FIVE - Earnings call transcript Q2 2024

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. [Operator Instructions] 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. Please go ahead.

Christiane Pelz

Thank you. thanks XXXX us Financial and Below's for everyone, Quarter Second Results afternoon, for today joining Five Good Conference Call. are Chief Kristy call Officer; and today's Joel and President On Chief Treasurer. Ken Bull, Chief Operating Chipman, and Officer; Financial Officer Anderson, Executive

has comments we open the After statements call constitute made to during made of the remind to and formal safe I harbor Private the XXXX Reform the pursuant of forward-looking within Instructions]. as this meaning [Operator need their to are you call amended. remarks, management of will questions. that and Litigation made certain may provisions Securities Act

Such cause this any risks are made described forward-looking the unknown could actual and results and known in the to date of our and of uncertainties press from we obligation subject not SEC to statements statements and Those forward-looking to release statements. filings. differ The both statements. today that risks undertake and forward-looking our as do uncertainties materially call, update are are such

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

now to over I the Joel. turn will call

Joel Anderson

Thank Christiane. you,

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

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

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

results. our to Moving second quarter now

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

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

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

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

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

Finally, movie, begin grow Super several we as the beauty anticipation a a Barbie customers. April release This our related for movie like source Mario in including were $X. and stores. is can In thrilled were quickly successful Barbie Brothers amazing theaters trend to our in see buyers July late to licenses styling selling of again for at in Barbie sourcing customers by capitalize a the great incredible Barbie to on releases mini into value our of drove we product head, of items, able even example dolls, sets a how only and new all

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

give update on you each. quick Let me a

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

in increases As by life for as with I it customers and we customer new off kicked a last goal May, bringing count. store to the marketing the evidenced reaching Beyond in in of new successful quarter, mentioned campaign the store believe format. conversions was transactions We Five

our presence is and brand the ensure value a fun, the to everyone. out and media, on Through social for Below itself we has and brand efforts as go-to word established growing to Five want

in the fourth is optimization. scaling effectively, you Ken vision. delivery as other the a of X 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

success seeing a are which back-to-school half, with with the the We season. kicked off start of second solid also

call notable year. staple Below, a backpacks is newness A out with infuse we each Five at that

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

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

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

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

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

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

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

Kenneth Bull

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

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

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

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

we and replenishment improving great to improving of and and flow an ordering, a maximize of data to Using analytics, focused goal visibility. as with opportunity inventory leverage are technology better turns us drive continue profits. asset forecasting, a increasing inventory ahead and on have sales in-stocks and We end-to-end to

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

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

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 X 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 continue 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 a margin X.X%. As $XX.X operating while decreased basis income approximately at result, operating points finished million, to

million income benefited and higher average last million rates cash from interest larger as year. $X.X versus balance Net compared was we as interest a $X.X to

quarter million. income earnings second of per second in the XX.X% second per diluted effective XXXX to year's compared tax quarter was diluted $X.XX. increased the $X.XX of for Earnings year. quarter to for XX.X% rate $XX.X was XX.X% last the for Net of share Our to last XXXX second share the compared quarter

cash million to the end year. ended end second $XXX with quarter at equivalents approximately was debt at credit. We cash, the last nothing on investments when for the to second purposefully receipts XXXX compared $XXX strong per-store million no decreased as of XX% outstanding inventory accelerated million in-stock quarter the second season. $XXX the including and of last positions the on line $XXX of million versus second basis and Average the a holiday quarter quarter we ensure Inventory year, in our inventory

Now on to guidance.

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

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

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

$X.X of comparable range For are XXXX, the midpoint reiterating to XX.X% expected X% of the in to an XX%. we is $X.XX sales The be our still billion, billion increase range in to sales increase to sales of XX.X%. since expected the of annual or the compound in total of the deliver X-year half to This is At XX.X% CAGR are expected a CAGR, X%. guidance, first with period growth for line this rate, XXXX.

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

lower costs, year, reserves. to freight and due the management margin lower is onetime higher place still by gross certain to offset For than prior of be shrink deleverage to This we year SG&A leverage the anticipated strategies put last we of expect magnitude expected margin lapping compensation. in due to cost lower guidance than more due leverage incentive gross is leverage though

our currently relates to quarter across the and of is we reflect inventory to anticipate physical believe anticipated of it year, much due it a third prudent The results we're balance significant is negative stores interim industry. to impact in the year. the subset year-to-date shrink and our shrink, true-up will seen on the counts increase Therefore, trends higher As fourth expect reserve impact to last to rate be expected the for to lower. the and we a quarter compared the conducting

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

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

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

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

be to to implied are per XX-week earnings diluted XX.X%. share year-over-year for to per Diluted basis, of growth share comparative $X.XX, in to earnings implying be of XX.X%. a XX.X% range $X.XX growth On the is XX.X% to expected

CapEx, we spend and impact the in approximately reflects distribution in excluding Georgia converting locations, to new CapEx, our systems respect over allowances. still With to store This centers gross and commencing total the opening $XXX infrastructure. of plan of in million to XXX Arizona and XXX over expansions in tenant investments stores,

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

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

an X.X% are for basis headwind. expect the approximately be at in $X.XX of share midpoint third of million margin per expected third XXXX interest $X.XX are of to per earnings income the approximately Diluted operating is Net share expected the expected approximate diluted the third X.X% for $X.X in quarter the in of of XXXX. is the to points The to XX%. and earnings to XXXX. deleverage We $X.XX taxes third versus anticipated shrink to be primarily quarter due to quarter XXX be quarter fiscal

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

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

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

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

Operator

[Operator Craig-Hallum Jeremy Hamblin Instructions] Our Capital first question Group. comes with from

Jeremy Hamblin

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

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

Joel Anderson

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

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

Kenneth Bull

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

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

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

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

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

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

again, the strategies. about this, the mitigating talk just efforts mentioned to And you just -- Jeremy, because and

mentioned you think self-checkout. the I also

we're chain play know, not you these been the issues. year. We've to financial As before, with disruption, the whether the impact throughout are to And faced last macro offense of macro it's challenges company out there. that tariffs, new to like we these mitigate these supply pandemic, inflation

is -- societal government issue, require traditional leaders noticed fully the measures previously. an This from that fully been is and local effective as are involvement for around we and what they've protection to to not it. resolve a as We've view asset external as mitigation going it also

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

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

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

then cost going some board be too, of is seeing increasing initiating other they're we're we're enterprise-wide cost -- it, across to what on here, top think And savings. the that so. I also

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

Operator

Our comes from with Barclays. next question Seth Sigman

Seth Sigman

with around a think how managing is bit points Can ASPs, question main that's the input happening I on come Any think as you been I with insight down? but talk little you costs going up price you're my largely what's would So were slightly, said price more points? into ticket. certain what's about Your mix.

And quarter, context then some trend last any recall improvement, lower UPT, about the think when been more you for that's a look time. but I If talked I there? you just some at

Joel Anderson

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

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

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

Operator

Your Nagel next with question comes from Oppenheimer. Brian

Brian Nagel

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

Joel Anderson

the you it growth I got out the it's at first SG&A. we in year, margin stores the give get question. X getting and that the And between does coming We Yes. it's in tradition for end guidance. see new margin we'll closer I in operating to answer. But level. mean, here gross leverage fit our great that year weeks. explosive just unfair But you it's see to of to pretty say, especially for think safe the Kristy as a next to where with She's figure will Brian, we

But a lot that's as gave cover a you to on just of lot to Ken SG&A examples of come going mitigation, heard, shrink of out that.

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

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

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

Kenneth Bull

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

So with said. Joel line what in

Joel Anderson

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

Operator

Grom next Our comes Haskett. Gordon with question from Chuck

Charles Grom

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

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

Joel Anderson

I look our Chuck, Look X-year CAGR, store the Kristy? at that average your CAGR Isn't you think look at Yes. your X-year is the right, -- at way if it's mid-high-teens. compare I and think it half in first growth. we X-year

Kristy Chipman

Yes.

Joel Anderson

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

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

Kenneth Bull

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

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

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

Operator

Boss The JPMorgan. with Matthew next question comes from

Matthew Boss

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

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

Joel Anderson

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

pretty QX was QX. that to from consistent So

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

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

that's So good to really see.

to Cohorts, nothing call out.

We would continue then, no I'm out. that all to pleased but across the strength really per talk cohorts, ready to trade-down hey, see about and And really holiday call with just se not we're back-to-school great we rather but reasons, And I needs would say of wants. product. anything, than a store if a for becomes competitive of the in store our for store whole quarter got fourth a lineup

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

Operator

Heinbockel question next Securities. Guggenheim with comes from John The

John Heinbockel

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

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

Joel Anderson

Yes.

John, half over we're and tech to difference Ken. on we Beyond Five Look, to learned Five for it a how stores year. I full just to stores. And is mean, performed from I'll the out last our given the a to it's us close this have biggest that's the that. start great year turn prepare of call reset, for magnitude versus part but biggest going on merchants comp approaching lot think and the year me Let I year change, last the our Beyond and

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

Kenneth Bull

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

ability we the the the to place appropriately. want there. We Joel put about them continue trends out trends that in are to The spoke those sure have and buy make of ability to or customers front

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

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

Operator

Morgan Simon from with Simeon ] Gutman (sic) comes question Stanley. next [ Our

Simeon Gutman

I in should Simon. I name get Joel, my restate case a

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

-- do your movement, little not but your the down. others. getting you're even seeing that mass, you're I'm suggest You value share discount dollar than a stores trade seeing said if seems to you of fair curious we're better traffic

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

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

Joel Anderson

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

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

So really that to see ticking up.

think isn't need Our here. time. excited a nicely there, seeing our marketing the any for for value vogue we're as out And but it. we're other store certainly, a stuff, And set is going in And lot called kids what really of becomes we're I out I'm customer so QX all working, Simeon, great momentum. for about holiday families you and then store up really really again needs really at -- retailer holiday is into there the a holiday. of And

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

Operator

comes next Kelly Edward from The Wells Fargo. question with

Edward Kelly

to wanted I It time shrink. was about year-over-year headwind. basis a looks that, basis you point XX points mentioned you January question mitigation. The talked follow-up XX now, an cost shrink but have your like accounts, additional it on last you after think I that the ask

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

the think we don't risk then And forward I as about around you rolling shrink, do count. think

traditional people But a think I low. lot this the from of has here? Unemployment's again in more count where and is to And there? think initially, into worked all still you bottom Do about. there's this last way the part its is right? crime, seen coming stuff January, that employees? then are You talking we've organized of it customers

Joel Anderson

probably you Ed, for scenario. remember, painted to the there's mean, our for worst-case And of call, all to in unpack. I think you got I you guide, on Yes. just the we've a lot

of process our We reconciliation, the last in already We'd the basis still quantifying efforts. increase doing things mitigation of all all from XX from the the year. mitigated some are

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

we mitigation we of just everything efforts that the from really all 'XX. in through And were remember, a of half inventory stores So and also of that 'XX. the back inventoried are included the half the putting 'XX back This lot on exiting started. includes shrink 'XX were front

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

coming just And exit the aren't it which we've watch level. that's cities Center a in It's seen hometown City. in Philly watched is prosecuting Wawa Sadly, you've several is angles. coming where our below and we've so all highest And now, here from? simply rates. got shrink $XXX And of Target, our some city

that at don't closing included while there, think yet Below consider as stores these if extreme see do integration type strategies don't be so things of are to I And the we're what we will we Five that of improve.

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

Operator

question from with Paul next Citi. Our Lejuez comes

Paul Lejuez

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

Joel Anderson

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

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

Paul Lejuez

first is That the one.

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

Joel Anderson

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

Kristy Chipman

to Close XX.

Kenneth Bull

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

Operator

Our with next question comes Ciccarelli from Truist. Scott

Joseph Civello

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

Joel Anderson

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

Joseph Civello

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

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

Joel Anderson

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

Operator

Our Lasser next question Michael with comes UBS. from

Michael Lasser

a In prior the Below X margin Five average. operating to years on XX% had pandemic,

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

Joel, So XX%? to happen to in to order needs the get what back

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

Joel Anderson

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

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

continue it, we improve things I to to as mitigate find So think -- that's going and that. to

of put to converting. new accelerated then start for big us. wanted money we're years of the to time been to for lever we things we've coming. X our Five to behind there's also, a lot stores be the really that get about a stores. that's setback leverage are And lot And that Those off in But where to pandemic. -- X into, due a spent of we're 'XX going back We're are Beyond going we these

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

going And have distribution We're We're the leverage. the the next XX-XX, that we've We lever in all to any on a off help then systems years focus invested all to in. his really the towards lever here. centers and We'll back opening X close to DCs. not are Ken contributes we going and made off investments them those fixed.

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

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

Operator

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

Joseph Feldman

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

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

Kenneth Bull

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

at XX%. there. about down down expect quarter, improving of QX, single we you this inventory end I management what probably digits. digits, the to of of we if this more think of us a our QX, think to similar I were Again, first saw that's I disciplines be forward, double end roll it end reflection,

position what forward. coming than then mean, made and shrink are of an we more the estimates around and allocating going shrink, the And your that. in would make in to your we're stores out stores the make obviously then yes, -- we the adjustments -- the product of higher would higher we be in question these obviously, shrink be, those response to sure levels. to I are inventory second part appropriate

Operator

comes question Michael with Evercore. next from The Montani

Michael Montani

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

Joel Anderson

obviously, that change. could trying California quarter whole through Florida like storms week ago get But with a QX a together, a the start next rolled no and for to geographies. you if Mike, We it Yes. margin -- pretty there week here, geography if there's but see all really and pleased range. you here put of absolutely now. through yes, on And the these across rest for week calls, to a real just the right within when consistent follow-up. get We're look

Operator

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

Bradley Thomas

merchandising ask and another for question stay of to category now. Kristy. off Welcome, I'll shrink

dies pulling the back-to-school, underway that I not we've to the well. performing that here, as sense down? mania gotten guess trends here drive it partly And question help is, may Barbie here across away some kind this fade material was here? that you're mentioned it Barbie any whole country. acceleration? may early Maybe seeing You any of

Joel Anderson

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

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

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

Operator

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

Jason Haas

store? online insulates us competitors, just And business competition seen sales And I'm a the if talk from you've both Five your was the increased I competition? you online-only from not, I portion your Below what about know business, with can if online you seen and could recently. to remind curious of it's if also small any online but what you've also curious model

Joel Anderson

been us. has online Look, good for Yes.

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

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

now. that good to But -- stores. online a retailers. already us set impact us helps more of great it because have And that, here online an get no for we we what's in But -- us. helps up early get every all that every about X And It do We change, it's pure from seasonal tell Halloween the with sense sell having online read. been said from for weeks is first. online prepare can and we it going

Operator

next comes from Daniel The Credit with Suisse. question Silverstein

Daniel Silverstein

Just on question conversions. quick a

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

Joel Anderson

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

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

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

Daniel Silverstein

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

Joel Anderson

Yes.

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

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

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

Operator

with comes Chukumba Markets. question Next from Capital Loop Anthony

Anthony Chukumba

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

Joel Anderson

Thanks, Anthony.

enough. it's think I

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

Operator

Next question comes Deutsche Krisztina Katai from with Bank.

Krisztina Katai

given I just store the growth you're had on question talking acceleration to. a that and just

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

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

Joel Anderson

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

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

but or month look, here then pull we flowing back really, a the landlords have it's time, back pretty and X problems chain building. store get seeing opening And on of will bigger in team -- much we're a a got supply that we have We've another pushed had terms we're we'll that up. store and then for not And are building. to there weeks,

yes. pushbacks. So This of our going might pull we're We ups here. seeing keep are be as even on it's last call, we more got to like an amount

Operator

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

Phillip Blee

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

Joel Anderson

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

Kenneth Bull

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

Joel Anderson

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

of inventory. about opening transforming of growing jumping to stores. a in number is what on. really our certainly questions starting new but for set we record productivity stores. brand awareness. more everybody, thanks, marketing Hey, increasing of The are We're -- lot our shrink, the our work. importantly, We're A We're

great rest Below summer, don't to place and The focus that for going going on to is our Five to you. see enjoy of the the I'll efficiencies. store. third for great you everybody. get We visit joining forget And put hope Have a create make call. We quarter to a out work to Thanks the Thanksgiving going to and Ken's Five associates. hope us, night, on Below you and a we're see after

Operator

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

may now disconnect. You

Five Below (FIVE) 30 Aug 232024 Q2 Earnings call transcript