Five Below (FIVE) Q4 2018 earnings summary

Executive summary

• FY2017 net sales rose 27.8% to $1,278.2M; comparable sales increased 6.5%, and the store base grew to 625 across 32 states.

• Growth plan targets ~125 new stores in FY2018 and a U.S. store base exceeding 2,500 over time.

Financial highlights

• Net sales were $1,278.2M, gross profit $463.4M, operating income $157.4M, and net income $102.5M in FY2017.

• Diluted EPS was $1.84 versus $1.30 in FY2016; net income increased 42.6% to $102.5M.

• FY2017 net sales growth included $15.7M from the 53rd week; comparable sales rose 6.5% on transactions up ~5.8% and average ticket up ~0.7%.

Outlook and guidance

• FY2018 plan calls for ~125 new stores; 68 new-store leases were signed by Feb. 3, 2018.

• FY2018 capital expenditures are planned at ~$137M, including ~$38M for construction and opening of ~125 stores; funding expected from operating cash flow.

• FY2018 effective tax rate is expected to be ~24.5% following federal tax reform.

• New-store model targets ~$1.6M first-full-year sales, ~$0.3M initial cash investment, and payback in less than one year.