Five Below(FIVE) - 2024 Q1 - Quarterly Report

Store Operations - As of April 29, 2023, the company operated 1,367 stores across 43 states[71] - Total stores at the end of the period reached 1,367, up from 1,225[90] - From January 29, 2023, to April 29, 2023, the company entered into 95 new retail leases with average terms of approximately 10 years, resulting in future minimum lease payments of approximately $154.3 million[115] Financial Performance - Net sales increased to$ 726.2 million for the thirteen weeks ended April 29, 2023, up from $639.6 million, representing a 13.5% increase[90] - Gross profit rose to$ 234.8 million, an increase of $28.0 million or 13.6%, with a consistent gross margin of 32.3%[91] - Selling, general and administrative expenses increased to$ 192.4 million, up 17.0% from $164.4 million, with expenses as a percentage of net sales rising to 26.5%[92] - Net income increased to$ 37.5 million, a rise of 14.5% from $32.7 million[94] - Cash provided by operating activities was$ 85.3 million, an increase of $43.2 million compared to the prior year[104] - Comparable sales increased by 2.7%, driven by a 3.9% increase in the number of transactions[90] Sales and Revenue - The company reported that net sales are typically highest in the fourth fiscal quarter due to the year-end holiday season[75] - Comparable sales include net sales from stores open for at least 15 full months and e-commerce sales, with variations in calculation methods compared to competitors[76] - The company expects a significant percentage of net sales to continue coming from new stores not included in comparable sales[79] - E-commerce sales, including shipping and handling revenue, are included in net sales and comparable sales[72] Expenses and Costs - Gross profit is calculated as net sales minus cost of goods sold, with gross margin being gross profit as a percentage of net sales[80] - Selling, general and administrative (SG&A) expenses are expected to increase in future periods due to ongoing store growth[84] - Operating income is used as an indicator of business productivity and ability to manage SG&A expenses[85] Risks and Challenges - The company faces risks including inflation, supply chain disruptions, and increased operating costs that could adversely affect financial performance[67] - The company believes the impact of inflation on its historical results has been immaterial, and it seeks to minimize inflation effects through vendor sourcing and product mix changes[122] Capital Expenditures and Financing - The company plans to make cash capital expenditures of approximately$ 335 million in fiscal 2023, primarily for new store openings[101] - Net cash used in investing activities was $66.5 million, an increase of$ 123.9 million compared to the prior year[105] - As of April 29, 2023, the company had no borrowings under the Revolving Credit Facility and approximately $225 million available[111] - The Revolving Credit Facility provides a secured asset-based revolving line of credit of up to$ 225 million, with interest rates for SOFR loans ranging from 1.12% to 1.50%[109] - The Credit Agreement includes customary covenants that limit the company's ability to pay cash dividends, incur debt, and enter into certain transactions without lender approval[109] - The company has a variable interest rate exposure due to the Revolving Credit Facility, which could materially impact consolidated statements of operations if material borrowings occur[120] - The Second Amendment to the Credit Agreement replaced LIBOR provisions with SOFR provisions, converting outstanding LIBOR loans into SOFR loans[109] - The Credit Agreement allows for an increase of the Revolving Credit Facility by up to $150 million, subject to certain conditions[109]