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Five Below, Inc. Announces Third Quarter Fiscal 2023 Financial Results image

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)
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)
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)
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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