FIVE - Earnings call transcript Q2 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Five Below Second Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Christiane Pelz, Vice President of Investor Relations. ahead. go Please ahead, go -- Christiane. Please

Christiane Pelz

the forward-looking today's Hi. Thank unknown Private Officer; as for financial cause and everyone, could Anderson, On thanks that Ken Bull, Officer and Good us Cole. results and today I results made made and during and you obligation Safe remind provisions that forward-looking statements uncertainties Executive to uncertainties call. XXXX comments our today to to are forward-looking actual the in filings. such and afternoon, from joining made differ has Reform their quarter will described and the forward-looking for to are management of Act to remarks, and The second After of subject press risks release SEC Securities meaning we amended. undertake are the Joel are statements. of any statements. Financial made need open call you, risks Such do Five our not Chief date of and are statements this Those statements may and within constitute this Treasurer. update the XXXX pursuant the formal that call are as call Harbor and Chief conference materially known we Litigation President to questions. of Below call both certain

release, of one over you call will If you our turn I obtain do fivebelow.com. Relations a Joel. not at now may have to press visiting today's website the of by copy Investor page the

Joel Anderson

three topics review quarter XXXX for joining I on everyone today's quarter for earnings will the Christiane, results. second second and First, and our you, thanks Thank call: call. Ken broad discuss us

Triple-Double. third and business discuss focused the we Second, discuss future vision updated near-term for Five strategic Below. we remain about to the outlook And our challenges model initiatives excited third, very for XXXX, on execute are growth, the Despite longer-term in quarter and our year. for the opportunities our

X.X% the and year X.X%, sales $XXX Now and the grew million transactions. over last quarter. ticket second quarter reductions decreased onto Total to in sales for results driven by in the comparable

While low specific $X.XX guidance expected, disciplined believe than of to delivered due share Below. the expense as lower impacted factors at result macroenvironment we our diluted earnings Five end of management. by to per were this was well both the sales as We still

decades. needs macro are XXXX, of front, payments the in and an based year top and dollars significant levels XXXX their changing cutting On on experiencing of lapping due consumers of areas food, spending believe is the we unprecedented Inflation stimulus in consumers' seen in fuel inflation behaviors. in not to budgets into housing

mentioned than industry. we restrictions had this customers of a environment In that and COVID substantially traffic to and sectors much are top year, stores. significant Five last summer. just retail over increased last excess years lifted, largely inventory past the On seeing addition, to more with which due across an on in impact a the also and had factors, these travel retail promotional experience-based backdrop, year, the to less year. Trends driver a are to of due the we phenomenal consumer also Specific trends Below, sales in to of both our collectively drove I healthy year due multiple other

was last difficult more Taken trends together, robust and lapping we with the macroenvironment sales expected. than year's had

our to many be we expected given Investor very at in outlined. I factors you year of unique XXXX with shared for just Day a we As us March, these

for performance, drivers near-term. see specific positive While QX the the dissipating do in see some our not we we just we all headwinds, emerging do mentioned

country journey this XX%, respectively year. our a detail back stores by continued challenging X% our outlook and up and new Ken our are tell great sales minutes. opening you openings, Ken I growth XX share will QX XX% sign our is outlook nearly Amid planned out and the long-term can QX. few number plan, shifting in is QX. reduced but vision intact As that to a our across details in more our ramping result, we the collectively from of we the of a than in environment, strategy discuss will for This we have execution. the earnings is over all

these one XX top of in of each three Texas time, in and QX, the for ranked New all grand openings California. As new summer York, stores

with trends progress emerging our product, continue experience Beyond product, made supply we our expanded of addition, Five existing capitalize initiatives to assortment. on and we chain. strategic merchandise and amazing to our also On In source and key new

For for the Squishmallows popular collection. customers Squish offering, new our we created cool

sourced also the differentiator some provide creator which ability of trend participate know of of Sanrio Below is newer unique is for the in flexibility The Kitty. We almost you products and a preferences. Hello any trends our evolving react to Worlds customer like to Eight Five to

we first summer other and novelty resonated products like our WOW and categories snacks, With ever accessories, customers also saw and an Wall. we as giant pets brand Beyond introduced business be driver items our from outdoor to us, for tent for Beyond and with tumbling tower Five Eight Our Worlds growth outperformance approach our a the new Five game. like pet unique and consumables candy, beauty. health continued travel to in

our media bedrooms, and back-to-school during campaigns. tees on second social cool and half the marketing amazing great for teams focused items at campaign our July, all which kicked fun value, backpacks, dorms with addition, off in-store In we of and

even customers. we like are to I'd closeout in seeing for buys and add drive which Finally, selectively our we to are one-time marketplace, value special more that more opportunities choosing the

second initiative, experience. to our strategic Turning

into our Investor Day fleet at March. working are We latest our in to the prototype update diligently unveiled

new Beyond the about to with and Five the provides, Beyond are double within SKUs a We reimagined and product. the Five excited concept worlds Room opportunities, store store Tech the dedicated

long-term vision to offering this are playing both prototype will is our We track how for on this and firmly and we comp holidays stores the to the offense. the year. Five and into intact example are XXX be another and new is believe over of traffic We XXXX. driver This deliver back Beyond

encompasses is analytics as customer are digital customers experience marketing, e-commerce. important component, increased gaining and which of the To and and focused the we brand growing marketing, data overall awareness. on Another digital well as new customer effective more aspect

digital in TikTok platforms better and investment by knowledge to our gathering traction are X continued is tokenization by million we market through also Separately, customers gaining video Our to over understand data them. like speaker of with as Bluetooth developing better evidenced views. our

allows we'll shop our to where, of chain. Five furthering enhanced This and is goal with by September. we of and yet they to BOPUS our customers implementation priority, Below long-term chain even e-comm, over July like our vision stores out another offering the our becoming rollout how an deliver our third to For when, in rolling of this and BOPUS complete example better wide ongoing by XXX customers to for supply our our connect experience them. an respect retailer. omnichannel With the end

proactive ways We continue for and be destiny. control our to to look

are we and our we positions for receipts deliberately inventory as out-of-stocks position and this last ensure holiday earlier avoid with pleased accelerated the year holiday the to season experienced season. We to key good in-stock

serve quickly with a strong were execute retailer our better balance healthy customers. this to to a strategic able we decisions like As sheet,

ultimately are center speed gain this to to customers. and efficiencies our have summer As shipping to we and excited Indiana distribution it to stores our our officially infrastructure, our further relates very opened

DC provides Five to our this within XX% reminder, capability a one us service Node As our of completes network stores approximately day. and

season section our Currently, the are back-to-school we'll stores of are NOW Toluene. from couple opening taking years. a our We we finishing of now pause next the DCs and converting up several weeks, a for over be

and has on year We While of our wait by new preparing you. share we I customers XXXX challenging is earlier, some our per growth and extreme can't proven focused QX that number are XXXX. sales to the them the strategy, offense have expected. of triple the with to this the by delivering we products that summary, Triple-Double share and remain for found excited and value earnings approximately stores offer than all-important double In holiday, as more playing about said cool

throughout continued focused preparing with committed high our organization are to people, our the infrastructure. We growth systems and on teams

XXX are excuse this feel past. a same We of In the to them to achieved real results in environment ability see Next open to we have me, year's with time. over consistent first the dislocations the we signs opportunities. our potential store openings, in in on to in starting new some represent for addition of are confident milestone mentioned, capitalize I significant ready opportunities the these and already product estate

Our growth reinvest in continuously our and and and fresh. us benefit customers inventory as continues products we keeping to scale

the will gifts We inflationary us all-important a believe, Ken and relevant providing for We are Ken? rely the it celebrate season. combination environment as of and customers we season, financials continues go-to near shopping that, our more stock-in for will extreme to fun value customers affordable stuff our this as experience. I over become to turn retailer the holiday detail. value in review more even in to on amazing, a With

Ken Bull

year. afternoon, provide of and third begin will full then quarter with everyone. good quarter and our Joel, the second I remarks Thanks, review my and a guidance results the for

noted, we more difficult expected. was the than quarter Joel second As

transaction ticket by Our in Comparable was in X.X%. of decrease X.X%, million and geometric sales $XXX.X $XXX.X On of for sales three-year sales XX%. second XXXX. a from by to quarter second X.X% decreased quarter driven increased reported basis, increased quarter comp comp of the XXXX X.X% second decrease million the of a comp which stack a

approximately quarter the XXXX in compared stores a second corresponding stores XXX XXX $XXX.X second opened remained the year. new profit pre-pandemic of to flat result million basis we quarter XX% of increasing second which in XX versus X,XXX last deleverage XXXX. quarter by the in line Our margin quarter second stores We where in the of operating million deleverage strong, the of SG&A average of to relatively the new compared of second cost declined stores period, XXXX. comparison offset which ticket in In Gross quarter over $XXX.X or an approximately comp. in period ended part XX our and driven as margin points states quarter end pre-pandemic increase versus Operating and quarter stores, to X,XXX was with largely outlook, of opened second in of was to this versus management. the gross XXXX. This with the was was margin negative XX by the the at quarter both X.X%, second We for to quarter across the second XX% was XXXX. XXXX expect the relatively

margin as year. last well to XX.X%, occupancy deleverage expected, approximately by negative by gross the expense as decreased on basis versus driven freight primarily As XXX comp points higher

expenses, store sales, of points higher basis cost marketing quarter for the fixed a percentage to the increase XXX second in a planned XX.X%, and on increased As deleverage SG&A negative driven primarily spend comp. XXXX of by

effective at year. earnings diluted $X.XX. XX% second Our debt, on second $XXX XXXX. XXXX acceleration equivalents XX% basis quarter income of including freight was and XX.X% compared quarter units last share the year-over-year. tax higher second last store million cash to rate approximately and basis compared of $XXX year. of per inbound with of for the second last inventory Inventory second versus The our cost $XXX a the while the by investments end was year, the Net on approximately for quarter income the ended was outstanding store XX.X% merchandize driven nothing versus of in second end quarter second of quarter line net Average increased million to year. increased $X.XX compared was quarter a million second Earnings the was for planned the increase no million last XXXX of $XX.X $XX.X total the credit. cash, in share We of deliveries last on per quarter diluted the per at of year's as $XXX per to million average versus the million quarter and

preferences, capitalize disruptions supply Our significant to disciplined on chase flexible last versus in we our logistics and trends buyers customer Overall, the teams the opportunities. adjust continued year. and experiencing purchasing chain remained environment are managing to the their and in job an and excellent supply back half chain to improvements do closeout demands of

holiday with have made pleased our accelerating season. merchandize progress we are well selling for in fall and are receipts our we We believe positioned the

back per-store We average expect year-over-year and we this this to inventory year. in-stocks as significantly the our comparisons significantly through and levels improved moderate for of year move half

Now onto guidance.

As earlier a March, Investor we of year in for this stated reasons: to First, government Day stimulus. at expected unique we significant our be the year lapping several XXXX

openings. pandemic chain the and our of impacts residual store primarily negative supply the Second, on

pressures of ongoing impact inflation business our we merchandise especially trends. cycling And on the of these greater of was fuel than of very multiple costs. year fourth, Third, factors The the a planned. and strong had food

we result, our have a As outlook. updated XXXX

of reducing than geometric half are year sales our lower the first comp which the year, achieved at a three-year $XX of we assumes For slightly the half. approximately for guidance, in negative the of back approximate midpoint an half stack On results is the estimate second the sales this basis, by X% the million comp.

we million guidance the for Specifically approximately XX% includes rate the negative impact of points $X share-based store deleverage comps last margin expect of tax increased with $XX marketing EPS fixed a of diluted to stores, At $XXX XX expense. on this accounting, quarter, to effective third due the approximately net to million X% negative of XXX basis excludes of $XXX $X.XX comp, expenses midpoint following; sales X%, and the expenses our $X.XX. the million guidance, year, new opening between higher decline to over operating between to negative million, income and which of

offset About two-thirds and margin one-third in the SG&A. part tighter in is control. cost expected be All to deleverage gross of in by

the stocking will holiday believe expected comps quarter, As be primarily that we continue, look unique save for outlook environment holiday to the fourth The with quarter ever of is and to further money gifting negative for we places for low-single driven our digits. implies is more itself shopping. macro purchases current by out current it because looking stuff and fourth than customers to

be position destination. great go-to a shopping to we in are We

for the inventory and marketing. the Five quarter, in-stocks fourth effective Specifically quarter position merchandize versus last stores and in assortment expanded expect we improved in an and more year fourth Beyond more increased

cost negative the margin last operating offset deleveraging in expense quarter year implied assume fourth than more gross by comp from reductions. the versus the SG&A driven and is also management and tighter We margin fixed as expansion cost

half guidance Our first half reduces $XX at X%. outlook full by moderation midpoint this combined our performance with year the sales approximately in nearly or the second million for

expect of billion negative For the comps assumes end sales of now we to $X.X full range year of XXXX's $X.X negative XXXX X% versus fiscal we the with of in to and X%. year would fiscal average million. volumes XXXX, approximately $X.XX This billion $X.XX million unit

of normalized basis versus guidance, prior guidance. We points the primarily year SG&A expect margin basis expenses a represents for approximately XXX from the approximately XXX spend from of operating which full in offset points is management. of of at year XX% on our part by driven by decrease last a fixed decline higher marketing midpoint more The deleverage costs and cost

We from prior of represents $X.XX of $X.XX, approximately to a XX%. which EPS the our in range guidance reduction expect

infrastructure. plan fiscal systems approximately Five distribution we gross executing For Indiana prototype, new stores opening opening XXXX, million tenant in for and primarily the in approximately a center allowances conversions investing new to over $XXX CapEx, new XXX and to in XXX excluding spend Beyond

our are results, operator strategy amazing In our our to to navigate We to our with to to cost goals. fully experience how been we refer focus pressuring business. turn exceptional the our the operate financial and Operator? an that maintaining that, over closing, as delivering and we That while that press near-term this details on release. the has please customers And concludes it core discipline earnings continue For value headwinds Q&A. financial related committed longer-term other performance, and I'll to for to remarks. our remain we always begin

Operator

our first Wells [Operator with ahead. come Please And you. will question-and-answer Instructions] session. now begin question Edward from go Fargo. will Thank the we today And Kelly

Edward Kelly

it and tough imply this morning, more really you But is start I the you is a question any to seems I guidance of of to always using than look for trends, be we're more at which we're going QX, is, not lot if Good -- go becomes have guidance about and but there. a days in maybe my some Holiday predict think obviously. everyone. wanted and Yeah. be talking have think -- to geometric realistic, QX sort to QX. four you bit does you XXXX about we as versus deceleration to on Hi. sort when probably different three-year 'XX selling year

So rebasing thought just you I'm as how guidance. thoughts around about your to curious that

because not potential that QX positive with does You I'm in like guidance much you've how much the for just quite actually mentioned out it's the some figure doesn't, thoughts sure how drivers debt? to there, of seem emerging around that's and derisked outlook or ultimately it a your trying

Joel Anderson

Yeah, Ed.

about think turn it do especially to talk we a I'll wanted trends. Let But off we The couple financially. quarter. on to and thoughts Ken QX coming just emerging me clearly, any over it last at -- and last all to this it of was about speculate thing as

nicely in on QX over Ken last those mentioned marketing, position, for in think laid there. more nice I are that you you year, out all are better tailwinds bullets several days, so pretty what's different things this inventory like year

think headwinds, unknowns length. of certainly some macro that we got talked I at you've it about of the the things

to all those talk from And tailwinds and think about And calling could not so you potential make it you Ken you it maybe together emerging stack, it a guidance. I I see if out put certainly QX think the what sense. geometric is into all baking but all in starts

Ken Bull

assortment, a When the Yeah. Ed and to did, improved expanded Beyond we I you the better we that right, more what at at marketing. saw look the in half, looked less and break point, of I first macro we about see QX stack can control, out on full obviously when things on. the in first what's look at back to inventory, and year we we then now we talked the going increased focus QX. it think Joel's as slightly we piece, the you and Five it's half, that's the geometric mentioned, half than And

going things some macro down We there August we're having are perspective, to of guiding we're is to and benefit from guiding some point seeing improvement for why to there. some obviously that's a seeing But Joel's QX. the still comps uncertainty through the and that there

push it at that mentioned terms QX. appropriate kind appropriate especially of line a felt when with year puts stack us QX which for, that low-single had feel around digit in we the comps we for put the into to of you specifically we landed comp there, it geometric forward guidance, you point So and in was negative the in where was this that

Joel Anderson

Thanks Ed.

Edward Kelly

Great. you. Thank

Ken Bull

Yeah. Thank you, Ed.

Operator

next And Please our with go from Citi. Lejuez question will come Paul ahead.

Kelly Crago

in curious guys. is elaborate out and stand I could business? planned on bit buys Kelly was more getting showing and on margin it's up just you just Thanks our This market, there what Hi, the on for around curious then for which you for just Paul. seeing if same the some categories comments your your XQ in are looked if than closeout different taking profile that benefit, question. line, the and a just monthly opportunistic

Joel Anderson

Yeah. because the more of Look Thanks, buys is it years. materiality in less seen the and the out, haven't called because last opportunistic out couple Kelly. of I close something really we

planned. just it'll still margin. years be don't buy. we to different that than on to the still where as to they have any showcase I planned are really and a positive Ken business in we fact even had and getting digits value commentary going inbound calls, ago then, it's very It's buyers started of the the know, low-single are emerge I And is So our more we're than originally more our most opportunities though, XX some to are think starting buys our overall

Ken Bull

here go merch is, those bit year, reductions. merch did QX. after margin low-single are know, started that were But a in expect fourth calling the the adjust the the, that really we around, call the quarter, healthy so fourth out, our the tighter internally to margins. we cost be expense or done structure there margin and the the feel deleverage from the and operating solely it's to we we're in in controls work I to and especially little I'm benefit majority quarter due about of to offset for seeing negative fixed and And know we're really going the to And taking cost perspective, expansion place have don't type we've I especially that Kelly. costs then a margin you fourth quarter merch negative back what was overall into to to due comps going see to but of those to happen that's the out unusual low-single on margin digit magnitude going going comp. than more half Yeah, any have if the talking digit is on of are later going

Joel Anderson

Thanks, Kelly.

Operator

Boss And question from come will ahead. Please our Matt next with go JPMorgan.

Matt Boss

Great. Thanks.

spot in your seen geometric the second proved I XXXX you've So point, called supports could then that pretty that does And XQ on to that the year the Joel on Ken, stand you've Triple-Double XXX basis which comp anything picture quarter elaborate you seen as guide, unique, components altered the than that has better obviously guess you does stack, this multiyear on. guide? larger of points improvement August it plan? so

Joel Anderson

we is unique the And have six called Thanks, to as XXXX Yeah. Call. we it We now to we clearly, thought. knew months that Matt. out, March out it's be originally proven through since going more played even about talked Yeah. Investor unique, at than be we certainly then,

with being As prototype that. the in in long-term to XXX some progress the stores aside And around year. starting specifically to today's this profit on new of made still months we've put unique Beyond six far last in moving strategy the growth goes, remarks are the as from The conversions that over for to accelerate out new our execution store we you growth incredible called profile, opportunity. a long-term our very I confident examples in

that. back that rollouts another was with systems defense, IT example example BOPUS of moving playing we're ahead we're think anymore sitting not and BOPUS I one was

scenes, reason 'XX, behind point around don't lot be teams to backing all excited a time, to accomplished And are our long-term continue on any to but this innovate. to strategy. be focus 'XX, was at Triple-Double, the were and of see our in off to really the our really meant real guide and maintain this a working clearly, efforts So we

Ken Bull

And question the discussion around the that think of guide and the QX confidence was August. I Matt second in little then around for part a

Joel Anderson

geos versus Acceleration QX. in

Ken Bull

yes. Correct,

comparable it's and deceleration now basis XXX see right, just have QX. the we and mirror, in our August about and to did have we we seen then then of you're go points over accelerating So, geos back in But July. coming off a increase And that to guidance that QX, June an you in the rearview beginning in QX. the with other are saw to August trend there items so back guide. up larger we at piece And we when of impact in And early what QX, the are August. in that year, out of is comp last was happened against performance look in our is the line

QX. that So putting forward when for about good we guidance you feel that the put all we're together,

Joel Anderson

Matt. Thanks,

Ken Bull

Thanks, Matt.

Operator

Lasser will And UBS. Michael question our from come Please next with ahead. go

Michael Lasser

question. taking for evening. lot Good Thanks a my

Joel Anderson

Yeah.

You bet, Michael.

Sorry, ahead. go

Michael Lasser

I operating XX% there like a two an comp, reduction past pace next some is even to will years again, macroenvironment, XXXX a, and in have operating flat on that two, year margin of in the increased having said, the this $X the it a then is stores, four where in year, with cost knows? margin just be into the increase Five at on ago? start is margin new could can is XXXX, business Beyond who to comp flat possible if especially Five stores, billion large a versus Looking cleaner this expansion, you of And the point even a considering an all given business along Below light couple initiatives sales versus of next experience of XX.X% year that quarters

Joel Anderson

Michael. Hey,

comp some I is guidance around into for think on QX any XXXX. what here, had you giving question. us and think you conversions, you're if just call to see let's good speculate geos don't us. asking think contributors from the and of both traffic and my go again start for of is the But to the especially I starting around I you a start already commentary accelerate start be comps for this will are can looking commentary, as cleaner back sales also at positive second us a really don't to flat, benefit some us just lot true everything aside that taken comps saying exposes see helped we the go ways, to put your not to will commented to the out beyond to that And think, read perspective will Ken it's there's even it it's and comps, a clears towards being stores, really fixed yield all, to environment, but is 'XX things forget I but 'XX, and sales let's in pointing over significantly. of make we've leverage business a on those leaner into we costs a of organization. start open cost XXX as a and

what directionally for am not here the sit I implying it way. all to correct, give you a right but and prepared is 'XX, you're thinking forecast think you're about I So just concrete

Ken Bull

Yeah.

of we you've and year I the let's leverage cost comp. we'll lever add this point, heard Joel's the really and on as obviously come point to year looked to But us it including at and Michael but for Just, Beyond on that, new provide next beginning the next had we've we and of efficiencies can mean, through to year years the that talking store this about. some to and get year Five various into more opportunities the that get areas And conversions. some and year comp through we then this we we're question, flat in asking that those And and into through comp, the a will we you're reduce at over found look get carry continue growth then guidance. our

Joel Anderson

Michael. Thanks,

Ken Bull

Thanks, Michael.

Operator

And ahead. Morgan will Simeon come from our Stanley. go Gutman next Please with question

Simeon Gutman

feels whether first fourth the through Good I Ken. say stay same you XX% on like it assumption that quarter, in it that versus share ‘XX. seeing which consistent Kind last assumes or the which the some second fourth traffic or helped afternoon, the initiatives through fourth the with year's quarter the benefit and commentary. maybe ticket ticket would merchandizing by ticket quarter two Joel Joel's you're the just moderate given that of and follow-ups, the the gets of traffic would seems better cited Does was quarter, fourth you it think

half detail just then think the they first step question, the you to year, incremental a to muscle not the more that it's it fourth? up, be could And that year? that that set this a last these next question, back that's and there that company, the answered you more so traffic that precedent is you're year of the So I the for save or into in on ticket back the recapture becomes expenses sustained doing any

Ken Bull

Thanks, Simeon.

first down we've the we you the let's forget, fourth consistently as in we right those terms XXXX will this optimal and your you're in versus future. look move definitely ahead the when since part it forward reductions has to and pre-pandemic really out move also looking a and heard, going year back some improvement I again your in to our and been are continue are down being come us and go that's in we'll we've of that's the here in you've to and QX. we're maintained think question to and pandemic, look ticket those little total or predict question predict us opportunities, be I where But the those those one bit post quarter. that transactions, traffic come at of back of hours forward. And ticket trying the So things one-off the as to comp, things that carry what when are helps as are store saw operating given things again, along continue efficiencies we into consistently are of in There reopened around your then hours not you path We've into at inside in as some expenses, view above we that, levels of QX. carry don't through will we've future. that I the XXXX. back could across this the XX% been that go potentially about that would to expect things year, for And that us on

Joel Anderson

Thanks, Simeon.

Operator

will ahead. Chuck Haskett. next our with Please from go And question come Gordon Grom

Chuck Grom

store afternoon, give productivity take. guys. quarters, we When Hey. around averaged past five look XX% Thanks. XX%, the it's over new at Good or

the much greater pre-COVID XXX% I'm why quarters. guys like it When has run formerly the almost look been you're cannibalization, close NSP to at trying Now that understand still successful, are markets run sounds than you openings you compressing? I'm just lower fleet if rate it the many new curious seeing in had any and close is, that's to uptick

Ken Bull

Chuck. Hi Yeah.

supply look couple look it You're it's right, on it an back . as around going of versus pulled on that stores averaging the stores. averaging. new got XX% inventory the like last things there, adjusted of especially things and existing really and where levels post-pandemic where is chain is There we over on opening we marketing When back we grand you at tight favored handful a quarters basis,

So that probably versus periods. drove pre-pandemic we in what saw in productivity that reduction

openings country, years over performance, and be California, stores, our I last calculations, in the think expected that's terms couple overall out consistent of XXX did one see that to called the really Texas about of just run with we been out, for basis have the in we you right, new records closer we mentioned embedded stores it to from that that called continue to we every throughout Joel come great points, three stores had And was York. New guide. we that's and in cannibalization, and those across increase stores quarter our and pleased relatively we again, out

with So new where pleased overall really Thanks, Chuck. performance is. store

Operator

next Please come our Securities. with will question Ciccarelli go Scot And Truist from ahead.

Scot Ciccarelli

Scot the where you some provide but kind you any increase year do will the year? magnitude figure and good color, color end become does you the more of wherever guys, Can provide inventory calendar can you Ciccarelli. end and on think of this that specifically a Hey, go-forward

Ken Bull

Scot. Thanks, Yeah.

we've prior really our with As inventory levels we've actually we're with calls, where post-pandemic. pleased mentioned on been

we've that operate was even really that. I been us to think perspective an able and better tighter to opportunity continue inventory get for leaner and from and

increase advanced the of that seeing sure deliveries second that of because our due shows push And which supply we are somewhere it increase disruption our You that. versus point you center we've call embedded because so units, in that in that's freight else, so the high to a is number. make out, got wanted a in we'd the than because quarter, we out cost rather to have we chunk is at did distribution I costs really that chain any number end of but was that ahead

QX. The of even are and down other moderate expectations QX end that into are piece, as we those going the as you go to move my forward, numbers into what

think down we moderation like numbers year-over-year way get the then see gut closer the I is my getting be perform able year. continue as significant even to flatter we'll end to of And we forward. to move as to that you'll that

Joel Anderson

that on this important my and was and strategic. remarks, in intentional our was it I prepared I called is think part that, the on Ken out thing

to months and went for back it, when when your and think let's I backlog for we quarter, that on planning May I sat year anybody are months come you're expected unprecedented goods far back, ago and severe April, call in fourth out going don't and that months. think a the

you see And But about the that thinking large sure in a the end. accelerate increase freight fuel thanks so by year have QX we sitting it were great no Ken with and make of decision time was most Scot then of in-transit you water of just we a sheet in started the able on about most repeat talked the we to with stuff holiday so add and debt, that, this balance don't question. making it's and the to our as it,

Ken Bull

Thanks, Scot.

Operator

Please Hamblin next Craig-Hallum our with question come ahead. Group. go Capital will Jeremy And from

Jeremy Hamblin

about or coming in overall XX% slowdown bottom is from have the but you data demographic thinking it to color from a much able have change really this seen how since presentation what in given seeing do the Investor QX? much What have whether Thanks. income how trends a I you've and color that or changing around that the you're better across sense not geographies for of what think about I track then perspective. How of Day. on it's wanted Are also back to that kind of inventory is you earners you're you in customers. your softness of end you kind of have performance to ask going March

Joel Anderson

across stores assign would them in geographically, it's good Yeah. we you, in part, demographic end, in income, should and for most comp then profile. tell think Jeremy, that board. I case, a a than And a decline I we the question. did see people. income surprise more low Look, a the pretty our our all track of in our tight higher don't household range this of, compression demographics from

I called remarks, though. fourth out think, as into prepared in I as quarter my you get

as call as wants that know, quarter right we're business. whole box did outperformed. the mostly becomes needs and more our needing living needs think Hanukkah holidays to becomes a fulfill gifts Christmas with We become the and needs they families. their go-to. a people how you opposed in now, our categories But our As out of about about think and holiday the to, We celebrating

will capabilities teams we So refill I changing at where the there have stores presentation, that our we're is one inventory on looking sell-through. do based with not think we

amount and decisions quarter make so out. to little will the the where good into in bit. to back some cases closer all can in not you as DCs certainly demographics shipped gives so we that as look that selling are out we it's And a the plays have upfront we a replenish held Hopefully, stores real-time better, the

Operator

come Guggenheim. next Please from John our with question will ahead. Heinbockel And go

John Heinbockel

how hours, one, I then holiday haven't does tactically marketing, merchandize the we quick tweaking you that right is 'XX, Five better different very things. that stuff about just drive like for mandate of right because changing little this do know terms a thinking So a about the you environment seen price content? secondly, do 'XX will long awareness? And right, because guys, thought buyers How in think content not Michael might to he two, in quarter probably persist is of Number buck what operating and time. brand fourth find of points, that was terms at on a store in things this but into bit Beyond, 'XX that two

Joel Anderson

I I give would tell earlier, QX, can I whole we've good you, about but Look sooner. Yeah. we be one got The we do prepared be it will is, think things holiday I John, yet, think two on away really to don't want do say to feel my it. playbook or

I've always of you're that, and see think so I times, number some value in past, said think is out a of value becomes, I I going important. the to And think also called I

saw have and you I that think a back is relevant point I absolutely, you're the back we to words go 'XX to since now really 'XX, recession we would use can course came with go 'XX, back back to happened we as of and think got play. really relevancy there, to into what you've the to of But inflation, even further. 'XX value

into we'll customers to at And that far focus messaging, does holiday we 'XX new little our message can away time. think 'XX, more as and on get as to you we in across. So we as talk it believe bet bit a continue value Wow our probably from you, value goes, we really and pick price sharp up points be always

into also on $X going $X, beyond. will our a really sharp probably it's points us and perspective, from going price and and on looked 'XX for again refocus that be And to think consumables. at I of bode version well Michael's our value,

a couple insights John. into So of it, Thanks. that's

Operator

ahead. ISI. And next go our from will Please question Michael come Evercore Montani with

Michael Montani

the Yeah. Good taking Thanks evening. for questions.

ask, to wanted you against off, if remodels, and Just could, just CapEx to about the some the us first that can you cadence I put that? what store tailwind remind then of is from the also the to comps there cost see

Joel Anderson

Ken call those, the here days. in the and a quantify no it's mid-single on we've digit up to really CapEx. deviate then us the last are Michael, from at out too XX Days for as ramping We reason to in Look, And did started just there's early remodels Investor little Yeah. those range. it,

Ken Bull

Depending a call, what the on full conversion that, or that's up as to if if store, it's whether same much conversion vary it's it's type a fresh existing talking Michael. on it's would going store day. the a a $XX,XXX, the going it's a of Yeah, store just, vintage cost as thing we store. for conversion from an small store it's of It existing plus of older an from probably $XX,XXX, plus an the full at can out really, end up, on you're there

Joel Anderson

So XXX,XXX.

Ken Bull

Yeah.

Joel Anderson

Thank you, Michael.

Operator

Capital Brad with from question Thomas KeyBanc And go will ahead. Markets. Please our next come

Brad Thomas

you're any Good the have point quarter? of from more higher many selection Five the and perspective potential of year, was that some this of have about comp be fourth in going Hi. a a you'd perspective talk stores from quantification more to hoping come for holiday Joel to bit afternoon. give Thanks. be much you're how more the might and Wanted the about could assortment Beyond items your more price much to expanded driver how at that little you going to question how you willing

Joel Anderson

and tough positive think value few question we'll give the by to a get that times into roughly important reaction, online walks customer more time one to though of a recognize the slowdown starting in in, we it's you. Yeah. We've time, our Look, point I I just gave I as I of that, really doubling to them answering we as deliver more SKUs. think in guide fourth they economic have that at are as think John as points and relevant having come these Brad, of comp the this the hundreds embedded more that's we and I we get to but insight And was over minutes the tune to value. seen far five in think value of as stores it's clarity becoming our the it's seen five the these quarter, in to is a even as not even ago as driver into very some some a

before. looks that newness is early especially also So think but it's plus XXX I remember, newness Beyond seen it's as you got it, final thing insights Five into year, to the the they've that's never this and

lean going Brad. Thanks, on and QX newness got we Five the and as drive by at we've thoughts the got ones So that's we comp believe in focus here. the you've and Beyond outlined to and value value traffic

Operator

ahead. next our Telsey Please with And go come Joe will Advisory. Feldman from question

Joe Feldman

in much. at or just the about stores. are risk your mean the that you're closing does Thanks, take of more you're you a different real too companies had regard that, I dislocation, seeing and Yeah. the guys. question there want estate, -- to seeing seeing where locations available growth the up mentioned some seeing to sources you I go-forward. giving better commenting curious With was

creating therefore you? opportunities So new for

Joel Anderson

sources, Well, hours but just hey, Bath Yeah. to closures. thanks, think give my Beyond Joe. all I'm even several XXX not I publicly up going Bed, announced ago and

and flowed last the decade, have the in we like have past. really and years dislocation we for So last the seen ebbed retailers haven't in that two

part we've see, I can some about think will done probably of got And to I and of the done to I significant we're strategy XXXX, you what our in strategy is outlined to emerge. earliest you us easier retailers dislocation going estate continue you these But will starting we've team give tell a hence Investor to grow. help that's which real dislocations and into So some think insight and not growth specifics is accelerate of Day, the Thanks, about densification detail Philadelphia the remember as on what at the only that. greenfield and start is our why some that into is pipeline to our get working is we what and actually starting ever to and we've the started Joe.

Operator

Jason question will America. go come next Please And Haas our with ahead. Bank from of

Jason Haas

thanks and question. my for afternoon. Good Hey. taking

it curious the now, popular, if not to meaningful seems that or more the is that wane sure may if year curious, like seeing I'm trend then sense to for be some So concern And how given right I'm also comment elaborate I'm else? sensory to any could are your the the pretty you'd Squishmallows last in reference some was that the on start quantify comps able that a toys wane, still just of future? of anything you're you that were trends to successful

Joel Anderson

of it, is Five especially a great couple be this that the has created on known the but is the and publicly, the and of events of time, they trends, our out Below constantly I they're job market the go it starts point that's something Squish, emerge. Below getting sensory nature business in are and a in to through accelerates did they're with of Jason. and But the lines just is the when other we've poppers We're that and Squish the an Sundays, if not us. so stores about sensory to big in my go. a on appreciate year there us place did believe got started going I a identifying as others, absence see Squish that, at to to talking great a this done to in But will the and is remarks, not great and see deduce waning that least in part with example in want still of of just a to always or that's at have -- be of Squish have newness out there plays continue probably I I on a we to new or of talk you hand, been who out in poppers it's it position team them call there. Well, hear probably starting they trend to I fresh. continue little, that's things know merchant then Five when come unusual and Thanks. me and teams balance and who Sure. and prepared new trends fact moderate, nature Trends to you finding not can the about don't

Operator

Belanger will Your come from question next go Please David Partners. with ahead. MKM

David Belanger

the question. Thanks for Hey.

in So, you performed QX. the mentioned well that store the of areas

see where be how somewhat improving you into changing August, with also your deviation categories? did just on helpful? those detail early versus up are So category what's downside, in any on shifted QX makeup the have And the inventories trends largest other the plan will into

Joel Anderson

obviously decline we in in who on across sales ones called it the QX, the guide, that I accelerated consumables say, and would I I those board Look, in the confidence. it's but all food this our than that's and think of I and called I what think the gave missing was not out, outperformed, Yeah. case, out trends other much half I would pretty more what back say, us that

that customer, need our really macroenvironment repeat talked them we shortfall. there I something turned those the that I around the number about it turn way a in and wasn't of internally to the did times was it off ended truly don't to So business the all

we're to not see go expecting that carrying you. third about the I'm or We big are will starting any we inventory, moderation, anything Thank not markdown away worried David. into like anything that over third in were just quarter quarter,

Operator

next from go our Capital. come question will Anthony with Chukumba ahead. And Please Loop

Anthony Chukumba

much so longer-term question. me I little have for you a bit Thank in. squeezing of a

then all does and store at how experience Dollar been deep have about out playing store of You they're General concept the pocketed guess long-term terms but merchandise thousands has merchandise rolling has a open stores, your of question, then. your change one fact this And And you think how it's in Popshelf. assortment, you. questions, that to competitor view compares sort the two does in Thank new your it time assortment their to I potential? really do of over

Joel Anderson

other doesn't retailers the Take at of any Anthony. of No the Popshelf change aware time. very outlook other competition Thanks first. much I'm all part second it that in like all. in retail, our

it about does to caters a asked it and we it than tell a I'll age feels segment you, much the different Below home merch is Five specifically goods to like You more assortment, and a me, do.

some that impact all. seen stores haven't same centers any at now have So the our we in fact and we

small fact, for a and cases, very that size more -- footsteps, driving subsets improvements, center always there any good even is you're a vibrant In some we want store it's in us. drives be some but because might drives center a sample that

the what goods so very So largely call, teens. we but Anthony. categories home and different in, they're I target Thanks would and

we one think time I more for got call.

Operator

Instructions] That's all. [Operator

Joel Anderson

questions, to want any don’t operator. I ask

resilient Below Five runway about and for So I A and believe finish your still is were an growth. up to new we everybody focused appreciate lot model and talked In times, that got these innovative today. we industry-leading of us long We a truly believe a even strong more that, questions value with several are payback joining times growth, retailer I'll I today. about we've sheet. be going store on an that is current balance relevant. economic just

merchandise to deliver We right going to a compelling value. at incredible are continue trend

thank So really forward and they've job through hard tough done I look a Their continued brand. company really of have most Thank great a to Five and making want is night. here. speaking importantly, just you to times an teams again after all Below of all work paying amazing our Thanksgiving. some great to We you off and

Operator

now is presentation. concluded. for today's you conference The Thank attending

may You now lines this your at disconnect time.

Five Below (FIVE) 31 Aug 222022 Q2 Earnings call transcript