Five Below (FIVE)

Christiane Pelz VP, IR
Joel Anderson President and CEO
Ken Bull CFO and Treasurer
Matthew Boss JPMorgan
John Heinbockel Guggenheim Securities
Karen Short Barclays
Simeon Gutman Morgan Stanley
Michael Lasser UBS
Chuck Grom Gordon Haskett
Scot Ciccarelli RBC Capital Markets
David Bellinger Wolf Research
Jeremy Hamblin Craig-Hallum Capital Group
Anthony Chukumba Loop Capital
Call transcript
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Good day, and welcome to the Five Below First Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Christiane Pelz, Vice President, Investor Relations. ahead. go Please

Christiane Pelz

unknown President made afternoon, during today date Good financial formal Private statements Treasurer. thank as for need Officer Joel you conference Ken cause Officer; Thanks, Chief Bull, could that and results you statements to safe provisions we Five everyone, to their will Below's The statements uncertainties uncertainties to to forward-looking forward-looking are actual as the us such Financial Anderson, from are in to this call differ SEC for and On described statements. may Reform update XXXX Chief the are first joining and the Act filings. this subject risks Executive forward-looking press release remarks, call. pursuant Below's Securities any amended. made made of and constitute Cole. and statements. obligation today today's not Five and risks undertake of call and Such and call, quarter results management are the After forward-looking of Those made XXXX call the within our that open are and remind certain harbor the materially of we has meaning to I known Litigation and comments do questions. of and both fiscal

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

Joel Anderson

the for the I in 'XX, Ken our closings of up it will resiliency from dynamic I for remain on performance our We've for to the consecutive joining our before at for to Below we open and crew. our call. amazed outlook handing questions. call XXXX. we Five more our in and review vendors earnings financials We discuss to first of March Thank reopened thanks, customers, fully quarter them of support you, Then first three will this Christiane, and lapped continuing all for quarter and quarter us environment. quarters, been detail. flexibility initial everyone, temporary operating thank the over and highlights first

discuss across store the per ticket Now stores, reduced quarter, pleased sales new exceeded first achieved We quarter posting times. channels, We results on our the out and be share store XX%. per we first nascent of comparable turning March. record to deliver This will also in earnings our year's sales and growth, our $X.XX the QX business store when extremely we including X sales earnings but business last double-digit to saw earnings play both with and performance the than hitting existing quarter grew are shortly. of $XXX digital growth, new that to hours. grew average guidance call driven transactions that over million per due double-digit more last provided share grew by first while levels remained e-commerce fast-growing is to quarter for I all-time performance continued growth in XXXX, XX%, strong and strength for versus slightly records which negative XXXX, across Sales first

grand have fuel openings. Six these XX new the New stores across engine. quarter. The of all-time a opened spring opened have And stores. growth the made XX always list Five ever in we of five been stores states we QX, for the our in top Below most

the customer remarkable. Lake results grand seven Utah, entered even in stores with where opening our Salt marketing, were the of was In state, Texas, and more in We record. opening grand Lubbock, fact, response store all-time very operating hours the one stores Considering our reduced new these successfully set the XXth strong. City area, decreased

opened top one the openings. is finished spring of in also stores in grand the store market We that which new XX Arizona, the Tucson, of a

are fiscal a track total runway the We open with on stores stores, potential United new end XXXX in States. store and to reach us long believe leaving X,XXX ahead approximately to between XXX X,XXX the exists this year XXX plus we and

values, On factors $X Whether category our on their and or the customers when from capture year specifics vendor continued to continue them Room Externally, our have. Before just across their product, in expertise injecting chase value recovered value across performance. in broad Beyond and quarter. supported once the finally, most. benefited in WOW of stimulus worlds. needed items accessories. from base from Style product Sports Easter and our the was and from when merchandising category, lives perspective, began strength our to around we by they games to they've focused experience, growth into were delivering first our I a Room especially government the and executed quarter well world and organization, experience losing both our work to And fun and accounts our speak amazing maintained after benefit hit closed. first We combined to to for with of merchandising trend product including to unrelenting our gaming of with products Bugha the a team Sports, Style, benefit the section, the across bank last little it is we Tech we partners the products, season again, our scale. with launched the last $X customers most offer the the mid-March. the first Candy outstanding stimulus strong distorting nicely closely the apparel quarter, for schooling the from about categories, newer to Tech, at arguably strategic saw as I internal continued Candy Internally, also want year. the acknowledge teams working to supply was that on trends an that to initiatives external stores of home. focus the product, in worlds benefits and the to Five using extreme got during toys chain round across in We and people third contributed strong

the For and Room on sized past in expanded The budget. several category spotting media, The we among adoption our the in-sourcing by within in eight any key ability almost now Five features The products amazing has worlds Below continues the other on evolved especially has right flexibility to within to to with pet furniture of partners, trend customers our the trends team for flexible social response example, assortment, world the channels. trend. is a room distinguishing incredibly and worlds years and feature this outfit our year regularly over entire those nimble last working vendor significantly other trend tables remain grown the world as our to an listening and pet room merchandising a participate model. through and to

the is the successfully In on the customers have focused includes we Our of Experience store, digital, for included Beyond store. our experience in crew. Tech both through and the ways with and second now Five and we our in new pivoted back prototype constantly experience to innovation. in-store the Room to for worlds initiative and merchandise enhance look

QX in to with XXXX expect into stores to this Beyond stores the we and new remodeled Five finish of In prototype format. addition about stores, XX the our now about XX% a in dozen

the from Additionally, ACO, to ACO examples for by their in we experience. most even of register are ACO is how chain better we of below are to floor just associate year. end make allows Five two better the shopping XX% our of as it our call to the stores XXX fast which behind and to these be process, assisted move we and adding and the self-checkout this a ACO or customer the over it, stores, an crew checkout over in are faster to customers Beyond experience. assist transforming with five and concept makes of

awareness digital paid includes are channels, increasing highlight our focused platforms marketing, and value, For more amazing delight to inspire e-commerce, we and social such and our we as able targeted new on which digital, well as products through Through Instagram. hot marketing brand as search our utilizing customers.

integrated store also who well e-commerce, both as to customers. of number new appealing, Similarly, Below developing to convert as growing We is with a percentage deeper we for engaging. with we Five experience, are visually customers the our customers attracting approach regular repeat while believe current customers and bright are new customers. increasing Our connection of the

center also currently mid-April. with and In as we center third are operational our and our centers chain. weeks our to continuing in Arizona ship progress DC addition, our supply next is to two chain, of X/X to distribution With ago started few shipping Indianapolis forecasting our to ship our this help ground the pandemic. contending ship open. consistent to in DCs levels a feature center Arizona summer preparing We initiative, made which strategic we challenges service inventory we open warehouse with Instacart, refer e and ongoing will system, our allocations. commerce with in which which, improve and combined from is and costs the our global ship fulfillment, will platform, are centers resulting customers include the chain, rising retailers, states. expected new to other will These demand western our with Within optimize supply on our significant respect we a inbound later or management The our broke test

results a doing be navigating our first job early very supply to made great new it'd ship summary, in we by help these are tight with are the the carriers or whether our progress Our negotiating In finding teams contracts we quarter. annual conditions, pleased the and product.

to make execute discipline furthering We progress are experience strategic with across our and continue chain. excited supply initiatives product, in to play and offense,

wowing fund new extreme apparel, of toys our are as something pivot well sure have summer for outdoor quickly an products, product sandals to and with our beach lineup and We believe offers towels capture to including we We to everyone. nimble as be summer continue trends, customers value awesome for products. and selection

Looking to Five as Below, excited a ahead, wall we assortment as product. new seasonal Five WOW with traditional, more our offer well back-to-school are Beyond

celebrate amazing our truly enjoy WOW sourced normal. for to and have to We return product a customers

to packaged shopping fun told have extreme they Our will for us over like recognize trend-right Five we products to Ken? all experience. from to customers Beyond, got at them amazing extreme financial and listen I'd that, we through and the it those to Ken find the turn and value offer to a and With discussion. work value and back have continue

Ken Bull

review were and pleased I last of of results, quarter first quarter the commentary with and a our also provide quarter versus on will remarks first for guidance the I Joel, back less quarter half begin our first temporarily review quarter my our stores year. provide second good making will the closed Because very and during Thanks, everyone. the We year, with afternoon, of a of XXXX. meaningful, results year-over-year first comparison record the were results. a our then

$XXX.X to of on to Our count of the of XXXX grew the growth from year. an sales last XX% first rate for XXXX quarter increased $XXX.X store first in first reported million Total compared sales quarter this year quarter average million the XX%.

the last net continued demand that by transaction to of stores approximately operating fewer last on end record first in well first comparable subset as we the both quarter of in a For increase our We a are what initiatives. versus quarter first pre-COVID quarter first year. new the hours quarter hours. stores the the These our year. success operated reopening first given Transactions XX% the seen ended with with versus compared We stores stores, of XXX trends increased environment of of XX and chain at quarter similar be stores stores quarter XX aided opened record or we were own down since X,XXX to the stimulus opened as XXX first new by quarter an tickets ticket the the seeing heels the opened have standard of across the XX states net we to XXXX. and driven XXXX, are XXXX the merchandising with sales strong in stores of XX%,

of while the XXth Salt state store with shopping We performance more area City Lake and Joel of restrictive we grand very million quarter million pleased stores, resulting costs new XXXX results the which entered increased the of was Versus occupancy mentioned, first in inbound the conditions versus XXXX. from Joel opening seven were higher our by of the leverage. of Utah. $XXX.X for offset increased percent for XXXX XX%, $XXX.X but hours, the driven environment quarter quarter XXXX. SG&A approximately lower XX%, strong XXXX, Compared first fixed cost driven XXX more million points As first reduced the were gross quarter reduced the sales versus increased basis $XX.X points, expense on $XX.X expenses basis with quarter as a marketing. given on openings in extremely expenses than of the gross first first mentioned. especially to our primarily tight the leverage freight decreased the million XXXX, marketing the first Gross new chain limited profit of quarter SG&A margin store in by profit of sales, XX and approximately supply by operating expenses of

last million million XXXX. of cash, and accounting $X.XX compared increased year, cash outstanding the more reported $XX.X $X.XX of XXXX first the income the $XX.X of times. million of million quarter was the XXXX at inflated quarter the $XXX debt, on Versus benefit last XX% in first loss the for the $X.XX ended decreased quarter and in last quarter for income compared to first quarter of XXXX. versus versus first was XXXX. net and in XX% year's income and million XXXX XXXX. per operating first end was average loss quarter X.X nothing quarter inventory it versus the a decreased of a increase quarter in million for inventory as the quarter of had diluted compared per this $XXX quarter first was with the of share per-store net quarter year, the $XX.X We As quarter loss line first first $XXX basis a Earnings the end Inventory year's on as first store of of Average of quarter per investments inventory our $XX.X versus no in temporary first diluted diluted last operating million, share-based of a year quarter equivalents the a of Net result, million share at operating and $X.XX the to first the of income million than approximately $XXX XX%. including of $X.XX, first was XXXX, of earnings first closures. year Versus approximately XXXX, by last $XX.X to share store we approximately the $X.XX first We this in approximately credit. per year. in of an

position current levels year, as And are to second capacity support as we environment. are second inventory and supply Our to a receipts the we quarter. to chain good a we carrier in the look the add half navigate tight accelerate of working

full future ahead, due COVID-XX providing not potential second continued ongoing of looking the but are the uncertainty impact formal of related guidance consumer quarter we both and to Now the year shifts for spending. in XXXX, the to

commentary on are I full year. However, directional will offer the how viewing we

last year, full the by and in-store COVID-XX will disruption year. quarter XXXX the the caused both to closures I due to compare For fiscal

start are quarter. the to very We second pleased with the

million expect XX% an range sales an the given in of rate open this for $XXX XX in $XXX store quarter to versus second increase we midpoint stores approximately to the million. XXXX of to quarter range represents of plan of growth average second sales of count The We on the quarter. XX%, be second

year. in shift second second significant including versus the driven of by operating margin primarily half SG&A marketing expect a expenses, We the into quarter of leverage XXXX, spend the

rate XX%, effective the accounting of for share planned any tax at Our is or approximately repurchases. share-based quarter excludes impact which the second

the the to expected in XXXX $XX.X range report million with actual be to of rate tax update $XX.X quarter practice with is of growth second $X.XX when XXXX. Our income and is we expected of be the a earnings. Net to outlook represents EPS in income results million for diluted the $X.XX. of than net the second range to rate quarterly at This the to the midpoint quarter EPS more for of double reported

fiscal stronger we in We envisioned March. XXXX with half back are first a track much you deliver of we had to than spoke on when

time. we in the spending, mentioned future rate the in a provide not operating the annual consumer where to XXXX. in for this earlier, guidance sales I with at to would margins continued potential able I uncertainty COVID-XX scenario of As both shifts the and are due March, full from growth impact related year ongoing result discussed in Back compound to XXXX year, line teens XXXX high to

basis result non-operating to Given our in a for approximately of the XX in of our gamers first approximately higher two-year expected $X.XX. XXXX, result points expense other quarter results leverage. guidance net versus minority is quarter With XXs regards range and to leverage interest second still would driven CAGR a by results, SG&A in low the in nursery sales operating

effective In addition, of rate planning approximately an we XXXX back half tax are of currently for XX%. the

approximately the For new to expect year, half to XX year, XXX stores opening stores complete approximately to with in expect the first open XXX new we the XXX remodels. we of and

planning million strong navigate new qualities cost reflects and along tenant innovation, management ship Agility, Indianapolis, will with flexibility these disciplined stores executing opening second off are and serve spend and construction well operated. a to as we our in for infrastructure. growth and model ship and first a always In to operating of us and the allowances. and in inherent continue in impact excluding beginning quarter in approximately have to extremely the we a and to business scale We a had environment. outside center a quarter. the we capital the are how dynamic start ongoing all And gross are systems capital opening This and expenditures, new remodels center $XXX and new Arizona, great conclusion, investing on

summary Q&A. it I'll Joel? turn we a begin over for Now, to brief before Joel

Joel Anderson

And strong of pleased how from the the executing are momentum summary, that across I'm continues. our to a XXXX In proud Ken. teams Thanks, finish are very we Company.

flexibility and call worlds our I'd of that, to inherent like driving to over the and approach, unique strength continue operator the experience on With sustainable for remain we a in all across supply product With Below to chain, focus of Operator? turn stakeholders. position merchandising eight for and Five believe we long-term innovation value growing the questions.


will now JPMorgan. go will the Our first session. question come Matthew [Operator question-and-answer ahead. Boss begin from with Instructions] We today Please

Matthew Boss

congrats Thanks print Great. and great another guys. on

I the think question. maybe that new clearly Ken, XXXX, Five Joel, relative guess, and the top two-part out brand acquisition with know how to seeing for of the share to maybe about market in you're about could think contributing are and productivity accelerate you moving a to any coming line be way we that you would to maybe you then and best you're Company-specific And to I speak success talked new guys So maybe awareness doors Beyond rank the have What today? as growth ability drivers that to on offense. take in customer of outperformance? even terms it And seeing pandemic? the

Joel Anderson

line, hard distinguish internal, top an obviously, one. external just on it's Look, between and the was stimulus to that external

tell, see lot the gives categories. you think quarter. our things wasn't makes trends adding different chase a can momentum the quarter like factors, the by a well to and Beyond many though, just external Five into in in flexibility second you the it second difference us of I then April worlds in and that guide eight continuing both now Clearly,

picked of And that momentum regular become times with those I lot see, drove five or, what and that and customers think new new me then and keeps customers in out case, you in seen really adds us like they they They what of all we think to, like Below. different out Five call try going. heard trends up some this any we've COVID, I customers. up it worlds a

the good to really So Ken, you want feel to? do growth. about our we internal

Ken Bull

Matt, already customer. then, seeing the there. mean, Beyond, the Yes. it little we're had pleased from Five I And mentioned think on reactions of a Joel we're really bit what with I and

in we be value to We're roll to of that going have XX% the extreme us prototype continue end probably to customer and of Another the example our that the about out for at to in at chain year. present this to stores.

us a well they gives there for to continue to offer value to that it and again, the chance customers So respond really continue that. to

And So that you've a just to up from as us for great heard for just area where standpoint. opportunity from is as something the another innovation game us. an we of us, again, see experience before,

Joel Anderson

the Those called most like probably Matt, we proud new prepared out I get Beyond. is the both chain in idea, were a move we even fast. what nonexistent experience years team of changing so couple is to I'm and XX% ACO when of better. remarks, chain, the in of it in Beyond And my ACO And a really XX% make basically and the of Five ago. Five now

Ken Bull

We really then, fourth And new And also I first think were And healthy the about asked very saw there. what in quarter. again with talked this I you quarter, that we Matt, we've customer we results in happy saw acquisition. think about that before.

So it's good to those coming new continue on to board. customers see


come John And Heinbockel our Securities. will Guggenheim with ahead. Please next from question go

John Heinbockel

that holiday Two questions. for the right, gauging And do think the that light flowing the hours, So in? demand, profitability ongoing would chain of of one. any is you two, of One, COVID guys structural that is and improve, on about think what parts moving You an number environment about that's a lot of things the operating right, then in with product season basis? the supply marketing how might have spend, structural? created are business that

Joel Anderson

John, great questions. Yes.

we're not think formal guidance. giving it's as demand of holiday, I it reason part the relates to for

you as they're I But lot think tailwinds. headwinds say I of as ahead, and weighted a there's would look unknowns. equally

-- we And you for into the and right can Ken the the see going half back so about of pretty as with we've now, feel the good setup I year, a got on gave the think revised the you outlook we're scenario momentum year.

supply about chain. specifically asked You

it. about is everybody think I talking

of advantages. that. year. the that We the on with locked really a bunch contracts we're One, helps up throughout have two pretty cost side And mitigate to

They substitution. specific it birthday, for in being in On a problem, necessarily to lot with of don't the hand, other concept, a gift come that. Customers a treasure item. a specific little a something a hunt for or fun concept solve come like allows our

or that bringing us out of up. face product a done something helps really supply team setting ourselves chain tell for behind. I'll stocks temporary job being But so And great of you, as the might holiday. in we early has We're

we're good space. a in think I So

coming changes, of hostage. We're COVID, the of structural COVID. some for belt. the significantly we now hold was hey, structural out our piece. we paper say, I and a And pivoted And digital. off our As XXX% That think penny as of tightened marketing during always we XXX% focused on big

marketing is probably come lower year during is COVID example. in going to it's a efficiencies Our I the in think really around been And good which we than gain is this X%, past. that

We've for It anything is Ours quarter. us that's guide see of nice. coming some quarter has of a tighten rising another you operating environment, which in up, Ken, really a flow out add? that to hours second one. first to the through, as able and wage allowed good been to pretty margins

Ken Bull

at too, -- be to they've get Just is the sure there. get less we've there, another back we sort another But saw still operate structural environment And they the in vendors. during the year, anxious with it of look buyers there could successful ever at they're right, And a travel, that to done. I'll amount and I'm to really one out we and throw the did with look merchandise. response all tremendous that of do John, differently we how because able the what been last of the and in learned

good a are number of and there going applying that learnings of yes, kind takeaways forward. So we're


will come from Our Short go Please next Karen Barclays. question with ahead.

Karen Short

contract people you were I general? wondering, products pressures how on freight, said with a you actually just some at to versus you if bit front, little inflationary where a maybe how on in position on give then, tailwinds? very you're you're to little color And a Thanks the also, wage even maybe could terms little if much. color a you could on So on could just you concerned talk also 'XX respect about are but in spot? freight And freight of pressures but about? or about in headwinds then that know Wondering, good give thinking about in think if

Joel Anderson

Look, We specifically as the into contract. only back locked rates first job. Yes. go question number 'XX. up on did -- our on and sales versus the contract We're in a But exceeding play contract our XX-percent-plus would actually we're spot. Spot about team of in come up, great containers.

really so a right Karen, to that It's rates rate a on the stay up little environment be early, would that And if pretty helps mitigate spot surprised retailer of as are we that lose year fact The somebody as growing tough I the helps such to high. are. that's negotiate growth we now. 'XX. for much carrier a number wants spot really the no we speculate next because as the containers

value think And us. not as early we'll about important. value in like some too sort that's on the environment, I'm too more a it's of there. be tough it. to even One, inflation seen becomes for goes, as I look, But far or retailer recession fine helpful. it's numbers. advantage think an exactly But really So other speculate every we've I worried

I difference we is we And win with the now have And Five will so Beyond. then think value. time this

some If ago, strategy prices. me think of really place raising you'd is have asked would its go. question nicely. a But I be offensive an Five It pricing Karen, that which place And And tough. first we is years last two hitting the Below, go some strategy defensive Ten was we it they retails Beyond. be into pivoted ceilings. We'd

nice the the more go above really is way And as price create ability have can inflation. the $X of But so a value, pressures do we we're going to to we point, which to now overcome win.

Karen Short

the front? wage on just And Okay.

Joel Anderson

saying, you're wages? we seeing are Specifically, with what

Karen Short

-- terms I there's in concerns mean, at on obviously, what that have, scale? of wage that's be rising the your but Well, where wage many may rates you number investors

Joel Anderson

No, look, we're couple we've there. of for look, -- us Yes. a got things going

about it's smaller bit olds. is, all, to And also work And And And around environment. wage Below average a nice in They're another every with a lot our especially It's XX is thing first store. Five a willing hired three of and take little less. it's XX job. a of fun now for to It associates run doesn't. competitive stay doesn't of year store. First we lot a we stores it market. and ACO, their a

while nice helped we're wage in So it. that's any line, think I creep continue to mitigate seeing certainly bottom we're increases, they'll really the problem But top having and with line, hiring. not the the increases

spot the of done in have raising are hiring, to us. it -- materiality teams markets hasn't a We and we've really we risen where But for overall, nice need to. any job


with Our Gutman come will go ahead. Please next from Morgan Stanley. question Simeon

Simeon Gutman

My relative question to XXXX. is also

So still the above business with single a somewhat on QX the QX is or consistent basis that consistent makes and rate for two-year has year basis, compounded this is basis, way if volume where implied above way a still on sense. guide run grown a on

question that that So to going the normalized a in. any in my little the And to to going is, happen a to tongue question made? know where for environment case And unrelated, would what then that growth we're case make you're I of kind for now not of forward? guide given does potentially to But And higher be come? And there my share second is cheek. would occur? a have rate

entire first is by XX%. effectively whole half year that can't by XX%, Your why the there be reason bettered any amount? getting raised Is

Joel Anderson

what half second asking that half up be is couldn't Simeon, rate, high pick first the asking? be second as growth growth that rate trying you're as the part, why to

Simeon Gutman

year, thinking in I we proportion? Xs, well about effectively the for by not the it I can at you're as revising the XX%. think full guiding was first looking which low the half proportionate. half and the is second but about know consensus, you're And

Joel Anderson

mean, about. certainly, up half, tougher into have clearly, second the half, I is your compares. Yes. But you're half we we going by feel tough the first that Look, And difference the the in one, good question a until really first momentum comments just second against that great Ken's too.

stores. important that when everybody plan And But guide not a And of we're a what's away 'XX think going to growth You're normalized absolutely front is back to of We're us. right. unknowns point at back opening especially almost takes we're more program rate. is offense. this done. I The to to in there's higher lot

see out extreme us the only national pick way value. We're value, share. market expand merchandising become anything growing moves keep main extreme our just Five retailer we've And as continue really it's gift can Beyond reach. we're to to going as us to I deliver there. helps is starting into across one the broad-based can long Ken, And It how And kids another really to assortments. You Beyond. the is we Five up that's momentum the to? clearly destination. deliver that mean,

Ken Bull

really mentioned then you And feel first about think Joel. just we you the and quarter and it, I I today. where No, are we've come where from, Yes. hear good we Simeon, again, finished knowing year, where mean, can last we

we the in of myself had year. confident guidance. And us not In from providing guidance, terms business some in share, in Joel of brand customers terms QX compares, it's uncertainty from sales and That we just terms market can business macro has kind given as there's been where QX but at really there of out have last and we're what That's from explicit then tough looking in going. you and prohibits the and really and where obviously, hear providing mentioned of that perspective. and that do it some a I

Joel Anderson

got happy momentum going. Yes. Really the with we've

Ken Bull



And UBS. our come Michael Lasser next with question will Please go from ahead.

Michael Lasser

for lot Thanks taking question. a my

would why about You've a operating year? year, the year basis you Why that? level the to guidance, XX rate gave part So this you greater grow of be low parameters versus great XXXX, leverage first margin expansion growth and how full of year the points think the you And of that? last XX.X%, than you margin. wouldn't operating the which get even XX.X% about of getting didn't seen give in off you but higher on it year, a a would is can to conceptually, than that next XXs leverage

Joel Anderson

a We're strength merchandising understand giving time to you to think than macro the I and more our you And that given think hear we number And momentum the to right? and I, year. uncertainties the there keep just it It's don't I on care upside just that haven't chain. question, supply environment. got understanding up great higher think there's the looking that I are at the way half without ourselves Ken to of broad-based obviously we've of put tax slice child the to continuing nicely. just we that explicit it, guidance. category trying the any down But out the of coming, credits half sets us yet. we second And answers a year to go up, set have it's harder a being Michael, try for us Look, bit need Yes. and little figure

Ken Bull

the XXXX. think meaningful that I a And operating see improvement Yes. margins from road to was over provided Michael, that we the that we takeaway in scenario

And the that think to one a reference and I we story And we've now. what know historically, always I we're asked to ability But can gives obviously, the us about position said, talk thing in not comp holds you range about period. go still that's non-investment we're where forward, we a is when in leverage. that the comps. back said And there. we've that to I talk think, about when true X% in I we're that think

from this So that take of go kind point. I you and use that mean can forward

Michael Lasser

in there, momentum the to able a now of the be are on I host can what, the Are but comp, would comp you you'll there back you year. more out difficult previously business, what said of the it last be confident comp just Joel, more uncertainties comp experienced you that in half had given year you And confident recognizing based indicated to you the clarify is now? the

Joel Anderson

more And about was of closer way inflation, chain. And wage we mitigate we we ago. had than look, ago. tools asked confident that we trends. our an consumer has wish ball in to right? I And on it supply you have. always asking two offense is some We're And done for a great other. that, what's ago a year could go then I with obviously and it, or product way team do think can confident. crystal a then earlier. thing incredible and And job always to I what spending. than Karen or about -- and as here And us So control we is and those equally that. about more potential on looking when lot to get like just But the use certainly start chasing prudent the control. that's have I shift at Michael's closer value. control tailwinds inflation obviously, just I things bottom don't And and a line I one than there's paper, I -- you years mean, in were great amazing I sit in of was had can think experience the our job's to you piece they're quarter a we a at more get going I'm half, delivering got out headwinds to down, we've put and more measure

more go job much out. good a -- from execute. then feeling I our about the and And a were. of year where can sense confident But than Michael, there's we're they Matt tell So us, to we tailwinds, good other mean, is you clearly, sense there's yes, headwinds, each balance of


Please next ahead. question Grom go will And Chuck come from Haskett. with Gordon our

Chuck Grom

more I'm that per I I nicely. that your done moving updated versus why in are in of is you've store reason metrics most your guess is I'm past we asking some sales mature markets and the nascent guess curious you've where awareness up your if any of the of your brand ones. And some

are getting that the store the obviously sales more But some some versus on customers I'm newer door. where markets? of You're per curious of through the more front mature markets resting kind of

Joel Anderson

most I'm you're ours that ones but it's I metric mature, more the is mature. I really two about study I the awareness Yes. zero think know about are to the stores. excited Look, asking year less the most, that And probably Chuck,

You we've opening the went quarter, awareness it's there's many ago COVID. high have let's those this the Texas, the Utah close stood a in the don't have Utah have without And survey awareness. stores reason Lubbock, due which rather is example. back we done without record that openings, and done we've to the, right? by biggest had. teens. opened into it higher now. new years was to in any recent great call And most XX% And our marketing I go too to this when mean that we stores ever record we've done that nicely, is no way, first it, year, And would

faster in mature mature you're needed measure more right that's part new that's the studying because which So needle productivities, the to are of we've been you of productivity But improving nicely and move it the really that -- the store and than to less can't seeing the stores helped really more stores hard the model. now. we

Chuck Grom

best could I there stores million it way if But $X country? follow-up, is a contextualize, Is Right. just are to the your across million, comping per what store? $X

Joel Anderson

range, certainly have stores that in Chuck. We

density. of run points where same basis been of you volume we XXX of told higher the of with always now. they're because And at density store two located. But And a an it's we've cannibalization time in stores we those the the they're not guys, about in then that Philadelphia. urban environment the some It's in contextual And time, is length the factors more some they're are in -- and I to think market. markets, the

those And either. the range. so yes, impact stores But we about right that's haven't been afraid


our next Capital with And ahead. Ciccarelli Scot Markets. Please come question will from RBC go

Scot Ciccarelli

Ciccarelli. Scot It's

picture have I question. So a bigger

You merchandise room. guys of the assortments mentioned some for

you're little teens tables, preteens away mentioned know historical to from items move focus I pet away wondering full-size You examples. outside two higher finding traditional expanded guess that -- a and starts theme? you on I there bit value your an because that of I'm from only offering. are if

Joel Anderson

want the huge. home. about I we more was earlier there's to family John reason last certainly, changes. structural adoption being a Heinbockel own And Yes. mean year trend pet was more, their an -- kids mean, that focus Look, question mean, I fair asking I pet try a I in I really team's mean, they is thing. room. not room think And We is through, call kids to ask, room, but a think it's I a answer and no. still the it on

is think still been move that extreme our that positive. Beyond I true our every has probably stay is intent like yes, I value it. -- you Could into of does to deliver die very And it's intent to a that -- those on though What because examples teen, Five that. but to we've think we're away so done still both from find And continuing deliver where the value. it's don't how extreme customer to survey

move trying so, And but on we're to families parent, not team focused But from away great look, stay Scot. we question. that,


will from Lejuez go And Citi. Paul come Please with question our ahead. next

Unidentified Analyst

margins first into I Was we little could for on gross is the the more did 'XX? dig impact This Paul. you? bit margin Thanks. the the same do in How gross negatively think half product for on to how was still much F quarter. the about hoping relative And a just mix back a the negative Kelly freight impacted and you of that how note, second the should relative quarter, in then 'XX? year? XQ margins could just again, we quantify to in And

Joel Anderson

And saw, leverage. driver Sure. kind Again, most came similar was we're expecting. gross around part, is be margins the outperformance, freight double in to QX the Thanks the part SG&A. margin sales XXXX. where dynamics QX And offset freight saw gross the that And type by and expect the actually first going most a although part, as it Kelly. that leverage margin first on for was at QX, we again, that margin. incremental offset, actual see overwhelming costs, occupancy And gross was similar XX expecting going by for about shift but There points leverage. little leverage basis if that as majority higher of you we're driven it's the the in margin we there. look key we in the then was to bit of be you the gross occupancy into of versus dynamics leverage there for Operating your in of you favorable that -- question QX, costs. by to are If then than more the --

Joel Anderson


basis of I out that's us, think, for hundreds advantage it's points fast look, of And are XXs. as growing as some are. going the we the people in

of is, it making our for starting get years of there. leverage side been a we've distribution other investment network, number and we're to on The

a And this net margin somebody you're percentage that up still answered then so good large seeing all else's around And question it why rising despite direction, guy they together, as when that's of freight. and gross out supply to I locked our that's the come a leverage other environment we've of goes chain. earlier, contractually

not points, hundreds basis of for tens further to it's deteriorate why and than that. that's it So us, don't any we expect


Bellinger will Research. question with next Wolf David from come Please ahead. our And go

David Bellinger

called give an or room do few to, past Appreciate year for normalized you underperformed can such that QX. flexing seeing Or have levels? come also, us apparel going something higher your categories into months you you and on call attention or categories in-store just ago? those detail like on number go? those about the just than world those Are pool? a more But out and it, getting And update the of Are over the even space you Candy. of the as to back like still to so, part allocated they

Joel Anderson

It's party. top-performing that. I what and I take to can you that been I you're if through called you surprised. out lack all it only going where is, you the But all honestly, there's underperforming. was worlds. of Yes. and world Look, tell be COVID's the imagine to still parties when And eight, is one not too And

think here. was was Easter last one against mean, I I -- it closed. with that's certainly America reopening a being nothing up rule Candy is upside year has as lot that so And of

was But nicely. that Michael's job. does pleased. really good And coming other team obviously we're a around So party, really

broad-based that of go flex If room is stores give back growth to all you really this to have said, these back, today, for that our we'll But I our contracted starts And up. has that's been pretty when come tight, worlds. and a pretty in some Party our departments it section like off. taken for other

Ken Bull

square put based I gives foot or the can model, preferences about to we that's from store advantages us an whether eight show of flex David, a highlight. a that to the And an question there, in customers' response. it it think -- Yes. the X,XXX your flexing of store, the we the on certain in it really whether actually the worlds product that and Yes. And one standpoint and assortment customer that it's it just out want to advantage departments trend it's front of


Group. with come Please Capital go Craig-Hallum next from Jeremy And question ahead. will our Hamblin

Jeremy Hamblin

want versus XXXX back to performance levels. the I come in QX to

as that of relative XXXX, that similar transaction? ticket implied the XXXX into think versus you're growth we XX% the guidance I any performance composition in versus that XX%-plus we not XXXX, have has don't argue could better the than juice basically, suggests here is of here the probably stimulus levels kind do but kind of comping QX, And you then versus move maybe Why QX? So only QX. despite versus you what's sustained, maybe fact think even the in

Joel Anderson

second And the just I Yes. then, there. Look, merchants. even And lot out I'll to credit I I'll comment. a can trends we've take you, tell to that. We've right variety back a for question, tell last flexing things, the They've economy Jeremy, hunt a the up want Ken, -- of half David. been several of of to you got now, in. That really customers Right pick you treasure out there store. a now. the different it it's going environment a good was bringing for job for makes great and of done great give

I'm on deceleration those want into picked glad to just Ken, here, there's you you the that's And a lot not quarter is the... momentum. but So second seeing up you're Germany, all coming up mean the combined why I pick of

Ken Bull

Jeremy, to, and was opened in quarter past the XX% spoke set were Yes, rate. first this the that part. which growth out rate you Yes, the XXXX the both quarter, we of first first that that comparable of stores growth called

transactions If the single to that, then opposite we the right, -- of digits. tickets, was And obviously, the into XX%. you to dig down saw get that you

the half came pandemic. the healthy when So the post ticket opened -- through of customer we similar very back saw up what last stores out we year and in the a response second and from to

Joel Anderson

Ticket's really been them. driving

Ken Bull



go next from ahead. Capital. Anthony Chukumba Please come our Loop question with will And

Anthony Chukumba

kind I are quite And of guess worth pandemic. some from a with somewhat related. side trend recently second, time. guess a you of we you you questions I or or is given seeing about Congrats be I fads, of anything perspective quarter of again One, then had seem that related, the I the now given two anymore, haven't to talking reverse rainbow know name had math strength days Thank that's seeing your strong it loom loom? I all together that it either rainbow least -- to I my I guess can remember remember fad, on there's on which start fidget the a spinners really was the remember at whether the question year. guess I different question, remarkable makes more matter. And my doesn't don't we a because out? calling getting is, are there that right really fad in it? some or guys you. kind that performance

Joel Anderson

Yes. Look, wise, all bit. and liabilities. in the PPE position reversed quite certainly a inventory stuff We're inventory slowing a down is good no

called one out another Squish of call I that's while one I think PAT I think it's terms out for a specific is pretty I trends, out. now. But example. bigger malls is the right earlier been that broad-based there would as In called driving do up. out. so are And a really them all all. them lot together, And and the footsteps. pivoting put another we're things merchants and just following And come chasing it one I you gaming, as leads up the to of


that realized sorry, almost X:XX. We just Yes. guys. I'm it's

we'll to go little and going we're then our in So, pick right up conclusion to bit here. a

Joel Anderson

today everybody thank us you, on All appreciate right. Hey, the and joining call.

answered a the seeing of questions, and all speak of hopefully, can in look all. As those, of Ken to the great you we summer. to and and forward end thanks and Have we'll great evening. it in And tell, a you lot again I stores, our


has presentation. you conference concluded. The for Thank today's now attending

at your disconnect now may this time. lines You