Five Below, Inc. (NASDAQ:FIVE) Q2 2019 Earnings Conference Call - Final Transcript

Aug 28, 2019 • 04:30 pm ET

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Five Below, Inc. (NASDAQ:FIVE) Q2 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question today comes from John Heinbockel from Guggenheim Securities. Please go ahead with your question.

Analyst
John Heinbockel

Hi, Joel, can you hear me?

Executive
Joel D. Anderson

Yeah, I got you John. Good morning, Good afternoon.

Analyst
John Heinbockel

Good Afternoon. So two things, when you -- your pricing test on the $5 plus items in particular, but maybe all of them. What did you see happen to customer basket size and items per basket, it was a much impact in terms of either of those? And then in the event of tariff postponed then cancellation, what is the thought process? I assume you wouldn't there be some aspect of price rollback. I'm just curious how you manage such a fluid process kind of up and down without damaging your price credibility with the customer?

Executive
Joel D. Anderson

Yeah. Thanks, John. Both -- later questions exactly what we've been wrestling with the last 90 days and I think and hopefully you will appreciate as we do with everything we -- approach with pace and diligence. And I think we originally had planned to roll some of this out earlier and then with List 4 came on and then last week, some additional ones. We've approached this very slowly and make sure we get it right. So we aren't going up and down with the customer and we're sure exactly sure what we want to accomplish and specifically to your question you know the elasticity was really in line with our expectations and while there was a slight decline in demand, there was an overall lift in sales and it was right in line with what we expected and so we'll continue to test that in fact we rolled out another test last week that as I said in my prepared remarks, expanded the number of items that we went beyond $5 on and a few other aspects. Just to make sure we've got this right. But what comes last is raising prices, what we've done, first is mitigate the cost and I'll tell you as I said earlier on was the vendor partners and with our merchandise team has done -- has been phenomenal and mitigating more than half of the overall tariff impact. Thanks, John.

Operator
Operator

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

Analyst
Charles Grom

Thanks, good afternoon. Can, just on the -- on the third quarter you talked about 70 basis points pressure from the unmitigated cost from the tariffs. Just wondering what that would be in the fourth quarter or is it expected to be neutral because you're going to be raising prices I believe chain wide and you're just going to be able to offset it. Just wondering if you kind of just walk us through how it's expected to transfer during the balance of the year.

Executive
Joel D. Anderson

Sure. Yeah, the -- as I mentioned, we're going to see about 70 basis points of net unmitigated tariff cost in Q3.