Five Below (FIVE) Q4 2013 earnings summary

Executive summary

• Fiscal 2012 net sales rose 41.0% to $418.8 million; comparable sales grew 7.1%, and the store base expanded to 244 locations across 18 states. The fiscal year included 53 weeks.

• Growth reflected 52 store openings, strong comparable-store transactions, and a value-focused assortment; all stores were profitable on a four-wall basis in fiscal 2012.

Financial highlights

• Net sales increased 41.0% to $418.8 million; gross profit rose 42.8% to $149.8 million, and operating income increased to $37.7 million from $26.2 million.

• Net income was $20.0 million, up 24.2% YoY; net loss attributable to common shareholders was $45.4 million, or $1.28 per diluted share, after preferred and unvested-share dividend allocations.

• Operating cash flow was $30.4 million, down from $46.7 million; cash and cash equivalents ended the year at $56.1 million.

• Fiscal 2012 included a 53rd week contributing $5.0 million of sales; the additional week had an immaterial net-income impact.

Outlook and guidance

• Planned fiscal 2013 expansion: approximately 60 net new stores; 51 leases were signed by year-end, and the Olive Branch distribution center was expected to be operational during fiscal 2013.

• Fiscal 2013 capital expenditures were planned at approximately $26.0 million, including about $15.4 million for 60 stores and the new distribution center; the plan was to fund spending from operating cash flow.

• Long-term U.S. store-base opportunity was estimated at more than 2,000 locations; the new-store model targets $1.5–$1.6 million first-full-year sales and payback in under one year.

• Management expected cash, operating cash flow, and available revolver capacity to cover planned capex, working capital, and debt service over the next 12 months and beyond.