UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended December 26, 2020

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number: 001-36711

Boot Barn Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

90-0776290

(I.R.S. employer

identification no.)

15345 Barranca Pkwy

Irvine, California

(Address of principal executive offices)

92618

(Zip code)

(949) 453-4400

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.0001 par value	BOOT	New York Stock Exchange

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 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an 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 “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒	Accelerated filer ☐	Emerging growth company ☐
Non-accelerated filer ☐	Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of January 25, 2021, the registrant had 29,004,693 shares of common stock outstanding, $0.0001 par value.

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Boot Barn Holdings, Inc. and Subsidiaries

Form 10-Q

For the Thirteen and Thirty-Nine Weeks Ended December 26, 2020


		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of December 26, 2020 and March 28, 2020	3
	Condensed Consolidated Statements of Operations for the Thirteen and Thirty-Nine Weeks Ended December 26, 2020 and December 28, 2019	4
	Condensed Consolidated Statements of Stockholders’ Equity for the Thirteen and Thirty-Nine Weeks Ended December 26, 2020 and December 28, 2019	5
	Condensed Consolidated Statements of Cash Flows for the Thirty-Nine Weeks Ended December 26, 2020 and December 28, 2019	6
	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosure of Market Risk	35

Item 4.	Controls and Procedures	35

PART II.	OTHER INFORMATION	36

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 3.	Defaults Upon Senior Securities	36

Item 4.	Mine Safety Disclosures	36

Item 5.	Other Information	36

Item 6.	Exhibits	37

	Signatures	38

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Part 1. Financial Information

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

BOOT BARN HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)


	December 26,		March 28,
	2020		2020

Assets
Current assets:
Cash and cash equivalents	$	76,342	$	69,563
Accounts receivable, net		13,876		12,087
Inventories		246,008		288,717
Prepaid expenses and other current assets		15,008		14,284
Total current assets		351,234		384,651
Property and equipment, net		109,793		109,603
Right-of-use assets, net		170,311		170,243
Goodwill		197,502		197,502
Intangible assets, net		60,907		60,974
Other assets		2,425		1,738
Total assets	$	892,172	$	924,711
Liabilities and stockholders’ equity
Current liabilities:
Line of credit	$	—	$	129,900
Accounts payable		103,095		95,334
Accrued expenses and other current liabilities		94,831		52,612
Short-term lease liabilities		36,796		34,779
Total current liabilities		234,722		312,625
Deferred taxes		18,651		19,801
Long-term portion of notes payable, net		109,591		109,022
Long-term lease liabilities		165,176		160,935
Other liabilities		1,424		635
Total liabilities		529,564		603,018

Commitments and contingencies (Note 7)

Stockholders’ equity:
Common stock, $0.0001 par value; December 26, 2020 - 100,000 shares authorized, 29,044 shares issued; March 28, 2020 - 100,000 shares authorized, 28,880 shares issued		3		3
Preferred stock, $0.0001 par value; 10,000 shares authorized, no shares issued or outstanding		—		—
Additional paid-in capital		175,865		169,249
Retained earnings		188,475		153,641
Less: Common stock held in treasury, at cost, 93 and 71 shares at December 26, 2020 and March 28, 2020, respectively		(1,735)		(1,200)
Total stockholders’ equity		362,608		321,693
Total liabilities and stockholders’ equity	$	892,172	$	924,711

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BOOT BARN HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	December 26,		December 28,		December 26,		December 28,
	2020		2019		2020		2019


Net sales	$	302,338	$	283,997	$	634,619	$	656,947
Cost of goods sold		195,529		186,961		432,119		438,417
Gross profit		106,809		97,036		202,500		218,530
Selling, general and administrative expenses		65,183		62,059		149,034		154,558
Income from operations		41,626		34,977		53,466		63,972
Interest expense, net		2,303		3,155		7,327		10,369
Other income, net		152		37		294		51
Income before income taxes		39,475		31,859		46,433		53,654
Income tax expense		9,909		7,040		11,599		11,434
Net income	$	29,566	$	24,819	$	34,834	$	42,220

Earnings per share:
Basic shares	$	1.02	$	0.87	$	1.21	$	1.48
Diluted shares	$	1.00	$	0.85	$	1.19	$	1.45
Weighted average shares outstanding:
Basic shares		28,912		28,665		28,866		28,516
Diluted shares		29,581		29,367		29,275		29,188

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BOOT BARN HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


				Additional
	Common Stock			Paid-In		Retained		Treasury Shares
	Shares	Amount		Capital		Earnings		Shares	Amount		Total


Balance at March 28, 2020	28,880	$	3	$	169,249	$	153,641	(71)	$	(1,200)	$	321,693
Net loss	—		—		—		(490)	—		—		(490)
Issuance of common stock related to stock-based compensation	65		—		4		—	—		—		4
Tax withholding for net share settlement	—		—		—		—	(20)		(485)		(485)
Stock-based compensation expense	—		—		1,824		—	—		—		1,824
Balance at June 27, 2020	28,945	$	3	$	171,077	$	153,151	(91)	$	(1,685)	$	322,546
Net income	—		—		—		5,758	—		—		5,758
Issuance of common stock related to stock-based compensation	13		—		57		—	—		—		57
Tax withholding for net share settlement	—		—		—		—	(1)		(32)		(32)
Stock-based compensation expense	—		—		1,705		—	—		—		1,705
Balance at September 26, 2020	28,958	$	3	$	172,839	$	158,909	(92)	$	(1,717)	$	330,034
Net income	—		—		—		29,566	—		—		29,566
Issuance of common stock related to stock-based compensation	86		—		1,544		—	—		—		1,544
Tax withholding for net share settlement	—		—		—		—	(1)		(18)		(18)
Stock-based compensation expense	—		—		1,482		—	—		—		1,482
Balance at December 26, 2020	29,044	$	3	$	175,865	$	188,475	(93)	$	(1,735)	$	362,608

				Additional
	Common Stock			Paid-In		Retained		Treasury Shares
	Shares	Amount		Capital		Earnings		Shares	Amount		Total


Balance at March 30, 2019	28,399	$	3	$	159,137	$	105,692	(51)	$	(668)	$	264,164
Net income	—		—		—		9,721	—		—		9,721
Issuance of common stock related to stock-based compensation	143		—		1,267		—	—		—		1,267
Tax withholding for net share settlement	—		—		—		—	(15)		(422)		(422)
Stock-based compensation expense	—		—		965		—	—		—		965
Balance at June 29, 2019	28,542	$	3	$	161,369	$	115,413	(66)	$	(1,090)	$	275,695
Net income	—		—		—		7,680	—		—		7,680
Issuance of common stock related to stock-based compensation	90		—		655		—	—		—		655
Tax withholding for net share settlement	—		—		—		—	(1)		(61)		(61)
Stock-based compensation expense	—		—		1,180		—	—		—		1,180
Balance at September 28, 2019	28,632	$	3	$	163,204	$	123,093	(67)	$	(1,151)	$	285,149
Net income	—		—		—		24,819	—		—		24,819
Issuance of common stock related to stock-based compensation	200		—		2,790		—	—		—		2,790
Tax withholding for net share settlement	—		—		—		—	—		—		—
Stock-based compensation expense	—		—		1,181		—	—		—		1,181
Balance at December 28, 2019	28,832	$	3	$	167,175	$	147,912	(67)	$	(1,151)	$	313,939

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BOOT BARN HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Thirty-Nine Weeks Ended
	December 26,		December 28,
	2020		2019

Cash flows from operating activities
Net income	$	34,834	$	42,220
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		17,919		15,384
Stock-based compensation		5,011		3,326
Amortization of intangible assets		67		127
Amortization of right-of-use assets		25,342		22,899
Amortization of debt issuance fees and debt discount		663		725
Loss on disposal of property and equipment		23		389
Loss/(gain) on adjustment of right-of-use assets and lease liabilities		295		(186)
Store impairment charge		384		—
Deferred taxes		(1,150)		(736)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable, net		4,242		290
Inventories		42,709		(32,257)
Prepaid expenses and other current assets		(818)		(1,885)
Other assets		(687)		(559)
Accounts payable		9,753		17,063
Accrued expenses and other current liabilities		42,219		31,929
Other liabilities		789		396
Operating leases		(24,991)		(22,324)
Net cash provided by operating activities	$	156,604	$	76,801
Cash flows from investing activities
Purchases of property and equipment	$	(20,508)	$	(27,550)
Acquisition of business, net of cash acquired		—		(3,688)
Insurance recoveries for property and equipment		—		717
Net cash used in investing activities	$	(20,508)	$	(30,521)
Cash flows from financing activities
(Payments)/Borrowings on line of credit - net	$	(129,900)	$	45,000
Repayments on debt and finance lease obligations		(487)		(65,456)
Debt issuance fees paid		—		(1,221)
Tax withholding payments for net share settlement		(535)		(483)
Proceeds from the exercise of stock options		1,605		4,712
Net cash used in financing activities	$	(129,317)	$	(17,448)
Net increase in cash and cash equivalents		6,779		28,832
Cash and cash equivalents, beginning of period		69,563		16,614
Cash and cash equivalents, end of period	$	76,342	$	45,446

Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	3,684	$	8,139
Cash paid for interest	$	6,731	$	9,472
Supplemental disclosure of non-cash activities:
Unpaid purchases of property and equipment	$	3,703	$	2,659

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BOOT BARN HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Description of the Company, Recent Developments and Basis of Presentation

Boot Barn Holdings, Inc. (the “Company”), the parent holding company of the group of operating subsidiaries that conduct the Boot Barn business, was formed on November 17, 2011, and is incorporated in the State of Delaware. The equity of the Company consists of 100,000,000 authorized shares and 29,043,610 issued and 28,950,823 outstanding shares of common stock as of December 26, 2020. The shares of common stock have voting rights of one vote per share.

The Company operates specialty retail stores and e-commerce websites that sell western and work boots and related apparel and accessories. The Company operates retail locations throughout the U.S. and sells its merchandise via the internet. The Company operated a total of 266 stores in 36 states as of December 26, 2020 and 259 stores in 35 states as of March 28, 2020. As of December 26, 2020, all stores operate under the Boot Barn name, with the exception of two stores that operate under the “American Worker” name.

Recent Developments

In December 2019, a novel strain of coronavirus (“COVID-19”) was reported in Wuhan, China. Since first being reported, COVID-19 has spread to numerous countries around the world, including the U.S., resulting in the World Health Organization declaring the outbreak a global pandemic on March 11, 2020. As COVID-19 has continued to spread, public and private sector policies and initiatives intended to reduce the transmission of COVID-19, such as the imposition of travel restrictions, mandates from federal, state and local authorities to avoid large gatherings of people, quarantine or “shelter-in-place”, and the promotion of social distancing have significantly impacted the country. COVID-19 has had and will continue to have a significant impact on economic conditions and consumer confidence. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. economy and consumer confidence. These and other effects make it more challenging for us to estimate the future performance of our business, particularly over the near-to-medium term.

The extent to which COVID-19 impacts our operations will depend on future developments, which are highly uncertain and difficult to predict, including, among others, the duration of the outbreak, new information that may emerge concerning the severity of COVID-19 and the actions, especially those taken by governmental authorities, to contain the pandemic or treat its impact. As events are rapidly changing, additional impacts may arise that we are not aware of currently. For more information about the risks, uncertainties, and other factors that could affect our future results, please see Item 1A, Risk Factors, of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on May 22, 2020.

As a result of COVID-19, traffic at our retail stores significantly declined beginning in the last three weeks of fiscal 2020 and continued through the start of fiscal 2021 as many state and local governments began implementing stay-at-home directives to help prevent the spread of COVID-19. Except for temporary store closures due to COVID-19, all of our stores are currently open. We may be required to implement additional store closures in response to the future transmission of COVID-19. As a result of COVID-19, we have taken measures, as fully described in our Annual Report on Form 10-K, to preserve liquidity and reduce expenses, while maintaining flexibility to resume full operations once we re-emerge from this global pandemic. While certain of these measures, including temporary salary reductions and most employee furloughs, are no longer in effect as of the date of this report, we continue to closely monitor ongoing developments in connection with the COVID-19 pandemic and its impact on our business.

Basis of Presentation

The Company’s condensed consolidated financial statements as of and for the thirteen and thirty-nine weeks ended December 26, 2020 and December 28, 2019 are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), and include the accounts of the Company and each of its subsidiaries, consisting of Boot Barn, Inc., RCC Western Stores, Inc., Baskins Acquisition Holdings, LLC, Sheplers, Inc. and Sheplers Holding

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Corporation (collectively with Sheplers, Inc., “Sheplers”). All intercompany accounts and transactions among the Company and its subsidiaries have been eliminated in consolidation. The vast majority of the Company’s identifiable assets are in the United States. Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements have been condensed or omitted.

In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments that are of a normal and recurring nature necessary to fairly present the Company’s financial position and results of operations and cash flows in all material respects as of the dates and for the periods presented. The results of operations presented in the interim condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the fiscal year ending March 27, 2021.

Fiscal Periods

The Company reports its results of operations and cash flows on a 52- or 53-week basis 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 year, each quarter includes thirteen weeks of operations; in a 53-week fiscal year, the first, second and third quarters each include thirteen weeks of operations and the fourth quarter includes fourteen weeks of operations. Both the fiscal year ending on March 27, 2021 (“fiscal 2021”) and the fiscal year ended on March 28, 2020 (“fiscal 2020”) consist of 52 weeks.

2. Summary of Significant Accounting Policies

Information regarding the Company’s significant accounting policies is contained in Note 2, “Summary of Significant Accounting Policies”, to the consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on May 22, 2020. Presented below in the following notes is supplemental information that should be read in conjunction with those consolidated financial statements.

Comprehensive Income

The Company does not have any components of other comprehensive income recorded within its consolidated financial statements and, therefore, does not separately present a statement of comprehensive income in its consolidated financial statements.

Segment Reporting

GAAP has established guidance for reporting information about a company’s operating segments, including disclosures related to a company’s products and services, geographic areas and major customers. The Company’s retail stores and e-commerce websites represent two operating segments. Given the similar qualitative and economic characteristics of the two operating segments, the Company’s retail stores and e-commerce websites are aggregated into one reporting segment in accordance with guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting (“ASC 280”). The Company’s operations represent two reporting units, retail stores and e-commerce, for the purpose of its goodwill impairment analysis.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Among the significant estimates affecting the Company’s consolidated financial statements are those relating to revenue recognition, lease accounting, inventories, goodwill, intangible and long-lived assets, stock-based compensation and income taxes. Management regularly evaluates its estimates and assumptions based upon historical experience and various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. To the extent actual results differ from those estimates, the Company’s future results of operations may be affected.

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Inventories

Inventory consists primarily of purchased merchandise and is valued at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis and includes the cost of merchandise and import-related costs, including freight, duty and agent commissions. The Company assesses the recoverability of inventory through a periodic review of historical usage and present demand. When the inventory on hand exceeds the foreseeable demand, the value of inventory that, at the time of the review, is not expected to be sold at or above cost is written down to its estimated net realizable value.

Leases

Operating and finance lease liabilities are recognized at the lease commencement date based on the present value of the fixed lease payments using the Company's incremental borrowing rates for its population of leases. Related operating and finance lease right-of-use (“ROU”) assets are recognized based on the initial present value of the fixed lease payments, reduced by cash payments received from landlords as lease incentives, plus any prepaid rent and other direct costs from executing the leases. Amortization of both operating and finance lease right-of-use assets is performed on a straight-line basis and recorded as part of rent expense in selling, general and administrative expenses on the condensed consolidated statements of operations. The interest expense amortization component of the finance lease liabilities is recorded within interest expense on the condensed consolidated statements of operations.

Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Variable lease payments are recognized as lease expense as they are incurred.

Fair Value of Certain Financial Assets and Liabilities

The Company follows FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), which requires disclosure of the estimated fair value of certain assets and liabilities defined by the guidance as financial instruments. The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable and debt. ASC 820 defines the fair value of financial instruments as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities.

●

Level 1 uses unadjusted quoted prices that are available in active markets for identical assets or liabilities.

●

Level 2 uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data.

●

Level 3 uses one or more significant inputs that are unobservable and supported by little or no market activity, and reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation. The Company’s Level 3 assets include certain acquired businesses and the evaluation of store impairment.

Cash and cash equivalents, accounts receivable and accounts payable are classified according to the lowest level input that is significant to the fair value measurement. As a result, the asset or liability could be classified as Level 2 or Level 3 even though there may be certain significant inputs that are readily observable. The Company believes that the

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recorded value of its financial instruments approximates their current fair values because of their nature and respective relatively short maturity dates or duration.

Although market quotes for the fair value of the outstanding debt arrangements discussed in Note 5, “Revolving Credit Facilities and Long-Term Debt” are not readily available, the Company believes its carrying value approximates fair value due to the variable interest rates, which are Level 2 inputs. There were no financial assets or liabilities requiring fair value measurements on a recurring basis as of December 26, 2020.

Recently Adopted Accounting Pronouncements

In January 2017, the FASB issued ASU No. 2017-04, Intangibles — Goodwill and Other: Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which simplifies the accounting for goodwill impairment by eliminating step two from the goodwill impairment test. Under this new guidance, if the carrying amount of a reporting unit exceeds its estimated fair value, an impairment charge shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The amendments in ASU 2017-04 are effective prospectively for fiscal years and interim periods within those years beginning after December 15, 2019. The standard became effective for the Company beginning March 29, 2020, the first day of its fiscal 2021 year. The Company does not expect the revised standard to have a material impact on the consolidated financial statements.

Revenue Recognition

Revenue is recorded for store sales upon the purchase of merchandise by customers. Sales are recorded net of taxes collected from customers. Transfer of control takes place at the point at which the customer receives and pays for the merchandise at the register. E-commerce sales are recorded when control transfers to the customer, which generally occurs upon delivery of the product. Shipping and handling revenues are included in total net sales. Shipping costs incurred by the Company are included in cost of goods sold.

The Company maintains a customer loyalty program. Under the program, customers accumulate points based on purchase activity. For customers to maintain their active point balance, they must make a qualifying purchase of merchandise at least once in a 365-day period. Once a loyalty program member achieves a certain point level, the member earns awards that may be redeemed for credits on merchandise purchases. To redeem awards, the member must make a qualifying purchase of merchandise within 60 days of the date the award was granted. Unredeemed awards and accumulated partial points are accrued as unearned revenue until redemption or expiration and, upon redemption and expiration, as an adjustment to net sales using the relative standalone selling price method. The unearned revenue for this program is recorded in accrued expenses and other current liabilities on the consolidated balance sheets and was $2.7 million as of December 26, 2020 and $2.6 million as of December 28, 2019. The following table provides a reconciliation of the activity related to the Company’s customer loyalty program:


Customer Loyalty Program
(in thousands)	December 26, 2020		December 28, 2019
Beginning balance as of March 28, 2020 and March 30, 2019, respectively	$	2,076	$	1,936
Year-to-date provisions		4,967		5,410
Year-to-date award redemptions		(4,346)		(4,795)
Ending balance	$	2,697	$	2,551

Revenue is recorded net of estimated and actual sales returns and deductions for coupon redemptions, estimated future award redemption and other promotions. The sales returns reserve reflects an estimate of sales returns based on projected merchandise returns determined through the use of historical average return percentages. The total reserve for returns is recorded in accrued expenses and other current liabilities in the consolidated balance sheets. The Company accounts for the asset and liability separately on a gross basis.

Proceeds from the sale of gift cards are deferred until the customers use the cards to acquire merchandise. Gift cards, gift certificates and store credits do not have expiration dates, and unredeemed gift cards, gift certificates and store credits are subject to state escheatment laws. Amounts remaining after escheatment are recognized in net sales in the

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period escheatment occurs and the liability is considered to be extinguished. The Company defers recognition of a layaway sale and its related profit to the accounting period when the customer receives the layaway merchandise. Income from the redemption of gift cards, gift card breakage, and the sale of layaway merchandise is included in net sales. The following table provides a reconciliation of the activity related to the Company’s gift card program:


Gift Card Program
(in thousands)	December 26, 2020		December 28, 2019
Beginning balance as of March 28, 2020 and March 30, 2019, respectively	$	10,118	$	8,796
Year-to-date issued		14,181		13,269
Year-to-date redemptions		(8,893)		(9,221)
Ending balance	$	15,406	$	12,844

Disaggregated Revenue

The Company disaggregates net sales into the following major merchandise categories:


	Thirteen Weeks Ended		Thirty-Nine Weeks Ended
% of Net Sales	December 26, 2020	December 28, 2019	December 26, 2020	December 28, 2019
Footwear	49%	48%	53%	50%
Apparel	36%	37%	32%	35%
Hats, accessories and other	15%	15%	15%	15%
Total	100%	100%	100%	100%

The Company further disaggregates net sales between stores and e-commerce:


	Thirteen Weeks Ended		Thirty-Nine Weeks Ended
% of Net Sales	December 26, 2020	December 28, 2019	December 26, 2020	December 28, 2019
Stores	80%	82%	80%	84%
E-commerce	20%	18%	20%	16%
Total	100%	100%	100%	100%

3. Asset Acquisition and Business Combinations

G.&L. Clothing, Inc.

On August 26, 2019, Boot Barn, Inc. completed the acquisition of G.&L. Clothing, Inc. (“G.&L. Clothing”), an individually-owned retailer operating one store in Des Moines, Iowa. As part of the transaction, Boot Barn, Inc. purchased the inventory, entered into new leases with the store’s landlord and offered employment to the G.&L. Clothing team. The primary reason for the acquisition of G.&L. Clothing was to further expand the Company’s retail operations in Iowa. The cash consideration paid for the acquisition was $3.7 million.

In allocating the purchase price, the Company recorded all assets acquired and liabilities assumed at fair value. The total fair value of consideration transferred for the acquisition was allocated to the net tangible and intangible assets based upon their estimated fair values as of the date of the acquisition of G.&L. Clothing. The excess of the purchase price over the net tangible and intangible assets was recorded as goodwill. The goodwill and intangibles are deductible for income tax purposes.

The Company determined the estimated fair values using Level 3 inputs after review and consideration of relevant information, including quoted market prices and estimates made by management. The inventory was valued using the comparative sales method. Property and equipment, net, customer list and merchandise credits and other current liabilities were valued under either the cost or income approach. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date based on the purchase price allocation:

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(in thousands)	At August 26, 2019
Assets acquired:
Inventory	$	2,361
Property & equipment, net		64
Customer list		345
Right-of-use asset, net		1,946
Goodwill		1,644
Total assets acquired	$	6,360

Liabilities assumed:
Merchandise credits and other current liabilities	$	169
Short-term lease liability		129
Long-term lease liability		2,374
Total liabilities assumed		2,672
Net assets acquired	$	3,688

4. Intangible Assets, Net and Goodwill

Net intangible assets as of December 26, 2020 and March 28, 2020 consisted of the following (in thousands, except for weighted average useful life):


	December 26, 2020
	Gross						Weighted
	Carrying		Accumulated				Average
	Amount		Amortization		Net		Useful Life
Customer lists	$	345	$	(117)	$	228	5.0
Trademarks—definite lived		15		(13)		2	3.0
Total definite lived		360		(130)		230
Trademarks—indefinite lived		60,677		—		60,677
Total intangible assets	$	61,037	$	(130)	$	60,907


	March 28, 2020
	Gross						Weighted
	Carrying		Accumulated				Average
	Amount		Amortization		Net		Useful Life
Customer lists	$	345	$	(54)	$	291	5.0
Trademarks-definite lived		15		(9)		6	3.0
Total definite lived		360		(63)		297
Trademarks—indefinite lived		60,677		—		60,677
Total intangible assets	$	61,037	$	(63)	$	60,974

Amortization expense for intangible assets totaled less than $0.1 million for both the thirteen weeks ended December 26, 2020 and December 28, 2019, and is included in selling, general and administrative expenses.

Amortization expense for intangible assets totaled less than $0.1 million and $0.1 million for the thirty-nine weeks ended December 26, 2020 and December 28, 2019, respectively, and is included in selling, general and administrative expenses.

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As of December 26, 2020, estimated future amortization of intangible assets was as follows:


Fiscal Year	(in thousands)
2021	$	22
2022		72
2023		62
2024		54
2025		20
Thereafter		-
Total	$	230

The Company performs its annual goodwill impairment assessment on the first day of the fourth fiscal quarter, or more frequently if it believes that indicators of impairment exist. The Company’s goodwill balance was $197.5 million as of both December 26, 2020 and March 28, 2020. As of December 26, 2020, the Company had identified no indicators of impairment with respect to its goodwill and intangible asset balances.

During the thirteen and thirty-nine weeks ended December 26, 2020, the Company recorded long-lived asset impairment charges of zero and $0.7 million, respectively, related to its stores. These long-lived asset impairment charges relate to right-of-use assets and property, plant and equipment associated with our stores. During the thirteen and thirty-nine weeks ended December 28, 2019, the Company did not record any long-lived asset impairment charges.

5. Revolving Credit Facilities and Long-Term Debt

On June 29, 2015, the Company, as guarantor, and its wholly-owned primary operating subsidiary, Boot Barn, Inc., refinanced a previous Wells Fargo credit facility with the $125.0 million syndicated senior secured asset-based revolving credit facility for which Wells Fargo Bank, National Association (“June 2015 Wells Fargo Revolver”), is agent, and the $200.0 million syndicated senior secured term loan for which GCI Capital Markets LLC (“2015 Golub Term Loan”) is agent. The borrowing base of the June 2015 Wells Fargo Revolver is calculated on a monthly basis and is based on the amount of eligible credit card receivables, commercial accounts, inventory, and available reserves.

Borrowings under the June 2015 Wells Fargo Revolver bear interest at per annum rates equal to, at the Company’s option, either (i) London Interbank Offered Rate (“LIBOR”) plus an applicable margin for LIBOR loans, or (ii) the base rate plus an applicable margin for base rate loans. The base rate is calculated as the highest of (a) the federal funds rate plus 0.5%, (b) the Wells Fargo prime rate and (c) one-month LIBOR plus 1.0%. The applicable margin is calculated based on a pricing grid that in each case is linked to quarterly average excess availability. For LIBOR Loans, the applicable margin ranges from 1.00% to 1.25%, and for base rate loans it ranges from 0.00% to 0.25%. The Company also pays a commitment fee of 0.25% per annum of the actual daily amount of the unutilized revolving loans. The interest on the June 2015 Wells Fargo Revolver is payable in quarterly installments ending on the maturity date. On May 26, 2017, the Company entered into an amendment to the June 2015 Wells Fargo Revolver (the “2017 Wells Amendment”), increasing the aggregate revolving credit facility to $135.0 million and extending the maturity date to the earlier of May 26, 2022 or 90 days prior to the previous maturity of the 2015 Golub Term Loan, which was then scheduled to mature on June 29, 2021. On June 6, 2019, the Company entered into Amendment No. 3 to the Credit Agreement (the “2019 Wells Amendment”), further increasing the aggregate revolving credit facility to $165.0 million and extending the maturity date to the earlier of June 6, 2024 or 90 days prior to the maturity of the 2015 Golub Term Loan, which is currently scheduled to mature on June 29, 2023. The 2019 Wells Amendment further made changes to the 2015 Wells Fargo Revolver in connection with the transition away from LIBOR as the benchmark rate. The amount outstanding under the June 2015 Wells Fargo Revolver as of December 26, 2020 and March 28, 2020 was zero and $129.9 million, respectively. Total interest expense incurred in the thirteen and thirty-nine weeks ended December 26, 2020 on the June 2015 Wells Fargo Revolver was $0.3 million and $1.3 million, respectively, and the weighted average interest rate for the thirteen weeks ended December 26, 2020 was 1.7%. Total interest expense incurred in the thirteen and thirty-nine weeks ended December 28, 2019 on the June 2015 Wells Fargo Revolver was $0.9 million and $2.4 million, respectively, and the weighted average interest rate for the thirteen weeks ended December 28, 2019 was 3.2%.

Borrowings under the 2015 Golub Term Loan bear interest at per annum rates equal to, at the Company’s option, either (a) LIBOR plus an applicable margin for LIBOR loans with a LIBOR floor of 1.0%, or (b) the base rate plus an

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applicable margin for base rate loans. The base rate is calculated as the greater of (i) the higher of (x) the prime rate and (y) the federal funds rate plus 0.5% and (ii) the sum of one-month LIBOR plus 1.0%. The applicable margin is 4.5% for LIBOR Loans and 3.5% for base rate loans. The principal and interest on the 2015 Golub Term Loan is payable in quarterly installments ending on the maturity date, which was originally June 29, 2021 but is now June 29, 2023. Quarterly principal payments of $500,000 are due for each quarter; however, on June 2, 2017, the Company prepaid $10.0 million on the 2015 Golub Term Loan, which included all of the required quarterly principal payments until the maturity date of the loan. On May 15, 2018, the Company made an additional $10.0 million prepayment on the 2015 Golub Term Loan. On June 6, 2019, the Company entered into the Third Amendment to the 2015 Golub Term Loan (the “2019 Golub Amendment”) which extended the maturity date to June 29, 2023. At the time of the Third Amendment, the company also prepaid $65.0 million of the term loan facility, reducing the outstanding principal balance to $111.5 million. The 2019 Golub Amendment further made changes to the 2015 Golub Term Loan in connection with the transition away from LIBOR as the benchmark rate. Total interest expense incurred in the thirteen and thirty-nine weeks ended December 26, 2020 on the 2015 Golub Term Loan was $1.6 million and $4.7 million, respectively, and the weighted average interest rate for the thirteen weeks ended December 26, 2020 was 5.9%. Total interest expense incurred in the thirteen and thirty-nine weeks ended December 28, 2019 on the 2015 Golub Term Loan was $1.9 million and $6.7 million, respectively, and the weighted average interest rate for the thirteen weeks ended December 28, 2019 was 6.6%.

All obligations under each of the 2015 Golub Term Loan and the June 2015 Wells Fargo Revolver are unconditionally guaranteed by the Company and each of its direct and indirect domestic subsidiaries (other than certain immaterial subsidiaries) which are not named as borrowers under the 2015 Golub Term Loan or the June 2015 Wells Fargo Revolver, as applicable.

The priority with respect to collateral under each of the 2015 Golub Term Loan and the June 2015 Wells Fargo Revolver is subject to the terms of an intercreditor agreement among the lenders under the 2015 Golub Term Loan and the June 2015 Wells Fargo Revolver.

Each of the June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan contains customary provisions relating to mandatory prepayments, restricted payments, voluntary payments, affirmative and negative covenants, and events of default. In addition, the terms of the June 2015 Wells Fargo Revolver require the Company to maintain, on a consolidated basis, a Consolidated Fixed Charge Coverage Ratio of at least 1.00:1.00 during such times as a covenant trigger event shall exist. On May 26, 2017, the Company entered into an amendment to the 2015 Golub Term Loan (the “2017 Golub Amendment”). The 2017 Golub Amendment changed the maximum Consolidated Total Net Leverage Ratio requirements to 4.00:1.00 as of December 29, 2018 and for all subsequent periods. The 2019 Golub Amendment maintains the same maximum Consolidated Total Net Leverage Ratio requirements. The June 2015 Wells Fargo Revolver and 2015 Golub Term Loan also require the Company to pay additional interest of 2.0% per annum upon triggering certain specified events of default set forth therein. For financial accounting purposes, the requirement for the Company to pay a higher interest rate upon an event of default is an embedded derivative. As of December 26, 2020, the fair value of these embedded derivatives was estimated and was not significant. As of December 26, 2020, the Company was in compliance with the June 2015 Wells Fargo Revolver and the 2015 Golub Term Loan debt covenants.

Debt Issuance Costs and Debt Discount

Debt issuance costs totaling $1.2 million were incurred under the June 2015 Wells Fargo Revolver, 2017 Wells Amendment and 2019 Wells Amendment and are included as assets on the condensed consolidated balance sheets in prepaid expenses and other current assets. Total unamortized debt issuance costs were $0.3 million and $0.4 million as of December 26, 2020 and March 28, 2020, respectively. These amounts are being amortized to interest expense over the term of the June 2015 Wells Fargo Revolver.

Debt issuance costs and debt discount totaling $7.1 million were incurred under the 2015 Golub Term Loan, 2017 Golub Amendment and 2019 Golub Amendment and are included as a reduction of the current and non-current notes payable on the condensed consolidated balance sheets. Total unamortized debt issuance costs and debt discount were $1.9 million and $2.5 million as of December 26, 2020 and March 28, 2020, respectively. These amounts are being amortized to interest expense over the term of the 2015 Golub Term Loan.

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The following sets forth the balance sheet information related to the term loan:


	December 26,		March 28,
(in thousands)	2020		2020
Term Loan	$	111,500	$	111,500
Unamortized value of the debt issuance costs and debt discount		(1,909)		(2,478)
Net carrying value	$	109,591	$	109,022

Total amortization expense of $0.2 million related to the June 2015 Wells Fargo Revolver and 2015 Golub Term Loan is included as a component of interest expense in both the thirteen weeks ended December 26, 2020 and December 28, 2019.

Total amortization expense of $0.7 million related to the June 2015 Wells Fargo Revolver and 2015 Golub Term Loan is included as a component of interest expense in both the thirty-nine weeks ended December 26, 2020 and December 28, 2019.

Aggregate Contractual Maturities

Aggregate contractual maturities for the Company’s long-term debt as of December 26, 2020 are as follows:


Fiscal Year	(in thousands)
2021	$	—
2022		—
2023		—
2024		111,500
Total	$	111,500

6. Stock-Based Compensation

Equity Incentive Plans

On January 27, 2012, the Company approved the 2011 Equity Incentive Plan (the “2011 Plan”). The 2011 Plan authorized the Company to issue options to employees, consultants and directors exercisable for up to a total of 3,750,000 shares of common stock. As of December 26, 2020, all awards granted by the Company under the 2011 Plan have been nonqualified stock options. Options granted under the 2011 Plan have a life of 10 years and vest over service periods of five years or in connection with certain events as defined by the 2011 Plan.

On October 19, 2014, the Company approved the 2014 Equity Incentive Plan, which was amended as of August 24, 2016 (as amended, the “2014 Plan”). Following the approval of the 2014 Plan, no further grants have been made under the 2011 Plan. The 2014 Plan authorizes the Company to issue awards to employees, consultants and directors for up to a total of 3,600,000 shares of common stock. As of December 26, 2020, all awards granted by the Company under the 2014 Plan to date have been nonqualified stock options, restricted stock awards, restricted stock units or performance share units. Options granted under the 2014 Plan have a life of eight to ten years and vest over service periods of four or five years or in connection with certain events as defined by the 2014 Plan. Restricted stock awards granted under the 2014 Plan vest over one or four years, as determined by the Compensation Committee of our board of directors. Restricted stock units vest over service periods of one, four or five years, as determined by the Compensation Committee of our board of directors. Performance share units are subject to the vesting criteria discussed further below.

On August 26, 2020, the Company approved the 2020 Equity Incentive Plan (the “2020 Plan”). Following the approval of the 2020 Plan, no further grants have been made under the 2014 Plan. The 2020 Plan authorizes the Company to issue awards to employees and directors for up to a total of 2,000,000 shares of common stock. As of December 26, 2020, no awards had been granted under the 2020 Plan.