Five Below, Inc. Announces Second Quarter Fiscal 2023 Financial Results
Q2 Net Sales Increase of 13.5%
Q2 Comparable Sales Increase of 2.7% with a 4.5% Increase in Comparable Transactions
Q2 EPS Increase of 13.5% to $0.84
Philadelphia, PA — Five Below announced financial results for the second quarter and year to date period ended July 29, 2023.
For the second quarter ended July 29, 2023:
- Net sales increased by 13.5% to $759.0 million from $668.9 million in the second quarter of fiscal 2022; comparable sales increased by 2.7% versus the second quarter of fiscal 2022.
- The Company opened 40 new stores and ended the quarter with 1,407 stores in 43 states. This represents an increase in stores of 12.4% from the end of the second quarter of fiscal 2022.
- Operating income was $58.6 million compared to $56.0 million in the second quarter of fiscal 2022.
- The effective tax rate was 25.6% compared to 26.3% in the second quarter of fiscal 2022.
- Net income was $46.8 million compared to $41.3 million in the second quarter of fiscal 2022.
- Diluted income per common share was $0.84 compared to $0.74 in the second quarter of fiscal 2022.
Joel Anderson, President and CEO of Five Below, said, “We are pleased to deliver second quarter results in line with our guidance on the top and bottom line. Notably, the 2.7% comparable sales increase was driven by a 4.5% increase in comp transactions, illustrating the success of our Five Beyond conversion strategy and the appeal of our extreme value, WOW offering.”
Mr. Anderson continued, “As we look to the second half of the year, our merchants have sourced a terrific line-up of fresh, trend-right product at outstanding value for the holiday season. While we are adjusting our earnings guidance to reflect an anticipated increase in shrink reserves, our sales outlook remains unchanged. We will continue to play offense on sourcing amazing product, capitalizing on an improved supply chain, opening a record number of new stores, and executing on the continued success of our Five Beyond store format.”
For the year to date period ended July 29, 2023:
- Net sales increased by 13.5% to $1,485.2 million from $1,308.5 million in the year to date period of fiscal 2022; comparable sales increased by 2.7% versus the year to date period of fiscal 2022.
- The Company opened 67 new stores compared to 62 new stores in the year to date period of fiscal 2022.
- Operating income was $101.0 million compared to $98.3 million in the year to date period of fiscal 2022.
- The effective tax rate was 22.6% compared to 24.6% in the year to date period of fiscal 2022.
- Net income was $84.3 million compared to $74.1 million in the year to date period of fiscal 2022.
- Diluted income per common share was $1.51 compared to $1.33 in the year to date period of fiscal 2022. The benefit from share-based accounting was approximately $0.06 in the year to date period of fiscal 2023 compared to $0.02 in the year to date period of fiscal 2022.
Third Quarter and Fiscal 2023 Outlook:
The Company expects the following results for the third quarter and full year fiscal 2023:
For the third quarter of Fiscal 2023:
- Net sales are expected to be in the range of $715 million to $730 million based on opening approximately 70 new stores and assuming an approximate flat to 2% increase in comparable sales.
- Net income is expected to be in the range of $10 million to $14 million.
- Diluted income per common share is expected to be in the range of $0.17 to $0.25 on approximately 55.9 million diluted weighted average shares outstanding.
For the full year of Fiscal 2023:
- Net sales are expected to be in the range of $3.50 billion to $3.57 billion based on opening over 200 new stores and assuming an approximate 1% to 3% increase in comparable sales.
- Net income is expected to be in the range of $295 million to $311 million.
- Diluted income per common share is expected to be in the range of $5.27 to $5.55 on approximately 55.9 million diluted weighted average shares outstanding.
- The 53rd week is expected to contribute approximately $40 million in sales and approximately $0.08 in diluted income per common share.
- Gross capital expenditures are expected to be approximately $335 million in fiscal 2023.
| FIVE BELOW, INC. | |||||||||||
| Consolidated Balance Sheets | |||||||||||
| (Unaudited) | |||||||||||
| (in thousands) | |||||||||||
| July 29, 2023 | January 28, 2023 | July 30, 2022 | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 334,544 | $ | 332,324 | $ | 155,101 | |||||
| Short-term investment securities | 101,813 | 66,845 | 117,315 | ||||||||
| Inventories | 543,621 | 527,720 | 569,201 | ||||||||
| Prepaid income taxes and tax receivable | 10,524 | 8,898 | 14,371 | ||||||||
| Prepaid expenses and other current assets | 121,424 | 130,592 | 107,771 | ||||||||
| Total current assets | 1,111,926 | 1,066,379 | 963,759 | ||||||||
| Property and equipment, net | 1,013,686 | 925,530 | 842,002 | ||||||||
| Operating lease assets | 1,407,474 | 1,319,132 | 1,267,316 | ||||||||
| Other assets | 16,322 | 13,870 | 13,149 | ||||||||
| $ | 3,549,408 | $ | 3,324,911 | $ | 3,086,226 | ||||||
| Liabilities and Shareholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Line of credit | $ | — | $ | — | $ | — | |||||
| Accounts payable | 249,093 | 221,120 | 266,114 | ||||||||
| Income taxes payable | — | 19,928 | — | ||||||||
| Accrued salaries and wages | 26,279 | 25,420 | 19,983 | ||||||||
| Other accrued expenses | 162,919 | 136,316 | 159,976 | ||||||||
| Operating lease liabilities | 211,177 | 199,776 | 184,450 | ||||||||
| Total current liabilities | 649,468 | 602,560 | 630,523 | ||||||||
| Other long-term liabilities | 4,925 | 4,296 | 4,077 | ||||||||
| Long-term operating lease liabilities | 1,394,698 | 1,296,975 | 1,247,631 | ||||||||
| Deferred income taxes | 60,171 | 59,151 | 41,414 | ||||||||
| Total liabilities | 2,109,262 | 1,962,982 | 1,923,645 | ||||||||
| Shareholders’ equity: | |||||||||||
| Common stock | 556 | 555 | 555 | ||||||||
| Additional paid-in capital | 254,687 | 260,784 | 248,902 | ||||||||
| Retained earnings | 1,184,903 | 1,100,590 | 913,124 | ||||||||
| Total shareholders’ equity | 1,440,146 | 1,361,929 | 1,162,581 | ||||||||
| $ | 3,549,408 | $ | 3,324,911 | $ | 3,086,226 | ||||||
| FIVE BELOW, INC. | |||||||||||||||
| Consolidated Statements of Operations | |||||||||||||||
| (Unaudited) | |||||||||||||||
| (in thousands, except share and per share data) | |||||||||||||||
| Thirteen Weeks Ended | Twenty-Six Weeks Ended | ||||||||||||||
| July 29, 2023 | July 30, 2022 | July 29, 2023 | July 30, 2022 | ||||||||||||
| Net sales | $ | 758,981 | $ | 668,927 | $ | 1,485,228 | $ | 1,308,523 | |||||||
| Cost of goods sold | 494,402 | 440,418 | 985,845 | 873,237 | |||||||||||
| Gross profit | 264,579 | 228,509 | 499,383 | 435,286 | |||||||||||
| Selling, general and administrative expenses | 205,985 | 172,498 | 398,377 | 336,946 | |||||||||||
| Operating income | 58,594 | 56,011 | 101,006 | 98,340 | |||||||||||
| Interest income (expense) and other income (expense), net | 4,342 | 95 | 7,989 | (142 | ) | ||||||||||
| Income before income taxes | 62,936 | 56,106 | 108,995 | 98,198 | |||||||||||
| Income tax expense | 16,101 | 14,762 | 24,682 | 24,136 | |||||||||||
| Net income | $ | 46,835 | $ | 41,344 | $ | 84,313 | $ | 74,062 | |||||||
| Basic income per common share | $ | 0.84 | $ | 0.74 | $ | 1.51 | $ | 1.33 | |||||||
| Diluted income per common share | $ | 0.84 | $ | 0.74 | $ | 1.51 | $ | 1.33 | |||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic shares | 55,675,357 | 55,498,471 | 55,662,930 | 55,572,425 | |||||||||||
| Diluted shares | 55,801,507 | 55,646,039 | 55,789,323 | 55,739,752 | |||||||||||
| FIVE BELOW, INC. | |||||||
| Consolidated Statements of Cash Flows | |||||||
| (Unaudited) | |||||||
| (in thousands) | |||||||
| Twenty-Six Weeks Ended | |||||||
| July 29, 2023 | July 30, 2022 | ||||||
| Operating activities: | |||||||
| Net income | $ | 84,313 | $ | 74,062 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 60,068 | 49,120 | |||||
| Share-based compensation expense | 9,605 | 12,139 | |||||
| Deferred income tax expense | 1,021 | 5,258 | |||||
| Other non-cash expenses | 72 | 281 | |||||
| Changes in operating assets and liabilities: | |||||||
| Inventories | (15,901 | ) | (114,097 | ) | |||
| Prepaid income taxes and tax receivable | (1,626 | ) | (3,046 | ) | |||
| Prepaid expenses and other assets | 6,644 | (15,967 | ) | ||||
| Accounts payable | 17,674 | 64,908 | |||||
| Income taxes payable | (19,928 | ) | (28,096 | ) | |||
| Accrued salaries and wages | 859 | (33,556 | ) | ||||
| Operating leases | 20,782 | 17,167 | |||||
| Other accrued expenses | 5,685 | 17,984 | |||||
| Net cash provided by operating activities | 169,268 | 46,157 | |||||
| Investing activities: | |||||||
| Purchases of investment securities and other investments | (128,950 | ) | (21,848 | ) | |||
| Sales, maturities, and redemptions of investment securities | 93,982 | 219,391 | |||||
| Capital expenditures | (116,423 | ) | (109,710 | ) | |||
| Net cash (used in) provided by investing activities | (151,391 | ) | 87,833 | ||||
| Financing activities: | |||||||
| Net proceeds from issuance of common stock | 440 | 464 | |||||
| Repurchase and retirement of common stock | — | (40,007 | ) | ||||
| Proceeds from exercise of options to purchase common stock and vesting of restricted and performance-based restricted stock units | 54 | 102 | |||||
| Common shares withheld for taxes | (16,151 | ) | (4,421 | ) | |||
| Net cash used in financing activities | (15,657 | ) | (43,862 | ) | |||
| Net increase in cash and cash equivalents | 2,220 | 90,128 | |||||
| Cash and cash equivalents at beginning of period | 332,324 | 64,973 | |||||
| Cash and cash equivalents at end of period | $ | 334,544 | $ | 155,101 | |||
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