Western wear retail chain Boot Barn Inc. just bought one of its competitors in a move it hopes will boost its e-commerce fortunes.
The retailer, No. 590 in the Internet Retailer 2015 Second 500 Guide, plans to buy Sheplers Inc., No. 363 in the Internet Retailer 2015 Top 500 Guide, for $147 million in cash. The deal is expected to close by the end of June.
As part of the deal, Sheplers’ 25 stores will become Boot Barn 175 stores. However, CEO Jim Conroy told analysts on a call to discuss the acquisition that the Sheplers website will remain on its current platform, for now.
“We will explore whether it makes sense to go either one direction or the other and put both businesses on one platform,” Conroy says. “That would be a technical decision, not a branding or price promotional decision. We wouldn’t change the way we go to market.”
There’s a reason Conroy plans to leave Sheplers’ e-commerce presence alone: He thinks highly of it.
Throughout the nearly 45-minute call, Conroy repeatedly praised Sheplers’ e-commerce capabilities, calling them “industry leading.” Heited the retailer’s engaging promotional strategy as being among the reasons he’s content to leave well the e-commerce side of the business alone. By acquiring Sheplers, Conroy estimates that e-commerce will account for 15% of the newly combined retailer’s sales in 2015.
“They truly have a way of competing that we believe we can learn from, a set of best practices online that we can not only learn from but perhaps bring some of those over to the BootBarn.com site,” he says. “They have a terrific ability to generate traffic. Their site conversion is a bit higher than Boot Barn’s. All of that we intend to continue and candidly learn from some of it with the exception of the price promotion piece.”
With the acquisition of Sheplers, Boot Barn strengthens its position with adults 35 and older, who comprise 72.5% of Shepler’s consumer base, according to Top500Guide.com data. 57.7% of all Shepler customers have an income between $30,001-$100,000.
Sheplers isn’t the only addition Boot Barn made to its e-commerce operations in the past week.
On Thursday, Conroy told analysts on the retailer’s Q4 2015 earnings call that he had hired Wet Seal veteran Jon Kubo as the retailer’s new chief digital officer. Kubo also has worked at FAO Schwarz, where he Led the launch of the toy retailer’s online store.
In its Q4 2015 earnings filing, Boot Barn reported that same-store sales, which include e-commerce, grew 7.3% year over year. The retailer does not break out online sales figures.
Conroy hinted at plans to invest in e-commerce, including possibly updating Boot Barn’s e-commerce platform.
“Omnichannel strategy in fiscal year 2016 will focus on making some targeted investments in infrastructure as we further enhance our ability to connect with our customer,” Conroy said, according to a transcript of the call obtained from Seeking Alpha. “These include refinements to our e-commerce site and continued focus on augmenting our social media presence.”
For the 52 weeks ending March 28, Boot Barn reports:
- Net sales of $402.68 million, up 16.4% year-over-year from $345.87 million in fiscal 2014.
- Gross profit of $134.78 million, up 19.1% from $113.21 million from last year.