five-20210731

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(mark one)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2021.

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-35600

Five Below, Inc.

(Exact name of Registrant as Specified in its Charter)


Pennsylvania						75-3000378
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

701 Market Street
Suite 300
Philadelphia
Pennsylvania						19106
(Address of Principal Executive Offices)						(Zip Code)

(215) 546-7909

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	FIVE	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock, $0.01 par value, outstanding as of September 1, 2021 was 56,021,792.


INDEX

PART I - FINANCIAL INFORMATION		Page
Item 1.	Consolidated Financial Statements (unaudited)	4
	Unaudited Consolidated Balance Sheets as of July 31, 2021, January 30, 2021 and August 1, 2020	4
	Unaudited Consolidated Statements of Operations for the Thirteen and Twenty-Six Weeks Ended July 31, 2021 and August 1, 2020	5
	Unaudited Consolidated Statements of Shareholders' Equity for the Thirteen and Twenty-Six Weeks Ended July 31, 2021 and August 1, 2020	6
	Unaudited Consolidated Statements of Cash Flows for the Twenty-Six Weeks Ended July 31, 2021 and August 1, 2020	8
	Notes to Unaudited Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	32

PART I - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

FIVE BELOW, INC.

Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share data)


	July 31, 2021		January 30, 2021		August 1, 2020
Assets
Current assets:
Cash and cash equivalents	$	126,195	$	268,783	$	160,338
Short-term investment securities	286,929		140,928		41,670
Inventories	347,302		281,267		294,057
Prepaid income taxes and tax receivable	9,410		6,350		15,496

Prepaid expenses and other current assets	69,504		58,085		58,965
Total current assets	839,340		755,413		570,526
Property and equipment, net of accumulated depreciation and amortization of $317,499, $278,019, and $244,453, respectively.	677,183		565,351		505,299
Operating lease assets	1,086,386		975,862		911,631

Long-term investment securities	1,104		—		—
Other assets	18,921		18,144		12,791
	$	2,622,934	$	2,314,770	$	2,000,247

Liabilities and Shareholders’ Equity
Current liabilities:
Line of credit	$	—	$	—	$	—

Accounts payable	167,704		138,622		121,372
Income taxes payable	931		2,025		775
Accrued salaries and wages	41,654		43,445		18,992
Other accrued expenses	141,520		108,504		90,117
Operating lease liabilities	150,041		143,074		134,937

Total current liabilities	501,850		435,670		366,193

Other long-term liabilities	1,291		1,048		1,540
Long-term operating lease liabilities	1,081,555		967,255		908,554
Deferred income taxes	35,778		28,911		5
Total liabilities	1,620,474		1,432,884		1,276,292
Commitments and contingencies (note 6)
Shareholders’ equity:
Common stock, $0.01 par value. Authorized 120,000,000 shares; issued and outstanding 56,022,278, 55,935,237, and 55,837,096 shares, respectively.	560		559		559
Additional paid-in capital	327,211		321,075		307,506
Retained earnings	674,689		560,252		415,890
Total shareholders’ equity	1,002,460		881,886		723,955
	$	2,622,934	$	2,314,770	$	2,000,247

See accompanying notes to consolidated financial statements.

FIVE BELOW, INC.

Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share data)


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Net sales	$	646,554	$	426,110	$	1,244,377	$	627,009
Cost of goods sold	416,235		286,271		813,189		466,709
Gross profit	230,319		139,839		431,188		160,300
Selling, general and administrative expenses	144,151		106,697		281,333		199,354
Operating income (loss)	86,168		33,142		149,855		(39,054)
Interest (expense) income and other (expense) income, net	(1,071)		(500)		(2,048)		(357)


Income (loss) before income taxes	85,097		32,642		147,807		(39,411)
Income tax expense (benefit)	20,256		3,061		33,370		(18,410)
Net income (loss)	$	64,841	$	29,581	$	114,437	$	(21,001)





Basic income (loss) per common share	$	1.16	$	0.53	$	2.04	$	(0.38)
Diluted income (loss) per common share	$	1.15	$	0.53	$	2.03	$	(0.38)

Weighted average shares outstanding:
Basic shares	56,007,970		55,786,823		55,989,399		55,844,418
Diluted shares	56,299,491		55,966,840		56,287,095		55,844,418

See accompanying notes to consolidated financial statements.

FIVE BELOW, INC.

Consolidated Statements of Shareholders’ Equity

(Unaudited)

(in thousands, except share data)


	Common stock	Additional paid-in capital	Retained earnings	Total shareholders’ equity

								Shares			Amount

Balance, January 30, 2021			55,935,237	$	559	$	321,075		$	560,252		$	881,886

Share-based compensation expense			—	—		5,695			—			5,695
Issuance of unrestricted stock awards			400	—		81			—			81
Exercise of options to purchase common stock			200	—		6			—			6
Vesting of restricted stock units and performance-based restricted stock units			92,914	1		—			—			1
Common shares withheld for taxes			(34,682)	—		(6,623)			—			(6,623)



Net income			—	—		—			49,596			49,596
Balance, May 1, 2021			55,994,069	$	560	$	320,234		$	609,848		$	930,642
Share-based compensation expense			—	—		6,457			—			6,457
Issuance of unrestricted stock awards			413	—		80			—			80
Exercise of options to purchase common stock			10,246	—		352			—			352
Vesting of restricted stock units and performance-based restricted stock units			17,339	—		—			—			—
Common shares withheld for taxes			(1,879)	—		(355)			—			(355)

Issuance of common stock to employees under employee stock purchase plan			2,090	—		443			—			443
Net income			—	—		—			64,841			64,841
Balance, July 31, 2021			56,022,278	$	560	$	327,211		$	674,689		$	1,002,460

FIVE BELOW, INC.

Consolidated Statements of Shareholders’ Equity

(Unaudited)

(in thousands, except share data)


			Common stock						Additional paid-in capital		Retained earnings		Total shareholders’ equity

	Shares	Amount
Balance, February 1, 2020				55,712,067			$	557							$	322,330	$	436,891	$	759,778

Share-based compensation benefit			—		—				(3,536)		—		(3,536)

Exercise of options to purchase common stock			2,136		—				65		—		65
Vesting of restricted stock units and performance-based restricted stock units			204,769		2				—		—		2
Common shares withheld for taxes			(46,532)		—				(3,299)		—		(3,299)
Repurchase and retirement of common stock			(137,023)		(1)				(12,662)		—		(12,663)


Net loss			—		—				—		(50,582)		(50,582)
Balance, May 2, 2020			55,735,417		$	558			$	302,898	$	386,309	$	689,765
Share-based compensation expense			—		—				2,416		—		2,416
Issuance of unrestricted stock awards			584		—				64		—		64
Exercise of options to purchase common stock			83,814		1				2,196		—		2,197
Vesting of restricted stock units and performance-based restricted stock units			18,030		—				—		—		—
Common shares withheld for taxes			(2,885)		—				(297)		—		(297)


Issuance of common stock to employees under employee stock purchase plan			2,136		—				229		—		229
Net income			—		—				—		29,581		29,581
Balance, August 1, 2020			55,837,096		$	559			$	307,506	$	415,890	$	723,955

See accompanying notes to consolidated financial statements.

FIVE BELOW, INC.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Twenty-Six Weeks Ended
	July 31, 2021		August 1, 2020
Operating activities:
Net income (loss)	$	114,437	$	(21,001)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	39,480		33,200





Share-based compensation expense (benefit)	12,353		(1,033)
Deferred income tax expense (benefit)	6,867		(8,711)

SEC Form 10-Q filed by Five Below, Inc.