What Happened?
Shares of clothing and footwear retailer Boot Barn (NYSE: BOOT) jumped 4.9% in the afternoon session after it benefited from positive sentiment in the footwear retail sector as competitor Shoe Carnival reported strong quarterly earnings.
Shoe Carnival announced second-quarter earnings per share of $0.70, significantly beating Wall Street's expectation of $0.62. The company also reported a notable increase in its gross profit margin to 38.8%, a 270 basis point jump from the previous year. This strong performance from a peer suggests healthy consumer demand and pricing power within the industry, sparking investor optimism for Boot Barn as well.
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What Is The Market Telling Us
Boot Barn’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 21 days ago when the stock dropped 3.2% on the news that a hotter-than-expected wholesale inflation report fueled concerns about slowing consumer spending. The market was rattled by a Labor Department report showing the Producer Price Index (PPI), a measure of wholesale inflation, jumped 0.9% in July, significantly exceeding economists' expectations of a 0.2% rise. This was the largest monthly increase since March 2022, reigniting worries that businesses will be forced to pass higher costs on to consumers, who are already showing signs of price sensitivity. This inflation data has fanned concerns that U.S. tariffs on imported goods could start to translate into higher prices for shoppers. The inflation report landed amid growing evidence of consumer caution, with recent reports highlighting that shoppers are cutting back on non-essential spending, seeking out sales, and trading down to cheaper brands.
Boot Barn is up 23.9% since the beginning of the year, and at $189.05 per share, has set a new 52-week high. Investors who bought $1,000 worth of Boot Barn’s shares 5 years ago would now be looking at an investment worth $6,342.
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