Boot Barn (BOOT) plummeted to $10 in late March 2020 as the Covid pandemic took hold, notes Doug Gerlach, editor of SmallCap Informer — and a participant in The Interactive MoneyShow Virtual Expo on March 22-24. Register here for free.

The company, however, responded well to the pressures on its business and its share price reacted accordingly, pushing the stock as high as $130 in late 2021. The price has since fallen back due to investors’ concerns about future macro headwinds, inflation, and tough comparisons to strong 2021 results.

Our experience with the company shows that Boot Barn is resilient and long-term-focused, two attributes that give confidence about its prospects. With much of the above-noted risks already reflected in the stock price, we think Boot Barn is well worth considering at its present valuation.

Founded in 1978, Boot Barn today is the largest western and work wear retailer in the nation, operating 293 stores in 37 states. Stores are located throughout the U.S., with a heavy legacy concentration in Texas (where the company was founded) and California. Northeast and mid-Atlantic U.S. at present have few stores.

Boot Barn also operates several e-commerce channels:;, the nation’s leading pure play online western and work retailer; and, selling to customers who live a country lifestyle. When the pandemic began in 2020, the company pivoted to expand online sales and fulfilment capabilities.

Today, these efforts are bringing more customers into stores as well as attracting customers who are taking advantage of offers such as same-day delivery or in-store pickup and returns.

The company has divided its customers into several segments. Boot Barn serves the iconic American cowboy, from ranch to rodeo. Boot Barn Work supports workers, from the oil & gas industry to agriculture. Boot Barn Just Country serves outdoors enthusiasts including hunters and anglers.

Wonderwest offers women’s mainstream and western-inspired pieces, and includes a line developed in collaboration with country-western star Miranda Lambert. Boot Barn Commercial Accounts supports businesses with large quantity purchases.

Typically, western wear makes up 70% of sales, while work wear comprises 30%. Boots comprise 49% of the company’s total product sales mix, and 62% of customers are men. Since 2012, sales have grown annually at an average rate of 17.2%, reaching $893.5 million in fiscal 2020. EPS have been less consistent but faster-growing, increasing at an annual rate of 55.1% since 2012.

For the third fiscal quarter ended December 25, 2021, sales increased 60.7% to $485.9 million, compared to the year-ago quarter. EPS was $2.27, up 127.0% over the year-ago quarter’s $1.00. Same store sales increased 61.0%, comprised of an increase in retail store same store sales of 59.1% and an increase in e-commerce same store sales of 69.3%.

Three of the top five brands sold today by Barn are exclusive to the chain. These brands are growing and driving an increasing level of profitability, and the company is investing in expanding these portfolios. Country music, western events, ranching, horse ownership, and agriculture are all driving western wear growth, while blue collar employment trends drive work wear growth.

For Fiscal 2022, management guides to 10.0% in new unit growth. The five-year analysts’ consensus EPS growth rate is 17.6%. We believe the company can support 15% annual growth in EPS and revenues through 2026.

Boot Barn’s pre-tax profit margins have expanded every year since 2015, reaching 8.6% at the end of fiscal 2020 and 16.2% for the trailing twelve months ending December 31, 2021. Debt-to-equity stood at 79.8% at the end of fiscal 2020, continuing a general downtrend. Return on equity has stabilized at or above 18.0%.

With a selected high P/E of 23.0 and five-year projected EPS of $11.44, BOOT could reach $263 by 2026. On the downside, a further pullback of 20% from the current price provides a low price of $66. From the current price of $82.22, the upside/downside ratio is 11:1, above our 3:1 minimum, and the projected annual total return is 26.2%.

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