Earnings call transcript Q2 2023

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

Operator

Good day, and welcome to the Five Below Second Quarter 2023 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. Please note, this event is being recorded.

I would now like to turn the conference over to Christiane Pelz, VP of Investor Relations and Treasury. ahead. go Please

Christiane Pelz

Chief afternoon, and for Good conference thanks joining Chipman, President for On Operating Bull, Thank and Officer; Below's everyone, second today Kristy and Anderson, Joel Five call Financial results Officer; quarter us Ken today's Chief Officer you. Chief are and Executive Treasurer. XXXX call. financial

accommodate queue. management made their question the Please questions. to to has formal one open the After limit enable to everyone to us call remarks, we in yourself will

as I you forward-looking during differ and the and remind Securities statements. of that need call and are this statements Such meaning uncertainties provisions forward-looking to the materially cause unknown to Litigation XXXX are results made to the actual from risks comments Reform certain that Private could pursuant may of statements Act such to constitute Harbor amended. within both of Safe subject known made and

uncertainties filings. obligation this release we are our date press of not described call, the statements Those statements. forward-looking as update the are any undertake forward-looking risks today do The and of in SEC to and our and made

of by copy the you obtain not may press Investor one at website If release, do Relations you today's of fivebelow.com. a have page our visiting

call to will now I turn the over Joel.

Joel Anderson

Thank you, Christiane.

started, introduce Before Kristy new Treasurer. Chipman I officially get want to our I and to you CFO as

she the to on hit in And been board. weeks, business. immersed excited six while already her really have only are running has the and well We here ground is she's

Below. resource to Kristy, the and Bull COO March, great has we welcome he been transition. recall, Ken a with As to promoted to Five you help in

now our Moving second results. to quarter

million growth to transactions. in sales deliver our line to continued guidance to $XXX with pleased by over sales X.X% with driven which increase, are comp be QX XX% and We

is increased outstanding Beyond our even our transactions that the illustrates that value, a WOW offering represents success strategy dollars once again conversion stretching further. customers when This of strong are Five the value comp their X.X%. more and appealing Our of appeal

of Diluted earnings range, per share approximately increasing came end to in XX% the our outlook high towards $X.XX.

a performers teams we Our a Notable of curated our candy, Anime, saw of across Collectibles snacks Squish, world. of including beverages. our Kitty, reinforces trends Hello again version broad Five merchant relevancy, were assortment variety product continued and and Below's popularity consumables, and that

such also teams bracelets jewelry, and Our the with products. clothing, as beauty popular trend stylish captured Swifty friendship

releases into stores. Finally, Mario were movie Barbie see licenses to as our we Brothers April begin in to theaters like in grow Super customers drove thrilled July again in and the new late

of anticipation only source buyers quickly value mini can items, customers. release Barbie the styling amazing a a for all $X. a dolls, sourcing successful our we related example product is at beauty This selling of our for of Barbie how great In and on a trend movie, were several sets to by head, even capitalize including able Barbie incredible

Overall, long-term across given underpin with were the Triple-Double still five executing that progress vision. the and challenging key Five pillars we economic our pleased strategic Below's in results backdrop,

quick give each. me you a on Let update

for potential opened growth a under payback our nationwide new In X,XXX of across expansion. key over stores second year. pillar first The With quarter, the are a states. new period us economics is store the driver with industry-leading store we XX stores locations, remain new and XX

list. opening made in openings Louisiana these our XX of top One all-time grand

strong new pipeline for on the to opening track of We of our to have and a estate our see goal this XXX stores great marketplace opportunities stores real teams remain achieve continue XXXX. in over year

half historical XXXX much openings an four closer we our will cadence. As open next our opening get XXX to over months and stores example, in XX-XX the will first

to in are pleased Investor prototype we of XXX We announced goal conversions. Day stores for completed our brings close new total since fiscal This potential. store aggressive have an at store to and set the March our XXX Moving second XXXX to XXXX. conversion already converted pillar, over to

average We through volume addition products see transactions, continue Beyond the well both of to these Five new as converted our ultimately higher as sales drive unit and stores and services. growing

is pillar passion. United and extraordinary third Five while value, in product brand strategy. persistently Our merchants product Below's and customers our great newness is and globe. Finding the across both for States value trends our at And the pursue

bring new excited future. global India about opportunities the sourcing will the office are We in in and it the

beginning the strategic in drive strengthening Asia benefits realize suppliers to partnerships team the already in of key region. to having our with quality and are with We speed along own improve

office will source first be In upcoming the for fact, delivering in product holiday the new we time to this season.

into On to cohorts our analytics understand marketing integrate digital the continue we better to brand customers. and of data efforts strategy,

As life for with I we new off kicked a last goal May, bringing store to the marketing the Beyond in of quarter, mentioned campaign the store format. conversions Five

efforts by our brand We Through growing is on everyone. to increases has in transactions word media, and customer value believe itself it count. go-to evidenced was Below fun, and and a want out social the we the as as Five new ensure for reaching in presence and successful brand customers established to

in the fourth is optimization. scaling effectively, you Ken vision. delivery as other the a of four while on pillar Our Ken Triple-Double COO few pillar now also inventory is the enabling pillars is This minutes. update focused will our ensuring are

Triple-Double, focuses improve that on pillar, on and our talent innovation, in critical advancement, through the opportunities associates wages the training, achieving fifth investing is store The for our crew continues of and the by of the focusing engagement and to to crew year-over-year. pipeline crew

at hire quarter, this stores holiday season. later ship delivering all-important associates our the experience recruiting for for over Below to They XX,XXX are, the WOW Five key holiday customers. shopping begin looking centers and seasonal at to our will We

financial we are In results accomplishments and summary, pleased year-to-date. with our operational

we success that infused seeing staple out a each are which with A is back-to-school Five half, newness Below, with with the the We season. kicked notable off start at of year. second solid also a call backpacks,

assortment and key patches coordinated year, our customers and chains backpacks, this to added For for their example, backpacks. we introduced expanded personalize license clear

We program provided need. backpacks, our with donation significantly also over for increased in XXX,XXX kids

of rest the customers. we year, pressures the the mindful remain our we look facing of to As macro

Additionally, detail. for discuss as originally levels the expect also guidance adjusted Kristy have will more our many in we have which year and higher than discussed, anticipated retailers accordingly, shrink

this Against I'm how continue very pleased with backdrop, the offense. teams play to

our are love. and lineup have ship procured will our stores Our for want product merchants at other the our believe centers trend-right holiday ready to fresh, and teams holiday a at overall values and Wow customers of Town, plans. we outstanding supporting I thank terrific

Kristy financials and it detail. to the our Ken, turn will to words in more say outlook I that, With over before Ken? a few reviews

Kenneth Bull

also has extend And welcome finance her on organization. I previous Joel. over the of while my just a in connections Thanks weeks, she have great finance to to want six building within beyond all taken And to duties warm Kristy. and It's board.

for role achieve of us as thereby as am responsible the our Triple-Double other are I the on ensuring COO, inventory part as to track, my pillar, As new well collectively vision. allowing optimization four pillars

efficiency. last while several years, we have a also for the supply a and Over done systems chain, tools managing great implementing job volatile

to we all-important well back improved Our of current reflect inventory, our expect season. be the enter an half the positioned year with the and health inventory supply we are chain for and pleased holiday the as of levels

to leverage maximize and have to asset, better inventory drive profits. as We sales an great a to us opportunity continue ahead of

forecasting, end-to-end improving focused a analytics, Using of and technology improving turns and flow and are data replenishment on we inventory increasing goal with in-stocks ordering, and visibility.

We both replenishment begun a planning forecasting the tool. system have the and work already on financial new merchandise

our pillars, other established of and we've made. focus and the oversight about communication I progress Regarding very cross-functional positive my and reporting a and feel developed the initiatives activities better to streamline we've cadence

counter shrink efforts Joel trends am I operational leading just elevated also focus mentioned. on the Finally, team to a mitigation to

Kristy I'll through results to turn second and guidance. our to Now quarter it over Kristy? go

Kristy Chipman

and six excited Thanks at good at for be to with say the today. validated. and to like team the stores I'd And the Below adopted I'm saw thank been outside to the visiting and afternoon last what happy the Below business, talk I you from have the the Ken diving warm family. into Five weeks here welcome has that to meeting I everyone. crew. Five I'm spent

with by of forward you crew partnering is with to I looking to achieve is opportunities know none. Five Below that am amazing second each the a as business to growth the led to tremendous unique with brand culture a getting triple-double an well. and vision

on begin the quarter to guidance quarter. financials. second my and of Now, I'll the remarks a our provide with results third full the year then review for and

million XXXX comp ticket a increased of partially quarter $XXX sales decrease to Comparable the increasing XX.X% X.X%, second with increased last comp the by offset by X.X%, year. over for X.X%. transactions of sales Our

strategy. transactions comp stores, to in meaningful converted see this investment a in We validating are pleased in our our increase

transaction, retail lower increase delivered also was stores non-converted in what a offset partially transactions. decrease slight for by to price, by similar our comp seen addition, per driven unit average ticket now. The several have quarters In we positive comp units in

XX opened new quarter of quarter locations. of an approximately the productivity stores, year last and with the pleased stores states XX with to compared XX%. to across our stores XXX in continued second stores We We the X,XXX or increase second XX opened quarter in new new ended be the

lower up XX profit million. $XXX.X of inbound to XX.X%, the basis last margin approximately for Gross costs. XX.X% increased points XXXX over by was by driven second quarter to Gross year freight primarily

basis points marketing for the XXXX versus increase to of driven year, higher versus second last second planned As a XXX a quarter expenses. percentage last SG&A XX.X% normalized and expense of and by costs approximately quarter store-related primarily increased sales, incentive compensation more year's in

XX and as a million, average margin to year. X.X%. income $X.X rates Net As compared $XX.X benefited balance a higher from we operating while decreased basis income approximately was at million result, larger operating interest as cash points finished $X.X million, last interest versus to

tax second to Net to per in quarter for the earnings cash, was year. the increased cash was last $XXX equivalents XXXX per for our quarter $XX.X ended compared credit. earnings XX.X% second share quarter investments million, of with nothing income no XX.X% share rate for effective second outstanding the second including $X.XX on the compared of million XX.X% of diluted line We XXXX quarter second Our last $X.XX. the quarter debt of diluted to $XXX and and million year's in

basis season. year. quarter end the in-stock second was decreased versus inventory strong per-store $XXX to of the for as million the receipts quarter inventory end accelerated $XXX on approximately of the the at when purposefully the holiday second last last XX% positions to compared we XXXX million at a second quarter Average ensure year, Inventory

Now on to guidance.

guidance million As unless XXXX a and XXrd $XX still to remarks is to approximately expected includes approximately year on refer noted. sales EPS. year full otherwise add in $X.XX My in the a will reminder, fiscal which week, XX-week

any include future not impact share-based repurchases. from does share guidance or Our potential accounting

quarter. third the with for guidance year and start then to I'll full the turn

are the in XXXX, of in our XX%. X% billion an increase sales $X.XX X%. to range is increase to For the reiterating expected XX.X% of we to billion, comparable sales of still $X.X to range be The expected

this the rate, guidance, line in At since XX.X% total of sales with XXXX. of or four-year first CAGR to are growth is midpoint the CAGR, XX.X%. for the annual half deliver expected This period compound a

the With basis operating margin, respect we XX at points midpoint, approximately guidance to to lowering by XX.X%. are

to For anticipated due is freight due the leverage year, higher guidance of shrink we to leverage magnitude though than margin costs, lower the still gross prior expect reserves. lower

one-time than to deleverage year leverage of to offset and certain management margin lapping lower gross This strategies is last in we put by place due more be incentive expected SG&A compensation. cost

counts we're shrink, results on and the inventory currently the relates seen physical As a negative across to trends subset reflect stores anticipate of conducting industry. it will our interim

Therefore, to the and the in year, compared expect third balance reserve prudent and the a to we impact year. due is last higher the to for shrink our it we anticipated true-up year-to-date believe of quarter increase significant rate

the quarter lower. to to be expected impact is The much fourth

working mitigate the are shrink the increased help initiatives several throughout expense. and We on to operational organization

approximate are guidance versus our reduction. of $X.XX, be diluted earnings with to representing the now EPS lowering the We X% per $X.XX an expected prior share midpoint of midpoint

in our of free growth generation, XXX over rates, healthy to year income cash and We end XX%. are this on open With interest cash year. new assuming a X,XXX flow the with increase balance and still we strong over higher stores or track with approximately to combined unit significant year-over-year net remain interest stores

XX.X%. in of a currently the expect of tax year is implying of higher expected XX.X%, We million of be to effective year-over-year million, share of a income for earnings to rate growth $XXX rate growth $X.XX, half effective XXXX $XXX second XX.X%. the are to the for range of assumes XX.X% full XX.X% which year XX.X% be to approximately XXXX. representing per to Net expected over in of a rate the $X.XX Diluted tax range to

excluding approximately With per comparative distribution to diluted centers CapEx, basis, XX. This of for opening XX.X% plan growth systems million XXX we total the to and impact tenant implied our converting expansions allowances. and to in in to be earnings XX-week the still over X%. a CapEx, spend over to and $XXX Arizona infrastructure. reflects share locations, investments store is On respect XXX in new in of stores, commencing gross Georgia

in third plan third third stores XXXX, XX.X% latter For these expected the opening increase the an the to stores million approximately range to year. open majority compares last to quarter in are of quarter. XX This the to sales to of million, XX opened of XX.X%. be quarter $XXX new net We in of the with $XXX half of stores the

third flat a assuming are X%. increase sales range comp in to the of quarter We

an of XXXX. to midpoint third is in approximate shrink basis the expect at margin anticipated of to operating X.X% XXX deleverage quarter of the primarily headwind. The points We X.X% the due

income approximately XXXX interest is third in share third Net fiscal to the for of the $X.XX third expected be XXXX. $X.XX and earnings per are for taxes expected be are quarter of to Diluted to $X.XX the expected to XX%. share per $X.X approximately million quarter and quarter in earnings diluted versus be

quarter results the our second delivered outlook. we summary, range In of within

are As objectives year, against our holiday look progress balance we great the of preparing strategic the operational for the to teams season. and key making

release. our to earnings to please refer and our related guidance, press details other all For results

turn that, to back I'd the with like question-and-answer operator the over session. for the call Operator? to And

Operator

you. Thank

begin now session. the will Instructions] question-and-answer We [Operator

Our Craig-Hallum Please Hamblin with Jeremy ahead. first question go comes from Capital Group.

Jeremy Hamblin

with year? basis portion for to in What might Thanks. margin attributable shrink operating is your joining start shrink question of I reserves and year. Congrats in change Five on the XX a point Kristy of team. on thought the Below understanding in asking just I change the the that terms for

on that you're and and strategy that do new forth, be observing and gone working feel move strategies of that out? the might to related kiosks you're that terms any if been of Or can you mitigation the to the you added years? environment that have that, to secondly, can of you've the like rolling forward stores the then there And the higher just we adapt couple change pathway all do in in sense so the self-checkout last shrink

Joel Anderson

Yes. Jeremy. Thanks

is not take Let last basis changing only that. changes I pretty quarter, shrink. and point on we're the the mean, with really the topline, the decline XX of us me obviously, based the making much assumption is the change all from that with

and And right and though, now maybe both about of we're a about past ACO, a in inventory. as kind maybe role for think, what about questions asked got few Ken's And COO, role lot lot comments of all in a you at I as we're because I mitigation. Ken, it. where then questions responsible things his now he's of doing think you

Kenneth Bull

of a just shrink did asked the Thanks What impacted this on had XXXX that we XX call, that year, a experienced had increase note shrink annual fiscal about we levels over you bit if recall, because thanks Jeremy. you at I'd rate. is specifically do basis around of year-end last Joel, little Jeremy, around our beginning point year this And higher XXXX. give and history to like Sure. we all

reflect that. and and tactics. a we we exited this And we work in we did Based protection higher in little the areas in rate response, you our could and on of that, asset bit mitigating some I'll But increase also our XXXX revised XXXX. we increased talk reserves policies mentioned on, about to that that

also of so mentioned the inventories this middle of right conducting over standard one-third Kristy our month, of stores. meaningful on a had our population subset we're stores, of physical bit little in stores, interim a that a the our it's

year. crime we're and you're sector are out. we this there And seeing as I are are the we and of of retailers that of last out levels kind are we across think related with incidents experiencing the levels videos initial immune not where shrink elevated noted And the finding increased recent what to familiar and end versus all media at

on margin from mentioned, financial do indications the Kristy about a a from XX basis preliminary to expect we're based the as XXXX these of doing, work Again, we net financial impact that perspective, operating points.

based experiencing, efforts. So, efforts that being includes and net that those of impact obviously higher all the than mitigating of mitigation shrink also The cost both that rates XX reduction be other we're points basis enterprise-wide in initiatives. shrink the true on savings would is

efforts you because just mentioned again, this, mitigating and Jeremy, the just to you talk self-checkout. think about strategies, -- the also the I mentioned And

know, last you are new whether challenges faced out there. inflation before, these pandemic chain tariffs, to supply not with disruption we're macro the been year. these that As it's We've

offense And of issues. mitigate This societal external from as involvement going view resolve we and impact to the like an government is it play company what leaders throughout and to local to the financial fully is a require these issue, to we -- it. macro

We've also are protection as fully effective noticed around been they've traditional measures previously. as the asset for that mitigation not

So, prevention, and comprehensive includes we efforts shrink a asset more approach are actually focusing crew of our safety. both on prevention asset loss mitigation that

And that increases, with help technology, different mitigation areas And at we've to there. look team price throughout includes improvements look the going formats, for to efforts. merchandise the and register to all policies chain enhanced presentation, procedures. supply dedicated selective We're

around seen see we that increased talked to about Regarding of historically. ACO we levels before that shrink we've ACO, think that you mentioned, expected I and

increasing we're the that here. they're what is think board seeing I across

enterprise-wide -- then So, savings. cost going initiating of -- also cost it, other some too, on be we're top and to

all coming and So, of about from where we're what doing overview it. it's just on kind that, of an

Jeremy Hamblin

the wishes. all color. Best for Thanks

Joel Anderson

Jeremy. Thanks

Operator

Barclays. with Seth The next Sigman question comes from

Seth Sigman

the Hey everyone. for questions. taking Thanks

with said a I what's happening is been slightly, that's So about points? but price think I going up what's ASPs, my Can would question you main little ticket. you around Your with bit on were talk think mix. largely the

insight you're that's If talked you managing more context much. more when look points UPT, into trend how but you so then lower some I at think just recall some come improvement, there? about quarter, input as Thanks, been And costs Any price I last for time. down? certain the a any

Joel Anderson

really on area has we're UPTs that Seth, think is slightly. quarter-over-quarter. Yes. And The which and slightly down I only transactions, the is only most is very AUR pleased making up for the proxy probably been traffic. with are consistent progress we're our

So, we're and price it's taking more the comp than sales from transactions, coming getting up. is coming just from not

And increases so, comp of we've from price taken transactions. really you're not up it's driver come the all where while slightly, really It's from. our seeing main coming

Seth Sigman

Okay. Thank you.

Operator

Your next Please ahead. Brian with Oppenheimer. go question Nagel from comes

Brian Nagel

Hi, good afternoon. Kristy, welcome.

Kristy Chipman

Thank you.

Brian Nagel

of My provided but second recognizing next But the for prepared year year, I -- just on little addressed this elevated in had a so elevated telegraphing remain those to SG&A, just think it about for rate the we've generally you you're next this haven't growth bit comments, first SG&A this half you the SG&A we to half, in the year? expenses mean, we from go year. how guidance as should fiscal question

Joel Anderson

will the next see we especially weeks. our for Brian, year in is stores think mean, unfair I And see end guidance. we'll and as at that operating She's a we tradition in leverage it's getting six you the -- But with here say, for I answer. level. question. safe year, Kristy to explosive the great to margin that the to just closer coming as give it's the get first Yes, growth But you of pretty new

shrink of to give SG&A But and figure where gross examples come to margin mitigation, a fit lot heard, got you to Ken going out that. does lot that's of cover it between We out of a on as SG&A. just

at No at this. expansion. look would And are margin job any -- operating it's different to our environments than translate and I net-net, other the other margin that macro So, level. it into paced mitigate these

we out next closer everybody, said prepared remind remarks, store year it I shared four over I mean, you and new the also here my months. back And And in with our coming to next XXX expect to stores just we to get cadence I opening XX-XX. in have

growth or on So so anything the of there's you'd know, I XX a lot Ken, that? months in add happening next don't here.

Kenneth Bull

Yes.

Triple-Double Brian, unit profile, mean, the the I feel mentioned -- extremely comp prepared the which the growth around Joel profit heard you of remarks, drivers Just still vision and with confident the kind assumes opportunity the there really in leverage. being

with what Joel So said. in line

Joel Anderson

But too callouts early to be specific for next year. given

Kenneth Bull

Right.

Joel Anderson

Thanks Brian.

Brian Nagel

Appreciate. Thanks.

Operator

Haskett. question Please Our comes go next from Chuck with Gordon ahead. Grom

Chuck Grom

afternoon, Thanks. Good everybody. Hey.

speak quarter, stack XQ throughout then guys pretty comp wondering midpoint your on to guide, Just of the second uptick relative take we a And it consistent comp if first of the does it with the the if does the the cadence to quarter. you could four-year quarter. imply the big but

is, remind can the you if implied that So, the in compares I acceleration that unusual factors drove past guess my the the of over that us there's question and/or years couple any support comp?

Joel Anderson

Yes. Hey Chuck.

think four-year look I average we is, at at your at Look growth. look store your four-year way the CAGR. it

Kenneth Bull

Yes.

Joel Anderson

in the if I And CAGR, half you first compare it's think four-year mid-high-teens. our

Kenneth Bull

High-teen, Yes.

Joel Anderson

that Aren’t Kristy? right,

Kristy Chipman

high Yes, teens.

Joel Anderson

what's then back or is it's for the half of implied identical, almost basis XX year XX the within points. And

consistent. Chuck, And it that's three think, look all to it It's then cadence, in a better relatively comp. the terms at QX within of line I in months. for was the way

Kenneth Bull

on. for Chuck, what our guide And that, is we to had expected also, line add with to early QX much just in pretty

we If you gave guidance recall, when for on the year. call quarter the this spoke fourth I about we think

at kind we out of a year year. really multiyear In of expected terms be early performance, laying the stack by if as of what -- had look you geo cadence in the the would is quarter

Chuck Grom

That’s great. it. Okay,

Joel Anderson

Chuck. Thanks

Next?

Operator

JPMorgan. comes question Boss go Please with Matthew from next ahead. The

Joel Anderson

Matt? Matt?

Operator

Hello, muted? your Matthew. Is line

Matthew Boss

Hey, sorry about that.

Joel Anderson

Matt. ahead, the to going but for was you, go up I Matt, make question you

Matthew Boss

could saw you income the couple trends of quarter, that to discretionary on know elaborate category across things. I to specific call anything outs cohorts, but on you relative out? more touched maybe So, Any call third by to Joel, you a Maybe consumables? August

to your half? into chase the holiday, second on elaborate lineup product that the just just maybe flexibility demand you then and cited terrific And in of

Joel Anderson

quarter lot our form second on product Yes. and skew little of trends, version bit. questions like. or the in to candy change. much Look, It all first a category towards comes not which a of HBA The the continues quarter, and Matt, of consumables

that from to QX was So pretty QX. consistent

licenses, huge quarter, call impact was to the the emergence The just reemerge. interesting did there while Mario out and change it's on Brothers just that Barbie, see nice a we not of licenses

We for haven't anything licenses really really here. seen years of there been hasn't meaningful a few movies since

So, that's really good see. to

to Cohorts, nothing call out.

continue really we're that across all to but cohorts, talk for down no pleased se a call but just about really trade would product. to we competitive the per ready We see with strength I'm out. hey, not And for then, and reasons, great holiday back-to-school lineup got

in I anything, store store if becomes than want. a the a fourth say needs whole would store And of rather quarter our

fourth Matt. way, excited and what's this So about coming quarter

Matthew Boss

of luck. Great. Best

Joel Anderson

you. thank Hey,

bet. You

Operator

go comes with Heinbockel The next question Securities. ahead. John Please from Guggenheim

John Heinbockel

in of All about, Five in right? putting assess for reset early when I positioning and but know down, the quick a right? to be tech to fourth I Joel, couple right. than bit Two the you Beyond for would of questions, right, would then been So, in it's seem think ready about you're your It years. better holiday, trade a how quarter, not talk

right? you out problem Because where that? had is do don't then on big Or is more think turnover? And stock, of I just it the on for it think is opportunity biggest Ken, you've inventory? So, inventory a

Joel Anderson

Yes.

I the Five our close to us to Ken. half reset, Look, last for the going we're to tech change, on but the me have mean, stores call Beyond biggest difference stores. biggest it the John, Let comp over year year. is turn great magnitude and out think of versus and this just approaching I it's start

Beyond last that's merchants for from part a on full learned we given And our and the Five prepare year lot a that. to performed year how

inventory, But think matured running better in coming. I start there's so a year, that And than about than also we few that's much head last have and licenses would that's we're better in can certainly a last a And situation already much other years. then, then year a prior didn't big shape and year. this things

Kenneth Bull

the the the the internally, Much are about about there. better the the can sure all us. we for got in And The mentioned we you location for there. better day, we still right of making it's I right there's buying Joel the turns. at John. feel at on position, trends compliment ability better that opportunity But And time. right stocks, inventory there thanks out in-stocks. we've Within still do mean, spoke the end feel

We want to to have in make those them of we ability appropriately. the sure trends and buy place to customers continue the put or front

there's opportunity from technology. from incorporating So, out come going to and It's it's to And process. going also data come still there. analytics. We're

still to we So, there. have a see ways improvements go, to

John Heinbockel

Okay. Thank you.

Joel Anderson

Thanks John.

You bet.

Kenneth Bull

John. Thanks

Operator

go next from comes Simeon Gutman Please with question Our Morgan Stanley. ahead.

Simeon Gutman

Joel, I time. restate Hi. in Simon Good I case, should my get name afternoon. a this

Joel Anderson

Hey, Simeon. How are you?

Simeon Gutman

All right.

You got it that time.

little retail to the wanted I in and So, seeing bit quarter. follow on on this we're fourth movement value a

trade seeing down. not you're said You

to you mass, getting your share better the seems I'm little others. curious, of your movement, but we're than dollar value fair -- even stores do, discount that suggest a traffic if you're seeing

if Beyond there's there's that's if anything anything curious, So, there call out changed? within, to Five

ago a you being does well. to as John's fourth when you around. Curious, lineup And two out the your quarter value. been could this for called it I was can it on or I customer positioned reasonably prime your that have point, if think And think comment year well it for time

Joel Anderson

up, trade customers down, lot to is look it's of referring on was But look, clearly, new of to the how a and our seeing others the general the traffic some up down. trade I at door. I of in sense Yes. more mean, the

Five I our I And just so lease of think when off this that season. needed. shows I the year, And time mean, we're think more is more the this to customers. is relevant time Below

up. So, to ticking see that really

is customer it. marketing the working, Our needs

really I And isn't out And set again. up kids' is is, all we're there. for really as then great out in stuff, but certainly, vogue really Simeon, there called nicely think holiday. holiday other the a And you value any retailer

Our at time. holiday needs for becomes of store store a families

momentum. And for -- we're what excited about into And going really QX I'm seeing of here. lot we're so a

about, and call all know asked the earlier. are for The I tech cetera. for the want John just cetera, questions the just competitive of Beyond specific to say being et items, done, I'm next But et to Five that have you Some going done resets reasons. those

Simeon Gutman

Yes. Thanks.

Joel Anderson

Yes. Thanks, Simeon.

Operator

question next go ahead. Please with from Fargo. Wells The comes Kelly Edward

Edward Kelly

a everyone. that that, The Hi. shrink accounts. you Good it last time about to wanted January think I ask question was I after shrink. follow-up on talked your afternoon

You XX basis mentioned headwind. point year-over-year the

It points now, an cost basis you XX looks like mitigation. have but additional

of we're year-over-year? really wondering quantify much terms like I'm if much it So, how really up talking in just you could how is

forward about we risk we've seen can then low? do rolling the January, in think here, don't think around think right? you the bottom shrink, And you as still you again unemployment Do count I

the last this a way part and talking that organized stuff people initially, of is I think you. then coming there's from about. into to employees? lot its where But are Thank crime, worked of this has customers it And all there? more is traditional

Joel Anderson

basis Ed, all increase some I painted the all Yes, things still of We'd XX are in you the to our just guide, for of efforts. mitigation last mean, we the quantifying for of scenario, from the doing you process all we've in the call, unpack. worst-case reconciliation, remember, from a year. our think to already the And mitigated got probably I there's lot on you

policy. water I ago, mark. We've year in new do it. a anything the In damages June, our now a we weren't put policy. is high seen about we've pretty changed difference much return think The doing is we

mitigation the started. are we in efforts all putting just So,

front exiting XXXX XXXX. stores the on included back we also were lot that the shrink that a of and were This inventoried XXXX And everything the through of from back inventory of half XXXX. half includes really remember, that

job and really watermark it. it's our a now mitigate of have to high we the sense So, good

And to fully remains are of to having. seeing somewhat a this Ken the increased and a but that out shrink to said, after job really issue all the is silo get and as fact retailers way mitigate, figure our we're mitigate this

simply $XXX coming just And angles. prosecuting several so now, where the on coming which cities got all And aren't you've level. It's is it from? below

that I while here exit rates. and Sadly, integration included improve. shrink highest and what a at City Below we yet Five think city we seen be things strategies do that watched are some there, closing Wow Town type don't don't Target, of our we're we these our is hometown so of as Center to And the in of if will that's consider we've watch Philly extreme see stores

is that. could think, XX basis I guide, that points be points. to as amount our is XX it's our basis in be, big job a to think mitigate -- total, tell around I by can it's and XX to going you we So, And

Edward Kelly

Thank you. Great.

Joel Anderson

Ed. you, Thank

Operator

Citi. comes Our with go Paul next from question Lejuez Please ahead.

Paul Lejuez

getting talk that Is from that lift, an transaction on does give you'd And Can guys. you're breakdown the thanks Hey trending good about remodels? lift anticipated? lift update the we as as us markets, the between just your in over increase mature more versus And then versus Thanks. with and productivity markets changed curious how invest lift time? And in what seeing? ASP? has you're transactions that your mature how

Joel Anderson

Yes changed Paul. mid-single-digit look, seeing I with in still even stores. than nothing's lift the being transactions We're mean, converted on higher that stores. conversion

conversion this excited are uber and strategy. we really, behind I standing So mean,

is year-to-date. back and got We've year this right lift expect what last Did that year continuing we've XXX But there, with at I to Paul? of are mid-single-digit this we the year stores. see that consistent that all some to year with next saw again get the more that end catch after done and

Paul Lejuez

the first is one. That

productivity newer Second at is versus seeing? on markets, one more looking what you're markets mature, your new store your is mature

Joel Anderson

I to-- they're were I Well, -- NSPs think mean, Close we what? came in --

Kristy Chipman

Close to XX.

Joel Anderson

yes. XX,

Kenneth Bull

types Yes. And it's and relatively the of consistent regions. stores through

Joel Anderson

right. Paul. All Thanks

Paul Lejuez

luck. good guys, Thanks

Operator

ahead. Please go comes Our Truist. next question with from Ciccarelli Scott

Unidentified Analyst

a Scott. Joe by for seeing demographics? the my income question. on different in call Thanks areas Hi, in to you're guys. This bit so I lift out Is for you'd the remodels. follow-up taking Actually, is there mid-single-digit anything wanted on little just much

Joel Anderson

consistent. type by of it No. that of and income an bit higher lift Honestly, a we type that matter older where of pretty we're in seeing the same demographics, that opened it's thing, consistent it's see we terms stores. and if If converted. income it's pretty anything, no But store we've consistently, little demographics

Unidentified Analyst

and then know been just closer holidays. question. And about people guys I one to talking Thanks. have follow-up Awesome. -- you shopping

you around what Halloween for Just year or thinking trends something year. you boost incrementally wanted expect to the versus were this half same? latter about last see that Would

Joel Anderson

similar seen pretty for a -- yes. year it holiday Halloween think this consistently we've closer the I No, will as over I Well, well. be to and think now, it's year

Unidentified Analyst

Got it. Thanks so much.

Joel Anderson

Yes.

Operator

Our Please next ahead. Michael with go question UBS. comes Lasser from

Michael Lasser

my lot question. a Good for evening. taking Thanks

Joel Anderson

Hey, Michael.

Michael Lasser

In to average. margin had years Hi. XX% prior follow on pandemic, three a the operating

guidance XX the the after of Now despite $X to incremental probably you're the basis your going to heels reduction operating sales. of margin on point increased billion an shrink, have around XX% having

you're the to back to operating is expenses Thanks. function to be there it are prior comp drive year, it fixed next was going generating can order you margin You mentioned place would strategies simply in restore targeting to leverage put growth the that margin other to but pandemic? a So, profitability the to what where the to expansion? back needs that in expansion XX%? of get the happen Or to

Joel Anderson

Look, that. Michael, think said last hard was the didn't and Yes. certainly, not to we're year But XX%. lose to let's over going And you we Hey. that working this something increased of shrink mitigate aside continue year. was sight now

you're -- closer our to end the taking low of not we're our of you're So, going guide, guide. our assuming be end high to

time going So, we lot of going improve that there's that -- coming. things a to to lot to are that's Five spend to for start the money mitigate We're lever think I going stores two as are it, But Those off a to we leverage big and these Beyond find get continue converting. into to us. put of that. things of

to stores. -- in pandemic. And really also, XXXX about be for we're accelerated due been our new setback we've three the then behind back we to And years wanted that's we're where a

are new huge here. come of the our so got going online on months, a on to stack We've next stores coming XXX really next coming in the beginning year. four And

and back a all fixed. haven't that to towards We contributes close XX-XX,

and his we systems We're lever really lever leverage. invested not the in. going here. the Ken are years off any then DCs. investments those going next And two focus We're centers distribution opening the in off the We'll to on to we've all help made

So, there's a lot of leverage that's coming from all those.

past I But to here all of so end you year those think you into it's I to put our exactly job the quantify to the your new and back can that towards come models. store growth Thanks for advantage we see strategy mitigation that shrink, the of Michael. this in nothing and upside get take working. but efforts then Five put and as Beyond

Operator

question next Please Advisory go comes Telsey Feldman Group. from Our with ahead. Joe

Joe Feldman

there. Why the finding you Yes. your there's go Hey, guys. impact for meaning question. minute? for taking don't the half? back how I how stuff are plan, second that's planning Thanks shrink my does And guys to presumably, a inventory you're And not for inventory

have And per the expect to I'm of should wondering end so you And like basis order now either quarter? look on maybe more. it's how each inventory Thanks. store a or to we on a at total

Joel Anderson

levels, Yes. the Yes, store look terms to Thanks in if basis. a we on we inventory inventory Joe. of average normally per out speak

think this forward, end single-digits. QX, saw to this of probably roll similar it what we double-digits, I at of we you XX%. down about I down if were quarter, the end be expect end QX, to more of

think of shrink, product would second I there. question the these allocating first your higher shrink to management the are And levels. stores more improving disciplines response to -- the inventory Again, part obviously reflection, that's yes, us we around your our be a out in of those then

in then be, and stores sure appropriate going we position obviously, made that we shrink in I what forward. are make estimates adjustments make and we're inventory coming of mean, the than to an higher would the

Joe Feldman

Got it. Thanks guys. Good luck.

Joel Anderson

Joe. Thanks

Kenneth Bull

Joe. Thanks

Operator

with comes go Please Montani Evercore. question next ahead. from The Michael

Michael Montani

the question. taking for thanks guys, Hey,

see if in just the there you margin started in terms had comp a on First, the comp of was I I geography out And then follow-up. and/or range? August just to any if wanted call

Joel Anderson

there if storms get on of ago rolled next here, for when calls, see but Florida like week and Mike, geography could a follow-up. right margin change. these Yes. there's you that no week just California a obviously, now. a real rest it for to through We're We through trying get a week

look quarter start But all across together, pretty consistent that there range. and the Thanks. with really within absolutely if geographies. yes, -- here pleased Mike. And talk you QX whole Appreciate put the the to

Operator

from Markets. KeyBanc Capital comes question next Our Please with Brad go Thomas ahead.

Brad Thomas

and off shrink taking for I'll Thanks category now. to for Kristy. ask my merchandising of Hey. and welcome, stay another question question

that as here? You the we've may guess gotten mentioned fade was Barbie-mania Barbie any And I material dies sense performing it well. down? here question is,

pulling Maybe this the back-to-school, here, drive acceleration? partly it early some to kind that Thanks. country. any that away seeing may across help trends of you're not whole underway

Joel Anderson

there. And Yes. it but -- Mario Barbie quarter to -- Look, is less and and going out impacted example staying be movie just that starting emerge. think see trend it's Frozen on I Barbie, pleased and big It's -- it's or a it's merchants really really couple our near other more Barbie to something. think we're Bros, I chasing of great to but to going as of as called the of that I don't shout-out not releases, a a as our licenses

season, was here it all It backpack backpacks. for up about Back-to-school, here. in that's sign there. the had We Northeast the a great really wrapping and is

week. Thanks nothing were you'll to stores Brad. be seeing the in call next there Halloween even relevant. out set licenses pretty and in think else backpacks us actually, But I

Brad Thomas

Great. Thanks Joel.

Operator

The next question comes from America. ahead. Jason Haas go with Bank Please of

Jason Haas

but my could talk your recently? for was what of if you've it's you a business, about online thanks know taking and afternoon portion question. I small sales I good Hey with curious seen

your you've from Below store? and online-only business increased to And from any the competitors, you online us not, if just online I'm competition model competition? And what seen also can remind curious Five both if insulates Thanks. also the

Joel Anderson

Yes. online has been Look, good us. for

is everybody to small our business, total what different everybody, Just certainly, which piece low of the for it of is it single-digit very is insulates starters. else. from remind And it's profile business, a a

a impact total it material it's had small on our a if even business. impact, very So,

sense already us Halloween because early all an us. We said helps good weeks what's read. in a online get sell that, having it's is for been great now. But to of four here going for have about It online

more change, prepare it from -- every we set impact seasonal But online us first it get the and -- pure that up from Appreciate online tell and that retailers. can do helps Jason. every we Thanks. no with we And it stores.

Jason Haas

you. Thank

Operator

question comes Silverstein ahead. with Daniel next The Credit Please from go Suisse.

Daniel Silverstein

there. for in. squeezing Hey Thanks me

Just a quick conversions. on question

openings comp factored to you. benefit Five more comp shift in that So, no thinking the and focus incremental particularly transaction of this potentially comp Beyond that Thank conversions half but, store Is acceleration the along. embeds driven in back about guidance, the into given which sequential growth have XQ, conversions? has the help year

Joel Anderson

all. This incremental and more It doesn't Dan. half think chains new I was it conversions COVID a supply is getting and the from the don't at was And back at of stores. intentional towards the it Yes, in factor hangover all open. of factor that shutdown any back

back to XX-XX be class our closer of So XXXX and of class will XXXX-- the

Kenneth Bull

back will XX-XX. be XXXX to

Joel Anderson

XXXX will XX-XX. to back be

of of last change. openings, it. to much the just doesn't next a a back this By play it comp cadence So, is remains but into normal year, we're

Daniel Silverstein

in can how could, Thanks. if availability speak potential quickly, the are I just of many crew in XH? stores opening members really to Okay. you And

Joel Anderson

Yes.

You we're crew know problems XX-year what good lot we any reminder a don't XX everybody, do. olds. have olds. XX with something and That's Not really and getting of retailers for XX open. not had at hiring and A XX and availability XX, stores year

job. And We kids. and place a their for so everybody for And hire kids job. have we great a first first store loves we're

So, in issues. expect weeks really no problem don't any four about another hiring there, kick three, and here we off

Daniel Silverstein

you. Thank

Joel Anderson

you. Thank right. All

welcome. You're

Operator

Markets. go Capital Next Chukumba ahead. from with Anthony Please question comes Loop

Anthony Chukumba

real much question. in quickly I've assortment? be didn't my get of it? would you. sort to all to Barbie I other -- happy I you Would three-part Thank chasing feel just your seen mean, in is with get about words, the -- your questions Would everyone want question on do so enough? for you stores. able two how it just Were -- in taking assortment? that you the your it Are guess Barbie more? you you Just is and you Barbie, your you was I with else think Thank I'd asking. my

Joel Anderson

Thanks, Anthony. Hi. Yes.

enough. it's think I

more feet overall, we stores, certain somewhat and Anthony. in one-part it as pretty faster But XX in. to it. We The the did like than something something that. sold to thought from But we question. Appreciate short. are that's stuff chasing grow seven like it. or coming that's we've got don't with it's see Thanks we're been But to are definitely going we and chasing XX Frozen pleased

Operator

Krisztina Katai go Next ahead. question comes Bank. with Please from Deutsche

Krisztina Katai

just just I us. squeezing for Thanks afternoon. the had and that Good given acceleration growth a to. Hi. question you're talking store on

to your early should these if So, year? open risk, that next overall maybe later some can into about there's you can time, about get quarters or ability pushed just two-parts, talk on any maybe think into get we

about Just could talk locations the next labor better? just what from availability cadence is that how closures? then finding incremental to looks getting about two, like of year. you're think estate best Or now getting to XX-XX And you process that real that closer

Joel Anderson

bankruptcies. the a -- first, Yes. Look, hasn't there bankruptcies XXXX, the back time accelerated part this, hate answering to of thing and in here bunch end there And was second I the been it of of that XXXX store biggest really in period changed, XXXX. say that XXXX unfortunately, many into

so on So, time. that's the really what up helped pipeline back back we're on filling

to -- the on time, back are we seeing terms in had and building it's team. supply not We're got pretty problems we're landlords much flowing. a We've and really, then that And chain bigger building. opening of

store a have here will weeks, up. month a but and pushed that store back there six then get we have pull for or we'll another Look,

more like you. So, as seeing are it's even of amount on we we're push-backs. Thank pull-ups an

Krisztina Katai

you. Thank

Joel Anderson

be our might This there. last call, yes. going keep to got We

Operator

go Yes. comes Please Blair. question with William from The last Blee Phillip ahead.

Phillip Blee

And expanding new versus you on Great. was non-converted Thank by guys. the to provide driven Beyond could I then Thank saw transaction attributable versus color you color existing value the bit any appeal? much growth growth you, customers was during on the just a little hoping on more you. quarter? Five How locations?

Joel Anderson

those numbers I conversions? Yes, the on I have don't you know Kristy, don't -- do know, if I

Kenneth Bull

For the converted?

Joel Anderson

mean-- I

Kenneth Bull

both, were positive in right? transactions Look,

Joel Anderson

Yes.

Kenneth Bull

And positive stores in we're And actual seeing you in non-converted our stores. mean, Philip, growth. retained I new talked and about we're think customers, I growth converted so both and -- too. we're in improvements customers the

Joel Anderson

Yes.

like we as next to That's the that's and honestly, of in we strategy. them XXX and year continue bodes converted look, And just I a rest wanted the that over mean that see what well So, higher them year the see. I obviously we it's for stores. And got good just now after. to it of was -- thing. our convert them

Phillip Blee

Okay, great. Thanks.

Joel Anderson

but starting that. make focus Below going The efficiencies. for questions marketing The increasing awareness. of for work. importantly, are everybody, record to a what we're associates. Ken's on Thank put create new to number is productivity a our to work great of you, our And to transforming our the growing the going on. lot Hey, we set about really shrink, stores. inventory. certainly jumping thanks, Philip. Yes. more It's to We're brand Five of We're going A We're opening stores. in place

to the third you. great us, you the rest Thanks store. everybody. on visit Below I'll see to get hope for Five you of We enjoy night, and joining and call. Have don't our a after forget see summer, quarter a hope Thanksgiving out and We

Operator

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

disconnect. now may You

Five Below (FIVE) 30 Aug 232023 Q2 Earnings call transcript