Why Boot Barn Stock Sank Nearly 26% Last Month

Shares of retail chain Boot Barn (NYSE: BOOT) sank 25.5% in October, according to data provided by S&P Global Market Intelligence. The biggest chunk of this decline happened on Oct. 28, after the company reported financial results for its fiscal second quarter of 2025. But the Q2 results weren't the problem. Rather, investors are concerned with a sudden change in leadership.

Boot Barn CEO Jim Conroy took over 12 years ago, meaning he took the company public in 2014 and has since led it to impressive revenue growth and earnings-per-share (EPS) growth.

BOOT Revenue (TTM) data by YCharts.

Conroy has done well leading Boot Barn and its shareholders are consequently richer. But that's why they're concerned that Conroy announced he's leaving for Ross Stores.

Even though Boot Barn announced that chief digital officer John Hazen will become interim CEO, the transition cast a cloud over otherwise strong Q2 financial results.

Good financial results and higher guidance

For Q2, Boot Barn's management had expected same-store sales to essentially be flat year over year. It expected to generate revenue of $412 million, at most. But in Q2, the company actually generated revenue of $426 million, thanks to a healthy 5% increase in same-store sales.

In light of much-stronger-than-expected financial results in Q2, Boot Barn's management raised its full-year guidance. There are many guidance metrics, but one that stands out is its EPS guidance. Previously, it expected full-year diluted EPS of $5.05 to $5.35, but now it expects full-year EPS of $5.30 to $5.60.

That's a big boost in guidance, and it likely would have lifted Boot Barn stock if Conroy hadn't decided to leave for another company.

What should investors do now?

Prior to the 26% drop in October, shares of Boot Barn had more than doubled year to date, which is extraordinary since it only expects roughly 13% growth in its fiscal 2025. In short, I believe a pullback was healthy, even though its financial results were better than expected.

Turning to management, I can appreciate investors' concern regarding a change of CEO. That said, I believe fears may be premature. After all, an apparel retail business is fairly straightforward, and Boot Barn has a long history of success. I'd say to give new management some time.

As of this writing, nothing has changed with Boot Barn's economics and long-term ambitions. It ended Q2 with nearly 430 locations, but it expects to have 900 locations in its fiscal 2030 -- about five years from now. The company's exclusive brands are growing as a percentage of sales, boosting profitability, and new locations have a short payback period at about 1.5 years.

Boot Barn can still create a lot of long-term shareholder value. Watch results in light of new management. But for now, I'd give new leadership the benefit of the doubt and keep holding shares if I were a shareholder.

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Jon Quast has no position in any of the stocks mentioned. The Motley Fool recommends Boot Barn. The Motley Fool has a disclosure policy.