8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 21, 2018

FIVE BELOW, INC.

(Exact Name of Registrant as Specified in Charter)

Pennsylvania	001-35600	75-3000378
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

701 Market Street

Suite 300

Philadelphia, PA 19106

(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (215) 546-7909

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

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

Item 2.02 Results of Operations and Financial Condition.

On March 21, 2018, Five Below, Inc. (the “Company”) issued a press release regarding its sales and earnings results for the fourteen and fifty-three weeks ended February 3, 2018 (the “Press Release”). A copy of the Press Release is attached hereto as Exhibit 99.1, and is being furnished, not filed, under Item 2.02 of this Current Report on Form 8-K. As previously announced, the Company has scheduled a conference call for 4:30 p.m. Eastern Time on March 21, 2018 to discuss the financial results.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b) On March 21, 2018, Thomas G. Vellios, Executive Chairman of the Board of Directors (the “Board”) of the Company, resigned as an executive officer of the Company effective as of the date of the Company's 2018 annual meeting of shareholders, which is expected to be held in June 2018. A copy of the Company's press release announcing the resignation is attached hereto as Exhibit 99.2 and is incorporated in this Item 5.02 by reference.

Item 8.01 Other Events

On March 20, 2018, the Board approved a share repurchase program authorizing the repurchase of up to $100 million of the Company’s common stock through March 31, 2021, on the open market, in privately negotiated transactions, or otherwise. There can be no assurances that any such repurchases will be completed, or as to the timing or amount of any repurchases.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Exhibit Description
99.1	Press Release dated March 21, 2018 announcing the Company's fourth quarter and fiscal 2017 financial results.
99.2	Press Release dated March 21, 2018 announcing the transition of Thomas G. Vellios from Executive Chairman to Chairman of the Board.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		Five Below, Inc.
Date: March 21, 2018	By:	/s/ Kenneth R. Bull
		Name:	Kenneth R. Bull
		Title:	Chief Financial Officer and Treasurer

EXHIBIT INDEX

Exhibit Number	Exhibit Description
99.1	Press Release dated March 21, 2018 announcing the Company's fourth quarter and fiscal 2017 financial results.
99.2	Press Release dated March 21, 2018 announcing the transition of Thomas G. Vellios from Executive Chairman to Chairman of the Board.

EX-99.1

NEWS RELEASE

Five Below, Inc. Announces Fourth Quarter and Fiscal 2017 Financial Results

Reports fourth quarter sales growth of 30% to $504.8 million; diluted EPS increase of 34% to $1.21

Reports fiscal 2017 sales growth of 28%; diluted EPS increase of 42% to $1.84

Provides first quarter and full year fiscal 2018 guidance

Announces first ever share repurchase authorization for $100MM

PHILADELPHIA, PA– (March 21, 2018) – Five Below, Inc. (NASDAQ: FIVE) today announced financial results for the fourth quarter and full year of fiscal 2017 ended February 3, 2018, both of which contained one additional week ("53rd week") versus the comparable prior periods.

For the fourth quarter endedFebruary 3, 2018:

• Net sales increased30.1% to $504.8 million from $388.1 million in the fourth quarter of fiscal 2016. Excluding the impact of the 53rd week in fiscal 2017, net sales increased 26.0%; comparable sales increased 5.9% on a thirteen week basis.

• Net sales in the 53rd week were $15.7 million and represented approximately $0.03 cents in diluted earnings per share.

• Operating income increased 31.2% to $103.5 million from $78.9 million in the fourth quarter of fiscal 2016.

• The Company ended the quarter with 625 stores in 32 states. This represents an increase of 19.7% from the end of the fourth quarter of fiscal 2016.

• Net income was $67.4 million, an increase of 35.3% compared to $49.8 million in the fourth quarter of fiscal 2016.

• Diluted income per common share was $1.21, an increase of 34.4% compared to $0.90 in the fourth quarter of fiscal 2016. Diluted income per common share included a $0.03 benefit in the fourth quarter of fiscal 2017 due to the adoption of a new accounting standard in fiscal 2017 for employee share-based payments.

For the fiscal year ended February 3, 2018:

• Net sales increased27.8% to $1,278.2 million compared to $1,000.4 million in fiscal 2016. Excluding the impact of the 53rd week in fiscal 2017, net sales increased 26.2%; comparable sales increased 6.5% on a fifty-two week basis.

• Net sales in the 53rd week were $15.7 million and represented approximately $0.03 cents in diluted earnings per share.

• Operating income increased 38.1% to $157.4 million compared to $114.0 million in fiscal 2016.

• The Company opened 103 net new stores compared to 85 net new stores opened in fiscal 2016.

• Net income was $102.5 million, an increase of 42.6% compared to $71.8 million in fiscal 2016.

• Diluted income per common share was $1.84, an increase of 41.5% compared to $1.30 per share in fiscal 2016. Diluted income per common share included a $0.05 benefit in fiscal 2017 due to accounting for employee share-based payments.

Joel Anderson, President and CEO, stated, “We are extremely pleased with our strong fourth quarter results, which capped an incredible year for Five Below, delivering outperformance on both the top and bottom line. For the year, sales grew 28%, we achieved a record operating margin of 12.3%, and net income grew over 40%. Our solid financial and operational performance continues to reinforce the universal appeal of Five Below and the strength, consistency and flexibility of our model. Given the strength of our balance sheet, free cash flow generation and year-end cash and investments position, we are announcing our first ever share repurchase authorization for $100 million dollars.” 

Mr. Anderson added, “We are excited to begin 2018 with momentum and are in a position of strength to execute against our key strategic priorities. With a portion of the recent tax reform benefits, we are accelerating important investments focused on our associates, systems and infrastructure, further solidifying the foundation to support our future growth. The majority of the benefit from tax reform will flow through to our shareholders. We remain confident in our 2,500 plus store potential and ability to achieve 20% top line growth with 20% plus bottom line growth through 2020."

First Quarter and Fiscal 2018 Outlook:

For the first quarter of fiscal 2018, net sales are expected to be in the range of $290 million to $294 million based on opening approximately 30 new stores and assuming a 3% to 4% increase in comparable sales. Net income is expected to be in the range of $17.4 million to $18.8 million, with a diluted income per common share range of $0.31 to $0.34 on approximately 55.9 million estimated diluted weighted average shares outstanding.

For the full year of fiscal 2018, net sales are expected to be in the range of $1.495 billion to $1.510 billion based on opening approximately 125 new stores and assuming a 1% to 2% increase in comparable sales. Net income is expected to be in the range of $132.7 million to $136.3 million, with a diluted income per common share range of $2.36 to $2.42 on approximately 56.2 million estimated diluted weighted average shares outstanding.

As a result of the Tax Cuts and Jobs Act legislation, the effective tax rate in fiscal 2018 is expected to be approximately 24.5%.

Share Repurchase Program:

The Company also announced that its board of directors has approved a stock repurchase program for up to $100 million of its common shares through March 31, 2021. The number of common shares actually repurchased, and the timing and price of repurchases, will depend upon market conditions, Securities and Exchange Commission requirements, and other factors. Shares may be repurchased from time to time on the open market, in privately negotiated transactions, or otherwise. Purchases may be started or stopped at any time without prior notice depending on market conditions and other factors.

Conference Call Information:

A conference call to discuss the fourth quarter and full year fiscal 2017 financial results is scheduled for today, March 21, 2018, at 4:30 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial 412-902-6510 approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at investor.fivebelow.com in the investor relations section of the website.

A taped replay of the conference call will be available within two hours of the conclusion of the call and can be accessed both online and by dialing 412-317-0088. The pin number to access the telephone replay is 10117405. The replay will be available until April 4, 2018.

Forward-Looking Statements:

This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect management's current views and estimates regarding the Company's industry, business strategy, goals and expectations concerning its market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. Investors can identify these statements by the fact that they use words such as "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future" and similar terms and phrases. The Company cannot assure investors that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to risks related to the Company's strategy and expansion plans, risks related to the inability to successfully implement our expansion into online retail, risks related to our ability to select, obtain, distribute and market merchandise profitably, risks related to our reliance on merchandise manufactured outside of the United States, the availability of suitable new store locations and the dependence on the volume of traffic to our stores, risks related to the Company's continued retention of its executive officers, senior management and other key personnel, risks related to changes in consumer preferences and economic conditions, risks related to increased operating costs, including wage rates, risks related to extreme weather, risks related to leasing, owning or building distribution centers, risks related to our ability to successfully manage inventory balance and inventory shrinkage, quality or safety concerns about the Company's merchandise, increased competition from other retailers including online retailers, risks related to the seasonality of our business, risks related to cyber security, risks related to our ability to protect our brand name and other intellectual property, risks related to customers' payment methods, risks related to trade restrictions, and risks associated with leasing substantial amounts of space. For further details and a discussion of these risks and uncertainties, see the Company's periodic reports, including the annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, filed with or furnished to the Securities and Exchange Commission and available at www.sec.gov. If one or more of these risks or uncertainties materialize, or if any of the Company's assumptions prove incorrect, the Company's actual results may vary in material respects from those projected in these forward-looking statements. Any forward-looking statement made by the Company in this news release speaks only as of the date on which the Company makes it. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

About Five Below:

Five Below is a leading high-growth value retailer offering trend-right, high-quality products loved by tweens, teens and beyond. We know life is way better when you’re free to “let go & have fun” in an amazing experience filled with unlimited possibilities. We make it easy to say YES! to the newest, coolest stuff because everything is just $5 and below across awesome Five Below worlds: Style, Room, Sports, Tech, Create, Party, Candy and Now. Founded in 2002 and headquartered in Philadelphia, Pennsylvania, Five Below today has approximately 650 stores in 32 states. For more information, please visit www.fivebelow.com and a store!

Investor Contact:

Five Below, Inc.

Christiane Pelz

Vice President, Investor Relations

215-207-2658

Christiane.Pelz@fivebelow.com

FIVE BELOW, INC.

Consolidated Balance Sheets

(Unaudited)

(in thousands)

	February 3, 2018		January 28, 2017
Assets
Current assets:
Cash and cash equivalents	$	112,669	$	76,088
Short-term investment securities	131,958		77,791
Inventories	187,037		154,448
Prepaid income taxes	2,264		1,552
Prepaid expenses and other current assets	45,434		29,910
Total current assets	479,362		339,789
Property and equipment, net	180,349		138,376
Deferred income taxes	6,676		11,039
Long-term investment securities	27,702		10,514
Other assets	1,619		818
	$	695,708	$	500,536
Liabilities and Shareholders’ Equity
Current liabilities:
Line of credit	$	—	$	—
Accounts payable	73,033		51,178
Income taxes payable	25,275		23,939
Accrued salaries and wages	22,906		10,794
Other accrued expenses	43,246		30,652
Total current liabilities	164,460		116,563
Deferred rent and other	72,690		52,568
Total liabilities	237,150		169,131
Shareholders’ equity:
Common stock	554		549
Additional paid-in capital	346,300		321,603
Retained earnings	111,704		9,253
Total shareholders’ equity	458,558		331,405
	$	695,708	$	500,536

FIVE BELOW, INC.

Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share data)

	Fourteen weeks ended		Thirteen weeks ended		Fifty-three weeks ended		Fifty-two weeks ended
	February 3, 2018		January 28, 2017		February 3, 2018		January 28, 2017
Net sales	$	504,832	$	388,090	$	1,278,208	$	1,000,410
Cost of goods sold	297,342		228,673		814,795		643,373
Gross profit	207,490		159,417		463,413		357,037
Selling, general and administrative expenses	103,995		80,552		306,022		243,075
Operating income	103,495		78,865		157,391		113,962
Interest income, net	556		88		1,458		299
Income before income taxes	104,051		78,953		158,849		114,261
Income tax expense	36,674		29,165		56,398		42,421
Net income	$	67,377	$	49,788	$	102,451	$	71,840
Basic income per common share	$	1.22	$	0.91	$	1.86	$	1.31
Diluted income per common share	$	1.21	$	0.90	$	1.84	$	1.30
Weighted average shares outstanding:
Basic shares	55,348,495		54,889,718		55,208,246		54,845,708
Diluted shares	55,725,959		55,157,603		55,561,472		55,128,870

FIVE BELOW, INC.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	Fifty-three weeks ended			Fifty-two weeks ended
	February 3, 2018			January 28, 2017
Operating activities:
Net income	$	102,451		$	71,840
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33,241			26,631
Share-based compensation expense	16,373			11,953
Deferred income tax expense (benefit)	4,363			(2,532		)
Other non-cash expenses	138			109
Changes in operating assets and liabilities:
Inventories	(32,589		)	(6,079		)
Prepaid income taxes	(1,277		)	(211		)
Prepaid expenses and other assets	(16,366		)	(14,875		)
Accounts payable	19,809			(5,451		)
Income taxes payable	1,902			11,997
Accrued salaries and wages	12,112			3,133
Deferred rent	15,886			7,855
Other accrued expenses	11,338			2,252
Net cash provided by operating activities	167,381			106,622
Investing activities:
Purchases of investment securities	(234,856		)	(119,746		)
Sales, maturities, and redemptions of investment securities	163,501			77,776
Capital expenditures	(67,795		)	(44,794		)
Net cash used in investing activities	(139,150		)	(86,764		)
Financing activities:
Net proceeds from issuance of common stock	251			208
Proceeds from exercise of options to purchase common stock and vesting of restricted and performance-based restricted stock units	9,603			3,290
Common shares withheld for taxes	(1,504		)	(1,904		)
Excess tax benefit related to exercises of stock options and vesting of restricted and performance-based restricted stock units	—			1,555
Net cash provided by financing activities	8,350			3,149
Net increase in cash and cash equivalents	36,581			23,007
Cash and cash equivalents at beginning of year	76,088			53,081
Cash and cash equivalents at end of year	$	112,669		$	76,088

EX-99.2

NEWS RELEASE

Five Below, Inc. Announces Tom Vellios' Planned Transition to Chairman

PHILADELPHIA, PA– (March 21, 2018) – Five Below, Inc. (NASDAQ: FIVE), the trend-right, high-quality, extreme-value retailer for tweens, teens and beyond, today announced the planned transition of Tom Vellios, co-founder and Executive Chairman of Five Below, to Chairman of the Board of Directors, as of the 2018 Five Below Annual Meeting of Shareholders expected to be held in June. Mr. Vellios will stand for re-election at that meeting for a new three-year term on the Board.

Joel Anderson, President and CEO of Five Below, stated, “Tom has been an incredible leader and a true mentor to me, and many, many others. He inspires us every day with his entrepreneurial spirit, passion for the customer and merchandising expertise. His vision for Five Below as a trend-right retailer offering both extreme value and an amazing shopping experience has made Five Below a very successful brand with universal appeal. We are extremely fortunate that Tom will remain a resource to us and we are thrilled to have the opportunity to benefit from his ongoing involvement in the business as Chairman of the Board.”

“David Schlessinger and I founded Five Below 16 years ago with a promise to build an amazing store for teens and pre-teens that offers trend-right, high-quality merchandise all at $5 or less,” said Tom Vellios. “Since we opened our first store in Wayne, Pennsylvania, our company has grown to almost 650 stores in 32 states and we have built an unparalleled retail brand with tremendously loyal customers, along with dedicated and passionate associates. As proud as I am about where we are today, I am even more optimistic about the future. Five Below has never been better positioned to deliver on that customer promise as the company builds towards its 2,500+ store potential. With a strong and talented team in place, the time is right for my transition to the Chairman role. Under the dynamic leadership of Joel Anderson, and with support from the Board, I am confident that the entire team will continue to execute on the significant growth potential that exists for Five Below while delivering consistent and profitable growth to our shareholders.”

In a separate press release issued today, Five Below announced the Company's fourth quarter fiscal 2017 financial results. To view the release or for more information, please visit the Company's investor relations website at http://investor.fivebelow.com/releases.cfm.

About Five Below:

Five Below is a leading high-growth value retailer offering trend-right, high-quality products loved by tweens, teens and beyond. We know life is way better when you’re free to “let go & have fun” in an amazing experience filled with unlimited possibilities. We make it easy to say YES! to the newest, coolest stuff because everything is just $5 and below across awesome Five Below worlds: Style, Room, Sports, Tech, Create, Party, Candy and Now. Founded in 2002 and headquartered in Philadelphia, Pennsylvania, Five Below today has approximately 650 stores in 32 states. For more information, please visit www.fivebelow.com and a store!

Investor Contact:

Five Below, Inc.

Christiane Pelz

Vice President, Investor Relations

215-207-2658

Christiane.Pelz@fivebelow.com