Five Below (FIVE) Q4 2020 earnings summary

Executive summary

• FY2019 net sales rose 18.4% to $1,846.7M and net income rose 17.0% to $175.1M; comparable sales grew 0.6% as 150 stores opened.

• Store expansion plans and FY2020 operations became uncertain as COVID-19 prompted a temporary chainwide store closure effective March 19, through at least March 31; e-commerce remained available.

Financial highlights

• FY2019 gross profit increased 19.3% to $674.0M; operating income increased to $217.3M from $187.2M, while SG&A rose 20.8% to $456.7M.

• Net cash from operating activities was $187.0M; investing activities used $193.6M and financing activities used $42.7M. Cash and equivalents ended FY2019 at $202.5M.

• Comparable sales increased 0.6%, reflecting ~1.1% growth in average transaction value partly offset by ~0.5% fewer transactions.

Outlook and guidance

• Planned FY2020 capital expenditures were ~$270M, excluding tenant allowances, including ~$75M for new stores; expected funding sources were operating cash flow and cash on hand.

• Expansion plans called for new FY2020 stores; 105 new-store leases had been executed as of February 1, 2020, subject to economic conditions, staffing and other opening factors.

• COVID-19’s duration and financial impact were uncertain; temporary store closures were expected to adversely affect results, financial position and liquidity.