Five Below, Inc. Announces Fourth Quarter and Fiscal 2021 Financial Results; Provides Long-Term "Triple-Double" Vision at Investor Day 2022

Rhea-AI Summary

Five Below reported a Q4 net sales increase of 16.1%, reaching $996.3 million, and Q4 EPS rose by 13% to $2.49. The company plans to triple its U.S. store potential to over 3,500 by 2030, aiming to double sales and more than double EPS through 2025. In fiscal 2021, net income jumped 59.3% to $278.8 million, with diluted EPS growing from $2.20 to $4.95. For fiscal 2022, sales are projected between $3.16 billion and $3.26 billion with EPS guidance of $5.19 to $5.70.

Positive

• Q4 net sales increased by 16.1% to $996.3 million.
• Q4 EPS rose by 13% to $2.49.
• FY 2021 net income surged 59.3% to $278.8 million.
• Plans to triple store count from 2,500+ to 3,500+ by 2030.
• Long-term vision to double sales and more than double EPS by 2025.

Negative

• Projected flat to 2% decrease in comparable sales for Q1 2022.
• Construction and permitting delays impacting store openings.

Q4 Net Sales Increase of 16%; Q4 Comparable Sales Increase of 3.4%

Q4 EPS increase of 13% to $2.49

Increases U.S. store potential to 3,500+ or triple current level

Plans to double sales and more than double EPS through 2025

PHILADELPHIA, PA, March 30, 2022 (GLOBE NEWSWIRE) -- Five Below, Inc. (NASDAQ: FIVE) today announced financial results for the fourth quarter and full year of fiscal 2021 ended January 29, 2022, outlook for fiscal 2022 and its long-term vision at Investor Day 2022.

Joel Anderson, President and CEO of Five Below, stated, “We were very pleased with our fourth quarter results that capped off a record year. We delivered sales growth in line with our expectations against the difficult comparison to last year's stimulus-fueled comparable sales increase of 13.8%, and despite the impact of weather in January. The strength was broad-based, with Sports, Candy, Seasonal and Style worlds outperforming.”

Mr. Anderson continued, “Looking ahead to 2022, we will continue to play offense and focus on innovation and experience as we navigate a dynamic macro environment related to the lingering impacts of the pandemic. We are excited to grow our new Beyond store prototype, expand categories and pilot new services to further enhance the customer experience. Our expectations for fiscal 2022 are embedded in our new long-term vision.”

Mr. Anderson concluded, "We are excited to share this long-term vision today, referred to as ‘Triple-Double.’ We are increasing our store potential in the U.S. from 2,500+ to 3,500+, or triple our current store count, and we are planning to double our sales and more than double our EPS through fiscal 2025. We expect to open approximately 1,000 stores during this time, including 375 to 400 new stores over the next two fiscal years. Our teams remain dedicated to delivering high growth while executing against our key strategic initiatives within product, experience and supply chain, all while maintaining financial discipline and always placing the customer at the center of our decision-making."

For the fourth quarter ended January 29, 2022:

• Net sales increased by 16.1% to $996.3 million from $858.5 million in the fourth quarter of fiscal 2020; comparable sales increased by 3.4% versus the fourth quarter of fiscal 2020.
• The Company opened 17 new stores and ended the quarter with 1,190 stores in 40 states. This represents an increase in stores of 16.7% from the end of the fourth quarter of fiscal 2020.
• Operating income increased by 10.6% to $187.6 million from $169.6 million in the fourth quarter of fiscal 2020.
• The effective tax rate was 25.1% compared to 26.6% in the fourth quarter of fiscal 2020.
• Net income increased by 13.1% to $140.2 million from $123.9 million in the fourth quarter of fiscal 2020.
• Diluted income per common share increased by 13.2% to $2.49 from $2.20 in the fourth quarter of fiscal 2020.
• The Company repurchased 368,699 shares in the fourth quarter of fiscal 2021 at a cost of approximately $60.0 million.
  

For the fiscal year ended January 29, 2022:

• Net sales increased by 45.2% to $2,848.4 million from $1,962.1 million in fiscal 2020 and by 54.2% from $1,846.7 million in fiscal 2019; comparable sales increased by 30.3% versus fiscal 2020. For the comparable subset of stores that were open in both fiscal 2019 and fiscal 2021, sales increased 20%.
• The Company opened 170 net new stores compared to 120 net new stores opened in fiscal 2020.
• Operating income was $379.9 million compared to $154.8 million in fiscal 2020. Operating income increased by 74.8% from $217.3 million in fiscal 2019.
• Interest expense and other, net was $13.2 million compared to $1.7 million in fiscal 2020 and interest income and other, net of $4.3 million in fiscal 2019. The increase in expense was primarily due to the write-down of an equity investment.
• The effective tax rate was 24.0% compared to 19.4% in fiscal 2020 and 21.0% in fiscal 2019.
• Net income was $278.8 million compared to $123.4 million in fiscal 2020. Net income increased by 59.3% from $175.1 million in fiscal 2019.
• Diluted income per common share was $4.95 compared to $2.20 in fiscal 2020 and $3.12 in fiscal 2019. The benefit from share-based accounting was approximately $0.06 in fiscal 2021, approximately $0.08 in fiscal 2020, and approximately $0.14 in fiscal 2019.
  

First Quarter and Fiscal 2022 Outlook:
The Company expects the following results for the first quarter and full year of fiscal 2022. This guidance reflects pandemic driven delays in construction and permitting that have resulted in a shift of stores into the second half of fiscal 2022 and the first half of fiscal 2023, and ongoing inflationary impacts. This guidance does not include the impact of share repurchases, if any.

For the first quarter of fiscal 2022:

• Net sales are expected to be in the range of $644 million to $658 million based on opening approximately 35 new stores and assuming an approximate flat to 2% decrease in comparable sales.
• Net income is expected to be in the range of $30 million to $35 million.
• Diluted income per common share is expected to be in the range of $0.54 to $0.62 on approximately 56.1 million diluted weighted average shares outstanding.
  

For the full year of fiscal 2022:

• Net sales are expected to be in the range of $3.16 billion to $3.26 billion based on opening approximately 160 new stores and assuming an approximate flat to 3% increase in comparable sales.
• Net income is expected to be in the range of $292 million to $320 million.
• Diluted income per common share is expected to be in the range of $5.19 to $5.70 on approximately 56.2 million diluted weighted average shares outstanding.
  

Long-Term Vision and Strategic Outlook:
As part of today's Investor Day 2022, the Company is sharing its "Triple-Double" growth vision and long-term targets. Embedded in this vision are the following expectations:

• Triple store count to 3,500+ by the end of fiscal 2030
• Achieve the following by the end of fiscal 2025:
  • Double sales
  • More than double EPS
  • Grow operating margin to approximately 14%
  • Open approximately 1,000 stores:
    • 375-400 new stores over the next two fiscal years
    • 550-600 new stores over fiscal years 2024 and 2025

Investor Day Webcast:
The meeting will begin at 9:00 a.m. Eastern Time today, and will webcast live at http://investor.fivebelow.com/. An archived replay will be available two hours after the conclusion of the live event. Questions about the event should be directed to InvestorDay2022@fivebelow.com.

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
InvestorDay2022@fivebelow.com

FIVE BELOW, INC.

Consolidated Balance Sheets
(Unaudited)
(in thousands)

		January 29, 2022			January 30, 2021
Assets
Current assets:
Cash and cash equivalents		$	64,973		$	268,783
Short-term investment securities			277,141			140,928
Inventories			455,104			281,267
Prepaid income taxes and tax receivable			11,325			6,350
Prepaid expenses and other current assets			96,196			58,085
Total current assets			904,739			755,413
Property and equipment, net			777,497			565,351
Operating lease assets			1,151,395			975,862
Long-term investment securities			37,717			—
Other assets			9,112			18,144
		$	2,880,460		$	2,314,770
Liabilities and Shareholders’ Equity
Current liabilities:
Line of credit		$	—		$	—
Accounts payable			196,461			138,622
Income taxes payable			28,096			2,025
Accrued salaries and wages			53,539			43,445
Other accrued expenses			145,268			108,504
Operating lease liabilities			163,537			143,074
Total current liabilities			586,901			435,670
Other long-term liabilities			1,663			1,048
Deferred income taxes			36,156			28,911
Long-term operating lease liabilities			1,135,456			967,255
Total liabilities			1,760,176			1,432,884
Shareholders’ equity:
Common stock			556			559
Additional paid-in capital			280,666			321,075
Retained earnings			839,062			560,252
Total shareholders’ equity			1,120,284			881,886
		$	2,880,460		$	2,314,770

FIVE BELOW, INC.

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

		Thirteen weeks ended								Fifty-two weeks ended
		January 29, 2022				January 30, 2021				January 29, 2022				January 30, 2021
Net sales		$	996,332			$	858,514			$	2,848,354			$	1,962,137
Cost of goods sold			599,438				517,584				1,817,910				1,309,807
Gross profit			396,894				340,930				1,030,444				652,330
Selling, general and administrative expenses			209,318				171,322				650,564				497,527
Operating income			187,576				169,608				379,880				154,803
Interest (expense) income and other, net			(505	)			(719	)			(13,177	)			(1,736	)
Income before income taxes			187,071				168,889				366,703				153,067
Income tax expense			46,875				44,952				87,893				29,706
Net income		$	140,196			$	123,937			$	278,810			$	123,361
Basic income per common share		$	2.50			$	2.22			$	4.98			$	2.21
Diluted income per common share		$	2.49			$	2.20			$	4.95			$	2.20
Weighted average shares outstanding:
Basic shares			55,995,978				55,901,221				55,999,713				55,816,508
Diluted shares			56,315,019				56,240,633				56,303,854				56,060,039

FIVE BELOW, INC.

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

		Fifty-two weeks ended
		January 29, 2022				January 30, 2021
Operating activities:
Net income		$	278,810			$	123,361
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			84,831				69,345
Share-based compensation expense			25,787				9,551
Deferred income tax expense			7,245				20,195
Other non-cash expenses			708				2,572
Changes in operating assets and liabilities:
Inventories			(173,837	)			42,761
Prepaid income taxes and tax receivable			(4,975	)			(2,287	)
Prepaid expenses and other assets			(26,287	)			17,141
Accounts payable			61,559				11,146
Income taxes payable			26,071				(7,480	)
Accrued salaries and wages			10,094				23,572
Operating leases			13,131				29,362
Other accrued expenses			24,775				26,727
Net cash provided by operating activities			327,912				365,966
Investing activities:
Purchases of investment securities and other investments			(477,082	)			(192,612	)
Sales, maturities, and redemptions of investment securities			299,652				105,912
Capital expenditures			(288,167	)			(200,189	)
Net cash used in investing activities			(465,597	)			(286,889	)
Financing activities:
Borrowing on note payable under Revolving Credit Facility			—				50,000
Repayment of note payable under Revolving Credit Facility			—				(50,000	)
Cash paid for Revolving Credit Facility financing costs			—				(2,029	)
Net proceeds from issuance of common stock			828				477
Repurchase and retirement of common stock			(60,011	)			(12,663	)
Proceeds from exercise of options to purchase common stock and vesting of restricted and performance-based restricted stock units			390				5,348
Common shares withheld for taxes			(7,332	)			(3,917	)
Net cash used in financing activities			(66,125	)			(12,784	)
Net (decrease) increase in cash and cash equivalents			(203,810	)			66,293
Cash and cash equivalents at beginning of year			268,783				202,490
Cash and cash equivalents at end of year		$	64,973			$	268,783

FAQ

What were Five Below's Q4 2021 financial results?

Five Below reported Q4 2021 net sales of $996.3 million, a 16.1% increase, and an EPS of $2.49, up 13%.

What is Five Below's EPS guidance for fiscal 2022?

For fiscal 2022, Five Below expects diluted EPS to be in the range of $5.19 to $5.70.

How many new stores does Five Below plan to open in fiscal 2022?

Five Below plans to open approximately 160 new stores in fiscal 2022.

What is Five Below's long-term growth strategy?

Five Below aims to triple its store count to over 3,500 by 2030 and double sales and EPS through 2025.