s products and services, geographic areas and major customers. The Company monitors
and reviews its segment reporting structure in accordance with authoritative guidance to determine whether any changes
66
have occurred that would impact its reportable segments. The Company’s retail stores and e-commerce websites
represent two operating segments. Given the similar qualitative and economic characteristics of the two operating
segments, the Company’s retail stores and e-commerce websites are aggregated into one reporting segment in
accordance with guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) Topic 280, Segment Reporting (“ASC 280”). Further, the Company’s operations represent two reporting units,
retail stores and e-commerce, for the purpose of its goodwill impairment analysis.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
Among the significant estimates affecting the Company’s consolidated financial statements are those relating to revenue
recognition, lease accounting, inventories, goodwill, intangible and long - lived assets, stock - based compensation and
income taxes. Management regularly evaluates its estimates and assumptions based upon historical experience and
various other factors that management believes to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other
sources. To the extent actual results differ from those estimates, the Company’s future results of operations may be
affected.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or
less to be cash equivalents. Cash equivalents also include receivables from credit card sales. The carrying amounts of
cash and cash equivalents represent their fair values.
Accounts Receivable
The Company’s accounts receivable consists of amounts due from commercial customers for merchandise sold,
as well as receivables from suppliers under co - operative arrangements. The Company’s allowance for doubtful accounts
was $0.3 million and $0.1 million in fiscal 2021 and fiscal 2020, respectively.
Inventories
Inventory consists primarily of purchased merchandise and is valued at the lower of cost or net realizable value.
Cost is determined using the weighted-average cost method (which approximates the first-in, first-out method) and
includes the cost of merchandise and import related costs, including freight, duty and agent commissions. The Company
assesses the recoverability of inventory through a periodic review of historical usage and present demand. When the
inventory on hand exceeds the foreseeable demand, the value of inventory that, at the time of the review, is not expected
to be sold is written down to its estimated net realizable value.
Debt Issuance Costs and Debt Discounts
Debt issuance costs are capitalized and amortized to interest expense over the terms of the applicable loan
agreements using the effective interest method. Those costs related to the issuance of debt are presented as a reduction to
the principal amount of the debt. Debt issuance costs incurred with the issuance of revolving credit lines are included in
prepaid expenses and other current assets.
Debt discounts arise when transaction fees are paid to the lending institution. Debt discounts are recorded as a
reduction to the principal amount of the debt. Amortization of debt discounts is recorded as an increase to the net
principal amount of the debt and as a charge to interest expense over the term of the applicable loan agreement using the
effective interest method.
67
Property and Equipment, net
Property and equipment consists of leasehold improvements, machinery and equipment, furniture and fixtures,
software and vehicles. Property and equipment is subject to depreciation and is recorded at cost less accumulated
depreciation. Expenditures for major remodels and improvements are capitalized while minor replacements, maintenance
and repairs that do not improve or extend the life of such assets are charged to expense. Gains or losses on disposal of
fixed assets, when applicable, are reflected in operations. Depreciation is computed using the straight - line method over
the estimated useful lives, ranging from five to ten years. Machinery and equipment is depreciated over five years.
Furniture and fixtures are depreciated over seven years. Software and vehicles are depreciated over five years. Leasehold
improvements are depreciated over the shorter of the terms of the leases or ten years.
Goodwill and Indefinite - Lived Intangible Assets
Goodwill is recorded as the difference between the aggregate consideration paid for an acquisition and the fair
value of the acquired net tangible and intangible assets. Goodwill is tested for impairment at least annually as of the first
day of the fourth fiscal quarter or more frequently if indicators of impairment exist, in accordance with the provisions of
ASC Topic 350, Goodwill and Other. This guidance provides the option to first assess qualitative factors such as
macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and other
relevant entity-specific events to determine whether it is more likely than not that the fair value of a reporting unit is less
than its carrying value.
GAAP has established guidance for reporting information about a company’s operating segments, including
disclosures related to a company’s products and services, geographic areas and major customers. The Company monitors
and reviews its segment reporting structure in accordance with authoritative guidance to determine whether any changes
have occurred that would impact its reportable segments, as well as the Company’s reporting units. As previously stated
above, the Company’s operations represent two reporting units, retail stores and e-commerce, for the purpose of its
goodwill impairment analysis.
If, based on a review of qualitative factors it is more likely than not that the fair value of a reporting unit is less
than its carrying value, we proceed to compare the fair value of the reporting unit with its carrying amount. We evaluate
the fair value of the reporting unit by using market-based analysis to review market capitalization and by reviewing a
discounted cash flow analysis using management’s assumptions. We determine the fair value of our reporting unit using
the income approach and market approach to valuation, as well as other generally accepted valuation methodologies. If
the carrying amount of the reporting unit exceeds the reporting unit’s fair value, we recognize an impairment loss equal
to the difference between the carrying amount and the estimated fair value of the reporting unit. The Company concluded
that there was no impairment of goodwill during fiscal 2021, 2020, or 2019.
Intangible assets with indefinite lives, which include the Boot Barn, Sheplers and Country Outfitter trademarks,
are not amortized but instead are measured for impairment at least annually, or when events indicate that impairment
may exist. The Company calculates impairment as the excess of the carrying value of indefinite - lived intangible assets
over their estimated fair value. If the carrying value exceeds the estimate of fair value, an impairment charge is recorded.
The Company concluded there was no impairment of intangible assets with indefinite lives during fiscal 2021, 2020, or
2019.
Definite - Lived Intangible Assets
Definite - lived intangible assets consist of certain trademarks and customer lists. Definite - lived intangible assets
are amortized utilizing the straight - line method over the assets’ estimated useful lives, with the exception of customer
lists, which are amortized based on the estimated attrition rate. The period of amortization for customer lists and definite-
lived trademarks is five years and three years, respectively.
Long - Lived Assets
Long - lived assets consist of property and equipment and definite - lived intangible assets. The Company assesses
potential impairment of its long - lived assets whenever events or changes in circumstances indicate that an asset or asset
68
group’s carrying value may not be recoverable. Factors that are considered important that could trigger an impairment
review include a current period operating or cash flow loss combined with a history of operating or cash flow losses and
a projection or forecast that demonstrates continuing losses or insufficient income associated with the use of a long - lived
asset or asset group. Other factors include a significant change in the manner of the use of the asset or a significant
negative industry or economic trend. This evaluation is performed based on estimated undiscounted future cash flows
from operating activities compared with the carrying value of the related assets. If the undiscounted future cash flows are
less than the carrying value, an impairment loss is recognized, measured by the difference between the carrying value,
and the estimated fair value of the assets, with such estimated fair values determined using the best information available
and in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 820, Fair Value Measurements.
During fiscal 2021, the Company recorded asset impairment charges of $0.7 million related to its stores. These long-
lived asset impairment charges relate to right-of-use assets and property, plant and equipment associated with the
Company’s stores. During fiscal 2020, the Company recorded an asset impairment charge of $0.2 million related to one
of its stores. During fiscal 2019, the Company recorded asset impairment charges of less than $0.5 million related to
three of its stores. The fair values of these locations were calculated based on the projected discounted cash flows at a
similar rate that would be used by market participants in valuing these assets or prices of similar assets.
Stock - Based Compensation
Stock - based compensation is accounted for under FASB ASC Topic 718, Compensation—Stock Compensation
(“ASC 718”). The Company accounts for all stock - based compensation transactions using a fair - value method and
recognizes the fair value of each award as an expense over the service period. The Company estimates the fair value of
stock options granted using the Black - Scholes option - pricing model. The use of the Black - Scholes model requires a
number of estimates, including the expected option term, the expected volatility in the price of the Company’s common
stock, the risk - free rate of interest and the dividend yield on the Company’s common stock. The fair value of stock
options granted with both service and market vesting conditions is estimated using a Monte Carlo simulation model. The
fair value of the Company’s restricted stock awards, restricted stock units and performance share units is the closing
price of the Company’s common stock on the grant date. The consolidated financial statements include amounts that are
based on the Company’s best estimates and judgments. The Company classifies compensation expense related to these
awards in the consolidated statements of operations based on the department to which the recipient reports.
Revenue Recognition
Revenue is recorded for store sales upon the purchase of merchandise by customers. Transfer of control takes
place at the point at which the customer receives and pays for the merchandise at the register. E-commerce sales are
recorded when control transfers to the customer, which generally occurs upon delivery of the product. Shipping and
handling revenues are included in total net sales. Shipping costs incurred by the Company are included as cost of goods
sold. Sales taxes that are collected in connection with revenue transactions are withheld and remitted to the respective
taxing authorities. As such, these taxes are excluded from revenue.
69
Revenue is recorded net of estimated and actual sales returns and deductions for coupon redemptions, estimated
future award redemption and other promotions. The sales returns reserve reflects an estimate of sales returns based on
projected merchandise returns determined through the use of historical average return percentages. The total reserve for
returns was $2.8 million, $1.6 million, and $1.8 million as of fiscal 2021, 2020, and 2019, respectively and is recorded in
accrued expenses and other current liabilities in the accompanying consolidated balance sheets. The Company accounts
for the asset and liability separately on a gross basis. The following table provides a reconciliation of the activity related
to the Company’s sales returns reserve:
Sales Returns Reserve
(In thousands)
Beginning balance
Provisions
Sales returns
Ending balance
Fiscal Year Ended
March 27, March 28, March 30,
2020
1,761 $ 1,587
39,026
(38,852)
1,648 $ 1,761
2021
$ 1,648 $
28,751
(27,609)
$ 2,790 $
43,664
(43,777)
2019
The Company maintains a customer loyalty program. Under the program, customers accumulate points based
on purchase activity. For customers to maintain their active point balance, they must make a qualifying purchase of
merchandise at least once in a 365 - day period. Once a loyalty program member achieves a certain point level, the
member earns awards that may be redeemed for credits on merchandise purchases. To redeem awards, the member must
make a qualifying purchase of merchandise within 60 days of the date the award was granted. Unredeemed awards and
accumulated partial points are accrued as unearned revenue until redemption or expiration and, upon redemption and
expiration, as an adjustment to net sales using the relative standalone selling price method. The unearned revenue for this
program is recorded in accrued expenses and other current liabilities on the consolidated balance sheets and was $2.5
million, $2.1 million, and $1.9 million as of March 27, 2021, March 28, 2020, and March 30, 2019, respectively. The
following table provides a reconciliation of the activity related to the Company’s customer loyalty program:
Customer Loyalty Program
(In thousands)
Beginning balance
Current year provisions
Current year award redemptions
Ending balance
Fiscal Year Ended
March 27, March 28, March 30,
2019
2021
2020
$ 2,076 $ 1,936 $ 1,705
5,433
6,468
(5,202)
(6,328)
$ 2,485 $ 2,076 $ 1,936
6,934
(6,525)
Proceeds from the sale of gift cards are deferred until the customers use the cards to acquire merchandise. Gift
cards, gift certificates and store credits do not have expiration dates, and unredeemed gift cards, gift certificates and store
credits are subject to state escheatment laws. Amounts remaining after escheatment are recognized in net sales in the
period escheatment occurs and the liability is considered to be extinguished. The Company defers recognition of a
layaway sale and its related profit to the accounting period when the customer receives the layaway merchandise. Income
from the redemption of gift cards, gift card breakage, and the sale of layaway merchandise is included in net sales. The
following table provides a reconciliation of the activity related to the Company’s gift card program:
Gift Card Program
(In thousands)
Beginning balance
Current year issuances
Current year redemptions
Current year breakage
Ending balance
70
Fiscal Year Ended
March 27, March 28, March 30,
2021
2020
2019
$ 10,118 $ 8,796 $ 7,857
14,112
(12,341)
(832)
$ 11,569 $ 10,118 $ 8,796
16,745
(14,874)
(549)
18,905
(16,614)
(840)
Disaggregated Revenue
The Company disaggregates net sales into the following major merchandise categories:
% of Net Sales
Footwear
Apparel
Hats, accessories and other
Total
March 27, 2021
53%
32%
15%
100%
Fiscal Year Ended
March 28, 2020
51%
34%
15%
100%
March 30, 2019
52%
34%
14%
100%
The Company also disaggregates net sales between stores and e-commerce:
% of Net Sales
Stores
E-commerce
Total
Cost of Goods Sold
March 27, 2021
81%
19%
100%
Fiscal Year Ended
March 28, 2020
84%
16%
100%
March 30, 2019
83%
17%
100%
Cost of goods sold includes the cost of merchandise, obsolescence and shrink provisions, store and warehouse
occupancy costs (including rent, depreciation and utilities), inbound and outbound freight, supplier allowances,
occupancy - related taxes, compensation costs for merchandise purchasing and warehouse personnel and other inventory
acquisition - related costs.
Store Opening Costs
Store opening costs consist of costs incurred prior to opening a new store and primarily consist of manager and
other employee payroll, travel and training costs, marketing expenses, initial opening supplies and costs of transporting
initial inventory and certain fixtures to store locations, as well as occupancy costs incurred from the time that we take
possession of a store site to the opening of that store. Occupancy costs are included in cost of goods sold and the other
store opening costs are included in selling, general and administrative (“SG&A”) expenses. All of these costs are
expensed as incurred.
Advertising Costs
Certain advertising costs, including pay-per-click, direct mail, television and radio promotions, event
sponsorship, in - store photographs and other promotional advertising are expensed when the marketing campaign
commences. The Company had prepaid advertising costs of $0.8 million and $0.2 million as of March 27, 2021 and
March 28, 2020, respectively. All other advertising costs are expensed as incurred. The Company recognized $24.1
million, $28.0 million, and $27.7 million in advertising costs during fiscal 2021, 2020, and 2019, respectively.
Leases
Prior to the adoption of ASU No. 2016 - 02, Leases (“ASC 842”), the Company recognized rent expense for
operating leases on a straight - line basis (including the effect of reduced or free rent and rent escalations) over the lease
term. The difference between the cash paid to the landlord and the amount recognized as rent expense on a straight - line
basis was recognized as an adjustment to deferred rent in the consolidated balance sheets. Cash reimbursements received
from landlords for leasehold improvements and other cash payments received from landlords as lease incentives were
recorded as deferred rent and amortized using the straight - line method over the lease term as an offset to rent expense.
Contingent rent, determined based on a percentage of sales in excess of specified levels, was recognized as rent expense
when the achievement of the specified sales that triggers the contingent rent was probable.
71
Subsequent to the adoption of ASC 842 on March 31, 2019, the first day of fiscal 2020, operating and finance
lease liabilities are recognized at the lease commencement date based on the present value of the fixed lease payments
using the Company's incremental borrowing rates for its population of leases. As a result of the adoption of the new
accounting standard, the Company elected transition-related practical expedients as accounting policies which allowed it
to not reassess, as of the adoption date, (1) whether any expired or existing contracts are or contain leases, (2) the
classification of any expired or existing leases, and (3) if previously capitalized initial direct costs qualify for
capitalization under ASC 842. The Company elected the practical expedient option to not separate lease and non-lease
components for all of its leases, and also elected the short-term lease recognition exemption that keeps leases with an
initial term of 12 months or less excluded from balance sheet capitalization. This results in recognizing those lease
payments in the consolidated statements of operations on a straight-line basis over the lease term. Related operating and
finance lease right-of-use assets are recognized based on the initial present value of the fixed lease payments, reduced by
cash payments received from landlords as lease incentives, plus any prepaid rent and other direct costs from executing
the leases. Amortization of both operating and finance lease right-of-use assets is performed on a straight-line basis and
recorded as part of rent expense in cost of goods sold and selling, general and administrative expenses on the
consolidated statements of operations. The interest expense amortization component of the finance lease liabilities is
recorded within interest expense on the consolidated statements of operations.
Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes
lease expense for these leases on a straight-line basis over the lease term. Variable lease payments are recognized as
lease expense as they are incurred.
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”),
which requires the asset and liability approach for financial accounting and reporting of income taxes. Deferred tax
assets and liabilities are attributable to differences between financial statement and income tax reporting. Deferred tax
assets, net of any valuation allowances, represent the future tax return consequences of those differences and for
operating loss and tax credit carryforwards, which will be deductible when the assets are recovered. Deferred tax assets
are reduced by a valuation allowance if it is deemed more likely than not that some or all of the deferred tax assets will
not be realized. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than
not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets
is dependent upon the generation of future taxable income during the periods in which those temporary differences
become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable
income and tax planning strategies in making this assessment.
The Company accounts for uncertain tax positions in accordance with ASC 740, which clarifies the accounting
for uncertainty in income taxes recognized in an enterprise’s financial statements. It prescribes a recognition threshold
and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to
be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition. Such changes in recognition or measurement might result in the
recognition of a tax benefit or an additional charge to the tax provision in the period.
The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax
expense line in the consolidated statements of operations. Accrued interest and penalties, if incurred, are included within
accrued expenses and other current liabilities in the consolidated balance sheets. There were no accrued interest or
penalties for the fiscal years ended March 27, 2021 or March 28, 2020.
Per Share Information
Basic earnings per share is computed by dividing net income by the weighted average number of outstanding
shares of common stock. In computing diluted earnings per share, the weighted average number of common shares
outstanding is adjusted to reflect the effect of potentially dilutive securities such as stock options and restricted stock. In
accordance with ASC 718, the Company utilizes the treasury stock method to compute the dilutive effect of stock
options, restricted stock awards, restricted stock units and performance share units.
72
Fair Value of Certain Financial Assets and Liabilities
The Company follows FASB ASC Topic 820, Fair Value Measurements and Disclosures, (“ASC 820”) which
requires disclosure of the estimated fair value of certain assets and liabilities defined by the guidance as financial
instruments. The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable,
accounts payable and debt. ASC 820 defines the fair value of financial instruments as the price that would be received
from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a
three - level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of
assets and liabilities.
• Level 1 uses unadjusted quoted prices that are available in active markets for identical assets or liabilities.
• Level 2 uses inputs other than quoted prices included in Level 1 that are either directly or indirectly
observable through correlation with market data. These include quoted prices for similar assets or liabilities
in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active;
and inputs to valuation models or other pricing methodologies that do not require significant judgment
because the inputs used in the model, such as interest rates, incremental borrowing rates and volatility, can
be corroborated by readily observable market data.
• Level 3 uses one or more significant inputs that are unobservable and supported by little or no market
activity, and reflect the use of significant management judgment. Level 3 assets and liabilities include those
whose fair value measurements are determined using pricing models, discounted cash flow methodologies
or similar valuation techniques and significant management judgment or estimation. The Company’s
Level 3 assets include certain acquired businesses and the evaluation of store impairment.
Cash and cash equivalents, accounts receivable and accounts payable are classified according to the lowest level
input that is significant to the fair value measurement. As a result, the asset or liability could be classified as Level 2 or
Level 3 even though there may be certain significant inputs that are readily observable. The Company believes that the
recorded values of its financial instruments approximate their current fair values because of their nature and respective
relatively short maturity dates or duration.
Although market quotes for the fair value of the outstanding debt arrangements discussed in Note 8 “Revolving
credit facilities and long - term debt” are not readily available, the Company believes its carrying value approximates fair
value due to the variable interest rates, which are Level 2 inputs. There were no material financial assets or liabilities
requiring fair value measurements as of March 27, 2021 on a recurring basis.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash
equivalents. At times, such amounts held at banks may be in excess of Federal Deposit Insurance Corporation insurance
limits, and the Company mitigates such risk by utilizing multiple banks.
Supplier Concentration Risk
The Company purchases merchandise inventories from several hundred suppliers worldwide. Sales of products
from the Company’s three largest suppliers totaled approximately 33% of net sales in fiscal 2021, 36% of net sales in
fiscal 2020, and approximately 39% of net sales in fiscal 2019.
73
Recent Accounting Pronouncements
In January 2021, the FASB issued ASU No. 2021 - 01, Reference Rate Reform (Topic 848), which clarifies some
of its guidance around reference rate reform activities as global market participants undertake efforts to transition from
using or referencing the London Interbank Offered Rate (LIBOR) and other interbank offered rates to using or
referencing alternative reference rates. The amendments in this ASU if elected by an entity, are effective immediately.
Unlike other topics, the provisions of this update are only available until December 31, 2022, by which time the
reference rate replacement activity is expected to be completed. The Company does not expect the revised standard to
have an impact on its consolidated financial statements.
Recently Adopted Accounting Pronouncements
In January 2017, the FASB issued ASU No. 2017 - 04, Intangibles — Goodwill and Other: Simplifying the Test
for Goodwill Impairment, which simplifies the accounting for goodwill impairment by eliminating step two from the
goodwill impairment test. Under this new guidance, if the carrying amount of a reporting unit exceeds its estimated fair
value, an impairment charge shall be recognized in an amount equal to that excess, limited to the total amount of
goodwill allocated to that reporting unit. The amendments in this ASU are effective prospectively for fiscal years and
interim periods within those years beginning after December 15, 2019. The standard became effective for the Company
beginning March 29, 2020, the first day of its fiscal 2021 year. The revised standard did not have a material impact on
the consolidated financial statements.
3. Asset Acquisitions and Business Combinations
Asset Acquisitions
Drysdales, Inc.
On July 3, 2018, Boot Barn, Inc. completed the acquisition of assets from Drysdales, Inc. (“Drysdales”), a
retailer with two stores in Tulsa, Oklahoma. As part of the transaction, Boot Barn, Inc. purchased the inventory, entered
into new leases with the stores’ landlord, offered employment to the Drysdales team at both store locations and assumed
certain customer credits. The primary reason for the acquisition of Drysdales was to further expand the Company’s retail
operations in Oklahoma. The cash consideration paid was $3.8 million.
In allocating the purchase price, the Company recorded all assets acquired and liabilities assumed at fair value.
As the acquisition did not meet the definition of a business combination under FASB ASC Topic 805, Business
Combinations, the Company accounted for the transaction as an asset acquisition. In an asset acquisition, goodwill is not
recognized, but rather any excess consideration transferred over the fair value of the net assets acquired is allocated on a
relative fair value basis to the identifiable net assets.
The Company determined the estimated fair values using Level 3 inputs after review and consideration of
relevant information, including quoted market prices and estimates made by management. The inventory was valued
using the comparative sales method and the customer credits were valued using the cost approach. Based on the fair
value analysis of the net assets acquired and liabilities assumed, the inventory was valued at $4.2 million, and the
customer credits were valued at $0.4 million.
Wood’s Boots
On September 11, 2017, Boot Barn, Inc., a wholly owned subsidiary of the Company, completed the acquisition
of assets from Wood’s Boots, a four-store family-owned retailer with stores in Midland and Odessa, Texas. As part of
the transaction, Boot Barn, Inc. purchased the inventory, entered into new leases with the stores’ landlord, offered
employment to the Wood’s Boots team at all four store locations and assumed certain customer credits. The cash
consideration paid was $2.7 million.
74
In allocating the purchase price, the Company recorded all assets acquired and liabilities assumed at fair value.
As the acquisition did not meet the definition of a business combination under FASB ASC Topic 805, Business
Combinations, the Company accounted for the transaction as an asset acquisition. In an asset acquisition, goodwill is not
recognized, but rather any excess consideration transferred over the fair value of the net assets acquired is allocated on a
relative fair value basis to the identifiable net assets.
The Company determined the estimated fair values using Level 3 inputs after review and consideration of
relevant information, including quoted market prices and estimates made by management. The inventory was valued
using the comparative sales method. Based on the fair value analysis of the net assets acquired and liabilities assumed,
the inventory was valued at $2.8 million, and the customer credits were valued at less than $0.1 million.
Business Combinations
G.&L. Clothing, Inc.
On August 26, 2019, Boot Barn, Inc. completed the acquisition of G.&L. Clothing, Inc. (“G.&L. Clothing”), an
individually-owned retailer operating one store in Des Moines, Iowa. As part of the transaction, Boot Barn, Inc.
purchased the inventory, entered into new leases with the store’s landlord and offered employment to the G.&L. Clothing
team. The primary reason for the acquisition of G.&L. Clothing was to further expand the Company’s retail operations in
Iowa. The cash consideration paid for the acquisition was $3.7 million.
In allocating the purchase price, the Company recorded all assets acquired and liabilities assumed at fair value.
The total fair value of consideration transferred for the acquisition was allocated to the net tangible and intangible assets
based upon their estimated fair values as of the date of the acquisition of G.&L. Clothing. The excess of the purchase
price over the net tangible and intangible assets was recorded as goodwill. The goodwill and intangible assets are
deductible for income tax purposes.
The Company determined the estimated fair values using Level 3 inputs after review and consideration of
relevant information, including quoted market prices and estimates made by management. The inventory was valued
using the comparative sales method. Property and equipment, net, customer list and merchandise credits and other
current liabilities were valued under either the cost or income approach. The following table summarizes the estimated
fair values of the assets acquired and liabilities assumed as of the acquisition date based on the purchase price allocation:
(in thousands)
Assets acquired:
Inventory
Property & equipment, net
Customer list
Right-of-use asset, net
Goodwill
Total assets acquired
Liabilities assumed:
Merchandise credits and other current liabilities
Short-term lease liability
Long-term lease liability
Total liabilities assumed
Net assets acquired
Lone Star Western & Casual LLC
At August 26, 2019
2,361
64
345
1,946
1,644
6,360
169
129
2,374
2,672
3,688
$
$
$
$
On April 24, 2018, Boot Barn, Inc. completed the acquisition of Lone Star Western & Casual LLC (“Lone
Star”), an individually owned retail company with three stores in Waxahachie, Corsicana and Athens, Texas. As part of
the transaction, Boot Barn, Inc. purchased the inventory, entered into new leases with the stores’ landlord and offered
75
employment to the Lone Star team at all three store locations. The primary reason for the acquisition of Lone Star was to
further expand the Company’s retail operations in Texas. The cash consideration paid for the acquisition was $4.4
million.
In allocating the purchase price, the Company recorded all assets acquired and liabilities assumed at fair value.
The total fair value of consideration transferred for the acquisition was allocated to the net tangible and intangible assets
based upon their estimated fair values as of the date of the acquisition of Lone Star. The excess of the purchase price
over the net tangible and intangible assets was recorded as goodwill. The goodwill and intangible assets are deductible
for income tax purposes.
The Company determined the estimated fair values using Level 3 inputs after review and consideration of
relevant information, including quoted market prices and estimates made by management. The inventory was valued
using the comparative sales method. Property and equipment, net, below and above-market leases and customer credits
were valued under either the cost or income approach. The following table summarizes the estimated fair values of the
assets acquired and liabilities assumed as of the acquisition date based on the purchase price allocation:
Assets acquired:
Inventory
Property & equipment, net
Below-market lease
Goodwill
Total assets acquired
Liabilities assumed:
Other liability - merchandise credits
Above-market lease
Total liabilities assumed
Net Assets acquired
At June 30, 2018
(in thousands)
1,872
42
92
2,763
4,769
69
276
345
4,424
$
$
$
$
The change in the carrying amount of goodwill is as follows (in thousands):
Balance as of March 30, 2019
Goodwill as a result of the G.&L. Clothing Inc. Acquisition
Balance as of March 28, 2020
Activity
Balance as of March 27, 2021
$ 195,858
1,644
197,502
—
$ 197,502
76
4. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
March 27, March 28,
2021
2020
Prepaid advertising
Prepaid insurance
Income tax receivable
Debt issuance costs
Prepaid merchandise
Other
Total prepaid expenses and other current assets
5. Property and Equipment, Net
Property and equipment, net, consisted of the following (in thousands):
Land
Buildings
Leasehold improvements
Machinery and equipment
Furniture and fixtures
Construction in progress
Vehicles
Less: Accumulated depreciation
Property and equipment, net
$
831 $
239
1,033
5,172
376
5,446
2,018
$ 12,777 $ 14,284
1,292
—
251
7,482
2,921
March 27, March 28,
2021
2020
$
— $
—
71,967
31,404
76,785
5,364
1,024
186,544
(76,100)
—
—
59,717
31,767
69,143
9,738
1,367
171,732
(62,129)
$ 110,444 $ 109,603
Depreciation expense was $24.1 million, $21.2 million, and $18.3 million for fiscal years 2021, 2020, and 2019,
respectively. Beginning in fiscal 2021, as a result of the adoption of ASC 842, amortization related to assets under
finance leases is included in cost of goods sold rather than depreciation expense (see Note 11 “Leases”). Additionally, as
a result of the adoption of ASC 842, land and buildings that were previously classified as property and equipment, net,
were reclassified to finance lease right-of-use assets beginning in fiscal 2020.
6. Intangible Assets, Net
Net intangible assets consisted of the following:
March 27, 2021
Customer lists
Trademarks—definite lived
Total definite lived
Trademarks—indefinite lived
Total intangible assets
Gross
Carrying Accumulated
Amount Amortization
Weighted
Average
Useful Life
(in thousands, except for weighted average useful life)
5.0
3.0
Net
$
345 $
15
360
60,677
$ 61,037 $
(137) $
(15)
(152)
—
208
—
208
60,677
(152) $ 60,885
77
Customer lists
Below-market leases
Trademarks—definite lived
Total definite lived
Trademarks—indefinite lived
Total intangible assets
March 28, 2020
Gross
Carrying Accumulated
Amount Amortization
Weighted
Average
Useful Life
(in thousands, except for weighted average useful life)
5.0
—
3.0
Net
$
345 $
—
15
360
60,677
$ 61,037 $
(54) $
—
(9)
(63)
—
291
—
6
297
60,677
(63) $ 60,974
Amortization expense for intangible assets totaled $0.1 million, $0.2 million, and $0.6 million for fiscal 2021,
2020, and 2019, respectively, and is included in selling, general and administrative expenses.
As of March 27, 2021, estimated future amortization of intangible assets was as follows:
Fiscal year
2022
2023
2024
2025
2026
Thereafter
Total
(in thousands)
72
$
62
54
20
—
—
208
$
7. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
Accrued compensation
Deferred revenue
Sales tax liability
Income taxes payable
Accrued occupancy expense
Accrued interest
Inventory reserve - returns
Sales reward redemption liability
Accrued property and equipment
Other
Total accrued expenses and other current liabilities
8. Revolving Credit Facilities and Long-Term Debt
March 27, March 28,
2021
2020
$ 23,537 $ 12,858
11,112
6,465
—
3,497
284
1,648
2,076
4,347
10,325
$ 77,615 $ 52,612
14,422
10,713
3,075
4,394
133
2,790
2,485
2,530
13,536
On June 29, 2015, the Company, as guarantor, and its wholly-owned primary operating subsidiary, Boot Barn,
Inc., refinanced the $150.0 million credit facility with Wells Fargo Bank, N.A. (“February 2015 Wells Fargo Credit
Facility”) with the $125.0 million June 2015 Wells Fargo Revolver and the $200.0 million 2015 Golub Term Loan. The
borrowing base of the June 2015 Wells Fargo Revolver is calculated on a monthly basis and is based on the amount of
eligible credit card receivables, commercial accounts, inventory, and available reserves. Borrowings under the credit
agreements were initially used to pay costs and expenses related to the Sheplers Acquisition and the closing of such
credit agreements, and may be used for working capital and other general corporate purposes.
78
Borrowings under the June 2015 Wells Fargo Revolver bear interest at per annum rates equal to, at the
Company’s option, either (i) London Interbank Offered Rate (“LIBOR”) plus an applicable margin for LIBOR loans, or
(ii) the base rate plus an applicable margin for base rate loans. The base rate is calculated as the highest of (a) the federal
funds rate plus 0.5%, (b) the Wells Fargo prime rate and (c) one-month LIBOR plus 1.0%. The applicable margin is
calculated based on a pricing grid that in each case is linked to quarterly average excess availability. For LIBOR loans,
the applicable margin ranges from 1.00% to 1.25%, and for base rate loans it ranges from 0.00% to 0.25%. The
Company also pays a commitment fee of 0.25% per annum of the actual daily amount of the unutilized revolving loans.
The interest on the June 2015 Wells Fargo Revolver is payable in quarterly installments ending on the maturity date. On
May 26, 2017, the Company entered into an amendment to the June 2015 Wells Fargo Revolver (the “2017 Wells
Amendment”), increasing the aggregate revolving credit facility to $135.0 million and extending the maturity date to the
earlier of May 26, 2022 or 90 days prior to the previous maturity of the 2015 Golub Term Loan, which was then
scheduled to mature on June 29, 2021. On June 6, 2019, the Company entered into Amendment No. 3 to the Credit
Agreement (the “2019 Wells Amendment”), further increasing the aggregate revolving credit facility to $165.0 million
and extending the maturity date to the earlier of June 6, 2024 or 90 days prior to the maturity of the 2015 Golub Term
Loan, which is currently scheduled to mature on June 29, 2023. The 2019 Wells Amendment further made changes to the
2015 Wells Fargo Revolver in connection with the transition away from LIBOR as the benchmark rate. The amount
outstanding under the June 2015 Wells Fargo Revolver as of March 27, 2021 and March 28, 2020 was zero and $129.9
million, respectively. Total interest expense incurred in the fiscal year ended March 27, 2021 on the June 2015 Wells
Fargo Revolver was $1.5 million, and the weighted average interest rate for the fiscal year ended March 27, 2021 was
1.6%. Total interest expense incurred in the fiscal year ended March 28, 2020 on the June 2015 Wells Fargo Revolver
was $3.1 million, and the weighted average interest rate for the fiscal year ended March 28, 2020 was 3.3%. Total
interest expense incurred in the fiscal year ended March 30, 2019 on the June 2015 Wells Fargo Revolver was $1.8
million, and the weighted average interest rate for the fiscal year ended March 30, 2019 was 3.4%.
Borrowings under the 2015 Golub Term Loan bear interest at per annum rates equal to, at the Company’s
option, either (a) LIBOR plus an applicable margin for LIBOR loans with a LIBOR floor of 1.0%, or (b) the base rate
plus an applicable margin for base rate loans. The base rate is calculated as the greater of (i) the higher of (x) the prime
rate and (y) the federal funds rate plus 0.5% and (ii) the sum of one-month LIBOR plus 1.0%. The applicable margin is
4.5% for LIBOR loans and 3.5% for base rate loans. The principal and interest on the 2015 Golub Term Loan is payable
in quarterly installments ending on the maturity date which was originally June 29, 2021 but is now June 29, 2023.
Quarterly principal payments of $500,000 are due for each quarter; however, on June 2, 2017, the Company prepaid
$10.0 million on the 2015 Golub Term Loan, which included all of the required quarterly principal payments until the
maturity date of the loan. On May 15, 2018, the Company made an additional $10.0 million prepayment on the 2015
Golub Term Loan. On June 6, 2019, the Company entered into the Third Amendment to the 2015 Golub Term Loan (the
“2019 Golub Amendment”) which extended the maturity date to June 29, 2023. At the time of the Third Amendment, the
Company also prepaid $65.0 million of the term loan facility, reducing the outstanding principal balance to $111.5
million. The 2019 Golub Amendment further made changes to the 2015 Golub Term Loan in connection with the
transition away from LIBOR as the benchmark rate. Subsequent to March 27, 2021, on April 26, 2021, the Company
made a $41.5 million voluntary prepayment on the term loan facility, reducing the outstanding principal balance to $70.0
million. Total interest expense incurred in the fiscal year ended March 27, 2021 on the 2015 Golub Term Loan was $6.3
million, and the weighted average interest rate for the fiscal year ended March 27, 2021 was 5.7%. Total interest expense
incurred in the fiscal year ended March 28, 2020 on the 2015 Golub Term Loan was $8.5 million, and the weighted
average interest rate for the fiscal year ended March 28, 2020 was 6.8%. Total interest expense incurred in the fiscal year
ended March 30, 2019 on the 2015 Golub Term Loan was $12.5 million, and the weighted average interest rate for the
fiscal year ended March 30, 2019 was 7.0%.
All obligations under each of the 2015 Golub Term Loan and the June 2015 Wells Fargo Revolver are
unconditionally guaranteed by the Company and each of its direct and indirect domestic subsidiaries (other than certain
immaterial subsidiaries) which are not named as borrowers under the 2015 Golub Term Loan or the June 2015 Wells
Fargo Revolver, as applicable.
The priority with respect to collateral under each of the 2015 Golub Term Loan and the June 2015 Wells Fargo
Revolver is subject to the terms of an intercreditor agreement among the lenders under the 2015 Golub Term Loan and
the June 2015 Wells Fargo Revolver.
79
Each of the June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan contains customary provisions
relating to mandatory prepayments, restricted payments, voluntary payments, affirmative and negative covenants, and
events of default. In addition, the terms of the June 2015 Wells Fargo Revolver require the Company to maintain, on a
consolidated basis, a Consolidated Fixed Charge Coverage Ratio (as defined in the June 2015 Wells Fargo Revolver) of
at least 1.00:1.00 during such times as a covenant trigger event shall exist. On May 26, 2017, the Company entered into
an amendment to the 2015 Golub Term Loan (the “2017 Golub Amendment”). The 2017 Golub Amendment changed the
maximum Consolidated Total Net Leverage Ratio (as defined in the 2015 Golub Term Loan) requirements to 4.00:1.00
as of December 29, 2018 and for all subsequent periods. The June 2015 Wells Fargo Revolver and 2015 Golub Term
Loan also require the Company to pay additional interest of 2.0% per annum upon triggering certain specified events of
default set forth therein. For financial accounting purposes, the requirement for the Company to pay a higher interest rate
upon an event of default is an embedded derivative. As of March 27, 2021, the fair value of these embedded derivatives
was estimated and was not significant.
As of March 27, 2021, we were in compliance with the June 2015 Wells Fargo Revolver and the 2015 Golub
Term Loan covenants.
Debt Issuance Costs and Debt Discount
Debt issuance costs totaling $1.2 million were incurred under the June 2015 Wells Fargo Revolver, 2017 Wells
Amendment and 2019 Wells Amendment and are included as assets on the consolidated balance sheets in prepaid
expenses and other current assets. Total unamortized debt issuance costs were $0.3 million and $0.4 million as of
March 27, 2021 and March 28, 2020, respectively. These amounts are being amortized to interest expense over the term
of the June 2015 Wells Fargo Revolver.
Debt issuance costs and debt discount totaling $7.1 million were incurred under the 2015 Golub Term Loan,
2017 Golub Amendment and 2019 Golub Amendment and are included as a reduction of the non-current note payable on
the consolidated balance sheets. Total unamortized debt issuance costs and debt discount were $1.7 million and $2.5
million as of March 27, 2021 and March 28, 2020, respectively. These amounts are being amortized to interest expense
over the term of the 2015 Golub Term Loan.
The following sets forth the balance sheet information related to the term loan:
(in thousands)
Term Loan
Unamortized value of the debt issuance costs and debt discount
Net carrying value
March 27, March 28,
2021
2020
$ 111,500 $ 111,500
(2,478)
$ 109,781 $ 109,022
(1,719)
Total amortization expense of $0.9 million, $0.9 million and $1.2 million related to the June 2015 Wells Fargo
Revolver and 2015 Golub Term Loan is included as a component of interest expense in the fiscal years ended March 27,
2021, March 28, 2020 and March 30, 2019.
80
Aggregate contractual maturities
Aggregate contractual maturities for the Company’s long-term debt as of March 27, 2021 are as follows:
Fiscal Year
2022
2023
2024
2025
2026
Total
9. Stock-Based Compensation
Equity Incentive Plans
$
(in thousands)
—
—
111,500
—
—
111,500
$
On January 27, 2012, the Company approved the 2011 Equity Incentive Plan (the “2011 Plan”). The 2011 Plan
authorized the Company to issue options to employees, consultants and directors exercisable for up to a total of
3,750,000 shares of common stock. As of March 27, 2021, all awards granted by the Company under the 2011 Plan have
been nonqualified stock options. Options granted under the 2011 Plan have a life of 10 years and vest over service
periods of five years or in connection with certain events as defined by the 2011 Plan.
On October 19, 2014, the Company approved the 2014 Equity Incentive Plan, which was amended as of
August 24, 2016 (as amended, the “2014 Plan”). Following the approval of the 2014 Plan, no further grants have been
made under the 2011 Plan. The 2014 Plan authorizes the Company to issue awards to employees, consultants and
directors for up to a total of 3,600,000 shares of common stock, par value $0.0001 per share. As of March 27, 2021, all
awards granted by the Company under the 2014 Plan to date have been nonqualified stock options, restricted stock
awards, restricted stock units or performance share units. Options granted under the 2014 Plan have a life of eight to ten
years and vest over service periods of four or five years or in connection with certain events as defined by the 2014 Plan
and as determined by the Compensation Committee of our board of directors. Restricted stock awards granted under the
2014 Plan vest over one or four years, as determined by the Compensation Committee of our board of directors.
Restricted stock units granted under the 2014 Plan vest over service periods of one, four or five years, as determined by
the Compensation Committee of our board of directors. Performance share units are subject to the vesting criteria
discussed further below.
On August 26, 2020, the Company approved the 2020 Equity Incentive Plan (the “2020 Plan”). Following the
approval of the 2020 Plan, no further grants have been made under the 2014 Plan. The 2020 Plan authorizes the
Company to issue awards to employees and directors for up to a total of 2,000,000 shares of common stock. As of
March 27, 2021 no awards had been granted under the 2020 Plan.
Stock Options
On May 20, 2019, the Company granted its Chief Executive Officer ("CEO") an option to purchase 227,273
shares of common stock under the 2014 Plan. This option contains both service and market vesting conditions. Vesting
of this option is contingent upon the market price of the Company's common stock achieving three stated price targets
for 30 consecutive trading days through the fourth anniversary of the date of grant. If the first market price target is met,
33% of the option granted will cliff vest on the fourth anniversary of the date of grant, with an additional 33% of the
option vesting if the second market price target is met, and the last 34% of the option vesting if the final market price
target is met. During fiscal 2020, the first market price target was met, and as such, 33% of the option or 75,000 shares
will cliff vest on the fourth anniversary of the date of grant, subject to the applicable service conditions. During fiscal
2021, the second and third market price targets were met, and as such, the final 67% of the option or 152,273 shares will
cliff vest on the fourth anniversary of the date of grant, subject to the applicable service conditions. The total grant date
81
fair value of this option was $2.0 million, with a grant date fair value of $8.80 per share. The Company is recognizing the
expense relating to this stock option on a straight-line basis over the four-year service period. The exercise price of this
award is $28.63 per share. The fair value of the option was estimated using a Monte Carlo simulation model. The
following significant assumptions were used as of May 20, 2019, the date of grant:
Stock price
Exercise price
Expected option term
Expected volatility
Risk-free interest rate
Expected annual dividend yield
$
$
28.63
28.63
7.0 years
35.3 %
2.3 %
0 %
During fiscal 2021, the Company granted certain members of management options to purchase a total of
287,373 shares under the 2014 Plan. The total grant date fair value of stock options granted during fiscal 2021 was $3.1
million, with grant date fair values of $10.40 to $12.71 per share. The Company is recognizing the expense relating to
these stock options on a straight-line basis over the four-year service period of the awards. The exercise price of these
awards ranges from $20.94 to $24.08 per share.
During fiscal 2020, the Company granted certain members of management options to purchase a total of
126,952 shares under the 2014 Plan. The total grant date fair value of stock options granted during fiscal 2020 was $1.4
million, with grant date fair values ranging from $7.22 to $11.19 per share. The Company is recognizing the expense
relating to these stock options on a straight-line basis over the four-year service period of the awards. The exercise prices
of these awards range between $19.23 and $28.63 per share.
During fiscal 2019, the Company granted certain members of management options to purchase a total of
294,691 shares under the 2014 Plan. The total grant date fair value of stock options granted during fiscal 2019 was $2.7
million, with grant date fair values ranging from $8.63 to $11.11 per share. The Company is recognizing the expense
relating to these stock options on a straight-line basis over the four-year service period of the awards. The exercise prices
of these awards range between $22.85 and $29.73 per share.
Stock option awards with service vesting conditions are measured at fair value on the grant date using the
Black - Scholes option valuation model. Key input assumptions used to estimate the fair value of stock options include the
exercise price of the award, the expected option term, expected volatility of the Company’s stock price over the option’s
expected term, the risk - free interest rate over the option’s expected term and the Company’s expected annual dividend
yield, if any. The Company issues shares of common stock when options are exercised.
82
The fair values of stock options granted in fiscal 2021, 2020, and 2019 were estimated on the grant dates using
the following assumptions:
March 27,
2021
Expected option term(1)
Expected volatility factor(2)
Risk-free interest rate(3)
Expected annual dividend yield
57.0 %
0.3 %
6.3 years
- 58.4 %
0.4 %
-
0 %
Fiscal Year Ended
March 28,
2020
-
-
-
6.3
35.3 %
0.5 %
7.0 years
38.1 %
2.3 %
0 %
March 30,
2019
36.1 %
2.2 %
-
-
5.3 years
37.7 %
2.8 %
0 %
(1) The Company has limited historical information regarding the expected option term. Accordingly, the Company
determined the expected life of the options using the simplified method.
(2) Stock volatility for each grant is measured using the weighted average of historical daily price changes of the
Company’s stock and its competitors’ common stock over the most recent period equal to the expected option term
of the Company’s awards.
(3) The risk - free interest rate is determined using the rate on treasury securities with the same term.
Intrinsic value for stock options is defined as the difference between the market price of the Company’s
common stock on the last business day of the fiscal year and the weighted average exercise price of in - the - money stock
options outstanding at the end of each fiscal period. The following table summarizes the stock award activity for the
fiscal year ended March 27, 2021:
Grant Date
Weighted
Average
Weighted
Average
Remaining
Contractual
Stock
Options
Exercise Price Life (in Years)
Aggregate
Intrinsic
Value
(in thousands)
Outstanding at March 28, 2020
Granted
Exercised
Cancelled, forfeited or expired
Outstanding at March 27, 2021
Vested and expected to vest after March 27, 2021
Exercisable at March 27, 2021
1,221,223 $
287,373 $
(387,950) $
(8,727) $
1,111,919 $
1,111,919 $
158,990 $
19.96
22.50
19.09
17.91
20.94
20.94
17.16
$
12,771
6.7 $
6.7 $
4.3 $
47,102
47,102
7,335
A summary of the status of non-vested stock options as of March 27, 2021 and changes during fiscal 2021 is
presented below:
Nonvested at March 28, 2020
Granted
Vested
Nonvested shares forfeited
Nonvested at March 27, 2021
Restricted Stock Units
Shares
Weighted-
Average
Grant Date
Fair Value
931,257 $
6.90
287,373 $ 10.92
6.01
7.39
8.36
(258,207) $
(7,494) $
952,929 $
During fiscal 2021, the Company granted 175,527 restricted stock units to various directors and employees
under the 2014 Plan. The shares granted vest in four equal annual installments beginning on the grant date, provided that
83
the respective award recipient continues to be employed by the Company through each of those dates (subject to certain
exceptions). The shares granted to the Company’s directors vest on the first anniversary of the date of grant. The grant
date fair value of these awards for fiscal 2021 totaled $3.7 million. The Company is recognizing the expense relating to
these awards on a straight-line basis over the service period of each award, commencing on the date of grant.
During fiscal 2020, the Company granted 95,985 restricted stock units to various directors and employees under
the 2014 Plan. The units granted to employees vest in four equal annual installments beginning on the grant date,
provided that the respective award recipient continues to be employed by the Company through each of those dates. The
units granted to the Company’s directors vest on the first anniversary of the date of grant, provided that the respective
award recipient continues service with the Company through the vesting date. The grant date fair value of these awards
for fiscal 2020 totaled $2.7 million. The Company is recognizing the expense relating to these awards on a straight-line
basis over the service period of each award, commencing on the date of grant.
During fiscal 2019, the Company granted 86,996 restricted stock units to various directors and employees under
the 2014 Plan. The units granted to employees vest in five equal annual installments beginning on the grant date,
provided that the respective award recipient continues to be employed by the Company through each of those dates. The
units granted to the Company’s directors vest on the first anniversary of the date of grant, provided that the respective
award recipient continues service with the Company through the vesting date. The grant date fair value of these awards
for fiscal 2019 totaled $2.2 million. The Company is recognizing the expense relating to these awards on a straight-line
basis over the service period of each award, commencing on the date of grant.
Performance Share Units
During fiscal 2020, the Company granted 38,546 performance share units to various employees under the 2014
Plan with a grant date fair value of $28.63 per share.
The performance share units granted are stock-based awards in which the number of shares ultimately received
depends on the Company's performance against its cumulative earnings per share target over a three-year performance
period beginning March 31, 2019 and ending March 26, 2022. These performance metrics were established by the
Company at the beginning of the performance period. At the end of the performance period, the number of performance
shares to be issued is fixed based upon the degree of achievement of the performance goals. If the cumulative three-year
performance goals are below the threshold level, the number of performance units to vest will be 0%, if the performance
goals are at the threshold level, the number of performance units to vest will be 50% of the target amounts, if the
performance goals are at the target level, the number of performance units to vest will be 100% of the target amounts,
and if the performance goals are at the maximum level, the number of performance units to vest will be 200% of the
target amounts, each subject to continued service by the applicable award recipient through the last day of the
performance period (subject to certain exceptions). If performance is between threshold and target goals or between
target and maximum goals, the number of performance units to vest will be determined by linear interpolation. The
number of shares ultimately issued can range from 0% to 200% of the participant's target award.
The grant date fair value of the performance share units granted during fiscal 2021 was initially measured using
the Company's closing stock price on the date of grant with the resulting stock compensation expense recognized on a
straight-line basis over the three-year vesting period. The expense recognized over the vesting period is adjusted up or
down on a quarterly basis based on the anticipated performance level during the performance period. If the performance
metrics are not probable of achievement during the performance period, stock compensation expense would be reversed.
The awards are forfeited if the threshold performance goals are not achieved as of the end of the performance period.
During fiscal 2021 and fiscal 2019, the Company did not grant any performance share units.
Stock-Based Compensation Expense
Stock - based compensation expense was $7.2 million, $4.9 million, and $2.9 million for fiscal 2021, 2020, and
2019, respectively. Stock-based compensation expense of $1.2 million, $0.9 million, and $0.4 million was recorded in
cost of goods sold in the consolidated statements of operations for fiscal 2021, 2020, and 2019, respectively. All other
84
stock-based compensation expense is included in selling, general and administrative expenses in the consolidated
statements of operations.
As of March 27, 2021, there was $4.5 million of total unrecognized stock-based compensation expense related
to unvested stock options, with a weighted-average remaining recognition period of 2.25 years. As of March 27, 2021,
there was $3.7 million of total unrecognized stock-based compensation expense related to restricted stock units, with a
weighted-average remaining recognition period of 2.44 years. As of March 27, 2021, there was $0.6 million of total
unrecognized stock-based compensation expense related to performance share units, with a weighted-average remaining
recognition period of 1.15 years.
10. Commitments and Contingencies
The Company is involved, from time to time, in litigation that is incidental to its business. The Company has
reviewed these matters to determine if reserves are required for losses that are probable and reasonable to estimate in
accordance with FASB ASC Topic 450, Contingencies. The Company evaluates such reserves, if any, based upon
several criteria, including the merits of each claim, settlement discussions and advice from outside legal counsel, as well
as indemnification of amounts expended by the Company’s insurers or others, if any.
On May 8, 2019, Sheplers, Inc., a wholly-owned subsidiary of the Company, was named as defendant in a
class-action complaint filed in the Superior Court of California, County of Los Angeles. Among other things, the
complaint generally alleges deceptive pricing on merchandise sold in Sheplers’ e-commerce site. The estimated cost of
the matter has been accrued as of March 27, 2021.
During the normal course of its business, the Company has made certain indemnifications and commitments
under which the Company may be required to make payments for certain transactions. These indemnifications include
those given to various lessors in connection with facility leases for certain claims arising from such facility leases, and
indemnifications to directors and officers of the Company to the maximum extent permitted under the laws of the State
of Delaware. The majority of these indemnifications and commitments do not provide for any limitation of the maximum
potential future payments the Company could be obligated to make, and their duration may be indefinite. The Company
has not recorded any liability for these indemnifications and commitments in the consolidated balance sheets as the
impact is expected to be immaterial.
11. Leases
The Company does not own any real estate. Instead, most of its retail store locations are occupied under
operating leases. The store leases generally have a base lease term of five or 10 years, with one or more renewal periods
of five years, on average, exercisable at the Company’s option. The Company is generally responsible for the payment of
property taxes and insurance, utilities and common area maintenance fees. Some leases also require additional payments
based on percentage of sales. Lease terms include the non-cancellable portion of the underlying leases along with any
reasonably certain lease periods associated with available renewal periods, termination options and purchase options.
Operating and finance lease liabilities are recognized at the lease commencement date based on the present
value of the fixed lease payments using the Company's incremental borrowing rates for its population of leases. Related
operating and finance lease ROU assets are recognized based on the initial present value of the fixed lease payments,
reduced by cash payments received from landlords as lease incentives, plus any prepaid rent and other direct costs from
executing the leases. Amortization of both operating and finance lease ROU assets is performed on a straight-line basis
and recorded as part of rent expense in cost of goods sold and selling, general and administrative expenses on the
consolidated statements of operations. The interest expense amortization component of the finance lease liabilities is
recorded within interest expense on the consolidated statements of operations. ROU assets are tested for impairment in
the same manner as long-lived assets. During fiscal 2021, the Company recorded ROU asset impairment charges of $0.3
million related to its stores. During both fiscal 2020 and 2019, the Company did not record any ROU asset impairment
charges related to its stores.
85
Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes
lease expense for these leases on a straight-line basis over the lease term. Variable lease payments are recognized as
lease expense as they are incurred.
In April 2020, the FASB issued guidance allowing entities to make a policy election whether to account for
lease concessions related to the COVID - 19 pandemic as lease modifications. The election applies to any lessor-provided
lease concession related to the impact of the COVID - 19 pandemic, provided the concession does not result in a
substantial increase in the rights of the lessor or in the obligations of the lessee. In fiscal 2021, the Company received
non-substantial concessions from certain landlords in the form of rent deferrals and abatements related to the COVID - 19
pandemic. The Company elected to not account for these rent concessions as lease modifications. As such,
approximately $4.4 million of short-term rent deferrals agreed upon with the Company’s landlords has been included in
the accounts payable financial statement line item as of March 27, 2021. The recognition of rent concessions did not
have a material impact on the Company’s consolidated financial statements as of March 27, 2021.
ROU assets and lease liabilities as of March 27, 2021 consist of the following:
Balance Sheet Classification
March 27, 2021
(in thousands)
Assets
Finance lease assets
Operating lease assets
Total lease assets
Liabilities
Current
Finance
Operating
Total short-term lease
liabilities
Right-of-use assets, net
Right-of-use assets, net
Short-term lease liabilities
Short-term lease liabilities
Non-Current
Finance
Operating
Total long-term lease liabilities
Total lease liabilities
Long-term lease liabilities
Long-term lease liabilities
Total lease costs for the fiscal year ended March 27, 2021 were:
Statement of Operations Classification
(in thousands)
Finance lease cost
Amortization of right-of-
use assets
Interest on lease liabilities Interest expense
Total finance lease cost
Cost of goods sold
Operating lease cost
Operating lease cost
Short-term lease cost
Variable lease cost
Sublease income
Total lease cost
Cost of goods sold
$
Selling, general and administrative expenses
Selling, general and administrative expenses
Selling, general and administrative expenses
Cost of goods sold
$
86
$
$
$
8,036
178,791
186,827
1,164
38,236
$
39,400
$
$
$
13,507
168,329
181,836
221,236
Fiscal Year Ended
March 27, 2021
$
$
848
795
1,643
43,820
1,102
2,085
2,192
(572)
50,270
The following table summarizes future lease payments as of March 27, 2021:
Fiscal Year
2022
2023
2024
2025
2026
Thereafter
Total
Less: Imputed interest
Present value of net lease payments
The following table includes supplemental lease information:
Supplemental Cash Flow Information (dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
Lease liabilities arising from new right-of-use assets
Operating leases
Finance leases
Weighted average remaining lease term (in years)
Operating leases
Finance leases
Weighted average discount rate
Operating leases
Finance leases
12. Defined Contribution Plan
$
(in thousands)
Operating Leases Finance Leases
(in thousands)
1,550
1,484
1,447
1,396
1,410
13,988
21,275
(6,604)
14,671
48,559 $
43,682
37,871
32,404
26,456
58,649
247,621
(41,056)
206,565 $
$
Fiscal Year Ended
March 27, 2021
$
$
$
$
45,078
2
1,781
46,861
64,669
2,733
6.3
14.1
5.6 %
12.1 %
The Boot Barn 401(k) Plan (the “401(k) Plan”) is a qualified plan under Section 401(k) of the Internal Revenue
Code. The 401(k) Plan provides a matching contribution for all employees that work a minimum of 1,000 hours per year.
Contributions to the plan are based on certain criteria as defined in the agreement, governing the 401(k) Plan.
Participating employees are allowed to contribute up to the statutory maximum set by the Internal Revenue Service. The
Company provides a safe harbor matching contribution that matches 100% of employee contributions up to 3% of their
respective wages and then 50% of further contributions up to 5% of their respective wages. Contributions to the plan and
charges to selling, general and administrative expenses were $1.3 million, $1.3 million, and $0.9 million for fiscal 2021,
2020, and 2019, respectively.
87
13. Income Taxes
Income tax expense consisted of the following:
(in thousands)
Current:
Federal
State
Foreign
Total current
Deferred:
Federal
State
Foreign
Total deferred
Total income tax expense
Fiscal Year Ended
March 27, March 28, March 30,
2021
2020
2019
$ 12,761 $ 7,619 $ 2,728
2,057
—
4,785
2,912
—
15,673
2,150
—
9,769
1,614
577
—
2,191
4,056
133
—
4,189
$ 17,864 $ 12,364 $ 8,974
3,149
(554)
—
2,595
The reconciliation between the Company’s effective tax rate on income from operations and the statutory tax
rate is as follows:
Expected provision at statutory U.S. federal tax rate
State and local income taxes, net of federal tax benefit
Change in state rate
Federal rate change
Permanent items
Excess tax benefit of stock-based compensation
IRC Section 162(M)
Valuation allowance
Other
Effective tax rate
Fiscal Year Ended
March 27, March 28, March 30,
2021
21.0 %
4.1
—
—
0.1
(3.5)
1.9
—
(0.4)
23.2 %
2020
21.0 %
3.6
—
—
0.2
(3.5)
0.9
(0.7)
(1.0)
20.5 %
2019
21.0 %
3.9
—
—
0.3
(7.6)
0.6
(0.1)
0.6
18.7 %
Differences between the effective tax rate and the statutory rate relate primarily to excess tax benefits due to
income tax accounting for share-based compensation, IRC Section 162(M) and state taxes.
88
Deferred taxes reflect the net tax effects of the temporary differences between the carrying amount of assets and
liabilities for financial reporting and the amount used for income tax purposes. Significant components of the Company’s
net deferred tax liabilities as of March 27, 2021 and March 28, 2020 consisted of the following (in thousands):
March 27 March 28,
2021
2020
Deferred tax assets:
State taxes
Accrued liabilities
Award program liabilities
Deferred revenue
Inventory
Stock options
Net operating loss carryforward
Long-term lease liabilities
Other, net
Total deferred tax assets
Deferred tax liabilities:
Depreciation and amortization
Prepaid expenses
Right-of-use assets
Total deferred tax liabilities
Valuation allowance
Net deferred tax liabilities
$
327 $
2,393
265
1,548
4,319
1,711
748
45,499
1,516
58,326
266
2,053
220
1,959
3,783
1,249
826
42,554
1,267
54,177
(34,752)
(401)
(45,166)
(80,319)
—
(31,346)
(313)
(42,319)
(73,978)
—
$ (21,993) $ (19,801)
As of March 27, 2021, the Company had net operating loss carryforwards for federal and state tax purposes of
zero and $16.1 million, respectively. Net operating losses generated in years beginning prior to January 1, 2018 will
begin to expire at various dates beginning in 2023.
Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amounts
expected to be realized. To this end, the Company has considered and evaluated its sources of taxable income, including
forecasted future taxable income, and the Company has concluded that a valuation allowance is not necessary at
March 27, 2021.
The Company applies ASC 740, which contains a two - step approach to recognizing and measuring uncertain
tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available
evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related
appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more
than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and
estimating its tax positions and tax benefits, which may require periodic adjustments. At March 27, 2021 and March 28,
2020, no material amounts were recorded for any uncertain tax positions.
The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a
component of income tax expense. To the extent that accrued interest and penalties do not ultimately become payable,
amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period that such
determination is made. The Company does not have any accrued interest or penalties associated with any unrecognized
tax benefits as of March 27, 2021 and March 28, 2020.
The Company does not anticipate a significant change in its uncertain tax benefits over the next 12 months.
The major jurisdictions in which the Company files income tax returns include the U.S. federal jurisdiction, as
well as various state jurisdictions within the U.S. The Company’s fiscal years 2016 through 2020 returns are subject to
examination by the U.S. federal and various state tax authorities.
89
On March 27, 2020, the United States enacted the CARES Act which provides certain income tax benefits
including the ability to carryback federal NOLs generated in 2018 through 2020 for an extended five-year period. It also
increased the limitation for the deduction of interest expense from 30 percent to 50 percent of modified taxable income.
The CARES Act also provides other economic benefits such as allowing employers to defer payment of the employer’s
portion of payroll taxes for 2020 and a refundable employee retention credit of up to $5,000 per eligible employee
wages. The CARES act did not have a material impact on the Company’s financial statements.
On December 27, 2020, the United States enacted the Consolidated Appropriations Act which extended many
of the benefits of the CARES Act that were scheduled to expire. The Company is evaluating the impact of the
Consolidated Appropriations Act on its consolidated financial statements and related disclosures.
14. Related Party Transactions
The Company had capital expenditures with Floor & Decor Holdings, Inc., a specialty retail vendor in the
flooring market. These capital expenditures amounted to $0.4 million, $0.8 million, and $0.5 million in fiscal 2021,
fiscal 2020, and fiscal 2019, respectively, and were recorded as property and equipment, net on the consolidated balance
sheets. Certain members of the Company’s board of directors either currently serve on the board of directors or as an
executive officer at Floor & Decor Holdings, Inc.
John Grijalva, the husband of Ms. Grijalva, Chief Merchandising Officer, works as an independent sales
representative primarily for Dan Post Boot Company, Outback Trading Company, LTD and KS Marketing LLC.
Mr. Grijalva conducts his business as an independent sales representative through a limited liability company of which
he and Ms. Grijalva are members. We purchased merchandise from these suppliers in the aggregate approximate
amounts of $13.8 million, $17.8 million, and $15.4 million in fiscal 2021, fiscal 2020, and fiscal 2019, respectively.
Mr. Grijalva was paid commissions by the Company of approximately $1.0 million, $1.2 million, and $1.1 million in
fiscal 2021, fiscal 2020 and fiscal 2019, respectively, a portion of which were passed on to other sales representatives
working for Mr. Grijalva.
15. Earnings Per Share
Earnings per share is computed under the provisions of FASB ASC Topic 260, Earnings Per Share. Basic
earnings per share is computed based on the weighted average number of outstanding shares of common stock during the
period. Diluted earnings per share is computed based on the weighted average number of shares of common stock plus
the effect of dilutive potential common shares outstanding during the period using the treasury stock method, whereby
proceeds from such exercise and unamortized compensation, if any, on share-based awards are assumed to be used by
the Company to purchase the shares of common stock at the average market price during the period. The dilutive effect
of stock options and restricted stock is applicable only in periods of net income. Performance share units and market-
based stock option awards are excluded from the calculation of diluted earnings per share until their respective
performance or market criteria has been achieved.
90
The components of basic and diluted earnings per share of common stock, in aggregate, for fiscal 2021, 2020,
and 2019 are as follows:
(in thousands, except per share data)
Net income
Weighted average basic shares outstanding
Dilutive effect of options and restricted stock
Weighted average diluted shares outstanding
Basic earnings per share
Diluted earnings per share
Fiscal Year Ended
March 27, March 28, March 30,
2021
2020
2019
$ 59,386 $ 47,949 $ 39,022
28,930
547
29,477
28,583
637
29,220
28,092
721
28,813
$
$
2.05 $
2.01 $
1.68 $
1.64 $
1.39
1.35
Options to purchase approximately 322,078, 360,079, and 483,050 shares of common stock during the fiscal
years ended March 27, 2021, March 28, 2020 and March 30, 2019 were outstanding, but were not included in the
computation of weighted average diluted common shares outstanding as the effect of doing so would have been anti-
dilutive.
16. Quarterly Financial Information (Unaudited)
The tables below set forth selected quarterly financial data for each of the last two fiscal years.
Fiscal 2021
Fiscal 2020
(in thousands, except per
share data)
Net sales
Gross profit
Income from operations
Net income/(loss)
Earnings/(loss) per share:
$
$
Basic shares
Diluted shares
Weighted average shares
outstanding:
Fourth
quarter
$ 258,872 $ 302,338 $ 184,515 $ 147,766 $ 188,628 $ 283,997 $ 187,183 $ 185,767
Third
quarter
Second
quarter
Fourth
quarter
Third
quarter
Second
quarter
quarter
quarter
First
First
92,379
32,860
24,552
106,809
41,626
29,566
55,490
40,201
57,961
97,036
59,338
62,156
10,042
5,758
1,798
(490)
9,696
5,729
34,977
24,819
12,934
7,680
16,061
9,721
0.84 $
0.82 $
1.02 $
1.00 $
0.20 $
0.20 $
(0.02) $
(0.02) $
0.20 $
0.20 $
0.87 $
0.85 $
0.27 $
0.26 $
0.34
0.33
Basic shares
Diluted shares
29,122
30,033
28,912
29,581
28,860
29,223
28,826
28,826
28,786
29,310
28,665
29,367
28,502
29,161
28,380
29,025
91
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain a system of disclosure controls and procedures (as defined in Rules 13a - 15(e) and 15d - 15(e) under
the Exchange Act) designed to ensure that the information required to be disclosed by us in the reports that we file or
submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the
rules and forms of the SEC, and is accumulated and communicated to our management, including our Chief Executive
Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer and principal
accounting officer), as appropriate, to allow timely decisions regarding required disclosure.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has
evaluated the effectiveness of our disclosure controls and procedures under the Exchange Act as of March 27, 2021, the
end of the period covered by this Annual Report on Form 10 - K. Based upon that evaluation, our Chief Executive Officer
and Chief Financial Officer concluded that, as of March 27, 2021, our disclosure controls and procedures were effective.
Management’s Annual Report on Internal Control Over Financial Reporting
We are responsible for establishing and maintaining internal control over financial reporting (as defined in
Rules 13a - 15(f) and 15d - 15(f) under the Exchange Act). Internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Our management, under the supervision and with the participation of our Chief Executive Officer and Chief
Financial Officer, assessed the effectiveness of our internal control over financial reporting as of March 27, 2021. In
making this assessment, our management used the Internal Control – Integrated Framework (2013) as issued by the
Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on this assessment, management
concluded that our internal control over financial reporting was effective as of March 27, 2021.
The effectiveness of our internal control over financial reporting as of March 27, 2021 has been audited by
Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which appears
immediately below.
92
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of
Boot Barn Holdings, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Boot Barn Holdings, Inc. and subsidiaries (the
“Company”) as of March 27, 2021, based on criteria established in Internal Control — Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of March 27, 2021,
based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements as of and for the year ended March 27, 2021, of the Company
and our report dated May 13, 2021, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ Deloitte & Touche LLP
Costa Mesa, California
May 13, 2021
93
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarterly period
ended March 27, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
Item 9B. Other Information
None.
94
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information required by this item will be contained in our 2021 Proxy Statement, which is expected to be
filed not later than 120 days after the end of our fiscal year ended March 27, 2021, and is incorporated herein by
reference.
In addition, our Board of Directors has adopted a Code of Business Ethics that applies to all of our directors,
employees and officers, including our Chief Executive Officer, Chief Financial Officer and Principal Accounting
Officer. The current version of the Code of Business Ethics is available on our website under the Investor Relations
section at www.bootbarn.com. In accordance with the rules adopted by the SEC and the New York Stock Exchange, we
intend to promptly disclose any amendments to certain provisions of the Code of Business Ethics, or waivers of such
provisions granted to executive officers and directors, on our website under the Investor Relations section at
www.bootbarn.com. The information contained on or accessible through our website is not incorporated by reference
into this Annual Report on Form 10 - K.
Item 11. Executive Compensation
The information required by this Item will be set forth in the 2021 Proxy Statement and is incorporated herein
by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item will be set forth in the 2021 Proxy Statement and is incorporated herein
by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item will be set forth in the 2021 Proxy Statement and is incorporated herein
by reference.
Item 14. Principal Accountant Fees and Services
The information required by this Item will be set forth in the 2021 Proxy Statement and is incorporated herein
by reference.
Item 15. Exhibits and Financial Statement Schedules
Financial Statements and Financial Statement Schedules
PART IV
See “Index to Consolidated Financial Statements” in Part II, Item 8 of this Annual Report on Form 10 - K.
Financial statement schedules have been omitted because they are not required or are not applicable or because the
information required in those schedules either is not material or is included in the consolidated financial statements or the
accompanying notes.
Exhibits
The exhibits listed below are filed or incorporated by reference as part of this Annual Report on Form 10 - K.
95
Exhibit
Number
2.1(1)
Agreement and Plan of Merger by and among Boot Barn, Inc., Rodeo Acquisition Corp., Sheplers
Holding Corporation and Gryphon Partners III, L.P. as Guarantor and the Sellers’ Representative, dated as
of May 29, 2015
Description
3.1(2) Second Amended and Restated Certificate of Incorporation of the Registrant
3.2(3) Amended and Restated Bylaws of the Registrant
3.2.1(4) Amendment, effective March 23, 2015, to Amended and Restated Bylaws of the Registrant
4.1(3) Specimen Common Stock Certificate
4.2(3)
Form of Registration Rights Agreement, by and among Boot Barn Holdings, Inc. and the stockholders
listed therein
4.3(14) Description of Capital Stock
10.1†(5) Amended and Restated Boot Barn Holdings, Inc. 2014 Equity Incentive Plan
10.2†(3)
10.3†(6)
10.4†(3)
Form of Restricted Stock Award Agreement under the Boot Barn Holdings, Inc. 2014 Equity Incentive
Plan
Form of Restricted Stock Unit Issuance Agreement under the Boot Barn Holdings, Inc. 2014 Equity
Incentive Plan
Form of Restricted Stock Award Agreement, by and between Boot Barn Holdings, Inc. and Brenda
Morris
10.5†(3) Form of Stock Option Agreement, by and between Boot Barn Holdings, Inc. and James G. Conroy
10.6†(3) Boot Barn Holdings, Inc. 2011 Equity Incentive Plan
10.7†(3) Boot Barn Holdings, Inc. 2007 Stock Incentive Plan
10.8†(17) Boot Barn Holdings, Inc. 2020 Equity Incentive Plan
10.9†(17) Boot Barn Holdings, Inc. Amended and Restated Cash Incentive Plan for Executives
10.10†(7)
Amended and Restated Employment Agreement, dated April 7, 2015, by and between Boot Barn, Inc. and
James G. Conroy
Continued Employment Agreement, effective as of January 26, 2015, by and between Boot Barn, Inc. and
Paul Iacono
Employment Agreement, effective as of May 11, 2014, by and between Boot Barn, Inc. and Laurie
Grijalva
10.11†(8)
10.12†(2)
10.13†(2) Letter Agreement, dated July 2, 2014, by and between Boot Barn, Inc. and Laurie Grijalva
10.14†(8)
Employment Agreement, effective as of January 26, 2015, by and between Boot Barn, Inc. and Gregory
V. Hackman
10.15†(8) Form of Stock Option Agreement, by and between Boot Barn Holdings, Inc. and Gregory V. Hackman
10.16†(9) Boot Barn Holdings, Inc. Cash Incentive Plan for Executives
10.17(3)
10.18+(3)
10.19+(3)
NSB Software as a Service Master Agreement, dated February 26, 2008, by and between Boot Barn, Inc.
and NSB Retail Solutions Inc.
Carrier Agreement P720025535 01, effective as of September 30, 2013, by and between Boot Barn, Inc.
and United Parcel Service Inc., including all Addendums thereto
Carrier Agreement P780025560 02, effective as of September 30, 2013, by and between Boot Barn, Inc.
and United Parcel Service Inc., including all Addendums thereto
10.20 (3) Form of Amended and Restated Indemnification Agreement
10.21+(10)
10.21.1+(12)
10.21.2(13)
Credit Agreement dated as of June 29, 2015, by and among Boot Barn Holdings, Inc., Boot Barn, Inc.,
GCI Capital Markets LLC, as Administrative Agent, Sole Lead Arranger, Sole Bookrunner and
Syndication Agent, and the other Lenders named therein.
First Amendment to Credit Agreement and Collateral Agreement dated as of May 26, 2017, by and
among Boot Barn Holdings, Inc., Boot Barn, Inc., Golub Capital Markets LLC, as Administrative Agent,
Sole Lead Arranger, Sole Bookrunner and Syndication Agent, and the other Lenders named therein.
Second Amendment to Credit Agreement dated as of February 19, 2019, by and among Boot Barn
Holdings, Inc., Boot Barn, Inc., Golub Capital Markets LLC, as Administrative Agent, Sole Lead
Arranger, Sole Bookrunner and Syndication Agent, and the other Lenders named therein.
96
Exhibit
Number
10.21.3(15)
10.22(10)
10.23+(10)
10.24(10)
10.25(10)
10.26(10)
10.26.1(11)
10.26.2+(12)
10.26.3(15)
10.27(10)
10.28(10)
10.29(10)
10.30(10)
10.31(14)
Description
Third Amendment to Credit Agreement dated as of June 6, 2019, by and among Boot Barn Holdings, Inc.,
Boot Barn, Inc., Sheplers Holding Corporation, Sheplers, Inc., Golub Capital Markets LLC, as
Administrative Agent, Sole Lead Arranger, Sole Bookrunner and Syndication Agent, and the other
Lenders named therein.
Guaranty Agreement dated as of June 29, 2015, by and among Boot Barn, Inc. as Borrower, Boot Barn
Holdings, Inc. and certain Subsidiaries of Boot Barn Holdings, Inc. as Guarantors, in favor of GCI Capital
Markets LLC, as Administrative Agent.
Collateral Agreement dated as of June 29, 2015, by and among Boot Barn Holdings, Inc., Boot Barn, Inc.
and certain of its Subsidiaries as Grantors, in favor of GCI Capital Markets LLC, as Administrative
Agent.
Trademark Security Agreement dated as of June 29, 2015 by Sheplers, Inc., in favor of GCI Capital
Markets LLC, as Administrative Agent.
Trademark Security Agreement dated as of June 29, 2015 by Boot Barn, Inc., in favor of GCI Capital
Markets LLC, as Administrative Agent.
Credit Agreement dated as of June 29, 2015, by and among Boot Barn Holdings, Inc., Boot Barn, Inc.,
Sheplers Holding Corporation, Sheplers, Inc., Wells Fargo Bank, National Association, as Administrative
Agent, Swingline Lender and Issuing Lender, and Wells Fargo Bank, National Association, as Sole Lead
Arranger and Sole Bookrunner, and the other Lenders named therein.
Amendment No. 1, dated as of January 25, 2017, to Credit Agreement dated as of June 29, 2015, by and
among Boot Barn Holdings, Inc., Boot Barn, Inc., Sheplers Holding Corporation, Sheplers, Inc., Wells
Fargo Bank, National Association, as Administrative Agent, Swingline Lender and Issuing Lender, and
Wells Fargo Bank, National Association, as Sole Lead Arranger and Sole Bookrunner, and the other
Lenders named therein.
Amendment No. 2, dated as of May 26, 2017, to Credit Agreement and Amendment No. 1, dated as of
May 26, 2017, to Collateral Agreement, in each case dated as of June 29, 2015, by and among Boot Barn
Holdings, Inc., Boot Barn, Inc., Sheplers Holding Corporation, Sheplers, Inc., Wells Fargo Bank, National
Association, as Administrative Agent, Swingline Lender and Issuing Lender, and Wells Fargo Bank,
National Association, as Sole Lead Arranger and Sole Bookrunner, and the other Lenders named therein.
Amendment No. 3, dated as of June 6, 2019, to Credit Agreement by and among Boot Barn Holdings,
Inc., Boot Barn, Inc., Sheplers Holding Corporation, Sheplers, Inc., Wells Fargo Bank, National
Association, as Administrative Agent, Swingline Lender and Issuing Lender, and Wells Fargo Bank,
National Association, as Sole Lead Arranger and Sole Bookrunner, and the other Lenders named therein.
Guaranty Agreement dated as of June 29, 2015 by and among Boot Barn, Inc. and Sheplers, Inc. as
Borrowers, Boot Barn Holdings, Inc., Sheplers Holdings Corporation and certain of their Subsidiaries as
Guarantors, in favor of Wells Fargo Bank, National Association, as Administrative Agent.
Collateral Agreement dated as of June 29, 2015, by and among Boot Barn Holdings, Inc., Boot Barn, Inc.,
Sheplers Holding Corporation, Sheplers, Inc. and certain of their Subsidiaries as Grantors, in favor of
Wells Fargo Bank, National Association, as Administrative Agent.
Trademark Security Agreement, dated as of June 29, 2015, by Sheplers, Inc., in favor of Wells Fargo
Bank, National Association, as Administrative Agent.
Trademark Security Agreement, dated as of June 29, 2015, by Boot Barn, Inc., in favor of Wells Fargo
Bank, National Association, as Administrative Agent.
Employment Agreement, effective on or around April 2, 2018, by and between Boot Barn, Inc. and John
Hazen.
10.32.1(14)
10.32(14) Employment Agreement, effective on May 5, 2014, by and between Boot Barn, Inc. and Michael A. Love.
Supplemental Employment Letter Agreement, effective on April 1, 2017, by and between Boot Barn, Inc.
and Michael A. Love.
Supplemental Employment Letter Agreement, effective on or around June 12, 2018, by and between Boot
Barn, Inc. and Michael A. Love.
10.32.2(14)
97
Exhibit
Number
10.33(16)
10.34(16)
10.35(16)
Description
Notice and Consent to Temporary Salary Adjustment, dated as of April 7, 2020, between Boot Barn
Holdings, Inc. and James G. Conroy.
Notice and Consent to Temporary Salary Adjustment, dated as of April 7, 2020, between Boot Barn
Holdings, Inc. and Laurie Grijalva.
Form of Notice and Consent to Temporary Salary Adjustment, dated as of April 7, 2020, between Boot
Barn Holdings, Inc. and each of Gregory V. Hackman, John Hazen and Michael A. Love.
32.2
21.1 List of subsidiaries
23.1 Consent of Deloitte & Touche LLP
31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002
31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
32.1
Section 906 of the Sarbanes - Oxley Act of 2002
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes - Oxley Act of 2002
Pursuant to Rules 405 and 406 of Regulation S-T, the following information from the Company’s Annual
Report on Form 10 - K for the fiscal year ended March 27, 2021 is formatted in iXBRL (Inline eXtensible
Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of
Operations; (iii) the Consolidated Statement of Stockholders’ Equity; (iv) the Consolidated Statements of
Cash Flows and (v) Notes to the Consolidated Financial Statements.
The cover page from the Company’s Annual Report on Form 10 - K for the fiscal year ended March 27,
2021, formatted in iXBRL in Exhibit 101.
104
101
†
Indicates management contract or compensation plan.
+ Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment
and the omitted portions have been filed separately with the SEC.
(1) Incorporated by reference to our Current Report on Form 8 - K filed on June 3, 2015.
(2) Incorporated by reference to our Quarterly Report on Form 10 - Q filed on December 9, 2014.
(3) Incorporated by reference to our Registration Statement on Form S - 1, File No. 333 - 199008.
(4) Incorporated by reference to our Current Report on Form 8 - K filed on March 26, 2015.
(5) Incorporated by reference to our Current Report on Form 8 - K filed on August 25, 2016.
(6) Incorporated by reference to our Quarterly Report on Form 10 - Q filed on August 4, 2015.
(7) Incorporated by reference to our Current Report on Form 8 - K filed on April 8, 2015.
(8) Incorporated by reference to our Current Report on Form 8 - K filed on January 9, 2015.
(9) Incorporated by reference to our Current Report on Form 8 - K filed on August 31, 2017.
(10) Incorporated by reference to our Current Report on Form 8 - K filed on July 2, 2015.
(11) Incorporated by reference to our Current Report on Form 8 - K filed on January 27, 2017.
98
(12) Incorporated by reference to our Current Report on Form 8 - K filed on June 1, 2017.
(13) Incorporated by reference to our Current Report on Form 8 - K filed on February 21, 2019.
(14) Incorporated by reference to our Annual Report on Form 10 - K filed on May 24, 2019.
(15) Incorporated by reference to our Current Report on Form 8 - K filed on June 6, 2019.
(16) Incorporated by reference to our Current Report on Form 8 - K filed on April 9, 2020.
(17) Incorporated by reference to our Current Report on Form 8 - K filed on September 1, 2020.
99
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: May 13, 2021
BOOT BARN HOLDINGS, INC.
By: /s/ JAMES G. CONROY
Name: James G. Conroy
Title: President, CEO and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ JAMES G. CONROY
James G. Conroy
President, CEO and Director (Principal Executive
Officer)
May 13, 2021
/s/ GREGORY V. HACKMAN
Executive Vice President, Chief Operating Officer, Chief
Gregory V. Hackman
/s/ GREG BETTINELLI
Greg Bettinelli
/s/ CHRIS BRUZZO
Chris Bruzzo
/s/ GENE EDDIE BURT
Gene Eddie Burt
/s/ LISA G. LAUBE
Lisa G. Laube
/s/ BRENDA I. MORRIS
Brenda I. Morris
/s/ ANNE MACDONALD
Anne MacDonald
/s/ PETER STARRETT
Peter Starrett
/s/ BRADLEY M. WESTON
Bradley M. Weston
Financial Officer and Secretary (Principal Financial
Officer and Principal Accounting Officer)
May 13, 2021
May 13, 2021
May 13, 2021
May 13, 2021
May 13, 2021
May 13, 2021
May 13, 2021
May 13, 2021
May 13, 2021
Director
Director
Director
Director
Director
Director
Director
Director
100
EXECUTIVE OFFICERS
BOARD OF DIRECTORS
CORPORATE INFORMATION
James G. Conroy
President and Chief Executive Officer
Gregory V. Hackman
Executive Vice President, Chief Operating
Officer, Chief Financial Officer and Secretary
Laurie Grijalva
Chief Merchandising Officer
John Hazen
Chief Digital Officer
Michael A. Love
Senior Vice President, Stores
Peter Starrett
James G. Conroy
Greg Bettinelli
Chris Bruzzo
Eddie Burt
Lisa G. Laube
Anne MacDonald
Brenda I. Morris
Brad Weston
Corporate Address
15345 Barranca Parkway
Irvine, CA 92618
www.bootbarn.com
Ticker Symbol
NYSE: BOOT
Transfer Agent
Computershare
462 South 4th Street, Suite 1600
Louisville, KY 40202
877.373.6374
www-us.computershare.com/
investor/contact
Independent Registered
Public Accounting Firm
Deloitte & Touche LLP
695 Town Center Dr. Ste 1000
Costa Mesa, CA 92626
714.436.7100
Investor Relations
investor.bootbarn.com
BOOT BARN STORE PORTFOLIO
273 Stores in 36 States1
E-commerce sales in all 50 states and
more than 100 countries worldwide1
1 Data for Fiscal 2021.