Five Below, Inc.

Good day, and welcome to the Five Below First Quarter 2023 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 star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I'd now like to turn the conference over to Christiana Pelz, CTO of Investor Relations.

Please go ahead. Thanks, Sarah, and good afternoon, everyone. Thanks for joining us today for Five Below's first quarter 2023 financial results conference call. On today's call are Joel Anderson, President and Chief Executive Officer, and Ken Bull, Chief Operating Officer, 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 our 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 fivebelow.com. I will now turn the call over to Joel.

Thank you, Christiana, and thanks, everyone, for joining us for our first quarter 2023 earnings call. We were pleased to achieve first quarter results in line with our guidance with sales growth of approximately 14 percent to $726 million and a transaction-driven 2.7 comp sales increase. It continues to be a challenging time for consumers with persistent inflation, lower tax refunds, and fewer government-sponsored benefits compared to the stimulus-fueled periods of the pandemic. However, being an extreme value TrendRight retailer, we continue to attract and retain more customers and Grow are comparable transactions in both converted and non-converted stores. Our transaction increase of 3.9% was the highest since 2017, excluding the stimulus fuel period during the pandemic, and is a strong indicator that Five Below is a destination customers rely on even in tougher economic times. We are a resilient retailer with a flexible model, and we continue to play offense opening new stores, and quickly reacting to customer needs to bring them the wow products that they want at amazing values, while also executing against our strategic pillars to achieve our triple-double growth. On product and trends, we saw continued popularity of a broad variety of trends across our world, since Squish, Hello Kitty, anime, collectibles, and our version of consumables, including candy, snacks, and beverages, in our candy world, and also beauty items and accessories in our style world. The new Super Mario movie released in April was a hit, and we sold through teas, posters, and other items and quickly procured more. It is nice to see licenses emerging again. For Easter, we had great baskets and candy at extreme value that resonated with our customers. The broad-based results of our world's demonstrate the relevancy of our products. All through the quarter, we made progress across our five key strategic pillars that underpin our long-term triple-double vision. As a reminder, we are looking at each of these five pillars through the lens of customer relevancy and are unleashing the power of data and analytics to drive results. The first pillar is store expansion. We are expanding our reach to put five below anywhere, as we said at our investor day. We now expect to reach a milestone of over 200 new stores this year while building our pipeline for next year and beyond. In the first quarter, we opened 27 new stores across 19 states. Two of these stores were in the top 25 spring grand openings of all time. With our strong balance sheet, seasoned and nimble teams, and focused execution, we acquired several leases from other retailers in bankruptcy, positioning us to exceed our original 200-store openings goal for this year. These negotiations took time and effort from our real estate, construction and design, legal, and finance team, on top of their already busy jobs, and we are very thankful for their commitment in achieving a great result. Moving to our second pillar, store potential, We are focused on growing our average unit volume through the addition of 5Beyond in the back of the store, as well as new products and services such as ear piercing and fun, snarky helium balloons. We converted approximately 250 stores into the new prototype in the first quarter alone and are on track to convert over 400 stores to the new 5Beyond prototype this year to achieve our goal of 5Beyond everywhere. These conversions continue to drive traffic and higher baskets, and we see a large opportunity to grow Phi Beyond from the current single-digit penetration of sales today. Our third pillar is product and brand strategy. We've discussed how Phi Below is a merchandise-driven organization and how our merchants are relentless about scouring the globe to pursue trends, wow, newness, and value. In the first quarter, we were very pleased to officially incorporate and open our first global sourcing office in India. We were very excited to have a presence on the ground to work directly with our factories overseas and together develop and bring to market even more amazing products at disruptive and distorted value for our customers. This was a huge effort by so many people who supported our product development team in establishing this office. Thank you to those who went above and beyond to achieve this milestone. On brand strategy, our digital marketing investments continue to grow and reach more customers to build our brand awareness, drive customer traffic, and position Five Below as a go-to destination for fun. We conducted a successful campaign in Q1 surrounding Easter while continuing to push evergreen offerings of the brand, In doing this, we have successfully used data and analytics to understand audiences and to segment and optimize our digital marketing investments. Complementing our paid digital marketing efforts, our social presence and customer fans are growing in terms of followers engagement across social media platforms. In addition to influencers creating content and posting about us, celebrities like Walker Hayes and Bethany Frankel shared the videos about their visits to Five Below on TikTok. Their posts had high viewership and engagement. The fourth pillar is inventory optimization. The focus of this pillar is to further enable the scale required to achieve our triple-double strategy while continuing to leverage inventory as an asset to drive sales and maximize profits. Using technology and data analytics, we are focused on improving inventory forecasting, ordering, replenishment, and flow with a goal of increasing turns and improving end-to-end visibility. We've already implemented a new vendor management platform that increases transparency and enhances real-time communications, and we are beginning the work on both a new planning system and a replenishment forecasting tool. The fifth pillar is crew innovation. which focuses on the critical pipeline and talent that we need to achieve our triple-double. We will hire and train hundreds of thousands of crew members in the next several years in order to serve our customers, lead our teams, ship our product, and support our strong growth. As you can see, we have been busy this first quarter. In summary, we are pleased with our financial results and operational accomplishments in the first quarter amid a challenging macro backdrop. With May actualized, we have a good perspective on Q2, in which we expect to see a continuation of transaction increases. As we look to the remainder of the year, we believe many of the headwinds of the pandemic era that impacted us will begin to emerge as tailwinds. We are accelerating our offensive playbook. We are opening 200-plus new stores in completing over 400 conversions. We are executing a focused marketing campaign to bring to life the new Five Beyond store format, and we are capitalizing on an improving supply chain, including favorability in freight costs, and continuing to build our strong pipeline of new stores for 2024. With that, I will turn it over to Ken to review our financials and our outlook in more detail. Ken?