Boot Barn Holdings, Inc.: A Capital Structure and Cost of Capital Sensitivity Analysis

Donald Rotz

Co-Presenters: Individual Presentation

College: College of Business and Public Management

Major: BS.ACCOUNTING

Faculty Research Mentor: Kakolyris, Andreas  

Abstract:

This project analyzes Boot Barn Holdings Inc., a specialty retailer that sells western and work related footwear, apparel and more through both stores and online channels. The objective of the analysis is to evaluate how Boot Barns mix of debt and equity financing affects its overall cost of capital and then run a sensitivity analysis under different leverage scenarios. My approach will use publicly available financial statements and market data to estimate the cost of equity and the cost of debt. I will then recompute WACC across the leverage range and interpret how changes in financial risk influence required returns. The expected outcome is to identify a reasonable leverage range that could minimize WACC while still keeping financial risk at a manageable level for a retail company that may face demand swings across economic cycles. The findings will help explain how financing choices can support Boot Barns growth strategy such as opening new stores and while balancing profitability, flexibility, and risk.