1、2017 ANNUAL REPORT45103 Merrill A269364.indd 17/7/17 6:27 PMBoot Barn is an authentic in the truest sense.We understand and serve the western lifestyle,country values and strong American work ethic that our customers represent.That is how we have become Americas largest western and work wear retaile
2、r.lifestyle retail brandCountryWesternWorkValuesLifestyleStrong American Ethic45103 Merrill A269364.indd 27/7/17 6:27 PMDear Shareholders,Fiscal 2017 was a year of both challenge and achievement.While our earnings fell short of our initial expectations,we grew our sales,store base and digital footpr
3、int considerably.For the year,revenue grew by more than 10%,we added 12 new Boot Barn stores and we added a leading e-commerce brand,Country Outfitter,to our online portfolio.While we continued to battle the impact of low commodity prices in some of our key markets as well as the overall softness in
4、 the retail environment,our investments in our digital channel,improvements in merchandising and our in-store environment,and new store openings set a foundation for sales and earnings growth over the long term and have strengthened our position as the leading western and work wear retailer in the U
5、nited States.In 2017,our team continued to build a national lifestyle brand and made progress on each of Boot Barns four strategic growth initiatives,including the following:1.Strengthening our omni-channel leadership Double-digit growth in e-commerce sales helped us increase our e-commerce sales to
6、$115 million,now representing more than 18%of total sales.We connected our digital channel with our physical stores by rolling out our“We Have It Promise,”or WHIP,tablets which enable in-store customers to access merchandise from our e-commerce fulfillment centers and,in many cases,directly from our
7、 vendors.We also acquired the website and customer list of a leading pure-play e-commerce business called Country Outfitter,which expanded our customer base to a broader demographic and increased our online presence.Finally,we began the consolidation of the Boot Barn,Sheplers,and Country Outfitter e
8、-commerce businesses onto a common front-end and fulfillment platform.While the migration of Sheplers to the new platform created a disruption in the business,we expect these issues to be resolved in short order which should enable us to achieve the planned operational efficiencies and deliver a mor
9、e compelling customer experience.2.Driving same-store sales growth Despite the combination of a soft retail environment and the headwinds we have faced in markets that rely on oil and other commodities,we were able to achieve slightly positive same-store sales growth for the year.Our double-digit e-
10、commerce growth offset a modest decline in retail store sales while we maintained a mostly full price promotional stance.Sales growth in work apparel and work boots was particularly strong as our commercial accounts and a broader work boot and apparel selection were well received by our customers.Ad
11、ditionally,the entire Boot Barn team worked in concert to drive sales by focusing on the needs of our Hispanic customers,enhancing our customers in-store experiences,and updating the Boot Barn brand creative aesthetic with the goal of broadening our target customer group.In fiscal 2018 we plan to la
12、unch a Boot Barn branded credit card to increase customer loyalty and drive increased sales.3.Increasing the penetration of our private brands We made significant progress during the year to expand our private brand offering to our customers by developing high-quality products that complement the as
13、sortment offered by our third party branded vendors.Our private brand penetration grew to 11%of total sales,driven by a broader assortment of core western merchandise under the Cody Core brand and an extremely compelling line of top quality exotic skin boots under the Cody Exotic label.Our private b
14、rands Cody James and Shyanne now represent two of our top 5 selling product lines.We also introduced our private brands to during the year and will introduce private brands to during fiscal 2018.We expect to continue to grow our private brand penetration to complement the merchandise assortment offe
15、red by our third party branded vendor partners which will enable us to create competitive differentiation and to enhance merchandise margin.4.Expanding our store base Adding new stores continues to be an important growth driver for sales and market share for Boot Barn.During the year we opened 12 ne
16、w Boot Barn stores,including our first stores in the states of Alabama and Washington.The addition of these new stores brought our store count to 219 stores across 31 states at year end.As we look ahead to fiscal 2018,I feel confident that our current momentum,combined with the growth we expect from
17、 our strategic initiatives,will continue to strengthen our position as the leading player in the industry.In conclusion,I would like to thank our investors who continue to support Boot Barn,our hundreds of store associates in the field,the organizations in the Store Support Centers in Irvine,Wichita
18、,Fontana,and Frisco,and our customers across the country and around the world.I am looking forward to a prosperous year in Fiscal 2018!Sincerely,JimUNITED 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
19、 EXCHANGE ACT OF 1934 For the fiscal year ended April 1,2017 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)Delawar
20、e(State or 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
21、(b)of the Act:Title of each class Name of each exchange on which registered Common Stock,$0.0001 par value 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 of the Sec
22、urities 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 Act of 1934
23、 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 and posted on its corporate Web
24、site,if any,every Interactive Data File required to be submitted and posted 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 and post such files).Yes No Indicate by check mark if disclo
25、sure of delinquent filers in response to Item 405 of Regulation S-K(229.405 of this chapter)is not contained herein,and will not be contained,to the best of registrants knowledge,in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
26、 this Form 10-K Indicate by check mark whether the registrant is a large accelerated filer,an accelerated 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“emergi
27、ng growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company)Smaller reporting company Emerging growth company If an emerging growth company,indicate by check mark if the registrant has elected not to
28、 use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange 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 th
29、e registrants common stock held by non-affiliates of the registrant as of the end of its most recently completed second fiscal quarter was approximately$136.1 million.Shares held by each officer,director and person owning more than 10%of the outstanding voting and non-voting stock have been excluded
30、 from this calculation because such persons may be deemed to be affiliates of the registrant.This determination of potential affiliate status is not necessarily a conclusive determination for other purposes.Shares held include shares of which certain of such persons disclaim beneficial ownership.The
31、 number of outstanding shares of the registrants common stock,$.0001 par value,as of June 5,2017 was 26,587,805.DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrants Proxy Statement for the 2017 Annual Meeting of Stockholders,to be filed pursuant to Regulation 14A within 120 days after the
32、 end of the 2017 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.Risk Factors 14 Item 1B.Unresolved Staff Comments 32 Item 2.Properties 32 Item 3.Legal Proceedings 33 Item 4.Mine Safety Disclosures 33 PART II Item 5.Ma
33、rket for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities 34 Item 6.Selected Consolidated Financial Data 35 Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations 39 Item 7A.Quantitative and Qualitative Disclosures A
34、bout Market Risk 56 Item 8.Consolidated Financial Statements and Supplementary Data 57 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 89 Item 9A.Controls and Procedures 89 Item 9B.Other Information 89 PART III Item 10.Directors,Executive Officers and Corp
35、orate Governance 90 Item 11.Executive Compensation 90 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 90 Item 13.Certain Relationships and Related Transactions,and Director Independence 90 Item 14.Principal Accounting Fees and Services 90 PART I
36、V Item 15.Exhibits,Financial Statement Schedules 90 1 Forward-Looking Statements This annual report contains forward-looking statements that are subject to risks and uncertainties.All statements other than statements of historical or current fact included in this annual report are forward-looking st
37、atements.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 industry.You can identi
38、fy 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 words and terms
39、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 earnings,revenue
40、s,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 forward-looking s
41、tatements 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 related to condition
42、s 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-party suppliers;ri
43、sks 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;risks relating to o
44、ur 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 current operating bud
45、gets and forecasts,which are based upon detailed assumptions.While we believe that our assumptions are reasonable,we caution that it is very difficult to predict the impact of known factors,and it is impossible for us to anticipate all factors that could affect our actual results.For these reasons,w
46、e caution readers not to place undue reliance on these forward-looking statements.2 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 all risks,nor can
47、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 expressly qualified i
48、n 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 uncertainties.We ca
49、ution 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 potential impact of any
50、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 operate on a fisc
51、al 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,second and third
52、quarters each include thirteen weeks of operations and the fourth quarter includes fourteen weeks of operations.The data presented contains references to fiscal 2017,fiscal 2016,and fiscal 2015,which represent our fiscal years ended April 1,2017,March 26,2016 and March 28,2015,respectively.Fiscal 20
53、17 was a 53-week period and fiscal 2016 and 2015 were each 52-week periods.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 U.S.With 219 stores in 31 states as of April 1,2017,we have approximat
54、ely three times as many stores as our nearest direct competitor that sells primarily western and work wear,and believe we have the potential to grow our store base to 500 domestic locations.Our stores,which are typically freestanding or located in strip centers,average 11,389 square feet and feature
55、 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 apparel.We strive to offer an authentic,one
56、-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 represent the aesthetics of the true Amer
57、ican 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 boots and is complemented by a wide assortm
58、ent 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 70%of our store inventory is kept in sto
59、ck through automated replenishment programs.The vast majority of our merchandise both in stores and on 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 products at discounted prices.Our bo
60、ot 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 brand.This allows us to display the full breadth of our inventory and deliver a convenient shopping
61、 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,Justin,Lucchese,Miss Me,Montana Silversmiths,Ste
62、tson,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 high-visibility clothing.Among the top work brands
63、sold in our stores are Carhartt,Georgia Boot,Timberland Pro and Wolverine.Our merchandise is also available on our e-commerce websites, and .Boot Barn was founded in 1978 and,over the past 39 years,has grown both organically and through successful strategic acquisitions of competing chains.We have r
64、ebranded 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 flow to support national growth.Recent Ac
65、quisitions and Corporate Transactions RCC Acquisition On August 31,2012,we acquired RCC Western Stores,Inc.,a western and work-related retail chain of 29 stores located in 12 states(RCC).We refer to the acquisition as the RCC Acquisition.Through the RCC Acquisition,we increased our store base by 33%
66、and expanded our geographic footprint into the Midwest and Southeast.In addition,we achieved significant benefits from the RCC Acquisition as a result of improved purchasing efficiencies from suppliers and corporate support efficiencies.All of the RCC stores were rebranded under the Boot Barn banner
67、.4 Baskins Acquisition On May 25,2013,we acquired Baskins Acquisition Holdings,LLC,a western and work-related retail chain of 30 stores located in Texas and Louisiana(“Baskins”).We refer to the acquisition as the“Baskins Acquisition”.Through the Baskins Acquisition,we entered the Texas market,which
68、is the number one market for western boots,apparel and accessories.All of the Baskins stores were rebranded under the Boot Barn banner and merchandised to be consistent with our existing stores.Reorganization As of June 8,2014,WW Top Investment Corporation held all of the outstanding shares of commo
69、n stock of WW Holding Corporation,which held 95.0%of the outstanding shares of common stock of Boot Barn Holding Corporation.Boot Barn Holding Corporation held all of the outstanding shares of common stock of Boot Barn,Inc.,which is our primary operating subsidiary.To simplify our organizational str
70、ucture,we completed a reorganization on June 9,2014,whereby WW Holding Corporation was merged with and into WW Top Investment Corporation and then Boot Barn Holding Corporation was merged with and into WW Top Investment Corporation(the“Reorganization”).As a result of this Reorganization,Boot Barn,In
71、c.became a direct wholly owned subsidiary of WW Top Investment Corporation,and the minority stockholders that formerly held 5.0%of Boot Barn Holding Corporation became holders of 5.0%of WW Top Investment Corporation.The legal name of WW Top Investment Corporation was subsequently changed to Boot Bar
72、n Holdings,Inc.Initial Public Offering On October 29,2014,we completed our initial public offering of 5,000,000 shares of our common stock.In addition,on October 31,2014,the underwriters of the initial public offering exercised their option to purchase an additional 750,000 shares of common stock fr
73、om us.As a result,5,750,000 shares of common stock were issued and sold by us at a price of$16.00 per share.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 a
74、cross the United States and an e-commerce business.We refer to the acquisition as the“Sheplers Acquisition”.We financed the acquisition and refinanced approximately$172 million of our and Sheplers existing indebtedness in part with an initial borrowing of$57 million under a new$125 million syndicate
75、d senior secured asset-based revolving credit facility for which Wells Fargo Bank,National Association(“June 2015 Wells Fargo Revolver”),is agent,and a$200 million syndicated senior secured term loan for which GCI Capital Markets LLC(“2015 Golub Term Loan”)is agent.Borrowings under the credit agreem
76、ents were initially used to pay costs and expenses related to the Sheplers Acquisition and the closing of such credit agreements,and may be used for working capital and other general corporate purposes.Commencing on June 29,2015,our consolidated financial statements include the financial position,re
77、sults of operations and cash flows of Sheplers.The purchase price was allocated to assets acquired and liabilities assumed based on their fair values as of the closing date of the Sheplers Acquisition,which resulted in the recognition of goodwill.Through the Sheplers Acquisition,we added eight new m
78、arkets,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(“Sheplers E-commerce”).We rebranded 19 of the 25 retail stores acquired through the Sheplers Acquisition,and closed six stores du
79、ring fiscal 2016.Country Outfitter Asset Acquisition On February 16,2017,Sheplers Inc.,a wholly owned subsidiary of Boot Barn Holdings,Inc.entered into an asset purchase agreement with Acumen Brands,Inc.,who owned and historically operated as one of its unincorporated business divisions a multi-face
80、ted e-commerce retail business,under the“Country Outfitter”5 name.As part of the purchase agreement,we agreed to purchase all rights and interest in the website and tradename,along with the associated social media platforms.We additionally purchased a customer email list and assumed Country Outfitte
81、rs 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 assumed liabilities.The Company now operates as a website separate from its other e-commerce channels, and .
82、Our Competitive Strengths We believe 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 lifes
83、tyle enables us to create long-lasting relationships with our customers who embody these ideals.Our brand is highly visible through our sponsorship of rodeos,stock shows,concerts and country music artists.We sponsor local community rodeos,national rodeos and other country and western events.We sell
84、our products through pop-up shops at several of the largest events that we sponsor.We believe these grassroots 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 ev
85、eryday needs.Strong e-commerce positioning.We offer a compelling shopping experience to our customers,including 219 brick-and-mortar stores combined with multiple websites including , and .B offers a compelling every-day low price shopping experience catered towards a lifestyle customer with western
86、 roots and a strong work influence.S offers a broad value proposition assortment targeted to a more promotional customer.C has a curated assortment appealing to a more fashion-based country lifestyle customer.Each of our e-commerce platforms has distinct brand positioning and provides a differentiat
87、ed shopping experience to our customers.Fast growing specialty retailer of western and work wear in the U.S.Our broad geographic footprint,which currently spans 31 states,provides us with significant economies of scale,enhanced supplier relationships,the ability to recruit and retain high quality st
88、ore associates and the ability to reinvest in our business at levels that we believe exceed those of our competition.Attractive,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.
89、In fiscal 2011 we implemented our customer loyalty program,B Rewarded,to enhance our connection and relationship with our customers.Our loyalty program has grown rapidly since inception and includes approximately 4.5 million members who have purchased merchandise from us.A vast majority of our sales
90、 are made to these customers.We leverage this database,which provides useful information about our customers,to enhance our marketing activities across our channels,refine our merchandising and planning efforts and assist in our selection of sites for new stores.Differentiated shopping experience.We
91、 deliver a one-stop shopping experience 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-
92、service selection of boots.We offer significant 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-commerc
93、e warehouse inventory as well as the inventory at most of our larger third-party vendors.We believe that our strong,long-lasting supplier relationships enhances our ability to provide a compelling merchandise assortment with a strong in-stock position both in-store and online.Our knowledgeable store
94、 associates are passionate about our merchandise and deliver a high level of service to our customers.These elements help promote customer loyalty and drive repeat visits.6 Compelling merchandise assortment and strategy.We believe we offer a diverse merchandise assortment that features the most soug
95、ht-after western and work wear brands,well-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
96、 assortment by region to cater to local preferences.In fiscal 2017,the vast majority of our merchandise sales in stores and on 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
97、and offers a greater assortment of products 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,Ame
98、rican 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.We also intend to sell our private brands on .Each of our private brands,which address product and
99、price 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.Customer receptivity and demand for our private brands has been strong,demonstrated by the private brands
100、increasing penetration and sales momentum across our store base and e-commerce channels.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 in
101、vestment across a variety 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 metropolita
102、n areas.Our new store model 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 ou
103、r products ship directly 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.Highly experienced management team and passionate organization.Our senior ma
104、nagement team has extensive 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
105、genuine and enduring qualities 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,i
106、ncluding:Continuing omni-channel leadership.Our growing national footprint,social media following and broader marketing efforts drive traffic to our stores and e-commerce websites.We operate and along with as an alternative to shopping in the stores,which allows us to reach customers outside our geo
107、graphic footprint.We continue to make investments in both online and in-store advertising,aimed at increasing traffic to our e-commerce websites,which reached over 26 million visits in total in fiscal 2017,and increasing the amount of merchandise purchased by customers who visit our websites,while i
108、mproving 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 the inventory at most of our larger thir
109、d-party vendors,purchase these items in store,and,in most cases,receive free shipping.We further 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
110、net sales in fiscal 2017 increased from 14.6%in fiscal 2016 to 18.4%in fiscal 2017.7 Driving same store sales 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 purcha
111、sed by customers while visiting our stores.Our management team has launched several initiatives to accelerate 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
112、 we can achieve gross margin enhancement by increasing the penetration of our private brand sales.As of April 1,2017,our private brands include Shyanne,Cody James,Moonshine Spirit by Brad Paisley,American Worker,El Dorado and BB Ranch,and are sold in our stores,on and on .Looking forward,we intend t
113、o make our private brands available on as well.Each of our private brands,which address product and price 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.Expand
114、ing our store base.Driven by our compelling store economics,we believe that there is a significant opportunity to expand our store base in the U.S.During fiscal 2017,we opened 12 stores.Based on an extensive internal analysis,we believe that we have the potential to grow our domestic store base from
115、 219 stores as of April 1,2017 to 500 domestic locations.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 in personnel,information techn
116、ology,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 infrastructure and drive store-l
117、evel 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 achieve higher merchandise margi
118、ns.We also expect to capitalize on additional economies of scale in purchasing and sourcing as we grow our geographic footprint and online presence.Enhancing brand awareness.We intend to enhance our brand awareness and customer loyalty in a number of ways,such as continuing to grow our store base an
119、d 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 sponsorship of rodeos,stock shows and oth
120、er western industry events,as well as our association with country music,including partnerships with Brad Paisley and up-and-coming country musicians.We have an effective social media strategy with high customer engagement,as evidenced by our growing fan base on Facebook,Instagram,Snapchat and Twitt
121、er.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 our customers daily lives.Many of our customers are em
122、ployed 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,such as rodeos,the popularity of country music and t
123、he 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.Additionally,government regulations for workplace safety have
124、 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.8 Our Sales Channels During fiscal 2017,we continued to enhance our omni-channel capabilities,primarily
125、as a result of the continued growth of the significant e-commerce business we acquired as part of the Sheplers Acquisition in fiscal 2016.Our current omni-channel presence consists of both brick and mortar stores as well as an e-commerce platform,including , and .Our stores As a lifestyle retail con
126、cept,our stores offer a broad array of merchandise to outfit an entire family,while 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 child
127、rens apparel on the right side of the store and mens western and mens work apparel on 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
128、 utilize the space in the front of the store for accessories such as hats,belts,jewelry,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
129、 virtually all of our boots in pairs out on the sales floor.To reflect the typical purchasing 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 c
130、ustomers,the store design facilitates a self-service shopping experience.Our stores 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 11,389 square feet and feature a comprehensive assortment of br
131、ands and styles,coupled with attentive,knowledgeable store associates.Our stores are designed and managed to drive profitability and,we believe,create a compelling customer shopping experience.During fiscal 2017,we opened 12 stores.As of April 1,2017,our retail footprint included 219 stores in the U
132、.S.Two of our 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.9 The following table shows the number of stores in each of the 31 states i
133、n which we operated as of April 1,2017:Number of State stores Alabama 1 Arizona 13 California 41 Colorado 13 Florida 7 Georgia 2 Idaho 3 Illinois 1 Indiana 2 Iowa 4 Kansas 4 Kentucky 3 Louisiana 6 Minnesota 2 Missouri 2 Montana 4 Nebraska 2 Nevada 10 New Mexico 7 North Carolina 4 North Dakota 6 Okla
134、homa 2 Oregon 3 South Carolina 3 South Dakota 3 Tennessee 9 Texas 48 Utah 2 Washington 1 Wisconsin 1 Wyoming 10 Total 219 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 customers
135、not served by our current geographic footprint.Our e-commerce platforms are highly scalable and have exhibited substantial growth.During fiscal 2017,we had over 26 million visits to our websites and we sold merchandise to customers in all 50 states.Approximately 6.4%of our total e-commerce revenue f
136、or fiscal 2017 was generated from customers outside of the United States.Such foreign-source revenue constituted approximately 1.4%of our overall net sales in fiscal 2017.Our growing national footprint and broader marketing efforts drive traffic to our website,which in turn also drives traffic to ou
137、r stores.We believe that many customers,especially those shopping 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 seaml
138、ess customer experience.As an example,this year we implemented in-store touch-screen devices to expand the product offering available to our in-store customers,including additional styles,colors and sizes not carried in the store.In fiscal 10 2017,we continued to enhance customer service by improvin
139、g real-time inventory sharing among our stores and .The business is an every-day low price model,while is more promotional and offers a greater assortment of products at discounted prices.For all of our e-commerce channels,we communicate information on current promotions and upcoming events on our e
140、-commerce websites,which helps drive purchases online and traffic to our stores.We 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
141、 substantial experience in opening stores in new and existing geographic markets and as of April 1,2017 have successfully added,on a net basis,67 new stores through a combination of organic growth and strategic acquisitions during our last three fiscal years.We evaluate potential new locations in li
142、ght of a variety of criteria,including local demographics and population,the areas industrial base,the 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 eff
143、iciencies in store management and media spending.Most of our stores are in high-traffic and highly visible 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
144、near highways or major thoroughfares.Based on an extensive internal analysis of our current customer base,store performance drivers and competitor penetration,we believe that the U.S.market can support 500 locations.We utilized multiple methods for measuring market size,including a review of demogra
145、phic and psychographic factors on a state-by-state basis.We supplemented 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 developm
146、ent plan to strategically extend our store portfolio.Careful consideration 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
147、 construction and real estate resources,information technology and 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
148、$0.8 million and targets an average payback period of three years.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 stro
149、ng culture focused on providing superior customer service.We believe 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
150、a positive culture of enthusiasm and entrepreneurial spirit throughout 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 f
151、unction in selling much of our product,we utilize a well-developed 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 produ
152、cts,selling skills and leadership at our annual three-day store 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
153、 the sales,customer service and operational tools necessary to monitor 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 11 right merchandise solu
154、tion for each of our customers based on the ultimate end use of our products.Our goal is to train 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 sale
155、s commissions and supplier-specific incentive programs,we utilize 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 as
156、sociates are focused on the specific needs of our customers.Merchandising 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,d
157、epartment and price point.We augment and tailor this assortment 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 ac
158、tively maintain a balance between third party brands and our own 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,wh
159、ich includes the Christmas shopping season,has historically produced 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 sea
160、sonality.We believe that many of our customers are driven primarily 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 t
161、hird fiscal quarter.We have a minimal amount of seasonal merchandise 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
162、purchase orders are systematically generated for approval by our 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 2017,our products co
163、ntributed to overall sales in the following manner:Gender:Mens merchandise accounted for approximately 60%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.Pro
164、duct category:Boots accounted for just over half of our sales,with apparel comprising an additional 32%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,coupl
165、ed with our scale,have allowed us to carry a wide selection of popular and niche brands,including Ariat,Carhartt Workwear,Cinch,Corral,Dan Post,Georgia Boot,Justin Boots,Keen,Lucchese,Old Gringo,Rocky,Stetson,Timberland,Tony Lama,Wolverine and Wrangler.In many cases,we are one of the largest account
166、s of our suppliers and have become important as the largest 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 compe
167、titive differentiation and the ability to generate higher merchandise margins.12 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 exc
168、lusive license agreement with country music star Brad Paisley,who designs a collection of boots,apparel and accessories for us,Moonshine Spirit By Brad Paisley,that reflect his lifestyle and personality.We develop private brand merchandise for our work wear business under the name American Worker,an
169、d for our home and gift category under the 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 e
170、xclusive to Boot Barn and are merchandised and marketed as if they were third-party brands both in our stores,and on and .In fiscal 2017,sales from our private brand products accounted for approximately 10.7%of our consolidated sales including our stores and e-commerce channels.These private brands
171、differentiate us from 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 tea
172、m is critical to understanding 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
173、,or SKU,on a store-by-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,sh
174、opping our competitors 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 re
175、fine the merchandise 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 t
176、raffic to our stores 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
177、and in-store,as well 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 ma
178、jority of our merchandise sales in stores and on 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
179、 Advertising Our marketing 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
180、 community outreach and advertise in local print media in select markets.We primarily use the following forms of media:Radio and televisionWe purchase spots on regional radio stations,primarily country music channels,to draw customers to nearby locations.We also maintain relationships with several c
181、ountry 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 perf
182、ormances.We also purchase television spots to create awareness in new markets and occasionally help support grand openings of new stores.Direct mailWe conduct several direct mail campaigns,and during fiscal 2017,we sent out approximately 7.9 million mailers,ranging in size from postcards to catalogs
183、 of nearly 60 pages.13 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 890 million e-mails in fiscal 2017.Social mediaWe also have a marketing strategy that has produce
184、d a fast-growing social media presence,as evidenced by our growing fan base 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 comm
185、unity-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 eight
186、een stores in the area.We also sponsored the San Antonio Stock Show and Rodeo this year,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 Nation
187、al Finals 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 allows participants to pur
188、chase our merchandise.Distribution Our suppliers ship most of our in-store merchandise directly to our stores and a substantial 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
189、the distribution center in Wichita,Kansas,that we acquired as a result of the Sheplers Acquisition.Our distribution center in California is used to fulfill orders and to distribute our private brand and volume discount purchases to our stores.In addition,our California distribution center also helps
190、 to provide inventory for sponsored events and new store openings.Our Wichita,Kansas distribution center is used to fulfill Sheplers E-commerce and orders,and will also be used to fulfill orders once the site is upgraded to our new e-commerce platform.In accordance with our automated replenishment p
191、rograms,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 work wear is highly fragmented and characterized by primarily regional compe
192、titors.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 recognition,price,customer service and the ability to identify and satisfy
193、 consumer demand.In addition,as we expand our e-commerce sales channel,we are competing to an increasing degree with online retailers and the e-commerce offerings of traditional competitors.We also compete with farm supply stores and,to a lesser degree,mass merchants,some of which are significantly
194、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 primarily western and work wear and we believe that our nationally recognized l
195、ifestyle 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 recruit and retain high quality store associates favorably differentiates u
196、s 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 investments in our information technology infrastructure.In 2008,we installed a new E
197、nterprise Resource Planning system,which we now refer to as Aptos Retail.We use this system for integrated point-of-sale,merchandising,planning,sales audit,customer relationship management,inventory control,loss prevention,purchase order management and business intelligence.We operate Aptos Retail o
198、n a software-as-a-service platform.This approach allows us to regularly upgrade to the most recent software release with 14 minimal operational disruption,nominal systems infrastructure investment and a relatively small in-house information technology department.Aptos Retail also interfaces with our
199、 accounting system,Microsoft Dynamics.We have also invested in an information technology platform for our e-commerce channels.At the end of fiscal 2017,we upgraded our e-commerce platform to more recent versions of Oracles Retail Order Management System in concert with Ss(formerly Demandware)Commerc
200、e Cloud“front end”user interface solution.The upgrade of our e-commerce platform will act as the foundation for all of our digital store fronts including ,and .Intellectual property We regard our trademarks as having value and as being important to our marketing efforts.We have registered our tradem
201、arks 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 Outfitter”brand names.We have sought foreign trademark protection by registering the Boot Barn trademark in Hong Kong,where we operate one of our subsidia
202、ries,Boot Barn International(Hong Kong)Limited.We also own the domain name for our websites, and .Our policy is to pursue registration of our trademarks and to rigorously defend their infringement by third parties.Our employees As of April 1,2017,we employed approximately 1,200 full-time and 1,800 p
203、art-time employees,of which approximately 300 were employed at our Store Support Center and distribution center and approximately 2,700 were employed at our stores.The number of employees,especially part-time employees,fluctuates depending upon our seasonal needs.None of our employees are represente
204、d 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 laws,laws governing truth-in-advertising,privacy laws,safety regulations and other laws
205、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 the operation of stores and warehouse facilities.We monitor changes in these laws an
206、d 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-kickback laws and regulations generally prohibit companies and their intermediaries fr
207、om 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 regulations.Item 1A.Risk Factors You should carefully consider the risks and uncerta
208、inties 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 following risks are realized,our business,financial condition,results of operations and pro
209、spects 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.15 Risks Related To Our Business Our sales could be severely impacted by decreases in consumer spending due to declines in consumer confidence
210、,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 be adversely impacted by economic conditions,such as consumer confidence in future econ
211、omic 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 exacerbated for retailers like us who focus on specialty footwear,apparel and accessories.
212、Our financial performance is particularly susceptible to economic and other conditions in California and other western states where we have a significant number of stores.Many of our stores operate in geographic areas where the local economies depend to a significant degree on oil and other commodit
213、y 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 financial performance also is impacted by conditions in the construction sector,domestic
214、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 popularity of the western and country lifestyle subsides,or if there is a general trend i
215、n 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 sales could decrease,which could have a material adverse effect on our business,finan
216、cial 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 acquired stores and in new markets where we have limited brand recognition,we may be unable
217、 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 image,particularly in markets where we have newly acquired stores and in new markets
218、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 expand into new markets or to maintain the strength and distinctiveness of our brand
219、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.Maintaining and enhancing our brand image may require us to make substantial investment
220、s 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 brand image could be jeopardized if we fail to maintain high standards for merchand
221、ise 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 control,such as the effects of negative publicity regarding our suppliers.Failure to
222、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 compete effectively.The retail industry for western and work wear is highly fragmente
223、d 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 recognition,price,customer
224、service and the ability to identify and satisfy consumer demand.In addition,as we expand our e-commerce sales channel,we are competing to an increasing degree with online retailers and the e-commerce offerings of traditional competitors.We also compete with farm supply stores and,to a lesser degree,
225、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 force us to respond in-kind and adversely impact our operating cash flow and gross profit.As a
226、 result of these factors,current and future competition could have a material adverse effect on our financial condition and results of operations.16 Many of the mass merchants and online retailers that sell some western or work wear products have greater financial,marketing and other resources than
227、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,generate national brand recognition or adopt more aggressive pricing policies than we can,whic
228、h 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 experience and product offerings.Our competitors may seek to emulate facets of our business stra
229、tegy,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-exclusive basis.As a result,our current and future competitors may be able to duplicate or im
230、prove 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 competitors were to duplicate or improve on some or all of our in-store experience,or our in-store a
231、nd 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 to international trade risks and other international conditions.The majority of our private
232、 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 majority of their merchandise made in foreign countries.The countries,specifically Mexico and China,in which our me
233、rchandise 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 restrictions,which could increase the cost or reduce the supply of products available to us and have a m
234、aterial 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 regulations affecting trade between the U.S.and other countries,such as Mexico and China.Significant tax
235、law changes are also being evaluated by the U.S.government.Such tax law changes,including a border adjustment tax,if enacted,could materially increase our income tax expense,which would have a material adverse effect on our financial condition and results of operations.In addition,major developments
236、 in tax policy or trade relations,particularly with respect to Mexico and China,could result in the disallowance of tax deductions for imported merchandise or the imposition of unilateral tariffs on imported products.Any increase in the cost of our merchandise or limitation on the amount of merchand
237、ise we are able to purchase could have a material adverse effect on our financial condition and results of operations.Our failure to adapt to new challenges that arise when expanding into new geographic markets could adversely affect our ability to profitably operate those stores and maintain our br
238、and image.Our expansion into new geographic markets could result in competitive,merchandising,distribution and other challenges that are different 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 risk
239、s associated with market saturation of our product offerings and locations.Our suppliers may also restrict their sales to us in new markets to 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 o
240、pened stores will be received as well as,or achieve net sales or profitability levels comparable to those of,our existing stores in the time periods 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 mate
241、rially harmed,we may incur significant costs associated with closing those stores and our brand image may be negatively impacted.Our continued growth depends upon successfully opening new stores as well as integrating any acquired stores,and our failure to successfully open new stores or integrate a
242、cquired stores could negatively affect our business and stock price.We have grown our store count rapidly in recent years,both organically and through strategic acquisitions of competing chains.Our ability to successfully open and operate new stores is subject to a variety of risks and uncertainties
243、,such as:17 identifying suitable store locations,the availability of which is beyond our control;obtaining acceptable lease terms;sourcing sufficient levels of inventory;selecting the appropriate merchandise to appeal to our customers;hiring,training and retaining store employees;assimilating new st
244、ore employees into our corporate culture;marketing the new stores locations and product offerings effectively;avoiding construction 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 environment
245、al liabilities;managing and expanding our infrastructure to accommodate growth;and integrating the new stores with our 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 re
246、sults of operations.We opened or acquired 12 stores in fiscal 2017,47 stores in fiscal 2016 and 18 stores in fiscal 2015.We plan to open 12 new stores in fiscal 2018.However,there can be no assurance that we will open the planned number of new stores in fiscal 2018 or thereafter,or that any such sto
247、res will be profitable.This expansion will place increased demands on our operational,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 deterio
248、rate.In addition,we currently plan to open some new stores within existing markets.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 e
249、xisting stores to decline.If this were to occur with a number of our stores,this could 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 th
250、at could adversely affect our growth and results of operation.Newly acquired stores 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.Integratin
251、g newly acquired chains or individual stores may divert our senior managements attention from our core business.Our ability to integrate newly 18 acquired stores will depend on the successful expansion of our existing financial controls,distribution model,information systems,management and human res
252、ources and on attracting,training and retaining qualified employees.As we expand 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,b
253、uild out new store space,purchase inventory,pay personnel,pay for the increased costs associated with operating as a public company and,if necessary,further invest in our infrastructure and facilities.We primarily rely on cash flow generated from existing stores and our e-commerce businesses to fund
254、 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 model 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,
255、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 could adversely affect our operations by reducing the amount of cash available to address other aspects of our business.We cannot assure you that a
256、ny 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 you that our existing stores,which may be currently profitable,will not cease to be profitable in the future.If our business does not generate suf
257、ficient cash flow from operations to fund these activities,and sufficient funds are not otherwise available from our current credit facility or future credit facilities,we may need additional equity or debt financing.If such financing is not available to us on satisfactory terms,our ability to opera
258、te 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 openings.Moreover,if we raise additional capital by issuing equity securities or securities convertible into equity securities,your ownership may be
259、 diluted.Any debt financing we may incur may impose covenants that restrict our operations,and will require interest payments that would create additional cash demands and financial risk for us.Any significant change in our distribution model could initially have an adverse impact on our cash flows
260、and results of operations.Our suppliers ship most of our in-store merchandise directly to our stores and a substantial portion of our e-commerce merchandise to our e-commerce customers.In the future,as part of our longterm strategic planning,we may change our distribution model to increase the amoun
261、t of merchandise that we selfdistribute through a centralized distribution center.Changing our distribution model to increase distributions from a centralized distribution center to our stores and customers would initially involve significant capital expenditures,which would increase our borrowings
262、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 our operations in a timely manner,our supply chain could experience significant disruptions,which could reduce our sales and adversely
263、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 sufficient quantities of merchandise at acceptable prices,our business and operations may be adversely affected.Our business is largely depende
264、nt on continued good relationships with our suppliers,including suppliers for our third-party branded products and manufacturers for our private brand products.During fiscal 2017,merchandise purchased from our top three suppliers accounted for approximately 23%,9%and 6%of our sales.We operate on a p
265、urchase order basis for our private brand and third-party branded merchandise and do not have long-term written agreements with our suppliers.Accordingly,our suppliers can refuse to sell us merchandise,limit the type or quantity of merchandise that they sell to us,enter into exclusivity arrangements
266、 with our competitors or raise prices at any time,which could have an adverse impact on our business.Deterioration in our relationships with our suppliers 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 suffici
267、ent 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 websites,and therefore directly compete with us.These suppliers may decide at some point in the future to discontinue supplying their merchandise to us,
268、supply us less desirable 19 merchandise or raise prices on the products they do sell us.If we lose key suppliers and are unable to find alternative suppliers to provide us with substitute merchandise for lost products,our business may be adversely affected.Our plans to improve and expand our exclusi
269、ve product offerings may be unsuccessful,and implementing these plans may divert our operational,managerial,financial and administrative resources,which could harm our competitive position and reduce our revenue and profitability.We currently plan to grow our business by improving and expanding our
270、exclusive product offerings,which includes introducing new brands and growing and expanding our existing brands.The principal risks to our ability to successfully carry out our plans to improve and expand our product offering are that:introduction of new products may be delayed,which may allow our c
271、ompetitors 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 brands and items;the third-party suppliers of our exclusive product offerings may not maintain adequate controls with respect to
272、 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 and enhance our distinctive brand identity,our brand image may be diminished and our sales may decrease;and implementation of thes
273、e plans 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 information systems.In addition,our ability to successfully improve and expand our exclusive product offerings may be
274、 affected by economic and competitive conditions,changes in consumer spending patterns and changes in consumer preferences.These plans could be abandoned,cost more than anticipated and divert resources from other areas of our business,any of which could impact our competitive position and reduce our
275、 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 actively manage our purchase of inventory.We generally order our seasonal and private brand merchandise several mo
276、nths 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 by disproportionately increasing the penetration of our private brand merchandise,we may be forced to rely on markdo
277、wns 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 merchandise,we may not have an adequate supply of products to meet consumer demand,thereby causing us to lose sales
278、 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 could adversely affect our results of operations.A rise in the cost of fabric,raw materials,labor or transportation
279、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 cotton and leather,that our suppliers use to manufacture our products,as well as the cost of labor and transportat
280、ion,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 increases in the cost of cotton or leather may significantly affect the cost of our products and could have an adver
281、se 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.20 If our suppliers and manufacturers fail to use acceptable labor or other practices,our reputation may be harmed,which
282、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 accepted in the U.S.,consumers may develop a negative view of us,our brand image could be damaged and we could become t
283、he 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 in their shipments of merchandise.For example,much of our merchandise is manufactured in China and Mexico,which have
284、 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 suppliers representations set forth in our purchase orders and supplier agreements concerning the suppliers compliance
285、 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,could affect the sourcing and availability of raw materials used by suppliers and subject us to costs associated with
286、 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 reporting requirements.If our goods are manufactured using illegal or unacceptable labor practices in these countr
287、ies,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,our sales may be adversely affected.If we lose key management personnel,our operations could be negatively impacted.W
288、e 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 harm to our supplier and employee relationships,the loss of key information,expertise or know-how and unanticipated
289、 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 negatively by investors and analysts,which could cause the price of our common stock to decline.We may be unable to f
290、ind qualified individuals to replace key management personnel on a timely basis,without incurring increased costs or at all.We do not intend to purchase key person life insurance covering any employee.If we lose the services of any of our key management personnel or we are unable to attract addition
291、al 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 upon the quality of the employees we hire.We recruit people who are welcoming,friendly and service-orient
292、ed,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 service environment.The turnover rate in the retail industry is typically high and finding qualified candida
293、tes 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 managers and store associates with the qualifications we deem necessary,our ability to effectively operate
294、 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 or seasonal personnel to staff our operations when needed,which may strain our existing personnel and neg
295、atively 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,including recent legislative proposals relating to healthcare reform,could cause us to incur additional wage and
296、 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 profitability.21 The concentration of our stores and operations in certain geographic locations subjects
297、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 we encounter any disruptions to our operations at these locations or if they were to shut down for any rea
298、son,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 shutdown at our buildings in California are greater than they might be if they were located in another region
299、,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 adverse effect on our financial condition and results of operations.In addition,of the 219 stores that we
300、operated as of April 1,2017,102 of these stores were located in Arizona,California and Texas.The geographic concentration of our stores may expose us to economic downturns in those states where our stores are located.For example,a recession in any area where we own several stores could adversely aff
301、ect our ability to generate or increase operating revenues.In addition,our stores located in North Dakota,Wyoming,Colorado,Texas and surrounding areas are likely to be adversely impacted by the economic downturn affecting the oil,gas,and commodities industries.Any negative impact upon or disruption
302、to the operations of stores in these states could have a material adverse effect on our financial condition and results of operations.Our leverage may reduce our cash flow available to grow our business.As of April 1,2017,we had an aggregate of$229.8 million of total outstanding indebtedness.Our obl
303、igations to pay principal and interest under the June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan will reduce our available cash flow,limiting our flexibility to respond to changing business and economic conditions and increasing any additional borrowing costs.Our borrowings under the Jun
304、e 2015 Wells Fargo Revolver and the 2015 Golub Term Loan are at variable rates,exposing us to interest rate risk.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 c
305、redit facilities could increase even though the amount borrowed remained the same,which would adversely impact our net income.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 J
306、une 2015 Wells Fargo Revolver and the 2015 Golub 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 o
307、r its subsidiaries,including the payment of dividends 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;22 entering into hedging transactio
308、ns;engaging in mergers,consolidations or sales of 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 r
309、atios will depend on our ongoing financial and operating 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
310、successfully implement our overall business strategy 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 resul
311、t in a default under the June 2015 Wells Fargo Revolver 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.Unde
312、r these circumstances,we might not have sufficient 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
313、.We are required to make significant lease payments 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 lease
314、s generally have a base lease term of five or 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 c
315、osts under these leases are a significant amount of our expenses and are growing rapidly as we expand the number of locations and the cost of leasing existing locations rises.In fiscal 2017,our total operating lease expense was$41.3 million,and we expect this amount to continue to increase as we ope
316、n more stores.We are required to pay additional 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 agre
317、ements also contain provisions which increase 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 signi
318、ficant,recurring and increasing,which places a 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 other
319、wise available to us from borrowings under our 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 busine
320、ss.Additional sites that we lease are likely to 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 fo
321、r the balance of the lease term.We may fail to 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
322、close stores in desirable locations.Twenty-two of our 219 store leases will reach their termination date during fiscal 2018,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 o
323、r be released from our obligations under leases for stores that we close,our business,profitability and results of operations may be harmed.23 We may be unable to maintain same store sales or net sales per square foot,which may cause our results of operations to decline.The investing public may use
324、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 of Operation for further discussion
325、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 and increased competition.These factors
326、 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 inability to balance our private brand mercha
327、ndise with the third-party branded merchandise that we sell may have an adverse effect on our net sales and gross profit.In fiscal 2017,sales from our private brand products accounted for approximately 10.7%of our consolidated sales including our stores and e-commerce channels.As of April 1,2017,two
328、 of our five top selling brands were private brand merchandise.Our private brand merchandise generally has a higher gross margin than the third-party branded merchandise that we offer.As a result,we intend to attempt to increase the penetration of our private brands in the future.However,carrying ou
329、r private brands limits the amount of third-party branded merchandise we can carry and,therefore,there is a risk that our customers perception that we offer many major brands will decline or that our suppliers of third-party branded merchandise may decide to discontinue supplying,or reduce the suppl
330、y of,their merchandise.If this occurs,it could have a material adverse effect on net sales and profitability.If our management information systems fail to operate or are unable to support our growth,our operations could be disrupted.We rely upon our management information systems in almost every asp
331、ect of our daily business operations.For example,our management information systems serve an integral part in enabling us to order merchandise,process merchandise at our distribution center and retail stores,perform and track sales transactions,manage personnel,pay suppliers and employees,operate ou
332、r e-commerce businesses and report financial and accounting information to management.In addition,we rely on our management information systems to enable us to leverage our costs as we grow.If our management information systems fail to operate or are unable to support our growth,our store operations
333、 and e-commerce businesses could be severely disrupted,and we could be required to make significant additional expenditures to remediate any such failure.We rely on UPS and the United States Postal Service to deliver our e-commerce merchandise to our customers and our business could be negatively impacted by disruptions in the operations of these third-party service providers.We rely on UPS an
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