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Summary of Significant Accounting Policies | 9 Months Ended
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Nov. 02, 2024
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Description of Business Five Below, Inc. is a specialty value retailer offering merchandise targeted at the tween and teen demographic. The Company offers an edited assortment of products, with most priced at $5 and below. As used herein, “Five Below,” the “Company,” refers to Five Below, Inc. (collectively with its wholly owned subsidiaries), except as expressly indicated or unless the context otherwise requires. As used herein, references to “Crew” refer to the Company's employees, and references to “Shipcenters” refer to the Company's distribution and logistics centers. The Company’s edited assortment of products includes select brands and licensed merchandise. The Company believes its merchandise is readily available, and that there are a number of potential vendors that could be utilized, if necessary, under approximately the same terms the Company is currently receiving; thus, it is not dependent on a single vendor or a group of vendors. The Company is incorporated in the Commonwealth of Pennsylvania and, as of November 2, 2024, operated in 44 states, excluding Alaska, Hawaii, Idaho, Montana, Oregon, and Washington. As of November 2, 2024 and October 28, 2023, the Company operated 1,749 stores and 1,481 stores, respectively, each operating under the name “Five Below.” The Company also sells its merchandise on the internet, through the Company's fivebelow.com e-commerce website, offering home delivery and the option to buy online and pick up in store. Additionally, the Company sells merchandise through on-demand third-party delivery services to enable its customers to shop online and receive convenient delivery. Fiscal YearThe Company operates on a 52/53-week fiscal year ending on the Saturday closest to January 31. References to "fiscal year 2024" or "fiscal 2024" refer to the period from February 4, 2024 to February 1, 2025, which is a 52-week fiscal year. References to "fiscal year 2023" or "fiscal 2023" refer to the period from January 29, 2023 to February 3, 2024, which is a 53-week fiscal year. The fiscal quarters ended November 2, 2024 and October 28, 2023 refer to the thirteen weeks ended as of those dates. The year-to-date periods ended November 2, 2024 and October 28, 2023 refer to the thirty-nine weeks ended as of those dates.Basis of Presentation The consolidated balance sheets as of November 2, 2024 and October 28, 2023, the consolidated statements of operations for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023, the consolidated statements of shareholders’ equity for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023 and the consolidated statements of cash flows for the thirty-nine weeks ended November 2, 2024 and October 28, 2023 have been prepared by the Company in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim reporting and are unaudited. In the opinion of management, the aforementioned financial statements include all known adjustments (which consist primarily of normal, recurring accruals, estimates and assumptions that impact the financial statements) necessary to present fairly the financial position at the balance sheet dates and the results of operations and cash flows for the periods ended November 2, 2024 and October 28, 2023. The balance sheet as of February 3, 2024, presented herein, has been derived from the audited balance sheet included in the Company's Annual Report on Form 10-K for fiscal 2023 as filed with the Securities and Exchange Commission on March 21, 2024 and referred to herein as the “Annual Report,” but does not include all annual disclosures required by U.S. GAAP. These consolidated financial statements should be read in conjunction with the consolidated financial statements for the fiscal year ended February 3, 2024 and footnotes thereto included in the Annual Report. The consolidated results of operations for the thirteen and thirty-nine weeks November 2, 2024 and October 28, 2023 are not necessarily indicative of the consolidated operating results for the year ending February 1, 2025 or any other period. The Company's business is seasonal and as a result, the Company's net sales fluctuate from quarter to quarter. Net sales are usually highest in the fourth fiscal quarter due to the year-end holiday season. Recently Issued Accounting Pronouncements In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures. This new guidance is designed to improve the disclosures about a public entity’s reportable segments and address requests from investors for more detailed information about a reportable segment’s expenses on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Public entities must adopt the changes to the segment reporting guidance on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes - Improvements to Income Tax Disclosures. This new guidance requires consistent categories and enhanced disaggregation of information in the rate reconciliation and enhanced disaggregation of income taxes paid by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. This new guidance requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory, employee compensation, and depreciation and amortization. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial statements and related disclosures. Use of EstimatesThe preparation of the consolidated financial statements requires management of the Company to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, net realizable value for inventories, income taxes, share-based compensation expense, the incremental borrowing rate utilized in operating lease liabilities, Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation at the measurement date: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Inputs, other than Level 1, that are either directly or indirectly observable. Level 3: Unobservable inputs developed using the Company’s estimates and assumptions which reflect those that market participants would use. The classification of fair value measurements within the hierarchy are based upon the lowest level of input that is significant to the measurement. The Company’s financial instruments consist primarily of cash equivalents, investment securities, accounts payable, borrowings, if any, under a line of credit, equity method investments and notes receivable. The Company believes that: (1) the carrying value of cash equivalents and accounts payable are representative of their respective fair value due to the short-term nature of these instruments; and (2) the carrying value of the borrowings, if any, under the line of credit approximates fair value because the line of credit’s interest rates vary with market interest rates. Under the fair value hierarchy, the fair market values of cash equivalents and the investments in corporate bonds are Level 1 while the investments in municipal bonds are Level 2. The fair market values of Level 2 instruments are determined by management with the assistance of a third-party pricing service. Since quoted prices in active markets for identical assets are not available, these prices are determined by the third-party pricing service using observable market information such as quotes from less active markets and quoted prices of similar securities. As of November 2, 2024, February 3, 2024 and October 28, 2023, the Company had cash equivalents of $150.3 million, $154.9 million and $115.1 million, respectively. The Company’s cash equivalents typically consist of cash management solutions, credit and debit card receivables, money market funds, corporate bonds and municipal bonds with original maturities of 90 days or less. Fair value for cash equivalents was determined based on Level 1 inputs. As of November 2, 2024, February 3, 2024 and October 28, 2023, the Company's investment securities are classified as held-to-maturity since the Company has the intent and ability to hold the investments to maturity. Such securities are carried at amortized cost plus accrued interest and consist of the following (in thousands):
|  | As of November 2, 2024
|  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Market Value
Short-term: |  |  |  |  |  |  |  |
Corporate bonds |  | $ | 46,941 |  |  | $ | — |  |  | $ | 2 |  |  | $ | 46,939 |
Total |  | $ | 46,941 |  |  | $ | — |  |  | $ | 2 |  |  | $ | 46,939 |
|  | As of February 3, 2024
|  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Market Value
Short-term: |  |  |  |  |  |  |  |
Corporate bonds |  | $ | 280,067 |  |  | $ | — |  |  | $ | 154 |  |  | $ | 279,913 |
Municipal bonds |  | 272 |  |  | — |  |  | — |  |  | 272 |
Total |  | $ | 280,339 |  |  | $ | — |  |  | $ | 154 |  |  | $ | 280,185 |
Long-term: |  |  |  |  |  |  |  |
Corporate bonds |  | $ | 7,791 |  |  | $ | — |  |  | $ | 8 |  |  | $ | 7,783 |
Total |  | $ | 7,791 |  |  | $ | — |  |  | $ | 8 |  |  | $ | 7,783 |
|  | As of October 28, 2023
|  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Market Value
Short-term: |  |  |  |  |  |  |  |
Corporate bonds |  | $ | 66,845 |  |  | $ | — |  |  | $ | 292 |  |  | $ | 66,553 |
Total |  | $ | 66,845 |  |  | $ | — |  |  | $ | 292 |  |  | $ | 66,553 |
Short-term investment securities as of November 2, 2024, February 3, 2024 and October 28, 2023 all mature in one year or less. Long-term investment securities as of February 3, 2024 all mature after one year but in less than two years. Prepaid Expenses and Other Current Assets Prepaid expenses as of November 2, 2024, February 3, 2024 and October 28, 2023 were $42.0 million, $30.5 million, and $31.1 million, respectively. Other current assets as of November 2, 2024, February 3, 2024 and October 28, 2023 were $115.4 million, $123.5 million, and $109.7 million, respectively. Other Accrued Expenses Other accrued expenses include accrued capital expenditures of $25.5 million, $48.3 million, and $50.3 million as of November 2, 2024, February 3, 2024 and October 28, 2023, respectively. Deferred Compensation The Five Below, Inc. Non qualified Deferred Compensation Plan (the "Deferred Comp Plan") and a related, irrevocable grantor trust (the "Trust") provides eligible key crew with the opportunity to elect to defer up to 80% of their eligible compensation. The Company may make discretionary contributions, at the discretion of the Board. Payments under the Deferred Comp Plan will be made from the general assets of the Company or from the assets of the Trust, funded by the Company. The related liability is recorded as deferred compensation and included in other long-term liabilities in the consolidated balance sheets. Supply Chain Finance The Company utilizes the supply chain finance program whereby qualifying suppliers may elect at their sole discretion to sell the Company's payment obligations to a designated third party financial institution. As of November 2, 2024, the amount of obligations outstanding under the supply chain finance program was $1.4 million.

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