Five Below, Inc. · NASDAQ:FIVE
Five Below — Investor Presentation (September 2018)
42 slides from Five Below's investor presentation, September 2018
Slide 1: Investor Presentation - Sept 2018
investor presentation - Sept 2018
Slide 2: Forward Looking Statements
forward looking statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which reflect management’s current views and estimates regarding our industry, business strategy, goals and expectations concerning our market
Slide 3: Our story... read on!
our story... read on! about fiv˚ bE¬W ® our differentiated experience our powerful store model the numbers our vision for growth 3
Slide 4: About Five Below
a bo ut five . be lo w ch ec k i t out ! 44
Slide 5: Five Below is a unique investment opportunity
fiv˚ bE¬W is a unique investment opportunity leading high growth value retailer long runway for unit growth compelling new store model consistent performance benefits from scale 5
Slide 6: Five distinctive growth drivers
five distinctive growth drivers tween & teen handpicked, focus trend-right, wow products disciplined exceptional value high growth $5 & below fun, differentiated shopping experience led by a highly experienced management team 6
Slide 7: Tween & teen-focused with broad customer appeal
tween & teen-focused with broad customer appeal target customers Gen Z Millennial / Gen X 8–14 yr olds 24–44 yr olds Girls & Boys Parents 7
Slide 8: Tech. room. candy.
trend-right “wow” products at great value across 8 awesome worlds party. tech. sports. create. room. now. 8 candy. style.
Slide 9: 2017 revenue, stores and states; store count history
over 625 stores in 33 states * (1) * new state net new year end entry stores count 2012 +52 244 2013 +60 304 2014 +62 366 2017 revenue 2015 +71 437 2016 +85 522 2017 +103 625 * distribution centers in Pedricktown, NJ and Olive Branch, MS 2018e +125 750 (1) 5-year store count CAGR (compound annual gr
Slide 10: Growth led by experienced leadership
growth led by experienced leadership executive role year joined experience tom vellios Executive Chairman & Co-Founder Co-founded 2002 Zany Brainy, Caldor/May Company joel anderson President & Chief Executive Officer 2014 Walmart, Lenox, Toys ‘R Us ken bull Chief Financial Officer & Treasurer 2005 U
Slide 11: Our differentiated experience
our entiated diffe r . er ience exp amaz i n g ! 11
Slide 12: Purpose-driven value retailer for tweens & beyond
THE purpose-driven value retailer FOR TWEENS & BEYOND knows life is way better when you’re free to in an a ma z in g e x p e r ie n c e filled with p os s i b i l i t i es unlimited priced so low, you can always say yes! to the n e w est, c oo l est st u f f! 12
Slide 13: Unlimited possibilities driven by the newest, coolest stuff
unlimited possiblities driven by the newest, coolest stuff “craze” trends licensed trends & brands our own on-trend stuff (relevancy) 13
Slide 14: An amazing, fun experience
an amazing, no one else does fun experience what we do in an 8,000 sq. ft. store! unique and engaging in-store atmosphere fun and dynamic with friendly “wow crews” and upbeat music easy-to-navigate with vibrant signs and low sightlines across the store iconic fixtures that encourage interaction with
Slide 15: Watch this!
WATCH THIS! | 15
Slide 16: We deliver our purpose with people!
we deliver our purpose with people! Hi! Welcome to Five Below! 16
Slide 17: Our customers say yes!
our customers us and say yes! “I went to #fivebelow for the first “ you bring time to look for a phone case and so much happiness “@fivebelow is the #LouisVuitton came out with a rug and a disco and joy to people! of dollar-stores... the best.” ball hahaha that store” Ashley @fivebelow best @Dibble_
Slide 18: Our powerful store model
ou r ul po w er f s to re mo d e l . WHEREON TH E A C T I IS! 18
Slide 19: Located in high traffic centers
located in high traffic centers Five Below visit was the first stop in the shopping center 45% 55% Five Below visit came after another stop in the center • currently lease all store locations. • average 8,000 sq. ft. per store. • majority 10-year initial terms with options to extend. source: may 201
Slide 20: Proven success across diverse markets
proven success across diverse markets urban a suburban a semirural a • Chestnut St, PA •Pasadena, TX • Lake City, FL (Philadelphia DMA) (Houston DMA) (Jacksonville DMA) • Philadelphia, PA • Redlands, CA • Dover, DE • Washington D.C. • Canton, OH • Tupelo, MS • New York, NY • Pasadena, TX • Chillicot
Slide 21: Best in class new store metrics
best in class new store metrics (1) ~$450K strong average store ~150% R.O.I. 4-wall EBITDA(2) Average ~$300K Low Average Net Investment (3) $1,976 $1,986 ~$2,100 $1,928 $1,885 $1,950 year one sales 4-wall store EBITDA dollars in thousands 25% 24% ~25% payback 25% 24% 24% period of 2012 2013 2014 201
Slide 22: Consistent store performance across fleet in FY 2017
consistent store performance across fLeet in FY 2017 2,761 by region(1) 2,373 2,112 2,075 2,059 2,120 2,036 1,912 2,045 2,049 1,939 New England Upstate NY Metro Philly Metro Balt/DC Rust Belt Midwest Eastern Southeast South Grand Total (30) NY/PA (41) (55) (48) (86) (72) Seaboard (57) (69) (521) (30
Slide 23: The numbers
th e s. n um ber we ’ r e a l l about r e s u lt s ! 23
Slide 24: Disciplined and profitable growth
disciplined and profitable growth 2012 2013 2014 2015 2016 2017 5YR CAGR(1) net sales $1,000 $1,278 $680 $832 $535 25% $419 $157.4 operating $114.0 income* $77.9 $92.9 26% $49.5 $60.8 net $71.8 $102.5 income* $48.6 $57.7 30% $27.4 $36.9 eps† $1.84 $1.05 $1.30 29% $0.89 $0.51 $0.68 dollars in million
Slide 25: Transactions drive comps!
over a decade of positive annual comps 2012 2013 2014 2015 2016 2017 +7.1% +6.5% +4.0% +3.4% +3.4% +2.0% comp avg. transaction +6.9% +4.8% +1.4% +1.8% -0.4% +5.8% avg. ticket +0.2% -0.8% +2.0% +1.6% +2.4% +0.7% store count (ye) 244 304 366 437 522 625 transactions year store comp count (ye) drive co
Slide 26: Strong business model drives self-funded growth
strong business model drives self-funded growth $68 includes new capex (1) home office free cash flow (2) $13 $100 includes $53 new D.C. $6 $62 $45 $5 $5 $20 $6 $32 $26 $3 $50 $35 $3 $8 $3 $29 $27 $34 $21 $20 $5 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 stores distribution corporate/IT syste
Slide 27: Our vision for growth
ou r or io n vis th. f gr o w fu t u r e ’ s so br i g h t .. . 27
Slide 28: 20/20 vision for continued disciplined growth thru 2020
20/20 vision for continued disciplined growth thru 2020 20% sales growth 20%+ net income growth 625+ stores & growing! note: assumes a 52-week basis; 2017 is a 53-week year 28
Slide 29: Strategic growth priorities
strategic growth priorities 1 grow our store base – 2 our largest growth driver reinvest in 3 “wow” merchandise 4 increase brand awareness scale systems & 5 infrastructure build our team & culture 29
Slide 30: 1 - Grow our store base: new stores!
1 - grow our store base 125 new stores! ~750 AGR (1) 625 % C 32nd state ~25 2017 215 67 2007 2012 2017 2018e YE at IPO YE YE • entered 16 new states since 2012 • entered Arkansas in 2018 • continued focus on densifying existing markets (1) compound annual growth rate 30
Slide 31: 1/4 of the way there!
1 - grow our store base 2,500 1/4 of the way there! 2,000 ~750 625 215 67 2007 2012 2017 2018e potential (1) YE at IPO YE YE At least 2,500 store potential • over a decade of growth • cover continental U.S. • largest states planned to be CA, TX, FL, NY and PA (1) management store count potential est
Slide 32: Reinvest in "wow" merchandise
2 - reinvest in “wow” merchandise trend-driven merchandising team ongoing reinvestment in products global sourcing with over 800 vendors low-cost operating philosophy balls ship deflated without packaging (we don’t ship air, so you save!) 32
Slide 33: Benefits of scale!
2 - reinvest in “wow” merchandise benefits of scale! micro r/c quadcopter! whoa $5 2017 exclusive marvel® flying figure yep, just $5 le cyc infrared helicopter c t still just $5 o du pr R /C r/c car just $5 2012 33
Slide 34: 2 - Reinvest in "wow" merchandise
2 - reinvest in “wow” merchandise we source items fr om the right countrye. at the right pric We We don’t don’t make make trends, trends, we we follow follow them... them... . . .through customers, associates, vendors, trade shows, social media, blogs and more. 34
Slide 35: 3 - Increase brand awareness
3 - increase brand awareness print tv mobile/social e-comm 2002 2014 2016 2017 35
Slide 36: Big awareness opportunity!
3 - increase brand awareness aided brand awareness* top dma’s 56 markets (open 2+ years) aided brand awareness 61% 58% Philadelphia 75% 45% Detroit 66% Boston 55% Houston 47% Orlando 47% spring 2015 spring 2017 spring 2018 New York 46% big Dallas 42% awareness Tampa 38% opportunity! Miami 33% Los An
Slide 37: Broad appeal across incomes; shop frequently
3 - increase brand awareness customers broad appeal shop frequently! across incomes average HHI $80,000 shop 10x/ year 28% $0 - $49,999 $100,000+ 27% purchase ~60 items/ year 17% spend ~$150/ year 22% $75,000 - $99,999 6% $50,000 - $74,999 n/a 11% < :10 25% > :20 mins mins high dwell times in a fun,
Slide 38: 4 - Scale systems & infrastructure
4 - scale systems & infrastructure midwest DC 2021 pedricktown, nj DC open since 2015 southeast DC 2019 new DC’s coming in olive branch, ms 2019, 2020 southwest DC DC open since 2013 &2021! 2020 38
Slide 39: 5 - Create an awesome experience to deliver long-term growth!
5 - build our team & culture create an awesome experience to deliver long-term growth! culture. talent. scale. • bring our purpose • attain and retain • evolve oranizational “let go & have fun” to life top-tier leaders structure to drive throughout the company continued growth • foster best-in-class
Slide 40: Five Below is a unique investment opportunity
fiv˚ bE¬W is a unique investment opportunity leading high growth value retailer long runway for unit growth compelling new store model consistent performance benefits from scale 40
Slide 41: fivebelow.com
41 fivebelow.com
Slide 42: Appendix: Non-GAAP reconciliation
appendix: non-GAAP reconciliation 2012 2013 2014 net income $ 20.0 $ 32.1 $ 48.0 interest/other expense (income)(1) $ 3.6 $ 1.8 $ 0.4 income tax expense $ 14.1 $ 19.8 $ 28.6 operating income $ 37.7 $ 53.7 $ 77.0 expenses related to advent transaction: founders’ transaction(2) $ 10.8 $ 6.1 $ 0.9 seco