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Five Below, Inc. Announces Fourth Quarter and Fiscal 2019 Financial Results

Q4 net sales increased 14% to $687 million

Q4 EPS increased 24% to $1.97

PHILADELPHIA, PA, March 18, 2020 (GLOBE NEWSWIRE) -- Five Below, Inc. (FIVE) today announced financial results for the fourth quarter and full year of fiscal 2019 ended February 1, 2020.

For the fourth quarter ended February 1, 2020:

  • Net sales increased 14.0% to $687.1 million from $602.7 million in the fourth quarter of fiscal 2018; comparable sales decreased 2.2%
  • The Company opened 6 new stores and ended the quarter with 900 stores in 36 states. This represents an increase in stores of 20.0% from the end of the fourth quarter of fiscal 2018.
  • Operating income increased 23.7% to $144.1 million from $116.5 million in the fourth quarter of fiscal 2018.
  • The effective tax rate was 23.6% compared to 24.4% in the fourth quarter of fiscal 2018.
  • Net income increased 23.7% to $110.4 million from $89.3 million in the fourth quarter of fiscal 2018.
  • Diluted income per common share increased 23.9% to $1.97 from $1.59 in the fourth quarter of fiscal 2018. The benefit from share-based accounting was approximately $0.01 in the fourth quarter of both fiscal 2019 and fiscal 2018.

For the fiscal year ended February 1, 2020:

  • Net sales increased 18.4% to $1,846.7 million from $1,559.6 million in fiscal 2018; comparable sales increased 0.6%.
  • The Company opened 150 new stores compared to 125 net new stores opened in fiscal 2018.
  • Operating income increased 16.1% to $217.3 million from $187.2 million in fiscal 2018.
  • The effective tax rate was 21.0% compared to 22.0% in fiscal 2018.
  • Net income increased 17.0% to $175.1 million from $149.6 million in fiscal 2018.
  • Diluted income per common share increased 17.3% to $3.12 from $2.66 in fiscal 2018. The benefit from share-based accounting was approximately $0.14 in fiscal 2019 compared to $0.09 in fiscal 2018.

Joel Anderson, President and CEO of Five Below, stated, “Our fourth quarter results were in line with the revised expectations announced in conjunction with our holiday sales release. With six new store openings in the fourth quarter, we were very pleased to complete our planned 150 new stores, and achieve fourth quarter earnings growth of nearly 24%.”

Mr. Anderson continued, “Fiscal 2019 marked our fourteenth consecutive year of positive comps. I am very pleased with our teams’ execution and accomplishments in 2019. We had a very productive year as we mitigated tariffs, opened a record number of new stores and remodels, successfully tested Ten Below concepts, hired key senior executives, upgraded IT systems, and began a multi-year build out of our distribution network. In addition, we made our first financial investments outside of Five Below. We continue to build on our foundation and innovate across the organization, focusing on three key strategic priorities: experience, product and supply chain.”

“With the rapidly evolving COVID-19 situation, the health and safety of our associates and customers is our top priority, and we are taking the necessary steps to address the current environment across our stores, distribution centers and WowTown. As we announced earlier today, all of our stores will be temporarily closed beginning Thursday evening through March 31st. We will be paying our associates through this period. Given the uncertainty related to COVID-19, we are not providing guidance for the first quarter or fiscal 2020 at this time. If not for COVID-19, we would have expected fiscal 2020 to be in line with our 20/20 through 2020 goals,” concluded Mr. Anderson.

Fiscal 2020:
Given the uncertainty related to COVID-19, the Company will not be providing guidance for the first quarter or fiscal 2020.

Conference Call Information:
A conference call to discuss the fourth quarter and full year of fiscal 2019 financial results is scheduled for today, March 18, 2020, at 4:30 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 412-902-6516 approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at investor.fivebelow.com in the investor relations section of the website.

A taped replay of the conference call will be available within two hours of the conclusion of the call and can be accessed both online and by dialing 412-317-0088. The pin number to access the telephone replay is 10139577. The replay will be available for approximately two weeks after the call.

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

About Five Below:
Five Below is a leading high-growth value retailer offering trend-right, high-quality products loved by tweens, teens and beyond. We know life is way better when you're free to "let go & have fun" in an amazing experience filled with unlimited possibilities. With most items priced $1-$5, and some extreme value items priced up to just $10, we make it easy to say YES! to the newest, coolest stuff across 8 awesome Five Below worlds: Style, Room, Sports, Tech, Create, Party, Candy and Now. Founded in 2002 and headquartered in Philadelphia, Pennsylvania, Five Below today has over 900 stores in 36 states. For more information, please visit www.fivebelow.com and a store!


FIVE BELOW, INC.

Consolidated Balance Sheets
(Unaudited)
(in thousands)

    February 1, 2020   February 2, 2019
Assets        
Current assets:        
Cash and cash equivalents   $ 202,490     $ 251,748  
Short-term investment securities   59,229     85,412  
Inventories   324,028     243,636  
Prepaid income taxes   4,063     1,337  
Prepaid expenses and other current assets   75,903     60,124  
Total current assets   665,713     642,257  
Property and equipment, net   439,086     301,297  
Operating lease assets   842,988      
Deferred income taxes       6,126  
Other assets   10,874     2,584  
    $ 1,958,661     $ 952,264  
         
Liabilities and Shareholders’ Equity        
Current liabilities:        
Line of credit   $     $  
Accounts payable   130,242     103,692  
Income taxes payable   9,505     20,626  
Accrued salaries and wages   19,873     24,586  
Other accrued expenses   81,255     104,201  
Operating lease liabilities   110,470      
Total current liabilities   351,345     253,105  
Deferred rent and other   1,199     84,065  
Deferred income taxes   8,716      
Long-term operating lease liabilities   837,623      
Total liabilities   1,198,883     337,170  
Shareholders’ equity:        
Common stock   557     557  
Additional paid-in capital   322,330     352,702  
Retained earnings   436,891     261,835  
Total shareholders’ equity   759,778     615,094  
    $ 1,958,661     $ 952,264  


FIVE BELOW, INC.

Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share data)

    Thirteen weeks ended   Fifty-two weeks ended
    February 1, 2020   February 2, 2019   February 1, 2020   February 2, 2019
Net sales   $ 687,130     $ 602,684     $ 1,846,730     $ 1,559,563  
Cost of goods sold   398,002     358,679     1,172,764     994,478  
Gross profit   289,128     244,005     673,966     565,085  
Selling, general and administrative expenses   145,027     127,497     456,682     377,901  
Operating income   144,101     116,508     217,284     187,184  
Interest income and other, net   333     1,503     4,285     4,623  
Income before income taxes   144,434     118,011     221,569     191,807  
Income tax expense   34,060     28,749     46,513     42,162  
Net income   $ 110,374     $ 89,262     $ 175,056     $ 149,645  
Basic income per common share   $ 1.98     $ 1.60     $ 3.14     $ 2.68  
Diluted income per common share   $ 1.97     $ 1.59     $ 3.12     $ 2.66  
Weighted average shares outstanding:                
Basic shares   55,692,475     55,761,714     55,823,535     55,763,034  
Diluted shares   56,006,952     56,230,318     56,166,167     56,220,864  


FIVE BELOW, INC.

Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)

    Fifty-two weeks ended
    February 1, 2020   February 2, 2019
Operating activities:        
Net income   $ 175,056     $ 149,645  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization   54,979     41,451  
Share-based compensation expense   12,383     12,018  
Deferred income tax expense   14,842     550  
Other non-cash expenses   117     44  
Changes in operating assets and liabilities:        
Inventories   (80,392 )   (56,599 )
Prepaid income taxes   (2,726 )   927  
Prepaid expenses and other assets   (16,603 )   (15,655 )
Accounts payable   20,742     32,866  
Income taxes payable   (11,121 )   (4,649 )
Accrued salaries and wages   (4,713 )   1,680  
Operating leases   13,922     12,143  
Other accrued expenses   10,543     9,712  
Net cash provided by operating activities   187,029     184,133  
Investing activities:        
Purchases of investment securities and other investments   (136,148 )   (117,371 )
Sales, maturities, and redemptions of investment securities   154,865     191,619  
Capital expenditures   (212,297 )   (113,720 )
Net cash used in investing activities   (193,580 )   (39,472 )
Financing activities:        
Net proceeds from issuance of common stock   435     365  
Repurchase and retirement of common stock   (36,885 )   (1,987 )
Proceeds from exercise of options to purchase common stock and vesting of restricted and performance-based restricted stock units   4,110     4,030  
Common shares withheld for taxes   (10,367 )   (7,990 )
Net cash used in financing activities   (42,707 )   (5,582 )
Net (decrease) increase in cash and cash equivalents   (49,258 )   139,079  
Cash and cash equivalents at beginning of year   251,748     112,669  
Cash and cash equivalents at end of year   $ 202,490     $ 251,748  

Investor Contact:
Five Below, Inc.
Christiane Pelz
Vice President, Investor Relations
215-207-2658
Christiane.Pelz@fivebelow.com