Five Below, Inc. Announces Third Quarter Fiscal 2020 Financial Results
Philadelphia, PA — Five Below, Inc. announced financial results for the third quarter and for the year to date period ended October 31, 2020.
For the third quarter ended October 31, 2020:
- Net sales increased by 26.3% to $476.6 million from $377.4 million in the third quarter of fiscal 2019; comparable sales increased by 12.8%.
- The Company opened 36 new stores and ended the quarter with 1,018 stores in 38 states. This represents an increase in stores of 13.9% from the end of the third quarter of fiscal 2019.
- Operating income increased by 91.2% to $24.2 million from $12.7 million in the third quarter of fiscal 2019.
- The effective tax rate was 13.4% compared to 24.2% in the third quarter of fiscal 2019.
- Net income increased by 100.5% to $20.4 million from $10.2 million in the third quarter of fiscal 2019.
- Diluted income per common share was $0.36 compared to $0.18 in the third quarter of fiscal 2019. The benefit from share-based accounting was approximately $0.04 in the third quarter of fiscal 2020 compared to less than a penny in the third quarter of fiscal 2019.
Joel Anderson, President and CEO, said, “Our third quarter results surpassed our expectations as customers responded very positively to our extreme value, trend-right offering. Our teams did a great job keeping the stores clean and safe, and our merchants pivoted quickly to ensure we met customer demand for products relevant in this COVID-impacted environment. Our performance this quarter demonstrates the inherent flexibility of our model and the agility of our teams to deliver a differentiated shopping experience with incredible value.”
Mr. Anderson continued, “In this high volume fourth quarter, we are focused on providing a safe and efficient shopping experience. In addition to several changes we made in store, such as adding expanded checkout capabilities, we are now offering a same-day delivery option for about 300 stores. The holiday selling season is off to an early and strong start, and COVID-related uncertainty notwithstanding, we believe we are well positioned to delight our customers with amazing Wow stocking stuffers and gifts at incredible values.”
For the year to date period ended October 31, 2020:
The results in the year to date period reflect the impact of store closures and reopenings.
- Net sales decreased by 4.8% to $1,103.6 million from $1,159.6 million in the year to date period of fiscal 2019; comparable sales decreased by 16.9%.
- The Company opened 118 net new stores compared to 144 new stores in the year to date period of fiscal 2019.
- Operating loss increased by 120.2% to $14.8 million from an operating income of $73.2 million in the year to date period of fiscal 2019.
- The effective tax rate was a benefit of 96.4% versus an expense of 16.1% in the year to date period of fiscal 2019.
- Net loss increased by 100.9% to $0.6 million from a net income of $64.7 million in the year to date period of fiscal 2019.
- Diluted loss per common share was $0.01 compared to a diluted income per common share of $1.15 in the year to date period of fiscal 2019. The benefit from share-based accounting was approximately $0.08 in the year to date period of fiscal 2020 compared to $0.13 in the year to date period of fiscal 2019.
Fourth Quarter and Fiscal 2020 Outlook:
Given the uncertainty related to COVID-19, the Company will not be providing sales or earnings guidance for the fourth quarter or fiscal 2020. The Company expects to open 120 net new stores in 2020 to end the year with 1,020 stores.
Conference Call Information:
A conference call to discuss the third quarter and year to date period fiscal 2020 financial results is scheduled for today, December 2, 2020, at 4:30 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 412-902-6753 approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at investor.fivebelow.com in the investor relations section of the website.
About Five Below:
Five Below is a leading high-growth value retailer offering trend-right, high-quality products loved by tweens, teens and beyond. We know life is way better when you’re free to “let go & have fun” in an amazing experience filled with unlimited possibilities. With most items priced $1-$5, and some extreme value items priced beyond $5, we make it easy to say YES! to the newest, coolest stuff across 8 awesome Five Below worlds: Style, Room, Sports, Tech, Create, Party, Candy and Now. Founded in 2002 and headquartered in Philadelphia, Pennsylvania, Five Below today has over 1,000 stores in 38 states. For more information, please visit www.fivebelow.com!
FIVE BELOW, INC.
Consolidated Balance Sheets
(Unaudited)
(in thousands)
| October 31, 2020 | February 1, 2020 | November 2, 2019 | ||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 117,045 | $ | 202,490 | $ | 77,496 | ||||||
| Short-term investment securities | 96,749 | 59,229 | 54,072 | |||||||||
| Inventories | 430,200 | 324,028 | 419,340 | |||||||||
| Prepaid income taxes and tax receivable | 18,090 | 4,063 | 16,396 | |||||||||
| Prepaid expenses and other current assets | 50,194 | 75,903 | 58,666 | |||||||||
| Total current assets | 712,278 | 665,713 | 625,970 | |||||||||
| Property and equipment, net | 522,214 | 439,086 | 400,129 | |||||||||
| Operating lease assets | 928,739 | 842,988 | 794,350 | |||||||||
| Deferred income taxes | — | — | 2,283 | |||||||||
| Other assets | 12,265 | 10,874 | 11,019 | |||||||||
| $ | 2,175,496 | $ | 1,958,661 | $ | 1,833,751 | |||||||
| Liabilities and Shareholders’ Equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Line of credit | $ | — | $ | — | $ | — | ||||||
| Accounts payable | 237,647 | 130,242 | 188,061 | |||||||||
| Income taxes payable | 1,031 | 9,505 | 831 | |||||||||
| Accrued salaries and wages | 22,164 | 19,873 | 11,773 | |||||||||
| Other accrued expenses | 99,489 | 81,255 | 91,304 | |||||||||
| Operating lease liabilities | 136,513 | 110,470 | 105,834 | |||||||||
| Total current liabilities | 496,844 | 351,345 | 397,803 | |||||||||
| Other long-term liabilities | 1,918 | 1,199 | 1,250 | |||||||||
| Long-term operating lease liabilities | 922,784 | 837,623 | 789,307 | |||||||||
| Deferred income taxes | 4,408 | 8,716 | — | |||||||||
| Total liabilities | 1,425,954 | 1,198,883 | 1,188,360 | |||||||||
| Shareholders’ equity: | ||||||||||||
| Common stock | 559 | 557 | 556 | |||||||||
| Additional paid-in capital | 312,668 | 322,330 | 318,318 | |||||||||
| Retained earnings | 436,315 | 436,891 | 326,517 | |||||||||
| Total shareholders’ equity | 749,542 | 759,778 | 645,391 | |||||||||
| $ | 2,175,496 | $ | 1,958,661 | $ | 1,833,751 | |||||||
FIVE BELOW, INC.
Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share data)
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | ||||||||||||||
| October 31, 2020 |
November 2, 2019 |
October 31, 2020 |
November 2, 2019 |
||||||||||||
| Net sales | $ | 476,614 | $ | 377,438 | $ | 1,103,623 | $ | 1,159,600 | |||||||
| Cost of goods sold | 325,514 | 258,756 | 792,223 | 774,762 | |||||||||||
| Gross profit | 151,100 | 118,682 | 311,400 | 384,838 | |||||||||||
| Selling, general and administrative expenses | 126,851 | 105,997 | 326,205 | 311,655 | |||||||||||
| Operating income (loss) | 24,249 | 12,685 | (14,805 | ) | 73,183 | ||||||||||
| Interest (expense) income and other (expense) income, net | (660 | ) | 753 | (1,017 | ) | 3,952 | |||||||||
| Income (loss) before income taxes | 23,589 | 13,438 | (15,822 | ) | 77,135 | ||||||||||
| Income tax expense (benefit) | 3,164 | 3,249 | (15,246 | ) | 12,453 | ||||||||||
| Net income (loss) | $ | 20,425 | $ | 10,189 | $ | (576 | ) | $ | 64,682 | ||||||
| Basic income (loss) per common share | $ | 0.37 | $ | 0.18 | $ | (0.01 | ) | $ | 1.16 | ||||||
| Diluted income (loss) per common share | $ | 0.36 | $ | 0.18 | $ | (0.01 | ) | $ | 1.15 | ||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic shares | 55,851,780 | 55,672,796 | 56,004,072 | 55,855,526 | |||||||||||
| Diluted shares | 56,099,328 | 56,019,736 | 56,004,072 | 56,208,718 | |||||||||||
FIVE BELOW, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
| Thirty-Nine Weeks Ended | ||||||||
| October 31, 2020 | November 2, 2019 | |||||||
| Operating activities: | ||||||||
| Net (loss) income | $ | (576 | ) | $ | 64,682 | |||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 50,919 | 39,894 | ||||||
| Share-based compensation expense | 3,582 | 9,446 | ||||||
| Deferred income tax (benefit) expense | (4,308 | ) | 3,843 | |||||
| Other non-cash expenses | 1,643 | 75 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Inventories | (106,172 | ) | (175,704 | ) | ||||
| Prepaid income taxes and tax receivable | (14,027 | ) | (15,059 | ) | ||||
| Prepaid expenses and other assets | 30,784 | 326 | ||||||
| Accounts payable | 110,970 | 78,372 | ||||||
| Income taxes payable | (8,474 | ) | (19,795 | ) | ||||
| Accrued salaries and wages | 2,291 | (12,813 | ) | |||||
| Operating leases | 25,453 | 9,660 | ||||||
| Other accrued expenses | 29,221 | 18,928 | ||||||
| Net cash provided by operating activities | 121,306 | 1,855 | ||||||
| Investing activities: | ||||||||
| Purchases of investment securities and other investments | (120,033 | ) | (103,055 | ) | ||||
| Sales, maturities, and redemptions of investment securities | 77,513 | 127,093 | ||||||
| Capital expenditures | (149,270 | ) | (156,350 | ) | ||||
| Net cash used in investing activities | (191,790 | ) | (132,312 | ) | ||||
| Financing activities: | ||||||||
| Borrowing on note payable under Amended Revolving Credit Facility | 50,000 | — | ||||||
| Repayment of note payable under Amended Revolving Credit Facility | (50,000 | ) | — | |||||
| Cash paid for credit facility financing costs | (1,755 | ) | — | |||||
| Net proceeds from issuance of common stock | 229 | 195 | ||||||
| Repurchase and retirement of common stock | (12,663 | ) | (36,885 | ) | ||||
| Proceeds from exercise of options to purchase common stock and vesting of restricted and performance-based restricted stock units | 3,017 | 3,186 | ||||||
| Common shares withheld for taxes | (3,789 | ) | (10,291 | ) | ||||
| Net cash used in financing activities | (14,961 | ) | (43,795 | ) | ||||
| Net decrease in cash and cash equivalents | (85,445 | ) | (174,252 | ) | ||||
| Cash and cash equivalents at beginning of period | 202,490 | 251,748 | ||||||
| Cash and cash equivalents at end of period | $ | 117,045 | $ | 77,496 | ||||
