Footwear Insight

January / February 2019

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48 • Footwear Insight ~ January / February 2019 WORKHORSES By Bob McGee n a Thursday afternoon in early December, the aisles of a Tractor Supply Co. store are bustling. Inside the space, a metal-like structure with concrete floors, country Christmas clas- sics are blaring over the sound system as customers walk through an eclectic mix of merchandise. Various couples are buying dog food for Rover, asking questions about the features of a home power generator and trying on Muck boots and assorted rainwear. On the right-hand side inside the front door, the retailer's soft goods department features cowboy hats, work boots, flannel shirts, gloves and socks. The Carhartt brand figures huge among all the merchandised clothing. This store isn't located near the dairy farms of the Upper Midwest, but in a suburb of Boston. Its popularity among locals – suburbanites in the densely populated Northeastm – speaks to the rising popularity of the rural lifestyle and the burgeoning appeal of work- wear. And retailers such as Tractor Supply Co. and others across the U.S. such as Blain's Farm & Fleet, Boot Barn and Work 'n Gear, are catering to these consumers very successfully. The four retailers highlighted here, in aggregate, control more than 2000 brick-and-mortar locations and have nascent e-commerce businesses. Two are publicly traded and two are regional players. All are aiming to cater to the working set, whether they are a Nebraskan rancher, a Texas oil and gas worker or an electric company line- man near Boston, a Michigan soybean farmer or someone who purely enjoys the rural lifestyle. l The Back Story: Founded in 1978, public on NYSE (BOOT) since October 2014, and based in Irvine, CA. Revenues grew at 24 percent between FY13 ($233 million) and FY17 ($678 million) as annual operating income grew to $46 million in FY18 from $9 million in FY13. Has had positive compa- rable store sales for six consecutive quarters, including a 11.3-percent increase in the recent Q2. CEO: James G. Conroy, a former Claire's Stores and Kurt Salmon Associates executive, has served as president, CEO and a director of the chain since 2012. Stores: 230 freestanding or strip center-based doors, averaging 11,400-square feet, across 31 states. Boot Barn says it has the potential to double its U.S. store base, partially through acquisitions of small regional chains. Over the last seven years, the chain has added 85 doors through expansion or tuck-in acquisition. A push into the Texas market has included purchases of Baskins, a 30-door chain across the Lone Star State and Louisiana, in May 2013; Sheplers, 25 stores in key Texas markets and Denver; and Country Outfitter and Wood's Boots (family-owned, four store chain in Midland and Odessa, TX) in 2017. An estimated 85 percent of merchan- dise at Boot Barn is sold at full price. The assortment is divided between Western boots and apparel (70 percent) and Work/Other (30 percent), approximately $203.4 million in FY18. The retailer generates 83 percent of topline from stores, 17 percent from e-commerce where it presently operates six sites —,,,,, Key Footwear Brands: Carhartt, Danner, Chippewa, UGG, Wolverine, Timberland Pro, Dr. Martens, Magnum, Georgia Boot, Rocky, John Deere and Carolina. During the fall, Boot Barn launched its own Hawx work brand for footwear and apparel that is projected to generate 1000 basis points of merchandise margin above vendor brands and snatch sales away from them as well. Uniqueness: Considered a "niche player" in the work segment by two branded vendors we spoke with, but a solid regional account. Steadily opening larger stores in Texas, where it thinks work wear growth will benefit greatly from the number of blue-collar employees, the oil and gas recovery segment, construction spending, commercial accounts and ongoing work safety regulations. l Boot Barn 4 Retail Chains Who Know How to Make it Work. Steadily opening larger stores in Texas. RETAIL

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