GlobeNewswire Inc | Dec 2, 2020 04:01PM EST

December 02, 2020

Net Sales Increase of 26.3%; Comparable Sales Increase of 12.8%

Operating ProfitGrew 91%; EPS Doubled to $0.36

PHILADELPHIA, PA, Dec. 02, 2020 (GLOBE NEWSWIRE) -- Five Below, Inc. (NASDAQ: FIVE) today announced financial results for the third quarter and for the year to date period ended October31, 2020.

For the third quarter ended October31, 2020:

-- Net sales increased by 26.3% to $476.6 million from $377.4 million in the third quarter of fiscal 2019; comparable sales increased by 12.8%. -- The Company opened 36 new stores and ended the quarter with 1,018 stores in 38 states. This represents an increase in stores of 13.9% from the end of the third quarter of fiscal 2019. -- Operating income increased by 91.2% to $24.2 million from $12.7 million in the third quarter of fiscal 2019. -- The effective tax rate was 13.4% compared to 24.2% in the third quarter of fiscal 2019. -- Net income increased by 100.5% to $20.4 million from $10.2 million in the third quarter of fiscal 2019. -- Diluted income per common share was $0.36 compared to $0.18 in the third quarter of fiscal 2019. The benefit from share-based accounting was approximately $0.04 in the third quarter of fiscal 2020 compared to less than a penny in the third quarter of fiscal 2019.

Joel Anderson, President and CEO, said, Our third quarter results surpassed our expectations as customers responded very positively to our extreme value, trend-right offering. Our teams did a great job keeping the stores clean and safe, and our merchants pivoted quickly to ensure we met customer demand for products relevant in this COVID-impacted environment. Our performance this quarter demonstrates the inherent flexibility of our model and the agility of our teams to deliver a differentiated shopping experience with incredible value.

Mr. Anderson continued, In this high volume fourth quarter, we are focused on providing a safe and efficient shopping experience. In addition to several changes we made in store, such as adding expanded checkout capabilities, we are now offering a same-day delivery option for about 300 stores. The holiday selling season is off to an early and strong start, and COVID-related uncertainty notwithstanding, we believe we are well positioned to delight our customers with amazing Wow stocking stuffers and gifts at incredible values."

For the year to date period ended October31, 2020:The results in the year to date period reflect the impact of store closures and reopenings.

-- Net sales decreased by 4.8% to $1,103.6 million from $1,159.6million in the year to date period of fiscal 2019; comparable sales decreased by 16.9%. -- The Company opened 118 net new stores compared to 144 new stores in the year to date period of fiscal 2019. -- Operating loss increased by 120.2% to $14.8 million from an operating income of $73.2 million in the year to date period of fiscal 2019. -- The effective tax rate was a benefit of 96.4% versus an expense of 16.1% in the year to date period of fiscal 2019. -- Net loss increased by 100.9% to $0.6 million from a net income of $64.7 million in the year to date period of fiscal 2019. -- Diluted loss per common share was $0.01 compared to a diluted income per common share of $1.15 in the year to date period of fiscal 2019. The benefit from share-based accounting was approximately $0.08 in the year to date period of fiscal 2020 compared to $0.13 in the year to date period of fiscal 2019.

Fourth Quarter and Fiscal 2020 Outlook: Given the uncertainty related to COVID-19, the Company will not be providing sales or earnings guidance for the fourth quarter or fiscal 2020. The Company expects to open 120 net new stores in 2020 to end the year with 1,020 stores.

Conference Call Information:A conference call to discuss the third quarter and year to date period fiscal 2020 financial results is scheduled for today, December 2, 2020, 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 10149151. 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 pandemic (including governmental restrictions and requirements, store closures and effects on customer demand or on our supply chain, our ability to keep our distribution centers and e-commerce fulfillment centers operational, our ability to effectively operate and remain open in some or all of our stores, and to open new stores and remodels), risks related to the Company's strategy and expansion plans, risks related to the inability to successfully implement our online retail operations, including cyber security risks, 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, 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 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 pricedbeyond $5, 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 1,000 stores in 38 states. For more information, please visit www.fivebelow.com!

FIVE BELOW, INC.Consolidated Balance Sheets(Unaudited)(in thousands)

October 31, February 1, November 2, 2020 2020 2019Assets Current assets: Cash and cash equivalents $ 117,045 $ 202,490 $ 77,496 Short-term investment 96,749 59,229 54,072 securitiesInventories 430,200 324,028 419,340 Prepaid income taxes and tax 18,090 4,063 16,396 receivablePrepaid expenses and other 50,194 75,903 58,666 current assetsTotal current assets 712,278 665,713 625,970 Property and equipment, net 522,214 439,086 400,129 Operating lease assets 928,739 842,988 794,350 Deferred income taxes ? ? 2,283 Other assets 12,265 10,874 11,019 $ 2,175,496 $ 1,958,661 $ 1,833,751 Liabilities and Shareholders? EquityCurrent liabilities: Line of credit $ ? $ ? $ ? Accounts payable 237,647 130,242 188,061 Income taxes payable 1,031 9,505 831 Accrued salaries and wages 22,164 19,873 11,773 Other accrued expenses 99,489 81,255 91,304 Operating lease liabilities 136,513 110,470 105,834 Total current liabilities 496,844 351,345 397,803 Other long-term liabilities 1,918 1,199 1,250 Long-term operating lease 922,784 837,623 789,307 liabilitiesDeferred income taxes 4,408 8,716 ? Total liabilities 1,425,954 1,198,883 1,188,360 Shareholders? equity: Common stock 559 557 556 Additional paid-in capital 312,668 322,330 318,318 Retained earnings 436,315 436,891 326,517 Total shareholders? equity 749,542 759,778 645,391 $ 2,175,496 $ 1,958,661 $ 1,833,751

FIVE BELOW, INC.Consolidated Statements of Operations(Unaudited)(in thousands, except share and per share data)

Thirteen Weeks Ended Thirty-Nine Weeks Ended October 31, November 2, October 31, November 2, 2020 2019 2020 2019Net sales $ 476,614 $ 377,438 $ 1,103,623 $ 1,159,600 Cost of goods 325,514 258,756 792,223 774,762 soldGross profit 151,100 118,682 311,400 384,838 Selling,general and 126,851 105,997 326,205 311,655 administrativeexpensesOperating 24,249 12,685 (14,805 ) 73,183 income (loss)Interest(expense)income and (660 ) 753 (1,017 ) 3,952 other(expense)income, netIncome (loss)before income 23,589 13,438 (15,822 ) 77,135 taxesIncome taxexpense 3,164 3,249 (15,246 ) 12,453 (benefit)Net income $ 20,425 $ 10,189 $ (576 ) $ 64,682 (loss)Basic income(loss) per $ 0.37 $ 0.18 $ (0.01 ) $ 1.16 common shareDiluted income(loss) per $ 0.36 $ 0.18 $ (0.01 ) $ 1.15 common shareWeightedaverage shares outstanding:Basic shares 55,851,780 55,672,796 56,004,072 55,855,526 Diluted shares 56,099,328 56,019,736 56,004,072 56,208,718

FIVE BELOW, INC.Consolidated Statements of Cash Flows(Unaudited)(in thousands)

Thirty-Nine Weeks Ended October 31, November 2020 2, 2019Operating activities: Net (loss) income $ (576 ) $ 64,682 Adjustments to reconcile net (loss) income to net cash provided by operating activities:Depreciation and amortization 50,919 39,894 Share-based compensation expense 3,582 9,446 Deferred income tax (benefit) expense (4,308 ) 3,843 Other non-cash expenses 1,643 75 Changes in operating assets and liabilities: Inventories (106,172 ) (175,704 )Prepaid income taxes and tax receivable (14,027 ) (15,059 )Prepaid expenses and other assets 30,784 326 Accounts payable 110,970 78,372 Income taxes payable (8,474 ) (19,795 )Accrued salaries and wages 2,291 (12,813 )Operating leases 25,453 9,660 Other accrued expenses 29,221 18,928 Net cash provided by operating activities 121,306 1,855 Investing activities: Purchases of investment securities and other (120,033 ) (103,055 )investmentsSales, maturities, and redemptions of investment 77,513 127,093 securitiesCapital expenditures (149,270 ) (156,350 )Net cash used in investing activities (191,790 ) (132,312 )Financing activities: Borrowing on note payable under Amended Revolving 50,000 ? Credit FacilityRepayment of note payable under Amended Revolving (50,000 ) ? Credit FacilityCash paid for credit facility financing costs (1,755 ) ? Net proceeds from issuance of common stock 229 195 Repurchase and retirement of common stock (12,663 ) (36,885 )Proceeds from exercise of options to purchase commonstock and vesting of restricted and 3,017 3,186 performance-based restricted stock unitsCommon shares withheld for taxes (3,789 ) (10,291 )Net cash used in financing activities (14,961 ) (43,795 )Net decrease in cash and cash equivalents (85,445 ) (174,252 )Cash and cash equivalents at beginning of period 202,490 251,748 Cash and cash equivalents at end of period $ 117,045 $ 77,496

Investor Contact:Five Below, Inc.Christiane PelzVice President, Investor Relations215-207-2658Christiane.Pelz@fivebelow.com