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Five Below (FIVE)

Participants
Christiane Pelz Vice President of Investor Relations
Joel Anderson President & Chief Executive Officer
Ken Bull Chief Financial Officer & Treasurer
Simeon Gutman Morgan Stanley
Edward Kelly Wells Fargo
Brian Nagel Oppenheimer
John Heinbockel Guggenheim Securities
Matthew Boss JPMorgan
Paul Lejuez Citigroup
Lorraine Hutchinson Bank of America Merrill Lynch
Anthony Chukumba Loop Capital
Michael Lasser UBS
Jeremy Hamblin Craig-Hallum Capital Group
Michael Montani Evercore ISI
David Bellinger Wolf Research
Chuck Grom Gordon Haskett
Joe Feldman Telsey Advisory Group
Krisztina Katai Deutsche Bank
Brian McNamara Berenberg Capital Markets
Call transcript
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Operator

Good day and welcome to the Five Below Second Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Christiane Pelz, Vice President of 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; Thank 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 second 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 you. 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

call I in Ken our questions. it will performance for to joining our before to the our call. outlook handing for we'll more and review earnings financials discuss second Thank thanks, of you, Then open Christiane for quarter quarter us detail. everyone, the over and highlights second

of and WOW with to chain. priority, delivering the a crew remains variant the store global health our conditions our staying operate much-needed navigate supply and successfully very while Ensuring the our evolving fund to product continue to customers in safety and environment, and nimble dynamic related also Delta We that experience.

the quarter. to turning Now,

pleased comparable very million of store in are per due XXX%. the more share and XXXX is than quarter growth of delivering the sales We first ticket results, the by of earnings XXXX driven Sales our grew and $X.XX. earnings which closures year. to grew half $XXX with versus share per double-digit second XX%,

and sales For of the that stores XXXX, grew group second were Both and in performed XX%. per XXXX store. quarter opened average record stores with the new existing of sales well

of strong a to for South our exists long list nearly XX total year XXX to us open The executed extremely the reach leaving California, engine, Five fuel stores bringing top to teams potential well West second stores on a again record XXX stores, stores. with across the new summer XXXX X,XXX believe in states, to of this United new total grand XXX growth these that QX. Below once the stores of XX Three openings. store stores delivered the and in Virginia first quarter, end open the opened track fiscal We New made and runway performance. Carolina X,XXX-plus are we we In the XX new ahead half in now States.

ongoing through items Our team supply to they trends WOW with were diligently did The to trend-right these our managing the disruption. stores chain chain got on sourcing supply bring merchants while the amazing current have. an stocked capitalizing products and worked to products global job ensure just the customers

in chain very focus the product, which priorities store the key and progress discuss also hours team experience strategic more little Overall, Our of results in delivered to while continued three now against and detail. teams these than make supply with fewer and operating our I past will marketing.

Style product; strength continue Tech, to trends broad especially broad-based Room and in the we and one-year both Sports, Customer two-year Candy, basis, diverse. our For on worlds worlds. across a see were and

For new called toys example, sensory emerged renewed fidget items Poppers. including in popular interest

Pet We remains launched as with drive collaboration gaming business in through the new and as products we trends Bugha last love did the bring traffic strong Our they year. customers.

ability in to unique flexibility the ever-changing enable have We preferences. our almost those to to and through any trend worlds customer adapt worlds within the participate X us

QX All with a distinguishing five Wall our all model. in and off featured end the Back-to-school features of of key seasonal amazing beyond stores. are these WOW kicked at products our of

the Our merchandising year. for flannel and jackets, team sourced shirts backpacks great denim like school products new value some

e-commerce ACO benefits remain upgrading as as our well in our the our beyond end pleased categories XX% The of another operational by eventually QX customers system we QX, as chain support as to crew. for almost offer acquiring to at in customer more customers. marketing from on beyond we and growth. this beyond investment section We we stores. robust permanent On for end awareness both enterprise enhance relentlessly given priced relatively efficiencies. We and of self-checkout to to we and this products through with existing as example experience digital of We systems our new Workday the delight prototype retaining store, to our to experience previously prototype focused over the Under a creating continued of able section the forward new in in and in-store be of chain merchandising featured strategic increasing well We of our are are the been The and our is both the new of recently extreme digital section Since the and marketing offer effective our at experience our to of we ACO, to and customers amount shifted beyond track management as August. to look store which did performance completed is and approximately have include call in not offer and we to brand small, team stores products relates great associate-assisted platform. experience; XXX customers we the sales. offers our would both and year to $X. additional we as was we XX all end customers, and QX offering, or experience; small which an efficient focused $X well our approximately innovation our looking XX With products as to five QX expect the the with into Five to it. reach last five in store five continues opportunity the XX% five current. to priority, drive area second ACO the successful. on by this of beyond than year-end, paid call the about crew. very any five XX% in were have XXXX. in platform Approximately new to us acquire back extreme time, on new by the search and we SKUs new provides an to platform as example stores. with beyond an value and continue of chain the believe of capital sell it is is doubled very in as Digital the XXXX, although store allows are the be new workforce our human mentioned social of end campaigns Separately, our on

on for repeat As growing new customers. focused of are of e-commerce, the percentage while number customers we the also increasing

is same-day strategic customers. our acquisition focus, Instacart delivery with In and for expanded believe chain. effective We an entire a chain. customer for to our to service on the as supply convenient addition, Instacart third partnership presence tool we awareness reach the well new On as brand now our

our out and contribute begin to which efficiency the Below west. the serve are E-commerce our We announce in expected west. very ship began from better to QX the shipping quarter customers third help will beginning will us Arizona facility opening stores later in more We which packages center sending center. excited of fulfillment also to that to this Five is at our of out stores

addition, Center to the optimal over complete service network is believe under to we and open the of what XXXX, planned the is stores. which In distribution center to be summer Indiana X,XXX ship construction in will

continued the pandemic. from achieving within objectives chain, longer-term our on resulting the supply through also manage current costs focused to we've While and rising challenges global

we We and conditions nimble the fiscal to of second expect innovative as pleased these from summary, navigate the quarter. the very the staying through with to are XXXX persist balance chain and In are environment. teams continue tight supply results they our

quarter, the see As continue overall third our we we business. in momentum strong to begin

chain right we to investments flexing playing We are execute as making experience and our product, and supply priorities we growth. with are high our of across the pivoting discipline support and offense,

Wall. to Additionally, showcase and on all-important including holiday fourth the beyond quarter excited great product, new we WOW the focused are are five

to to Ken? I'd that, from We to for experience. like Ken the turn back listen shopping and will got and all find a amazing to products to packaged over discussion. and extreme have With at continue in value it trend-right those to financial our work fun customers

Ken Bull

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

second with growth second XXXX to reported quarter count million average were of the year. As increased very pleased this XX% said, store Sales our last grew results. million compared quarter from year Joel in XX%. sales quarter we on $XXX.X an Total the $XXX.X to rate second of

XXXX subset sales XX stores, what year. second new at stores new of given hours states increase as reopening were given second the in the ended opening stores stores last the Transactions pre-COVID We XXXX, versus in opened down strong XX%, with limited of ticket XX% quarter transaction or XX X,XXX we we XXXX, operated These of and XX opened driven with versus new are XXXX. increased especially continue trends XXX both operating to marketing. quarter last by stores year. the second the that standard to the in end of seen the since grand the the We to of XXX open We as net For be continued quarter compared stores our the hours. quarter performance our fewer stores stores, comparable similar second well customer very second across the quarter chain an were pleased have tickets. versus quarter of of approximately the with

and $XXX.X inbound profit Gross record decreased in versus expense, California fiscal Virginia, and top primarily hours primarily with the second the SG&A approximately more gross the in quarter. expenses a XXX expenses gross basis versus the lower which quarter Turlock, of quarter expenses Summerville, strong costs The million the second XXXX, of the million Carolina, percent fixed for of XX%, QX SG&A on summer As of we versus grand openings opening to the grand a cost million three in $XXX.X of weekends. marketing all-time Compared margin Charleston, XXXX. quarter second profit Joel the basis quarter XX later approximately store higher South sales driven by reduced of had of in than Compared noted, by for in results points, offset increased increased locations percent driven in West million store expenses leveraging points finishing XXXX, second of $XXX.X was quarter reduced leverage. while sales. XXXX to leverage as XXXX. sales was XXXX of the second operating XXXX as occupancy freight on the quarter second XX SG&A by were $XXX.X

of nothing end the outstanding of as million $XXX end credit. inventory XXXX. on and per year. and per quarter of As income holiday million store X%. to of million versus increased of million ahead the of quarter million Inventory quarter was cash, quarter of for operating versus second second as year the Versus than second We quarter we doubled. accounting equivalents quarter second pandemic-related impacted the million We debt, compared Earnings year $XXX to $XX.X ended X.X% second second and the $X.XX Net in second approximately our XXXX last had approximately quarter second a on the compared order on share including income share-based in compared $XXX receipts income in reported in $XX.X second at million the last $XX.X of for in year diluted Versus and a quarter second inventory QX at positioned quarter second income million basis by year no the was increased the this XXXX, in standpoint last quarter the inventory of $X.XX year line $X.XX average was the earnings was share our per quarter $X.XX diluted last $X.XX XXX%. QX Versus investments this $X.XX last an XXXX. per are XXXX, cancellations. cash approximately in accelerating versus $XX.X XXXX. with Average $XXX quarter store of result, million the $XX.X deliver XXXX, last well for XXXX from of operating to second year quarter second of and benefit operating the feel more XXXX. the to decreased approximately outlook of quarter inventory season. second the the and We year's

providing ahead, looking of third the are formal guidance XXXX. quarter for we Now

We given disruption. ongoing supply beyond are impact chain in of towards spending COVID a the uncertainty away goods related the the not and the guiding services and still potential consumer impact quarter, the ongoing of from variants, to shift

due I are of closures we which how year. XXXX by on first year However, viewing full half to in last commentary will compare COVID to continue store the directional the in will to caused the we disruption offer fiscal

will For quarter as were the we reopened third our our third entire to quarter, XXXX. the last for year, fully of stores compare guidance

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

million in last to quarter We third XX.X% versus increase million with quarter comparable $XXX a of record be of to third mid-single-digit sales sales range comparable $XXX range the in the expect sales year.

We points, expenses. to to SG&A majority quarter deleverage stores this margin XX the approximately in within quarter. the last we third expect basis open with delever XXX expect XX to the operating third by year, to Versus occur of over

store resulted sales are higher-than-usual expenses up We lower which fixed on comps hours. costs to and marketing in year and addition against last record leverage in

We versus also disruptions delever freight as our year increasing to supply inbound chain expect last gross margin are costs.

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

we expected As practice $XX.X range when tax to be in with EPS actual $X.XX is outlook in results you to report the quarterly of expected is million Net be to million rate our the the to of know, to earnings. diluted $XX.X update range income with $X.XX.

deliver of gross to approximately operating leverage. million that's We a on not the fiscal environment provide the to on sales This now ship expenditures, approximately would formal approximately in tenant plan in XX% rate XXXX. tightening leverage continue the of XX full though growth construction XXXX to a reflects in how capital excluding driving shared we the visibility of compound basis spend profitability we remodels investing full supply versus a and higher center Looking from year; new a stores systems allowances. call at XX range outcome about to Indiana, position $XXX chain ship that We the thinking points our a more costs, year scenario would versus last in of infrastructure. in opening an opening guidance, the earnings center sales new June, despite same scenario perspective. where in executing business over light order and two-year our freight in impact and new shed in low are of provided operating result rate growth in now two-year points XXXX With and Arizona, compound basis some

start. XXX QX second to to a approximately We and quarter we In remodels is complete great conclusion, XX off expect to XXXX. a XXX had stores new fiscal strong and open in

at this dynamic level executing Our agile high very in environment. across organization, are remaining the operating teams a

improve third As year, with Q&A. forward important outstanding cost product of we we delivering now. for store the WOW of value are value Joel and supply always disciplined management second assortment look day to the key quarter capital capabilities the to customers in raise to us we expect all-important incredible chain. of at to attributes on look in even more an global half Flexibility, are season we deliver begin in how operated continued and the We challenges our have they to bar and we and out. that back our over call I'll turn that, base, customers as the we a day holiday And our the expand for the summary the and and relentlessly before innovation

Joel Anderson

Thanks, Ken.

with Ken both are can year-to-date we remarks, you our very my performance. and tell As pleased from prepared

focus Our well teams through found address for And I will approach teams I'd and position innovative flexibility again worked on I'm and driving challenges. to Operator? continue of confident The X turn to them for innovation all back worlds, have we supply operator and inherent resilience merchandising continue long-term the like so. agility. Five we our Every executed to will them. experience brought chain, unique across continued our value and stakeholders. remain our want of product, a growing we their the for call ways the have given believe that, has questions. to sustainable, and Below week new them With and strength to to thank in do

Operator

is Simeon Stanley. ahead. question Instructions] with go Our [Operator Gutman Please Morgan first from

Simeon Gutman

I when visibility into you're -- is two just on but do better the line maybe of have about, have freight, question inside I good. you are quarter, initiatives I the talk paying Thank pressures some gross how because margin? can guess, this off? assume And you. much merchandising would gross didn't your hope been then so if pressures peak sight same parts you we margin sort My of you Hey the topic. guys, have of Can or

Joel Anderson

perspective. it comment Yes. Ken let specifically talk Thanks, from I'll financial to and a Simeon.

freight. calls, said the our As overwhelming majority many contract on of we we've

I and our a in know to it those. think I to have that speaking fact, continue freight teams managing the relatively the they to pressures as manage industry, fantastic job -- So relates done

really continue strong despite that, tough all scenario by and despite the pretty as bottom So Simeon want comment tell you there, and can updated we us the environment, look, if overwhelming a financials. to Ken, results a a deliver guidance Ken to the on line. gave you

Ken Bull

Simeon. Yes,

on third Just increased the them back with really the mentioned, come cadence, quarter. quarter. the costs as in in, the in expect freight regards financials, half of then, to in impact second the fourth the we saw terms the I of And quarter and freight,

a as we able tens in going terms There's to is forward. is things impact, points that look the couple One, doing be internally of to In there. net and costs it's mitigating doing us basis on things logistics really we're those helping team of and the a offset of factors the out.

saying a number large are full net going doing quarter mitigating of why that's not in very a So seeing guidance but of financials. they're points again, be third the terms pretty in basis the job guidance. on we good I'm you're it's terms And tens didn't impact in a reflected to provide of that's I the a but if year that in

Joel Anderson

Simeon. Thanks,

Simeon Gutman

Thank you.

Operator

Kelly is The Wells Edward Please go ahead. with next Fargo. from question

Edward Kelly

mitigation, kind you like that And guys, a container relation points afternoon. sort just of kind any curious the impact usage, give And the to color if I issues, I'm kind us particularly saw basis much those that able to offset tariffs, there's about on the talk you guys it good in talking down have good, normal level you're part about? with issue to pricing Hey very you times? we with quarter. really of is on spot keep the just relates And ability be tens as wanted Ken, business versus on needs done this And that you're then I'm of how why more big could right, curious model. of how strong, of to for mitigation? follow-up as the flexible to pricing to of to a that as freight, is

Joel Anderson

Ed, great question.

have And as think five to there. up ago, well. in we I years came beyond. or we and been had the didn't this with think Look, I Ken back much happened the call would a start have me Let three in this last pricing position as different four work

with we be arsenal gives always said of And part so through gone that, it that to us as and five to certainly mitigate strategy. our pricing. have beyond will continue Having and -- an our there last today, opportunity

from pause of margin, And we we so price, benefits. added done we've and of of also features talked instead we've the the we've gross the to that raising a into and that addition taking line for bottom new in in also past product scale leverage our period addition features also time new to as about which can gotten

last to an use against that there's couple we mantra go our different can clearly avenue a Below is we we here go. you, like first So a But Five it, can it at And pricing mitigate the did we is of I implemented now ways Ed. at the will much we and tell when it is place vehicle tariffs.

the So you, percentage it's line how it what we've But can it by can But to Ken in the continue a on the net of scenario hard the in be have will we'll out, tell impact points. sight basis only I tens got as of tell quantify laid will we to last -- is. you pull. one

Ken Bull

think our our commitments contract out of kind And there. question, spoke up then, the of beginning Ed, and at set you I about the

You contracted rates advance. are mentioned spot in of rates. The our overwhelming majority

market. not So the in spot we are

you're job navigating adjust So when moved think, again, you year through And the with a through your that capacity also has our rates. that and as carriers the your in team up actually and to doing do locking here. great working and I that, done we've

get the States. help I that transloading United And out in We're areas obviously, lower and that now that stores when and those Some for out. have the of now ability here overall looking see helps us to internally things distribution just DCs some the bring around mitigation, at doing miles. the our all I'll up have we've us mean the to the to starting business investment kind we the things made network to in to of we're goods stem which leverage historically help. closer do we're

that it's And why past, -- this faced of that of And in done list a we're again, doing teams doing and got team same in increases been year. you're saying of if that's are there's back terms ever of always flexible being looking increase innovative. again, to in the that I'm So things a we've we've cost again, we've right, the mitigate. with in great our And the really at now costs. half through that the the thing freight this basis points terms impact in of tens

Joel Anderson

Thanks, Ed.

Operator

The ahead. next with Please question is Nagel from Brian Oppenheimer. go

Brian Nagel

Hi, question. good quarter. afternoon. Thank you for Nice taking my

So sales and get I disruptions. apologize sales weeds QX, if to much the lot in But all momentum too kind underlying have Clearly, the from COVID the of with just of parts moving QX regard question the here. maybe I a with you and to

comp calculated kind that that to in a figure gave was explain at comparable way points. there look you in is that XX% QX. Again, But similarly of percentage you I shift. XX% of If in it's QX know two

commentary, waned? prior the is called the some out stimulus. at other in that play? think there of I Or Has you benefit factor

Ken Bull

calculation couldn't -- QX. Brian. subset were we on QX, increase comp, Thanks, increase out we open a stores the called in Yes, that the was XX% did of and Yes. percentages 'XX picked in That a there. 'XX, that a right do true because you XX% in you

was the quarter, think first those pretty those two effect I between had the attribute a year of that the in was could in that business difference and stimulus. probably this really the the rates. to stimulus March on That round two amounts that third between biggest differential material of You

Joel Anderson

Thanks, Brian.

Brian Nagel

Thank you.

Operator

from question next Heinbockel John with The Guggenheim. Please go is ahead.

John Heinbockel

early, too think never holiday. to right, it's guys, So about

You back You've marketing step got levers a bunch the right? of can up. here,

three do and increase just to hours five you can can the more You beyond things.

you those those levers, confidence pulling year And of this prior about maybe right? how So holiday years level think fronts? some do to compared on

Joel Anderson

scale on out called Yes, are the we merchandise great that, call you've and put operations business trends ago together got that add The called years know quarter. that today available really what, the And some ACO us. a pure team the with would are management to in that, of has much us And right that now. there in you overall the question. assortment John. the to different. helped and addition to the is couple out his I out of Michael several just versus levers fourth also of Thanks, on you line team

lot when John, And that to you all manage guide tools you so in digits in them we as add to got of of not executing and an a the the others. there you doing a think sales. and comp of managing job teams year we've last example, so the I a that on top great of are speak, out I but mid-single can only through that tell the a toolbox, up, we've double-digit use couple here can laid examples by got gave few And QX, the

maturity it's of mean John, seeing is the -- overall the business. really I honestly you're -- there's So what

were were QX. much of new really about I a And gaining picked And momentum are good years obviously time some acquired the post more pandemic just up as continue we to period. are we bigger feel outside than few that we've and that during ago. We come customers

heard the you of number I think times, a strong quarter. I a start to and Ken

the and there future lot at reason fourth haven't a Now, get got closer get quarter. the guide to in of uncertainties about we as our look as we future we'll use is closer as through manage a and we the to we've to we think done but it's disposal the bunch long-term those it probably a

John Heinbockel

you. Thank

Joel Anderson

John. Thanks,

Ken Bull

John. Thanks,

Operator

with go The Matthew JPMorgan. Boss Please from next ahead. question is

Matthew Boss

congrats And on another quarter. thanks. nice Great,

Joel Anderson

Matt. Thanks,

Matthew Boss

like the Ken, in pretty consistency. moderation nice near-term all second to question Basically, exit as comp of the then, low incremental you we do first what your Joel, we just Maybe, forward, larger there couple maybe any point, term, have about some is of you you to times out said have the algorithm, And near that quarter? at would period that the maybe be, single-digit way I cited, to moving The second guess like a sounds a think just picture; have you offensively? this you you didn't pre-pandemic my as crisis, have gained just comp think the had August. strong you've it rank and think maybe line start relative before? to you quarter drivers And top seen to

Joel Anderson

Yes. Matt. unpack a there. Thanks, There's to lot

lapping QX to very side -- compare it not is some quarter as that year QX, it's give And with up which -- a really indication I it's now. business quarter to helping strong closed a guide business. the those QX I was the mean, there things, half and a but up I you are quarter. up basically strong out On apples-to-apples. mean and we're last clearly, of is then of quarters a comp against totally are should against spoke the trends digits. right closed how against and are fair And like mid-single of just

pandemic. flyers as Hollar, it in John's in think now rather have hard I And the that we to of the it's a We're What pull. about the to it's levers. Instacart. actually about last made no to out rank, was paper flyers. was, than rank. relates question that much different like XXX% was I doing different environment of you As it pre -- of lot to didn't the of add you we variety and levers way might longer digital digital ranking different than were similar talk I could I part we called out question we're rolled also a acquisition we've We answering asked, to And John more tell a have think goes them, just what I do it's certainly

touched the So the two other that sales. driving that we're George bit tell which and that's were are example operating all then, our we to just scale. little our I on merchants now are years of better And pre-pandemic. you, consistency team how in would ago, with contributes done in one our but than operators has John just better the it a efficiencies. with I And chain ACL the helps store side difference is of of And great. is XX%

about the So back post-pandemic those continue the can you obviously, bullish of and term on Matt tell get Thanks, Matt. in we a pretty together, you put half excited year. think and the environment long I to we're as all

Operator

with is Lejuez question ahead. go from Please next The Citi. Paul

Paul Lejuez

freight, inflation thanks at you these to a Hey, on navigate assortment and $X point. percent And of days what that? product sort $X plan of related what just I'm Curious Thanks. the price of to your cost note, seeing outside you're guys. is curious how

Joel Anderson

probably I Thanks. Yes. chain is -- inflation obviously, from about supply we're that Look, the one the front. biggest talking

probably seeing And where are also our of certainly we've inflation one You're most wage ways, states in up. comes the in moved two base then form wages. it moving. the different wages also where And

ones. different wages of competitive -- we that a time, state-mandated roll there. We're are So And inflation. are one all and manage done have out at the at material and through wages the variety job very to And same the different third merchants the times. but then two a biggest great there they we have Those that. happen probably raw continue is always on

maintain new the this efficient, features most get more you that three year We in But might we're the to some that's add of in same areas inflation. the cost. not You benefits seeing get some scale.

of terms $X. In the

Ken Bull

the price of I points. certain asked Yes, think Paul, you penetration about

$X, greater store. think in $X to than it's XX% of a that I the the are units

So have. it's still a of portion our we that assortment pretty significant

Joel Anderson

Paul. Thanks,

Paul Lejuez

Thanks. Good day.

Operator

Hutchinson with is question Please of Lorraine Lynch. from next go Merrill America ahead. Bank The

Lorraine Hutchinson

push your levels. I store on XXXX hear pull Thanks, back to wanted just hours good your to between afternoon. thoughts the and increasing

associated that think holiday balance that, move season? XXXX count above transaction might the you And you over how levels? costs Thanks. that with then If the

Joel Anderson

the is now right the you is question But if do is, Thanks, is think balance and tight go very hiring Lorraine. market about we the tight. asked the transactions we up. hours, And increase have seen the labor the I Clearly, think the way you it. way exactly

you Lorriane. -- a the the those the the the looking at we exact balance a so center the -- feel right we're spot. We the right all we two. why are But Thanks, us? right And be? at the question we're now, feedback it's it. probably hours it. in the at did And factor and right from now, we are when is exactly ways up what's feel look is we And Who's hours in to third the balance thinking center open? But we're in we're in we're And spot. the think asked they gotten quarter. good between we nice way with about the field take mid-second is right

Lorraine Hutchinson

Thank you.

Operator

Anthony from is go question Capital next Loop ahead. with Chukumba Please Markets. The

Anthony Chukumba

Good just in rates? afternoon. was the COVID-XX any geographically variations I obviously, performance your -- if mean, I strength vaccination strong infections the seeing quarter I seeing very on you're overall a was also is and wondering, question. hospitalizations any based my Thanks you're for sounds taking Thanks. if wondering and you had and broad-based. it like

Joel Anderson

question. great Anthony,

it's from You consistent COVID And week large cases. every we know see what, pretty surprisingly, that don't look and at a rates certainly not to week and based vaccination really on difference, we week.

well. and consistent can was pretty not the that is that a driver during I as but consistently is why Thanks, we it something pandemic look it been geographically. you sure Anthony. at tell Not So has

Anthony Chukumba

Thanks.

Operator

Michael with Lasser The question Please next from ahead. go UBS. is

Michael Lasser

Good for lot a evening. my Thanks taking question.

Or low marketing modest algorithm? the translates this to you where that annual expansion for Given in growth XXXX? margin be also up margin rate catch that might had be we a the for Can top basis wages, even if costs laid low assume year would of to expansion. more points growth in because year, wraparound achieve algorithm were out of these Thank to valid you your increase if XX% freight line the some next that, of XX compound you. and of you

Ken Bull

next and to a can got year been lot rising into And the can as before obviously, also. disruptions a of faced that want us navigate things pull. impact, we time. an yes, we been you are lot for you've you've far don't going 'XX. the mean a Thanks, through 'XX. But and long likely most end for you've too ahead in go have Michael. supply still way We We to probably of year out get to this chain I heard a cost of out there's do those. that We've environments But long with there with through levers know, seen and us again,

checkout, about bit of initiatives from is about to big that. standpoint, little over I a also think a that there. see product can for the a network Joel assisted years we've in one from place the of the terms traffic other But earlier talked We collaborations put business out in the us. there's some start beyond, that scale driver leverage talked always five distribution we

cost here So, help be good to we takeaway still I have a to do we ways thing but here the to offset in and a a the able that lot is toolbox to the of tools have environment. rising go think

Joel Anderson

just I'd be think question got And and a a asked price we add, price we'll would Yes. earlier I how much to use lever continues use.

move we yet, a we're out But see our start So until 'XX, some get if start levers from one ready to just more. us Michael. at that give that there disposal. pressure the to our on it a hopefully, of little our But hands around bit are to Michael, persists 'XX that into you sense Thanks, you'll get can commentary, guidance. not

Ken Bull

Thanks, Michael.

Michael Lasser

Thank you.

Operator

The from Please Jeremy ahead. Craig-Hallum Group. next question with go Capital is Hamblin

Jeremy Hamblin

new a Thanks on congrats units. and the the ask about to Wanted question momentum. sustained

color by time further the in of the to is sense the 'XX? a construction may about guiding on -- And if units. of to just us to whether into backup are to things than you're I not But of top not side sure of this point on you're you or add for see You the you down 'XX little on for of end change something at some also having know a think over by I I there. And unit it's wanted took done could for QX. spill bit the seeing not we -- new in units that new quite sites landlords total. typically, a but year wanted get along of are that percentage new suggesting the end X% maybe the openings I'm on

Joel Anderson

Yes, thanks, Jeremy.

a less little an sorry, getting we're it's AMBER here. think I -- alert

Christiane Pelz

warning. tornado That's

Joel Anderson

We're Tornado warning, in tornado and made Philly way it's the sorry. here.

you not the of back it's to it's little back hurricane. But question, into a but -- something getting Jeremy, more post So to a tornado pandemic. what less about do about rhythm insinuating, bit with the were

year got literally remember, You ago. all to construction we a stopped

you if even it's a a now to range give starting on start number. that you so really didn't And few And a years We we new you guys ago, gave up. just stores. remember,

side into that the getting the of the so gave side. of year just contractor not has inputs and given I the chain on weren't going, range there side, got on our disrupted. And knowing back the you years, all last we've on but both go the the range, at think obviously, up couple beginning totally landlord only when year, And we on the a we last

beginning XXX, year great fact sense still rate you be where the to at which so, a and still we're a And the we'd we're gives of that high that thought at was XXX growth the be. that teens we continues

in is anything the the momentum I add going the on again Ken, we'd of So engine be. getting and same kind thought right we know, that? range it's don't to

Ken Bull

is mentioned in that line with vision. high which growth exactly the teens multiyear mean there, still Joel Yes. in I our is range what

I hit think in year talked that. had near rates to growth next that be we'll again, about and You able seeing the term, we're similar

back it's disruption and pandemic Joel just what midstream delays kind has I the whether now adjustment or permitting types seeing of of place. and to or the mentioned, out equipment other you're there, think taking some are what that and here shortages caused

So to for see in year-to-date perspective. reacting six also a from the on of able we're first we stores to landlord's we is that a the XXX record opened year. were that flip which But -- the side, you us months up

teams what they I shows real look the you flexibility So it our think, at and the and construction of estate the when and do. again, resilience and can and agility the teams

term. in we as forward expect we move again, near the So growth significant

Joel Anderson

Jeremy. Thanks,

Operator

with Evercore question from next go Please Montani The ahead. ISI. is Michael

Michael Montani

spot had and wanted kind may I relatively wanted to on all the have main fact, pull to to contracted have the rate is you correct. follow-up past, just levers be Thanks. you front carrier freight in like then moment. do of go that about see rates spot in XXXX evening. the some kind if Good would feel you just that, into manage two, -- the Number back I to And that what number think if good I one. if of it December. afternoon all you a to to said market? that for through you could had of

Joel Anderson

Yes.

our your beyond are of rates by part of rolling part QX contracted really your is the which on QX. carrier-by-carrier basis. second is and question question first done The answered They're a

line started pretty have of into sight good to a 'XX. we've So

So this well the it's end year. of beyond

not to to continue worried. near overly so industry. manage relationship great Michael. of we're And a carriers up have Thanks, a We're we hearing not through the it. we the overall you're costs like but I out multiple high-growth and retailer are with mean are, that being impact

Michael Montani

Thank luck. you. you. Thank Good

Joel Anderson

you. Thank

Operator

Please next ahead. the with Short Barclays. go Karen is Excuse me, from question

Unidentified Analyst

This is Sean actually [ph].

ask to something. just to question but clarify another wanted freight Sorry

As other said, balance we are though some from hearing [Technical you Difficulty].

Operator

operator. Pardon me, this is the conference

We difficulty are some having hearing you.

line very Your understand. is bad hard and to

Christiane Pelz

Let's move question. next the to

Joel Anderson

-- we can't. can't Operator, I yes,

Operator

next The question Wolfe ahead. with David Agreed. from go Please Research. is Bellinger

David Bellinger

for thanks taking the Joel, Hey question.

historically year of or So, you're the new lot that opened new XX unit XX in stores QX; in to quarter expecting you XX would XX this QX stores. haven't to a something imply like openings where

in the the also, that in all -- doing stores hurdles you're anything those And time to So, into just the they QX to up how units can operational potentially your does a of holiday? period? fit that season? the any come up could thing particular larger for capture just for avoid with in sales Will ramped subset get holiday opening

Ken Bull

Yes. Yes, you're David. right. Thanks,

time of given in your can we're is that done would up get stores. that it winter bigger. terms But stretch quarter. the stores Historically, do we we're the time in be something continue also, as lot kind quarter to opened opening to -- those February. do in and unusual the of actually an Northeast stores it's -- And actual fourth as more obviously, have up -- us. the in But early in of see didn't We to you the frame of really of cadence estimate And a here. starts for You're we in number we right. opening there the that and opening opening for out,

that you the I us all of two part of to opening beginning from beginning November. thought. the really the And way to see then you'll year had question, the through So a

David Bellinger

hurdles amount to you're out Or Just the of any anything you just opened ordinary QX. that this just of perspective you're anything along in anything for particular, into that haven't doing big just in that that? given might avoid taking stores QX, with of operational come that that

Ken Bull

is things the of systems along sure continue an real Yes. it's to we business, And we and Joel in and that one all over the do Well, invest. right, important continue we've and business, years of estate to construction areas it we infrastructure. says and people, it the to make the area said want investing other time, with for that's, us

of So whether to ahead be out teams. it's stay to able it, in people opening in or store systems right, or the technology

have have to invest We continued opening dedicated store grow that teams and those. we in

openings. So record if quarter, you call hear I stores, every we think what's going our out store with on

success to the And think terms teams the of So that's it's continue and of we I indication the the opening store. have an of that we as in to on. great see process move

expect to continue we So would that we forward. move as

Joel Anderson

David. Thanks,

David Bellinger

Thank you.

Operator

next The Grom go Gordon Haskett. ahead. from with is Please question Chuck

Chuck Grom

guys, a couple Hey me. for of ones quick

on be First one would XQ.

it roll why. that curious quickly? $XXX the five seems to And very chain guess million why came a guess $XXX end the by bigger year, guided by XX% I XX% I'm end I two, just that. at bottom of little then beyond successful, the bit more the You of end not 'XX. the in million of picture, of out

Joel Anderson

example past, think in like million Yes. Chuck, lot quarter. was it you as in of we're it more a $X tell year the on to quarters to. uncertainties. to a just there's why and comparing was And weren't beyond remember, really wasn't there XXXX, $XX I you good not it's range range guide, a the million compare to can We our days guiding got a the

we but more of earnings with guide. -- is come wider it you the All QX shows we're from to due And important earnings, able I beating takeaway wherever more the and And approach then may unknowns And But despite beyond think, got and so really the It volatility the in -- just that in. and on you to thanks, the I there, we're QX. in sales need quarter. middle that deliver the coming importantly, the momentum pleased perspective. what tell now disciplined we're from pleased with Chuck. right right, really I'll

Operator

Please Joe is next go ahead. from question Telsey The with Advisory Feldman Group.

Joe Feldman

thanks taking Yes. the Hey question. guys, for

inventory, I what like to feel recall So light I you point. in And at guys it to this be might you on like would little be. it's a where good you feel the want does had thought you're know a spot. It if relative

at and higher entering end doing where are it? how Thanks. So coming the accelerate receipts be inventory maybe should I'm you even ahead what of holidays amount kind the you holidays just of it could is think today? of than to out we of be third the a fair the and wondering it Should quarter,

Ken Bull

Yes, you're QX number position reiterate, for again, And sales. mean just be a right. the gave landed we the we we Yes, thanks you obviously, where that I to at Joe. hit to able we're the the to have of QX. outlook in great end like we feel

receipts. would going accelerating as expect forward, And of I be significantly, QX to those the digits of per end reflection that we double the increase mentioned, average Looking inventory I are as to a store our at receipts. accelerating

in make buying those for receipts the seasonal holiday up, to and working team has the involved and the Joe. with So Thanks, to those vendors there the everybody try quarter. especially we been move have hard to the sure fourth receipts

Joe Feldman

Thanks.

Operator

the go Bank. me, is Katai question Please next ahead. Excuse Krisztina from Deutsche with

Krisztina Katai

to just on decelerated top deceleration a implies mean, your on I I And third quarter based follow-up bit. Hey versus I guess, XXXX. further has guys, good comp it the line. growth wanted quickly afternoon. guidance,

a helping bit inventory? light guys there being much rollout to is on stimulus, about perhaps sustain little due how of So five a way think line? beyond is how you top then to this do the quantify And waning

Joel Anderson

probably you a business anybody And I on QX going in mean, think different had we stimulus stimulus a than away have take you should clearly, sustained don't a based what Yes, did. forward. it. their I build being

spitting the a mean differential and distance within there. if So the QX. of at look of on number some you you're in take QX the I number guide middle

how seen one a year don't double-digit with mid-single you've back the then back us More have comp. come that come a the around importantly, and we I us spinner digits And with comp out last wondered craze. the double was of think guide A next a probably lot year. saw ever horn you on people think of digit The flat a time I of in

comp you're here, on a you're a coming mid-single to so And now and XX-plus digit. guiding around

and we're trends. And So, I deceleration broad-based I merchants, to don't you're testament just the seeing but how testament it's chasing feeling really pretty to of about consistent different just testament the appeal worlds. it's the to think know X a good And business. the it's a

we Krisztina. about So good feel it, pretty

Krisztina Katai

two door year-old your as awareness year. it, ones? you to the and stores, seen has to all that's the And over overall that maybe your speak of you opportunities know, about ahead, helpful. think just customers brand in some new Got zero last we it Can business productivity newer the especially call just

Joel Anderson

you we're ask to one and bring going limit can to just to calls follow-up we've get because I'm back to Krisztina, if everybody. Thanks. you through Hey the got to trying it people that question on

Operator

Please is next with question The ahead. Brian Markets. Capital go from Berenberg McNamara

Brian McNamara

the Hey, thank question. you taking for

in which Poppers you your prepared like pandemic-related first some trends. feels product remarks So in the mentioned outside time big trend of

QX days in early of you trend to QX Popper seemed comp widely distributed the compare your comp competitors your and this and to to fidget was spinners? relative can to be outlook, pretty 'XX meaningful So it spinners how across

Joel Anderson

it and is were as just about the at it's look, in guide. now you like the and have time comparisons you 'XX range it's 'XX. be that's continuing same a just to our big last nothing, you a bit But it's our and apples probably back 'XX. year-over-year of our the guide. up it baked a it And And pretty back versus in But way our we don't because into tell knew was business did best them prepared Brian. harder spinners think to our little the quarter versus in baked into probably in it's a identifying about you Thanks, relatively thanks, what it's but credit I assortment merchants right, obviously, Yes. obviously, of time really and quarter this to jumping Brian. calculate of All it And for to QX last got and they're on it's great then number. up remarks, making -- trend and well. QX against piece give a it against lot it's done healthy it part for I'll and really third

Operator

like our to for question-and-answer turn the his I back concludes would This closing session. remarks. to Anderson over Joel conference

Joel Anderson

today. We hope you, Thank QX you us stores Labor and the everyone, to results. the enjoy for great thanks, Thanksgiving weekend you see we our speaking operator look Have and upcoming evening again for Day in forward and weekend. to you. joining to Thank after a

Operator

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

disconnect. You now may