SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock, $0.01 par value, outstanding as of December ~~4, 2019~~2, 2020 was ~~55,673,032.~~55,871,672.


INDEX

~~INDEX~~

PART I - FINANCIAL INFORMATION	Page
Item 1.		Consolidated Financial Statements (unaudited)	4
		Unaudited Consolidated Balance Sheets as of October 31 , 2020, February 1, 2020 and November 2 , 2019 ~~February 2, 2019 and November 3, 2018~~	4
		Unaudited Consolidated Statements of Operations for the Thirteen and ~~Thirty-Nine~~T hirty-Nine Weeks Ended October 3 1, 2020 and November 2 , 2019 ~~and November 3, 2018~~	54
		Unaudited Consolidated Statements of Shareholders' Equity for the ~~Thirty-Nine~~ Thirt y-Nine Weeks Ended October 3 1, 2020 and November 2 , 2019 ~~and November 3, 2018~~	6
		Unaudited Consolidated Statements of Cash Flows for the ~~Thirty-Nine~~T hirty-Nine Weeks Ended October 3 1, 2020 and November 2 , 2019 ~~and November 3, 2018~~	8
		Notes to Unaudited Consolidated Financial Statements	9
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations	1920
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	2832
Item 4.		Controls and Procedures	2832

PART II - OTHER INFORMATION
Item 1.		Legal Proceedings	2934
Item 1A.		Risk Factors	3035
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	3136
Item 3.		Defaults Upon Senior Securities	3136
Item 4.		Mine Safety Disclosures	3136
Item 5.		Other Information	3136
Item 6.		Exhibits	3237

PART I - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

FIVE BELOW, INC.

Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share data)


	November 2, 2019		February 2, 2019		November 3, 2018			October 31, 2020		February 1, 2020		November 2, 2019
Assets							Assets
Current assets:							Current assets:
Cash and cash equivalents	$	77,496	$	251,748	$	103,262	Cash and cash equivalents	$	117,045	$	202,490	$	77,496
Short-term investment securities	54,072		85,412		85,029		Short-term investment securities	96,749		59,229		54,072
Inventories	419,340		243,636		339,898		Inventories	430,200		324,028		419,340
Prepaid income taxes	16,396		1,337		11,443
Prepaid income taxes and tax receivable							Prepaid income taxes and tax receivable	18,090		4,063		16,396

Prepaid expenses and other current assets	58,666		60,124		59,500		Prepaid expenses and other current assets	50,194		75,903		58,666
Total current assets	625,970		642,257		599,132		Total current assets	712,278		665,713		625,970
Property and equipment, net of accumulated depreciation and amortization of $200,306, $168,588, and $157,575, respectively.	400,129		301,297		245,631
Property and equipment, net of accumulated depreciation and amortization of $260,888, $215,071, and $200,306, respectively.							Property and equipment, net of accumulated depreciation and amortization of $260,888, $215,071, and $200,306, respectively.	522,214		439,086		400,129
Operating lease assets	794,350		—		—		Operating lease assets	928,739		842,988		794,350
Deferred income taxes	2,283		6,126		3,243		Deferred income taxes	0		0		2,283

Other assets	11,019		2,584		1,730		Other assets	12,265		10,874		11,019
	$	1,833,751	$	952,264	$	849,736		$	2,175,496	$	1,958,661	$	1,833,751

Liabilities and Shareholders’ Equity							Liabilities and Shareholders’ Equity
Current liabilities:							Current liabilities:
Line of credit	$	—	$	—	$	—	Line of credit	$	0	$	0	$	0

Accounts payable	188,061		103,692		155,986		Accounts payable	237,647		130,242		188,061
Income taxes payable	831		20,626		281		Income taxes payable	1,031		9,505		831
Accrued salaries and wages	11,773		24,586		11,139		Accrued salaries and wages	22,164		19,873		11,773
Other accrued expenses	91,304		104,201		72,019		Other accrued expenses	99,489		81,255		91,304
Operating lease liabilities	105,834		—		—		Operating lease liabilities	136,513		110,470		105,834

Total current liabilities	397,803		253,105		239,425		Total current liabilities	496,844		351,345		397,803
Deferred rent and other	1,250		84,065		85,240

Other long-term liabilities							Other long-term liabilities	1,918		1,199		1,250
Long-term operating lease liabilities	789,307		—		—		Long-term operating lease liabilities	922,784		837,623		789,307
Deferred income taxes							Deferred income taxes	4,408		8,716		0
Total liabilities	1,188,360		337,170		324,665		Total liabilities	1,425,954		1,198,883		1,188,360
Commitments and contingencies (note 6)							Commitments and contingencies (note 6)
Shareholders’ equity:							Shareholders’ equity:
Common stock, $0.01 par value. Authorized 120,000,000 shares; issued and outstanding 55,671,943, 55,759,048, and 55,760,985 shares, respectively.	556		557		557
Common stock, $0.01 par value. Authorized 120,000,000 shares; issued and outstanding 55,866,590, 55,712,067, and 55,671,943 shares, respectively.							Common stock, $0.01 par value. Authorized 120,000,000 shares; issued and outstanding 55,866,590, 55,712,067, and 55,671,943 shares, respectively.	559		557		556
Additional paid-in capital	318,318		352,702		351,941		Additional paid-in capital	312,668		322,330		318,318
Retained earnings	326,517		261,835		172,573		Retained earnings	436,315		436,891		326,517
Total shareholders’ equity	645,391		615,094		525,071		Total shareholders’ equity	749,542		759,778		645,391
	$	1,833,751	$	952,264	$	849,736		$	2,175,496	$	1,958,661	$	1,833,751

See accompanying notes to consolidated financial statements.

FIVE BELOW, INC.

Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share data)

Thirteen Weeks Ended Thirty-Nine Weeks Ended
November 2, 2019 November 3, 2018 November 2, 2019 November 3, 2018
Net sales $ 377,438
$ 312,823
$ 1,159,600
$ 956,879
Cost of goods sold 258,756
210,733
774,762
635,799
Gross profit 118,682
102,090
384,838
321,080
Selling, general and administrative expenses 105,997
86,542
311,655
250,404
Operating income 12,685
15,548
73,183
70,676
Interest income and other, net 753
1,058
3,952
3,120
Income before income taxes 13,438
16,606
77,135
73,796
Income tax expense 3,249
3,090
12,453
13,413
Net income $ 10,189
$ 13,516
$ 64,682
$ 60,383
Basic income per common share $ 0.18
$ 0.24
$ 1.16
$ 1.08
Diluted income per common share $ 0.18
$ 0.24
$ 1.15
$ 1.07
Weighted average shares outstanding:
Basic shares 55,672,796
55,742,854
55,855,526
55,731,098
Diluted shares 56,019,736
56,228,305
56,208,718
56,185,305


	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

See accompanying notes to consolidated financial statements.

FIVE BELOW, INC.

Consolidated Statements of Shareholders’ Equity

(Unaudited)

(in thousands, except share data)


	Common stock	Additional paid-in capital	Retained earnings	Total shareholders’ equity

								Shares			Amount

Balance, February 1, 2020			55,712,067	$	557	$	322,330		$	436,891		$	759,778

Share-based compensation benefit			0	—		(3,536)			—			(3,536)

Exercise of options to purchase common stock			2,136	—		65			—			65

Vesting of restricted stock units and performance-based restricted stock units			204,769	2		—			—			2
Common shares withheld for taxes			(46,532)	—		(3,299)			—			(3,299)
Repurchase and retirement of common stock			(137,023)	(1)		(12,662)			—			(12,663)


Net loss			—	—		—			(50,582)			(50,582)
Balance, May 2, 2020			55,735,417	$	558	$	302,898		$	386,309		$	689,765
Share-based compensation expense			0	—		2,416			—			2,416
Issuance of unrestricted stock awards			584	—		64			—			64
Exercise of options to purchase common stock			83,814	1		2,196			—			2,197
Vesting of restricted stock units and performance-based restricted stock units			18,030	—		—			—			0
Common shares withheld for taxes			(2,885)	—		(297)			—			(297)

Issuance of common stock to employees under employee stock purchase plan			2,136	—		229			—			229
Net income			—	—		—			29,581			29,581
Balance, August 1, 2020			55,837,096	$	559	$	307,506		$	415,890		$	723,955
Share-based compensation expense			0	—		4,538			—			4,538
Issuance of unrestricted stock awards			477	—		64			—			64
Exercise of options to purchase common stock			25,864	0		753			—			753
Vesting of restricted stock units and performance-based restricted stock units			4,657	—		—			—			0
Common shares withheld for taxes			(1,504)	—		(193)			—			(193)

Net income			—	—		—			20,425			20,425
Balance, October 31, 2020			55,866,590	$	559	$	312,668		$	436,315		$	749,542

Common stock
Additional
paid-in capital
Retained earnings
Total
shareholders’ equity

Shares Amount
Balance, February 2, 2019 55,759,048
$ 557
$ 352,702
$ 261,835
$ 615,094
Share-based compensation expense —
—
2,822
—
2,822
Issuance of unrestricted stock awards 307
—
45
—
45
Exercise of options to purchase common stock 72,365
1
2,246
—
2,247
Vesting of restricted stock units and performance-based restricted stock units 203,429
2
—
—
2
Common shares withheld for taxes (79,256 ) (1 ) (9,872 ) —
(9,873 )
Net income —
—
—
25,662
25,662
Balance, May 4, 2019 55,955,893
$ 559
$ 347,943
$ 287,497
$ 635,999
Share-based compensation expense —
—
3,055
—
3,055
Issuance of unrestricted stock awards 411
—
45
—
45
Exercise of options to purchase common stock 24,688
—
685
—
685
Vesting of restricted stock units and performance-based restricted stock units 17,099
—
—
—
—
Common shares withheld for taxes (2,110 ) —
(275 ) —
(275 )
Repurchase and retirement of common stock (146,185 ) (1 ) (16,598 ) —
(16,599 )
Issuance of common stock to employees under employee stock purchase plan 1,847
—
195
—
195
Net income —
—
—
28,831
28,831
Balance, August 3, 2019 55,851,643
$ 558
$ 335,050
$ 316,328
$ 651,936
Share-based compensation expense —
—
3,398
—
3,398
Issuance of unrestricted stock awards 355
—
45
—
45
Exercise of options to purchase common stock 8,921
—
252
—
252
Vesting of restricted stock units and performance-based restricted stock units 3,530
—
—
—
—
Common shares withheld for taxes (1,139 ) —
(143 ) —
(143 )
Repurchase and retirement of common stock (191,367 ) (2 ) (20,284 ) —
(20,286 )
Net income —
—
—
10,189
10,189
Balance, November 2, 2019 55,671,943
$ 556
$ 318,318
$ 326,517
$ 645,391

~~See accompanying notes to consolidated financial statements.~~

FIVE BELOW, INC.

Consolidated Statements of Shareholders’ Equity

(Unaudited)

(in thousands, except share data)

Common stock
Additional
paid-in capital
Retained earnings
Total
shareholders’ equity

Shares Amount
Balance, February 3, 2018 55,438,089
$ 554
$ 346,300
$ 111,704
$ 458,558
Cumulative effect of ASC 606 adoption —
—
—
486
486
Share-based compensation expense —
—
2,692
—
2,692
Issuance of unrestricted stock awards 876
—
62
—
62
Exercise of options to purchase common stock 39,237
—
1,222
—
1,222
Vesting of restricted stock units and performance-based restricted stock units 243,745
2
—
—
2
Common shares withheld for taxes (101,928 ) (1 ) (6,907 ) —
(6,908 )
Net income —
—
—
21,804
21,804
Balance, May 5, 2018 55,620,019
$ 555
$ 343,369
$ 133,994
$ 477,918
Share-based compensation expense —
—
3,360
—
3,360
Issuance of unrestricted stock awards 449
—
28
—
28
Exercise of options to purchase common stock 70,030
1
2,141
—
2,142
Vesting of restricted stock units and performance-based restricted stock units 39,359
1
—
—
1
Common shares withheld for taxes (8,223 ) —
(722 ) —
(722 )
Issuance of common stock to employees under employee stock purchase plan 1,633
—
168
—
168
Net income —
—
—
25,063
25,063
Balance, August 4, 2018 55,723,267
$ 557
$ 348,344
$ 159,057
$ 507,958
Share-based compensation expense —
—
3,087
—
3,087
Issuance of unrestricted stock awards 371
—
45
—
45
Exercise of options to purchase common stock 34,195
—
652
—
652
Vesting of restricted stock units and performance-based restricted stock units 4,650
—
—
—
—
Common shares withheld for taxes (1,498 ) —
(187 ) —
(187 )
Net income —
—
—
13,516
13,516
Balance, November 3, 2018 55,760,985
$ 557
$ 351,941
$ 172,573
$ 525,071


	Common stock	Additional paid-in capital	Retained earnings	Total shareholders’ equity

								Shares			Amount
Balance, February 2, 2019			55,759,048	$	557	$	352,702		$	261,835		$	615,094

Share-based compensation expense			0	—		2,822			0			2,822
Issuance of unrestricted stock awards			307	—		45			—			45
Exercise of options to purchase common stock			72,365	1		2,246			0			2,247
Vesting of restricted stock units and performance-based restricted stock units			203,429	2		—			—			2
Common shares withheld for taxes			(79,256)	(1)		(9,872)			—			(9,873)



Net income			—	—		—			25,662			25,662
Balance, May 4, 2019			55,955,893	$	559	$	347,943		$	287,497		$	635,999
Share-based compensation expense			0	—		3,055			—			3,055
Issuance of unrestricted stock awards			411	—		45			—			45
Exercise of options to purchase common stock			24,688	—		685			—			685
Vesting of restricted stock units and performance-based restricted stock units			17,099	—		—			—			0
Common shares withheld for taxes			(2,110)	—		(275)			—			(275)
Repurchase and retirement of common stock			(146,185)	(1)		(16,598)			—			(16,599)

Issuance of common stock to employees under employee stock purchase plan			1,847	—		195			—			195
Net income			—	—		—			28,831			28,831
Balance, August 3, 2019			55,851,643	$	558	$	335,050		$	316,328		$	651,936
Share-based compensation expense			0	—		3,398			—			3,398
Issuance of unrestricted stock awards			355	—		45			—			45
Exercise of options to purchase common stock			8,921	—		252			—			252
Vesting of restricted stock units and performance-based restricted stock units			3,530	—		—			—			0
Common shares withheld for taxes			(1,139)	—		(143)			—			(143)
Repurchase and retirement of common stock			(191,367)	(2)		(20,284)			—			(20,286)
Net income			—	—		—			10,189			10,189
Balance, November 2, 2019			55,671,943	$	556	$	318,318		$	326,517		$	645,391

See accompanying notes to consolidated financial statements.

FIVE BELOW, INC.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


								Thirty-Nine Weeks Ended
								October 31, 2020		November 2, 2019
Operating activities:							Operating activities:
Net (loss) income							Net (loss) income	$	(576)	$	64,682
Adjustments to reconcile net (loss) income to net cash provided by operating activities:							Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization							Depreciation and amortization	50,919		39,894

	Thirty-Nine Weeks Ended
	November 2, 2019			November 3, 2018
Operating activities:
Net income	$	64,682		$	60,383
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	39,894			30,267

Share-based compensation expense	9,446			9,297			Share-based compensation expense	3,582		9,446
Deferred income tax expense	3,843			3,433
Deferred income tax (benefit) expense							Deferred income tax (benefit) expense	(4,308)		3,843
Other non-cash expenses	75			43			Other non-cash expenses	1,643		75

Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Inventories	(175,704		)	(152,861		)	Inventories	(106,172)		(175,704)
Prepaid income taxes	(15,059		)	(9,179		)

Prepaid income taxes and tax receivable							Prepaid income taxes and tax receivable	(14,027)		(15,059)
Prepaid expenses and other assets	326			(14,175		)	Prepaid expenses and other assets	30,784		326
Accounts payable	78,372			79,036			Accounts payable	110,970		78,372
Income taxes payable	(19,795		)	(24,994		)	Income taxes payable	(8,474)		(19,795)
Accrued salaries and wages	(12,813		)	(11,767		)	Accrued salaries and wages	2,291		(12,813)
Deferred rent	(92,382		)	12,785

Operating leases	102,042			—			Operating leases	25,453		9,660
Other accrued expenses	18,928			19,351			Other accrued expenses	29,221		18,928
Net cash provided by operating activities	1,855			1,619			Net cash provided by operating activities	121,306		1,855
Investing activities:							Investing activities:
Purchases of investment securities and other investments	(103,055		)	(91,375		)	Purchases of investment securities and other investments	(120,033)		(103,055)
Sales, maturities, and redemptions of investment securities	127,093			166,006			Sales, maturities, and redemptions of investment securities	77,513		127,093
Capital expenditures	(156,350		)	(82,027		)	Capital expenditures	(149,270)		(156,350)
Net cash used in investing activities	(132,312		)	(7,396		)	Net cash used in investing activities	(191,790)		(132,312)
Financing activities:							Financing activities:

Borrowing on note payable under Amended Revolving Credit Facility							Borrowing on note payable under Amended Revolving Credit Facility	50,000		0
Repayment of note payable under Amended Revolving Credit Facility							Repayment of note payable under Amended Revolving Credit Facility	(50,000)		0
Cash paid for credit facility financing costs							Cash paid for credit facility financing costs	(1,755)		0

Net proceeds from issuance of common stock	195			168			Net proceeds from issuance of common stock	229		195
Repurchase and retirement of common stock	(36,885		)	—			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	3,186			4,019			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	(10,291		)	(7,817		)	Common shares withheld for taxes	(3,789)		(10,291)

Net cash used in financing activities	(43,795		)	(3,630		)	Net cash used in financing activities	(14,961)		(43,795)
Net decrease in cash and cash equivalents	(174,252		)	(9,407		)	Net decrease in cash and cash equivalents	(85,445)		(174,252)
Cash and cash equivalents at beginning of period	251,748			112,669			Cash and cash equivalents at beginning of period	202,490		251,748
Cash and cash equivalents at end of period	$	77,496		$	103,262		Cash and cash equivalents at end of period	$	117,045	$	77,496

Supplemental disclosures of cash flow information:							Supplemental disclosures of cash flow information:
Non-cash investing activities							Non-cash investing activities
(Decrease) increase in accrued purchases of property and equipment	$	(17,547	)	$	11,813
Decrease in accrued purchases of property and equipment							Decrease in accrued purchases of property and equipment	$	13,870	$	17,547

See accompanying notes to consolidated financial statements.

FIVE BELOW, INC.

Notes to Consolidated Financial Statements

(Unaudited)

(1) Summary of Significant Accounting Policies


~~(1)~~	~~Summary of Significant Accounting Policies~~


~~(a)~~	~~Description of Business~~

(a)Description of Business

Five Below, Inc. (collectively referred to herein with its wholly owned subsidiary as the "Company") is a specialty value retailer offering merchandise targeted at the tween and teen demographic. The Company offers an edited assortment of products, with most priced at $5$5 and below.

The Company’s edited assortment of products includes select brands and licensed merchandise. The Company believes its merchandise is readily available, and that there are a number of potential vendors that could be utilized, if necessary, under approximately the same terms the Company is currently receiving; thus, it is not dependent on a single vendor or a group of vendors.

The Company is incorporated in the Commonwealth of Pennsylvania and, as of ~~November 2, 2019,~~October 31, 2020, operated in 3638 states that include Pennsylvania, New Jersey, Delaware, Maryland, Virginia, Massachusetts, New Hampshire, West Virginia, North Carolina, New York, Connecticut, Rhode Island, Ohio, Illinois, Indiana, Michigan, Missouri, Georgia, Texas, Tennessee, Maine, Alabama, Kentucky, Kansas, Florida, South Carolina, Mississippi, Louisiana, Wisconsin, Oklahoma, Minnesota, California, Arkansas, Iowa, Nebraska, Arizona, Nevada and ~~Arizona.~~Colorado. As of October 31, 2020 and November 2, 2019, ~~and November 3, 2018,~~ the Company operated ~~894~~1,018 stores and ~~745~~894 stores, respectively, each operating under the name “Five ~~Below”,~~Below,” and sells merchandise on the internet, through the Company's fivebelow.com e-commerce website.


~~(b)~~	~~Fiscal Year~~

(b)Impact of COVID-19

As a result of the coronavirus (or COVID-19) pandemic in the first half of 2020, federal, state and local governments and private entities mandated various restrictions, including travel restrictions, restrictions on public gatherings, stay at home orders and advisories, and quarantining of people who may have been exposed to the virus, of which many have been eliminated or lessened over time. Such mandates required reduction of operating hours and forced temporary closures of certain retailers and other businesses. The COVID-19 pandemic has recently surged in many parts of the United States, which may lead to the imposition of new federal, state and local restrictions. It is impossible to predict the effect and ultimate impact of the pandemic and measures taken to control the spread, as the situation continues to evolve.

As a result of these restrictions and out of concern for its customers and employees, the Company temporarily closed all of its stores as of March 20, 2020. The Company began reopening its stores at the end of April in compliance with federal, state and local requirements. As a result of the temporary store closures, the Company withheld store rent for the closure period. With respect to virtually all of the Company's lease portfolio, the Company has either resumed rent payments or has agreed to rent deferrals and abatements related to this closure period with landlords. As a result, the Company does not expect that its prior rent withholdings or the associated deferrals and abatements agreed upon with landlords will have a material adverse impact on the Company's business, financial condition and results of future operations.

While the ultimate health and economic impact of the COVID-19 pandemic are highly uncertain, the Company expects that its business operations and results of operations, including net sales, earnings and cash flows, may be materially impacted for the foreseeable future, as a result of:

•temporary closures of Company stores;

•decreased customer traffic in stores, including, without limitation, as the result of limitations on the number of persons permitted in stores at one time by certain local and state regulations;

•uncertainty of the extent to which customers will maintain purchases through our e-commerce website and through curbside pickup (if and where any stores are closed to the public);

•changes in consumer confidence and consumer spending habits, including spending for the merchandise that the Company sells, and negative trends in consumer purchasing patterns due to changes in consumers’ disposable income, credit availability and debt levels;

•disruption to the Company’s supply chain including the manufacturing, supply, distribution, transportation and delivery of products;

•increased safety measures for the Company's employees and customers at the Company's stores, distribution centers and home office; and

•a slowdown in the U.S. and global economies, and an uncertain global economic outlook or a potential credit crisis.

To seek to mitigate the effects of the pandemic and to create financial flexibility, the Company has taken the following actions:

•a majority of its store and distribution center employees were furloughed in March and the Company covered the cost of health benefits for such furloughed employees through the end of May;

•the Company implemented a voluntary temporary base salary reduction of 50% for Joel Anderson, its Chief Executive Officer, and a 25% base salary reduction for the remainder of the executive leadership team that reports into Mr. Anderson. This compensation was reinstated in the second quarter of 2020 after substantially all of the Company’s stores were reopened;

•its Board of Directors elected to forgo its quarterly cash retainers for the first quarter of 2020;

•the Company implemented a temporary pay reduction for all salaried corporate employees and certain field and supply chain leadership (that has been reinstated now that substantially all of the Company's stores have reopened) and delayed annual salary increases for corporate employees;

•as permitted by the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, the Company has applied for and received payroll tax credits with the IRS, and elected to defer the payment of the employer's portion of FICA taxes;

•the Company implemented significant temporary non-payroll expense reductions, including advertising, occupancy and other store operating expenses, distribution and corporate office operating expenses, as well as professional and consulting fees;

•the Company temporarily ceased paying rent on all closed store locations; as discussed above, we have since resumed rent payments and/or agreed to lease modifications with virtually all of our landlords;

•the Company cancelled certain vendor orders and delayed receipts on others in order to manage inventory levels, and extended payment terms for product and non-product vendors, although we have since returned to more normalized payment terms;

•the Company significantly reduced its 2020 capital expenditure budget, including reducing the number of new stores to be opened in 2020 and delaying the purchase and construction of a new Midwest distribution center;

•the Company amended its credit facility and increased its line of credit from $50 million to $225 million; and

•the Company evolved its product mix to meet the needs of its customers by adding to its assortment of essential products, including consumables (such as cleaning and personal hygiene products), food and drink, fitness products, pet accessories, and products needed to support work-from-home and school-from-home.

Depending on future developments with respect to the COVID-19 pandemic, including any new federal, state and local governmental restrictions that may be imposed, the Company may determine to reinstate any of the foregoing mitigation measures or take any additional steps that we consider necessary.

(c)Fiscal Year

The Company operates on a 52/53-week fiscal year ending on the Saturday closest to January 31. References to "fiscal year 2020" or "fiscal 2020" refer to the period from February 2, 2020 to January 30, 2021, which is a 52-week fiscal year. References to "fiscal year 2019" or "fiscal 2019" refer to the period from February 3, 2019 to February 1, 2020, which is a 52-week fiscal year. ~~References to "fiscal year 2018" or "fiscal 2018" refer to the period from February 4, 2018 to February 2, 2019, which is a 52-week fiscal year.~~ The fiscal quarters ended October 31, 2020 and November 2, 2019 ~~and November 3, 2018~~ refer to the thirteen weeks ended as of those dates. The year-to-date periods ended October 31, 2020 and November 2, 2019 ~~and November 3, 2018~~ refer to the thirty-nine weeks ended as of those dates.

~~(c)~~(d) Basis of Presentation

The consolidated balance sheets as of October 31, 2020 and November 2, 2019, ~~and November 3, 2018,~~ the consolidated statements of operations for the thirteen and thirty-nine weeks ended October 31, 2020 and November 2, 2019, ~~and November 3, 2018,~~ the consolidated statements of shareholders’ equity for the thirty-nine weeks ended October 31, 2020 and November 2, 2019 ~~and November 3, 2018~~ and the consolidated statements of cash flows for the thirty-nine weeks ended October 31, 2020 and November 2, 2019 ~~and November 3, 2018~~ have been prepared by the Company in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim reporting and are unaudited. In the opinion of management, the aforementioned financial statements include all known adjustments (which consist primarily of normal, recurring accruals, estimates and assumptions that impact the financial statements) necessary to present fairly the financial position at the balance sheet dates and the results of operations and cash flows for the periods ended October 31, 2020 and November 2, ~~2019 and November 3, 2018.~~2019. The balance sheet as of February ~~2, 2019,~~1, 2020, presented herein, has been derived from the audited balance sheet included in the Company's Annual Report on Form 10-K for fiscal ~~2018~~2019 as filed with the Securities and Exchange Commission on March ~~28, 2019~~19, 2020 and referred to herein as the “Annual Report,” but does not include all annual disclosures required by U.S. GAAP. These consolidated financial statements should be read in conjunction with the financial statements for the fiscal year ended February ~~2, 2019~~1, 2020 and footnotes thereto included in the Annual Report. The consolidated results of operations for the thirteen and thirty-nine weeks ended October 31, 2020 and November 2, 2019 ~~and November 3, 2018~~ are not necessarily indicative of the consolidated operating results for the year ending ~~February 1, 2020~~January 30, 2021 or any other period. The Company's business is seasonal and as a result, the Company's net sales fluctuate from quarter to quarter. Net sales are usually highest in the fourth fiscal quarter due to the year-end holiday season.

~~(d)~~(e) Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)." ASU 2014-09 clarifies the principles for recognizing revenue from contracts with customers and outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. On February 4, 2018, the Company adopted the pronouncement using the modified retrospective method by recognizing the cumulative effect of gift card breakage as an adjustment to retained earnings resulting in a $0.5 million increase to retained earnings.

In February 2016, the FASB issued ASU 2016-02, “Leases.” ASU 2016-02 requires lessees to record assets and liabilities on the balance sheet for all leases with terms longer than 12 months. The updated guidance is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. On February 3, 2019, the Company adopted this pronouncement on a modified retrospective basis and applied the new standard to all leases. As a result, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which includes, among other things, the ability to carry forward the existing lease classification. WeThe Company also elected the practical expedient related to land easements, allowing usthe Company to carry forward ~~our~~its accounting treatment for land easements on existing agreements. At adoption, the new standard had a material impact on the Company's balance sheets resulting in an increase in net assets and liabilities of approximately $618 million, as the Company has a significant number of leases for its stores. Although the standard impacts the treatment of certain initial direct leases costs that were previously capitalizable, it did not materially impact the Company's consolidated statements of operations and had no impact on the Company's cash flows.

~~The following is a discussion of the Company’s lease policy under the new lease accounting standard:~~

The Company determines if an arrangement contains a lease at the inception of a contract. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease assets and operating lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments. As the rate implicit in the lease is not readily determinable for the Company's leases, the Company utilizes its incremental borrowing rate to determine the present value of future lease payments. The incremental borrowing rate represents a significant judgment and is determined based on an analysis of our synthetic credit rating, prevailing financial market conditions, corporate bond yields, treasury bond yields, and the effect of collateralization. The operating lease assets also include lease payments made before commencement and exclude lease incentives.

The Company’s real estate leases typically contain options that permit renewals for additional periods of up to five years. For real estate leases, except for renewals that generally take the lease to a ten-year term, the options to renew are not considered reasonably certain at lease commencement because the Company reevaluates each lease on a regular basis to consider the economic and strategic incentives of exercising the renewal options, and regularly opens, relocates or closes stores to align with its operating strategy. Generally, except for renewals that generally take the lease to a ten-year term, the renewal option periods are not included within the lease term and the associated payments are not included in the measurement of the operating lease asset and operating lease liability as the exercise of such options is not reasonably certain. Similarly, renewal options are not included in the lease term for non-real estate leases because they are not considered reasonably certain of being exercised at lease commencement. Leases with an initial term of 12 months or less are not recorded on the balance sheets and lease expense is recognized on a straight-line basis over the term of the short-term lease.

For certain real estate leases, the Company accounts for lease components and nonlease components as a single lease component. Certain real estate leases require additional payments based on sales volume, as well as reimbursement for real estate taxes, common area maintenance and insurance, which are expensed as incurred as variable lease costs. Other real estate leases contain one fixed lease payment that includes real estate taxes, common area maintenance and insurance. These fixed payments are considered part of the lease payment and included in the operating lease assets and operating lease liabilities.

See Note 3 ‘‘Leases’’ for additional information.

~~Impact of New Lease Standard on Balance Sheet Line Items~~

As a result of applying the new lease standard using the modified retrospective method, the following adjustments were made to accounts on the consolidated balance sheet as of February 3, 2019 (in thousands):

Impact of ASC 842 Adoption
As Reported February 2, 2019 Adjustments Adjusted February 3, 2019
Assets
Current assets:
Prepaid expenses and other current assets 60,124
(11,077 ) 49,047
Total current assets 642,257
(11,077 ) 631,180
Operating lease assets —
628,924
628,924
$ 952,264
$ 617,847
$ 1,570,111

Liabilities and Shareholders’ Equity
Current liabilities:
Other accrued expenses 104,201
(8,033 ) 96,168
Total current liabilities 253,105
(8,033 ) 245,072
Deferred rent and other 84,065
(84,065 ) —
Long-term operating lease liabilities —
709,945
709,945
Total liabilities 337,170
617,847
955,017
Shareholders’ equity:

Total shareholders’ equity 615,094
—
615,094
$ 952,264
$ 617,847
$ 1,570,111

In August 2018, the FASB issued ASU 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract." ASU 2018-15 requires implementation costs incurred by customers in cloud computing arrangements to be deferred over the noncancelable term of the cloud computing arrangements plus any optional renewal periods (1) that are reasonably certain to be exercised by the customer or (2) for which exercise of the renewal option is controlled by the cloud service provider. The effective date of this pronouncement is for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, and early adoption is permitted. The standard can be adopted either using the prospective or retrospective transition approach. During the thirteen weeks ended November 3, 2018, the Company adopted the pronouncement using the prospective transition method and it did not have a significant impact to the Company's financial statements.

In April 2019, the FASB issued ASU 2019-04, "Codification Improvements to Topic 326, Financial Instruments - Credit Losses," which addresses certain fair value disclosure requirements, the measurement basis under the measurement alternative and which equity securities have to be remeasured at historical exchange rates. In May 2019, the FASB issued ASU 2019-05, "Financial Instruments - Credit Losses (Topic 326), Targeted Transition Relief," which ~~allows~~gives entities the ability to irrevocably elect ~~to measure assets in the scope of ASC 326-20, using~~ the fair value option ~~when~~in Subtopic 825-10 for certain existing financial assets upon transition to ASU ~~2016-13 is adopted.~~2016-13. The effective date of the standards will be for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 and early adoption is permitted for annual periods beginning after December 15, 2018. The new standard will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align the Company's credit loss methodology with the new standard. ~~While~~The Company adopted the standard on February 2, 2020. The adoption did not impact the Company's financial statements.

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU 2020-04"). The pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is currently evaluating the impact ~~to its consolidated financial statements~~the adoption of ~~adopting this guidance, the Company does not anticipate that the guidance~~ASU 2020-04 will ~~materially impact~~have on its consolidated financial statements.

~~(e)~~(f) Use of Estimates

The preparation of the consolidated financial statements requires management of the Company to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, valuation allowances for inventories, income taxes, share-based compensation expense and the incremental borrowing rate utilized in operating lease liabilities.

~~(f)~~ ~~Equity Method Investments~~

The Company uses the equity method to account for its investments in which the Company is deemed to have the ability to exercise significant influence over an investee’s operating and financial policies or in which the Company holds a significant partnership or limited liability company interest. Equity method investments are initially recorded at cost in other assets in the consolidated balance sheets. The cost is adjusted to recognize the Company's proportionate share of the investee’s net income or loss after the date of investment and is also adjusted for any impairments resulting from other-than-temporary declines in fair value. These adjustments are recorded in interest income and other, net in the consolidated statements of operations. Additional adjustments to cost may include any additional contributions made and dividends received and both are recorded in other assets in the consolidated balance sheets.

(g) Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation at the measurement date:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Inputs, other than Level 1, that are either directly or indirectly observable.

Level 3: Unobservable inputs developed using the Company’s estimates and assumptions which reflect those that market participants would use.

The classification of fair value measurements within the hierarchy is based upon the lowest level of input that is significant to the measurement.

The Company’s financial instruments consist primarily of cash equivalents, short-term ~~and long-term~~ investment securities, accounts payable, and borrowings, if any, under a line of credit. The Company believes that: (1) the carrying value of cash equivalents and accounts payable are representative of their respective fair value due to the short-term nature of these instruments; and (2) the carrying value of the borrowings, if any, under the line of credit approximates fair value because the line of credit’s interest rates vary with market interest rates. Under the fair value hierarchy, the fair market values of the short-term ~~and long-term~~ investments in corporate bonds are ~~level~~Level 1 while the short-term ~~and long-term~~ investments in municipal bonds are ~~level~~Level 2. The fair market values of ~~level~~Level 2 instruments are determined by management with the assistance of a ~~third party~~third-party pricing service. Since quoted prices in active markets for identical assets are not available, these prices are determined by the ~~third party~~third-party pricing service using observable market information such as quotes from less active markets and quoted prices of similar securities.

As of October 31, 2020, February 1, 2020, and November 2, 2019, ~~February 2, 2019, and November 3, 2018,~~ the Company had cash equivalents of ~~$64.3~~$104.7 million, ~~$215.7~~$200.1 million and ~~$84.9~~$64.3 million, respectively. The Company’s cash equivalents consist of credit and debit card receivables, money market funds, and corporate bonds with original maturities of 90 days or less. Fair value for cash equivalents was determined based on level 1 inputs.

As of October 31, 2020, February 1, 2020, and November 2, 2019, ~~February 2, 2019, and November 3, 2018,~~ the Company's ~~short-term~~ investment securities are classified as held-to-maturity since the Company has the intent and ability to hold the investments to maturity. Such securities are carried at amortized cost plus accrued interest and consist of the following (in thousands):


	As of October 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Short-term:
Corporate bonds	$	78,516	$	0	$	43	$	78,473

Municipal bonds	18,233		0		7		18,226
Total	$	96,749	$	0	$	50	$	96,699


	As of November 2, 2019									As of February 1, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Short-term:									Short-term:
Corporate bonds	$	53,996	$	48	$	—	$	54,044	Corporate bonds	$	58,625	$	0	$	4	$	58,621

Municipal bonds	76		—		—		76		Municipal bonds	604		0		0		604
Total	$	54,072	$	48	$	—	$	54,120	Total	$	59,229	$	0	$	4	$	59,225

As of February 2, 2019
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Market Value
Short-term:
Corporate bonds $ 83,128
$ —
$ 63
$ 83,065
Municipal bonds 2,284
—
2
2,282
Total $ 85,412
$ —
$ 65
$ 85,347

Short-term investment securities as of October 31, 2020, February 1, 2020, and November 2, 2019 ~~February 2, 2019, and November 3, 2018~~ all mature in one year or less.

(h) Prepaid Expenses and Other Current Assets

Prepaid expenses as of October 31, 2020, February 1, 2020, and November 2, 2019~~, February 2, 2019, and November 3, 2018~~ were ~~$18.8~~$17.7 million, ~~$26.1~~$17.2 million, and ~~$32.1~~$18.8 million, respectively. Other current assets as of October 31, 2020, February 1, 2020, and November 2, 2019 ~~February 2, 2019,~~were $32.5 million, $58.7 million, and ~~November 3, 2018 were~~ $39.9 million, ~~$34.0 million, and $27.4 million,~~ respectively.

(i) Other Accrued Expenses

Other accrued expenses include accrued capital expenditures of ~~$30.6~~$18.6 million, ~~$54.2~~$28.9 million, and ~~$12.9~~$30.6 million as of October 31, 2020, February 1, 2020, and November 2, 2019, ~~February 2, 2019, and November 3, 2018,~~ respectively.

(2)Revenue ~~from Contracts with Customers~~

~~In May 2014, the FASB issued ASU 2014-09, "Revenue~~ from Contracts with Customers (Topic 606)." ASU 2014-09 clarifies the principles for recognizing revenue from contracts with customers. The Company adopted the standard during the thirteen weeks ended May 5, 2018 using the modified retrospective method by recognizing the cumulative effect as an adjustment to retained earnings.

Revenue Transactions

Revenue from store operations is recognized at the point of sale when control of the product is transferred to the customer at such time. Internet sales, through the Company's fivebelow.com e-commerce website, are recognized when the consumer receives the product as control transfers upon delivery. Returns subsequent to the period end are immaterial; accordingly, no significant reserve has been recorded. Gift card sales to customers are initially recorded as liabilities and recognized as sales upon redemption for merchandise or as breakage revenue in proportion to the pattern of redemption of the gift cards by the customer in net sales.

The transaction price for the Company’s sales is based on the item’s stated price. To the extent that the Company charges customers for shipping and handling on e-commerce sales, the Company records such amounts in net sales. Shipping and handling costs, which include fulfillment and shipping costs related to the Company's e-commerce operations, are included in costs of goods sold. The Company has chosen the pronouncement's policy election, which allows it to exclude all sales taxes from net sales in the accompanying consolidated statements of operations.

Disaggregation of Revenue

The following table provides information about disaggregated revenue by groups of products: leisure, fashion and home, and party and snack (in thousands):


	Thirteen Weeks Ended				Thirteen Weeks Ended
	October 31, 2020				November 2, 2019
	Amount		Percentage of Net Sales		Amount		Percentage of Net Sales
Leisure	$	221,970	46.6	%	$	188,627	50.0	%
Fashion and home	176,867		37.1	%	120,636		32.0	%
Party and snack	77,777		16.3	%	68,175		18.0	%

Total	$	476,614	100.0	%	$	377,438	100.0	%

	Thirty-Nine Weeks Ended				Thirty-Nine Weeks Ended
	October 31, 2020				November 2, 2019
	Amount		Percentage of Net Sales		Amount		Percentage of Net Sales
Leisure	$	524,719	47.5	%	$	587,649	50.7	%
Fashion and home	400,679		36.3	%	352,593		30.4	%
Party and snack	178,225		16.2	%	219,358		18.9	%

Total	$	1,103,623	100.0	%	$	1,159,600	100.0	%

Thirteen Weeks Ended Thirteen Weeks Ended
November 2, 2019 November 3, 2018
Amount Percentage of Net Sales Amount Percentage of Net Sales
Leisure $ 188,627
50.0 % $ 161,634
51.7 %
Fashion and home 120,636
32.0 % 97,107
31.0 %
Party and snack 68,175
18.0 % 54,082
17.3 %
Total $ 377,438
100.0 % $ 312,823
100.0 %

Thirty-Nine Weeks Ended Thirty-Nine Weeks Ended
November 2, 2019 November 3, 2018
Amount Percentage of Net Sales Amount Percentage of Net Sales
Leisure $ 587,649
50.7 % $ 493,650
51.6 %
Fashion and home 352,593
30.4 % 288,944
30.2 %
Party and snack 219,358
18.9 % 174,285
18.2 %
Total $ 1,159,600
100.0 % $ 956,879
100.0 %

(3) Leases

~~Financial Statement Impact~~The Company determines if an arrangement contains a lease at the inception of ~~Adopting ASU 2014-09~~

~~All~~a contract. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease assets and operating lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments. As the rate implicit in the lease is not readily determinable for the Company's leases, the Company utilizes its incremental borrowing rate to determine the present value of future lease payments. The incremental borrowing rate represents a significant judgment and is determined based on an analysis of the Company's ~~revenue is recognized from contracts~~synthetic credit rating, prevailing financial market conditions, corporate bond yields, treasury bond yields, and the effect of collateralization. The operating lease assets also include lease payments made before commencement and exclude lease incentives.

The Company’s real estate leases typically contain options that permit renewals for additional periods of up to five years. For real estate leases, except for renewals that generally take the lease to a ten-year term, the options to renew are not considered reasonably certain at lease commencement because the Company reevaluates each lease on a regular basis to consider the economic and strategic benefits of exercising the renewal options, and regularly opens, relocates or closes stores to align with ~~customers~~its operating strategy. Therefore, generally, except for renewals that take the lease to a ten-year term, the renewal option periods are not included within the lease term and ~~therefore, is subject to ASU 2014-09. The Company adopted ASU 2014-09 using a modified retrospective approach during~~ the ~~thirteen weeks ended May 5, 2018 and recognized~~associated payments are not included in the cumulative effect as an adjustment by increasing retained earnings by $0.5 million and income taxes payable by $0.1 million, and reducing accrued expenses by $0.7 million and deferred tax asset by $0.1 million. The cumulative adjustment was related to the recognition of gift card breakage.

The Company leases property and equipment under noncancelable operating leases. Certain retail store lease agreements provide for contingent rental payments if the store’s net sales exceed stated levels (percentage rents) and/or contain escalation clauses, which provide for increases in base rental payments for increases in future operating costs. Manymeasurement of the ~~Company’s leases provide for one or more renewal~~operating lease asset and operating lease liability as the exercise of such options ~~for periods of five years.~~is not reasonably certain. The Company’s operating lease agreements, including assumed renewals, which are generally those that take the lease to a ten-year term, expire through fiscal ~~2033.~~2034. Similarly, renewal options are not included in the lease term for non-real estate leases because they are not considered reasonably certain of being exercised at lease commencement. Leases with an initial term of 12 months or less are not recorded on the balance sheets and lease expense is recognized on a straight-line basis over the term of the short-term lease.

For certain real estate leases, the Company accounts for lease components and nonlease components as a single lease component. Certain real estate leases require additional payments for reimbursement of real estate taxes, common area maintenance and insurance as well as payments based on sales volume, all of which are expensed as incurred as variable lease costs. Other real estate leases contain one fixed lease payment that includes real estate taxes, common area maintenance and insurance. These fixed payments are considered part of the lease payment and included in the operating lease assets and operating lease liabilities.

In response to the COVID-19 pandemic, certain of the Company's landlords have agreed to temporary rent concessions. These rent concessions generally relate to abatements and deferrals of certain rent payments for April through October until future periods. Additional negotiations of payment terms are still in process.

In accordance with the Financial Accounting Standards Board's recent staff guidance regarding rent concessions related to the effects of the COVID-19 pandemic, the Company has elected to account for the concessions agreed to by landlords that do not result in a substantial increase in the obligations of the lessee as if the enforceable rights and obligations for those concessions existed in the original lease agreements and the Company has elected to not remeasure the related lease liabilities and right-of-use assets. For qualifying rent abatement concessions, the Company has recorded negative variable lease expense for the amount of the concession during the period of relief, and for qualifying deferrals of rental payments, the Company has recognized a non-interest bearing payable in lieu of recognizing a decrease in cash for the lease payment that would have been made based on the original terms of the lease agreement, which will be reduced when the deferred payment is made in the future.

During the thirteen weeks ended ~~November 2, 2019,~~October 31, 2020, the Company committed to 2837 new store leases with average terms of approximately 10 years that have future minimum lease payments of approximately ~~$49.5~~$83.0 million.

All of the Company's leases are classified as operating leases and the associated assets and liabilities are presented as separate captions in the consolidated balance sheets. As of October 31, 2020 and November 2, 2019, the weighted average remaining lease term for the Company's operating leases iswas 8.0 years and 7.9 years, respectively, and the weighted average discount rate iswas 6.6% and 7.0%. For the thirty-nine weeks ended November 2, 2019, cash paid for amounts included in the measurement of operating lease liabilities of $96.5 million was reflected in cash flows from operating activities in the consolidated statements of cash flows., respectively.

The following table is a summary of the Company's components for net lease costs ~~as of November 2, 2019~~ (in thousands):


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
Lease Cost	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Operating lease cost	$	43,584	$	37,549	$	126,205	$	106,580
Variable lease cost	11,977		10,422		33,939		29,634
Net lease cost*	$	55,561	$	47,971	$	160,144	$	136,214

November 2, 2019
Lease Cost Thirteen Weeks Ended Thirty-Nine Weeks Ended
Operating lease cost $ 37,549
$ 106,580
Variable lease cost 10,422
29,634
Net lease cost* $ 47,971
$ 136,214

* Excludes short-term lease cost, which is ~~immaterial~~immaterial.

The following table summarizes the maturity of lease liabilities under operating leases as of ~~November 2, 2019~~October 31, 2020 (in thousands):


Maturity of Lease Liabilities	Operating Leases
2020	$	60,035
2021	184,549
2022	179,370
2023	172,390
2024	161,411
After 2024	595,524
Total lease payments	1,353,279
Less: imputed interest	293,982
Present value of lease liabilities	$	1,059,297

Maturity of Lease Liabilities Operating Leases
2019 $ 39,821
2020 161,775
2021 157,668
2022 149,453
2023 139,771
After 2023 518,912
Total lease payments 1,167,400
Less: imputed interest 272,259
Present value of lease liabilities $ 895,141

The following table summarizes the supplemental cash flow disclosures related to leases (in thousands):


	Thirty-Nine Weeks Ended
	October 31, 2020		November 2, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Cash payments arising from operating lease liabilities (1)	$	91,013	$	96,496
Supplemental non-cash information:
Operating lease liabilities arising from obtaining right-of-use assets	$	159,707	$	205,690

(1) Included within operating activities in the Company's Consolidated Statements of Cash Flows.

(4) Income (Loss) Per Common Share

Basic income (loss) per common share amounts are calculated using the weighted average number of common shares outstanding for the period. Diluted income (loss) per common share amounts are calculated using the weighted average number of common shares outstanding for the period and include the dilutive impact of exercised stock options as well as assumed vesting of restricted stock awards and shares currently available for purchase under the Company's Employee Stock Purchase Plan, using the treasury stock method. Performance-based restricted stock units are considered contingently issuable shares for diluted income per common share purposes and the dilutive impact, if any, is not included in the weighted average shares until the performance conditions are met. The dilutive impact, if any, for performance-based restricted stock units, which are subject to market conditions based on our total shareholder return relative to a pre-defined peer group, are included in the weighted average shares.

The following table reconciles net income (loss) and the weighted average common shares outstanding used in the computations of basic and diluted income (loss) per common share (in thousands, except for share and per share data):


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Numerator:
Net income (loss)	$	20,425	$	10,189	$	(576)	$	64,682






Denominator:
Weighted average common shares outstanding - basic	55,851,780		55,672,796		56,004,072		55,855,526
Dilutive impact of options, restricted stock units and employee stock purchase plan	247,548		346,940		0		353,192
Weighted average common shares outstanding - diluted	56,099,328		56,019,736		56,004,072		56,208,718
Per common share:
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

Thirteen Weeks Ended Thirty-Nine Weeks Ended
November 2, 2019 November 3, 2018 November 2, 2019 November 3, 2018
Numerator:
Net income $ 10,189
$ 13,516
$ 64,682
$ 60,383
Denominator:
Weighted average common shares outstanding - basic 55,672,796
55,742,854
55,855,526
55,731,098
Dilutive impact of options, restricted stock units and employee stock purchase plan 346,940
485,451
353,192
454,207
Weighted average common shares outstanding - diluted 56,019,736
56,228,305
56,208,718
56,185,305
Per common share:
Basic income per common share $ 0.18
$ 0.24
$ 1.16
$ 1.08
Diluted income per common share $ 0.18
$ 0.24
$ 1.15
$ 1.07
The effects of the assumed vesting of restricted stock units for 4,361 shares of common stock for the thirteen weeks ended October 31, 2020 were excluded from the calculation of diluted net income per share, as their impact would have been anti-dilutive.

For the thirty-nine weeks ended October 31, 2020, all common stock equivalents related to outstanding stock options and unvested restricted units were excluded from the calculation of diluted net loss per share, as their impact would have been anti-dilutive due to the Company's net loss for the period.

The effects of the assumed vesting of restricted stock units for 2,303 and 768 shares of common stock for the thirteen ~~weeks ended~~ and thirty-nine weeks ended November 2, 2019, ~~respectively, were excluded from the calculation of diluted net income per share, as their impact would have been anti-dilutive.~~

~~The effects of the assumed vesting of restricted stock units for 1,322 and 1,971 shares of common stock for the thirteen weeks ended and thirty-nine weeks ended November 3, 2018,~~ respectively, were excluded from the calculation of diluted net income per share, as their impact would have been anti-dilutive.

The aforementioned excluded shares do not reflect the impact of any incremental repurchases under the treasury stock method.

On ~~May 10, 2017,~~March 20, 2020, the Company ~~entered into a~~exercised its right under the Fourth Amended and Restated Loan and Security Agreement, executed on May 10, 2017 (the ~~“Amended Loan~~"Prior Credit Agreement') to increase the aggregate commitments under the Revolving Credit Facility from $20 million to $50 million.

On April 24, 2020, the Company entered into a Fifth Amended and ~~Security~~Restated Credit Agreement (the “Fifth Restated Credit Agreement”), among the Company, 1616 Holdings, Inc. ~~(formerly known as Five Below Merchandising, Inc.)~~, a wholly-owned subsidiary of the Company ~~and Wells Fargo Bank, National Association. The Amended~~

~~Loan and Security Agreement amends and restates the Third Amended and Restated Loan and Security Agreement, dated June 12, 2013, among the Company,~~ ("1616 ~~Holdings, Inc.~~Holdings"), and Wells Fargo Bank, National Association as administrative agent (the “Agent”), and other lenders. The Fifth Restated Credit Agreement amends and restates the Prior Credit Agreement which governed the Revolving Credit Facility.

The ~~Amended Loan and Security~~Fifth Restated Credit Agreement includes a secured asset-based revolving line of credit in the amount of up to ~~$20.0~~$225.0 million (the “Amended Revolving Credit Facility”). Pursuant to the ~~Amended Loan and Security~~Fifth Restated Credit Agreement, advances under the Amended Revolving Credit Facility are ~~no longer~~ tied to a borrowing ~~base; however, the Company is required~~base consisting of eligible credit card receivables and inventory, as reduced by certain reserves in effect from time to ~~maintain eligible inventory at all times in an amount equal to at least $100.0 million.~~time. The Amended Revolving Credit Facility expires on the earliest to occur of (i) ~~May 10, 2022~~April 24, 2023 or (ii) an event of default. The Amended Revolving Credit Facility may be increased toby up to ~~$50.0~~$150.0 million, subject to certain ~~conditions.~~conditions, including obtaining commitments from one or more lenders. The entire amount of the Amended Revolving Credit Facility ~~also includes a $20.0 million sub-limit~~is available for the issuance of letters of ~~credit.~~credit and allows for swingline loans.

The ~~Amended Loan and Security~~Fifth Restated Credit Agreement ~~reduces~~provides that the interest rate payable on borrowings toshall be, at the Company’s option, a per annum rate equal to (a) a ~~prime~~base rate plus an applicable margin ranging from 1.00% to 1.25% or (b) a ~~LIBOR-based~~LIBOR rate plus a margin ~~of 1.00%~~ranging from 2.00% to 2.25%. Letter of credit fees ~~are equal~~will range from 2.00% to ~~the interest rate payable on LIBOR-based loans.~~2.25%. The interest rate and letter of credit fees under the ~~Amended Loan and Security~~Fifth Restated Credit Agreement are subject to an increase of 2.00% per annum upon an event of default.

The ~~Amended Loan~~Fifth Restated Credit Agreement contains customary covenants that limit, absent lender approval, the ability of Company and ~~Security Agreement removes restrictions on the Company’s ability~~certain of its affiliates to, ~~pay or make dividends and distributions or repurchase its stock, but the Amended Loan and Security Agreement continues to include other customary negative and affirmative covenants including,~~ among other things, ~~limitations on~~pay cash dividends, incur debt, create liens and encumbrances, redeem or repurchase stock, enter into certain acquisition transactions or transactions with affiliates, merge, dissolve, repay certain indebtedness, change the nature of Company’s ~~ability~~business, enter sale or leaseback transactions, make investments or dispose of assets. In some cases, these restrictions are subject to ~~(i) incur additional debt; (ii) create liens; (iii) make~~ certain ~~investments, loans and advances; (iv) sell assets; (v) engage in mergers~~negotiated exceptions or ~~consolidations; or (vi) change its business.~~

~~The Amended Loan and Security Agreement also removes the provisions that~~permit Company to undertake otherwise restricted activities if it satisfies certain required conditions. In addition, the Company will be required to ~~make prepayments on outstanding Amended Revolving Credit Facility balances upon~~maintain availability of not less than (i) 15% of the ~~receipt~~lesser of ~~certain proceeds, including those from the sale of certain assets. Amounts~~(x) aggregate commitments under the Amended Revolving Credit Facility ~~may become due upon~~and (y) the borrowing base (the "loan cap") prior to a stepdown date (as described below) and (ii) 10% of the loan cap after the stepdown date. The stepdown date is the first date occurring after both (i) the date that 75% of the number of stores as of the closing date of the Amended Revolving Credit Facility have reopened ("store opening date") and (ii) the date occurring at least six months after the store reopening date on which the fixed charge coverage ratio is at least 1.00 to 1.00.

If there exists an event of default or availability under the Amended Revolving Credit Facility is less than 15% of the loan cap, amounts in any of the loan parties’ or subsidiary guarantors' designated deposit accounts will be transferred daily into a blocked account held by the Agent and applied to reduce outstanding amounts under the Amended Revolving Credit Facility (the “Cash Dominion Event”), so long as (i) such event of default has not been waived and/or (ii) until availability has exceeded 15% of the loan cap for sixty (60) consecutive calendar days (provided that such ability to discontinue the Cash Dominion Event shall be limited to two times during the term of the Agreement).

The Fifth Restated Credit Agreement also contains a provision stating that the Company cannot borrow in excess of $50 million under the Amended Revolving Credit Facility at any time the amount of the consolidated cash and cash equivalents of the loan parties (excluding certain long-term investments and certain other items) exceeds $50 million.

The Fifth Restated Credit Agreement contains customary events of default including, among other things, ~~the Company’s~~ failure to ~~comply with~~pay obligations when due, initiation of bankruptcy or insolvency proceedings, defaults on certain other indebtedness, change of control, incurrence of certain material judgments that are not stayed, satisfied, bonded or discharged within 30 days, certain ERISA events, invalidity of the credit documents, and violation of affirmative and negative covenants or breach of representations and warranties set forth in the Fifth Restated Credit Agreement. Amounts under the Amended Revolving Credit ~~Facility’s covenants, bankruptcy,~~Facility's may become due upon events of default ~~on certain other indebtedness~~(subject to any applicable grace or ~~a change in control.~~

cure periods). Under the ~~Amended Loan and Security~~Fifth Restated Credit Agreement, all obligations under the Amended Revolving Credit Facility continue to be guaranteed by 1616 Holdings, Inc. and are secured by substantially all of the assets of the Company and 1616 Holdings, Inc.

During the thirteen weeks ended May 2, 2020, the Company borrowed and repaid approximately $50 million from its Amended Revolving Credit Facility. As of ~~November 2, 2019,~~October 31, 2020, the Company had 0 borrowings under the Amended Revolving Credit Facility and had approximately ~~$20.0~~$225.0 million available on the ~~line of credit.~~Amended Revolving Credit Agreement.

All obligations under the Amended Revolving Credit Facility are secured by substantially all of the Company's assets and are guaranteed by the Company's subsidiary. As of October 31, 2020 and November 2, 2019, ~~and November 3, 2018,~~ the Company was in compliance with the covenants applicable to it under the Amended Revolving Credit Facility.

(6)Commitments and Contingencies

Other ~~contractual commitments~~Contractual Commitments

As of ~~November 2, 2019,~~October 31, 2020, the Company has other purchase commitments of approximately ~~$1.8~~$4.2 million consisting of purchase agreements for materials that will be used in the construction of new stores.

During the thirteen weeks ended May 4, 2019, the Company completed the purchase of an approximately 700,000 square foot build-to-suit distribution center in Forsyth, Georgia for approximately $42 million, for land and building, to support the Company's anticipated growth.

During the thirteen weeks ended November 2, 2019, the Company acquired land in Conroe, Texas, to build an approximately 860,000 square foot distribution center to support the Company's anticipated growth. The total amount paid for the land and building was approximately $56 million. The Company began operating the distribution center in July 2020.

During the thirteen weeks ended August 1, 2020, the Company acquired land in Buckeye, Arizona, to build an approximately 860,000 square foot distribution center to support the Company's anticipated growth. The total cost of the land and building is expected to be approximately ~~$56~~$65 million, of which approximately ~~$15~~$13 million has been paid through ~~November 2, 2019.~~October 31, 2020. The Company expects to occupy the distribution center in ~~Conroe, Texas~~Buckeye, Arizona in ~~2020.~~the second half of 2021.

~~From time to time, the~~The Company is ~~involved in certain legal actions~~subject to various proceedings, lawsuits, disputes, and claims arising in the ordinary course of the Company's business. ~~In management’s opinion,~~Many of these actions raise complex factual and legal issues and are subject to uncertainties. Actions filed against the Company from time to time include commercial, intellectual property, customer, and employment actions, including class action lawsuits. The plaintiffs in some actions seek unspecified damages or injunctive relief, or both. Actions are in various procedural stages, and some are covered in part by insurance. The Company cannot predict with assurance the outcome of actions brought against the Company. Accordingly, adverse developments, settlements, or resolutions may occur and negatively impact income in the quarter of such development, settlement or resolution. If a potential loss arising from these lawsuits, claims and pending actions is probable and reasonably estimable, the Company records the estimated liability based on circumstances and assumptions existing at the time. Although the outcome of these and other claims cannot be predicted with certainty, management does not believe that the ultimate resolution of these matters will ~~not~~ have a material adverse effect on the ~~Company’s~~Company's financial condition or results of operations.

(7)Share-Based Compensation

Equity Incentive Plan

Pursuant to the Company's 2002 Equity Incentive Plan (the “Plan”), the Company’s ~~board~~Board of ~~directors~~Directors may grant stock options, restricted shares, and restricted stock units to officers, directors, key employees and professional service providers. The Plan, as amended, allows for the issuance of up to a total of 7.6 million shares under the Plan. As of ~~November 2, 2019,~~October 31, 2020, approximately ~~3.3~~2.5 million stock options, restricted shares, or restricted stock units were available for grant.

Common Stock Options

All stock options have a term not greater than ten years. Stock options vest and become exercisable in whole or in part, in accordance with vesting conditions set by the Company’s ~~board~~Board of ~~directors.~~Directors. Options granted to date generally vest over four years from the date of grant.

Stock option activity during the thirty-nine weeks ended ~~November 2, 2019~~October 31, 2020 was as follows:

Options
Outstanding Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Term
(in years)
Balance as of February 2, 2019 374,257
$ 30.23
5.1
Forfeited (950 ) 39.42

Exercised (105,974 ) 30.04

Balance as of November 2, 2019 267,333
30.27
4.2
Exercisable as of November 2, 2019 255,776
$ 30.04
4.1

The fair value of each option award granted to employees, including outside directors, is estimated on the date of grant using the Black-Scholes option-pricing model. There were 0 stock options granted during the thirty-nine weeks ended ~~November 2, 2019.~~October 31, 2020.

Restricted Stock Units and Performance-Based Restricted Stock Units

All restricted stock units ("RSU") and performance-based restricted stock units ("PSU") vest in accordance with vesting conditions set by the compensation committee of the Company’s ~~board~~Board of ~~directors.~~Directors. RSUs granted to date have vesting periods ranging from less than one year to five years from the date of grant and the fair value of RSUs is the market price of the underlying common stock on the date of grant. PSUs granted to date have vesting periods ranging from less than one year to five years from the date of ~~grant, including grants~~grant.

PSUs that have a ~~cumulative three year~~ performance ~~period,~~condition are subject to satisfaction of the applicable performance goals established for the respective grant. The Company periodically assesses the probability of achievement of the performance criteria and adjusts the amount of compensation expense accordingly. The fair value of these PSUs is the market price of the underlying common stock on the date of grant. Compensation is recognized over the vesting period and adjusted for the probability of achievement of the performance criteria.

PSUs that have a market condition based on our total shareholder return relative to a pre-defined peer group are subject to multi-year performance objectives with a vesting date in 2023 (if the applicable performance objectives are achieved). The fair value of these PSUs is determined using a Monte Carlo valuation model.

RSU and PSU activity during the thirty-nine weeks ended ~~November 2, 2019~~October 31, 2020 was as follows:

Restricted Stock Units Performance-Based Restricted Stock Units
Number Weighted-Average Grant Date Fair Value Number Weighted-Average Grant Date Fair Value
Non-vested balance as of February 2, 2019 292,888
$ 53.52
416,200
$ 47.38
Granted 87,361
119.11
85,939
116.92
Vested (106,921 ) 43.58
(117,137 ) 39.21
Forfeited (17,105 ) 66.53
(27,836 ) 45.23
Non-vested balance as of November 2, 2019 256,223
$ 79.16
357,166
$ 66.96


	Restricted Stock Units			Performance-Based Restricted Stock Units
	Number	Weighted-Average Grant Date Fair Value		Number	Weighted-Average Grant Date Fair Value
Non-vested balance as of February 1, 2020	250,352	$	79.37	357,166	$	66.96
Granted	175,346	106.79		370,613	134.73
Vested	(99,836)	65.79		(127,622)	39.89
Forfeited	(22,376)	87.39		(22,152)	74.08
Non-vested balance as of October 31, 2020	303,486	$	99.09	578,005	$	116.12

In connection with the vesting of RSUs and PSUs during the thirty-nine weeks ended October 31, 2020, the Company withheld 50,921 shares with an aggregate value of $3.8 million in satisfaction of minimum tax withholding obligations due upon vesting.

In connection with the vesting of RSUs and PSUs during the thirty-nine weeks ended November 2, 2019, the Company withheld 82,505 shares with an aggregate value of $10.3 million in satisfaction of minimum tax withholding obligations due upon vesting.

In connection with the vesting of RSUs and PSUs during the thirty-nine weeks ended November 3, 2018, the Company withheld 111,649 shares with an aggregate value of $7.8 million in satisfaction of minimum tax withholding obligations due upon vesting.

As of ~~November 2, 2019,~~October 31, 2020, there was ~~$22.7~~$41.3 million of total unrecognized compensation costs related to non-vested share-based compensation arrangements (including stock options, RSUs and PSUs) granted under the Plan. The cost is expected to be recognized over a weighted average vesting period of ~~2.4~~2.9 years.

Share Repurchase Program

On March 20, 2018, the Company's ~~board~~Board of ~~directors~~Directors approved a share repurchase program authorizing the repurchase of up to $100 million of the Company's common stock through March 31, 2021, on the open market, in privately negotiated transactions, or otherwise. In ~~December 2018,~~fiscal 2019, the Company purchased ~~21,810~~337,552 shares under this program at an aggregate cost of approximately ~~$2.0~~$36.9 million, or an average price of ~~$91.07~~$109.27 per share. During the thirteen weeks ended ~~August 3, 2019,~~May 2, 2020, the Company purchased ~~146,185~~137,023 shares under this program at an aggregate cost of approximately ~~$16.6~~$12.7 million, or an average price of ~~$113.55~~$92.42 per share. During the thirteen weeks ended ~~November 2, 2019,~~October 31, 2020, the Company did 0t execute any share repurchases. Since approval of the share repurchase program in March 2018, the Company has purchased ~~191,367~~approximately 500,000 shares ~~under this program at~~for an aggregate cost of approximately ~~$20.3 million, or an average price of $106.00 per share.~~$50 million. There can be no assurances that any additional repurchases will be completed, or as to the timing or amount of any repurchases. The share repurchase program may be modified or discontinued at any time.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted and signed into law. The CARES Act includes a number of income tax changes, including, but not limited to, (i) permitting taxpayers a five-year carryback period for net operating losses ("NOLs") arising in tax years beginning after December 31, 2017 and before January 1, 2021. (ii) temporarily suspending the 80% of taxable income limitation on the use of NOLs for tax years beginning before January 1, 2021, thereby permitting corporate taxpayers to use NOLs to fully offset taxable income in these years regardless of the year in which the net operating loss arose, (iii) accelerating AMT tax credit carryover refunds, (iv) temporarily increasing the allowable business interest deduction from 30% to 50% of adjusted taxable income, and (v) providing a technical correction for depreciation as relates to the definition of qualified improvement property. As a result of the CARES Act, the Company recorded an income tax receivable for the thirteen and thirty-nine weeks ended October 31, 2020.

The following table summarizes the Company’s income tax expense (benefit) and effective tax rates for the thirteen and thirty-nine weeks ended October 31, 2020 and November 2, 2019 ~~and November 3, 2018~~ (dollars in thousands):

Thirteen Weeks Ended Thirty-Nine Weeks Ended
November 2, 2019 November 3, 2018 November 2, 2019 November 3, 2018
Income before income taxes $ 13,438
$ 16,606
$ 77,135
$ 73,796
Income tax expense $ 3,249
$ 3,090
$ 12,453
$ 13,413
Effective tax rate 24.2 % 18.6 % 16.1 % 18.2 %


	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	October 31, 2020			November 2, 2019			October 31, 2020			November 2, 2019
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
Effective tax rate	13.4		%	24.2		%	96.4		%	16.1		%

The effective tax rates for the thirteen and thirty-nine weeks ended October 31, 2020 and November 2, 2019 ~~and November 3, 2018~~ were based on the Company’s forecasted annualized effective tax rates and were adjusted for discrete items that occurred within the periods presented. The effective tax rate for the thirteen weeks ended ~~November 2, 2019~~October 31, 2020 was ~~higher~~lower than the thirteen weeks ended November ~~3, 2018~~2, 2019 primarily due to discrete items, which includes the impact of the CARES Act and the impact of ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting," with respect to the requirement to recognize excess income tax benefits or deficiencies as income tax benefit or expense in the consolidated statements of ~~operations rather than as additional paid-in capital in the consolidated balance sheets.~~operations. The effective tax rate for the thirty-nine weeks ended ~~November 2, 2019~~October 31, 2020 was ~~lower~~higher than the thirty-nine weeks ended November ~~3, 2018~~2, 2019 primarily due to discrete items, which includes the impact of the CARES Act and the impact of ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting."

The Company had 0 material accrual for uncertain tax positions or interest and/or penalties related to income taxes on the Company’s balance sheets as of October 31, 2020, February 1, 2020, or November 2, 2019 ~~February 2, 2019, or November 3, 2018~~ and has not recognized any material uncertain tax positions or interest and/or penalties related to income taxes in the consolidated statements of operations for the thirteen and thirty-nine weeks ended October 31, 2020 or November 2, ~~2019 or November 3, 2018.~~2019.

The Company files a federal income tax return as well as state tax returns. The Company’s U.S. federal income tax returns for the fiscal years ended February 3, 2018 and thereafter remain subject to examination by the U.S. Internal Revenue Service. State returns are filed in various state jurisdictions, as appropriate, with varying statutes of limitation and remain subject to examination for varying periods up to three years to four years depending on the state.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion together with “Selected Financial Data,” and the consolidated financial statements and related notes included in our Annual Report on Form 10-K for our fiscal year ended February ~~2, 2019~~1, 2020 and referred to herein as the "Annual Report," and the consolidated financial statements and related notes as of and for the thirteen ~~weeks ended~~ and thirty-nine weeks ended ~~November 2, 2019~~October 31, 2020 included in Part I, Item I of this Quarterly Report on Form 10-Q. The statements in this discussion regarding expectations of our future performance, liquidity and capital resources and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described below in “Special Note Regarding Forward-Looking Statements” and in Part II, Item 1A "Risk Factors." Our actual results may differ materially from those contained in or implied by any forward-looking statements.

We operate on a fiscal calendar widely used by the retail industry that results in a given fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to January 31 of the following year. References to "fiscal year 2020" or "fiscal 2020" refer to the period from February 2, 2020 to January 30, 2021, which is a 52-week fiscal year. References to "fiscal year 2019" or "fiscal 2019" refer to the period from February 3, 2019 to February 1, 2020, which is a 52-week fiscal year. ~~References to "fiscal year 2018" or "fiscal 2018" refer to the period from February 4, 2018 to February 2, 2019, which is a 52-week fiscal year.~~ The fiscal quarters ended October 31, 2020 and November 2, 2019 ~~and November 3, 2018~~ refer to the thirteen weeks ended as of those dates. The year-to-date periods ended October 31, 2020 and November 2, 2019 ~~and November 3, 2018~~ refer to the thirty-nine weeks ended as of those dates. Historical results are not necessarily indicative of the results to be expected for any future period and results for any interim period may not necessarily be indicative of the results that may be expected for a full year.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts or present facts or conditions, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the introduction of new merchandise, and the implementation of our marketing and branding strategies. In many cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or the negative of these terms or other comparable terminology.

The forward-looking statements contained in this Quarterly Report on Form 10-Q reflect our views as of the date of this report about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to, those factors described in Part I, Item 1A “Risk Factors” in our Annual Report, as amended by the risk factors included in Part II, Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q. These factors include without limitation:

•uncertainties associated with the Coronavirus (or COVID-19) pandemic, including closures of our stores, adverse impacts on our sales and operations, future impairment charges and the risk of global recession;

•failure to successfully implement our growth strategy;

•disruptions in our ability to select, obtain, distribute and market merchandise profitably;

•reliance on merchandise manufactured outside of the United States;

•the direct and indirect impact of recent and potential tariffs imposed and proposed by the United States on foreign imports, including, without limitation, the tariffs themselves, any counter-measures thereto and any indirect effects on consumer discretionary spending, which could increase the cost to us of certain products, lower our margins, increase our import related expenses, and reduce consumer spending for discretionary items, each of which could have a material adverse effect on our business, financial condition and results of future operations;

•the impact of price increases, such as, a reduction in our unit sales, damage to our reputation with our customers, and our becoming less competitive in the marketplace;

•dependence on the volume of traffic to our stores and website;

•inability to attract and retain qualified employees;

•inability to successfully build, operate or expand our distribution centers or network capacity;

•disruptions to our distribution network or the timely receipt of inventory;

•the risks of cyberattacks or other cyber incidents, such as the failure to secure customers' confidential or credit card information, or other private data relating to our employees or our company, including the costs associated with protection against or remediation of such incidents;

•increased operating costs or exposure to fraud or theft due to customer payment-related risks;

•inability to increase sales and improve the efficiencies, costs and effectiveness of our operations;

•dependence on our executive officers, senior management and other key personnel or inability to hire additional qualified personnel;

•inability to successfully manage our inventory balances and inventory shrinkage;

•inability to meet our lease obligations;

•the costs and risks of constructing and owning real property;

•changes in our competitive environment, including increased competition from other retailers and the presence of online retailers;

•increasing costs due to inflation, increased operating costs, wage rate increases or energy prices;

•the seasonality of our business;

•inability to successfully implement our expansion into online retail;

•disruptions to our information technology systems in the ordinary course or as a result of system upgrades;

•the impact of damage or interruptions to our technology systems;

•failure to maintain adequate internal controls;

•complications with the design or implementation of the new enterprise resource system;

•natural disasters, adverse weather conditions, pandemic outbreaks (in addition to COVID-19), global political events, war, ~~and terrorism;~~terrorism or civil unrest;

•the impact of changes in tax legislation;

•current economic conditions and other economic factors;

•the impact of governmental laws and regulations;

•the impact of changes in accounting standards;

•the impact to our financial performance related to insurance programs;

•the costs and consequences of legal proceedings;

•inability to protect our brand name, trademarks and other intellectual property rights;

•the costs and liabilities associated with infringement of ~~third party~~third-party intellectual property rights;

•the impact of product and food safety claims and effects of legislation;

•inability to obtain additional financing, if needed;

•restrictions imposed by our indebtedness on our current and future operations; and

•regulations related to conflict minerals.

Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements. All of the forward-looking statements we have included in this Quarterly Report on Form 10-Q are based on information available to us on the date of this report. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as otherwise required by law.

Five Below, Inc. (collectively referred to herein with its wholly owned subsidiary as "we," "us," or "our") is a rapidly growing specialty value retailer offering a broad range of trend-right, high-quality merchandise targeted at the tween and teen customer. We offer a dynamic, edited assortment of exciting products, with most priced at $5 and below, including select brands and licensed merchandise across our category worlds. As of ~~November 2, 2019,~~October 31, 2020, we operated ~~894~~1,018 stores in 3638 states. ~~In fall 2018, we began offering an expanded product assortment with prices exceeding $5 in a select number of our stores (with~~

~~such product offerings branded as "Ten Below" or "JUST WOW").~~ In addition, in fall 2019, we rolled out new pricing to our full chain, increasing prices on certain products over $5. Most of our products remain at $5 and below.

We also offer our merchandise on the internet, through our fivebelow.com e-commerce website. All e-commerce sales, which includes shipping and handling revenue, are included in net sales. Beginning with the third fiscal quarter of 2016, when we launched our e-commerce channel, all e-commerce sales are included in comparable sales. Our e-commerce expenses will have components classified as both cost of goods sold and selling, general and administrative expenses.

~~On December 22, 2017,~~Effect of the ~~Tax Cuts~~COVID-19 Pandemic on our Business and ~~Jobs Act (the "TCJA") was enacted.~~Operations

As a result of the coronavirus (or COVID-19) pandemic in the first half of 2020, federal, state and local governments and private entities have mandated various restrictions, including travel restrictions, restrictions on public gatherings, stay at home orders and advisories, and quarantining of people who may have been exposed to the virus, of which many have been eliminated or lessened over time. Such mandates required reduction of operating hours and forced temporary closures of non-essential retailers and other businesses. The ~~TCJA includes~~COVID-19 pandemic has recently surged in many parts of the United States, which may lead to the imposition of new federal, state and local restrictions. It is impossible to predict the effect and ultimate impact of the pandemic as the situation continues to evolve.

As a result of these restrictions and out of concern for our customers and employees, we temporarily closed all of our stores as of March 20, 2020. We began reopening our stores at the end of April in compliance with federal, state and local requirements. As a result of the temporary store closures, we withheld store rent for the closure period. With respect to virtually all of our lease portfolio, we have either resumed rent payments or agreed to rent deferrals and abatements related to this closure period with landlords. As a result, we do not expect that our prior rent withholdings or the associated deferrals and abatements agreed upon with landlords will have a material adverse impact on our business, financial condition and results of future operations.

While the ultimate health and economic impact of the COVID-19 pandemic are highly uncertain, we expect that our business operations and results of operations, including our net sales, earnings and cash flows, may be materially impacted for the foreseeable future, as a result of:

•temporary closures of our stores;

•decreased customer traffic in stores, including, without limitation, as the result of limitations on the number of persons permitted in stores at one time by certain local and state regulations;

•uncertainty of the extent to which customers will maintain purchases through our e-commerce website and through curbside pickup (if and where any stores are closed to the public);

•changes in consumer confidence and consumer spending habits, including spending for the merchandise that we sell, and negative trends in consumer purchasing patterns due to ~~existing~~changes in consumers’ disposable income, credit availability and debt levels;

•disruption to our supply chain including the manufacturing, supply, distribution, transportation and delivery of our products;

•increased safety measures for our employees and customers at our stores, distribution centers and home office; and

•a slowdown in the U.S. ~~tax laws that impact us, most notably~~and global economies, and an uncertain global economic outlook or a potential credit crisis.

To seek to mitigate the effects of the pandemic and to create financial flexibility, we have taken the following actions:

•a majority of our store and distribution center employees were furloughed in March and we covered the cost of health benefits for such furloughed employees through the end of May;

•we implemented a voluntary temporary base salary reduction of 50% for Joel Anderson, our Chief Executive Officer, and a 25% base salary reduction for the ~~U.S.~~remainder of the executive leadership team that reports into Mr. Anderson. This compensation was reinstated in the second quarter of 2020 after substantially all of the Company’s stores were reopened;

•our Board of Directors elected to forgo its quarterly cash retainers for the first quarter of 2020;

•we implemented a temporary pay reduction for all salaried corporate employees and certain field and supply chain leadership (that has been reinstated now that substantially all of our stores have reopened) and delayed annual salary increases for corporate employees;

•as permitted by the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, we have applied for and received payroll tax ~~rate~~credits with the IRS, and elected to defer the payment of the employer's portion of FICA taxes;

•we implemented significant temporary non-payroll expense reductions, including advertising, occupancy and other store operating expenses, distribution and corporate office operating expenses, as well as professional and consulting fees;

•we temporarily ceased paying rent on all closed store locations; as discussed above, we have since resumed rent payments and/or agreed to lease modifications with virtually all of our landlords;

•we cancelled certain vendor orders and delayed receipts on others in order to manage inventory levels, and extended payment terms for product and non-product vendors, although we have since returned to more normalized payment terms;

•we significantly reduced our 2020 capital expenditure budget, including reducing the number of new stores to be opened in 2020 and delaying purchase and construction of a new Midwest distribution center;

•we amended our credit facility and increased our line of credit from ~~35%~~$50 million to ~~21% for tax years beginning after December 31, 2017. In fiscal 2018~~$225 million; and

•we evolved our product mix to meet the needs of our customers by adding to our assortment of essential products, including consumables (such as cleaning and personal hygiene products), food and drink, fitness products, pet accessories, and products needed to support work-from-home and school-from-home.

Depending on future ~~years,~~developments with respect to the COVID-19 pandemic, including any new federal, state and local governmental restrictions that may be imposed, we may ~~invest a portion~~determine to reinstate any of the foregoing mitigation measures or take any ~~savings generated by the TCJA into expenses~~additional steps that ~~could significantly increase and impact the comparability between periods of Cost of Goods Sold and Gross Profit, Selling, General and Administrative Expenses and Operating Income.~~we consider necessary.

How We Assess the Performance of Our Business

In assessing the performance of our business, we consider a variety of performance and financial measures. These key measures include net sales, comparable sales, cost of goods sold and gross profit, selling, general and administrative expenses and operating income.

Net sales constitute gross sales net of merchandise returns for damaged or defective goods. Net sales consist of sales from comparable stores, non-comparable stores, and e-commerce, which includes shipping and handling revenue. Revenue from the sale of gift cards is deferred and not included in net sales until the gift cards are redeemed to purchase merchandise or as breakage revenue in proportion to the pattern of redemption of the gift cards by the customer.

Our business is seasonal and as a result, our net sales fluctuate from quarter to quarter. Net sales are usually highest in the fourth fiscal quarter due to the year-end holiday season.

Comparable sales include net sales from stores that have been open for at least 15 full months from their opening date, and e-commerce sales. Comparable stores include the following:

•Stores that have been remodeled while remaining open;

•Stores that have been relocated within the same trade area, to a location that is not significantly different in size, in which the new store opens at about the same time as the old store closes; and

•Stores that have expanded, but are not significantly different in size, within their current locations.

For stores that are relocated or expanded, the following periods are excluded when calculating comparable sales:

•The period beginning when the closing store receives its last merchandise delivery from one of our distribution centers through:

▪the last day of the fiscal year in which the store was relocated or expanded (for stores that increased significantly in size); or

▪the last day of the fiscal month in which the store re-opens (for all other stores); and

•The period beginning on the first anniversary of the date the store received its last merchandise delivery from one of our distribution centers through the first anniversary of the date the store re-opened.

Comparable sales exclude the 53rd week of sales for 53-week fiscal years. In the 52-week fiscal year subsequent to a 53-week fiscal year, we exclude the sales in the non-comparable week from the same-store sales calculation. Due to the 53rd week in fiscal 2017, all comparable sales related to any reporting period during the year ended February 2, 2019 are reported on a restated calendar basis using the National Retail Federation's restated calendar comparing similar weeks.

There may be variations in the way in which some of our competitors and other retailers calculate comparable or “same store” sales. As a result, data in this Quarterly Report on Form 10-Q regarding our comparable sales may not be comparable to similar data made available by other retailers. Non-comparable sales are comprised of new store sales, sales for stores not open for a full 15 months, and sales from existing store relocation and expansion projects that were temporarily closed (or not receiving deliveries) and not included in comparable sales.

Measuring the change in fiscal year-over-year comparable sales allows us to evaluate how we are performing. Various factors affect comparable sales, including:

•consumer preferences, buying trends and overall economic trends;

•our ability to identify and respond effectively to customer preferences and trends;

•our ability to provide an assortment of high-quality, trend-right and everyday product offerings that generate new and repeat visits to our stores;

•the customer experience we provide in our stores and online;

•the level of traffic near our locations in the power, community and lifestyle centers in which we operate;

•changes in our merchandise mix;

•our ability to source and distribute products efficiently;

•the timing of promotional events and holidays;

•the timing of introduction of new merchandise and customer acceptance of new merchandise;

•our opening of new stores in the vicinity of existing stores;

•the number of items purchased per store visit;

•weather conditions; and

~~weather conditions.~~•the impacts associated with the COVID-19 pandemic, including closures of our stores, adverse impacts on our operations, and consumer sentiment regarding discretionary spending.

Opening new stores is an important part of our growth strategy. As we continue to pursue our growth strategy, we expect that a significant percentage of our net sales will continue to come from new stores not included in comparable sales. Accordingly, comparable sales is only one measure we use to assess the success of our growth strategy.


Pennsylvania			75-3000378
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

~~Pennsylvania~~		~~75-3000378~~
~~(State or Other Jurisdiction of~~ ~~Incorporation or Organization)~~	~~(I.R.S. Employer~~ ~~Identification No.)~~

701 Market Street
Suite 300
Philadelphia
Pennsylvania			19106
(Address of Principal Executive Offices)			(Zip Code)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	FIVE	NASDAQ Global Select Market


	Options Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Balance as of February 1, 2020	231,525	$	30.92	4.1

Forfeited	(1,650)	31.49

Exercised	(111,814)	26.96
Balance as of October 31, 2020	118,061	34.66		4.6
Exercisable as of October 31, 2020	118,061	$	34.66	4.6


	Thirteen Weeks Ended						Thirty-Nine Weeks Ended							Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	November 2, 2019			November 3, 2018			November 2, 2019			November 3, 2018				October 31, 2020			November 2, 2019			October 31, 2020			November 2, 2019
	(in millions, except percentages and total stores)													(in millions, except percentages and total stores)
Consolidated Statements of Operations Data ⁽¹⁾:													Consolidated Statements of Operations Data (1):
Net sales	$	377.4		$	312.8		$	1,159.6		$	956.9		Net sales	$	476.6		$	377.4		$	1,103.6		$	1,159.6
Cost of goods sold	258.8			210.7			774.8			635.8			Cost of goods sold	325.5			258.8			792.2			774.8
Gross profit	118.7			102.1			384.8			321.1			Gross profit	151.1			118.7			311.4			384.8
Selling, general and administrative expenses	106.0			86.5			311.7			250.4			Selling, general and administrative expenses	126.9			106.0			326.2			311.7
Operating income	12.7			15.5			73.2			70.7
Interest income, net	0.8			1.1			4.0			3.1
Income before income taxes	13.4			16.6			77.1			73.8
Income tax expense	3.2			3.1			12.5			13.4
Net income	$	10.2		$	13.5		$	64.7		$	60.4
Operating income (loss)													Operating income (loss)	24.2			12.7			(14.8)			73.2
Interest (expense) income and other (expense) income, net													Interest (expense) income and other (expense) income, net	(0.7)			0.8			(1.0)			4.0

Income (loss) before income taxes													Income (loss) before income taxes	23.6			13.4			(15.8)			77.1
Income tax expense (benefit)													Income tax expense (benefit)	3.2			3.2			(15.2)			12.5
Net income (loss)													Net income (loss)	$	20.4		$	10.2		$	(0.6)		$	64.7
Percentage of Net Sales ⁽¹⁾:													Percentage of Net Sales (1):
Net sales	100.0		%	100.0		%	100.0		%	100.0		%	Net sales	100.0		%	100.0		%	100.0		%	100.0		%
Cost of goods sold	68.6			67.4			66.8			66.4			Cost of goods sold	68.3			68.6			71.8			66.8
Gross profit	31.4			32.6			33.2			33.6			Gross profit	31.7			31.4			28.2			33.2
Selling, general and administrative expenses	28.1			27.7			26.9			26.2			Selling, general and administrative expenses	26.6			28.1			29.6			26.9
Operating income	3.4			5.0			6.3			7.4
Interest income, net	0.2			0.3			0.3			0.3
Income before income taxes	3.6			5.3			6.7			7.7
Income tax expense	0.9			1.0			1.1			1.4
Net income	2.7		%	4.3		%	5.6		%	6.3		%
Operating income (loss)													Operating income (loss)	5.1			3.4			(1.3)			6.3
Interest (expense) income and other (expense) income, net													Interest (expense) income and other (expense) income, net	(0.1)			0.2			(0.1)			0.3

Income (loss) before income taxes													Income (loss) before income taxes	4.9			3.6			(1.4)			6.7
Income tax expense (benefit)													Income tax expense (benefit)	0.7			0.9			(1.4)			1.1
Net income (loss)													Net income (loss)	4.3		%	2.7		%	(0.1)		%	5.6		%
Operational Data:													Operational Data:
Total stores at end of period	894			745			894			745			Total stores at end of period	1,018			894			1,018			894
Comparable sales growth	2.9		%	4.8		%	2.4		%	3.6		%
Comparable sales increase (decrease)													Comparable sales increase (decrease)	12.8		%	2.9		%	(16.9)		%	2.4		%
Average net sales per store ⁽²⁾	$	0.4		$	0.4		$	1.4		$	1.4		Average net sales per store (2)	$	0.5		$	0.4		$	1.1		$	1.4


	Thirty-Nine Weeks Ended							Thirty-Nine Weeks Ended
	November 2, 2019			November 3, 2018				October 31, 2020		November 2, 2019
Net cash provided by operating activities	$	1.9		$	1.6		Net cash provided by operating activities	$	121.3	$	1.9
Net cash used in investing activities	(132.3		)	(7.4		)	Net cash used in investing activities	(191.8)		(132.3)
Net cash used in financing activities	(43.8		)	(3.6		)	Net cash used in financing activities	(15.0)		(43.8)
Net decrease during period in cash and cash equivalents ⁽¹⁾	$	(174.3	)	$	(9.4	)	Net decrease during period in cash and cash equivalents (1)	$	(85.4)	$	(174.3)



	Impact of ASC 842 Adoption
	As Reported February 2, 2019		Adjustments			Adjusted February 3, 2019
Assets
Current assets:
Prepaid expenses and other current assets	60,124		(11,077		)	49,047
Total current assets	642,257		(11,077		)	631,180
Operating lease assets	—		628,924			628,924
	$	952,264	$	617,847		$	1,570,111

Liabilities and Shareholders’ Equity
Current liabilities:
Other accrued expenses	104,201		(8,033		)	96,168
Total current liabilities	253,105		(8,033		)	245,072
Deferred rent and other	84,065		(84,065		)	—
Long-term operating lease liabilities	—		709,945			709,945
Total liabilities	337,170		617,847			955,017
Shareholders’ equity:
Total shareholders’ equity	615,094		—			615,094
	$	952,264	$	617,847		$	1,570,111



	As of February 2, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Short-term:
Corporate bonds	$	83,128	$	—	$	63	$	83,065
Municipal bonds	2,284		—		2		2,282
Total	$	85,412	$	—	$	65	$	85,347


	As of November 3, 2018									As of November 2, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Short-term:									Short-term:
Corporate bonds	$	82,710	$	—	$	194	$	82,516	Corporate bonds	$	53,996	$	48	$	0	$	54,044

Municipal bonds	2,319		—		7		2,312		Municipal bonds	76		0		0		76
Total	$	85,029	$	—	$	201	$	84,828	Total	$	54,072	$	48	$	0	$	54,120



Maturity of Lease Liabilities	Operating Leases
2019	$	39,821
2020	161,775
2021	157,668
2022	149,453
2023	139,771
After 2023	518,912
Total lease payments	1,167,400
Less: imputed interest	272,259
Present value of lease liabilities	$	895,141


▪	~~the last day of the fiscal year in which the store was relocated or expanded (for stores that increased significantly in size); or~~


▪	~~the last day of the fiscal month in which the store re-opens (for all other stores); and~~


⁽¹⁾ (1)Components may not add to total due to rounding. (2)Only includes stores that opened before the beginning of the thirteen weeks ended and thirty-nine weeks ended.	~~Components may not add to total due to rounding.~~


⁽²⁾	~~Only includes stores open during the full thirteen and thirty-nine weeks ended.~~



Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased As Part of a Publicly Announced Program ⁽¹⁾	Maximum Dollar Value of Shares that May Yet be Purchased Under the Program
Second Quarter 2019					$	81,413,121
August 4, 2019 - August 31, 2019	191,367	$	106.00	191,367	$	61,128,219
September 1, 2019 - October 5, 2019	—	$	—	—	$	61,128,219
October 6, 2019 - November 2, 2019	—	$	—	—	$	61,128,219
Third Quarter 2019	191,367	$	—	191,367	$	61,128,219


No.						Description

~~No.~~10.32†						~~Description~~Compensation Policy for Non-Employee Directors

~~31.1~~10.33†						Form of Award Agreement for Performance-Based Restricted Stock Units under the Five Below, Inc. Amended and Restated Equity Incentive Plan (Directors)

31.1						Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101*						The following financial information from this Quarterly Report on Form 10-Q for the fiscal quarter ended ~~November 3, 2019,~~October 31, 2020, formatted in XBRL (Extensible Business Reporting Language) and furnished electronically herewith: (i) the Unaudited Consolidated Balance Sheets as of October 31, 2020, February 1, 2020 and November 2, ~~2019, February 2, 2019 and November 3, 2018;~~2019; (ii) the Unaudited Consolidated Statements of Operations for the Thirteen ~~Weeks Ended~~ and Thirty-Nine Weeks Ended October 31, 2020 and November 2, ~~2019 and November 3, 2018;~~2019; (iii) the Unaudited Consolidated Statements of Shareholders’ Equity for the Thirty-Nine Weeks Ended October 31, 2020 and November 2, ~~2019 and November 3, 2018;~~2019; (iv) the Unaudited Consolidated Statements of Cash Flows for the Thirty-Nine Weeks Ended October 31, 2020 and November 2, 2019 ~~and November 3, 2018~~ and (v) the Notes to Unaudited Consolidated Financial Statements, tagged in detail.

104*						Coverage Page Interactive ~~Date~~Data File (formatted as Inline XBRL and contained in Exhibit 101).


~~(3)~~	~~Leases~~


~~(4)~~	~~Income Per Common Share~~


~~(5)~~	~~Line of Credit~~


~~(6)~~	~~Commitments and Contingencies~~


†			Management contract or compensatory plan or arrangement.

*			Pursuant to applicable securities laws and regulations, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Exchange Act of 1934, as amended, and otherwise is not subject to liability under those sections.


		FIVE BELOW, INC.

	~~FIVE BELOW, INC.~~

Date: December ~~5, 2019~~3, 2020	/s/ Joel D. Anderson
		Joel D. Anderson
		President and Chief Executive Officer (Principal Executive Officer)

Date: December ~~5, 2019~~3, 2020		/s/ Kenneth R. Bull
		Kenneth R. Bull
		Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)