Five Below, Inc.

Good day and welcome to the Five Below First Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star then one. Please note that this event is being recorded. I would now like to turn the conference over to Christiana Pelz, Vice President Investor Relations. Please go ahead.

Thanks, Cole. Good afternoon, everyone, and thank you for joining us today for Five Below's first quarter fiscal 2021 financial results conference call. On today's call are Joel Anderson, President and Chief Executive Officer, and Ken Boll, Chief Financial Officer and Treasurer. After management has made their formal remarks, we will open the call to questions. I need to remind you that certain comments made during this call may constitute forward-looking statements. and are made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in the press release and by the lowest SEC filings. The forward-looking statements made today are as of the date of this call, and we do not undertake any obligation to update our forward-looking statements. If you do not have a copy of today's press release, you may obtain one by visiting the investor relations page of our website at buybelow.com. I will now turn the call over to Joel.

Thank you, Christiana, and thanks everyone for joining us for our first quarter earnings call. I will review the highlights of our first quarter performance before handing it over to Ken to discuss our financials and outlook in more detail. Then we will open the call up for questions. We've been fully reopened for three consecutive quarters, and on March 20th, we lapped our initial temporary closings from the first quarter of 2020. I remain amazed at the resiliency and flexibility of our customers, vendors, and crew. We thank them all for continuing to support Five Below in this dynamic operating environment. Now turning to the first quarter, we are extremely pleased to deliver Q1 results that exceeded the guidance we provided on our last earnings call in March. We achieved first quarter sales of $598 million and earnings per share of $0.88. Versus 2019, which is more comparable than 2020, sales grew 64% and earnings per share grew 91%. Sales growth continued to be driven by double-digit ticket growth, while transactions remained slightly negative due to reduced store hours. We saw strength across the business in both existing and new stores, including all-time records for new store performance that I will discuss shortly. This strong performance also played out across channels, with our average sales per store hitting record levels for the first quarter and our nation's fast-growing digital business posting double-digit growth over last year's first quarter when e-commerce grew four times. New stores have always been the fuel for the Five Below growth engine, and in Q1, we opened 68 new stores, the most we have ever opened in a quarter. Six of these stores across five states made the top 25 list of our all-time spring grand openings. In fact, one of our stores, in Lubbock, Texas set the all-time grand opening record. Considering the reduced store operating hours and increased grand opening marketing, these results were even more remarkable. We successfully entered our 39th state, Utah, with seven new stores in the Salt Lake City area, where the customer response was very strong. We also opened a store in the new market of Tucson, Arizona, which is one of the stores that finished in the top 25 spring grand openings. We are on track to open between 170 and 180 new stores this year and end fiscal 2021 with approximately 1200 stores, leaving us a long runway ahead to reach the 2500 plus total store potential we believe exists in the United States. Before I speak to the specifics about the first quarter, I want to acknowledge that once again, both internal and external factors contributed to our strong performance. Internally, our teams executed well across the organization, delivering WOW for our customers with amazing product at outstanding values, injecting a little fun into their lives when they arguably needed it most. Externally, we also continued to benefit from the government stimulus as the third round of stimulus began to hit bank accounts in mid-March. We maintained an unrelenting focus on our strategic initiatives across product, experience, and supply chain in the first quarter. On product, from a merchandising perspective, we continue to work closely with our vendor partners around the world to capture and chase trends for our customers to offer them the products they've just got to have. We saw broad-based strength across our worlds during the first quarter, especially in the sports, tech, style, candy, and room worlds. Sports was strong in the games and toys category. Tech benefited from gaming products, including the Booga items we launched last year. Style was supported by apparel and accessories. Candy recovered nicely. after losing most of the Easter season last year when our stores were closed. And finally, room continued to benefit from the trend of people working and schooling from home. Whether in the $1 to $5 product category or the newer Extreme Value 5 Beyond section, the merchandising team has focused on distorting value across categories. using their expertise and experience combined with our growth and benefits of scale. For example, the room world has evolved incredibly over the last several years and now features regularly sized tables and other furniture to outfit an entire room on a budget. The pet category within the room world has grown significantly as we expanded the assortment, especially this past year in response to the pet adoption trend. The merchandising team continues to remain nimble and flexible in sourcing amazing, trend-right products by working with our vendor partners, listening to our customers, and spotting trends on social media, among other channels. The ability for Five Below to participate in almost any trend through our eight worlds and the flexibility within those worlds is a key distinguishing feature of our model. Our second initiative is focused on the experience for our customers and crew. Experience includes both in-store and digital, and we constantly look for ways to enhance the experience through innovation. In-store, we have now successfully pivoted to our new prototype with 5Beyond merchandise included in the tech and room worlds in the back of the store. In addition to the 68 new stores, we remodeled about a dozen stores in Q1 into this prototype and now expect to finish 2021 with about 30% of our stores in the Five Beyond format. Additionally, Associate Assisted Self-Checkout, or ACO as we call it, is in most of these stores and we are adding over 250 ACO stores to be in over 60% of the chain by the end of this year. ACO allows our crew to move from behind the register to the floor to assist our customers with their shopping and checkout process, which makes for a better and faster customer experience. Five Beyond and ACO are just two examples of how fast we are transforming the Five Below concept to make it an even better experience. For digital, which includes marketing as well as e-commerce, we focused on increasing our brand awareness through more targeted marketing, utilizing paid search and social platforms such as Instagram. Through digital channels, we are able to highlight our amazing value, hot new products, and inspire and delight our customers. Our approach is integrated with our store experience, visually appealing, bright, and engaging. We believe we are attracting both new customers to 5.0 who convert to regular customers, as well as developing a deeper connection with current customers. Similarly, for e-commerce, we are growing the number of new customers while also increasing the percentage of repeat customers. In addition, we are continuing our tests with Instacart, which is currently operational in a third of our chain. With respect to our third strategic initiative, supply chain, we made significant progress in preparing our next two distribution centers to open. We started inbound shipping to our Arizona DC or ship center as we refer to our DCs a few weeks ago and also broke ground on our Indianapolis ship center in mid-April. The Arizona ship center is expected to open later this summer and will include e-commerce fulfillment, which will improve our service to customers in the Western states. These ship centers feature new warehouse management system, which combined with our demand forecasting platform will help optimize our inventory levels and allocations. Within our supply chain, consistent with other retailers, we are contending with the ongoing global challenges and rising costs resulting from the pandemic. Our teams are doing a great job navigating these tight supply conditions, whether it be by negotiating our annual contracts early or finding new carriers to help ship our product. In summary, we are very pleased with the results and the progress we made in the first quarter. We are excited to continue to play offense, execute with discipline, and make progress in furthering our strategic initiatives across product, experience, and supply chain. We continue to be nimble and pivot quickly to capture trends, wowing our customers with extreme value products. We believe our product lineup for summer fun offers an awesome selection of outdoor products, including new beach toys and towels, as well as sandals and summer apparel. We are sure to have something for everyone. Looking ahead, we are excited to offer a more traditional, buy below, back to school assortment as well as our seasonal WOW wall with new Five Beyond products. We have sourced truly amazing WOW products for our customers to enjoy and celebrate a return to normal. Our customers have told us they recognize the extreme value we offer through Five Beyond, and we will continue to listen and work back from them to find those gotta-have, trend-right products at extreme value and all packaged in a fun and amazing shopping experience. With that, I'd like to turn it over to Ken for the financial discussion. Ken?