Boot Barn's 2026 Q2 Earnings Call: Contradictions Emerge on Tariff Impact, Exclusive Brands, Pricing Strategy, and Work Boot Performance

Date of Call: October 29, 2025

Financials Results

• Revenue: $505.0M, up 19% YOY
• EPS: $1.37 per diluted share, up 44% YOY (prior year $0.95)
• Gross Margin: 36.4% gross profit rate, up 50 bps YOY (merchandise margin up 80 bps YOY; 30 bps deleverage in buying/occupancy/DC)
• Operating Margin: 11.2% of sales (income from operations $56M) compared to 9.4% ($40M) in the prior year

Guidance:

• Raised full-year sales high end to $2.235B (growth ~17% YoY).
• FY26 same-store sales +6% (retail +5.3%, e-commerce +13%).
• Merchandise margin ~50.6% (up ~50 bps YoY); gross profit ~37.7% of sales.
• Income from operations ~$294M (13.2% of sales); net income $219.6M; EPS $7.15.
• Plan to open 70 new stores in FY26 (15% unit growth); capex $125–$130M (net of $39M tenant allowances); effective tax rate ~26%.
• Q3 high end: sales ~$700M, consolidated same-store sales +4.5%, merchandise margin ~49.7%, gross profit ~38.8%, operating income ~$107M (15.3%), EPS $2.59.

Business Commentary:

• Strong Revenue and Store Growth:
• Boot Barn reported an increase in net sales by 19% for Q2 2026, reaching $505 million, driven by the opening of 64 new stores and consolidated same-store sales growth of 8.4%.

• This growth was attributed to the successful execution of their store expansion strategy and strong performance across major merchandise categories.

• Margin Expansion and Exclusive Brand Penetration:

• Merchandise margin rate increased by 80 basis points, with exclusive brand penetration rising to 41% of sales.

• The improvement in margins was primarily due to better buying economies of scale and growth in exclusive brand penetration, despite higher freight expenses.

• Total Addressable Market and Store Potential:

• The total addressable market estimate was revised from $40 billion to $58 billion, indicating a 45% increase.

• This expansion was driven by demographic analysis, increased mainstream denim sales, and a focus on the casualization of wearing occasions.

• E-commerce Performance and AI Initiatives:

• E-commerce same-store sales grew 14.4%, with bootbarn.com comping high teens.
• The growth in online sales was attributed to new exclusive brand websites, AI enhancements in search functionality, and increased marketing efforts, both organic and paid.

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly stated they were 'very pleased' and 'increasing full year guidance' after reporting revenue up 19% to $505M and EPS up 44% to $1.37; they raised FY26 sales and margin outlook and highlighted broad-based category and geographic strength, new-store momentum, and improved omnichannel performance.

Q&A:

• Question from Matthew Boss (JPMorgan Chase & Co): So John, could you elaborate on the drivers of October's further comp acceleration? And then on the more than 30% increase to your long-term store target today, does this embed any moderation in unit economics? And maybe if you could speak to regions of largest white space opportunity?
  Response: October comps mirrored Q2 category strength with a notable acceleration in work boots (low-single to mid-single digits); the 1,200-store target assumes new-store AUVs around $3.2M (consistent with current new-store economics) and does not imply lower unit economics.

• Question from Matthew Boss (JPMorgan Chase & Co): And then maybe, Jim, as a follow-up, could you just walk through the bridge between roughly 2% comps forecasted for the second half of the year relative to the October performance, 9% plus. Just maybe how much of this is prudent macro haircut versus anything specific to the business?
  Response: We modeled recent sales (Aug–Oct) then applied an approximate 3% prudent macro haircut to derive our +2% same-store sales assumption for the remainder of the period.

• Question from Peter Keith (Piper Sandler & Co.): The TAM increase is pretty impressive from $40 billion to $58 billion, so a 45% increase. I was hoping if you could just unpack that a little bit. And is it specific categories, age demographics, the proliferation of Western wear? Like what's driving this large increase just after taking up about 3 years ago?
  Response: Third-party analysis plus internal work expanded TAM by incorporating broader demographics, casualization of occasions, brand awareness, and inclusion of a portion of mainstream denim as part of Boot Barn's addressable market.

• Question from Peter Keith (Piper Sandler & Co.): So the branded prices have gone up. You have not taken exclusive brand pricing yet, but you now plan to take exclusive brand pricing up after the holiday. So does that imply you're not really seeing the mix shift that you were hoping to into exclusive brands?
  Response: Exclusive penetration ticked to 41% but customers still buy third-party brands; we delayed exclusive price increases through the holidays using factory mitigation and inventory turns, then will implement targeted, style-by-style price moves post-holiday to preserve margins.

• Question from Jay Sole (UBS): Given the momentum that you've seen in the success of those plans, what's your vision now for where you can take the exclusive brands? Like what can they become beyond just brands in the Boot Barn store? Can they become bigger? And how would you do that now that you've seen that new websites have been successful?
  Response: Exclusive-brand sites (e.g., Cody James, Hawx) serve as standalone storytelling and sales channels mainly to drive traffic into Boot Barn stores; no plans for wholesale or international expansion at this time.

• Question from Jay Sole (UBS): Do you plan on expanding the assortment, in other words, offering more categories on those websites and maybe you have room for in the Boot Barn stores just as a way to dimensionalize those brands?
  Response: The brand sites will carry full assortments (e.g., Cody James lines) to showcase depth that stores can't fully represent; we won't develop additional exclusive-only product for the sites.

• Question from Steven Zaccone (Citigroup Inc.): Can you help us think through the second half AUR — what should AUR be up in the second half — and why has pricing elasticity performed better than planned? Is fashion a tailwind and are you becoming more of a denim destination?
  Response: Expect AUR to be up roughly 2–3% in H2 with slowing transactions; mid-single-digit price increases on third-party brands haven't materially changed consumer behavior; demand appears need-based rather than fashion-driven.

• Question from Steven Zaccone (Citigroup Inc.): Can you help us think through the buying and occupancy leverage point for the second half and with the 12%–15% store growth rate do you see the buying and occupancy point coming down at some point?
  Response: Leverage point modestly above prior 7% (around ~7.5%) due to store timing and preopening rent; sustained 12–15% openings pressures leverage but could ease toward ~6% over a couple years as openings normalize.

• Question from Maksim Rakhlenko (TD Cowen): In your TAM and store analysis, can you speak to where you see the bigger opportunities for growth ahead regionally? And could we see stores potentially get a little bit bigger?
  Response: We will expand broadly across the U.S.; won't disclose regional detail for competitive reasons; store size will remain flexible and driven by available real estate and location opportunity.

• Question from Maksim Rakhlenko (TD Cowen): With changes to sourcing, exclusive brand mix and margin improvement, do you see an opportunity to reach mid-teens EBIT margin sooner and what's the latest thinking on margin as you approach 1,200 stores?
  Response: We're ahead of schedule—operating margin up ~120 bps over two years—and reaching 15% EBIT may come sooner, but timing depends on tariffs and macro; continued store growth and sourcing initiatives support margin upside.

• Question from Janine Hoffman Stichter (BTIG): Curious if you're seeing anything different regionally. And then anything you've seen in terms of weakness with the Hispanic consumer?
  Response: We observed widespread growth across geographies and have not seen meaningful changes in Hispanic customer shopping behavior.

• Question from Janine Hoffman Stichter (BTIG): Earlier you had said $8M of tariff headwinds; with changes since then and potential exclusive price moves, where does that number shake out now relative to the initial forecast?
  Response: $8M was a sizing metric; tariffs are fluid and P&L timing varies by when inventory sells; mitigation with factories complicates exact quantification—tariffs are incorporated into current margin guidance but no updated dollar figure provided.

• Question from Dylan Carden (William Blair): With the TAM/store rethink and AI initiatives, where does online penetration net out in your estimate and are there margin repercussions?
  Response: Online penetration should remain around ~10%; AI and other investments are driving growth but we don't expect a material tectonic shift in penetration or a major margin disclosure change from that level.

• Question from Jonathan Komp (Robert W. Baird): Could you talk about merchandising initiatives and denim—sustainability of momentum and ability to sustain double-digit performance?
  Response: Merchandising and inventory health improved (low clearance, full-price levels); denim remains a destination—men comped strongly, women's has more room—and denim will be emphasized through holiday.

• Question from Jonathan Komp (Robert W. Baird): As you set guidance for second-half comps, have you contemplated ranges of outcomes or potential tailwinds like stimulus?
  Response: We considered a wide range of outcomes but did not include any stimulus tailwind; guidance reflects a conservative haircut and remains flexible to macro developments.

• Question from Samuel Poser (Williams Trading): How many stores by quarter for the balance of the year—how many in Q3 and Q4?
  Response: 25 stores in Q3 and 15 stores in Q4.

• Question from Samuel Poser (Williams Trading): Are you applying the 'narrow and deep' tried-and-true assortment concept to other categories, especially boots, and where are you in that process?
  Response: Yes—top ~3–4% of styles (~1,000 SKUs) are 'tried-and-true'; in-stock levels on those are ~90% now and the approach has been extended beyond denim into other categories.

• Question from Samuel Poser (Williams Trading): Are you applying this by region/district and what was last year's in-stock on those tried-and-trues?
  Response: We focus down to individual store levels and acknowledge opportunity to better apply optimization at district/region levels; last year's in-stock on those styles was lower than the current ~90% (exact prior % not provided).

• Question from Christopher Nardone (BofA Securities): Are you seeing more elasticity in certain categories versus others—work showing less elasticity vs fashion?
  Response: Generally, mid-single-digit AUR increases didn't change demand; an exception was a small brand that raised prices ~15% and saw demand drop—elasticity appears limited except for outsized increases.

• Question from Christopher Nardone (BofA Securities): Are you seeing new emerging competition in Western category and will the holidays be more promotional relative to last year given third-party pricing actions?
  Response: Promotion cadence will be similar to last year; industry remains rational on promotions and we haven't seen significant new sizable entrants into the market.

• Question from Jeremy Hamblin (Craig-Hallum): As we look ahead to FY27, are there dynamics to consider on gross margin or SG&A that might change versus this year?
  Response: We expect dynamics to be broadly similar next year; buying/occupancy leverage points remain in range, SG&A may normalize back toward ~1.5–2% and quarter-to-quarter noise exists (e.g., lapping incentive reversals).

• Question from Jeremy Hamblin (Craig-Hallum): On exclusives—after the 6-week test and potential price moves—do you expect a similar step-up in exclusive penetration or will price increases limit growth?
  Response: Price tests didn't materially alter consumer behavior; long-term goal remains ~50% exclusive penetration over 4–5 years, growing ~100–200 bps per year; price adjustments post-holiday are tactical to protect margin.

• Question from Corey Tarlowe (Jefferies): How do you think about new stores and opportunity in new vs existing markets?
  Response: With national coverage now, new stores will continue across the country per our roadmap; we won't disclose market-level detail but remain confident in targeted openings across both new and existing markets.

• Question from Corey Tarlowe (Jefferies): What's driving the next leg of TAM growth—another customer segment or category expansion?
  Response: TAM expansion is driven by broader country-lifestyle adoption—Western and work category growth—and by increased penetration into mainstream denim segments.

• Question from Mitchel Kummetz (Seaport Research): Can you elaborate on drivers of recent e-commerce strength (e.g., Oct +24%)?
  Response: E‑comm growth is multi-factor: site search/AI enhancements (~100 bps), new exclusive-brand sites, improved paid acquisition (better ROAS enabling higher spend), and organic traffic gains (~400 bps).

• Question from Mitchel Kummetz (Seaport Research): Is there opportunity to create dedicated sites for other exclusive brands and what's the rollout plan?
  Response: Yes—Idyllwind already has a site; Cheyenne will launch post-holiday and additional brand sites will roll out thereafter.

• Question from Ashley Owens (KeyBanc): On work—has recovery completed or is there more runway, especially as work expanded in the TAM?
  Response: Not declaring victory: work boots have improved (now mid-single-digit comp in October after relay completion) and work apparel has comped mid-single digits for ~6 quarters; early signs are encouraging but monitoring continues.

• Question from Ashley Owens (KeyBanc): As store base scales rapidly, how are you protecting culture and in-store standards while managing operational complexity?
  Response: We scale via district structure (~10 stores per district), intensive on-the-job training, internal promotions, a strong real-estate and construction team, and careful hiring to preserve culture and operational standards.

Contradiction Point 1

Tariff Impact and Mitigation

It involves the company's approach to tariff-related challenges and its ability to mitigate their effects on margins, which are crucial for financial performance.

What's the latest on tariffs, and how do they compare to the initial forecast? - Janine Marie Hoffman Stichter (BTIG, LLC)

2026Q2: We have factored tariffs into our margin guide, and we feel good about the impact. Tariff mitigation strategies help, and we won't provide updates on specific numbers due to the fluid environment. - Jim Watkins(CFO)

How do you assess the competitive landscape amid tariff volatility? - Janine Marie Hoffman Stichter (BTIG, LLC)

2026Q1: First, while we believe we are well-positioned relative to the competition, the tariffs are hitting us, and they are getting in the way of profitability. - John Hazen(CEO)

Contradiction Point 2

Exclusive Brand Pricing Strategy

It involves the company's strategy for pricing its exclusive brands, which could impact customer behavior and brand perception.

Branded prices have increased, and exclusive brand pricing remains to be determined. Does this indicate a lack of mix shift toward exclusive brands? - Peter Keith (Piper Sandler & Co.)

2026Q2: The exclusive brand penetration is at 41%, but we have not seen consumer behavior change. The goods for the holiday season were sourced pre-tariff, and the current exclusives have a slower turn, allowing for margin preservation. - John Hazen(CEO & Director)

Have supplier price increases remained consistent with the mid-single-digit level reported three months ago? - Peter Jacob Keith (Piper Sandler)

2026Q1: The lower-for-longer pricing strategy involves holding prices until October or January post-holiday. The goal is to increase exclusive brand penetration gradually, aiming for 50% over the next 5 to 6 years, with 100 to 200 basis points increase annually. - John Hazen(CEO & Director)

Contradiction Point 3

Pricing Strategy and Consumer Behavior

It involves the company's approach to pricing strategies and consumer behavior, which directly affects sales and profitability.

Have branded prices increased while exclusive brand pricing remains undetermined? Does this mean there's no shift in mix to exclusive brands? - Peter Keith

2026Q2: The exclusive brand penetration is at 41%, but we have not seen consumer behavior change. The goods for the holiday season were sourced pre-tariff, and the current exclusives have a slower turn, allowing for margin preservation. - John Hazen(CEO)

Is the guidance implying demand declines exceed mid-single-digit percentages for items with mid-single-digit price increases? - Peter Keith

2025Q4: We're seeing elasticity of demand and softening of consumer demand due to price increases. Mid-single-digit increases from third-party vendors and macro-level increases are expected to soften demand in the second half. - John Hazen(CEO)

Contradiction Point 4

Work Boot Category Performance

It involves the performance of the work boot category, which is critical for overall sales and market positioning.

What drives the work boots category's strength, and are there opportunities for further acceleration? - Ashley Owens (KeyBanc Capital Markets)

2026Q2: Work boots had a mid-single-digit comp in October, with positive comps in the last two quarters. The relay of work boots has improved shopping experience, and we're encouraged but not ready to declare victory. - John Hazen(CEO & Director)

Can you sustain the positive trend, and are the results driven by easier comparisons or resolved past challenges? - Maksim Rakhlenko (TD Cowen)

2026Q1: From a negative 1 in Q1 last year to a positive 1 this quarter, work boots have improved. But there's still work to be done. I'm not declaring victory yet, but the initiative continues, and we're optimistic. - John Hazen(CEO & Director)

Contradiction Point 5

Exclusive Brands Growth Strategy

It involves the company's strategic focus on exclusive brands, which impacts product offerings, market positioning, and potential revenue streams.

What's your vision for expanding the exclusive brands beyond Boot Barn? Can they scale further? - Jay Sole

2026Q2: Our vision is to make them big as their own brands with direct-to-consumer offerings on exclusive websites. The sites drive customer excitement and bring them into Boot Barn stores for better brand awareness. - John Hazen(CEO)

With higher prices for third-party products, is there an opportunity to expand exclusive offerings? - Ashley Owens

2025Q4: We're cautious about entry-level boots. We aim to offer competitive pricing, not entry-level. Significant opportunities exist for exclusive brands to become more visible. - John Hazen(CEO)