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| 8-K - FORM 8-K - FIVE BELOW, INC | q42019fivebelowform8k.htm |
NEWS RELEASE
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) – Five Below, Inc. (NASDAQ: 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!
Investor Contact:
Five Below, Inc.
Christiane Pelz
Vice President, Investor Relations
215-207-2658
Christiane.Pelz@fivebelow.com
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 | ||||