Few investors like it when a long-serving chief executive suddenly departs.
Boot Barn‘s (BOOT 0.74%) fiscal second-quarter results hit the headlines this week, but the company’s stock was far more affected by a development in its C-suite. By the time the smoke had cleared, Boot Barn’s share price had taken a hit of almost 21% across the week, according to data compiled by S&P Global Market Intelligence.
Second-quarter results were published
Monday was the day both pieces of news were released. Boot Barn’s second-quarter figures actually weren’t bad, with total net sales rising by 12% to over $849 million on the back of an almost 5% rise in same-store sales. Generally accepted accounting principles (GAAP) net income also defied gravity, rising to more than $29 million ($0.95 per share) from the year-ago profit of almost $28 million.
The top-line result was slightly higher than the consensus analyst estimate, while profitability fell just short of the average projection.
Yet, investor eyes were diverted to another section of the earnings release. This was Boot Barn’s announcement that long-serving CEO Jim Conroy was stepping down — and soon. His effective date of departure is Nov. 24. In what’s likely an “offer he can’t refuse,” he’s accepted an offer to serve as co-CEO and, soon thereafter, sole CEO of big discount retailer Ross Stores.
Some analysts recommend not being discouraged
It’s never easy for investors to accept the resignation of a longtime leader, particularly if the enterprise they guided did well in the past — as in the case of Boot Barn. They shouldn’t get too encouraged, though, as a pack of analysts tracking the stock got more bullish on the company following the earnings release.
Several either reiterated their buy ratings on the shares or raised their price targets, with one — Baird — even upgrading its recommendation to outperform (read: buy) from the preceding neutral.