Five Below (FIVE) Q4 2016 earnings summary

Executive summary

• FY15 net sales rose 22.3% to $832.0M and net income increased 20.1% to $57.7M; comparable sales grew 3.4%.

• Store count reached 437 across 27 states after 71 net openings; positive comparable sales had continued for 39 consecutive fiscal quarters.

Financial highlights

• Gross profit increased 22.8% to $291.9M; operating income rose to $92.9M from $77.0M.

• SG&A grew 23.8% to $199.0M, including $25.8M of store-related costs, $7.8M of corporate costs, and $4.6M of share-based compensation increases.

• Net income was $57.7M versus $48.0M; basic and diluted EPS were $1.06 and $1.05, respectively.

• Operating cash flow was $87.9M; investing cash flow was $(99.4)M and financing cash flow was $1.4M.

Outlook and guidance

• FY16 plan: open approximately 85 stores; 53 leases were executed by Jan. 30, 2016, with 14 additional leases committed by Mar. 23.

• FY16 capital expenditures planned at approximately $44M, including $27M for construction and opening of 85 stores; expected funding from operating cash flow.

• Long-term U.S. store opportunity estimated at more than 2,000 locations; new-store model targets approximately $1.6M first-full-year sales and payback under one year.