Form 8-K FIVE BELOW, INC For: Mar 27

March 27, 2019 4:17 PM


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): March 27, 2019
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.)
701 Market Street
Suite 300
Philadelphia, PA 19106
(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 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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 March 27, 2019, Five Below, Inc. (the “Company”) issued a press release regarding its sales and earnings results for the fourth quarter and fiscal 2018 (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 March 27, 2019 to discuss the financial results.

Item 9.01
Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number
Exhibit Description
99.1
Press Release dated March 27, 2019 announcing the Company's fourth quarter and fiscal 2018 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: March 27, 2019
 
 
 
 
 By:
/s/ Kenneth R. Bull
 
 
 
 
 
 
Name:
 
Kenneth R. Bull
 
 
 
 
 
 
Title:
 
Chief Financial Officer and Treasurer







EXHIBIT INDEX
 
Exhibit Number
Exhibit Description
99.1






fivebelowlogo08.jpg
NEWS RELEASE
Five Below, Inc. Announces Fourth Quarter and Fiscal 2018 Financial Results

Fourth quarter sales grew 19.4% or 23.2% excluding the 53rd week,
diluted EPS increased 31.4% or 34.7% excluding the 53rd week

Fiscal 2018 sales grew 22.0% or 23.5% excluding the 53rd week,
diluted EPS increased 44.6% or 47.0% excluding the 53rd week

Provides first quarter and full year fiscal 2019 guidance

Plans to open 145-150 stores ending fiscal 2019 with 895-900 stores
 
PHILADELPHIA, PA (March 27, 2019) – Five Below, Inc. (NASDAQ: FIVE) today announced financial results for the fourth quarter and full year of fiscal 2018 ended February 2, 2019. The fourth quarter and full year of fiscal 2017 ended February 3, 2018 contained one additional week ("53rd week") which represented $15.7 million in net sales, approximately $3.0 million in operating income and approximately $0.03 in diluted earnings per share.

For the fourth quarter ended February 2, 2019:
Net sales increased 19.4% to $602.7 million or an increase of 23.2% excluding the impact of the 53rd week in fiscal 2017.
The Company opened 5 net new stores and ended the quarter with 750 stores in 33 states. This represents an increase of 20.0% from the end of the fourth quarter of fiscal 2017.
Comparable sales increased 4.4%.
Operating income increased 12.6% to $116.5 million or an increase of 16.0% excluding the impact of the 53rd week in fiscal 2017.
Net income increased 32.5% to $89.3 million or an increase of 36.5% excluding the impact of the 53rd week in fiscal 2017.
Diluted income per common share increased 31.4% to $1.59 or 34.7% excluding the impact of the 53rd week in fiscal 2017. Diluted income per common share included an approximate $0.01 benefit in the fourth quarter of fiscal 2018 due to the tax benefit from share-based accounting.
For the fiscal year ended February 2, 2019:
Net sales increased 22.0% to $1,559.6 million or 23.5% excluding the impact of the 53rd week in fiscal 2017.
The Company opened 125 net new stores compared to 103 net new stores opened in fiscal 2017.
Comparable sales increased 3.9%.
Operating income increased 18.9% to $187.2 million or 21.3% excluding the impact of the 53rd week in fiscal 2017.
Net income increased 46.1% to $149.6 million or 48.9% excluding the impact of the 53rd week in fiscal 2017.
Diluted income per common share increased 44.6% to $2.66 or 47.0% excluding the impact of the 53rd week in fiscal 2017. Diluted income per common share included an approximate $0.09 benefit in fiscal 2018 due to the tax benefit from share-based accounting.








Joel Anderson, President and CEO of Five Below, stated, “Our strong fourth quarter performance capped off a great year for Five Below. Our 2018 store openings are on track to be another record class with first year average unit volumes expected to be over $2 million. For the year, we delivered comparable sales growth of 3.9% on top of last year’s record results. We saw broad-based strength across our worlds as our incredible, trend-right value offering and fun in-store experience drove both new and existing customers to Five Below.”

Mr. Anderson continued, “As we look ahead to 2019, we are focused on elevating our customer experience, delivering even better WOW products, and further enhancing our supply chain as we innovate across the organization. We are excited to continue our high growth with a record number of new store openings and remain confident in our 20/20 through 2020 goals and our ability to reach our 2,500+ U.S. store potential.”


First Quarter and Fiscal 2019 Outlook:
The Company expects the following results for the first quarter and full year fiscal 2019. This outlook includes the impact of opening our new Southeast distribution center and adoption of the new lease accounting standard. The effective tax rate in fiscal 2019 is expected to be approximately 24.5%, which excludes any potential future impact from share-based accounting. The outlook also excludes any potential share repurchases.

For the first quarter of fiscal 2019:
Net sales are expected to be in the range of $361 million to $366 million based on opening approximately 35 new stores and assuming a 3% to 4% increase in comparable sales.
Net income is expected to be in the range of $18.0 million to $19.7 million.
Diluted income per common share is expected to be in the range of $0.32 to $0.35 on approximately 56.4 million estimated diluted weighted average shares outstanding.

For the full year of fiscal 2019:
Net sales are expected to be in the range of $1.865 billion to $1.885 billion based on opening approximately 145 to 150 new stores and assuming an approximate 3% increase in comparable sales.
Net income is expected to be in the range of $169.9 million to $173.9 million.
Diluted income per common share is expected to be in the range of $3.00 to $3.07 on approximately 56.6 million estimated diluted weighted average shares outstanding.


Conference Call Information:
A conference call to discuss the fourth quarter and full year fiscal 2018 financial results is scheduled for today, March 27, 2019, 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 10129013. 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 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, 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. We make it easy to say YES! to the newest, coolest stuff because prices are just $5 and below across 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 750 stores in 35 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 2, 2019
 
February 3, 2018
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
251,748

 
$
112,669

Short-term investment securities
 
85,412

 
131,958

Inventories
 
243,636

 
187,037

Prepaid income taxes
 
1,337

 
2,264

Prepaid expenses and other current assets
 
60,124

 
45,434

Total current assets
 
642,257

 
479,362

Property and equipment, net
 
301,297

 
180,349

Deferred income taxes
 
6,126

 
6,676

Long-term investment securities
 

 
27,702

Other assets
 
2,584

 
1,619

 
 
$
952,264

 
$
695,708

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

 
$

Accounts payable
 
103,692

 
73,033

Income taxes payable
 
20,626

 
25,275

Accrued salaries and wages
 
24,586

 
22,906

Other accrued expenses
 
104,201

 
43,246

Total current liabilities
 
253,105

 
164,460

Deferred rent and other
 
84,065

 
72,690

Total liabilities
 
337,170

 
237,150

Shareholders’ equity:
 
 
 
 
Common stock
 
557

 
554

Additional paid-in capital
 
352,702

 
346,300

Retained earnings
 
261,835

 
111,704

Total shareholders’ equity
 
615,094

 
458,558

 
 
$
952,264

 
$
695,708








FIVE BELOW, INC.
Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share data)
 
 
 
Thirteen weeks ended
 
Fourteen weeks ended
 
Fifty-two weeks ended
 
Fifty-three weeks ended
 
 
February 2, 2019
 
February 3, 2018
 
February 2, 2019
 
February 3, 2018
Net sales
 
$
602,684

 
$
504,832

 
$
1,559,563

 
$
1,278,208

Cost of goods sold
 
358,679

 
297,342

 
994,478

 
814,795

Gross profit
 
244,005

 
207,490

 
565,085

 
463,413

Selling, general and administrative expenses
 
127,497

 
103,995

 
377,901

 
306,022

Operating income
 
116,508

 
103,495

 
187,184

 
157,391

Interest income, net
 
1,503

 
556

 
4,623

 
1,458

Income before income taxes
 
118,011

 
104,051

 
191,807

 
158,849

Income tax expense
 
28,749

 
36,674

 
42,162

 
56,398

Net income
 
$
89,262

 
$
67,377

 
$
149,645

 
$
102,451

Basic income per common share
 
$
1.60

 
$
1.22

 
$
2.68

 
$
1.86

Diluted income per common share
 
$
1.59

 
$
1.21

 
$
2.66

 
$
1.84

Weighted average shares outstanding:
 
 
 
 
 
 
 
 
Basic shares
 
55,761,714

 
55,348,495

 
55,763,034

 
55,208,246

Diluted shares
 
56,230,318

 
55,725,959

 
56,220,864

 
55,561,472








FIVE BELOW, INC.

Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
 
 
 
Fifty-two weeks ended
 
Fifty-three weeks ended
 
 
February 2, 2019
 
February 3, 2018
Operating activities:
 
 
 
 
Net income
 
$
149,645

 
$
102,451

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
41,451

 
33,241

Share-based compensation expense
 
12,018

 
16,373

Deferred income tax expense
 
550

 
4,363

Other non-cash expenses
 
44

 
138

Changes in operating assets and liabilities:
 
 
 
 
Inventories
 
(56,599
)
 
(32,589
)
Prepaid income taxes
 
927

 
(1,277
)
Prepaid expenses and other assets
 
(15,655
)
 
(16,366
)
Accounts payable
 
32,866

 
19,809

Income taxes payable
 
(4,649
)
 
1,902

Accrued salaries and wages
 
1,680

 
12,112

Deferred rent
 
12,143

 
15,886

Other accrued expenses
 
9,712

 
11,338

Net cash provided by operating activities
 
184,133

 
167,381

Investing activities:
 
 
 
 
Purchases of investment securities
 
(117,371
)
 
(234,856
)
Sales, maturities, and redemptions of investment securities
 
191,619

 
163,501

Capital expenditures
 
(113,720
)
 
(67,795
)
Net cash used in investing activities
 
(39,472
)
 
(139,150
)
Financing activities:
 
 
 
 
Net proceeds from issuance of common stock
 
365

 
251

Repurchase and retirement of common stock
 
(1,987
)
 

Proceeds from exercise of options to purchase common stock and vesting of restricted and performance-based restricted stock units
 
4,030

 
9,603

Common shares withheld for taxes
 
(7,990
)
 
(1,504
)
Net cash (used in) provided by financing activities
 
(5,582
)
 
8,350

Net increase in cash and cash equivalents
 
139,079

 
36,581

Cash and cash equivalents at beginning of year
 
112,669

 
76,088

Cash and cash equivalents at end of year
 
$
251,748

 
$
112,669





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