Boot Barn, a small-cap Apparel Retail company, moved -1.3 during today's morning session. The company's business may appear to be profitable at first glance, since its most recent operating margins stand at 17.4%. But there is more to the story.
Investors should review the company's profitability over several years, and also its ability to convert these profits into hard cash. Some profitable companies struggle in this respect. For example, an unexpected increase in capital expenditures, or an inability to collect payments from customers can quickly empty a company's coffers despite healthy profits on paper. Let's compare Boot Barn's operating profits and cash flows side-by-side to see this process firsthand.
| Date Reported | Total Revenue ($ MM) | Operating Expenses ($ MM) | Operating Margins (%) | YoY Growth (%) |
|---|---|---|---|---|
| 2022-03-31 | 1,488 | 317 | 17.36 | 79.71 |
| 2021-03-31 | 893 | 209 | 9.66 | 10.91 |
| 2020-03-31 | 846 | 203 | 8.71 | 5.19 |
| 2019-03-31 | 777 | 187 | 8.28 | n/a |
| Date Reported | Cash Flow from Operations ($ MM) | Capital expenditures ($ MM) | Free Cash Flow ($ MM) | YoY Growth (%) |
|---|---|---|---|---|
| 2022-03-31 | 89 | -60 | 28 | -77.71 |
| 2021-03-31 | 156 | -28 | 127 | 1173.4 |
| 2020-03-31 | 25 | -37 | -12 | -133.24 |
| 2019-03-31 | 63 | -28 | 36 | n/a |
Despite the profitability being reported on the earnings side, the company's cash flows are frequently negative. We also note that Boot Barn's free cash flows have a significantly higher volatility than its margins, with coefficients of variability of 131.0% and 38.9% respectively.
