Five Below (FIVE) 1 Dec 222022 Q3 Earnings call transcript

Good day, and welcome to the Five Below Third Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Christiane Pelz, VP of Investor Relations and Treasury. ahead. go Please ahead, go -- Christiane. Please

of call, Thank you, and joining results Ken and President today's forward-looking for Bull, made Chief and in afternoon, the we today are Good risks are that conference Chief made for Officer made from release could and forward-looking Such Reform and call amended. the forward-looking formal described during On our financial risks we need everyone Litigation of us obligation XXXX any statements. Five Safe statements thanks that to to quarter Anderson, statements such cause as are statements. actual Officer comments and the Cole. Below's made Those Securities forward-looking uncertainties filings, Executive results Joel are will remind both Harbor today Financial update differ After unknown to of the call. SEC Private subject to and the call Treasurer. meaning do materially of you and are as their undertake the management press open call statements our not Act this may and within constitute this XXXX to has pursuant The I remarks, of uncertainties third and provisions to questions. and date known certain

copy press turn Relations you to release, now a today's over may by of I have our of page Investor Joel. not website visiting call one do the you at If the will obtain fivebelow.com.

our year's strong call. quarter to earnings joining given Christiane, difficult our and quarter for that guidance We extremely XXXX last macroenvironment, a a you, comparison everyone especially delivered for third the against sales. us Thank thanks substantially beat third

staying customer of making. We nimble the of keeping we value while controlling our all our delivering at promise decision center and are what the can, offense, playing

we met a are our new store which on to conversions growth pleased initiative customer and our executing are positive that response. of that plan, Five long-term store with our being is very triple also double key the growth are Beyond We underpin format

sales stores of We $XXX sales helped All ahead new two of earnings were of ranked new our top in country new in both third XX also South to across of opened the results, total We and third Times was North were which these the quarter. ticket guidance all Manhattan third and quarter. by transactions the stores quarter XXX Dakota the very all opened sales excited were Three in time the decrease the of $X.XX, for them per beat drive improving of in quarter, a this our million, Dakota. share openings Square. X% of comparable open and The grand fall growth stores X.X% throughout finishing driven of of our and to with year-to-date. location XX states

have Five In converted we the this XXX approximately stores to already Beyond addition, prototype. year new

long year, customer and we were execution to initiatives driving are and pleased our product and key pace our traffic past focus of stores. strategic these higher We our term past chain, with and to of sales which which were of continue as rollout very is the well performance as important this This supply response, targets. to on enablers the experience

of Talkies. version exclusive products remain Liquors, brands like from needs-based our featuring mentioned games Sunday Triple-Double with strategic recently Slime squish and On our customers goals. of In Next and our or consumables resonating our last with year, with Only with The Swiss customers. candy like as Chip world connected well One once Challenge products that enable We continued, toys, our Squish the Rochelle, novelty we collection model the Snacks launched our will Hershey as great our quarter featuring events business outline models. popular. and and will again we Five salty Below product, candy pillars outperformed, trends

like trends Anime, & figures, Kitty such grew and all we Marvel at Stitch and items Hello extreme Disney's, Newer Action licensed and Funko as Lilo sourced product, including more value.

other offering more was Halloween assortment normalized earlier, addition, in pleased a the I as received. growth years. tricker us, the and XXXX XXXX more pandemic In treating impacted Beyond, for the recovered mentioned offerings We store. were rituals Halloween driver be well to continues back the and Five were full our with performance with stores and of as seasonal from our

about added have to We items XXX Five stores. Beyond converted the

opportunities extreme of values in special add now to products across marketplace close-out Finally, that took like buys of and we the one-time I'd many and additional advantage have categories.

drive Our inflation Below. will even to and traffic new pursue value induced more opportunistic we attract that holiday will Five this customers customers our goal, to drive is continue buys season, to and selectively for especially

an to a better even initiative relates spoke in we already the within back We of for strategic worlds. customers and featuring it store successful store of re-imagined Beyond our our with tech rollout focused about store, experience As room the the shopping the of prototype includes on experience, the are the Five delivering latest them. and connecting which

media. spend half second be season. new We toward not, continued With are in bodes on about unveiled continued increases earlier the our of and productivity. chain goal We store marketing that Five Five the With to invested focusing into to see key year, to the spend our Beyond year-over-year, selling who of holiday strategies the we over XX% customers efforts Beyond were our we purchased various believe in this third for social marching digital, driving the XX% twice search well as marketing as who did and in much specifically respect more XXXX. which format in track by in and this increased those quarter, chain leading products, the quarter, on of approximately for we effective sales. tested our in for We format paid heavily

customers, in store. great or Our our message design marketing and did to digitally teams a digital value whether job communicating

addition, more our about increasing gained we and target are customers, leveraging knowledge to through tokenization, effectively. data In existing both new with customers

pick offering holiday are enhanced rolling customers bopis out our managing store, by and and our September. convenience we wide For in season. navigating we up initial discovering orders dynamic chain our during this promising to respect With buy busy the online, proactively forward are e-commerce, we supply that results look The in to chain, conditions. operations

We our ways continue control to look to for destiny.

for accelerated receipts the strategically team and this ensure ever positive results we example, inventory an extremely the season. am with remain environment a holiday nimble the in-stock pleased We has great As position changing in to I delivered.

keep of network now We summer to days our completed ship opening XX% we the center. our service of stores no well stores Jersey, first and approximately Town, efficiencies large provide stores. the to Regarding Indianapolis the expected with our stocked. ability distribution ship center the and infrastructure, XXX has now five is have with capability two New out our Peter built approximately to our been network fully within the reach

will The the other continued for our be centers support years growth. expanded to over coming ship

Now, all-important holiday season. on to the

with Friday of pleased are We the Black start QX, weekend. including

value games their license something to customers, have beds decor we that ready from Our lists. pet promises complete toys keys to with stores branded and and are stocked an amazing holiday and products to for everyone from delight bluetooth our shopping assortment to and speakers, of

which we also a extreme and In to reinforces categories, Beyond are excited provide value for addition new in Five to our holiday gifting our and stuffers different position Five products destination. must-stop gifts, further Below stocking as

this folding holiday we a LED example, with season, featuring for For are wheels scooter light-up only $XX.

and month, $X, for and thousands audiences. excited our sourced these our of partners and Kelly shelves utilizing associates marketing only to really we've exclusive to kicked and bags customers needs. hired we save Kendall crossover campaign, their like Kylie stores, also social to earlier holiday media, our paid are attract search, And TV this to the highlight values, off have new filled help In key to Five Below. shopping with We existing holidays Clarkson, keep amazing

also everyone We to of in the which and offering elevate checkout, with We and season. our online XX% the stores at holiday customers' assisted throughput fivebelow.com. shopping further experience can't our customer wait busy our improves stores during to see plan journey approximately

we believe adding and fourth and retailer an inflation macro are for in So the inventory during we have in a assortment, with customers Five play progress taken, stores, holiday and our customers shopping accelerating and including value on improved need for pressures needs-based we season, to go quarter value in extreme position the of value. are growing the fun summary, alleviate see we providing third We to We season let steps holiday well our BOPIS the great Last several marketing, adjust our for increasing the more becomes experience that and great the look are help fun. expanding offer to Below initiatives a quarter. self-checkouts with receipts, to in beginning said out positioned made they transactions. a number while quarter, even that as

Our they season count to over detail. customers stocking affordable to disappoint. celebrate the for we can Five financials on in amazing, the turn gifts and it Below to that, stuffers more Ken With and I'll know won't review Ken?

for results good a then I guidance afternoon, and the begin everyone. fourth and Joel, our year. with third provide of quarter full Thanks, and the review quarter will remarks my

said, quarter we As we third the pleased were Joel to provided. exceed guidance

of basis, On by of in of a million sales XXXX to reported million decreased sales transaction the Our ticket of increased X.X% growth comp and X.X% quarter a comp rate the Comparable third a quarter decrease was sales quarter with growth compound third for approximately XXXX. X.X% annual $XXX X-year $XXX.X for from third the XX%. X.X%. decrease

were that basis margin new quarter approximately the in across comp. Our We in a the with XX% on basis last pre-pandemic compared stores average third stores of XXXX. quarter end since stores, year. points increased of XX.X%, and in XX% is We increased states to primarily compared in million increase deleverage new X.X% of stores geometric by million to post-August three-year the pleased $XXX.X of opened ended XXX negative an Gross in stack XXXX, the mid-XXXX. in the quarter reopened which increasing XXXX profit basis strong, for third we decreased versus the on as with corresponding line ticket. in stores approximately have versus we third X-year the to X,XXX seen transaction Gross XX in ticket by XXX both third with $XXX.X third driven occupancy quarter results third year. opened the stores remains at our quarter over X,XXX quarter the the to and the improvements last XX We comps XX or period a quarter

and XXX increased to were offset sales of expenses fixed XX%. cost primarily this higher As for than quarter approximately by SG&A basis a compensation. lower year percentage of a by management marketing year SG&A the third percent deleverage, strategies XXXX last incentive as of driven all sales, points part expense, initiated higher increased cost in expenses store and

in million expectations These As the than operating XX.X% to XXX last sales million margin due a operating basis were beat. result, our with $XX.X versus to income quarter year, third the deleveraging points. year-over-year decreased by approximately better primarily $XX.X results

for receipts at rate the We end $XX.X million $XXX the million of XX% year. our the nothing $XXX third of with for end million million line tax $XXX last no million average and was half net growth on with increased third accelerated quarter XX% year. equivalents as store were of versus outstanding in-stock third holiday third effective expectations, per In the $XXX Inventory to of inventory we quarter income XX.X% million of per income the to on Net quarter to period. cash quarter was of this $X.XX. to year's XXXX. the $X.XX better and came at credit. line a for compared last as from for debt, our the diluted positions compared inventory Earnings versus quarter Our third year. ensure the Approximately last of of the $XX.X was increase the third third in approximately basis quarter of cash, quarter last ended diluted per including third XXXX quarter XXXX share compared investments the share in earnings unit

expect per inventory moderate in year-over-year of average by the continue We the to fourth growth significantly end the to quarter. store

on guidance Now to fourth fiscal of quarter year. and

the with the quarter, Black Friday weekend start results. including pleased are We fourth to

positive $X.XXX comparable based opening in quarter negative We $X.XXX quarter, expect the range last to XX to to year's sales the stores X% approximately of fourth sales in range a comparable increase be quarter with billion sales $X.XXX. on new versus of X% in of billion fourth

improvement expanded more As targeted the in-stock guidance, our more Five Joel feel gross year-over-year XXX higher cost said, and Beyond points, expect margin in are costs offset we Lower QX, management stores. on margin driven originally deleverage about holiday fourth expenses. from and operating and basis in to leverage and strategies quarter by of additional we expect to than marketing great assortment SG&A assortment spend. than more planned an compensation fixed approximately the and At of incentive in both effective a position marketing benefit midpoint our better expected in and

quarter the share share-based impact repurchases. of $X.XX which expected range of Our $X.XX. is million is to planned approximately to for effective EPS of diluted excludes the tax million for the with in any XX%, $XXX fourth Net in expected to range be be the rate accounting to $XXX income at

fiscal versus billion XXXX. the $X.XX expect For X.X% full we of billion $X.XX year, to an in of increase X.X% the or to year range sales

range X% reduction is X.X% to $X.XX conversions X%, to and Five year. XXX These and last the versus store comparable format. We in assume negative negative opening projections XXX the $X.XX, to sales completing of which EPS to X.X% Beyond full approximately year expect new new of the range in stores an

For excluding the to the executing and new environment. This of of the opening and conversions expenditures, better-than-expected are third XXXX, ship impact a in in and start allowances. we infrastructure. opening stores spend gross investing conclusion, remains economic a Indianapolis, planning approximately center In our fourth a had off and It are to new $XXX dynamic in capital quarter. fiscal million for quarter reflects systems good we tenant

is Below resilient a retailer. Five However,

priorities strong quickly combined changing customer with management ahead. them all to and to I'll sets operator our commitment significant dedication. to their lies thank The and move long and industry-leading adjust us model the our deliver apart the on growth to new store disciplined weather combination back preferences, Our Q&A. begin and that ongoing to while economic to With continuing strategic capitalize us of cost positions balance want to to growth, teams turn uncertainty, I it continue opportunity on for Operator? for over that, sheet, runway economic to

[Operator Instructions] Burns Kathy And today, it'll from JPMorgan. with come

Great.

since review so November? on couple Joel, you've a on congrats things. So do of prevents anything to you're embedding see you we the a to quarter. you And you fair What seen August. conservatism the then the potential as in business today is look returning inflection of next that say level from And just XQ to of guide? the that components in year. a great Triple-Double Could that you it elaborate plan

quarter that and increased said has Obviously, the as of combination to done closer become the some in happen. really I based begin Triple-Double to the And guide quarter throughout our Yes. of October, improvement get around finally, in holiday, we needs-based Thanks, remarks, transactions. we've on always retailer, largely we Matt. we we've a where marketing. then outlined which clearly helped the were And factors seeing of prepared we I it's my and end, combination specifically a the think September improved a what

our things And probably it. down are has that and not us helped side how see kind those And that's customers that gone it's lost CPI so well. of the all then as certainly on of consumer the out. throughout playing on QX we And quarter,

is QX conservatism know, as in As far fourth have And us. to X/X that in confirm of quarters. than the the you always still quarter, is the quarter clearly sense a Matt, as on deny of word the front of rest a or quarter elaborating we tough different

we have to remarks, I to pretty a see quarter. And our with the line we before. we're to also in stop. recognize But with very seems the But it's to hasn't reason and Matt. and we look, in environment to all Thanks, place this like really in customer dynamic start forecast. that a stuff inflation put expect dealt the our to for think So that no said solid off throughout It's December. work we that resonating, be we

come Our question Stanley. will with Gutman from Morgan next Simeon

about different? 'XX. then in is that not anything that's that's anything I give I'm next the Joel, the and your that heading can the assortment into pipeline then that not talk But And and but not, product to already you you guidance, assuming any holidays. for products set the there around won't into are 'XX? point. holiday Happy know 'XX come

assortment QX, Look, far for the see few Beyond. I as in Yes. a floating as still for stuff -- would Five you'll new

I out. think that's a we that very dynamic and expect to go stuff in line

carry in bags. and called wow just there. my great to prepared we big And the the stuff the of that next because us. and continue crossover great newness for into But out to then think Kendall merchants the is you'll line, year. movies. relevant seen being like Kylie want movies to So of haven't example I right to the that's been we've the product in of X on a there, 'XX, And forecast I I largely haven't out licenses change see I that will last item some start, and years, exclusive off some the -- think out come a licenses remarks, and trend getting being I mean, into happened big terms to mean of tend

product in here 'XX into licenses that's kind that of as probably well. think the quick about emergence going sign will the 'XX. But a and quarter a of continue into as good overview fourth on we is So

John Heinbockel next question Guggenheim. will Our from with come

where that discipline we on points need that of your you've $XX as today? merchants, as price are always need Five need always What's items beyond, need more We that challenged on you've But $XX. know dollar right? in has much I Five I than as items thought right, items price Is right? worlds, in and $XX $X, beyond -- we we got terms the much thoughts, you've we Michael points, Your now, think right, had. ever as

on Yes. on And we that call, the Five really are very the I than Five Good that. to you're that in to $X, $X during going at to stocking Below. and and to excited Five intent question, great and stores. price honestly, to us focused the And do Below. gift, And not only headquarters but we're Below and But really value strategically, bifurcation your screen John. you on Beyond say year, not upon everyone that try what obviously allows more same time, this two. is what about be on of main for still we what would the is ever or a points landed we've see stuff And also our called the to us be holiday, non-Five the continue it to emphasize in build assortment. grow stores and platform,

in message not the You or the beyond, front. merchants a non-Five we that assortment stores. you're the value. still deliver is section But X-foot that may whether carry about will see consistent Five will in talking the grow Below Beyond Five

actual that's important have And more did year. think last right, the than more I you're $XX we we items price. than John,

talking start between time, and you'll that's you Beyond go start we'll But they to moving a Beyond, difference from emerge, same shelf to worlds now, second in end Beyond for John. of away too and the Five the gives we're at And emerge. and and We'll to sense think higher any And to John. value. stores. to will high Five store the about the that said the that it's have Michael Day, within the delivering many opportunities And continue right Below where we categories expand on you'll I some start to got go. team hopefully, do. at yet as Thanks, Five For Five you'll I'm the now, a what Investor but we've of do here, than items store see about that see see the

And Truist. our next with will come Ciccarelli question from Scot

have on store growth. I a question

think kind again lower going I it's than a anticipated. to be previously bit of

thoughtful opening growth opportunity? are, cadence guess especially to unit still the I we there the as 'XX should So about, be questions headwinds we towards the look are

much of coming Yes. good persisted Even headwinds half on the rolls of I for we're And coming the first skewed It's half pandemic. is in out 'XX. the mean still course, over half second a year later bit here, stores that into into over John. clearly, to -- But track question, second Look, goals. 'XX 'XX. ratio a to the long-term the Triple-Double of little

X I said years. think we over X,XXX stores

start you the that 'XX you still start slow does stores, 'XX. up X% that's that something. missing If or in directionally It's and the to because here only hey, here, by take X,XXX end of

gaining of years, And we Scott. going the we good and into more to for I are are us. time We hate 'XX going thing headwinds first outlook pick we're coming some the of hopefully that think grow. it, retail expect to behind be up to us Scott, to in growth. majority it. That displacement say out continue see you think expand that the But gives as I momentum will sites our some X I Thanks, holidays. on for a But as the

And come our with next Brian question will Oppenheimer. Nagel from

Congrats on this quarter.

your prepared mentioned question -- you mentioned in my comments, opportunistic purchases. the So

more So could Or I do the product that. given elaborate this in products just always you've in that some Below? Five This buying maybe you've have And of opportunistically, dislocations. effort Is the something same be it you now you're that -- have this year? is bigger of past. just the this a done what is is on the unique -- further question

Yes.

opportunistic note, purchases. buys. relatively though, our you still But you'll in selection low of stores, last important big our of years, is digits I the walk think Funko. that see onetime to And of I a a Brian, closeout prepared single honestly, it lot get to opportunities, why couple that, that for been there included, of was remarks in think overall it's it's hasn't my important

things brought licenses incredible and action and value that to great combination are Our stores. Uno, marble a really the we figures, that then of like XX-inch brands

been our years. to our of So I playbook, remind that's last there for hasn't of something been in DNA everybody I it's it think that's it's for needed but in quite couple back the kind and look, time, some

will from come with And Paul question Lejuez Citi. our next

in rest that Curious And to stores the chain? terms seeing Beyond what can able traffic get in terms comp prototype performance you're those be the the versus share if of Beyond non-Five the the or might stores? of in Five you of versus give you any to detail

to the XXX, same what mid-single time, we tell really going that real Investor it's they're which quarter. I Day, those would But signs digits, we And full seen statements Paul, Matt the to a subset run stores improvements a laid digits. now, got happened kind year We and data. your Day. think at that input watch our into perform I'm And quarter. great it quarter. expected an It same alludes what in a are improvements give at about that how it's the QX, while was want watch asked of of what you sales through any of at in QX throughout early stick at we you post not bit -- on haven't I'll first to to really question. definitive out dodge because kind both, we of level. for little I not the everybody And remind us And But which really kind why overwhelming those answer. to goes. improved QX majority a of the to and need we -- again, more seeing Investor kind we'll with mid-single through time, the plus But to we in the of is the large it's at kind of is remodel trying

our from will next Kelly with Wells And come Edward question Fargo.

heavy QX there's think can just So the in closeout maybe category of how -- And set compete? a you're you toys, one especially been talk business. about just up what that earlier you on then holiday on promotions mix talk talked you follow this and in about about thing lot categories to your period, a like up is

little on you in the that terms well? QX seeing it maybe Could opportunity. Just there as have in could size a and of the color maybe impact you're what

talking holiday really category in it's toy range. us, that is over for us. the Ed, impacted And heavy industry Yes. the kind I a about of I the -- teens -- We promotions, know lot is high buys. look, think hasn't

play too And the don't in tend our toy that to traditional We very that people expect of in the toys. world. I I that's that? from in the -- Squish plastic Ken, lot the in QX And I everybody to terms the are much a don't referencing. on toys is of is performance talking also to high deviate model teens toy don't about. us different in line-up anything add think than know,

you also. think are mentioned, expecting And season. that's historically important always holiday from see holiday of I part an the hit expectations. penetration it. standpoint. for Joel No, It's we're this those as And what our a That's to we've seen what

And America. Haas question come from our next will Jason with Bank of

get into that So more needs-based becomes we season. Joel, the you mentioned calls the a holiday past few times, and I as on know you business said

there. for as just get I'm cadence, see I'm could if just to continues. curious starting similar we the curious this you next plan you're sort of So think environment to thoughts business year, a your

me clarify. Let

the You base see a similar holiday? the going into needs cadence of

the season, summer, as get that into as assuming again if softening picks pressure we and holiday just Yes. the out run planning we consumer kind you're of get of holidays. the see spring it before entered the business continue broadly this the up that some I wonder, under if just we we'll rate still won't

Yes see look, I softening. wouldn't expect us to

they out it's that said we're think the the where and year was. important, clearly has of value it's a figured consumer different time equation. start is very a period value The of the -- piece than I

the did the freeze. we forward. most Will retailers, as our They've consumables that look, They've any categories couple inflation. to adjusted gets quarters, But going more slowdown massive the war I their you're you're transitory foreshadowing Plus, new deliver was think what going adjusted more we consumer and slowdown lifestyle, the part which to the we're saw to be and and equation don't Certainly, benefit saw as offset saw focused than big in you're into that is we of go conversions we a QX during going asking, needs-based time like of Jason? hopefully, what of where started, XXXX, and continue that get there. pocketbooks. as more we going it I value, continued on see potential backwards. absolutely. candy, long as at of first

next our Jeremy Group. Hamblin Capital from And Craig-Hallum will with question come

on the into Congrats to compares one ask results. first, I as clarifying trends. the we if, get January. to wanted back I'm not think -- the cadence into see on half cadence strong easier I mistaken, the and get December If just of the

And increase would in particularly as sense just confirm a we here quarters lot be We've the second couple stores just talked in So have that and for had wanted I you've in rates and that. XXXX. what the an about get shrink into lot the last of as retailers season. technology of invested then holiday within self-checkout. get the a first seeing you're a to question

the from piece XXXX, Yes. Thanks, Jeremy. of payment 'XX was up it, thinking 'XX. end of cadence about you I our the think January the If Yes, fiscal QX you're was January, year, against which right? last of recall, stimulus

all year. our normalized And think And I smallest and from baseline year. a our was -- clearly, January month years. prior the that But is it's so I last guide, our do of think is this more also hardest compare now too. in

of over toughest. 'XX. in factored thought But in that whole quarter. forward we look, about as far last that was We started for lot we a the buying think concern cadence shrink of been expect year 'XX all then all industry there's And as rates, and pull big that a I about that, emerge the to with of talk chain. our the kind in -- the November as supply There was

And points vis-a-vis driven some so also kind 'XX. to expect price that's year. in base retailers, of I already of significantly be our than our higher-end from by And don't different 'XX last in our -- but some largely the of -- it's

from question next Chuck Gordon with Haskett. Grom Our will come

as you quarter. of sort you're Eric and a of how get also this then sort was year-end. Chuck. is growth of to on if improving definitely growth Cohen thinking about for the I improved drivers lot Inventory This we inventory could unpack wondering

prepared inventory XX%. get It remarks, -- year-over-year think store get levels any type is the was the that position And year the the of in XX%, recall this see to half think high in we dropped actually you the our to be in to mentioned back for I we've inventory. a average majority as I of improvement end freshest on The should did -- Yes, at in Eric. want significant season. forward, inventory seeing Thanks, a QX as caught we very in end And get we in the back the seen be didn't based XX% was going accelerating think in the receipts continue to rate up Yes. We move we're And our that overwhelming of of strategy in prepared to that that I down you holiday end expectations, of moderation chain supply the if some we year. good was to of growth the significantly we'll year. probably of years. disruption.

good where about feel really right inventory us now. for we is So

our And Loop come Anthony Chukumba will Markets. question Capital with from next

in of to penetration long-term guess are any You kind it's was factors of XXX%? mentioned I assisted And stores. limiting your your wondering just sort of XX% there the get that And into I what's target? self-checkout

Anthony. XXX%. Thanks, will never Look, probably targets, it the Yes. be long-term exactly

a converting Some of old it is of factor stores.

low-volume to it put our shrink probably to it we stores, stores stores, our would or the not have going our smaller really say format aren't in. And So high in we put there. still to then extremely room I tend

all for to intents never to XX%. going will be purposes, will less but continue number than XXX%, up. probably not but -- it's float be So that It

So to Thanks, somewhere XX%. that range, in Anthony. XX%

Brad with will KeyBanc Thomas Our Capital from next Markets. come question

gross XXXX, margin? holidays for know here. you're little guiding was, given thinking the in more given And talk to the early some My question the it's if and bit that wishes I a I broad about Ken, margins that noise give can we're wondering strokes around but you of best was for us here in seeing inflection

we models all you're in QX. would a I I people's look, this asking. wouldn't It's where the stores, to also top little turn just know a question think trying our year. think can ICR on Ken you give a want Think you're to a is to bottom a or on below expect for this we second. and of maybe maybe normally probably to guidance line. to a bit and XXX about the that have input tend through to we line your kind we be help top you But you Brad, maybe to next new have is out Yes. over listen, on bit realize all any growth line. figure scenario save of and them I'll get But But lot help March to I to largest mind. wouldn't that of here it's about 'XX, Ken, little And that. think can about

I store range call, get our of We'll we're March in scenario think help of Ken program as have the as so about and certainly think line. we sight the full the to about thinking about a new And it. but line year-end them that's think to bottom to how

the question. sure. And for thanks, Brad, Yes,

As going and Joel mentioned, season again, guidance our we'll a get we're is March we provide as call. scenario in do on but guidance, obviously, the holiday And not this normally format. to through

should what scenario, providing. a in Based next year. and of we on know operating our So that we're comp that's 'XX we X% fiscal say, margins up Brad, for believe that be versus today, slightly, a guidance

year, to higher headwinds we that from us strategies spoken Now we're are have areas takes management going some that significantly this spoken that that we we've the profitability primarily a around we've helped incentive before. initiated the year about be done, back standpoint, and puts that about the There compensation, does in anniversarying of those. expect half cost some like year include would next that

of carrying and some we some can't. those, of we're And those forward

you and a and headwind our negotiations on business, the those into Gale of we of coming slight operating year. increases will here mitigating based look especially the be place. put good can that there increases a of So we we in in always late lot on certain know, pretty there. a We're job do But inflation. other cost And areas strategies management as seeing

next a a, year was see that's, a if scenario of say, would it So what we comp. again, X% just

Brad. Thanks,

from next Partners. MKM with Bellinger David question come will our And

points? ticket appreciate in commentary acceleration getting XXXX, was up Five down. lift Did I respect, to the XX% back you the basis. around this but that saw quarter and looking year-over-year you're average It but through down was Below moving period still to that on a seeing this they faster to higher? than, a in those lower of it, are velocity you at of the Are sort terms did that with shift value? do comp, quick QX more And price call and $X have

question me to were you that trying through again? follow David, the asking that it. -- I'm it quarter. Did ask

with you that So lift the quicker items you an of more that and just still turning to items better? lower your saw throughout and improvement that have did from are acceleration, higher? QX priced being Or selling some and do $X are

increases shift, inflation it it's mix I coming of it, Well, is one that's... Five sales I it's from third, one and So we to coming it strategic is I third one from roughly if price had of one coming to right? think third, third from think Beyond, third one it is categorize probably of third, meaning one then combat made

That's of from Yes. that's referring retail where the there. to David, you're you mix. if typical coming increases unit average that kind --

X/X -- the about unit each those changes. of one make components up probably average retail It's

a business. in across from perspective. terms the product board from But coming an overall the improvement It's of really in

come Lasser UBS. from And our next Michael with question will

margin you need the point X% have to do that's norm given a leverage you'll for year. back Presumably, expenses some not expansion rolled some new the base. next that comp unique generate the into Ken,

is flat there's comp amount see how point much just XXXX, is compression you'll what a into lot you margin given if new sustainable what to of a happens are expenses? And year? what in next in comp macro So the that environment the long-term need would lever uncertainty your sales

just I everyone a the want to -- gave thinking and this don't the me hand comp. is Ken I I -- you over I think I mean, flat specifically, you. but on because scenario about Michael, Let don't be think I'll X% beginning, Ken, Ken it there, let the answer scenario, take I a should -- jumped I'll just scenario call in

the again, We're I think we're all right it. clearly, year. think I those, still working is the we pushing initiatives Investor we've I'd unwind what March years. told and X% into X Day, outlined X% we comment. the to and ahead for we with our get think about the that to way all world focused next the But X% think that I on way as to if got the at with all next And you changes

caution X% than you We're If you that's add push to comp. at flat not want off know from in conversions, take any getting yet. But would to... low single-digit, historical benefits And that starts or of Ken, you don't to higher I the our I ready us go higher. of everyone what a if

Yes.

a asking, if further out of because timing terms Michael, little in little it here. a the further take you're you're So you going

of lot this headwinds, carryovers of I Just about of an reduced to things because pretty the was right? happened they're a spoke on next from some impact which XXXX And incentive unique are year, remind year, everybody, having really year. a that year, this compensation.

cost management Some strategies some and those other of things.

obviously, the would perspective. Joel But a the you emphasized there things, we leverage where At of specifics the other things -- unpack. like we of to would would how move back technology can't I Day network forward. any that terms increased this some as spoke lot areas higher point, expectations an have in top and go one to ability So think us, provide distribution and in we profit that embedded was about just little to a kind takeaway that. more And time on we would from basis, leverage our bit that, operating need that term us going our in were that's on answer then for our profile to probably from higher given the that. a Investor investments a key there's line I a But I longer specifically leverage I of a behind in right, think lever for ability

be. used get said see X% We up I point longer we our term, 'XX that needs to at to just the tipping where X%, first. got don't through anything Yes, to leverage Ken, stay has

Yes.

gives that some you Hopefully, Michael. Thank there, color you.

question Michael Montani ISI. will with come next Our from Evercore

Joe, Can Beyond Five CapEx the we for sense think the up. front give remind had year? new follow Can And to those? is you in what side store just us about wanted earlier. the next Just plus? mentioned for you conversion $XXX remodel any

Yes.

point, how bit $XXX-plus $XXX than a number. will a probably I Michael. think certainly this I little that all any at north be is less stretch. we're expect wouldn't a At But to together, of certainly number be still it putting It per we some number. out that only And lay the of call store. the timing March investment certainly, the -- what And then for get you behind for that. the but not we Ken or build-out of many, will is all

the store, can varies that Michael, versus the will it the it pretty of a an as conversion more the full -- down for recent depending of on cost store. it age depending taking below it's pretty actually low $XXX,XXX. If be type store, much on Yes, type older that's vintage building would If a new place it's a store. same

about But Thanks, $XXX,XXX, that's of less right? where -- It's those we're the not it. than Michael. about majority are thinking going be to overwhelming

come Krisztina with Katai question from Our next Deutsche will Bank.

a good I wondering wallet. quarter. really of about was share just thinking on Congratz

You did your for that working messaging. to you're remarks leverage prepared mention effective in data more

half back also of You quarter. the in more invested heavily in marketing the

brand does So the meaningful be customer seem you like about to it can awareness. talk ahead, pretty you opportunity it looking drive especially saw? a Because could that response maybe

Thanks, you Yes. question year-over-year your month have -- the used on here invested And which DMA Krisztina. have first starting answer it we forward, level, data specifically. And have tell November we going with statistics we'll why at customer really we that I is will at would But -- the really only to that's so our tokenization. in level. where

the of start value is half quarter we'll transactions the really mix that be third and as see throughout what look think improve able beyond our fourth customers start after of is to I are advertise. at all really what as use second And working, who's as you specifically in quarter. proxy to traffic. saw then of sign is our for for the look says to And is to coming a a backwards, good have I that we looking we here and marketing give we I transactions customer

year work Go that which I've Krisztina. way year, ahead, bit this need But So of it. time Thanks, credit our can the done we've the we a loyalty having short I that a trends. last a tokenization is 'XX of old kind so just which off started of November operator. card, more We'll ahead. little get first have means Go year-over-year got you. then in therefore for starting or

remarks. question-and-answer say like over this closing session. to I'd the concludes just to to Joel for Anderson the going I'm turn conference back

Yes. operator. Thanks,

wow And our and to Sorry for at thanks, value is everyone, and exceptional communicate Five tried than there. we important top deliver us is for jumping just customers purpose on and it holiday ever. -- our for to Below of you this value Hey, here more a even for think today. joining as I reminder today, everyone, always,

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concluded. conference today's The Thank has you attending presentation. for now

lines this now your may at You disconnect time.