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

Aug 28, 2019 • 04:30 pm ET


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


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Joel D. Anderson

well as other drivers of our second quarter performance. During Q2, we opened 44 new stores which is four more than planned. We opened in diverse markets across 21 states, bringing our total first half openings to 83 stores, seven of these Q2 new stores made our top 25 all-time spring or summer grand opening list with stores ranging from Augusta, Georgia to Hemet California illustrating yet again the breadth of Five Below's appeal.

We plan to open a 150 new stores for the year which is at the high end of our original store growth target for 2019. With an industry-leading less than one-year average payback on our new store investment, we continue to believe new stores are the best use of capital. Summer got off to a cooler and wetter start especially when compared to the record hot May and June, we had last year impacting traffic and our seasonal product. However as weather patterns normalized into July sales improved, we drove good performance in the rest of our assortment with strength in the candy, create, room, tech and party worlds. We saw a newer trends such as gaming and unicorn contribute to sales and we also began to see some early results from the exciting moving line up for this year, such as Toy Story 4 and Lion King.

Our merchandising teams continue to do an excellent job delivering a fresh, high quality added an Trend-Right assortment of WOW products at extreme value across all eight world. On to marketing we are focused on increasing brand awareness and our digital presence, including TV. We grew the number of stores receiving TV in Q2 from about 40% last year to approximately 50% this year. Our Summer TV campaign featured camp Five Below with lots of outdoor fun for kids with more favorable summer weather our campaign would likely have been even more impactful, but overall, we were pleased with our TV results.

Additionally, the marketing team continue to make progress on adding content and reach on the Social Mobile front, as an example. We also tested two new social media influencers who posted their favorite Five Below products on their feeds. Finally, our growing e-commerce channel which is part of our digital strategy continues to contribute to our brand awareness. We are successfully incorporating a wide range of digital strategies into our marketing program as we shift our focus to more effective communication vehicles [Phonetic] which we believe will help us grow our brand awareness.

Excuse me. In addition to our merchandising and marketing we are executing on our other key strategic initiatives, namely people, systems and infrastructure, as well as elevating the customer and associate experience innovation. First on the people front and support of our focus on creating a superior supply chain network. We hired an SVP of Supply Chain, Rich Tannenbaum he brings experience from national retailers such as PetSmart and Vitamin Shoppe and we are excited to welcome him to the team.

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