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Five Below, Inc. Announces Third Quarter Fiscal 2016 Financial Results

Q3 sales increased 18% to $199.5 million

Q3 EPS increased 25% to $0.10

Raises low end and reiterates high end of fiscal 2016 sales and EPS guidance

/EIN News/ -- PHILADELPHIA, PA, Dec. 01, 2016 (GLOBE NEWSWIRE) -- Five Below, Inc. (NASDAQ:FIVE) today announced financial results for the thirteen and thirty-nine weeks ended October 29, 2016.

For the thirteen weeks ended October 29, 2016:

  • Net sales increased by 17.6% to $199.5 million from $169.7 million in the third quarter of fiscal 2015; comparable sales decreased by 0.2%.
  • Operating income increased by 23.4% to $8.6 million from $7.0 million in the third quarter of fiscal 2015.
  • The Company opened 26 new stores and ended the quarter with 517 stores in 31 states. This represents an increase in stores of 19.1% from the end of the third quarter of fiscal 2015.
  • Net income was $5.4 million compared to $4.3 million in the third quarter of fiscal 2015.
  • Diluted income per common share was $0.10 compared to $0.08 per share in the third quarter of fiscal 2015.

“We are pleased to have delivered earnings at the high-end of our guidance range in our fiscal third quarter,” stated Joel Anderson, CEO of Five Below.  “Our track record of outstanding new store performance continued and, despite being up against a strong third quarter last year, we delivered solid sales growth, expanded operating margins and increased EPS by 25% for the quarter.”

Mr. Anderson continued, “As we look to the all-important fourth quarter, we believe we are well-positioned to wow our customers with our compelling holiday assortment accompanied by exciting marketing plans, including our new and expanded TV campaign. We are pleased with the start to the holiday season and look forward to delivering our customers a steady stream of amazing products at exceptional values, reinforcing our position as a destination of choice for their holiday gift-giving and stocking stuffer needs.”

For the thirty-nine weeks ended October 29, 2016:

  • Net sales increased by 21.1% to $612.3 million from $505.6 million in the comparable period of fiscal 2015; comparable sales increased by 2.6%.
  • Operating income increased to $35.1 million from $25.6 million in the comparable period of fiscal 2015.
  • The Company opened 80 new stores compared to 68 net new stores opened in the comparable period in fiscal 2015.
  • Net income was $22.1 million compared to $15.7 million in the comparable period of fiscal 2015.
  • Diluted income per common share was $0.40 compared to $0.29 per share in the comparable period of fiscal 2015.

Fourth Quarter and Fiscal 2016 Outlook:

For the fourth quarter of fiscal 2016, net sales are expected to be in the range of $391 million to $397 million based on opening 5 net new stores and assuming a 2% to 3% increase in comparable sales. Net income is expected to be in the range of $49.2 million to $50.6 million, with a diluted income per common share range of $0.89 to $0.92 on approximately 55.3 million estimated diluted weighted average shares outstanding.

For fiscal 2016, net sales are expected to be in the range of $1,003 million to $1,009 million based on opening 85 net new stores for the full year and assuming a 2.3% to 2.7% increase in comparable sales. Net income is expected to be in the range of $71.3 million to $72.7 million, with a diluted income per common share of $1.29 to $1.32 on approximately 55.3 million estimated diluted weighted average shares outstanding.

Conference Call Information:

A conference call to discuss the third quarter fiscal 2016 financial results is scheduled for today, December 1, 2016, at 4:30 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 888-661-5176 (international callers please dial 913-312-1273) 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 877-870-5176 (international callers please dial 858-384-5517). The pin number to access the telephone replay is 3771037. The replay will be available until December 8, 2016.

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 related to the Company's strategy and expansion plans, risks related to the inability to successfully implement our expansion into online retail, the availability of suitable new store locations and the dependence on the success of shopping centers in which our stores are located, risks that consumer spending may decline and that U.S. and global macroeconomic conditions may worsen, risks related to the Company's continued retention of its 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 the Company's distribution centers, quality or safety concerns about the Company's merchandise, events that may affect the Company's vendors, increased competition from other retailers including online retailers, risks related to cyber security, risks related to customers' payment methods, risks related to trade restrictions, 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 rapidly growing specialty value retailer offering a broad range of trend-right, high-quality merchandise targeted at the teen and pre-teen customer. Five Below offers a dynamic, edited assortment of exciting products in a fun and differentiated store environment, all priced at $5 and below. Select brands and licensed merchandise fall into the Five Below worlds: Style, Room, Sports, Tech, Crafts, Party, Candy, and Now. Five Below was founded in 2002 and is headquartered in Philadelphia, Pennsylvania, with over 500 stores in 31 states. For more information, please visit www.fivebelow.com or come into one of our stores!

FIVE BELOW, INC.
Consolidated Balance Sheets
(Unaudited)
(in thousands)
 
    October 29, 2016   January 30, 2016   October 31, 2015
Assets            
Current assets:            
Cash and cash equivalents   $ 53,537     $ 53,081     $ 18,083  
Short-term investment securities   9,912     46,335      
Inventories   228,175     148,370     213,635  
Prepaid income taxes   5,789     1,341     10,328  
Prepaid expenses and other current assets   33,200     15,618     24,698  
Total current assets   330,613     264,745     266,744  
Property and equipment, net   135,939     119,784     119,974  
Deferred income taxes   9,045     8,507     10,349  
Other assets   1,312     258     318  
    $ 476,909     $ 393,294     $ 397,385  
             
Liabilities and Shareholders’ Equity            
Current liabilities:            
Line of credit   $     $     $  
Accounts payable   104,684     58,225     110,135  
Income taxes payable   126     11,942     239  
Accrued salaries and wages   8,677     7,661     6,170  
Other accrued expenses   32,051     24,368     34,504  
Total current liabilities   145,538     102,196     151,048  
Deferred rent and other   53,220     46,617     46,850  
Total liabilities   198,758     148,813     197,898  
Shareholders’ equity:            
Common stock   549     546     545  
Additional paid-in capital   318,137     306,522     303,533  
Accumulated deficit   (40,535 )   (62,587 )   (104,591 )
Total shareholders’ equity   278,151     244,481     199,487  
    $ 476,909     $ 393,294     $ 397,385  


FIVE BELOW, INC.
Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share data)
 
    Thirteen Weeks Ended   Thirty-Nine Weeks Ended
    October 29,
2016
  October 31,
2015
  October 29,
2016
  October 31,
2015
Net sales   $ 199,475     $ 169,685     $ 612,320     $ 505,603  
Cost of goods sold   135,472     116,920     414,700     345,851  
Gross profit   64,003     52,765     197,620     159,752  
Selling, general and administrative expenses   55,372     45,768     162,523     134,177  
Operating income   8,631     6,997     35,097     25,575  
Interest income (expense), net   64     23     211     12  
Other expense               325  
Income before income taxes   8,695     7,020     35,308     25,262  
Income tax expense   3,248     2,683     13,256     9,586  
Net income   $ 5,447     $ 4,337     $ 22,052     $ 15,676  
Basic income per common share   $ 0.10     $ 0.08     $ 0.40     $ 0.29  
Diluted income per common share   $ 0.10     $ 0.08     $ 0.40     $ 0.29  
Weighted average shares outstanding:                
Basic shares   54,871,172     54,529,403     54,809,768     54,525,797  
Diluted shares   55,170,686     54,833,252     55,100,534     54,811,978  


FIVE BELOW, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
 
    Thirty-Nine Weeks Ended
    October 29, 2016   October 31, 2015
Operating activities:        
Net income   $ 22,052     $ 15,676  
Adjustments to reconcile net income to net cash used in operating activities:        
Depreciation and amortization   19,449     16,126  
Share-based compensation expense   9,014     8,400  
Deferred income tax benefit   (538 )   (2,468 )
Other non-cash expenses
  53     47  
         
Changes in operating assets and liabilities:        
Inventories   (79,805 )   (97,983 )
Prepaid income taxes   (4,448 )   (8,389 )
Prepaid expenses and other assets   (18,656 )   (6,572 )
Accounts payable   47,240     64,971  
Income taxes payable   (11,816 )   (14,203 )
Accrued salaries and wages   1,016     895  
Deferred rent   7,623     6,916  
Other accrued expenses   5,946     15,078  
   Net cash used in operating activities   (2,870 )   (1,506 )
Investing activities:        
Purchases of investment securities   (35,856 )    
Sales, maturities, and redemptions of investment securities   72,279      
Capital expenditures   (35,714 )   (44,749 )
   Net cash provided by (used in) investing activities   709     (44,749 )
Financing activities:        
Net proceeds from issuance of common stock   93     81  
Proceeds from exercise of options to purchase common stock   2,736     811  
Common shares withheld for taxes   (1,819 )   (322 )
Excess tax benefit related to exercises of stock options and vesting of restricted stock units   1,607     582  
   Net cash provided by financing activities   2,617     1,152  
   Net increase (decrease) in cash and cash equivalents   456     (45,103 )
Cash and cash equivalents at beginning of period   53,081     63,186  
Cash and cash equivalents at end of period   $ 53,537     $ 18,083  
Investor Contact:
Five Below, Inc.
Christiane Pelz
215-207-2658
Christiane.Pelz@fivebelow.com

ICR, Inc.
Farah Soi/Caitlin Morahan
203-682-8200
Farah.Soi@icrinc.com/Caitlin.Morahan@icrinc.com

Media Contact:
ICR, Inc.
Jessica Liddell/Julia Young
203-682-8200
FivePR@icrinc.com

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