Five Below (FIVE) 21 Mar 182017 Q4 Earnings call transcript

Good day, everyone and welcome to the Five Below Fourth Quarter Fiscal 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] And please note that today’s event is being recorded. I would now like to turn the conference over to Christiane Pelz, Vice President of Investor Relations. Please go ahead.

William. you, Thank and Five everyone financial for us joining conference Good fourth thank quarter for Below’s XXXX and today call. afternoon, you fiscal results year

and call XX As Officer Executive we has and Bull, and year. questions. certain was may Litigation provisions the made as forward-looking and to reminder, filings. Officer Ken Anderson, risks today to described are that of XXXX Five uncertainties Reform Below’s call to a Financial statements After could the a On amended. any I undertake and cause forward-looking XXXX Securities are made and actual statements today’s comments are materially SEC update uncertainties Act of constitute during Those of will the remind risks both release statements. unknown Treasurer. from are Chief of Chief such and results their obligation our that the and statements. Joel President forward-looking Private statements remarks, need week management and open made in known you do of not to differ and call Such made this forward-looking date The subject this meaning within are pursuant to press as the the we Harbor Safe to call formal

copy press turn Relations you to release, now a today’s over may by of I not our of page Investor Joel. have website visiting call one If the you at do the will obtain fivebelow.com.

the before Ken and it end review then outlook on year joining the as Christiane for year our call and open quarter questions. for will and our the quarter earnings to handing and up XXXX as fiscal I you, financials thoughts everyone well call. to for will discuss we and over discuss us Thank thanks highlights of fourth

The driven to increased in quarter the delivered was $XXX best share of public quarters Sales new per we and Five Below, $X.XX. by new X.X%. growth XX% going year quarter which of Earnings store by driven to strong stores XXth to from annual comp grew comps. of solid $X.X unit XXXX very XX% almost fourth XXXX. sales results million billion a increase consecutive since X.X%. XX% a fourth of XX% our sales have comp transaction Our our grew driven a was one year fourth of positive for and capped

earnings finished margins while share operating record at and income grew net year, the XX%. For per XX.X%, a over

cash With repurchases with and We great and to of million. begin which our ever these cash balance $XXX through for of position repurchase year Key consistent first from to and flow driver today authorization most cash $XXX some we was are announcing sheet, are opportunity share XXXX towards growth strong continued well our XXXX main performance of as new to remain as investments significant share the stores, in generate flow are see vision. continue the results ended free a the allocating our strong free and million. to our our strong we

opportunity XXXX of believe previous our plus we stores. in higher XX% now our we January, States, stores than store As United the target X,XXX announced in exceeds

growth remains As with runway XXX we stores, finished the XXXX for long.

class milestone. average with to suburban make first generating achieve very in and year The During with this refreshed class strong diverse a stores, XX opened rural, the $X Below XXXX productivity across opened track class our markets This of range that to opened exceed year, Five we most with on would our volumes states. million, unit new which net class of stores was each is urban XXX a which of experience. store first

to existing in open our We our a plan XXXX. footprint grow markets, California to XXX excited to densify stores and continue with are including

throughout and on X.X% again guidance of high With We led core amazing the room, end to style, broad customer for by performance items Moving quarter of merchandising, in business. an our saw led business X% the of fourth our with the create were by to strength selection underlying and respect our response of quality illustrates pleased to at tech, X% our original comps, high once based at to which believe our whereas value. we very the we our comp came trend-right candy. transactions

scale options and affordable like gets and contribute in and invest trends year slime, our our As of of to Trends to we slime cheese. incredible offered continue began spinners, the out better. emerging allowed the smiley – closed celebrating with thousands products, also mermaid better customers. smiley, overall and quarter for the we vendor continued gift-giving. to assortment leverage In and momentum. and relationships trends Swiss like We and XXXX spa contribute our S XXXX to We sales fourth

awareness, brand open We On customer point awareness and more. working evidenced front, to engagement. the years continuing brand are are on X efforts our in traffic the by XX marketing percentage we markets believe and increase increase as aided and our our focused

We continue XX% which advertising and was we covering markets holiday and our This our of TV our reached fourth shift mobile to of and social e-commerce. approximately TV digital marketing includes year efforts into stores.

engaging more brand, content. testing social, we marketing of and by expanded video customer generated mobile for deploying As targeted our

a and to tool very marketing as serves our small sales to vital were traffic Additionally, a brand e-commerce creates stores. that contributor awareness

and shareholders. enhance opportunity to people focused XXXX, tax key strategic value continue support foundation our some on further the infrastructure Now of marketing, lies for ahead. important merchandising, solidify to stores, and including remain us our and that reform we the business legislation systems as we the in five on the new customers invest our associates, significant and investments accelerate to long-term to has provided recent The priorities growth

us to key competitive stay customer in for are experience and vital it believe we talent. is Associates retaining our attracting and to

wages training and higher as as benefits will We into associate additional store of be development our a savings tax programs. investing portion well reform and

for sale a have completed of be self such point is POS future capabilities we loyalty earlier the checkout upgrade, program, our customer than On initiatives. new now will The XXXX, which omnichannel as front, necessary anticipated. in and full year a system systems accelerated

Regarding store infrastructure, base that manner possible. faster in January, announced support products new plan distribution efficient and growing is In Southwest delivering the in in which two and by crucial XXXX XXXX. in we to it most our open the we centers we Southeast

acceleration invest to in speed the we our as well our at Midwest with stores as of in important store today chain stores. discipline additional ahead are component around XXXX. our of distribution is and reducing customers. on announcing we to which plan our optimism potential the and and growth a confidence in delivery This like be strategic our freight investments plan which supply a DC An open pace Additionally, XPL reflects to California additions growth in These our the will and increasing improve we XXXX efficiencies of network both focused costs.

to amazing of to Our we goal in is our visits loyal and in test program is to more our continue loyalty increase brand before shopping moving which to experience better believe store the so even we among differentiated with create further experience, an conducted on we designed a The foster more loyalty fierce an remodel customers store forward to XXXX repeat customers. in store Five refine plan store refresh even provide already XXXX, doing the XXXX. will the success remodel in Based formal more model and Below. experience drive

and positive customers resources marketing into overall increase the to new with brand. brand given will engagement targeted Additionally, be response to better efforts, our reach awareness we our investing more customer

initiatives also to within Finally, we are an Five launch is $X pleased investment of announce to approximately Below funding initial our that Foundation. the million

where with want need causes, the hurricanes continuing to of Jude’s activities. charities Along being we we will Toys at during Lemonade a as these of we and did support XXXX. fall in the our raised recipients these associates Stand, better and formalize millions Over children, help to to on Tots. largest to for us, in have a we in point we to years, St. our support in And Alex also important position are donated be the it’s growth focused the charitable

We where efforts helping increase are a in in our focus thrilled operate. communities to to position be we and service

I investments believe would reform able done but are have over are we accomplish time, tax as the things as now the benefits outlined of All far sooner. to just accelerate and

margins runway XXXX investments Ken ahead. discuss they further operating will will strengthen growth of our as long impact these will lies the While shortly, and support that foundation

invest such financial to are we in Looking past we wages, in areas marketing. and with distribution business have and summary, performance we full ahead and year in the beyond quarter continue fourth XXXX our extremely the XXXX, will pleased In as both operational. done as

flexibility growth, of in XX% bottom plus model and to through reinforce Five to continue our Below the us and strength, and potential of with continued universal our Our growth appeal results XX% consistency line XXXX. achieve giving the X,XXX top line store ability plus confidence our

focused the stores new trend-right opportunities are distribution more beyond with provide our to to plans color innovative will Ken fresh, turn financials. over continue people. Below marketing see more efficient from us in executing We as tremendous to it as well on and technology for and we grow hiring amazing XXXX With to on more to I Five merchandise, as Ken? to that,

quarter XXXX then everyone. quarter Joel I outlook discuss with and my good a the remarks first fiscal of our fourth and full will XXXX. year our afternoon, for Thanks, begin and fiscal review and results

fourth to As versus week income the share. included fiscal fiscal extra $X fiscal XXXX million per the XXrd earnings This the sales, year to an XXXX million of diluted upcoming week XXXX. the reminder, approximately to $X.XX XX-week $XX.X extra operating a quarter added and and and year year

costs The comp increase up comp X% offset with of week. increased leverage in the sales the fourth Comparable of increased XXXX in the expense the a profit XXXX of fourth quarter XXXX comp comp ended fourth Gross million compensation fourth XXXX. million XXXX. XXX stores from quarter higher Our quarter higher a $XXX.X transactions. sales fixed leverage the the of the for for on part by compensation. year-over-year margin driven from Gross X.X% flat XX% of XXX of primarily We fourth in versus higher quarter last quarter XX.X%. X% of quarter at XX.X% XX.X% quarter $XXX.X or comp a was million, excluding offset percentage reported in was from XXrd year with sales new incentive the $XXX.X the stores, by fourth of to SG&A XX.X% by increase of of to increase XXXX increase occupancy net were the incentive as up finished the in a in higher costs. or the the impact

to margin to Our approximately basis Operating million. XX operating increased income sales. XX.X% $XXX.X increased of points XX.X%

net included the from tax our in per The included XX.X% rate per and fourth million from XX.X% the benefit benefit of or XXrd effective to share was share was the year. as guidance. tax week a share by the XX.X% in $XX.X the tax diluted lower $X.XX rate $X.XX share accounting deferred effective based Our rate in compensation for to increased or quarter quarter fourth included from from million reflecting benefit of our tax the compensation tax of driven $X.XX tax XXXX benefit diluted the earnings earnings per per write-down fourth which $X.XX a reform diluted Also based well net benefit reform. XXXX. net accounting Net was extra and $X.XX quarter for last was compared the from decrease asset. share income blended as Diluted in a $XX.X share from

sales. a total sales XXXX increase Gross Comparable basis. the an XXXX. spinner sales XX was comp $XXX.X operating increase of basis increase expenses $X.XXX last increased XX.X% on points of XX-week margins due points decreased comparable the finished XX X.X% of XX.X% reported a as sale basis $XXX.X weeks in were driven of for million of fixed basis sales to in by X% a at XX.X% costs XXXX. margin profit Operating income SG&A increased by primarily leverage comp Gross on comp XX.X% million transactions. billion, from by as for the of from fiscal the year’s high in from a XX.X% XX or an increased operating XX occupancy increased This improved higher approximately leverage full year margin percentage merchandise our points the in sales XXXX increased to on XXXX. increase Operating year for basis XX.X% $XXX XX.X%. the net compared XX-week to XX.X% sales the margin for For of of and XX.X%. primarily driven margin from out-performance. in On margins XX.X% of million to

XX.X% increase Diluted the was with rate week earnings Also the increase extra versus investment on an securities tax based fiscal benefit per to with based earnings reform the of in was approximately net was Earnings and XXXX. XXXX. from tax tax year $XXX in XXXX, net effective included year that no $XXX decrease for cash I primarily was of benefit increase of of included respect due earnings per for million share per Our fiscal $X.XX fourth an and or reform. for million This discussed XXrd XX.X% the the benefit earlier long-term accounting share $X.XX short-term The the and includes versus compensation approximately quarter. benefit a of compared from diluted debt. from equivalents to the impact We share from XXXX. compensation share was rate the is in and effective $X.XX to per XX.X% in a XX-week net $X.XX $X.XX share in and end accounting the XX.X% our share benefit cash, basis ended for of guidance. the which year tax fiscal

on cash We from our payback economic than flow new generate average strong that investment delivers continue model less powerful year. X free of store to of our a

$XXX Ending the in today million compared $XXX and if the As on from as announced we repurchases will million year our Inventory basis made earnings. store XXXX. on end at maybe we million increased year-over-year. next report the open was repurchase of quarter’s the to program, fiscal $XXX.X the mentioned, any shares a end with X% inventory time at Joel time quarter to approximately during conjunction per of share purchased the market

guidance. Now, I would turn to like to our

$X.XXX X%. XX.X% sales For to to count approximately X% increase XX-week billion of $X.XXX and be be to of fiscal are with The stores on billion, the to end expected we the XXXX, a comparable open sales of plan to to range basis. XXX. expected an XXXX, to in is store XX.X% increase new XXX year In a expect

stores half open of stores the of of XX% half We The our in new expect majority the XXXX new opened to of XX% XXXX. approximately compared of to in first first and new of Columbia. stores in expect existing we the in will finish Arkansas states XXXX operating be state markets to states add and XX and will our and District to footprint

year, operating reform margins full approximate XX to our reinvestment partial our benefits. the For impact assumes the basis an from of guidance related point tax

income As Joel infrastructure and the mentioned, in benefit Below reinvest reform the through Foundation. communities we customer plan experience and of the to well use our a portion from Five systems associates, of funding as tax the to tax as

SG&A. of these investments impact All

over in year XX-week expect to XXXX basis, reform. be full $X.XX which with rate of We in income to XX.X% earnings to of tax compared is the to approximately XX share rate XX.X% lower range the points of a XX.X%, rate expected representing the percentage $X.XX. to the tax effective on range due of per is normalized our benefit to growth approximately $XXX diluted of a tax $XXX million approximately million comparable Net

XXX the through excluding plan impact the of in earlier. We in approximately from in we as new This approximately investing of reform shareholders and to CapEx remainder $XXX be stores, benefit are With reinvested reflects benefiting of and center gross in a tax in the the to flowing our to discussed CapEx, million distribution systems infrastructure. EPS new the to with we respect spend XXXX business XX% Southeast in allowances. the opening total approximately building tenant

net million XX.X%. in $XXX in March opened X.X% to increase per QX expected to year this assuming diluted to first an the sales per of $X.XX in are XX.X% the versus range year and XXXX comp quarter approximately compared last to the For earnings the earnings plan comp open range quarter to quarter of a XXXX, $XXX quarter for of share in the increase expected fiscal stores first QX versus sales X% XXXX. the X% as are in to to new million, to $X.XX of be XX in $X.XX the in ending We be XX, increase first stores first XXXX. XX share are Diluted of QX

cadence planned well of of top as the XXXX openings by the comps line our store the our in in the reinvestments, notable timing expected there Given differences year. throughout in as of new and bottom are quarter level growth

out, year. guide one to directional provide practice thinking our and remains some quarter the about full will year comments are it how While the on we I currently for

in expected substantial G&A incentive see initial as operating as X% can we outlook, into expansion versus to the leverage you the comp well as when from year-over-year year costs our X% given QX first absorbed for compensation well expect costs California. we last on margin our as higher quarter as leverage First, in entry

Second that is to or our flat X%, a fixed expect with to at fixed to mind comp, comp flat in approximately see cost Keep close we therefore our our comp leverage a expect we leverage on of threshold. would expenses. deleverage would

the deliver Therefore, and reinvestments, our lowest which income to in exacerbating the is SG&A cost current tax ramp EPS of representing assume QX. fixed further headwinds to our reform-related growth outlook does growth into in begin QX QX and EPS not is timing year-on-year assumes in QX Third deleverage. and we that operating

As based any include impact share this standards. a reminder not guidance from accounting compensation does the

with report quarterly our any the will standard impact if We results. this of

tax reform in assumes guidance and material no change reflects Our understanding current our of legislation. the

to questions. Joel Joel? it and our comments our the open refer up we would to to please release. before for to like closing I that provide with call some over details related results For guidance all earnings And press other turn back to

a Ken. great Yes. XXXX Below. Five Thanks year was for

average amazing X new executed organization. our successfully across and XXXX. broad-based social newness the digital already mobile the our and home We into crystallized rounded at throughout out executive our moved store experience We format. achieved We our provided store and purpose We new We trends. leadership presence. team. and record lot a managed hot worlds with estimated million stores. structure office entered the accomplished California of unit our and for our January. a We unique $X values new successfully class volumes optimized increased and for teams awareness Our brand end in refresh our the We we with quickly enhanced XX leadership

of generating new we to space did loving collaboration look and and on We the is top XXXX. energy and the this the and line and year are of Associates with building look delivering bottom progress it all strong the new and to this quarter feel results throughout throughout forward organization. out-performance while in

on on as have Tom’s current and our from is customers and make look in so connection of his also all who as worked Board will Below and our to with role must unique I retailer as leading a the say Vellios our transitioning my imprint the family to in He his close I Tom for will Five like we and for Chairman I would future. the visionary personally culture contributions be closely driven associates our I our June. annual Five all want store of growth in meeting express entire as in fourth for him shareholders Co-Founder, work customers. seen thank year me. our tirelessly high success behalf company Five well you to with and Executive offering so Chairman as Before has truly the the our to him experience and and and release, of continuing of to of him his do value I indelible partnership gratitude to to We in thank differentiated fun our may continue the to coming throughout Below believe of special Below that quarter forward combination years. commitment the associates the to is leader a press

to go mission for are the better operator the would like I life call make to that on turn simply and a they questions. let for so Operator? back fun. our We customers With to have can

Thank you.

question-and-answer be Please today questioner Kelly Wells will the session. with Instructions] [Operator will We now And our begin first Edward go ahead. Fargo.

is actually for taking This my on guys. Hey Ed. Anthony Thanks question. [indiscernible] for

SG&A the you of investing savings, the on of is obviously how just a you reform, have still quick you in the obviously through balance us peers real beneficiary, tax guys you are you So terms labor, are lot process allocate between in thought walk a can chose line? in in how thinking big about to growth

in the and that well be Joel. main it’s and where we in model focus confident as systems. first associates should our as current Clearly really that’s on was Yes, the believe infrastructure and focus are some investments our our

our SG&A But our our add? As added on prepared XX% to gross you do the will though the XX% shareholders. tax remarks the XXX% it’s investments large majority – will that we of important And through note were not investment reform the in anything the investments of focused said the associates. have benefits lines the of Ken, flow of hit lines. to margin to

add to geography SG&A. going just XXX% was to I goes Anthony, Joel standpoint, that mentioned there from Yes, a

As prepared that operating amount margin deleverage the about we tax investment XXXX. our in mentioned XX basis drives total in our a in of point remarks

the incremental thinking year, different you been in up are pretty comparisons levers gross what And XX about can follow-up terms of still the expectations walk guys just That’s and improvement? the us are terms in quarters this past a you continued as helpful. improvement of have quick impressive your Thanks. against given margin the you just on through line, are and

Anthony, are Yes, XXXX? when you think you I – about asking

Yes.

Yes.

look as expect continue past at our as guidance we margin we don’t merchandise we see to leverage we to as in we move and scale. said forward As the

the help products into with back to drive our are which newness customers. We plowing that

to continue that go as So expect will we to forward. see we

imply X% fixed there average mentioned that from costs. of and to we X% that range cost comp I our also around remarks think leverage X% prepared the that start to fixed for of obviously our leveraging I on would given no in see year the guidance

overall as remain move we gross would flat margin an basis we XXXX. forward on in relatively So, will expect

caller, had about and pretty and be Joel, some next before can to operator could question it that ‘XX lengthy we And everybody. would go for great, so you remind just through just we to hold to plans get everyone we pretty gave our it’s if we detailed one information

And Gordon Please Haskett. our next ahead. with go today questioner will Chuck Grom be

done brand called have first you never awareness but the before, am everything. been XX% the I a nice I am for improvement XX just in top time front, time sounded XX%, from have that first bit and Hey. you. talked what reflect on the that you back to is think perspective Thank awareness think improve going guys much From brand about ahead? you wondering back I awareness in you from a the XXXX markets, think we performance about helped sure it looking I out, I said that. seen year-over-year to a Joel, which it’s And I how I think disclosed have look have and stepping how at you could little brand you the when spinner just but stronger am what if you your comp certainly wondering comps has obviously sustainable

the that it important at thanks it and a is website, I out of ICR We and did got that I’d you disclosed remind shared investors our we on lot think not Yes, in for ICR. information Chuck. and was it’s at fact that out we lot there of

of real a strategy. our of we the things estate awareness, In been terms lot there doing. have of One densification brand is been has

circulars better, marketing TV, marketing then a think mobile merchandise we since And combine to of are invested that solely got those hit we X awareness. great really you the increase fact years to social us I in allowed contribute invested I all tell were and year the continues and ago to our just paper with those XXx on to entire better really largely story in and making that have have front, the together difference. we a it’s a brand in our efforts digital all get our Secondly, think really and accelerate we

luck. and Great. Thanks good

Yes. Thanks, Chuck.

Please with will ahead. today questioner next go our Kras Sean Barclays. And be

my in Hey, performance pretty details so guys. categories. all on just to been far you quarter of fourth across the for are what I Last you Thanks seeing and the are extent guidance. taking saw willing in to question the and in the am what the quarters couple had comment quarter? wondering robust first that you the

worlds. have fourth but Well, X trying very to clearly, could nearly outperformance mean, are successful on quarter named strong broad-based XXXX. X focus think out X and of called was really all probably X, of we I our I across the all I the

into it’s a to many, we I get last think as go the many continues continue merchandise And the assortment better. in to of As across to worlds. ‘XX I I here, said as momentum said see we the question Chuck, combination

our like continue customers crazed back. those last and We year new Below are they said are surveys to trends Five of benefiting as came they say exposed from the example it many to what have of and customers have come into spinners buy

the we QX success guess net-net saw So into has I QX. based in broad here continued

That’s for helpful thanks the and color.

day. Good

And our go Guggenheim. Please next will John with be questioner Heinbockel today ahead.

in secondly – any about that for hours you and what’s think So, Ken, maybe and benefits. in store, increase and forward? the process thought leasing two now things, Joel wages going on might then maybe to And when in you between what do is disaggregate and that increase ownership so investments your you DCs versus labor

it I to the one Thanks Yes. first John. over hand Ken. and take will

In terms the of of wages. that is of increased investment the in majority the in the form stores, investment

the productivity we programs a in big However, if on give is in tick-up comments will there stores. and the improving did effort my training you

from material and through of gotten last the amount organization, us a With addition has year joining of having he stores, is people his dollars making training in the really DCs? we are consistency so tax are we a our arms George and training development there. the Ken and our on of been the around in delivering, holiday wages, now the he are that aspect effort the is reform impact doing in the

terms very then quickly you we in more purchase I from bit sense for you bigger, presence growing mean us stages helped resources we come. on for those the is where have flexibility especially for then of placed company and have distribution seeing make that that control feeling strategically now and us earlier the and of in in good past have and didn’t allocating we It are sense more we will it’s stable, comfortable And known decision property to the also make. on especially our little more grew experience, a Yes. us a are a to a around John from many also years center the to and financially are areas we of DC, one where really are

see the with center. doing us you Southeast So distribution that

going to for will are with to and review that we analyze continue forward DCs. future as that the we then potential move We us

Thanks. Thank you.

John. Thanks

question next Paul ahead. the with go will be Please Bank. Deutsche Trussell And

afternoon. Good

Hi Paul.

I you in year is in of first us confidence I ahead? little circle so compares an worth quarter can the through comp spinners months just like and but today quarter continue a cadence so seeing slow to that on guide, trends if guidance drivers are strong and of against going the to do full weather, earlier sales January, that comp on perhaps back Easter categories obviously in and looks the the upcoming, to of your any did and you highlighting walk a investors your very traffic tough could forward, bit certain driving you wanted are comps, bad Northeast I ask number and the think here have it holiday, the wanted year, a combination about post noting

are because looking are funny spring my I it’s are bringing we snowflakes and first you the day window and Paul, out you here. up and all Yes, white on see trees weather, of think

there first the So on the storms been it’s and rolled several through has wait quarter quarter. Northeast clearly

that the In your the question terms it’s conference, clearly we of you we gave for guidance contemplated January answering ICR sales. updated

the are middle on. the We many that in storm make of storm were and late people a ICR was going didn’t with

quarter. we There ‘XX knew has up, played we when way. that we in guidance. continued updated quarter been end in against So, that named was all that mostly range was storms. contemplated from of number first ‘XX, out a our And near terms and of and weather and high tougher exactly of it’s the finished driven but said It compares the also the were we it

I think in Five Below. what from a are we obviously X they between Five weeks four we here, in traffic the to we our X customers fourth great weather, are In seeing are Below, guidance, and one tell breaks in our like but finding stores.

not You we Easter we strong continue business, and at the have ad continue and the the storm a strong quarter newness our can the out expect but to wouldn’t April. that of strong see and business had we look of you in are a then or see with we not can pleased lot is the storms like reason core it’s forward are this week just Sunday, in to Obviously, no of success into looking very we to to into between Easter weekend, and are start to really having. leading next see a we products

quarter second think growth, think That’s be very will to said helpful. is Really I you to the or negative that be you still is a have quarter flattish? said made, Ken, you I EPS follow-up comment the third positive quick given that clarify lowest to just

Yes, it in that lowest mention there, but out growth QX to negative not and deliver lowest assume growth around the was growth, didn’t of more the have QX just we word QX. would EPS the the I

it. Got

Just good and luck. wanted to you clarify. Thank

Paul. Thanks, you. thank Yes,

Thanks, Paul.

our Please will UBS. Michael with ahead. next Lasser be go questioner And

and thanks a taking for Good my question. evening lot

a how the operating just implies much and are of The guidance earlier flat first to And so year spinner trend the ago quarter substantial be from Easter you to quarter in the anniversary we near and increase comp that mentioned flat as the then to margin a expect is negative clarify third rate, potentially? expecting because or a add? Ken, should second your in you Easter comp, earlier you

Yes, from that’s X% I comps, QX recorded we last incentive-based compensation providing take operating first around margin thanks, on, Michael. some and margin for year some you two leverage and cost one have costs. entry X% costs then on the the things Really, against California are around also that so there, have you was our will going operating the drivers fixed up the QX. to

flat those I second around leverage question, was to are comp? drivers regards in the are seeing significant key QX. really terms that So, a the your mentioned guess, overall With you comps, of in you the

and be think so I near said negative flat, XQ you Yes, imply, XQ? it in flat or does that could

that that range to the provides And some guidance we it QX a the assume X% and does are and year a QX. comp to through move significant the annual and provided it than and a the giving in of for to is would we we QX X%, be assume understand guidance X% comp. you as within of negative able potential assumed includes Yes, for obviously QX comps potential out are outcomes, it we of in both X% outcomes range hit against forward up QX

quarter about what’s are think a on the we to for on spinner which excited Michael, introduced drives on about, realistic really was obviously call. see team the why guidance it’s us. but comps strong QX it’s to QX now, think at such Easter, QX I great from Right continue and that customers a first just And we wealth are that together every the focused Five spinner put are been trend the trend. great you Yes, and give I of lineup we Below trend has new

comps. consecutive of we it confidence. May positive through the a and height in customers go really the just We year us and our finished June, gives to number going will of It’s but year of be new XXth here great

really got ‘XX year. our to forward quarterly I this by am monthly be but some can here. XXth and ups our it’s expect be the in looking tell a you and You and guidance, going to we downs great cadence, to

the luck good and with you year. Thank

Thanks.

Thanks, Michael.

the Rifkin BTIG. will Alan And next questioner go with Please ahead. be

I year the what great both for metrics the the are and of how on Congratulations each one corporate those setting those you. much relative and will to like have averages look and foundation. up Thank to contributing XXXX? for average, question Joel, the California refreshes

average about company talking on volume the are a… You overall

much refresh relative contributing and class corporate the the average average average million above for to the above about $X how talked and or you How the is many how refreshes revenue that? new there how much corporate much the the to your of contribution stores will new and part ‘XX, then second California was And is the ‘XX towards many how be? California stores in question making of of in the

Yes.

California of I what you would of pulled out In the XXXX still terms tell of refresh mix the class is million. even you $X the if be above

two. So, very there the you is very, little there tell differentiation can between

are stores. is So, to that, non-comp to hard answer because much refresh just there. how all out it’s gauge contributing, get want about your To question Alan the they that

you our guess. your from so making Hopefully, remarks X with So, the you are pleased what last best stores is can year. tell compared remodeled are we we

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Okay, you much. thank very luck. Best of

Hey, appreciate bet. thanks You it. Alan,

questioner And go with Binder be will Please the Jefferies. next Dan ahead.

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Great, thank you.

Thanks, it. Dan. Appreciate

go questioner next & our will Company. ahead. And Dougherty Please Hamblin be Jeremy with

be years? beyond kind should even comment your ask or XXXX a openings my we about for to up comment added those on additional window. than growth store XX% in plan growth in of potentially have See XXXX of snowflakes higher is Midwest, unit in next longstanding outside XX% relatively to a that the really of I the over comment extending out unit and distribution few more your XXXX, comments pace the office you guys. the to is had same thinking kind Joel XXXX related noted wanted center about Hey, XX% you bit the or the little to close piling

if years closer didn’t X distribution We about XPL be DCs runway at wouldn’t it what early stores strategy? be with announcing be stores. our trying feel X,XXX of as some to me to to a stores. to XXXX you get on get in get will up to certainly but to range important one, you that kind the us are over-guess too trying over-think continue even strongly what’s in you long ICR of and give than before you the foreshadowing X,XXX instead on for XXXX, how best assured It’s was is we do beyond new picked speculate Yes, as is new our but plans. was to committed X or wasn’t guys it I to that and we rest to we new us of position plus for believe announced we we greater and we are runway We the is the I at

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a on year. Great. to the great and Congrats you team

Thanks, Jeremy.

Scott Capital will ahead. RBC be with next questioner Ciccarelli today Please our go Markets. And

Hey, guys. It’s [ph] for Reed Beth Scott. on

gross challenging offset this thinking normalized, other potential leverage out then to year the headwinds with Given comparisons kind called are potential transportation freight have that? retailers guys of about you and sales trends how and margin some as any

I forget that XXX you opening Yes. stores. are new know we are focusing comp, don’t but on

other transportation value for to be in at some they to increase total high or that looking growth and And so think are leverage looking are those as freight they to any comp we line. at retailer a sales, really continue store we go and negotiate us matter, sure stay as that not make contract gives I costs

is a there there, upward largely And mitigate some that So, pressure we growth Ken? out while lot excessive opportunity. our of with

mean, I whether Beth stores just deliveries then to it’s whether add it’s or we that, costs, period obviously And Yes. inflationary of in to to are here import a through freight container costs.

that estimates move factored really our offset the we for increases to provided point, our benefit and this. year this have forward to scale they as continue like guidance We will into past to and have the as Joel’s and we have growth us they in

you. Thank it. Got

Thanks, Beth.

Beth. Thanks,

Morgan Tennessee Stanley. And Vincent with be questioner go our ahead. Please will next

my Hey, very been answered, great. of afternoon. I two have question but the Most here. Thanks guess questions taking Thanks fast for things. guys. Good much

basis? or of of year-to-year investing a be kind really we change, what tariff a of of the thoughts, of I should be in that, awareness Thanks less you of on response refine think your have initial fundamental kind to continuing mediums just and you on opinion of sure am sales here would that what what flat potential kind advertising to any more be of lot. a just are question as to as greater then kind the pass First, percent that? mediums versus seems And will been phone your stay we asked relatively the getting the various brand changes rate as more etcetera, any to in your

come later Yes, the first right take if now, situation on you Look, Ken, will this lot situation thoughts. some very the fluid a is tariff that. one, I have to week

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from questioner be next our And ahead. Citi. Alvin Please will go Concepcion today

Thanks for my guys. Hi, taking question.

could more sites opportunities, negotiate I attractive you have if your talked or model real your improvements returns? store ability about wondering am new you leases wondering about in your that estate Just to so could improve you talk if increasing scale, find seen

Alvin. Thanks, Yes.

as to landlords rather I them awareness gotten brand have used to down. to stronger coming seen are has the than think the biggest the we have chase thing is us we

see or as centers. traffic landlords want vibrant And somebody a so that They somebody their to us that center centers. we young want us – want as our a vibrant in bad brings brings as vibrant see be They be as a center. to in center to youthful to traffic

is really so And or for growing are centers being opportunities the us redevelopment built. new of happens as centers there

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much. Thank it. you very Got

Alvin. Thanks,

Thanks Alvin.

Goldman with Please Prykull Chris be will questioner Sachs. ahead. next the And go

taking I questions. follow-ups had just the two Hey, guys. for Thanks questions. earlier quick to

year-over-year. comp, had or you the if gross on last headwinds how deleverages that through Correct walk again are give back puts I X% merch that think you there me mentioned and me the I of lift that just occupancy to I X% I could spinners flat from on Ken just to then are assume takes would me getting and through you would some if mentioned freight we to do hold margin walk year, you flat? appreciate, misheard and the margin I lapping

provided obviously Chris guidance margin we from the both a guide levels, margin but gross relatively normally And flat was there year on we Sure. don’t that and full margin and the QX, That in leverage SG&A then for significant levels. provided driving to operating margin guidance guidance is implied that again, gross And the the investment overall gross we implied margin to leverage. operating our then as X% and as comp go through years. the we full way and are comps the year, it’s for which QX of year QX up the two comps, go obviously work through the there, QX really from really QX through in things we X% the we ramping getting us the to as – rest tax-free guide the

way our the So, our we key that’s of then get two is guidance. to to through And – really keeping just the that in as mind year those drivers there the overall are on work a tax we basis, it mentioned from provide margin will and year an SG&A at of XXX% deleverage those XX reinvestments basis level. operating point I full the a estimate are a standpoint about reinvestments rest

buyback? your just does account Great, not that’s one take share helpful. into And accretion clarification guidance, any then EPS from

that our the we in timing announced we the but of those going forward not today, Obviously, is know authorization not. or included is don’t so that guidance. amount It the

for Thanks and clarification Great. good luck.

Chris. Thanks

Thanks Chris.

for conclude question-and-answer turn his back Anderson like the conference closing remarks. And this would our to over will to Joel session. I

today. speaking Appreciate quarter less operator you on the all everybody our We first out weather call. support. look forward have We with thanks Yes, evening. you again and for windows. flakes a for everybody night. Thanks great respective joining thank us and look warmer and Good our white to

attending Thank now today’s for presentation. And the you conference concluded. has

disconnect. You may now