Why Boot Barn Rocketed Higher This Week

Shares of Western-style retailer Boot Barn (NYSE: BOOT) rocketed 34% higher this week through 2 p.m. ET Friday, according to data from S&P Global Market Intelligence.

Boot Barn not only got a lift from the relaxation of tariffs on Chinese-imported goods announced Monday, but also held its fiscal fourth-quarter earnings release and call on Wednesday.

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While reported results actually missed expectations, Boot Barn's forward guidance for the year ahead and its encouraging commentary on tariff mitigation led to a massive recovery, following a three-month sell-off.

Investors look past a miss

For the quarter ended March 29, Boot Barn grew revenue 16.8% to $453.7 million on the back of 6% same-store sales growth. Earnings per share of $1.22 grew 27%, showing nice operating leverage.

Image source: Getty Images.

While those numbers seem really strong, especially in the apparel space, they actually fell short of analyst expectations. Likely, analysts had anticipated consumers rushing to buy boots and Western shirts to get ahead of higher tariffs.

However, management's forecast for the upcoming fiscal year appeared to encourage analysts and investors alike. CEO John Hazen guided for 65 to 70 new store openings, which would be above last year's 60 store openings and increase Boot Barn's store count by just under 15%. Hazen also stated he sees the opportunity for the company to double its store count over just the next "several years."

While management forecast just flat overall same-store sales at the midpoint for the year ahead, that was likely better than anticipated, given the low consumer confidence readings and fears of a tariff-induced recession.

Moreover, Hazen said the company would be able to halve its exposure to China in the upcoming fiscal year, with the 24% of exclusive brands sourced from China in fiscal 2025 falling to just 12% in 2026, while exiting the year at an even lower rate.

While the Trump administration and China agreed to roll back their retaliatory tariff rates for the next three months earlier this week on Monday, the tariff on Chinese-imported goods will still be 30%, down from 145%. So, the mitigation of exposure to China may have also helped sentiment.

Boot Barn is a winner, but comes at a price

Even after Boot Barn's rally, it's still about 12% below its all-time highs set back in January. So does that still make the stock a buy?

Given its solid performance, fashionable niche, and growth outlook, the company remains one of the best stories in retail. That being said, shares also come at a price, trading around 26.5 times the midpoint of this year's earnings guidance. That's pretty high for a fashion-oriented apparel retailer in an uncertain economic environment.

As of now, I'd say the opportunity for big gains in Boot Barn may have passed. However, it's a high-quality name investors should monitor in case the stock dips again.

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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool recommends Boot Barn. The Motley Fool has a disclosure policy.