I'm Dylan Carden, consumer analyst here at Blair. Jim Conroy, CEO of Boot Barn, who's going to talk about the company. Our disclosures are on williamblair.com. That's really why I'm up here. Okay.
What a lovely introduction, Dylan. Thank you. Good morning, everyone. It's been a heck of a month for us, and boy, do we have a story to tell you. I'd like to give you just a little bit of an update on the business, but before we do that, I thought in the first couple of sections of today's presentation, I would give kind of a review, big picture of the industry that we operate in, and really kind of bring to life the transformation that Boot Barn's gone through over the last seven or so years. Then we'll go through our typical four strategic initiatives and give you an update on current business. If you start with the industry in general, and if you think back to business school, there were all these frameworks. One of them was the Porter's framework. It's kind of tried and true.
They're talking about the five forces. We decided to try to portray the model of Boot Barn and the attractiveness of the industry through this framework. If you look at competitive dynamics, right, it's a very large and fragmented industry dominated by one-store mom-and-pops. The impact for us is we have a tremendous opportunity to continue to grow new stores with very little direct competition in any organized way. We have massive first-mover advantage now, right? From a customer-to-Boot Barn standpoint, where is sort of the negotiating power? Well, we have a very, very loyal customer base. They will come to Boot Barn. They're not always looking for sales or discounts from us. There's very little downward price pressure. One of the things that's been true about Boot Barn for years is we're a full-price selling retailer.
So we have tremendous margin expansion from a merchandise margin perspective. In terms of new entrants, lots of industries are being disrupted by either new startups or online DTC disruptors. We have a couple of things that are protecting us. We have the strongest national brand, and we have a bit of a competitive moat against online threats because most of our customers want to shop in a store. They need the product immediately, or the boots are tough to fit, and they want to come to a store and try them on. In terms of substitute products, it's very hard to find a substitute for a boot, so we're pretty good there. We also have very little fashion risk because most of the product that we sell is used for functional purposes. And then finally, how do we interact with our vendor base?
We have very strong vendor partners, but none of them make up more than 15% of our business. So our biggest vendor is about 15%. Our second biggest vendor is 5% of our business. And then there's a long tail of vendors after that. So based on that, we have the ability to continue to build our own brands, which are margin accretive for us. So when I first looked at the company 12 years ago and I look at the industry that we operate in today, we have the good fortune. I have the good fortune as the CEO to operate in a very attractive industry with the strongest player. So all of those are very good things. I want to give you a story of the Boot Barn transformation.
We talk all the time about our four strategic initiatives, but we don't always pull it together as to how the company's evolved, particularly in the last six or seven years. Prior to that, we were growing quite nicely. So I started around fiscal 2012 or fiscal 2013. We were growing at about 18% a year on average. Part of that was new stores. Occasionally, we had an acquisition. We were comping up 6% or 7%, same-store sales every year. So we had some really nice growth, including in fiscal 2020 going into fiscal 2021. So that's March of 2020 through March of 2021, which, of course, was the COVID year. And we actually got some growth during COVID. We kept our stores open, which was a bit of an aggressive decision, but it worked out really well for us.
I think in retrospect, the part that was sometimes lost with the investment community is at that point in time, we were transforming the company, and we probably would have lost some sales during COVID, but all the changes that we had been making enabled us to grow a bit. So we were going through this brand transformation. A year after COVID started, we then saw this giant spike in our business, right? For those new to Boot Barn, this isn't an acquisition. This isn't anything other than a 53% comp and some new stores added to it. The narrative then became, well, you've seen this giant peak in business. You're going to give it all back, or you're going to give it back over time. And from that point forward, from fiscal 2022 until today, we've continued to grow. Same-store sales were flat. Same-store sales were -6%.
Same-store sales are now inflecting positive. But we continue to add enough stores that the business continued to grow top line. So we haven't been giving it all back, so to speak, since fiscal 2022. And this is the part that I really want to bring to life. I'm going to summarize it quickly on this page and then throughout the presentation talk about all the different things that changed across the business from the legacy of Boot Barn to kind of the new and transformed Boot Barn. From a customer standpoint, historically, our customer was really Western. They knew the rodeo athletes out there. They rode horses. And we've really opened the aperture quite a bit to be much more inclusive of a lot more customer segments. From a brand perspective, we sold almost exclusively third-party brands, and our own brands were very small.
We were very promotional in nature. So every month, we would take a different third-party brand and promote it $20 off and try to get people into the store to buy boots or jeans for a period of time. And then the following month, we change to a different brand. Today, the brand that takes precedence with us is Boot Barn. We try to raise Boot Barn on a platform and have really eliminated most of our promotional and sales activity in the stores. From an assortment standpoint, mostly third-party brands. Now, today, we are about 40% proprietary brands with a much more diverse offering. And then finally, from a store location standpoint, we were truly Western. We were geographically Western. When I first got to the company, we were in eight states, and none of them were called Texas.
So we have been growing across the country and changed the aesthetic of the brand to be more inclusive of much more than just a Western customer. We've modernized the stores. We've modernized the brand. And we started with, first, how do we get more customers into the store? So historically, we were Western and Work. And we went out and had a very proactive strategy to open the aperture and add new customer segments. Country simply means someone that might wear boots from time to time but doesn't ride a horse. They might go to a NASCAR event, but they can't name a rodeo athlete. And then fashion is more this sort of Western-inspired. It's very topical right now. People are talking about it, so it's benefiting us to some degree.
And those two new segments helped us take our customer count, which was already growing pretty rapidly, and really start to accelerate. If you see the fiscal 2020 and fiscal 2021, we've been growing nicely. And then we've added million customers a year in the last three years since that. So the strategy of saying, we want to remain tried and true to our core Western customer, but we also want to open the aperture and add new segments has worked, right? We've added all these new customers, which is why we saw the spike in business and why we haven't lost that spike in business. Now I'm going to walk you through the four strategic initiatives. For those that have seen some of these materials before, I apologize.
I do want to try to weave in this notion of how the company has been transformed into each of those initiatives and how the brand has changed. So this is what the stores used to look like. This is what the stores looked like when I first got to the company. And sure, it looks old and tired, but if you look a little bit closer than that and you look at the logo as an example, while very cute, the cowboy hat resting on top of the Western boot and the open sign and the chalk in the window on the top photo, we were really laser-focused on somebody that would have driven 50 miles to find a pair of cowboy boots at our store. If you look at the bottom part, it was very much a value-oriented and third-party brand.
You can see the brand logos in the back part of the store there, Cinch and Carhartt. That's what we were promoting. We have all this great stuff that other people have made, and you should come to our store and buy it at a discount. About seven years ago, we kind of threw all of that aside and said, we're going to take the new store, and we want to be able to expand it. We want more customers. We want to be able to grow from a Western geographic store base to a national store base. We want to be in 48 or 50 states. So we've updated the aesthetic. This is a store that happens to be in Texas, but as you can tell, it's much more welcoming to somebody who isn't necessarily living and working on a ranch.
As you walk through the store, it also just kind of raises the level of the brand aesthetic to the extent that almost any customer should feel comfortable there. It finds a really nice balance between we have some customers that are younger female fashion customers that might be going to a country music festival, and then we have a hardcore blue-collar worker, or we have an exotic-skin men's cowboy boot customer. This store design had to balance all of those dynamics. By bringing in sort of just very organic materials, concrete floors, and natural wood, we think we've achieved that very careful balance. We didn't alienate our core customer while we were adding these new customer segments. This is a little bit of the history. This is what the company looked like when I started interviewing. This is what it looks like today.
We love coloring in a new state. We get one dot in the state, and we color the entire darn state. And then the investors say, well, now you're going to start cannibalizing because you've painted the entire country. Well, then we said, all right, forget the colored states. We're going to take the black away from the filled-out PowerPoint here. And now you just see the dots, and you can see that we still have plenty of room to continue to grow. So we have 406 stores today, and we think we can more than double that number. The reason we're so excited about new stores, and I know five years ago, this was very much out of favor. Today, a lot of direct consumer brands are starting to open up stores. But what we've always seen is that our new stores were an incredibly strong investment vehicle.
So the darker bar is the model when we went public. The lighter bar is the current model. So we used to think the stores could do $1.7 million and pay back in three years. Now we think they can do $3 million and pay back in a year and a half. So our store opening engine has been one of the strongest growth pieces of our business with a 60% cash-on-cash return. You'll see that we spent a little bit more money on the stores, right? And there's three reasons for that. one, the store got a little bit bigger because we wanted to broaden the assortment because we had more customers that we wanted to attract. Two, we made the stores nicer, right? Because we weren't just servicing a cowboy. We wanted to service a fashion customer, a higher-end men's boot customer.
Three, the stores are bigger and have more inventory. All of that costs a little bit more. When we did all of those things, the payback as a percent went from about 30%-60% return on capital. Today we sit here. We've gone from 400 stores at the end of our most recent fiscal year. We've guided this year at 15%. That's our sort of new growth rate that we achieved last year and hope to achieve again this year. That would get us to 460 stores. We do believe we can continue to grow across the country and more than double the chain. If we did 500 more stores at $3 million each, that's $1.5 billion. They pay back at 60%. Every single store in the company on a four-wall basis is EBITDA positive, right?
So we have zero stores that are drags on our profitability. If you were to work through the math, you'd see that from an EBITDA standpoint, our EBITDA rate of a new store is around 30%. Our EBIT rate is about 25%. So you have to remember that 25% because in a second, we'll circle back to it. We've been on the road now for three days. It's been an exciting three days and one that we get to see the stock price come up. So it's always more fun for us and for most of you, I'm sure. So here are some of the questions we've gotten. So could you accelerate new store openings? We used to open 10% new stores. Now we're open 15% more stores. So we have done that. Could we go faster? Probably. We're likely to just stay at 15% for now. I don't know.
It's somewhat Goldilocks, I guess. We could try to push us for more. We could go a little bit slower, but we're settling into 15%. It seems to be a manageable number for us. Are you seeing meaningful cannibalization as you expand your store footprint? One of the things that we're trying to kind of build into our reputation all the time is to be extremely forthcoming. If we were seeing cannibalization, we would have already told you that. I would say last year, the cannibalization across the country was less than 1% on our consolidated comps. If that changes, we will certainly let you know. If you look at a given market and a given store that just had a new store open, sure, there's been some cannibalization to a store that might be down the street. But big picture, it's just not an issue for us yet.
Are the new stores dilutive to consolidated operating margin rate? This one, we get this question all the time. So we've guided this year for our operating margin to be 11.2%. I told you two slides ago that our new stores' operating margin is 25%. If I opened up a whole bunch of new stores, all I would do is take that 11.2% up, right? It would be very hard to construct an argument where new stores hurt our EBIT margin rate. Same store sales. From a product offering standpoint, this is what we used to carry. We still carry all this product, right? Very Western cowboy boots and cowboy hats intended to sell to people that are working on a farm or working on a ranch. That's still a very important part of our assortment, but we've expanded quite a bit, right?
So now you can come into the store. You might buy boots, but you might buy a baseball hat. You may not need a button-down woven shirt, but you'll buy a graphic T-shirt. We've extended a little bit into some more fashionable categories on the bottom of that slide. And you can see as we go from sort of the dark to the red color, that's sort of what the transformation of the brand has looked like. From a marketing standpoint, same thing I mentioned earlier. This is what our marketing used to look like. It was very third-party brand-oriented. In this case, it was around Ariat. It was at a discount. It typically had a period of time. This weekend only or for this month, we're running these specials. It was very hard-hitting from a promotional standpoint.
So it was "save up to $20" or tiered promotions on the bottom right. We were doing online-only sales, which still boggles my mind. Most retailers make more money in the stores, but yet they're more promotional and they're a less profitable channel. We have done away with essentially all of this. So if you look at our marketing today, right, that red bar across the top denotes what the current business looks like. The branding is much more elevated. It's much more aspirational in nature. And you can see it from a Western perspective. You can see it on the men's and the ladies' side. Our work customer multiple different industries, but we're never talking about the boot, the jean, or the price, right? It's more about the brand and what we mean to the customer.
We've expanded our net a bit to try to get customers outside of Western. So we're doing a small partnership with NASCAR. And of course, a nod to Wall Street. This is clearly a fashion customer, which gets a lot of attention from the investment community. And that's great. And sometimes it's a tailwind for us, and sometimes it's a headwind for us. It's still a very small piece of our business. I want to give you a chance to just get a glimpse into the creative side of our business. Maybe it'll be a palate cleanser after all these PowerPoint presentations you're going through, but this will give you a sense for what we've done with the brand over the last few years and sort of the level of branding and marketing that we've taken it to.
So we had showed that to an investor yesterday, and they gave us a really nice compliment. They said, "Looks like you guys are benefiting from a tailwind in your industry. Have you ever considered that you perhaps created the tailwind, given that you're the only national player in the space?" I don't think anybody would ever give us credit for that, but we took a little bit of credit for it. So when you think about the marketing that I showed you a few slides ago, price-oriented, discount-oriented, and now we've kind of changed the game completely. Over the last seven years, our merchandise margin has grown by 1 point a year, 100 basis points a year, or 760 basis points of margin expansion in seven years. And one of the misconceptions is, well, you're getting more margin because you're doing more exclusive brands.
That's true, but that's not the bulk of it. Most of the margin expansion that we've gotten is because we've become less promotional and less sale-oriented. Oftentimes, you'll see an email. You guys all subscribe to our emails. One day, I'm going to send you all a joke email that like the whole store is on sale, 40%, but I won't. You'll see sometimes buy one, get one 50% off. And if you stop there, you start to worry, "Oh my God, Boot Barn must be in trouble. They have bloated inventory." If you look more closely, this will say, "This is 50% off a piece of the business." So here's all the inventory in the store. Well, this particular email doesn't include boots. It doesn't include men's. It doesn't include hats and accessories. It also doesn't include product that's not already been marked down.
So it doesn't include ladies' non-clearance. So next time you get that email, if you read it closely, you'll realize it's only 3% of our business that is being promoted. And the whole goal of that kind of sale is to move through the very small amount of clearance product that we do have in the store. Clearance is about 10% of our inventory. Every once in a while, we have to move through some of it. And we use mechanisms like this. We tend to do buy one, get one 50 or buy two, get one free to get more units out the door faster. So that brand transformation from a same-store sales perspective drove that 54% growth or 55% stack over the last five years, including most recent year when we were -6%.
People say, "Well, are you taking share or are you just benefiting from what's happening in the industry?" Well, if you look at the public companies in the industry over that same period of time, they're growing 8%. Our same-store sales has been 55%. We've also added new stores. So we've been growing almost 100% over that same period of time. So we're clearly taking share, and we're not just benefiting from sort of a tailwind in the industry. We get a lot of questions around the average unit volume of a store. It used to be $2.8 million. It spiked up to $4.6 million. That roughly approximates the same-store sales number from before, that 55%. It's now down from that number, and we have to split that into two pieces. Part of it is down because we comped -6% last fiscal year.
The other part of it, and hopefully that will go away as we've inflected positive now. The other part of it is every time we open up new stores, we can open up a whole bunch of really great stores, 60 stores this year. And if they're going to do $3 million, it's going to pull that average down. So as we interact in the future, we kind of have to talk about what are comps doing, what are new stores doing with the average unit volume, simply sort of the arithmetic of those two pieces pulled together. Common investor questions. How are the new cohorts doing? Are they behaving like the legacy cohorts? We've added a whole bunch of customers. They shop very similarly to our original customers, roughly twice a year. Are you more promotional than your historical posture? No. That's another thing.
If we were going to change that, we will signal that to you all. What external factors impact your business the most? There's a lot of conversations around things happening in pop culture right now. Country music is great for us. We love that. The bigger drivers are infrastructure, oil and gas, ag markets. Sort of the functional part of our business is much bigger than all of the fashion pieces of the business together. From an omnichannel standpoint, this is what the site used to look like in the spirit of trying to update the brand. We've taken the site and made it vastly different. This is what it looks like now for Father's Day. It's much more about branding, but we're leaning in a little bit on, "Hey, this is a gift-giving time of the year for Father's Day.
So come in and buy a gift." We believe that in order for us to be successful from an omnichannel standpoint, our strategic competitive advantage is the stores piece of the omni term. And we lean heavily on the stores. So 60% of what we do in our online business goes through the stores channel. You can return in the store. You can pick up in the store. Oftentimes, our customers will ship to a store. And we continue to try to nurture that part of the business. There's a bunch of bullet points on this slide, but the takeaway is we run our online channel to be profitable and to drive store traffic, which if you think about many of the things that we do with our company are contrarian in nature. A lot of companies are trying to get store customers to go online.
We're actually trying to get online customers to come into the store. And we also hold our online business to a very strict standard to earn real money, bottom line. We are making some progress on artificial intelligence, certainly a very hot topic. If you were to go into the store, you could click on that button, and then you'd be interacting with a ChatGPT-powered mechanism that would then help you build out an outfit for product that's actually in the exact store that you're sitting in. So the goal here is to take artificial intelligence and try to drive conversion in the store. It's very much in its infancy, but it's up and running. You can go to all of our stores and see it working soon to be released online. From an omnichannel standpoint, we get some questions around, "Is there channel conflict? Your vendors are selling directly.
You guys are developing exclusive brands." Of course, there's a little channel conflict, but the health and the relationship with our vendors is extremely strong and extremely healthy. Are you able to track customers going from one channel to another? We have a very vibrant loyalty program. So yes, we are. And we can see the customer's journey, including customers that started with us at bootbarn.com and then have been converted to a stores customer or to an omnichannel customer. Our fourth initiative around exclusive brands and margin. So historically, we had two brands. When I first got to the company, we called them private label and not exclusive brands. They were much more familiar to what you might see in other retailers, which they tended to be inexpensive alternatives to real brands. And this is another area where we completely transformed and developed 10 or 12 real brands.
They all have their own positioning. They all have their own design team. We tend to take some of the profitability that you'd expect to get and put it back into the make of the goods so the goods themselves can stand on their own against some of the best brands out there. Our number one, our number three, our number five, and our number seven brands are all exclusive brands. So four of the top eight are our own brands. The penetration of that part of the business has gone up really nicely. And when you do that in dollars, right, it's over $600 million today. It's on its way to $1 billion just in exclusive brands. And if you look at what's happened in that same time when we've transformed the company, we've gone from 13.5% to almost 39% exclusive brand penetration.
All of that product is 1,000 basis points of margin accretion. There's that 13.5% and that same 38%. So 25 points more penetration at 10 points more margin is a lot more merchandise margin embedded in our business, but it's still only a third of the 760 basis points that we've had growing over the last seven years. So exclusive brands have been a nice contributor to it, but not all of it. What's the ceiling? We're marching towards 50%. I think when we get closer to 50%, exclusive brand penetration will likely change the ceiling and get it up to 60 or 70%. There will be a place, a point in time where we have gone too far, but I don't think we're there yet. Where will the additional growth come from? Typically, it's from our current brands just getting wider and not adding new brands.
Where do we source most of our product from? China's about a third. Mexico's a relatively big piece as well. Then rest of world. So we have, in the grand scheme of things, some exposure to China, but not as much as we used to have, which used to be more than 50%. Update on current business. One of the most exciting things we've been talking about this week. We've seen this broad-based sequential improvement from third quarter to the fourth quarter, from the fourth quarter into April, and April into May, and again from May into June. June's only 11 days old, but it's gotten better. On a quarter-to-date basis, our comp now is 1.4%. We talk about it being broad-based. So if you go through the categories, the last page, I promise.
If you go through the categories, the best business that we have right now is men's Western boots and men's Western apparel. Not only have they seen sequential improvement, but they're now both positive. We've also seen some really nice sequential improvement in work boots and work apparel. Those businesses are still slightly negative, just now barely tipping into the positive territory. And while we do think that there might be some macro trends, there might be some fashion trends, it might be Beyoncé, we don't think those kinds of trends are impacting these parts of our business all that much. They might be impacting our ladies' business. Our ladies' business has gotten sequentially better as well. While it's only one week of business, last week, our first fiscal week of June, every one of those boxes, with the exception of work boots, was slightly positive or nicely positive.
It's really great to see the sequential improvement across essentially every category. If you were to ask me what categories aren't doing great, I don't know. There's some very small businesses that are lagging behind a little bit. Kids' boots is still slightly negative. A very small business, shorts, is slightly negative. That could be the next CNBC financial headline. Shorts aren't working at Boot, particularly with the stock price where it is. That's it. That's all I had to say. Wanted to wrap up and thank you all for your time and attention.