Five Below, Inc
FIVE BELOW, INC (Form: 8-K, Received: 08/30/2017 16:23:31)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 30, 2017
 
FIVE BELOW, INC.
(Exact Name of Registrant as Specified in Charter)
 
Pennsylvania
001-35600
 
75-3000378
(State or Other Jurisdiction of
Incorporation)
(Commission
File Number)
 
(IRS Employer
Identification No.)
1818 Market Street
Suite 2000
Philadelphia, PA 19103
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (215) 546-7909
Not applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
o
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨







Item 2.02
Results of Operations and Financial Condition.
On August 30, 2017 , Five Below, Inc. (the “Company”) issued a press release regarding its sales and earnings results for the thirteen and twenty-six weeks ended July 29, 2017 (the “Press Release”). A copy of the Press Release is attached hereto as Exhibit 99.1, and is being furnished, not filed, under item 2.02 of this Current Report on Form 8-K. As previously announced, the Company has scheduled a conference call for 4:30 p.m. Eastern Time on August 30, 2017 to discuss the financial results.
 
Item 9.01
Financial Statements and Exhibits.
(d) Exhibits

Exhibit No.
 
Description
99.1
 
Press Release dated August 30, 2017 announcing the Company's second fiscal quarter 2017 financial results.






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
Five Below, Inc.
Date: August 30, 2017
 
 
 
By:
 
/s/ Kenneth R. Bull
 
 
 
 
 
 
Name:
 
Kenneth R. Bull
 
 
 
 
 
 
Title:
 
Chief Financial Officer and Treasurer





EXHIBIT INDEX
 
 
 
 
Exhibit No.
  
Description
99.1
  
Press Release dated August 30, 2017 announcing the Company's second fiscal quarter 2017 financial results.





 

FIVEBELOWLOGOQ12015A07.JPG
NEWS RELEASE
Five Below, Inc. Announces Second Quarter Fiscal 2017 Financial Results
Q2 net sales increased 29% to $283.3 million
Q2 EPS increased 67% to $0.30
Raises full year fiscal 2017 guidance
PHILADELPHIA , PA – ( August 30, 2017 ) – Five Below, Inc. (NASDAQ: FIVE) today announced financial results for the thirteen and twenty-six weeks ended July 29, 2017 :

For the thirteen weeks ended July 29, 2017 :
Net sales increased by 28.7% to $283.3 million from $220.1 million in the second quarter of fiscal 2016 ; comparable sales increased by 9.3% .
The Company opened 31 new stores and ended the quarter with 584 stores in 32 states. This represents an increase in stores of 18.9% from the end of the second quarter of fiscal 2016 .
Operating income increased by 67.4% to $26.3 million from $15.7 million in the second quarter of fiscal 2016 .
Net income was $16.8 million compared to $9.8 million in the second quarter of fiscal 2016 .
Diluted income per common share was $0.30 compared to $0.18 per share in the second quarter of fiscal 2016 .

Joel Anderson, CEO, stated: “Our strong second quarter results demonstrate the amazing appeal of the Five Below brand. We exceeded the high end of our sales, comp and earnings outlook. Sales growth of 29% was led by strong new store performance and our transaction-driven comp of 9.3%, which was the highest since our IPO. We saw solid broad-based performance across our worlds, with notable contribution from the spinner trend. Our top line results were accompanied by strong margin expansion, resulting in over 70% net income growth.”

Anderson continued, “We are entering the second half of the year with momentum and believe we are well-positioned to deliver on our financial goals. We are focused on the all-important fourth quarter and executing our strategic initiatives, which include continuing to provide a differentiated in-store experience, offering amazing, trend-right, quality merchandise at value prices, introducing new customers to our brand and increasing awareness while building out our infrastructure to support our 2,000+ store opportunity.”

For the twenty-six weeks ended July 29, 2017 :
Net sales increased by 25.0% to $516.2 million from $412.8 million in the comparable period of fiscal 2016 ; comparable sales increased by 6.1% .
The Company opened 62 new stores compared to 54 new stores opened in the comparable period of fiscal 2016 .
Operating income increased by 47.7% to $39.1 million from $26.5 million in the comparable period of fiscal 2016 .
Net income was $25.2 million compared to $16.6 million in the comparable period of fiscal 2016 .
Diluted income per common share was $0.45 compared to $0.30 per share in the comparable period of fiscal 2016 .

Third Quarter and Fiscal 2017 Outlook:
For the third quarter of fiscal 2017 , net sales are expected to be in the range of $241 million to $246 million based on opening approximately 35 new stores and assuming a 3% to 5% increase in comparable sales. Net income is expected to be in the range of $6.2 million to $7.4 million , with a diluted income per common share range of $0.11 to $0.13 on approximately 55.6 million estimated diluted weighted average shares outstanding.

The fiscal 2017 results will contain an additional, non-comparable week, or the "53rd week" in the fourth quarter. For the full year of fiscal 2017 , net sales are expected to be in the range of $1.236 billion to $1.248 billion based on opening approximately 100 new stores and assuming a 3.5% to 4.5% increase in comparable sales. Net income is expected to be in the range of $90.3 million to $92.6 million , with a diluted income per common share of $1.62 to $1.66 on approximately 55.7 million estimated diluted weighted average shares outstanding. The 53rd week is expected to contribute approximately $15 million in sales and approximately $0.02 in diluted income per common share.

Conference Call Information:
A conference call to discuss the second quarter fiscal 2017 financial results is scheduled for today, August 30, 2017 , at 4:30 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 719-325-4791 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 412-317-6671. The pin number to access the telephone replay is 4084236. The replay will be available until September 13, 2017.

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, 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 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 the Company's 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 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 approximately 600 stores in 32 states. For more information, please visit www.fivebelow.com or come into one of our stores!

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





FIVE BELOW, INC.
Consolidated Balance Sheets
(Unaudited)
(in thousands)
 
 
 
July 29, 2017
 
January 28, 2017
 
July 30, 2016
Assets
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
74,759

 
$
76,088

 
$
67,109

Short-term investment securities
 
92,721

 
77,791

 
28,933

Inventories
 
184,517

 
154,448

 
154,809

Prepaid income taxes
 
3,698

 
1,552

 
3,177

Prepaid expenses and other current assets
 
34,876

 
29,910

 
24,907

Total current assets
 
390,571

 
339,789

 
278,935

Property and equipment, net
 
159,717

 
138,376

 
132,500

Deferred income taxes
 
9,653

 
11,039

 
8,838

Long-term investment securities
 

 
10,514

 

Other assets
 
1,638

 
818

 
795

 
 
$
561,579

 
$
500,536

 
$
421,068

 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Line of credit
 
$

 
$

 
$

Accounts payable
 
76,880

 
51,178

 
59,565

Income taxes payable
 
3,271

 
23,939

 
670

Accrued salaries and wages
 
8,550

 
10,794

 
5,313

Other accrued expenses
 
44,772

 
30,652

 
34,557

Total current liabilities
 
133,473

 
116,563

 
100,105

Deferred rent and other
 
61,591

 
52,568

 
51,266

Total liabilities
 
195,064

 
169,131

 
151,371

Shareholders’ equity:
 
 
 
 
 
 
Common stock
 
552

 
549

 
548

Additional paid-in capital
 
331,515

 
321,603

 
315,131

Retained earnings (accumulated deficit)
 
34,448

 
9,253

 
(45,982
)
Total shareholders’ equity
 
366,515

 
331,405

 
269,697

 
 
$
561,579

 
$
500,536

 
$
421,068








FIVE BELOW, INC.
Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share data)
 
 
 
Thirteen Weeks Ended
 
Twenty-Six Weeks Ended
 
 
July 29, 2017
 
July 30, 2016
 
July 29, 2017
 
July 30, 2016
Net sales
 
$
283,320

 
$
220,130

 
$
516,201

 
$
412,845

Cost of goods sold
 
184,814

 
146,780

 
343,909

 
279,228

Gross profit
 
98,506

 
73,350

 
172,292

 
133,617

Selling, general and administrative expenses
 
72,205

 
57,636

 
133,209

 
107,151

Operating income
 
26,301

 
15,714

 
39,083

 
26,466

Interest income, net
 
259

 
73

 
568

 
147

Income before income taxes
 
26,560

 
15,787

 
39,651

 
26,613

Income tax expense
 
9,756

 
5,940

 
14,456

 
10,008

Net income
 
$
16,804

 
$
9,847

 
$
25,195

 
$
16,605

Basic income per common share
 
$
0.30

 
$
0.18

 
$
0.46

 
$
0.30

Diluted income per common share
 
$
0.30

 
$
0.18

 
$
0.45

 
$
0.30

Weighted average shares outstanding:
 
 
 
 
 
 
 
 
Basic shares
 
55,150,108

 
54,795,750

 
55,101,406

 
54,756,580

Diluted shares
 
55,519,303

 
55,077,754

 
55,423,034

 
55,039,204








FIVE BELOW, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
 
 
 
Twenty-Six Weeks Ended
 
 
July 29, 2017
 
July 30, 2016
Operating activities:
 
 
 
 
Net income
 
$
25,195

 
$
16,605

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
15,479

 
12,680

Share-based compensation expense
 
7,992

 
6,013

Deferred income tax expense (benefit)
 
1,386

 
(331
)
Other non-cash expenses
 
66

 
29

Changes in operating assets and liabilities:
 
 
 
 
Inventories
 
(30,069
)
 
(6,439
)
Prepaid income taxes
 
(2,146
)
 
(1,836
)
Prepaid expenses and other assets
 
(5,826
)
 
(9,839
)
Accounts payable
 
22,323

 
1,994

Income taxes payable
 
(20,668
)
 
(11,272
)
Accrued salaries and wages
 
(2,244
)
 
(2,348
)
Deferred rent
 
9,507

 
6,143

Other accrued expenses
 
10,107

 
4,992

Net cash provided by operating activities
 
31,102

 
16,391

Investing activities:
 
 
 
 
Purchases of investment securities
 
(72,804
)
 
(35,631
)
Sales, maturities, and redemptions of investment securities
 
68,387

 
53,033

Capital expenditures
 
(29,949
)
 
(22,372
)
Net cash used in investing activities
 
(34,366
)
 
(4,970
)
Financing activities:
 
 
 
 
Net proceeds from issuance of common stock
 
135

 
93

Proceeds from exercise of options to purchase common stock
 
2,843

 
2,612

Common shares withheld for taxes
 
(1,045
)
 
(1,808
)
Excess tax benefit related to exercises of stock options, vesting of restricted stock units, and vesting of performance-based restricted units
 

 
1,710

Other
 
2

 

Net cash provided by financing activities
 
1,935

 
2,607

Net (decrease) increase in cash and cash equivalents
 
(1,329
)
 
14,028

Cash and cash equivalents at beginning of period
 
76,088

 
53,081

Cash and cash equivalents at end of period
 
$
74,759

 
$
67,109