FIVE
#You bet.
Thanks, Ed.
It was certainly contemplated but I would tell you for us it's really not material.
Halloween is not a big holiday for us.
If anything, it's probably a benefit as we pick up that last Saturday but it's so small, <UNK>, that it wouldn't move the needle either way for us.
Back-to-school is a bigger holiday for us than ---+ a bigger piece of Q3.
I might just add just for everyone's reference on the call, of all the quarters, Q3 is our smallest quarter.
And honestly what's on our mind and what's most important in Q3 is getting set up for Q4 and being prepared for Q4.
But the Halloween shift is not material at all.
As we mentioned, we have been very pleased with new store performance to date, and I think implied in our guidance, I'm sure you will be able to do the math on that.
It is ongoing similar type performance in the back half of the year.
Thanks, <UNK>.
Yes, probably not too surprising, but I think probably won't get into the details of all the learnings.
I think that's somewhat competitive in nature, but I'll share one example with you.
Mobile is where it's at.
I think even if you look at our new e-commerce site, we built that site to be mobile only.
And it's not to be desktop, be really focused on the mobile device, and that's where our traffic is coming.
As it relates to TV, to digital, we talked mobile social, all our ads are really being focused to tie into mobile, whether it's watching YouTube clips or anything like that.
But I think mobile is clearly with the teen/tween customer.
That's kind of their device and that's where they live and I think the marketing team has done a great job of pivoting and shifting and playing that up.
Having said that, I think I've shared in the past, we have learned a lot about circulars.
And I was probably too aggressive candidly in my first period of time to cut out too much circular, and I think we have learned that circulars still play a role.
And they are especially good in protecting the base, and so I think we are working to make sure we remain a nice balance of that as we understand our base customer from that perspective.
But those are just a couple examples of some of the things we've learned.
Vinnie, it's obvious you have been on the site and shopping and checking it out.
I appreciate that.
Sure.
Having spent a few years in e-commerce, you never want to let perfection be the enemy of great, and what I mean by that is speed is more important than anything.
And the teams got focused on it this year, and anything that was a hurdle that would delay, we pulled out of the feature set.
And we launched with a few hundred items.
You'll see us begin to ramp that up.
We've had zero issues with the site.
When I say feature set, you can't use a gift card today.
We will have that before holiday.
You can't ship to California today.
We will have that in conjunction with our launch next year.
Those are just two examples of features that aren't there today that will come.
And expect to see more product.
We're testing what's the right elasticity on shipping and handling fees, what's the right threshold at what level, minimum orders, et cetera.
So you hit it and found a couple of those.
But you've done a great job.
It's been a quick launch.
It's great to see no issues.
And as <UNK> has shared from day one, minimal impact on the bottom line for us.
Very helpful.
Thanks, <UNK>.
Yes, you bet.
<UNK> <UNK> with RBC Capital Markets.
Good afternoon, guys.
Two questions.
First, I think you mentioned you are looking for a slight increase in EBIT margins this year but when you look at your guidance and obviously the strong first-half performance hit the margin line.
Are you anticipating flat or down EBIT margins in either 3Q or 4Q.
And secondly, can you help us understand the drop in payables given the increase in inventory.
Thanks.
Yes, it would normalize to what we've seen in prior quarters as we move forward.
You are right.
We are getting ---+ when you dig a little bit deeper, we are getting returns on those investments that we made in the past but they are being offset by e-com and California because they are really in the back half of the year.
That is the key driver there to ---+ that's getting that operating margin at a flat level for the back half of the year.
Thanks, <UNK>.
You mentioned it, <UNK>.
Historically, we would rather not open up stores in Q4, and when we say Q4, we are really talking about the first week, maybe two weeks in Q4 so it's really just after the end of Q3 and that's really what we are expecting for this year.
From a go-forward perspective, I would expect that to be consistent as we move forward.
There is a potential for stores or for us to open up stores in that early part of Q4 but really for the most part probably in those first couple of weeks.
Yes, let me take those and <UNK> can add any color to that.
On the store in Michigan, I think at the end of the day, when it is all done and said, I don't think you should adjust your model at all on that.
And certainly if we begin to see upsides to that, we would share that with you.
But I don't think ---+ we certainly didn't go into it expecting to see a downside in it.
As I shared on a call earlier, it's 5% to 10% larger but it's considered relatively the same size from that perspective.
And then the ---+ what was the second part.
Oh, the new headquarters.
We are still finalizing that lease and the exact timing.
A lot of work to do on that, but as we get closer and certainly as we look out in 2017 and all that, we would have all the specifics for you.
But I think the biggest reason we wanted to share with on everybody on the call is this was part of our original plan.
We have been looking for a couple of years now, and as we would send out a press release in a couple of weeks, we didn't certainly want any of you that followed us for a long time surprised, kind of wondering what this is.
Initially, we don't see any significant impact.
Thanks, <UNK>.
We look forward to talking to you soon.
When you are looking at the back half, <UNK>, that is the key driver when you are in SG&A for the back half.
There really isn't anything else meaningful to call out that's driving that.
Again, because all those costs are really embedded in the back half.
Obviously, there is no increase in the first two quarters related to that.
So that is the key driver of the delever.
No, no, no.
I think, <UNK>, actually if you look at our overall marketing spend in Q2, it was, on a rate basis, was flat to last year.
In fact, it might even be down 10 basis points or so.
There was overall, really no increase in marketing spend year over year.
Yes.
Yes, <UNK>, for obviously comparative purposes, I don't really want to get into the specifics there.
But I think what I'd must remind you and everybody, what's continued to make Five Below so unique and special and lead to those 41 consecutive quarters of positive comps is the eight worlds.
And <UNK> and the merchants are constantly shifting the worlds, leaning in on worlds that are trending, and shrinking down worlds that aren't, and I think that is what has really allowed us to pivot the concept wherever the customer is or wherever the trends are.
And I think as quarter by quarter goes along, we certainly share with you what drove the quarter.
In the quarter we just finished, we talked a lot about seasonal and room, and we will do that as we go through the quarter, but we've got a great lineup for the holiday season, and it will stay in those eight worlds.
It might shift around from quarter to quarter.
Obviously, when you are growing at the size we are growing, it will constantly create opportunities for us.
We announced Christiane joining us.
That's the first time we have had an in-house IR person.
A year ago, we brought on our first loss prevention group.
As we continue to grow out and become a large retailer, we will fill those out but there is no glaring gaps that concern us.
It will just be the necessary headcount growth to stay ahead of and in line with our annual growth of 20% or so.
Sales growth, that is.
Oh man, you answered the question for me there.
That's still the strategy.
I think <UNK>'s team has done a great job in that area, and as we do find margin opportunities, we do plan to reinvest that back into the product and continue to bring newness and wow and you have seen that in some of the stuff that came out last year, and I think you will see some even more impressive [items] as we get into the fourth quarter here.
<UNK>, as a poli-sci major in college and worked on the Hill, I thought you were going to ask for my opinion on who is going to win.
(laughter) History would tell you there is always volatility at this time of year.
But history would also tell you regardless of who wins, the markets just want certainty, and that will all be defined and decided barring any hanging chads in Florida in the first week of November.
As it relates to Five Below and what matters for us, the fourth quarter is the most important quarter and that all happens after the election.
So I think any choppiness or worries that happen in the third quarter here will largely be immaterial for us specifically.
And we will stay hunkered down and focused on the fourth quarter.
All our TV starts after the election and I think all the uncertainty will be done by then so largely for us, knock on wood, thankfully we don't really have to worry about it.
Sure.
We only have one member of management in our stores, our general manager.
We are largely on average at the threshold there.
Because it doesn't start until December, it's very immaterial for this year.
I think we forecasted for next year it probably has about a $0.01 impact on the overall year.
There's still possibly some legislation that could happen on that to change it, but I think worst-case scenario we kind of believe there's about a $0.01 impact in 2017.
This year, it's not much at all given how late it's coming.
Thanks, <UNK>.
Thank you, operator, and thank you, everyone, for joining us today.
We look forward to updating you again with our third-quarter results in early December and talking about the all-important fourth quarter.
Have a great day and thanks for the questions and the support.
Take care.
Goodbye.
