1、2019 ANNUAL REPORTDearShareholders,ThispastyearwasanotherstrongyearofgrowthforBootBarn.Wecontinuedtobuildourbrand,strengthentheconnectiontoourcustomerbaseandexpandthereachofourstorestomoreregionsofthecountry.Fromafinancialperspective,theteamdeliveredoutstandingresults.Ourtotalsalesgrewbynearly15%for
2、theyearasweaddednewlocationsandachieved10%growthinsamestoresales.Thissalesgrowthwasaccompaniedbysolidimprovementinmerchandisemarginandresultedinanearly40%growthinoperatingincome.Wefeelfortunatetobeabletocontinuetobuckthetrendintheretailindustrywithourretailstoresnowshowingpositivesamestoresalesgrowt
3、hineachofthelasteightquarters.WearecontinuingtobuildanationalpresencebyfocusingontheexecutionofeachofBootBarnsfourstrategicinitiatives,including:1.DrivingsamestoresalesgrowthOur10%samestoresalesgrowthfortheyearreflectsbroadbasedgrowthacrossnearlyallmerchandisecategoriesandgeographicregions.Ahealthym
4、acroeconomicenvironmentandcontributionsfromtheentireBootBarnteamdrovethesalesincreasesduringtheyear.Ouryearoveryearsalesgrowthinworkapparel,workbootsandwomenswesternapparelwereespeciallystrong.Inourstores,weaddedsalesandcustomerservicetrainingaswellasproducteducationforallofourstoreassociates.Fromam
5、arketingstandpoint,wehavecontinuedtoupgradeourbrandaestheticandfurthersegmentedourcustomersintoourwestern,work,andWonderwestcategoriesinordertoprovideourcustomersmorerelevantmessaging.Wealsoimprovedourproductassortmentasourmerchantsaddednewstyles,broadersizeranges,andgreatermerchandisevariety.2.Stre
6、ngtheningouromnichannelleadershipOverthepastcoupleofyearsweimplementedseveralomnichannelinitiatives,includingtheintegrationofourecommercesitesontoacommonplatformwhileconsolidatingthefulfillmentofinventoryforeachofoursitesintoanupgradedfulfillmentcenterinWichita,Kansas.Thesechangeshaveenabledustooper
7、ateourecommercebusinessmoreefficientlyandhaveallowedustoincorporateacompellingdigitalexperienceinsideourretailstores.Today,ourstorecustomerscanseekauthoritativeservicefromourstoreassociatesandiftheycannotfindthespecificitemorsizetheyneed,theycanorderseamlesslyfromourWHIP(WeHaveItPromise)tabletwhicha
8、ccessesourbroaderecommerceassortmentplustheentireselectionfrommostofourmajorvendorsdirectly.Thisenablesourstorestofulfillnearlyeverycustomersneedsandhavetheiritemsshippedtotheirhouseortothestoreforpickup.Wecannowseamlesslyacceptreturnsforonlinepurchasesinallofourstores.Inadditiontothesenewtoplinegro
9、wthinitiatives,wehavefocusedintenselyonimprovingtheprofitabilityofouronlinebusinessresultinginamaterialimprovementinourEBITrate.3.IncreasingthepenetrationofourexclusivebrandportfolioandexpandingourmerchandisemarginSalesofourexclusivebrandsrepresented16.2%oftotalsalesinFiscal2019,animprovementonthepr
10、ioryearofmorethan250basispoints.Inthefall,welaunchedIdyllwind,fueledbyMirandaLambert,HawxandCodyJamesWork,cappinganexcitingyearofgrowthinourexclusivebrandsbusiness.Wehaveseenpositivereceptivitytoeachofthesebrands,whichcontributedtoourgrowthlateintheyear.Weexpectthesenewbrandstocontinuetodrivegrowthi
11、nbothsalesandmarginaswemovefurtherintofiscalyear2020.Thesenewbrandsaregreatadditionstoourexclusivebrandportfolio,whichisledbyCodyJamesandShyanne,ourlargestexclusivebrands,andtwoofthetopfivesellingbrandsinthecompany.Notonlyareweexcitedaboutourthreenewbrands,butallofourexclusivebrandshavetheabilitytoe
12、xpandinbreadthofstyles,depthofinventory,andoverallstorecount.Wewillcontinuetoinvestinthisareawithourfocusonproducinghighqualitymerchandisethatsupplementstheassortmentfromourthirdpartybrands.4.ExpandingourstorebaseAddingnewstoresinattractivemarketsisanimportantdriverofgrowthinsalesandmarketshareforBo
13、otBarn.Duringthispastyearweadded12newBootBarnstoresand5acquiredstores,bringingourtotalcountto240locations.Wecontinuetobelievethatwecanexpandto500storesnationwideandplantogrownewunitsby10%inFiscalYear2020.Weremainfocusedonaugmentingournewstoredevelopmentwithopportunistictuckinacquisitionsthatenableus
14、toquicklyenteranewmarket,andwillcontinuetotargeta3yearpaybackorbetteronnewstores.Fiscal2019wasafantasticyearforus,andIamverypleasedwiththesustainedmomentuminthebusinessaswehavemovedintofiscal2020.Therearemanyopportunitiesaheadtocontinuetodrivesamestoresales,strengthenouromnichannelexperience,growexc
15、lusivebrandsandexpandournationalfootprintandIamconfidentintheteamthatwehaveinplacetocontinuetoexecuteonourgrowthstrategies.Sincerely,Jim UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C.20549 FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE AC
16、T OF 1934 For the fiscal year ended March 30,2019 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number:001-36711 BOOT BARN HOLDINGS,INC.(Exact name of registrant as specified in its charter)Delaware(State or
17、other jurisdiction of incorporation or organization)90-0776290(I.R.S.Employer Identification No.)15345 Barranca Pkwy Irvine,CA 92618(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code:(949)453-4400 Securities registered pursuant to Section 12(b)of the A
18、ct:Title of each class Trading Symbol Name of each exchange on which registered Common Stock,$0.0001 par value BOOT New York Stock Exchange Securities registered pursuant to Section 12(g)of the Act:None Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 o
19、f the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Ac
20、t of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data
21、File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerat
22、ed filer,a non-accelerated filer,a smaller reporting company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accel
23、erated filer Smaller reporting company Emerging growth company If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Ex
24、change Act.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No The aggregate market value of the registrants common stock held by non-affiliates of the registrant as of the end of its most recently completed second fiscal quarter was approxima
25、tely$802.8 million.Shares held by each officer,director and person owning more than 10%of the outstanding voting and non-voting stock have been excluded from this calculation because such persons may be deemed to be affiliates of the registrant.This determination of potential affiliate status is not
26、 necessarily a conclusive determination for other purposes.Shares held include shares of which certain of such persons disclaim beneficial ownership.The number of outstanding shares of the registrants common stock,$0.0001 par value,as of May 22,2019 was 28,356,159.DOCUMENTS INCORPORATED BY REFERENCE
27、 Portions of the Registrants Proxy Statement for the 2019 Annual Meeting of Stockholders,to be filed pursuant to Regulation 14A within 120 days after the end of the 2019 fiscal year,are incorporated by reference into Part III of this Form 10-K.TABLE OF CONTENTS Page PART I Item 1.Business 3 Item 1A.
28、Risk Factors 13 Item 1B.Unresolved Staff Comments 32 Item 2.Properties 33 Item 3.Legal Proceedings 33 Item 4.Mine Safety Disclosures 33 PART II Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities 34 Item 6.Selected Consolidated Financial
29、Data 35 Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations 39 Item 7A.Quantitative and Qualitative Disclosures About Market Risk 54 Item 8.Consolidated Financial Statements and Supplementary Data 55 Item 9.Changes in and Disagreements with Accountants on Acco
30、unting and Financial Disclosure 85 Item 9A.Controls and Procedures 85 Item 9B.Other Information 87 PART III Item 10.Directors,Executive Officers and Corporate Governance 88 Item 11.Executive Compensation 88 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholde
31、r Matters 88 Item 13.Certain Relationships and Related Transactions,and Director Independence 88 Item 14.Principal Accounting Fees and Services 88 PART IV Item 15.Exhibits and Financial Statement Schedules 88 1 Forward-Looking Statements This annual report contains forward-looking statements that ar
32、e subject to risks and uncertainties.All statements other than statements of historical or current fact included in this annual report are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,as amended,and Section 21E of the Securities Exchange Act of 1934,as a
33、mended(the“Exchange Act”).Forward-looking statements refer to our current expectations and projections relating to,by way of example and without limitation,our financial condition,liquidity,profitability,results of operations,margins,plans,objectives,strategies,future performance,business and indust
34、ry.You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts.These statements may include words such as“anticipate”,“estimate”,“expect”,“project”,“plan”,“intend”,“believe”,“may”,“might”,“will”,“could”,“should”,“can have”,“likely”and other
35、 words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events,but not all forward-looking statements contain these identifying words.For example,all statements we make relating to our estimated and projected
36、 earnings,revenues,costs,expenditures,cash flows,growth rates and financial results,our plans and objectives for future operations,growth or initiatives,strategies or the expected outcome or impact of pending or threatened litigation are forward-looking statements.We believe the risks attending any
37、forward-looking statements include,but are not limited to,those described under“Risk Factors”and include,among other things:risks related to levels of consumer spending and economic conditions;risks related to our ability to maintain and enhance a strong brand image and compete effectively;risks rel
38、ated to conditions in the foreign countries in which our products are manufactured and other risks of international trade;risks related to our growth,including opening new stores in new and existing geographic markets;risks related to our distribution model;risks related to our dependence on third-p
39、arty suppliers;risks related to our exclusive product offerings;risks related to retention of our key executive management and other talent required for our business,as well as costs related to wage and benefits;risks related to our indebtedness;risks related to our management information systems;ri
40、sks relating to our e-commerce business;risks relating to the seasonality of our business;risks relating to celebrity endorsements of our products;risks related to intellectual property;and litigation costs and the outcomes of litigation.We derive many of our forward-looking statements from our curr
41、ent operating budgets and forecasts,which are based upon detailed assumptions.While we believe that our assumptions are reasonable,we caution that it is very 2 difficult to predict the impact of known factors,and it is impossible for us to anticipate all factors that could affect our actual results.
42、For these reasons,we caution readers not to place undue reliance on these forward-looking statements.See“Risk Factors”for a more complete discussion of the risks and uncertainties mentioned above and for a discussion of other risks and uncertainties.It is not possible for our management to predict a
43、ll risks,nor can we assess the impact of all factors on our business or the extent to which any factor,or combination of factors,may cause actual results to differ materially from those contained in any forward-looking statements we may make.All forward-looking statements attributable to us are expr
44、essly qualified in their entirety by these cautionary statements as well as others made in this annual report and in our other Securities and Exchange Commission(“SEC”)filings and public communications.You should evaluate all forward-looking statements made by us in the context of these risks and un
45、certainties.We caution you that the risks and uncertainties identified by us may not be all of the factors that are important to you.Furthermore,the forward-looking statements included in this annual report are made only as of the date hereof.Our forward-looking statements do not reflect the potenti
46、al impact of any future acquisitions,mergers,dispositions,joint ventures or investments that we may make.We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information,future events or otherwise,except as otherwise required by law.Fiscal Year We
47、operate on a fiscal calendar that results in a 52-or 53-week fiscal year ending on the last Saturday of March unless April 1st is a Saturday,in which case the fiscal year ends on April 1st.In a 52-week fiscal year,each quarter includes thirteen weeks of operations;in a 53-week fiscal year,the first,
48、second and third quarters each include thirteen weeks of operations and the fourth quarter includes fourteen weeks of operations.The data presented contains references to fiscal 2019,fiscal 2018,and fiscal 2017,which represent our fiscal years ended March 30,2019,March 31,2018 and April 1,2017,respe
49、ctively.Fiscal 2019 was a 52-week period,fiscal 2018 was a 52-week period and fiscal 2017 was a 53-week period.3 PART I Item 1.Business.Our Company We are the largest lifestyle retail chain devoted to western and work-related footwear,apparel and accessories in the United States.With 240 stores in 3
50、3 states as of March 30,2019,we have approximately three times as many stores as our nearest direct competitor that sells primarily western and work wear,and believe we have the potential to double our domestic store base.Our stores,which are typically freestanding or located in strip centers,averag
51、e 10,600 selling square feet and feature a comprehensive assortment of brands and styles,coupled with attentive,knowledgeable store associates.We target a broad and growing demographic,ranging from passionate western and country enthusiasts to workers seeking dependable,high-quality footwear and app
52、arel.We strive to offer an authentic,one-stop shopping experience that fulfills the everyday lifestyle needs of our customers and,as a result,many of our customers make purchases in both the western and work wear sections of our stores.Our store environment,product offering and marketing materials r
53、epresent the aesthetics of the true American West,country music and rugged,outdoor work.These threads are woven together in our motto,“Be True”,which communicates the genuine and enduring spirit of the Boot Barn brand.Our product offering is anchored by an extensive selection of western and work boo
54、ts and is complemented by a wide assortment of coordinating apparel and accessories.Many of the items that we offer are basics or necessities for our customers daily lives and typically represent enduring styles that are not meaningfully impacted by changing fashion trends.Accordingly,approximately
55、70%of our store inventory is kept in stock through automated replenishment programs.The vast majority of our merchandise in stores,on and is sold at full price and is not subject to typical inventory markdowns.Sheplers E-commerce,defined below,is more promotional and offers a greater assortment of p
56、roducts at discounted prices.Our boot selection,which comprises approximately one-third of each stores selling square footage space,is merchandised on self-service fixtures with western boots arranged by size and work boots arranged by style and function.This allows us to display the full breadth of
57、 our inventory and deliver a convenient shopping experience.We also carry market-leading assortments of denim,western shirts,cowboy hats,belts and belt buckles,western-style jewelry and accessories.Our western assortment includes many of the industrys most sought-after brands,such as Ariat,Dan Post,
58、Justin,Lucchese,Miss Me,Montana Silversmiths,Stetson,Resistol and Wrangler.Our work assortment includes rugged footwear,outerwear,overalls,denim and shirts for the most physically demanding jobs where durability,performance and protection matter,including safety-toe boots and flame-resistant and hig
59、h-visibility clothing.Among the top work brands sold in our stores are Carhartt,Georgia Boot,Timberland Pro and Wolverine.Our merchandise is also available on our e-commerce websites.Boot Barn was founded in 1978 and,over the past 41 years,has grown both organically and through successful strategic
60、acquisitions of competing chains.We have rebranded and remerchandised the acquired chains under the Boot Barn banner.We believe that our business model and scale provide us with competitive advantages that have contributed to our consistent and strong financial performance,generating sufficient cash
61、 flow to support national growth.Recent Acquisitions Sheplers Acquisition On June 29,2015,we acquired Sheplers,Inc.and Sheplers Holding Corporation(collectively with Sheplers,Inc.“Sheplers”),a western lifestyle company with 25 retail locations across the United States and an e-commerce business.We r
62、efer to the acquisition as the“Sheplers Acquisition”.We financed the Sheplers Acquisition with borrowings under a senior secured asset-based revolving credit facility for which Wells Fargo Bank,National Association is agent(the“June 2015 Wells Fargo Revolver”),and a syndicated senior secured term lo
63、an for which GCI Capital Markets LLC is agent(the“2015 Golub Term Loan”).Through the Sheplers Acquisition,we added eight new markets,expanded both our Texas(Dallas and San Antonio)and Denver markets,and greatly increased our omni-channel capabilities as Sheplers had a leading e-commerce platform(“Sh
64、eplers E-commerce”).We rebranded 19 of the 25 retail stores acquired through the Sheplers Acquisition,and closed the remaining six stores during fiscal 2016.4 Country Outfitter Asset Acquisition On February 16,2017,we acquired all rights and interest in the website and tradename,along with the assoc
65、iated social media platforms.We additionally purchased a customer email list and assumed Country Outfitters merchandise credits.The Country Outfitter e-commerce website sells primarily country and western fashion merchandise.The Country Outfitter assets were purchased for$1.8 million of cash and ass
66、umed liabilities.The Company operates as a website separate from its other e-commerce sites.Woods Boots Asset Acquisition On September 11,2017,we acquired assets from Woods Boots,a four-store family-owned retailer with stores in Midland and Odessa,Texas.As part of the transaction,we purchased the in
67、ventory,entered into new leases with the stores landlord,offered employment to the Woods Boots team at all four store locations and assumed certain customer credits.Based on the fair value analysis of the net assets acquired and liabilities assumed,the inventory was valued at$2.8 million,and the cus
68、tomer credits were valued at less than$0.1 million.Lone Star Western&Casual LLC On April 24,2018,Boot Barn,Ipleted the acquisition of Lone Star Western&Casual LLC(“Lone Star”),an individually owned retail company with three stores in Waxahachie,Corsicana and Athens,Texas.As part of the transaction,B
69、oot Barn,Inc.purchased the inventory,entered into new leases with the stores landlord and offered employment to the Lone Star team at all three store locations.The primary reason for the acquisition of Lone Star was to further expand the Companys retail operations in Texas.The cash consideration pai
70、d for the acquisition was$4.4 million.Drysdales,Inc.On July 3,2018,Boot Barn,Ipleted the acquisition of assets from Drysdales,Inc.(“Drysdales”),a retailer with two stores in Tulsa,Oklahoma.As part of the transaction,Boot Barn,Inc.purchased the inventory,entered into new leases with the stores landlo
71、rd,offered employment to the Drysdales team at both store locations and assumed certain customer credits.The primary reason for the acquisition of Drysdales was to further expand the Companys retail operations in Oklahoma.The cash consideration paid was$3.8 million.Our Competitive Strengths We belie
72、ve the following strengths differentiate us from our competitors and provide a solid foundation for future growth:Powerful lifestyle brand.The Boot Barn brand is built on western lifestyle values that are core to American culture.Our deep understanding of this lifestyle enables us to create long-las
73、ting relationships with our customers who embody these ideals.Our brand is highly visible through our sponsorship of local and national rodeos,stock shows,concerts and country music artists.We sell our products through pop-up shops at several of the largest events that we sponsor.We believe these gr
74、assroots marketing efforts make our brand synonymous with the western lifestyle,validate our brands authenticity and establish Boot Barn as the trusted specialty retailer for all of our customers everyday needs.Strong e-commerce positioning.We offer a compelling shopping experience to our customers,
75、including 240 brick-and-mortar stores combined with our e-commerce websites consisting primarily of , and .B offers a compelling every-day low price shopping experience catered towards a lifestyle customer with western roots and a strong work influence.S offers a broad value proposition assortment t
76、argeted to a more promotional customer.C has a curated assortment appealing to a more fashion-based country lifestyle customer.Each of our e-commerce sites has distinct brand positioning and provides a differentiated shopping experience to our customers.5 Fast growing specialty retailer of western a
77、nd work wear in the U.S.Our broad geographic footprint,which currently spans 33 states,provides us with significant economies of scale,enhanced supplier relationships,the ability to recruit and retain high quality store associates and the ability to reinvest in our business at levels that we believe
78、 exceed those of our competition.Loyal customer base.Our customers come to us for many aspects of their everyday footwear and clothing needs because of the breadth and availability of our product offering.Our customer loyalty program,B Rewarded,enhances our connection and relationship with our custo
79、mers.Our loyalty program has grown rapidly since its inception in fiscal 2011 and as of March 30,2019 includes approximately 4.0 million members who have purchased merchandise from us in the last three fiscal years.The majority of our sales are made to these customers.We leverage this database,which
80、 provides useful information about our customers,to enhance our marketing activities across our stores and e-commerce websites,refine our merchandising and planning efforts and assist in our selection of sites for new stores.Differentiated shopping experience.We deliver a one-stop shopping experienc
81、e that engages our customers and,we believe,fulfills their lifestyle needs.Our stores are designed to create an inviting and engaging experience and include prominent storefront signage,a simple and easy-to-shop layout and a large and conveniently arranged self-service selection of boots.We offer si
82、gnificant inventory breadth and depth across a range of boots,apparel and accessories.Additionally,all of our stores are equipped with touch screen devices that allow our customers to access millions of additional boots,apparel and other items from our e-commerce warehouse inventory as well as the i
83、nventory at most of our larger third-party vendors.We believe that our strong,long-lasting supplier relationships enhance our ability to provide a compelling merchandise assortment with a strong in-stock position both in-store and online.Our knowledgeable store associates are passionate about our me
84、rchandise and deliver a high level of service to our customers.These elements help promote customer loyalty and drive repeat visits.Compelling merchandise assortment and strategy.We believe we offer a diverse merchandise assortment that features the most sought-after western and work wear brands,wel
85、l-regarded niche brands and exclusive private brands across a range of merchandise categories including boots,apparel and accessories.We have a core assortment of styles that serves as a foundation for our merchandising strategy and we augment and tailor that assortment by region to cater to local p
86、references.In fiscal 2019,the vast majority of our merchandise sales in stores,on and were at full price,which we believe demonstrates the strength of our brand and the less discretionary nature of our product offering.Sheplers E-commerce is more promotional and offers a greater assortment of produc
87、ts at discounted prices.Portfolio of exclusive private brands.We have leveraged our scale,merchandising experience and customer knowledge to launch a portfolio of private brands exclusive to us,including Shyanne,Cody James,Moonshine Spirit by Brad Paisley,Idyllwind Fueled by Miranda Lambert,Hawx,Cod
88、y James Work,American Worker,El Dorado and BB Ranch.Our private brands are currently available in stores,on , and and offer high-quality western and work boots as well as apparel and accessories for men,ladies and kids.Each of our private brands,which address product and price segments that we belie
89、ve are underserved by third-party brands,offers exclusive products to our customers and achieves better merchandise margins than the third-party brands that we carry.Customer receptivity and demand for our private brands have been strong,demonstrated by the increasing penetration of private brands a
90、nd sales momentum across our store base and e-commerce websites.Versatile store model with compelling unit economics.We have successfully opened and currently operate stores that generate strong cash flow,consistent store-level financial results and an attractive return on investment across a variet
91、y of geographies,markets,store sizes and location types.We operate stores in markets characterized as agribusiness centers and ranch regions,and in other various geographies throughout the United States.Our stores are also successful in small,rural towns and major metropolitan areas.Our new store mo
92、del requires an average net cash investment of approximately$0.8 million and targets an average payback period of three years.Our lean operating structure,coupled with our strong supplier relationships,has allowed us to grow with minimal supply chain investments as most of our products ship directly
93、 from our suppliers to our stores.We believe that our proven retail model and attractive unit economics support our ability to grow our store footprint in both new and existing markets across the U.S.6 Highly experienced management team and passionate organization.Our senior management team has exte
94、nsive experience across all key retail disciplines and has been instrumental in developing a robust and scalable infrastructure to support our growth.In addition to playing an important role in developing our long-term growth initiatives,our senior management team embraces the genuine and enduring q
95、ualities of the western and work lifestyle and has created a positive culture of enthusiasm and entrepreneurial spirit which is shared by team members throughout our entire organization.Our Growth Strategies We are pursuing several strategies to continue our profitable growth,including:Continuing om
96、ni-channel leadership.Our growing national footprint,social media following and broader marketing efforts drive traffic to our stores and e-commerce websites.We operate our e-commerce websites as an alternative to shopping in the stores,which allows us to reach customers outside our geographic footp
97、rint.We continue to make investments in both online and in-store advertising,aimed at increasing traffic to our e-commerce websites,which reached over 62 million total visits in fiscal 2019 compared to over 56 million total visits in fiscal 2018,and increasing the amount of merchandise purchased by
98、customers who visit our websites,while improving the shopping experience for our customers.Additionally,all of our stores are equipped with touch screen devices that allow our customers to access millions of additional boots,apparel and other items from our e-commerce warehouse inventory as well as
99、the inventory at most of our larger third-party vendors,purchase these items in store,and,in most cases,receive free shipping.We also have touch screen devices that allow customers to browse our in-store assortment and select an item that meets their functional requirements and preferences.We furthe
100、r continue to make investments in our e-commerce infrastructure,including adding automation to our warehouses to support expanding e-commerce growth.Our e-commerce sales as a portion of total consolidated net sales were 16.9%and 17.3%in fiscal 2019 and fiscal 2018,respectively.Driving same store sal
101、es growth.We believe that we can continue to grow our same store sales by increasing our brand awareness,driving additional traffic to our stores and increasing the amount of merchandise purchased by customers while visiting our stores.Our management team has launched several initiatives to accelera
102、te growth,enhance our store associates selling skills,drive store-level productivity and increase customer engagement through our loyalty program.Building our private brand portfolio.We believe we can achieve gross margin enhancement by increasing the penetration of our private brand sales.As of Mar
103、ch 30,2019,our private brands include Shyanne,Cody James,Moonshine Spirit by Brad Paisley,Idyllwind Fueled by Miranda Lambert,Hawx,Cody James Work,American Worker,El Dorado and BB Ranch,and are sold in our stores and on our e-commerce websites.Each of our private brands,which address product and pri
104、ce segments that we believe are underserved by third-party brands,offers exclusive products to our customers and achieves better merchandise margins than the third-party brands that we carry.Expanding our store base.Driven by our compelling store economics,we believe that there is a significant oppo
105、rtunity to expand our store base in the U.S.During fiscal 2019,we opened 12 stores,acquired and rebranded three Lone Star stores and acquired two Drysdales stores.We typically rebrand acquired stores within twelve months from the date of acquisition.Based on an extensive analysis,we believe that we
106、have the potential to double our domestic store base of 240 stores as of March 30,2019.We currently plan to target store openings in new and existing markets and in adjacent and underserved markets that we believe will be receptive to our concept.Over the past several years,we have made investments
107、in personnel,information technology,warehouse infrastructure and e-commerce platforms to support the expansion of our operations.Leveraging our economies of scale.We believe that we have a variety of opportunities to increase the profitability of our business over time.Our ability to leverage our in
108、frastructure and drive store-level productivity due to economies of scale is expected to be a primary driver of our improvement in profitability.We intend to continually refine our merchandise mix and increase the penetration of our private brands to help differentiate us from our competitors and ac
109、hieve higher merchandise margins.We also expect to capitalize on additional economies of scale in purchasing and sourcing as we grow our geographic footprint and online presence.7 Enhancing brand awareness.We intend to enhance our brand awareness and customer loyalty in a number of ways,such as cont
110、inuing to grow our store base and our online and social media initiatives.We use broadcast media such as radio,television and outdoor advertisements to reach customers in new and existing markets.We also maintain our strong market position through our grassroots marketing efforts,including sponsorsh
111、ip of rodeos,stock shows and other western industry events,as well as our association with country music,including partnerships with Brad Paisley and Miranda Lambert and up-and-coming country musicians.We have an effective social media strategy with high customer engagement,as evidenced by our stron
112、g following on Facebook,Instagram,Snapchat and Twitter.Our Market Opportunity We participate in the large,growing and highly fragmented western and work wear markets of the broader apparel and footwear industry.We offer a variety of boots,apparel and accessories that are basics or necessities for ou
113、r customers daily lives.Many of our customers are employed in the agriculture,oil and gas,manufacturing and construction industries,and are often country and western enthusiasts.We believe that growth in the western wear market has been and will continue to be driven by the growth of western events,
114、such as rodeos,the popularity of country music and the continued strength and endurance of the western lifestyle.We believe that growth in the work wear market has been and will continue to be driven by increasing activity in the construction sector and the return of domestic manufacturing.Additiona
115、lly,government regulations for workplace safety have driven and,we believe,will continue to drive,sales in specific categories,such as safety-toe boots and flame-resistant and high-visibility clothing for various industrial and outdoor occupations.Our Sales Channels During fiscal 2019,we continued t
116、o enhance our omni-channel capabilities.Our current omni-channel presence consists of both brick-and-mortar stores as well as an e-commerce platform,consisting primarily of , and .Our stores As a lifestyle retail concept,our stores offer a broad array of merchandise to outfit an entire family,while
117、working during the week,relaxing on the weekend,or dressing up for an evening out.Our stores are easy to navigate with clear sight lines to all major product categories.Our preferred store layout has ladies and childrens apparel on the right side of the store and mens western and mens work apparel o
118、n the left side.Our basic denim is usually merchandised on shelving placed on the exterior walls,while our premium-priced,more stylized denim and clothing are prominently displayed on floor fixtures and mannequins.We utilize the space in the front of the store for accessories such as hats,belts,jewe
119、lry,handbags,home merchandise,gifts and various impulse purchase items.Boots,our signature category,anchor the rear of the store with an expansive assortment displayed on fixtures up to six shelves in height.We offer virtually all of our boots in pairs out on the sales floor.To reflect the typical p
120、urchasing decision process of each of our customer segments,we arrange all western boots by size and all work boots by brand.While our knowledgeable and friendly store associates are readily available to assist our customers,the store design facilitates a self-service shopping experience.Our stores
121、are generally located in or near high visibility,power and large neighborhood shopping centers with trade areas of five or more miles.Our stores average 10,600 selling square feet and feature a comprehensive assortment of brands and styles,coupled with attentive,knowledgeable store associates.Our st
122、ores are designed and managed to drive profitability and,we believe,create a compelling customer shopping experience.During fiscal 2019,we opened 12 stores and acquired three Lone Star stores and two Drysdales stores.As of March 30,2019,our retail footprint included 240 stores in the U.S.Two of our
123、stores are operated under the“American Worker”name.Our American Worker stores primarily feature work-related footwear,apparel and accessories.We do not currently intend to open additional American Worker stores.8 The following table shows the number of stores in each of the 33 states in which we ope
124、rated as of March 30,2019:Number of State stores Alabama 2 Arizona 14 California 47 Colorado 13 Florida 8 Georgia 2 Idaho 3 Illinois 1 Indiana 2 Iowa 4 Kansas 4 Kentucky 3 Louisiana 6 Minnesota 2 Mississippi 1 Missouri 2 Montana 4 Nebraska 2 Nevada 10 New Mexico 7 North Carolina 4 North Dakota 6 Okl
125、ahoma 5 Oregon 3 South Carolina 3 South Dakota 3 Tennessee 9 Texas 54 Utah 2 Virginia 1 Washington 3 Wisconsin 1 Wyoming 9 Total 240 E-commerce Our e-commerce websites are a natural extension of our brand and in-store experience,allowing us to further build awareness in our current markets and reach
126、 customers not served by our current geographic footprint.During fiscal 2019,we had over 62 million total visits to our websites and we sold merchandise to customers in all 50 states.Approximately 4.5%of our total e-commerce revenue for fiscal 2019 was generated from customers outside of the United
127、States.Such foreign-source revenue constituted approximately 0.8%of our overall net sales in fiscal 2019.Our growing national footprint and broader marketing efforts drive traffic to our website,which in turn also drives traffic to our stores.We believe that many customers,especially those shopping
128、for boots,browse online at and then visit our stores to make their purchases to ensure a proper fit.As a multi-channel retailer,we are implementing technology initiatives that integrate in-store and e-commerce platforms into one seamless customer experience.As an example,last year we implemented in-
129、store touch-screen devices to expand the product 9 offering available to our in-store customers,including additional styles,colors and sizes not carried in the store.In fiscal 2019,we continued to enhance customer service with our buy online,pick up in-store function.The and businesses are every-day
130、 low price models,while is more promotional and offers a greater assortment of products at discounted prices.For all of our e-commerce brands,we communicate information on current promotions and upcoming events on our e-commerce websites,which helps drive purchases online and traffic to our stores.W
131、e continue to improve follow-up email communication related to order confirmations,as well as offer boot care and other accessories associated with boot purchases.Store expansion opportunities and site selection We have substantial experience in opening stores in new and existing geographic markets.
132、During the last three fiscal years,we have successfully added,on a net basis,32 new stores through a combination of organic growth and strategic acquisitions.We evaluate potential new locations in light of a variety of criteria,including local demographics and population,the areas industrial base,th
133、e existing competitive landscape,occupancy costs,store visibility,traffic,environmental considerations,co-tenancy and accessibility.We also consider a regions total store potential to help ensure efficiencies in store management and media spending.Most of our stores are in high-traffic and highly vi
134、sible locations and many have freeway signage.Stores located in metropolitan areas are typically established in high-density neighborhoods,and stores located in rural areas are typically established near highways or major thoroughfares.Based on an extensive internal analysis of our current customer
135、base,store performance drivers and competitor penetration,we believe that the U.S.market supports the ability to double our current domestic store base.We utilized multiple methods for measuring market size,including a review of demographic and psychographic factors on a state-by-state basis.We supp
136、lemented that data by analyzing our share of the geographic markets in which we currently operate and extrapolating that share to new geographic markets.Based on our market analysis,we have created a regional and state-by-state development plan to strategically extend our store portfolio.Careful con
137、sideration was given to operational constraints and merchandising differences in new and existing markets,while balancing the relevant risks associated with opening stores in those markets.Over the past several years,we have invested in construction and real estate resources,information technology a
138、nd warehouse infrastructure to support the expansion of our operations.In addition,we have developed a model for new stores that assumes a leased 8,000 to 12,000 square foot space,requires an average net cash investment of approximately$0.8 million and targets an average payback period of three year
139、s.We believe that under this model we can grow our store base by approximately 10%annually over the next several years without substantially modifying our current resources and infrastructure.Store Management and Training We have a strong culture focused on providing superior customer service.We bel
140、ieve that our store associates and managers form the foundation of the Boot Barn brand.We recruit people who are welcoming,friendly and service-oriented,and who often live the western lifestyle or have a genuine affinity for it.We have a positive culture of enthusiasm and entrepreneurial spirit thro
141、ughout the Company,which is particularly strong in our stores.Given the lifestyle nature of the Boot Barn brand,we have developed a natural connection between our customers and our store associates.Given the importance of both fit and function in selling much of our product,we utilize a well-develop
142、ed sales,service and product training program.We provide over 20 hours of training for new store associates,as well as ongoing product,sales and leadership training.Additionally,we provide home office and supplier-led workshops on products,selling skills and leadership at our annual three-day store
143、manager meeting.Our store management training programs emphasize building skills that lead to effective store management and overall leadership.Our store managers are responsible for hiring and staffing our stores and are empowered with the sales,customer service and operational tools necessary to m
144、onitor employee and store performance.We believe that our continued investments in training our employees help drive loyalty from our store associates and,in turn,our customers.We are committed to providing the right merchandise solution for each of our customers based on the ultimate end use of our
145、 products.Our goal is to train 10 each of our store associates to be able to guide a customer throughout a store and provide helpful knowledge on product fit,functions and features across our departments.Rather than rely heavily on sales commissions and supplier-specific incentive programs,we utiliz
146、e a system under which the vast majority of a store associates compensation is based on an hourly wage.We believe that this produces a team-oriented culture,creates a less pressured selling environment and helps ensure that our store associates are focused on the specific needs of our customers.Merc
147、handising Strategy We seek to establish our stores as a one-stop destination for western and work-related footwear,apparel and accessories.Our merchandising strategy is to offer a core assortment of products,brands and styles by store,department and price point.We augment and tailor this assortment
148、by region to cater to local preferences such as toe profiles for western boots,styling for western apparel,and functions and features for work apparel and work boots depending on climate and the local industries served.In addition,we actively maintain a balance between third party brands and our own
149、 brands that,we believe,offers our customers a compelling mix between selection,product and value.Our business is moderately seasonal and as a result our revenues fluctuate from quarter to quarter.The third quarter of our fiscal year,which includes the Christmas shopping season,has historically prod
150、uced higher sales and disproportionately higher operating results than the other quarters of our fiscal year.Historically,neither the western nor the work component of our business has been meaningfully impacted by fashion trends or seasonality.We believe that many of our customers are driven primar
151、ily by utility and brand,and our best-selling styles tend to be items that carry over from year to year with only minor updates.On average,over the last three fiscal years we have generated approximately 33%of our net sales during our third fiscal quarter.We have a minimal amount of seasonal merchan
152、dise that could necessitate significant markdowns.This allows us to implement automated replenishment systems for approximately 70%of our store merchandise,meaning that,as sales are captured in a stores point of sale system,recommended purchase orders are systematically generated for approval by our
153、 merchandising group,ensuring our strong in-stock inventory position.As a result,demand and margins for the majority of our products are fairly predictable,which reduces our inventory risk.Our products During fiscal 2019,our products contributed to overall sales in the following manner:Gender:Mens m
154、erchandise accounted for approximately 65%of our sales with the balance being ladies,kids and unisex merchandise.Styling:Western styles comprised approximately 70%of our sales,with work-related and other styles making up the balance.Product category:Boots accounted for just over half of our sales,wi
155、th apparel comprising an additional 34%and the balance consisting of hats,gifts,accessories and home merchandise.Throughout our long history we have maintained collaborative relationships with our key suppliers.These relationships,coupled with our scale,have allowed us to carry a wide selection of p
156、opular and niche brands,including Ariat,Carhartt Workwear,Cinch,Corral,Dan Post,Georgia Boot,Justin Boots,Keen,Lucchese,Old Gringo,Rocky,Stetson,Timberland,Tony Lama,Twisted X,Wolverine and Wrangler.In many cases,we are one of the largest accounts of our suppliers and have become important as the la
157、rgest specialty retailer of western and work wear in the U.S.As a result,we have several advantages relative to our competitors,including increased buying power and access to first-to-market or limited edition products.This provides us with competitive differentiation and the ability to generate hig
158、her merchandise margins.11 Our scale has also allowed us to introduce our own proprietary western wear brands,Shyanne and Cody James,which offer high-quality western boots,shirts,jackets and hats for women and men,respectively.We also have an exclusive license agreement with country music star Brad
159、Paisley,who designs a collection of boots,apparel and accessories for us,Moonshine Spirit By Brad Paisley,that reflect his lifestyle and personality.In fiscal 2018 we entered into a new partnership with country music artist Miranda Lambert,to develop a lifestyle brand,Idyllwind,inspired by her music
160、 and creative talents,which includes boots,apparel and accessories.In fiscal 2019 we developed two additional exclusive brands,Hawx and Cody James Work.These brands offer high quality work wear and work boots to our customer.We develop private brand merchandise for our home and gift category under t
161、he name BB Ranch.We created these brands to address segments that we believe are underserved by third-party brands.We have a dedicated product development team that designs and sources merchandise from suppliers around the world.These product assortments are exclusive to Boot Barn and are merchandis
162、ed and marketed as if they were third-party brands both in our stores and on our e-commerce websites.In fiscal 2019,sales from our private brand products accounted for approximately 16.2%of our consolidated sales including our stores and e-commerce websites.These private brands differentiate us from
163、 our competitors and produce higher incremental merchandise margins than the third-party brands that we carry.Planning and allocation We believe that we have assembled a talented and experienced team in both the buying and merchandise planning functions.The experience of our team is critical to unde
164、rstanding the technical requirements of our merchandise based on region and use,such as the appropriate safety toe regulations for work boots in a particular industry.The team is constantly managing our replenishment model to ensure a high in-stock position by stock keeping unit,or SKU,on a store-by
165、-store basis.Our merchandising team optimizes the product selection,mix and depth across our stores by analyzing demand on a market-by-market basis,continuously reviewing our sell-through results,communicating with our suppliers about local market preferences and new products,shopping our competitor
166、s stores,and immersing themselves in trade and western lifestyle events including rodeos,country music concerts and other industry-specific activities.Our merchandising team also makes frequent visits to our stores and partners with our regional,district and store managers to refine the merchandise
167、assortment by region.Our team has demonstrated the ability to effectively manage merchandising,pricing and promotional strategies across our store base.To keep the product assortment fresh,we reposition a small portion of our merchandise on the sales floor every month.To drive traffic to our stores
168、and create in-store energy and excitement,we execute a promotional calendar that showcases select brands or merchandise categories throughout the year and rotates on a monthly cadence.Our promotional activity also enables us to consistently engage with our customers both online and in-store,as well
169、as through our various marketing media.Our ability to optimize the price for each merchandise category on a market-by-market basis,helps us to maximize profitability while remaining price competitive.While our promotional activity is important for customer engagement,the vast majority of our merchan
170、dise sales in stores,on and were at full price,which we believe demonstrates the strength of our brand and the less discretionary nature of our product offering.Sheplers E-commerce is more promotional and offers a greater assortment of products at discounted prices.Marketing and Advertising Our mark
171、eting strategy is designed to build brand awareness,acquire new customers,enhance customer loyalty and drive in-store and online transactions.We customize our marketing mix for each of our markets and purposes.For example,during store grand openings we engage in additional local community outreach a
172、nd advertise in local print media in select markets.We primarily use the following forms of media:Radio and televisionWe purchase spots on both national and regional radio stations,primarily country music channels,to draw customers to nearby locations.We also maintain relationships with several coun
173、try music artists in order to capitalize on the popularity of country music,using our stores and marketing communications to promote their album sales or concerts.In return,these country music artists often make in-store appearances or mention us on social media and occasionally give private perform
174、ances.We also purchase television spots to create awareness in new markets and occasionally help support grand openings of new stores.12 Direct mailWe conduct several direct mail campaigns,and during fiscal 2019,we sent out approximately 5.1 million mailers,ranging in size from postcards to catalogs
175、 of approximately 50 pages.E-mailWe e-mail our e-commerce customers and members of our B Rewarded loyalty program as part of our cross-channel effort to drive traffic to our stores and websites.We sent over 1.0 billion e-mails in fiscal 2019.Social mediaWe also have a marketing strategy that has pro
176、duced a fast-growing social media presence,as evidenced by our strong following on Facebook,Instagram,Snapchat and Twitter.Our posts celebrate country and western life and humor,and routinely get thousands of likes,hundreds of shares and dozens of comments each.Event sponsorshipWe typically sponsor
177、community-based western events each year within the regional footprint of our store locations.Houston Livestock Show and Rodeo,a well-known 20-day celebration of western heritage,is one of our most prominent sponsorships and attracts more than two million visitors to Houston,Texas,where we operate e
178、ighteen stores in the area.We also sponsor the San Antonio Stock Show and Rodeo,an 18-day event with more than two million attendees.Other prominent sponsorships include Cheyenne Frontier Days,the largest outdoor rodeo in the U.S.,the Professional Rodeo Cowboys Association and related National Final
179、s Rodeo in Las Vegas,Nevada,Professional Bull Riders and the National High School Rodeo Association,which supports rodeos for competitors in high school and junior high school.At more prominent events,we often set up pop-up shops as large as 9,000 square feet,which allow participants to purchase our
180、 merchandise.Distribution Our suppliers ship most of our in-store merchandise directly to our stores and a portion of our e-commerce merchandise to our e-commerce customers.The remaining units are either shipped from our distribution center located in Fontana,California,or from the distribution cent
181、er in Wichita,Kansas,that we acquired as a result of the Sheplers Acquisition.Our distribution center in California distributes our private brand and volume discount purchases to our stores,and supplies inventory for sponsored events and new store openings.Our Wichita,Kansas distribution center fulf
182、ills our e-commerce orders.In accordance with our automated replenishment programs,third-party suppliers typically deliver merchandise to our stores daily,ensuring in-stock merchandise availability and a steady flow of new inventory for our customers.Competition The retail industry for western and w
183、ork wear is highly fragmented and characterized by primarily regional competitors.We estimate that there are thousands of independent specialty stores scattered across the country.We believe that we compete primarily with smaller regional chains and independents on the basis of product quality,brand
184、 recognition,price,customer service and the ability to identify and satisfy consumer demand.In addition,as we expand our e-commerce sales presence,we are competing to an increasing degree with online retailers and the e-commerce offerings of traditional competitors.We also compete with farm supply s
185、tores and,to a lesser degree,mass merchants,some of which are significantly larger than us,but most of which realize only a small percentage of their total revenues from the sale of western and work wear.We have approximately three times as many stores as our nearest direct competitor that sells pri
186、marily western and work wear and we believe that our nationally recognized lifestyle brand,economies of scale,breadth and depth of inventory across a variety of categories,strong in-stock position,portfolio of authentic private brands,enhanced supplier partnerships,exclusive offerings and ability to
187、 recruit and retain high quality store associates favorably differentiates us from our competitors.Information technology We have made significant investments to create a scalable information technology platform to support growth in our retail and e-commerce sales without further near-term investmen
188、ts in our information technology infrastructure.We use an Enterprise Resource Planning system,which we now refer to as Aptos Retail for integrated point-of-sale,merchandising,planning,sales audit,customer relationship management,inventory control,loss prevention,purchase order management and busines
189、s intelligence.We operate Aptos Retail on a software-as-a-service platform.This approach allows us to regularly upgrade to the most recent software release with minimal operational disruption,nominal 13 systems infrastructure investment and a relatively small in-house information technology departme
190、nt.Aptos Retail also interfaces with our accounting system.We have also invested in an information technology platform for our e-commerce websites.At the end of fiscal 2017,we upgraded our e-commerce platform.This upgrade of our e-commerce platform acts as the foundation for all of our digital store
191、 fronts.Intellectual property We regard our trademarks as having value and as being important to our marketing efforts.We have registered our trademarks in the U.S.,including our brand name“Boot Barn”and our private label brands.We also have a registered trademark for the“Sheplers”and“Country Outfit
192、ter”brand names.We have sought foreign trademark protection by registering the Boot Barn trademark in Hong Kong.We also own the domain name for our primary e-commerce websites, and .Our policy is to pursue registration of our trademarks and to rigorously defend their infringement by third parties.Ou
193、r employees As of March 30,2019,we employed approximately 1,300 full-time and 2,700 part-time employees,of which approximately 600 were employed at our Store Support Center and distribution center and approximately 3,400 were employed at our stores.The number of employees,especially part-time employ
194、ees,fluctuates depending upon our seasonal needs.None of our employees are represented by a labor union and we consider our relationship with our employees to be good.We have never experienced a strike or significant work stoppage.Regulation and legislation We are subject to labor and employment law
195、s,laws governing truth-in-advertising,privacy laws,safety regulations and other laws at the federal,state and local level,including consumer protection regulations,such as the Consumer Product Safety Improvement Act of 2008,that regulate retailers and govern the promotion and sale of merchandise and
196、 the operation of stores and warehouse facilities.We monitor changes in these laws and believe that we are in material compliance with all applicable laws.We source many of our private brand products from outside the U.S.The U.S.Foreign Corrupt Practices Act and other similar anti-bribery and anti-k
197、ickback laws and regulations generally prohibit companies and their intermediaries from making improper payments to non-U.S.officials for the purpose of obtaining or retaining business.Our policies and our supplier compliance agreements mandate compliance with applicable law,including these laws and
198、 regulations.Item 1A.Risk Factors You should carefully consider the risks and uncertainties described below,together with all of the other information in this annual report,including our consolidated financial statements,and related notes included elsewhere in this annual report.If any of the follow
199、ing risks were realized,our business,financial condition,results of operations and prospects could be materially and adversely affected.In that event,the price of our common stock could decline,and you could lose part or all of your investment.14 Risks Related To Our Business Our sales could be seve
200、rely impacted by decreases in consumer spending due to declines in consumer confidence,local economic conditions in our markets or changes in consumer preferences.We depend upon consumers feeling confident about spending discretionary income on our products to drive our sales.Consumer spending may b
201、e adversely impacted by economic conditions,such as consumer confidence in future economic conditions,interest and tax rates,employment levels,salary and wage levels,the availability of consumer credit,the level of housing,energy and food costs and general business conditions.These risks may be exac
202、erbated for retailers like us who focus on specialty footwear,apparel and accessories.Our financial performance is particularly susceptible to economic and other conditions in California,Texas and other states where we have a significant number of stores.Many of our stores operate in geographic area
203、s where the local economies depend to a significant degree on oil and other commodity extraction,and many of our customers are employed in these industries.Our financial performance is accordingly susceptible to economic and other conditions relating to output and employment in these areas.Our finan
204、cial performance also is impacted by conditions in the construction sector,domestic manufacturing and the transportation and warehouse sectors,the growth of which we believe is an important driver of our work wear business.In addition,our financial performance may be negatively affected if the popul
205、arity of the western and country lifestyle subsides,or if there is a general trend in consumer preferences away from boots and other western or country products in favor of another general category of footwear or attire.If this were to occur or if periods of decreased consumer spending persist,our s
206、ales could decrease,which could have a material adverse effect on our business,financial condition,results of operations and prospects.Our business largely depends on a strong brand image,and if we are unable to maintain and enhance our brand image,particularly in markets where we have newly acquire
207、d stores and in new markets where we have limited brand recognition,we may be unable to increase or maintain our level of sales.We believe that our brand image and brand awareness have contributed significantly to the success of our business.We also believe that maintaining and enhancing our brand i
208、mage,particularly in markets where we have newly acquired stores and in new markets where we have limited brand recognition,is important to maintaining and expanding our customer base.Our ability to successfully integrate newly acquired and newly opened stores into their surrounding communities,to e
209、xpand into new markets or to maintain the strength and distinctiveness of our brand image in our existing markets will be adversely impacted if we fail to connect with our target customers.Our efforts to rebrand newly acquired stores could result in reduced sales and profitability of such stores.Mai
210、ntaining and enhancing our brand image may require us to make substantial investments in areas such as merchandising,marketing,store operations,community relations,store graphics and employee training,which could adversely affect our cash flow and which may ultimately be unsuccessful.Furthermore,our
211、 brand image could be jeopardized if we fail to maintain high standards for merchandise quality,if we fail to comply with local laws and regulations or if we experience negative publicity or other negative events that affect our image and reputation.Some of these risks may be beyond our ability to c
212、ontrol,such as the effects of negative publicity regarding our suppliers.Failure to successfully market and maintain our brand image in new and existing markets could harm our business,results of operations and financial condition.We face intense competition in our industry and we may be unable to c
213、ompete effectively.The retail industry for western and work wear is highly fragmented and characterized by primarily regional competitors.We estimate that there are thousands of independent specialty stores scattered across the country.We believe that we compete primarily with smaller regional chain
214、s and independent stores on the basis of product quality,brand recognition,price,customer service and the ability to identify and satisfy consumer demand.In addition,as we expand our e-commerce sales presence,we are competing to an increasing degree with online retailers and the e-commerce offerings
215、 of traditional competitors.We also compete with farm supply stores and,to a lesser degree,mass merchants.Competition with some or all of these retailers could require us to lower our prices or risk losing customers.In addition,significant or unusual promotional activities by our competitors may for
216、ce us to respond in-kind and adversely impact our operating cash flow and gross profit.As a result of these factors,current and future competition could have a material adverse effect on our financial condition and results of operations.15 Many of the mass merchants and online retailers that sell so
217、me western or work wear products have greater financial,marketing and other resources than we currently do,and in the case of online retailers,lower overhead and overall cost structure.Therefore,these competitors may be able to devote greater resources to the marketing and sale of these products,gen
218、erate national brand recognition or adopt more aggressive pricing policies than we can,which would put us at a competitive disadvantage if they decide to expand their offerings of these product lines.Moreover,we do not possess exclusive rights to many of the elements that comprise our in-store exper
219、ience and product offerings.Our competitors may seek to emulate facets of our business strategy,including our in-store experience,which could result in a reduction of some competitive advantages or special appeal that we might possess.In addition,most of our suppliers sell products to us on a non-ex
220、clusive basis.As a result,our current and future competitors may be able to duplicate or improve on some or all of the in-store and e-commerce product offerings that we believe are important in differentiating our stores,our e-commerce offerings and our customers shopping experience.If our competito
221、rs were to duplicate or improve on some or all of our in-store experience,or our in-store and e-commerce product offerings,our competitive position and our business could suffer.Most of our merchandise is produced in foreign countries,making the price and availability of our merchandise susceptible
222、to international trade risks and other international conditions.The majority of our private brand products are manufactured in foreign countries,including Mexico and China.In addition,we purchase most of our third-party branded merchandise from domestic suppliers that have a large portion of their m
223、erchandise made in foreign countries.The countries,specifically Mexico and China,in which our merchandise currently is manufactured or may be manufactured in the future could become subject to trade restrictions imposed by the U.S.,including increased tariffs or quotas,embargoes and customs restrict
224、ions,which could increase the cost or reduce the supply of products available to us and have a material adverse effect on our business,financial condition and results of operations.Recently,uncertainty has increased regarding tax and trade policies,border adjustments,tariffs and government regulatio
225、ns affecting trade between the U.S.and other countries,such as Mexico and China.This includes the possibility of the imposition of tariffs or penalties on products manufactured outside the United States,including several tariffs on a variety of products from China imposed or threatened by the Office
226、 of the U.S.Trade Representative in 2018 ranging from 10-25%.China has already announced a plan to impose tariffs on a wide range of American products in retaliation for such American tariffs.There is also a concern that the imposition of additional tariffs by the United States could result in the a
227、doption of tariffs by other countries as well.Such tariffs on imports from foreign countries,as well as changes in tax and trade policies such as a border adjustment tax or disallowance of certain tax deductions for imported merchandise,if enacted,could materially increase our manufacturing costs,th
228、e costs of our imported merchandise or our income tax expense,which would have a material adverse effect on our financial condition and results of operations.Any tariffs by China or other foreign countries on imports of our products could also adversely affect our international e-commerce sales.Any
229、increase in our manufacturing costs,the cost of our merchandise or limitation on the amount of merchandise we are able to purchase,or any decrease in our international e-commerce sales,could have a material adverse effect on our financial condition and results of operations.Our failure to adapt to n
230、ew challenges that arise when expanding into new geographic markets could adversely affect our ability to profitably operate those stores and maintain our brand image.Our expansion into new geographic markets could result in competitive,merchandising,distribution and other challenges that are differ
231、ent from those we encounter in the geographic markets in which we currently operate.In addition,to the extent that our store count increases,we may face risks associated with market saturation of our product offerings and locations.Our suppliers may also restrict their sales to us in new markets to
232、the extent they are already saturating that market with their products through other retailers or their own stores.There can be no assurance that any newly opened stores will be received as well as,or achieve net sales or profitability levels comparable to those of,our existing stores in the time pe
233、riods estimated by us,or at all.If our stores fail to achieve,or are unable to sustain,acceptable net sales and profitability levels,our business may be materially harmed,we may incur significant costs associated with closing those stores and our brand image may be negatively impacted.16 Our continu
234、ed growth depends upon successfully opening new stores as well as integrating any acquired stores,and our failure to successfully open new stores or integrate acquired stores could negatively affect our business and stock price.We have grown our store count rapidly in recent years,both organically a
235、nd through strategic acquisitions of competing chains.Our ability to successfully open and operate new and acquired stores is subject to a variety of risks and uncertainties,such as:identifying suitable store locations,the availability of which is beyond our control;obtaining acceptable lease terms;
236、sourcing sufficient levels of inventory;selecting the appropriate merchandise to appeal to our customers;hiring,training and retaining store employees;assimilating new store employees into our corporate culture;marketing the new stores locations and product offerings effectively;avoiding constructio
237、n delays and cost overruns in connection with the build out of new stores;avoiding other costs in opening new stores,such as rebranding acquired locations and environmental liabilities;managing and expanding our infrastructure to accommodate growth;and integrating the new and acquired stores with ou
238、r existing buying,distribution and other support operations.Our failure to successfully address these challenges could have a material adverse effect on our financial condition and results of operations.We opened or acquired 17 stores in fiscal 2019,9 stores in fiscal 2018,and 12 stores in fiscal 20
239、17.We plan to open or acquire approximately 25 new stores in fiscal 2020.However,there can be no assurance that we will open or acquire the planned number of new stores in fiscal 2020 or thereafter,or that any such stores will be profitable.This expansion will place increased demands on our operatio
240、nal,managerial and administrative resources.These increased demands could cause us to operate our existing business less effectively,which in turn could cause the financial performance of our existing stores to deteriorate.In addition,we currently plan to open some new stores within existing markets
241、.Some of these new stores may open close enough to our existing stores that a segment of customers will stop shopping at our existing stores and instead shop at the new stores,causing sales and profitability at those existing stores to decline.If this were to occur with a number of our stores,this c
242、ould have a material adverse effect on our financial condition and results of operations.In addition to opening new stores,we may acquire and rebrand stores.Acquiring and integrating stores involves additional risks that could adversely affect our growth and results of operations.Newly acquired stor
243、es may be unprofitable and we may incur significant costs and expenses in connection with any acquisition including systems integration and costs relating to remerchandising and rebranding the acquired stores.Integrating newly acquired chains or individual stores may divert our senior managements at
244、tention from our core business.Our ability to integrate newly 17 acquired stores will depend on the successful expansion of our existing financial controls,distribution model,information systems,management and human resources and on attracting,training and retaining qualified employees.As we expand
245、our business,we may be unable to generate significant amounts of cash from operations.As we expand our business,we will need significant amounts of cash from operations to pay our existing and future lease obligations,build out new store space,purchase inventory,pay personnel,and,if necessary,furthe
246、r invest in our infrastructure and facilities.We primarily rely on cash flow generated from existing stores and our e-commerce businesses to fund our current operations and our growth.It typically takes several months and a significant amount of cash to open a new store.For example,our new store mod
247、el requires an average net cash investment of approximately$0.8 million.If we continue to open a large number of stores relatively close in time,the cost of these store openings and the cost of continuing operations could reduce our cash position.An increase in our net cash outflow for new stores co
248、uld adversely affect our operations by reducing the amount of cash available to address other aspects of our business.We cannot assure you that any new stores that we open will become profitable in the anticipated time frame,or at all.Not all of our stores are currently profitable.We cannot assure y
249、ou that our existing stores,which may be currently profitable,will not cease to be profitable in the future.If our business does not generate sufficient cash flow from operations to fund these activities,and sufficient funds are not otherwise available from our current credit facility or future cred
250、it facilities,we may need additional equity or debt financing.If such financing is not available to us on satisfactory terms,our ability to operate and expand our business or to respond to competitive pressures would be limited and we could be required to delay,curtail or eliminate planned store ope
251、nings.Moreover,if we raise additional capital by issuing equity securities or securities convertible into equity securities,your ownership may be diluted.Any debt financing we may incur may impose covenants that restrict our operations,and will require interest payments that would create additional
252、cash demands and financial risk for us.Any significant change in our distribution model could initially have an adverse impact on our cash flows and results of operations.Our suppliers ship most of our in-store merchandise directly to our stores and a portion of our e-commerce merchandise to our e-c
253、ommerce customers.In the future,as part of our long-term strategic planning,we may change our distribution model to increase the amount of merchandise that we self-distribute through a centralized distribution center.Changing our distribution model to increase distributions from a centralized distri
254、bution center to our stores and customers would initially involve significant capital expenditures,which would increase our borrowings and interest expense or temporarily reduce the rate at which we open new stores.In addition,if we are unable to successfully integrate a new distribution model into
255、our operations in a timely manner,our supply chain could experience significant disruptions,which could reduce our sales and adversely impact our results of operations.If we fail to maintain good relationships with our suppliers or if our suppliers are unable or unwilling to provide us with sufficie
256、nt quantities of merchandise at acceptable prices,our business and operations may be adversely affected.Our business is largely dependent on continued good relationships with our suppliers,including suppliers for our third-party branded products and manufacturers for our private brand products.Durin
257、g fiscal 2019,merchandise purchased from our top three suppliers accounted for approximately 24%,8%and 7%of our sales,respectively.We operate on a purchase order basis for our private brand and third-party branded merchandise and do not have long-term written agreements with our suppliers.Accordingl
258、y,our suppliers can refuse to sell us merchandise,limit the type or quantity of merchandise that they sell to us,enter into exclusivity arrangements with our competitors or raise prices at any time,which could have an adverse impact on our business.Deterioration in our relationships with our supplie
259、rs could have a material adverse impact on our business,and there can be no assurance that we will be able to acquire desired merchandise in sufficient quantities on terms acceptable to us in the future.Also,some of our suppliers sell products directly from their own retail stores or e-commerce webs
260、ites,and therefore directly compete with us.These suppliers may decide at some point in the future to discontinue supplying their merchandise to us,supply us less desirable merchandise or raise prices on the products they do sell us.If we lose key suppliers and are unable to find alternative supplie
261、rs to provide us with substitute merchandise for lost products,our business may be adversely affected.18 Our efforts to improve and expand our exclusive product offerings may be unsuccessful,and implementing these efforts may divert our operational,managerial,financial and administrative resources,w
262、hich could harm our competitive position and reduce our revenue and profitability.We currently seek to grow our business by improving and expanding our exclusive product offerings,which includes introducing new brands and growing and expanding our existing brands.The principal risks to our ability t
263、o successfully improve and expand our product offering are that:introduction of new products may be delayed,which may allow our competitors to introduce similar products in a more timely fashion,which could hinder our ability to be viewed as the exclusive provider of certain western and work apparel
264、 brands and items;the third-party suppliers of our exclusive product offerings may not maintain adequate controls with respect to product specifications and quality,which may lead to costly corrective action and damage to our brand image;if our expanded exclusive product offerings fail to maintain a
265、nd enhance our distinctive brand identity,our brand image may be diminished and our sales may decrease;and these efforts may divert our managements attention from other aspects of our business and place a strain on our operational,managerial,financial and administrative resources,as well as our info
266、rmation systems.In addition,our ability to successfully improve and expand our exclusive product offerings may be affected by economic and competitive conditions,changes in consumer spending patterns and changes in consumer preferences.These efforts could be abandoned,cost more than anticipated and
267、divert resources from other areas of our business,any of which could impact our competitive position and reduce our revenue and profitability.We purchase merchandise based on sales projections and our purchase of too much or too little inventory may adversely affect our overall profitability.We must
268、 actively manage our purchase of inventory.We generally order our seasonal and private brand merchandise several months in advance of it being received and offered for sale.If there is a significant decrease in demand for these products or if we fail to accurately predict consumer demand,including b
269、y disproportionately increasing the penetration of our private brand merchandise,we may be forced to rely on markdowns or promotional sales to dispose of excess inventory.This could have an adverse effect on our margins and operating income.Conversely,if we fail to purchase a sufficient quantity of
270、merchandise,we may not have an adequate supply of products to meet consumer demand,thereby causing us to lose sales or adversely affecting our customer relationships.Any failure on our part to anticipate,identify and respond effectively to changing consumer demand and consumer shopping preferences c
271、ould adversely affect our results of operations.A rise in the cost of fabric,raw materials,labor or transportation could increase our cost of merchandise and cause our results of operations and margins to decline.Fluctuations in the price,availability and quality of fabrics and raw materials,such as
272、 cotton and leather,that our suppliers use to manufacture our products,as well as the cost of labor and transportation,could have adverse impacts on our cost of merchandise and our ability to meet our customers demands.In particular,because key components of our products are cotton and leather,any i
273、ncreases in the cost of cotton or leather may significantly affect the cost of our products and could have an adverse impact on our cost of merchandise.We may be unable to pass all or any of these higher costs on to our customers,which could have a material adverse effect on our profitability.19 If
274、our suppliers and manufacturers fail to use acceptable labor or other practices,our reputation may be harmed,which could negatively impact our business.We purchase merchandise from independent third-party suppliers and manufacturers.If any of these suppliers have practices that are not legal or acce
275、pted in the U.S.,consumers may develop a negative view of us,our brand image could be damaged and we could become the subject of boycotts by our customers or interest groups.Further,if the suppliers violate labor or other laws of their own country,these violations could cause disruptions or delays i
276、n their shipments of merchandise.For example,much of our merchandise is manufactured in China and Mexico,which have different labor practices than the U.S.We do not independently investigate whether our suppliers are operating in compliance with all applicable laws and therefore we rely upon the sup
277、pliers representations set forth in our purchase orders and supplier agreements concerning the suppliers compliance with such laws.In addition,regulatory developments regarding the use of“conflict minerals,”certain minerals originating from the Democratic Republic of Congo and adjoining countries,co
278、uld affect the sourcing and availability of raw materials used by suppliers and subject us to costs associated with the regulations,including for the diligence pertaining to the presence of any conflict minerals used in our products,possible changes to products,processes or sources of our inputs,and
279、 reporting requirements.If our goods are manufactured using illegal or unacceptable labor practices in these countries,or other countries from which our suppliers source the products we purchase,our ability to supply merchandise for our stores without interruption,our brand image and,consequently,ou
280、r sales may be adversely affected.If we lose key management personnel,our operations could be negatively impacted.We depend upon the leadership and experience of our executive management team.If we are unable to retain existing management personnel who are critical to our success,it could result in
281、harm to our supplier and employee relationships,the loss of key information,expertise or know-how and unanticipated recruitment and training costs.The loss of the services of any of our key management personnel could have a material adverse effect on our business and prospects,and could be viewed ne
282、gatively by investors and analysts,which could cause the price of our common stock to decline.We may be unable to find qualified individuals to replace key management personnel on a timely basis,without incurring increased costs or at all.We do not maintain key person life insurance covering any emp
283、loyee.If we lose the services of any of our key management personnel or we are unable to attract additional qualified personnel,we may be unable to successfully manage our business.If we cannot attract,train and retain qualified employees,our business could be adversely affected.Our success depends
284、upon the quality of the employees we hire.We recruit people who are welcoming,friendly and service-oriented,and who often live the western lifestyle or have a genuine affinity for it.Employees in many positions must have knowledge of our merchandise and the skill necessary to excel in a customer ser
285、vice environment.The turnover rate in the retail industry is typically high and finding qualified candidates to fill positions may be difficult.Our planned growth will require us to hire and train even more personnel.If we cannot attract,train and retain corporate employees,district managers,store m
286、anagers and store associates with the qualifications we deem necessary,our ability to effectively operate and expand may be adversely affected.In addition,we rely on temporary and seasonal personnel to staff our distribution center.We cannot guarantee that we will be able to find adequate temporary
287、or seasonal personnel to staff our operations when needed,which may strain our existing personnel and negatively impact our operations.Higher wage and benefit costs could adversely affect our business.Changes in federal and state minimum wage laws and other laws relating to employee benefits,includi
288、ng recent legislative proposals relating to healthcare reform,could cause us to incur additional wage and benefit costs.Increased labor costs brought about by changes in minimum wage laws,other regulations or prevailing market conditions would increase our expenses and have an adverse impact on our
289、profitability.20 The concentration of our stores and operations in certain geographic locations subjects us to regional economic conditions and natural disasters that could adversely affect our business.Our Store Support Center and distribution centers are located in California,Kansas and Texas.If w
290、e encounter any disruptions to our operations at these locations or if they were to shut down for any reason,including due to fire,tornado or other natural disaster,then we may be prevented from effectively operating our stores and our e-commerce businesses.Furthermore,the risk of disruption or shut
291、down at our buildings in California are greater than they might be if they were located in another region,as southern California is prone to natural disasters such as earthquakes and wildfires.Any disruption or shutdown at our locations could significantly impact our operations and have a material a
292、dverse effect on our financial condition and results of operations.In addition,of the 240 stores that we operated as of March 30,2019,115 of these stores were located in Arizona,California and Texas.The geographic concentration of our stores may expose us to economic downturns or natural disasters i
293、n those states where our stores are located.For example,our stores located in North Dakota,Wyoming,Colorado,Texas and surrounding areas are likely to be adversely impacted by an economic downturn affecting the oil,gas,and commodities industries.In addition,in fiscal 2018 hurricanes severely impacted
294、 parts of Texas and Florida and we lost sales and incurred additional costs as a result.Any similar events in states where our stores are concentrated could have a material adverse effect on our financial condition and results of operations.We could be required to collect additional sales taxes or b
295、e subject to other tax liabilities that may increase the costs our clients would have to pay for our products and adversely affect our operating results.An increasing number of states have considered or adopted laws that attempt to impose tax collection obligations on out-of-state retailers.In South
296、 Dakota v.Wayfair,Inc.et al(“Wayfair”),a case challenging existing law that online sellers are not required to collect sales and use tax unless they have a physical presence in the buyers state,the Supreme Court decided that states may adopt laws requiring sellers to collect sales and use tax,even i
297、n states where the seller has no physical presence.As a result of Wayfair,states or the federal government may adopt,or begin to enforce,laws requiring us to calculate,collect,and remit taxes on sales in their jurisdictions.A successful assertion by one or more states requiring us to collect taxes w
298、here we presently do not do so,or to collect more taxes in a jurisdiction in which we currently do collect some taxes,could result in substantial tax liabilities,including taxes on past sales,as well as penalties and interest.The imposition by state governments of sales tax collection obligations on
299、 out-of-state retailers could also create additional administrative burdens for us,put us at a competitive disadvantage if they do not impose similar obligations on our competitors and decrease our future sales,which could have a material adverse impact on our business and operating results.Our leve
300、rage may reduce our cash flow available to grow our business.As of March 30,2019,we had an aggregate of$176.5 million of total outstanding indebtedness.Our obligations to pay principal and interest under the June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan will reduce our available cash f
301、low,limiting our flexibility to respond to changing business and economic conditions and increasing any additional borrowing costs.Our borrowings under the June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan are at variable rates,exposing us to interest rate risk,including increases in inter
302、est rates resulting from changes in the determination of LIBOR.The June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan provide for variable interest rates.As a result,if interest rates increase,our debt service obligations under the current credit facilities could increase even though the am
303、ount borrowed remained the same,which would adversely impact our net income.The variable interest rates under the June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan may be determined,at the Companys option,based upon LIBOR or a base rate,in each case,plus an applicable margin.On July 27,201
304、7,the United Kingdoms Financial Conduct Authority,which regulates LIBOR,announced that it intends to phase out LIBOR by the end of 2021.It is unclear whether LIBOR will cease to exist or if new methods of calculating 21 LIBOR will be established such that it continues to exist after 2021.The U.S.Fed
305、eral Reserve,in conjunction with the Alternative Reference Rates Committee,a steering committee comprised of large U.S.financial institutions,is considering replacing U.S.dollar LIBOR with a new index calculated by short term repurchase agreements,backed by Treasury securities.Any changes to the det
306、ermination of LIBOR or replacement thereof may result in an increase in LIBOR and,in turn,an increase in the variable interest rates based upon LIBOR under the June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan,or cause us to elect to apply the base rate to the borrowings thereunder,which b
307、ase rate may be higher than applicable interest rates prior to any such changes.The June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan contain restrictions and limitations that could significantly impact our ability to operate our business.The June 2015 Wells Fargo Revolver and the 2015 Gol
308、ub Term Loan contain covenants that,among other things,may,under certain circumstances,place limitations on the dollar amounts paid or other actions relating to:payments in respect of,or redemptions or acquisitions of,debt or equity issued by Boot Barn or its subsidiaries,including the payment of di
309、vidends on our common stock;incurring additional indebtedness;incurring guarantee obligations;paying dividends;creating liens on assets;entering into sale and leaseback transactions;making investments,loans or advances;entering into hedging transactions;engaging in mergers,consolidations or sales of
310、 all or substantially all of their respective assets;and engaging in certain transactions with affiliates.In addition,the Company is required to satisfy certain financial ratios as set forth in these agreements.Our ability to satisfy these financial ratios will depend on our ongoing financial and op
311、erating performance,which in turn will be subject to economic conditions and to financial,market and competitive factors,many of which are beyond our control.Our ability to comply with these ratios in future periods will also depend on our ability to successfully implement our overall business strat
312、egy and realize contemplated synergies.Various risks,uncertainties and events beyond our control could affect our ability to comply with the covenants contained in our current credit facilities.Failure to comply with any of these covenants could result in a default under the June 2015 Wells Fargo Re
313、volver and the 2015 Golub Term Loan and under other agreements containing cross-default provisions.A default would permit lenders to accelerate the maturity of the debt under these agreements and to foreclose upon any collateral securing the debt.Under these circumstances,we might not have sufficien
314、t funds or other resources to satisfy all of our obligations.In addition,the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing.22 We are required to make significant lease pay
315、ments for our stores,Store Support Center and distribution center,which may strain our cash flow.We do not own any real estate.Instead,we lease all of our retail store locations as well as our Store Support Center and distribution centers.The store leases generally have a base lease term of five or
316、10 years,with one or more renewal periods of five years,on average,exercisable at our option.Many of our leases have early cancelation clauses which permit us to terminate the lease if certain sales thresholds are not met in certain periods of time.Our costs under these leases are a significant amou
317、nt of our expenses and are growing rapidly as we expand the number of locations and the cost of leasing existing locations rises.In fiscal 2019,our total operating lease expense was$45.7 million,and we expect this amount to continue to increase as we open more stores.We are required to pay additiona
318、l rent under many of our lease agreements based upon achieving certain sales thresholds for each store location.We are generally responsible for the payment of property taxes and insurance,utilities and common area maintenance fees.Many of our lease agreements also contain provisions which increase
319、the rent payments on a set time schedule,causing the cash rent paid for a location to escalate over the term of the lease.In addition,rent costs could escalate when multi-year leases are renewed at the expiration of their lease term.These costs are significant,recurring and increasing,which places a
320、 consistent strain on our cash flow.We depend on cash flows from operations to pay our lease expenses and to fulfill our other cash needs.If our business does not generate sufficient cash flows from operating activities,and sufficient funds are not otherwise available to us from borrowings under our
321、 current credit facility,future credit facilities or from other sources,we may be unable to service our operating lease expenses,grow our business,respond to competitive challenges or fund our other liquidity and capital needs,which would harm our business.Additional sites that we lease are likely t
322、o be subject to similar long-term leases.If an existing or future store is not profitable,and we decide to close it,we may nonetheless be committed to perform our obligations under the applicable lease including,among other things,paying the base rent for the balance of the lease term.We may fail to
323、 identify suitable store locations,the availability of which is beyond our control,to replace such closed stores.In addition,as our leases expire,we may fail to negotiate renewals,either on commercially acceptable terms or at all,which could cause us to close stores in desirable locations.Fifteen of
324、 our 240 store leases will reach their termination date during fiscal 2020,and none of these leases contain an option to automatically extend the lease term.If we are unable to enter into new leases or renew existing leases on terms acceptable to us or be released from our obligations under leases f
325、or stores that we close,our business,profitability and results of operations may be harmed.New accounting guidance or changes in the interpretation or application of existing accounting guidance could adversely affect our financial performance.The implementation of new accounting standards could req
326、uire certain systems,internal processes and controls and other changes that could increase our operating costs and result in changes to our financial statements.For example,the implementation of accounting standards related to leases,as issued by the Financial Accounting Standards Board,required us
327、to make significant changes to our lease management and other accounting systems,and will result in a material impact to our consolidated financial statements.U.S.generally accepted accounting principles and related accounting pronouncements,implementation guidelines and interpretations with regard
328、to a wide range of matters that are relevant to our business involve many subjective assumptions,estimates and judgments by our management.Changes in these rules or their interpretation or in underlying management assumptions,estimates or judgments could significantly change our reported or expected
329、 financial performance.The outcome of such changes could include litigation or regulatory actions which could adversely affect our financial condition and results of operations.23 We may be unable to maintain same store sales or net sales per square foot,which may cause our results of operations to
330、decline.The investing public may use same store sales or net sales per square foot projections or results,over a certain period of time,such as on a quarterly or yearly basis,as an indicator of our profitability growth.See Item 7,Managements Discussion and Analysis of Financial Condition and Results
331、 of Operations for further discussion of“same store sales”.Our same store sales can vary significantly from period to period for a variety of reasons,such as the age of stores,changing economic factors,unseasonable weather,pricing,the timing of the release of new merchandise and promotional events a
332、nd increased competition.These factors could cause same store sales or net sales per square foot to decline period to period or fail to grow at expected rates,which could adversely affect our results of operations and cause the price of our common stock to be volatile during such periods.Any inabili
333、ty to balance our private brand merchandise with the third-party branded merchandise that we sell may have an adverse effect on our net sales and gross profit.In fiscal 2019,sales from our private brand products accounted for approximately 16.2%of our consolidated sales including our stores and e-commerce websites.As of March 30,2019,two of our five top selling brands were private brand merchandi
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