Five Below (FIVE)

Filed: 30 Mar 22, 9:01am

Five Below, Inc. Announces Fourth Quarter and Fiscal 2021 Financial Results;
Provides Long-Term "Triple-Double" Vision at Investor Day 2022
Q4 Net Sales Increase of 16%; Q4 Comparable Sales Increase of 3.4%
Q4 EPS increase of 13% to $2.49
Increases U.S. store potential to 3,500+ or triple current level
Plans to double sales and more than double EPS through 2025
PHILADELPHIA, PA (March 30, 2022) – Five Below, Inc. (NASDAQ: FIVE) today announced financial results for the fourth quarter and full year of fiscal 2021 ended January 29, 2022, outlook for fiscal 2022 and its long-term vision at Investor Day 2022.

Joel Anderson, President and CEO of Five Below, stated, “We were very pleased with our fourth quarter results that capped off a record year. We delivered sales growth in line with our expectations against the difficult comparison to last year's stimulus-fueled comparable sales increase of 13.8%, and despite the impact of weather in January. The strength was broad-based, with Sports, Candy, Seasonal and Style worlds outperforming.”

Mr. Anderson continued, “Looking ahead to 2022, we will continue to play offense and focus on innovation and experience as we navigate a dynamic macro environment related to the lingering impacts of the pandemic. We are excited to grow our new Beyond store prototype, expand categories and pilot new services to further enhance the customer experience. Our expectations for fiscal 2022 are embedded in our new long-term vision.”

Mr. Anderson concluded, "We are excited to share this long-term vision today, referred to as ‘Triple-Double.’ We are increasing our store potential in the U.S. from 2,500+ to 3,500+, or triple our current store count, and we are planning to double our sales and more than double our EPS through fiscal 2025. We expect to open approximately 1,000 stores during this time, including 375 to 400 new stores over the next two fiscal years. Our teams remain dedicated to delivering high growth while executing against our key strategic initiatives within product, experience and supply chain, all while maintaining financial discipline and always placing the customer at the center of our decision-making."

For the fourth quarter ended January 29, 2022:
Net sales increased by 16.1% to $996.3 million from $858.5 million in the fourth quarter of fiscal 2020; comparable sales increased by 3.4% versus the fourth quarter of fiscal 2020.
The Company opened 17 new stores and ended the quarter with 1,190 stores in 40 states. This represents an increase in stores of 16.7% from the end of the fourth quarter of fiscal 2020.
Operating income increased by 10.6% to $187.6 million from $169.6 million in the fourth quarter of fiscal 2020.
The effective tax rate was 25.1% compared to 26.6% in the fourth quarter of fiscal 2020.
Net income increased by 13.1% to $140.2 million from $123.9 million in the fourth quarter of fiscal 2020.
Diluted income per common share increased by 13.2% to $2.49 from $2.20 in the fourth quarter of fiscal 2020.
The Company repurchased 368,699 shares in the fourth quarter of fiscal 2021 at a cost of approximately $60.0 million.

For the fiscal year ended January 29, 2022:
Net sales increased by 45.2% to $2,848.4 million from $1,962.1 million in fiscal 2020 and by 54.2% from $1,846.7 million in fiscal 2019; comparable sales increased by 30.3% versus fiscal 2020. For the comparable subset of stores that were open in both fiscal 2019 and fiscal 2021, sales increased 20%.
The Company opened 170 net new stores compared to 120 net new stores opened in fiscal 2020.
Operating income was $379.9 million compared to $154.8 million in fiscal 2020. Operating income increased by 74.8% from $217.3 million in fiscal 2019.
Interest expense and other, net was $13.2 million compared to $1.7 million in fiscal 2020 and interest income and other, net of $4.3 million in fiscal 2019. The increase in expense was primarily due to the write-down of an equity investment.
The effective tax rate was 24.0% compared to 19.4% in fiscal 2020 and 21.0% in fiscal 2019.
Net income was $278.8 million compared to $123.4 million in fiscal 2020. Net income increased by 59.3% from $175.1 million in fiscal 2019.
Diluted income per common share was $4.95 compared to $2.20 in fiscal 2020 and $3.12 in fiscal 2019. The benefit from share-based accounting was approximately $0.06 in fiscal 2021, approximately $0.08 in fiscal 2020, and approximately $0.14 in fiscal 2019.

First Quarter and Fiscal 2022 Outlook:
The Company expects the following results for the first quarter and full year of fiscal 2022. This guidance reflects pandemic driven delays in construction and permitting that have resulted in a shift of stores into the second half of fiscal 2022 and the first half of fiscal 2023, and ongoing inflationary impacts. This guidance does not include the impact of share repurchases, if any.

For the first quarter of fiscal 2022:
Net sales are expected to be in the range of $644 million to $658 million based on opening approximately 35 new stores and assuming an approximate flat to 2% decrease in comparable sales.
Net income is expected to be in the range of $30 million to $35 million.
Diluted income per common share is expected to be in the range of $0.54 to $0.62 on approximately 56.1 million diluted weighted average shares outstanding.

For the full year of fiscal 2022:
Net sales are expected to be in the range of $3.16 billion to $3.26 billion based on opening approximately 160 new stores and assuming an approximate flat to 3% increase in comparable sales.
Net income is expected to be in the range of $292 million to $320 million.
Diluted income per common share is expected to be in the range of $5.19 to $5.70 on approximately 56.2 million diluted weighted average shares outstanding.

Long-Term Vision and Strategic Outlook:
As part of today's Investor Day 2022, the Company is sharing its "Triple-Double" growth vision and long-term targets. Embedded in this vision are the following expectations:
Triple store count to 3,500+ by the end of fiscal 2030
Achieve the following by the end of fiscal 2025:
Double sales
More than double EPS
Grow operating margin to approximately 14%
Open approximately 1,000 stores:
375-400 new stores over the next two fiscal years
550-600 new stores over fiscal years 2024 and 2025

Investor Day Webcast:
The meeting will begin at 9:00 a.m. Eastern Time today, and will webcast live at http://investor.fivebelow.com/. An archived replay will be available two hours after the conclusion of the live event. Questions about the event should be directed to InvestorDay2022@fivebelow.com.

Forward-Looking Statements:
This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect management's current views and estimates regarding the Company's industry, business strategy, goals and expectations concerning its market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources, store count potential and other financial and operating information. Investors can identify these statements by the fact that they use words such as "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future" and similar terms and phrases. The Company cannot assure investors that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to risks and uncertainties associated with the COVID-19 pandemic (including closures of our stores, adverse impacts on our sales and operations, future impairment charges and the risk of global recession, and the impact of government regulation), risks related to disruption to the global supply chain, risks related to the Company's strategy and expansion plans, risks related to disruptions in our information technology systems and our ability to maintain and upgrade those systems, risks related to the inability to successfully implement our online retail operations, risks related to cyberattacks or other cyber incidents, risks related to our ability to select, obtain, distribute and market merchandise profitably, risks related to our reliance on merchandise manufactured outside of the United States, the availability of suitable new store locations and the dependence on the volume of traffic to our stores, risks related to changes in consumer preferences and economic conditions, risks related to increased operating costs, including wage rates, risks related to extreme weather, pandemic outbreaks (in addition to COVID-19), global political events, war, terrorism or civil unrest (including any resulting store closures, damage, or loss of inventory), risks related to leasing, owning or building distribution centers, risks related to our ability to successfully manage inventory balance and inventory shrinkage, quality or safety concerns about the Company's merchandise, increased competition from other retailers including online retailers, risks related to the seasonality of our business, risks related to our ability to protect our brand name and other intellectual property, risks related to customers' payment methods, risks related to domestic and foreign trade restrictions including duties and tariffs affecting our domestic and foreign suppliers and increasing our costs, including, among others, the direct and indirect impact of current and potential tariffs imposed and proposed by the United States on foreign imports, risks associated with the restrictions imposed by our indebtedness on our current and future operations, the impact of changes in tax legislation and accounting standards and risks associated with leasing substantial amounts of space. For further details and a discussion of these risks and uncertainties, see the Company's periodic reports, including the annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, filed with or furnished to the Securities and Exchange Commission and available at www.sec.gov. If one or more of these risks or uncertainties materialize, or if any of the Company's assumptions prove incorrect, the Company's actual results may vary in material respects from those projected in these forward-looking statements. Any forward-looking statement made by the Company in this news release speaks only as of the date on which the Company makes it. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

About Five Below:
Five Below is a leading high-growth value retailer offering trend-right, high-quality products loved by tweens, teens and beyond. We believe life is better when customers are free to "let go & have fun" in an amazing experience filled with unlimited possibilities. With most items priced between $1 and $5, and some extreme value items priced beyond $5 in our incredible Five Beyond offering, Five Below makes it easy to say YES! to the newest, coolest stuff across eight awesome Five Below worlds: Style, Room, Sports, Tech, Create, Party, Candy and New & Now. Founded in 2002 and headquartered in Philadelphia, Pennsylvania, Five Below today has over 1,200 stores in 40 states. For more information, please visit www.fivebelow.com or find Five Below on Instagram, TikTok, Twitter and Facebook @FiveBelow.

Investor Contact:
Five Below, Inc.
Christiane Pelz
Vice President, Investor Relations & Treasury

Consolidated Balance Sheets
(in thousands)
January 29, 2022January 30, 2021
Current assets:
Cash and cash equivalents$64,973 $268,783 
Short-term investment securities277,141 140,928 
Inventories455,104 281,267 
Prepaid income taxes and tax receivable11,325 6,350 
Prepaid expenses and other current assets96,196 58,085 
Total current assets904,739 755,413 
Property and equipment, net777,497 565,351 
Operating lease assets1,151,395 975,862 
Long-term investment securities37,717 — 
Other assets9,112 18,144 
$2,880,460 $2,314,770 
Liabilities and Shareholders’ Equity
Current liabilities:
Line of credit$— $— 
Accounts payable196,461 138,622 
Income taxes payable28,096 2,025 
Accrued salaries and wages53,539 43,445 
Other accrued expenses145,268 108,504 
Operating lease liabilities163,537 143,074 
Total current liabilities586,901 435,670 
Other long-term liabilities1,663 1,048 
Deferred income taxes36,156 28,911 
Long-term operating lease liabilities1,135,456 967,255 
Total liabilities1,760,176 1,432,884 
Shareholders’ equity:
Common stock556 559 
Additional paid-in capital280,666 321,075 
Retained earnings839,062 560,252 
Total shareholders’ equity1,120,284 881,886 
$2,880,460 $2,314,770 

Consolidated Statements of Operations
(in thousands, except share and per share data)
 Thirteen weeks endedFifty-two weeks ended
 January 29, 2022January 30, 2021January 29, 2022January 30, 2021
Net sales$996,332 $858,514 $2,848,354 $1,962,137 
Cost of goods sold599,438 517,584 1,817,910 1,309,807 
Gross profit396,894 340,930 1,030,444 652,330 
Selling, general and administrative expenses209,318 171,322 650,564 497,527 
Operating income187,576 169,608 379,880 154,803 
Interest (expense) income and other, net(505)(719)(13,177)(1,736)
Income before income taxes187,071 168,889 366,703 153,067 
Income tax expense46,875 44,952 87,893 29,706 
Net income$140,196 $123,937 $278,810 $123,361 
Basic income per common share$2.50 $2.22 $4.98 $2.21 
Diluted income per common share$2.49 $2.20 $4.95 $2.20 
Weighted average shares outstanding:
Basic shares55,995,978 55,901,221 55,999,713 55,816,508 
Diluted shares56,315,019 56,240,633 56,303,854 56,060,039 


Consolidated Statements of Cash Flows
(in thousands)
 Fifty-two weeks ended
 January 29, 2022January 30, 2021
Operating activities:
Net income$278,810 $123,361 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization84,831 69,345 
Share-based compensation expense25,787 9,551 
Deferred income tax expense7,245 20,195 
Other non-cash expenses708 2,572 
Changes in operating assets and liabilities:
Prepaid income taxes and tax receivable(4,975)(2,287)
Prepaid expenses and other assets(26,287)17,141 
Accounts payable61,559 11,146 
Income taxes payable26,071 (7,480)
Accrued salaries and wages10,094 23,572 
Operating leases13,131 29,362 
Other accrued expenses24,775 26,727 
Net cash provided by operating activities327,912 365,966 
Investing activities:
Purchases of investment securities and other investments(477,082)(192,612)
Sales, maturities, and redemptions of investment securities299,652 105,912 
Capital expenditures(288,167)(200,189)
Net cash used in investing activities(465,597)(286,889)
Financing activities:
Borrowing on note payable under Revolving Credit Facility— 50,000 
Repayment of note payable under Revolving Credit Facility— (50,000)
Cash paid for Revolving Credit Facility financing costs— (2,029)
Net proceeds from issuance of common stock828 477 
Repurchase and retirement of common stock(60,011)(12,663)
Proceeds from exercise of options to purchase common stock and vesting of restricted and performance-based restricted stock units390 5,348 
Common shares withheld for taxes(7,332)(3,917)
Net cash used in financing activities(66,125)(12,784)
Net (decrease) increase in cash and cash equivalents(203,810)66,293 
Cash and cash equivalents at beginning of year268,783 202,490 
Cash and cash equivalents at end of year$64,973 $268,783