Net Sales Increase of 26.3%; Comparable Sales Increase of 12.8%
Operating Profit Grew 91%; EPS Doubled to $0.36
PHILADELPHIA, PA, Dec. 02, 2020 (GLOBE NEWSWIRE) -- Five Below, Inc. FIVE today 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.
A taped replay of the conference call will be available within two hours of the conclusion of the call and can be accessed both online and by dialing 412-317-0088. The pin number to access the telephone replay is 10149151. The replay will be available for approximately two weeks after the call.
Forward-Looking Statements:
This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect management's current views and estimates regarding the Company's industry, business strategy, goals and expectations concerning its market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. Investors can identify these statements by the fact that they use words such as "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future" and similar terms and phrases. The Company cannot assure investors that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to risks and uncertainties associated with the COVID-19 pandemic (including governmental restrictions and requirements, store closures and effects on customer demand or on our supply chain, our ability to keep our distribution centers and e-commerce fulfillment centers operational, our ability to effectively operate and remain open in some or all of our stores, and to open new stores and remodels), risks related to the Company's strategy and expansion plans, risks related to the inability to successfully implement our online retail operations, including cyber security risks, risks related to our ability to select, obtain, distribute and market merchandise profitably, risks related to our reliance on merchandise manufactured outside of the United States, risks related to any legal proceedings that we may become subject to, the availability of suitable new store locations and the dependence on the volume of traffic to our stores, risks related to the Company's continued retention of its executive officers, senior management and other key personnel, risks related to changes in consumer preferences and economic conditions, risks related to increased operating costs, including wage rates, risks related to extreme weather, pandemic outbreaks (in addition to COVID-19), global political events, war, terrorism or civil unrest (including any resulting store closures, damage, or loss of inventory), risks related to leasing, owning or building distribution centers, risks related to our ability to successfully manage inventory balance and inventory shrinkage, quality or safety concerns about the Company's merchandise, increased competition from other retailers including online retailers, risks related to the seasonality of our business, risks related to our ability to protect our brand name and other intellectual property, risks related to customers' payment methods, risks related to domestic and foreign trade restrictions including duties and tariffs affecting our domestic and foreign suppliers and increasing our costs, including, among others, the direct and indirect impact of recent and potential tariffs imposed and proposed by the United States on foreign imports, risks associated with the restrictions imposed by our indebtedness on our current and future operations, the impact of changes in tax legislation and accounting standards and risks associated with leasing substantial amounts of space. For further details and a discussion of these risks and uncertainties, see the Company's periodic reports, including the annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, filed with or furnished to the Securities and Exchange Commission and available at www.sec.gov. If one or more of these risks or uncertainties materialize, or if any of the Company's assumptions prove incorrect, the Company's actual results may vary in material respects from those projected in these forward-looking statements. Any forward-looking statement made by the Company in this news release speaks only as of the date on which the Company makes it. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.
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 | ||||
Investor Contact: Five Below, Inc. Christiane Pelz Vice President, Investor Relations 215-207-2658 Christiane.Pelz@fivebelow.com
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