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Five Below, Inc. Announces Second Quarter Fiscal 2022 Financial Results

·12 min read
Five Below, Inc.
Five Below, Inc.

PHILADELPHIA, PA, Aug. 31, 2022 (GLOBE NEWSWIRE) -- Five Below, Inc. (NASDAQ: FIVE) today announced financial results for the second quarter and for the year to date period ended July 30, 2022.

For the second quarter ended July 30, 2022:

  • Net sales increased by 3.5% to $668.9 million from $646.6 million in the second quarter of fiscal 2021; comparable sales decreased by 5.8% versus the second quarter of fiscal 2021.

  • The Company opened 27 new stores and ended the quarter with 1,252 stores in 40 states. This represents an increase in stores of 11.7% from the end of the second quarter of fiscal 2021.

  • Operating income was $56.0 million compared to $86.2 million in the second quarter of fiscal 2021.

  • The effective tax rate was 26.3% compared to 23.8% in the second quarter of fiscal 2021.

  • Net income was $41.3 million compared to $64.8 million in the second quarter of fiscal 2021.

  • Diluted income per common share was $0.74 compared to $1.15 in the second quarter of fiscal 2021. The second quarter of fiscal 2021 included a $0.01 benefit from share-based accounting.

Joel Anderson, President and CEO of Five Below, stated, “We delivered earnings per share within our guidance range despite lower than expected sales, which we believe were largely driven by the impact of accelerated inflation on our customers’ purchasing behavior during the quarter. We have revised our guidance for the year to reflect our year-to-date performance and updated second half outlook.”

Mr. Anderson added, “We remain focused on our long-term opportunities and Triple-Double goals, including opening 1,000 new stores over the next several years and converting the majority of our chain to the Five Beyond concept. New stores remain our growth driver and we are excited to open approximately 160 new stores this year while preparing to open a record 200-plus stores next year. We will continue to provide our customers an amazing shopping experience with fresh, new WOW products at extreme value, which we believe becomes even more important during the holidays.”

For the year to date period ended July 30, 2022:

  • Net sales increased by 5.2% to $1,308.5 million from $1,244.4 million in the year to date period of fiscal 2021; comparable sales decreased by 4.8% versus the year to date period of fiscal 2021.

  • The Company opened 62 new stores compared to 101 net new stores in the year to date period of fiscal 2021.

  • Operating income was $98.3 million compared to $149.9 million in the year to date period of fiscal 2021.

  • The effective tax rate was 24.6% compared to 22.6% in the year to date period of fiscal 2021.

  • Net income was $74.1 million compared to $114.4 million in the year to date period of fiscal 2021.

  • Diluted income per common share was $1.33 compared to $2.03 in the year to date period of fiscal 2021. The benefit from share-based accounting was approximately $0.02 in the year to date period of fiscal 2022 compared to $0.05 in the year to date period of fiscal 2021.

  • The Company repurchased 247,132 shares in the year to date period of fiscal 2022 at a cost of approximately $40.0 million.

Third Quarter and Fiscal 2022 Outlook:
The Company expects the following results for the third quarter and full year fiscal 2022:

For the third quarter of Fiscal 2022:

  • Net sales are expected to be in the range of $600 million to $619 million based on opening approximately 45 new stores and assuming an approximate 7% to 9% decrease in comparable sales.

  • Net income is expected to be in the range of $4 million to $11 million.

  • Diluted income per common share is expected to be in the range of $0.08 to $0.19 on approximately 55.8 million diluted weighted average shares outstanding.

For the full year of Fiscal 2022:

  • Net sales are expected to be in the range of $2.97 billion to $3.02 billion based on opening approximately 160 new stores and assuming an approximate 3% to 5% decrease in comparable sales.

  • Net income is expected to be in the range of $238 million to $255 million.

  • Diluted income per common share is expected to be in the range of $4.26 to $4.56 on approximately 55.8 million diluted weighted average shares outstanding.

  • Gross capital expenditures are expected to be approximately $235 million in fiscal 2022.

Conference Call Information:

A conference call to discuss the financial results for the second quarter of fiscal 2022 is scheduled for today, August 31, 2022, at 4:30 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 412-902-6753 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 8086739. 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, store count potential and other financial and operating information. Investors can identify these statements by the fact that they use words such as "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future" and similar terms and phrases. The Company cannot assure investors that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to risks and uncertainties associated with the COVID-19 pandemic (including closures of our stores, adverse impacts on our sales and operations, future impairment charges and the risk of global recession, and the impact of government regulation), risks related to disruption to the global supply chain, risks related to the Company's strategy and expansion plans, risks related to disruptions in our information technology systems and our ability to maintain and upgrade those systems, risks related to the inability to successfully implement our online retail operations, risks related to cyberattacks or other cyber incidents, risks related to our ability to select, obtain, distribute and market merchandise profitably, risks related to our reliance on merchandise manufactured outside of the United States, the availability of suitable new store locations and the dependence on the volume of traffic to our stores, risks related to changes in consumer preferences and economic conditions, risks related to increased operating costs, including wage rates, risks related to extreme weather, pandemic outbreaks (in addition to COVID-19), global political events, war, terrorism or civil unrest (including any resulting store closures, damage, or loss of inventory), risks related to leasing, owning or building distribution centers, risks related to our ability to successfully manage inventory balance and inventory shrinkage, quality or safety concerns about the Company's merchandise, increased competition from other retailers including online retailers, risks related to the seasonality of our business, risks related to our ability to protect our brand name and other intellectual property, risks related to customers' payment methods, risks related to domestic and foreign trade restrictions including duties and tariffs affecting our domestic and foreign suppliers and increasing our costs, including, among others, the direct and indirect impact of current and potential tariffs imposed and proposed by the United States on foreign imports, risks associated with the restrictions imposed by our indebtedness on our current and future operations, the impact of changes in tax legislation and accounting standards and risks associated with leasing substantial amounts of space. For further details and a discussion of these risks and uncertainties, see the Company's periodic reports, including the annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, filed with or furnished to the Securities and Exchange Commission and available at www.sec.gov. If one or more of these risks or uncertainties materialize, or if any of the Company's assumptions prove incorrect, the Company's actual results may vary in material respects from those projected in these forward-looking statements. Any forward-looking statement made by the Company in this news release speaks only as of the date on which the Company makes it. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

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

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

 

FIVE BELOW, INC.
Consolidated Balance Sheets
(Unaudited)
(in thousands)

 

 

 

 

 

 

 

 

 

July 30, 2022

 

January 29, 2022

 

July 31, 2021

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

155,101

 

 

$

64,973

 

 

$

126,195

 

Short-term investment securities

 

 

117,315

 

 

 

277,141

 

 

 

286,929

 

Inventories

 

 

569,201

 

 

 

455,104

 

 

 

347,302

 

Prepaid income taxes and tax receivable

 

 

14,371

 

 

 

11,325

 

 

 

9,410

 

Prepaid expenses and other current assets

 

 

107,771

 

 

 

96,196

 

 

 

69,504

 

Total current assets

 

 

963,759

 

 

 

904,739

 

 

 

839,340

 

Property and equipment, net

 

 

842,002

 

 

 

777,497

 

 

 

677,183

 

Operating lease assets

 

 

1,267,316

 

 

 

1,151,395

 

 

 

1,086,386

 

Long-term investment securities

 

 

 

 

 

37,717

 

 

 

1,104

 

Other assets

 

 

13,149

 

 

 

9,112

 

 

 

18,921

 

 

 

$

3,086,226

 

 

$

2,880,460

 

 

$

2,622,934

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Line of credit

 

$

 

 

$

 

 

$

 

Accounts payable

 

 

266,114

 

 

 

196,461

 

 

 

167,704

 

Income taxes payable

 

 

 

 

 

28,096

 

 

 

931

 

Accrued salaries and wages

 

 

19,983

 

 

 

53,539

 

 

 

41,654

 

Other accrued expenses

 

 

159,976

 

 

 

145,268

 

 

 

141,520

 

Operating lease liabilities

 

 

184,450

 

 

 

163,537

 

 

 

150,041

 

Total current liabilities

 

 

630,523

 

 

 

586,901

 

 

 

501,850

 

Other long-term liabilities

 

 

4,077

 

 

 

1,663

 

 

 

1,291

 

Long-term operating lease liabilities

 

 

1,247,631

 

 

 

1,135,456

 

 

 

1,081,555

 

Deferred income taxes

 

 

41,414

 

 

 

36,156

 

 

 

35,778

 

Total liabilities

 

 

1,923,645

 

 

 

1,760,176

 

 

 

1,620,474

 

Shareholders’ equity:

 

 

 

 

 

 

Common stock

 

 

555

 

 

 

556

 

 

 

560

 

Additional paid-in capital

 

 

248,902

 

 

 

280,666

 

 

 

327,211

 

Retained earnings

 

 

913,124

 

 

 

839,062

 

 

 

674,689

 

Total shareholders’ equity

 

 

1,162,581

 

 

 

1,120,284

 

 

 

1,002,460

 

 

 

$

3,086,226

 

 

$

2,880,460

 

 

$

2,622,934

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

FIVE BELOW, INC.
Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share data)

 

 

 

 

 

Thirteen Weeks Ended

 

Twenty-Six Weeks Ended

 

July 30, 2022

 

July 31, 2021

 

July 30, 2022

 

July 31, 2021

Net sales

$

668,927

 

 

$

646,554

 

 

$

1,308,523

 

 

$

1,244,377

 

Cost of goods sold

 

440,418

 

 

 

416,235

 

 

 

873,237

 

 

 

813,189

 

Gross profit

 

228,509

 

 

 

230,319

 

 

 

435,286

 

 

 

431,188

 

Selling, general and administrative expenses

 

172,498

 

 

 

144,151

 

 

 

336,946

 

 

 

281,333

 

Operating income

 

56,011

 

 

 

86,168

 

 

 

98,340

 

 

 

149,855

 

Interest income (expense) and other income (expense), net

 

95

 

 

 

(1,071

)

 

 

(142

)

 

 

(2,048

)

Income before income taxes

 

56,106

 

 

 

85,097

 

 

 

98,198

 

 

 

147,807

 

Income tax expense

 

14,762

 

 

 

20,256

 

 

 

24,136

 

 

 

33,370

 

Net income

$

41,344

 

 

$

64,841

 

 

$

74,062

 

 

$

114,437

 

Basic income per common share

$

0.74

 

 

$

1.16

 

 

$

1.33

 

 

$

2.04

 

Diluted income per common share

$

0.74

 

 

$

1.15

 

 

$

1.33

 

 

$

2.03

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic shares

 

55,498,471

 

 

 

56,007,970

 

 

 

55,572,425

 

 

 

55,989,399

 

Diluted shares

 

55,646,039

 

 

 

56,299,491

 

 

 

55,739,752

 

 

 

56,287,095

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

FIVE BELOW, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)

 

 

 

 

 

Twenty-Six Weeks Ended

 

 

July 30, 2022

 

July 31, 2021

Operating activities:

 

 

 

 

Net income

 

$

74,062

 

 

$

114,437

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

49,120

 

 

 

39,480

 

Share-based compensation expense

 

 

12,139

 

 

 

12,353

 

Deferred income tax expense

 

 

5,258

 

 

 

6,867

 

Other non-cash expenses

 

 

281

 

 

 

354

 

Changes in operating assets and liabilities:

 

 

 

 

Inventories

 

 

(114,097

)

 

 

(66,035

)

Prepaid income taxes and tax receivable

 

 

(3,046

)

 

 

(3,060

)

Prepaid expenses and other assets

 

 

(15,967

)

 

 

(9,050

)

Accounts payable

 

 

64,908

 

 

 

29,616

 

Income taxes payable

 

 

(28,096

)

 

 

(1,094

)

Accrued salaries and wages

 

 

(33,556

)

 

 

(1,791

)

Operating leases

 

 

17,167

 

 

 

10,743

 

Other accrued expenses

 

 

17,984

 

 

 

15,987

 

Net cash provided by operating activities

 

 

46,157

 

 

 

148,807

 

Investing activities:

 

 

 

 

Purchases of investment securities and other investments

 

 

(21,848

)

 

 

(251,447

)

Sales, maturities, and redemptions of investment securities

 

 

219,391

 

 

 

100,842

 

Capital expenditures

 

 

(109,710

)

 

 

(134,614

)

Net cash provided by (used in) investing activities

 

 

87,833

 

 

 

(285,219

)

Financing activities:

 

 

 

 

Net proceeds from issuance of common stock

 

 

464

 

 

 

443

 

Repurchase and retirement of common stock

 

 

(40,007

)

 

 

 

Proceeds from exercise of options to purchase common stock and vesting of restricted and performance-based restricted stock units

 

 

102

 

 

 

359

 

Common shares withheld for taxes

 

 

(4,421

)

 

 

(6,978

)

Net cash used in financing activities

 

 

(43,862

)

 

 

(6,176

)

Net increase (decrease) in cash and cash equivalents

 

 

90,128

 

 

 

(142,588

)

Cash and cash equivalents at beginning of period

 

 

64,973

 

 

 

268,783

 

Cash and cash equivalents at end of period

 

$

155,101

 

 

$

126,195