Five Below, Inc. Announces Third Quarter Fiscal 2023 Financial Results
Q3 Net Sales Increase of 14.2%
Q3 Comparable Sales Increase of 2.5% with a 3.1% Increase in Comparable Transactions
Raises Midpoint of Fiscal 2023 Guidance
Philadelphia, PA –– Five Below announced financial results for the third quarter and year to date period ended October 28, 2023.
For the third quarter ended October 28, 2023 :
- Net sales increased by 14.2% to $736.4 million from $645.0 million in the third quarter of fiscal 2022; comparable sales increased by 2.5% versus the third quarter of fiscal 2022.
- The Company opened 74 new stores and ended the quarter with 1,481 stores in 43 states. This represents an increase in stores of 14.6% from the end of the third quarter of fiscal 2022.
- Operating income was $16.1 million compared to $20.9 million in the third quarter of fiscal 2022.
- The effective tax rate was 25.4% compared to 24.6% in the third quarter of fiscal 2022.
- Net income was $14.6 million compared to $16.1 million in the third quarter of fiscal 2022.
- Diluted income per common share was $0.26 compared to $0.29 in the third quarter of fiscal 2022.
- The Company repurchased approximately 500,000 shares in the third quarter of fiscal 2023 at a cost of approximately $80.0 million.
Joel Anderson, President and CEO of Five Below, said, “We are very pleased with our results and operational execution in the third quarter. We exceeded our guidance for sales, comparable sales and EPS, as our value offering resonated with customers and we effectively capitalized on multiple trends. We opened a record 74 new stores in the third quarter and are on track to open over 200 new stores for the year. We have also successfully converted over 400 stores to our new Five Beyond format, ending the third quarter with approximately 50% of our comparable store base in this format.”
Mr. Anderson continued, “We entered the all-important holiday quarter ready to Wow our customers with an outstanding assortment of gifts and stocking stuffers at incredible value. We are well-positioned to execute this holiday season and deliver on our goals for the year.”
For the year to date period ended October 28, 2023 :
- Net sales increased by 13.7% to $2.22 billion from $1.95 billion in the year to date period of fiscal 2022; comparable sales increased by 2.6% versus the year to date period of fiscal 2022.
- The Company opened 141 new stores compared to 102 new stores in the year to date period of fiscal 2022.
- Operating income was $117.1 million compared to $119.3 million in the year to date period of fiscal 2022.
- The effective tax rate was 23.1% compared to 24.6% in the year to date period of fiscal 2022.
- Net income was $98.9 million compared to $90.2 million in the year to date period of fiscal 2022.
- Diluted income per common share was $1.78 compared to $1.62 in the year to date period of fiscal 2022. The benefit from share-based accounting was approximately $0.07 in the year to date period of fiscal 2023 compared to approximately $0.03 in the year to date period of fiscal 2022.
Fourth Quarter and Fiscal 2023 Outlook:
The Company expects the following results for the fourth quarter and full year fiscal 2023:
For the fourth quarter of Fiscal 2023 :
- Net sales are expected to be in the range of $1.32 billion to $1.35 billion based on opening over 60 new stores and assuming an approximate 2% to 3% increase in comparable sales.
- Net income is expected to be in the range of $201 million to $211 million.
- Diluted income per common share is expected to be in the range of $3.64 to $3.80 on approximately 55.4 million diluted weighted average shares outstanding.
For the full year of Fiscal 2023 :
- Net sales are expected to be in the range of $3.54 billion to $3.57 billion based on opening over 200 new stores and assuming an approximate 2.5% increase in comparable sales.
- Net income is expected to be in the range of $300 million to $310 million.
- Diluted income per common share is expected to be in the range of $5.40 to $5.56 on approximately 55.6 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.
Share Repurchase Program:
On November 27, 2023, the Company announced that the Board of Directors retired the Company’s current share repurchase program and approved a new share repurchase program authorizing the repurchase of up to $100 million of the Company’s common shares through November 27, 2026. The number of common shares actually repurchased, and the timing and price of repurchases, will depend upon market conditions, Securities and Exchange Commission requirements, and other factors. Shares may be repurchased from time to time on the open market, in privately negotiated transactions, or otherwise. Purchases may be started or stopped at any time without prior notice depending on market conditions and other factors.
| FIVE BELOW, INC. Consolidated Balance Sheets (Unaudited) (in thousands) |
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| October 28, 2023 | January 28, 2023 | October 29, 2022 | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 162,928 | $ | 332,324 | $ | 44,229 | |||||
| Short-term investment securities | — | 66,845 | 72,722 | ||||||||
| Inventories | 763,349 | 527,720 | 701,561 | ||||||||
| Prepaid income taxes and tax receivable | 23,906 | 8,898 | 25,389 | ||||||||
| Prepaid expenses and other current assets | 140,816 | 130,592 | 113,147 | ||||||||
| Total current assets | 1,090,999 | 1,066,379 | 957,048 | ||||||||
| Property and equipment, net | 1,075,275 | 925,530 | 880,469 | ||||||||
| Operating lease assets | 1,475,095 | 1,319,132 | 1,312,437 | ||||||||
| Other assets | 16,069 | 13,870 | 13,761 | ||||||||
| $ | 3,657,438 | $ | 3,324,911 | $ | 3,163,715 | ||||||
| Liabilities and Shareholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Line of credit | $ | — | $ | — | $ | — | |||||
| Accounts payable | 349,340 | 221,120 | 279,836 | ||||||||
| Income taxes payable | — | 19,928 | — | ||||||||
| Accrued salaries and wages | 19,357 | 25,420 | 14,140 | ||||||||
| Other accrued expenses | 158,272 | 136,316 | 152,260 | ||||||||
| Operating lease liabilities | 231,197 | 199,776 | 193,614 | ||||||||
| Total current liabilities | 758,166 | 602,560 | 639,850 | ||||||||
| Other long-term liabilities | 4,625 | 4,296 | 4,307 | ||||||||
| Long-term operating lease liabilities | 1,455,358 | 1,296,975 | 1,293,692 | ||||||||
| Deferred income taxes | 61,364 | 59,151 | 41,378 | ||||||||
| Total liabilities | 2,279,513 | 1,962,982 | 1,979,227 | ||||||||
| Shareholders’ equity: | |||||||||||
| Common stock | 551 | 555 | 555 | ||||||||
| Additional paid-in capital | 177,877 | 260,784 | 254,663 | ||||||||
| Retained earnings | 1,199,497 | 1,100,590 | 929,270 | ||||||||
| Total shareholders’ equity | 1,377,925 | 1,361,929 | 1,184,488 | ||||||||
| $ | 3,657,438 | $ | 3,324,911 | $ | 3,163,715 | ||||||
| FIVE BELOW, INC. Consolidated Statements of Operations (Unaudited) (in thousands, except share and per share data) |
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| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | ||||||||||||||
| October 28, 2023 | October 29, 2022 | October 28, 2023 | October 29, 2022 | ||||||||||||
| Net sales | $ | 736,405 | $ | 645,034 | $ | 2,221,633 | $ | 1,953,557 | |||||||
| Cost of goods sold | 513,577 | 437,226 | 1,499,422 | 1,310,463 | |||||||||||
| Gross profit | 222,828 | 207,808 | 722,211 | 643,094 | |||||||||||
| Selling, general and administrative expenses | 206,705 | 186,874 | 605,082 | 523,820 | |||||||||||
| Operating income | 16,123 | 20,934 | 117,129 | 119,274 | |||||||||||
| Interest income and other income | 3,434 | 483 | 11,423 | 341 | |||||||||||
| Income before income taxes | 19,557 | 21,417 | 128,552 | 119,615 | |||||||||||
| Income tax expense | 4,963 | 5,271 | 29,645 | 29,407 | |||||||||||
| Net income | $ | 14,594 | $ | 16,146 | $ | 98,907 | $ | 90,208 | |||||||
| Basic income per common share | $ | 0.26 | $ | 0.29 | $ | 1.78 | $ | 1.62 | |||||||
| Diluted income per common share | $ | 0.26 | $ | 0.29 | $ | 1.78 | $ | 1.62 | |||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic shares | 55,452,533 | 55,509,525 | 55,592,536 | 55,551,382 | |||||||||||
| Diluted shares | 55,576,140 | 55,683,609 | 55,717,987 | 55,720,792 | |||||||||||
| FIVE BELOW, INC. Consolidated Statements of Cash Flows (Unaudited) (in thousands) |
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| Thirty-Nine Weeks Ended | |||||||
| October 28, 2023 | October 29, 2022 | ||||||
| Operating activities: | |||||||
| Net income | $ | 98,907 | $ | 90,208 | |||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
| Depreciation and amortization | 93,652 | 76,698 | |||||
| Share-based compensation expense | 13,366 | 18,117 | |||||
| Deferred income tax expense | 2,213 | 5,222 | |||||
| Other non-cash expenses | 172 | 364 | |||||
| Changes in operating assets and liabilities: | |||||||
| Inventories | (235,629 | ) | (246,457 | ) | |||
| Prepaid income taxes and tax receivable | (15,008 | ) | (14,064 | ) | |||
| Prepaid expenses and other assets | (12,530 | ) | (21,787 | ) | |||
| Accounts payable | 123,374 | 79,046 | |||||
| Income taxes payable | (19,928 | ) | (28,096 | ) | |||
| Accrued salaries and wages | (6,063 | ) | (39,399 | ) | |||
| Operating leases | 33,841 | 27,271 | |||||
| Other accrued expenses | 15,521 | 7,895 | |||||
| Net cash provided by (used in) operating activities | 91,888 | (44,982 | ) | ||||
| Investing activities: | |||||||
| Purchases of investment securities and other investments | (128,950 | ) | (31,815 | ) | |||
| Sales, maturities, and redemptions of investment securities | 195,795 | 273,951 | |||||
| Capital expenditures | (231,921 | ) | (173,589 | ) | |||
| Net cash (used in) provided by investing activities | (165,076 | ) | 68,547 | ||||
| Financing activities: | |||||||
| Cash paid for Revolving Credit Facility financing costs | — | (248 | ) | ||||
| Net proceeds from issuance of common stock | 440 | 464 | |||||
| Repurchase and retirement of common stock | (80,541 | ) | (40,007 | ) | |||
| Proceeds from exercise of options to purchase common stock and vesting of restricted and performance-based restricted stock units | 288 | 111 | |||||
| Common shares withheld for taxes | (16,395 | ) | (4,629 | ) | |||
| Net cash used in financing activities | (96,208 | ) | (44,309 | ) | |||
| Net decrease in cash and cash equivalents | (169,396 | ) | (20,744 | ) | |||
| Cash and cash equivalents at beginning of period | 332,324 | 64,973 | |||||
| Cash and cash equivalents at end of period | $ | 162,928 | |||||
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