Should Investors Buy BOOT as Growth Outpaces Near-Term Margin Risks?

BOOT's Store Runway Supports Durable Growth

Boot Barn’s store expansion remains a key driver of its long-term growth strategy. The company ended the first quarter of fiscal 2027 with 566 stores across 49 states after opening 27 locations during the quarter. Management continues to target approximately 1,200 U.S. stores over time, leaving significant room for geographic expansion.

The economics of new stores remain attractive. New locations are expected to generate roughly $3.2 million in first-year sales, require about $1.7 million of total net investment and deliver a payback period of approximately 1.8 years. Management also noted that new stores continue to perform ahead of expectations across the country.

With 70 new store openings planned for fiscal 2027, expansion should remain an important contributor to revenue growth. The company’s fiscal 2027 sales outlook of $2.58 billion to $2.63 billion reflects continued contributions from the expanding footprint.

Boot Barn's Comps Show Broad-Based Demand

Boot Barn’s recent sales trends suggest growth is not dependent on store openings alone. First-quarter fiscal 2027 consolidated same-store sales increased 4.7%, including a 3.8% gain in retail store same-store sales and a 13.4% increase in e-commerce same-store sales.

The company benefited from broad category demand. Men’s Western boots posted mid-single-digit growth, men’s and women’s apparel increased at a high-single-digit pace led by denim, and work boots delivered high-single-digit growth for the fifth consecutive quarter. This category diversity reduces reliance on any single merchandise group.

Boot Barn’s omnichannel model is also supporting customer engagement. E-commerce growth was driven by double-digit gains at BootBarn.com, while store-based fulfillment helped expand inventory access and improve the shopping experience across digital and physical channels.

BOOT's Margin Gains Face Temporary Tailwinds

Margin improvement remains a key earnings driver, although investors need to separate structural gains from temporary benefits. First-quarter merchandise margin expanded 220 basis points, helped by 250 basis points from tariff refunds and 60 basis points of product-margin expansion, partly offset by freight pressures.

Excluding tariff refunds, product margin improved because of better buying economies of scale, discounted inventory purchases, stronger full-price selling and improved assortment execution. Management expects fiscal 2027 merchandise margin to expand approximately 60 basis points excluding refunds.

However, tariff refunds will not provide the same level of support throughout the year. The first quarter included a $14.7 million tariff refund benefit, contributing 38 cents to earnings per share. For fiscal 2027, management expects tariff refunds to add $17.8 million to merchandise margin and approximately 46 cents to earnings per share, with the benefit declining sharply after the first quarter.

At the same time, occupancy costs tied to new-store growth remain a near-term pressure point. Buying, occupancy and distribution center costs deleveraged by 90 basis points in the first quarter, primarily due to expenses associated with store expansion.

Boot Barn's Valuation Balances Growth and Risk

BOOT’s valuation reflects expectations for continued earnings growth. The stock trades at a forward P/E multiple of 17.6X, while the company is expected to deliver double-digit sales growth and earnings growth above 20% in fiscal 2027. 

Compared with broader apparel and footwear companies such as Levi Strauss & Co. LEVI and Wolverine World Wide, Inc. WWW, Boot Barn’s valuation reflects expectations for faster growth, supported by its store expansion opportunity, comparable sales momentum and focus on western and workwear categories.

Management’s outlook calls for fiscal 2027 earnings per share of $9.23, representing 26% growth, supported by merchandise margin expansion, SG&A leverage and continued sales growth.

The valuation debate depends on whether investors view Boot Barn as a retailer with a long runway for expansion or a business facing near-term normalization after unusually favorable margin conditions. Store growth, category momentum and estimate revisions support a premium valuation, while slower traffic trends and temporary tariff benefits could limit upside if execution weakens.

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BOOT's Signals Favor Selective Optimism

Boot Barn’s Zacks indicators remain favorable. The stock currently carries a Zacks Rank #1 (Strong Buy), with a VGM Score of B, Value Score of B, Growth Score of B and Momentum Score of C. The lower Momentum Score of C indicates that recent share-price trends have been less supportive than the company’s fundamental outlook. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The favorable Zacks Rank reflects improving earnings expectations, while the Style Scores provide additional insight into the stock’s valuation, growth characteristics and recent price trends. Zacks Style Scores are designed to complement the Zacks Rank by evaluating value, growth and momentum factors that can influence stock performance.

For BOOT, the combination of estimate revisions, store expansion and operating momentum supports a constructive view. Still, investors should monitor comparable sales trends, margin performance after tariff refunds fade and the pace of exclusive-brand growth. The company’s growth profile remains attractive, but near-term execution will determine whether the valuation continues to hold.

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This article originally published on Zacks Investment Research (zacks.com).

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