Good day, and welcome to the Five Below First Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Christiane Pelz, VP of Investor Relations. Please go ahead.

Thank you, Todd. Good afternoon, everyone and thanks for joining us today for Five Below’s first quarter 2020 financial results conference call. On today’s call are Joel Anderson, President and Chief Executive Officer and Ken Bull, 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 Web site at fivebelow.com. I will now turn the call over to Joel.

Thank you, Christiane, and thanks everyone for joining us for our first quarter earnings call. Before I get started, I want to share how deeply saddened I am by the events of the past weeks. We, as a company, simply do not tolerate racism and we want to proactively be a part of the solution. We are taking time to listen and learn how we can do just that. Since the day, Tom and David founded Five Below in 2002, we have been a store of the community. Today, in honor of George Floyd and all other victims of racial discrimination, we closed our stores in Houston, as we did in Minneapolis last Thursday and in Fayetteville last Saturday. During this unprecedented period, which began with COVID-19, we adapted swiftly and we have done so with the safety and wellbeing of our customers and crew top of mind. As I look back at Q1 and what has taken place since our last earnings call, there are five key themes that define our actions. Number one, health and safety. Without a question, the health and safety of our customers and crew has been and remains our number one priority. With this in mind, we close chain-wide on March 20th and we reopened, and as we reopened, we have implemented strict health and sanitation protocols consistent with CDC and other guidance at our stores, ship centers and offices. Number two, financial strength. We entered this period with a strong debt-free balance sheet and the business itself funds its growth while generating cash. In a closed-store environment, we moved quickly to address costs and capital outlays, as well as increasing our line of credit, all in order to further bolster our liquidity. We had to make some difficult but necessary decisions to do…

Thanks, Joel, and good afternoon, everyone. I will begin my remarks with a review of our first quarter results and then discuss the second quarter. As a reminder, all of our stores were closed beginning on March 20th and through the key Easter selling period, with only a small number of stores reopening late in the first quarter on April 21st. While ecomm sales were strong in Q1 with sales of over 4 times higher versus last year's first quarter, it still represents a low single digit percentage of our total sales. In addition, we cut costs as quickly as we could in order to conserve cash. One of the early actions we took was to furlough the majority of our store and distribution center associates. Our Wowtown team and field leadership also took temporary pay cut to help offset the impact of loss sales. Additionally, we managed our working capital by canceling merchandise orders and delaying vendor payments. We also reduced our plan for growth capital expenditures for 2020. With the majority of stores now reopened, we believe we are in a solid position on all fronts from associate engagement to inventory, liquidity and future real estate opportunities. Our sales in the first quarter of 2020 were $200.9 million, down 44.9% from $364.8 million reported in the first quarter of 2019. We opened 20 net new stores during the quarter compared to 39 new stores opened in the first quarter of 2019. We ended the quarter with 920 stores, an increase of 131 stores or 16.6% versus 789 stores at the end of the first quarter of 2019. With a reduction in comp store operating days of approximately 47% due to the temporary store closures in Q1 and the loss of the key Easter selling days, comparable sales decreased…

Thank you. We will now begin the question-and-answer session [Operator instructions]. And the first question comes from Matthew Boss with JP Morgan. Please go ahead.

Joel, maybe to start on the positive high single digits comps since reopening stores, maybe just higher level. Have you seen a fairly consistent trend since the initial first reopening, and maybe any areas of relative strength to call out across your worlds? And just third, you talked about the stronger potential exits post crisis competitively. Where do you see opportunity as we think about consolidation and the bankruptcies laterally that we're seeing across brick and mortar retail?

Say that sort of that last part there, Matt, where do we see consolidation…

Just opportunities to come out of this as a stronger model and take market share?

Actually what I would tell you is I think in my prepared remarks, Matt, I said we were in the middle of our eighth wave of opening and what that means is we open state-by-state as regulations change, and we saw a pretty consistent opening across geographies. It took about a week, which was consistent in almost every wave to kind of ramp up to this new norm we're seeing, regardless of what part of the country. And so I think that part was pretty consistent throughout it. In terms of commentary on categories and that types of things, not surprising just a lot of demand for essentials, as well as things that tie into being at home. The tees businesses is great. Obviously, the capitalization of America working from home makes a big difference. And like we always at Five Below, we're kind of fun and snarky with our tees. And I returned back to Wowtown for the first time yesterday as we reopened here in Philly, and I had one of our fun tees on that said, I totally miss humans. I mean that's the kind of fun we have at Five Below. And then finally as far as consolidation goes, Matt, it's really a little too early on that piece of it. But I think clearly there's going to be a geography geographical opportunity as many retailers go out and I think that's going to give us some opportunities to get into some markets that we haven't been able to get into before. And then, I think as we tweaked our assortment like we do with every time there's a trend, we become more and more relevant to the customer and this is just another example of being relevant. And of course, I think I’d just finish with saying value, value, value. That certainly resonated back in ‘08 and we came out of ‘08 with a really strong ‘09 and I think the customer really appreciates our value.

The next question will be from Simeon Gutman with Morgan Stanley. Please go ahead.

My question is on EBIT margin. You ended last year at around 12% just underneath it. Knowing what we know, realizing it's still fresh and raw. Your store operating costs, I assume, are a little bit higher. Your online exposure maybe a little bit higher when this is all done. And I don't know if you're permanently, if you're going to get back up to double digit or 20% store growth or high teens, as a normal run rate. But can you talk about how EBIT could get back to the prior level knowing what you know now or any of these impediments that I mentioned could prevent you assuming you get back to the same store level productivity?

Again, you're, you're going out to the future here a little bit in 2021, as you know, we weren't even really able to provide guidance for ‘20 based on the uncertainty ahead of us. But we did mention, to your point, that we do see ourselves continuing to grow the top line from unit growth in that high teen percentage. And if you kind of look back on the years when we don't have unusual events, significant investments and things like that, where we do have comps say in that 3% range, we do expect to see some slight leverage from an operating margin perspective. But obviously coming off of 2020, we would expect to see meaningful de-leverage this year, given the significant loss of sales in the first half of the year and the reduced operating days and meaningful improvement on that as we move into 2021.

The next question will come from David Buckley with Bank of America. Please go ahead.

Given the current economic environment, there's likely an opportunity to attract more new customers, just given the increased focus on value offerings. Can you talk about what you're doing to attract those consumers? And then just any color on recovery by store location that you can share? Thank you.

Well, clearly, we already saw that on ecommerce. But having said that, ecommerce still is a very small piece of our business. The biggest change you've seen from us and it was if you go back to my prepared remarks, as I was talking about our marketing plans for Q2, obviously, we've really accelerated our shift into digital with no print in Q1 or Q2. The biggest benefit of that is it really gives us the flexibility to zero in on zip codes, take advantage of markets where we're seeing customers come more rapidly. And that's probably the single biggest area that we're going to continue to focus in terms of our shift in marketing. We're seeing that as a really great way to attract and keep new customers. As customers are out there, watching their pocket book more than ever, we come across very strong when it relates to value and that's the biggest reason we pivoted there.

And then, David, I think the second part of your question around the recovery by store location…

David, are you talking about as it relates to the protests or just stores reopening…

No, just more reopening urban, suburban, semi-rural, just any...

Like I was saying to Matt, we've been opening by waves, those waves tend to be by states. Our states are full of both urban, as well as suburban rural stores, and really not seeing any material difference by type of store, as well as we're not seeing a material difference by geography. But the only consistent thing we're seeing, it takes about a week to ramp them up as customers discover that we've reopened, but really not much different. Now, the big, the remaining 10% that we have in open, not surprising is largely here in the Tristate areas, New York, New Jersey. But we've got line of sight now pretty much on the entire country reopening here within the next two weeks, and we don't expect those stores open much different. In fact, we're just hearing great, great feedback from customers. They're just excited to have us open. Some precedent every parents got their kids home, they're looking for us to help them kind of provide solutions and have a fun store environment. So, we're seeing great results regardless of type.

The next question comes from John Heinbockel with Guggenheim. Please go ahead.

Hey guys, couple of things, learnings from curbside so far. Your ability to accelerate omni-channel, whether it’d be curbside or direct to home by holiday and then operational changes, when you get into a holiday December and maybe social distancing still being in place. What changes do you think you need to do and how digital plays into that?

Look, I think the real learnings from curbside is it just showed us how fast we can really move when pressed. Obviously, we didn't have really any BOPUS capabilities going into this. So, our curbside offer was pretty scrappy. But hand it to the team, they really put it together quickly and it resonated with the customer. Now, keep in mind, John, we made the acquisition of the Hollar assets back before this pandemic even happened. So, we knew we had to get into the ecommerce and omni-channel space with a little bit more effort than we had been putting in, now that we have our store infrastructure stabilized. And so, combined with what we learned during the pandemic plus picking up resources of Hollar, it's really just going to allow us to accelerate. We've got two distribution centers now instead of one. We're looking at the capabilities of accelerating BOPUS quicker than we originally planned. And, the customers is spending time on our Web site and they're learning about our new product, which will only benefit the stores, seeing the essentials we now carry. So, the two all tie together and we're going as quick as we can, John.

[Operator Instructions]. The next question comes from Chuck Grom with Gordon Haskett. Please go ahead.

My question is with regards to the product and the ability to grow overseas to secure that product. So, I guess I'm curious how much Michael's been able to go overseas, identify trends and secure relevant items, and how that bodes to the back half of the year and 2021?

Just as I was kind of talking about digital capabilities with John Heinbockel there a second ago Chuck, I think that the same applies to kind of ways of working for our whole corporate staff here Wowtown. And while Michael hasn't been able to go over there physically during this time period, the technology afforded to us vis-a-vis and Zooms and the teams networks has really worked well. And our buying teams have kept very connected to Asia and India and some of the other countries we’re in. And I would tell you that we moved and reacted very, very quick on that and really hasn't been a problem. I think now you're going to add, there's clearly going to be some closeout opportunities out there and like we have in the past, we'll be nimble and take advantage of those as well. But we're feeling really good, if you go back to my prepared remarks, it’s why I spent some time talking about shifting from, we obviously had to play defense for a good six week period there to really shut things down and react to the stores being closed. But Michael and all the merchants, the buyers has done a great job pivoting 180 degrees and getting back to playing offense and we're just doing it all virtually. And products starting to flow back into the stores and we're starting the engine back up again, and it feels great to see the sales.

The next question comes from Karen Short with Barclays. Please go ahead.

One clarification on the bigger picture, just on in terms of the stores, the reopening stores, I know they're eight waves. But are you still at an exit rate of that 8% in terms of the quarter to date. I just want to clarify that. But then my bigger picture question is, you have talked about close outs and opportunistic buys. Wondering how to think about that in terms of sales mix, percent of sales going into kind of fall back to school and/or how you're pivoting on that to make that more of a focus?

Yes, I mean look, on one hand, we always trying to be really transparent with all of you and this is a very unusual quarter. Year-to-date you can't put a lot of faith and focus just on comp sales. And it's part of the reason we're not giving an outlook and it's not because we don't want to, there's just so many possible scenarios. But the short answer is, yes, as I said all of those waves are kind of seeing the consistent trend there. But you got to remember, Karen, I mean some of those waves are only a week or two old. So, it's really you're asking me to speculate on something I just, its unprecedented, right? I don't have a history here. On the plus side, you certainly got to pent-up and you got the stimulus. On the negative side, there has been a lot of distractions the last two weeks with the protests. So, it kind of goes both ways and there's just so much noise in that number, Karen. But as I shared with couple of the other questions, the consistency is there geographically, the consistency is there by type of store. And then I think in terms of trying to comment on a percentage of sales, the close outs, what that will be, it's really opportunistic driven. We've moved away from being a close out company a long time ago when we got to such a size that we're at that you have to plan for the business. And Michael’s teams got a great plan for the back half of the year. We're layering in the Five Beyond product. I mean, as I said in my comments, we're starting to play offense again. And the close outs that were just, they're going to be opportunistic, they got to fit in, they got a screen value and they got to resonate with our customer. And so that's where we'll really use those, and it's plus or minus in terms of what the percent is. It's more about how do they fit in and drive value.

The next question will come from Judah Frommer with Credit Suisse. Please go ahead.

First, just on to follow-up on some of the margin recovery opportunity here. Is there anything you're doing different in terms of store operations? Obviously, you furloughed a lot of your workers. You kept the store managers in place. But any thoughts around bringing back less labor to the store as traffic is depressed right now and maybe working around that going forward?

Yes, great question. I think, we had to make a lot of decisions through this. I think one of the best decisions we made was not to furlough our store managers. They are the heart and soul of each community we run in and they've been there throughout the entire thing. And it's been, the best part about keeping them is we've been able to get these stores back open quicker. If you'll notice, we are running on reduced hours and still running positive comp, and what that is allowing us to do is to run with less hours. So that there is a labor benefit there, but we'll continue to pivot as the traffic comes. Once this engine is back up and going like it is now, the model is pretty flexible and with shortened hours that certainly afforded us some real opportunity to run on less hours. But for the most part, the less labor is working out just fine and what we're seeing is less transactions but a higher ticket, it's turned out really good.

And then just following-up on the real estate plan for next year. Just the thought process behind kind of going back to high teens square footage growth off of a lower 2020 base and not kind of making up for the 2020 stores that didn't open in 2021 and maybe pushing above 20% growth for that year?

Yes, there's going to be some great opportunities, Judah, out there for real estate. And it's really too early for us to speculate on the 2021 number. I think what Ken was referring to is more of a multi year run rate. And just as I think 2020 was a real anomaly, the biggest variable left in 2021 is honestly the landlords are, they're not back up and running yet. So as they paused on construction, as they don't understand what the turnover is going to be of other retailers, it's a little hard to speculate on ‘21. But I would say there's probably more upside than there is downside to the 2021 number. But what we're trying to share as we always done is give you guys a much more longer range outlook on store openings as it still remains our biggest driver of growth.

Our next question comes from Paul Lejuez with Citi Research. Please go ahead.

Joel, you said it takes about a week for stores to ramp back up. I'm curious if maybe you could talk about kind of wave one, wave two stores and ones, since those are the ones that we have been open the longest, what have you seen kind of since then? And have you reached a point in those stores where traffic is actually up, where transactions are actually a positive as you've kind of moved along. And curious if you’ve had any issues in any of the waves of stores in terms of the number of people that can be let in, just has tried to adhere to any social distancing capacity requirements? Thanks.

I know this is hard to swallow or believe. But honestly, the difference between the wave one and two and the waves five and six from a traffic perspective really aren't that different. And so, I mean, obviously what we're seeing from the customer is a consolidation of trips. They're coming in less frequently, but they're buying more when they're in there. What we don't know and we just need more time is how many new customers we're going to pick up. We have seen that on our ecommerce channel where we're able to know exactly who the customer is. But, we're really seeing incredible consistency from wave to wave as we continue to open that up. Paul, there's a second part of that.

Second part was just if you had any constraints in terms of letting people into the stores…

Look, the teams have done a great job. And I think the benefit of less people but bigger baskets is kind of helped on that but we have not ran into any constraints at all. And stores are doing great job. If you've been in one of our stores, they're all marked. But we've been able to hear kind of all the guidelines out there and doing well.

The next question will come from Chandni Luthra with Goldman Sachs. Please go ahead.

I wanted to talk to you about your supply chain, in terms of the disruption that we’ve obviously seen this year and then in more recent years, you know from tariffs. Are you envisioning any permanent changes to your global supply chain, any plans to diversify? Thank you.

Look, in terms of supply chain goes, clearly, last year's tariff multi-phases of that really put a lot of pressure on the supply chain, forced us to get into many different countries. And so if anything, we sit here today in a much more flexible position than we've been in years past. And so, but overall, we're not really forecasting any major disruption to our supply chain, even through the height of this pandemic, the supply chain has really continued to work. And so we feel we're in a good spot. Thank you.

The next question comes from Michael Lasser with UBS. Please go ahead.

Joel, you mentioned that half of your 8% comp quarterly is coming from your ecommerce channel, that would imply that the channel is growing 200% to 300% given the low single digit penetration. Why do you think the channel has not slowed quarter-to-date even as you’ve been opening stores. Is it due in part to having assortment of masks, hand sanitizer and other, I think you referred to essential items. Would you say that that's as big as a trend you might have witnessed in the past, like fidget spinners or silly bands or loom? And then how are you buying for the holiday. Do you expect to buy up year-over-year for the holiday as you see it now, because I think you have to put those orders in the next few days?

Just on the penetration of these, it has started to slow. What you have to remember, which is Michael that you have the ecomm for the full quarter, but the comp we're giving you is for the stores that have reopened. So, some of their stores are only in there. So, as every week goes by more stores get added into the comp mix and so ecomm then becomes a lesser and lesser piece of the total. But at the height, it was over 400% increase and we are starting to see that moderate a little bit but we need more time to kind of understand that, what it'll ultimately moderate to. And as far as holiday goes, Michael, I really I don't want to speculate too soon on that. As Ken said, we've got several scenarios we're looking at. Michael still has a good 60-days here to finish up buying. And we're really, we need a longer read here before we finalize. But they turn it around pretty quick and I think we're going to be ready for all scenarios coming out but more to come.

And Joel, just to clarify about the essential [Multiple Speakers]…

Yes, we've added a lot of essentials. I think it's making a big impact. It's what the customer wants. It’s no different than when they have a silly man trend or a spinner trend, where Michael’s team pivots quick and we added into the assortment. And you look on our Web site, you'll see a big piece of it.

The next question is from Edward Kelly with Wells Fargo. Please go ahead.

Joel, I want to ask you about the marketing side. Maybe can you talk a little bit more about the shift in strategy here and then as it relates to TV. What's the outlook for the back half of the year, especially into holiday? Has that changed? And then as we look out into ‘21, on things like national TV advertising. Is this something that's still in the cards, potentially sort of like post election period?

Yes, look as I explained the marketing, we really have pivoted to digital. It's working really well for us. Our kickstart the fun campaign will start this Friday. I think especially with this being an election year going to national TV, this is probably the year to do it, rates are going to be up a lot, there's going to be a lot of bidding for it. And honestly right now, what we're liking is digital and the response we're seeing, a good casing point we were planning to start it today with the memorial service being today that didn't feel like the right time to start, and we were able to adjust it really quickly to Friday. And so just it gives us a lot more flexibility and we'll be able to kind of move into markets that either need extra marketing or were seeing good trend. But right now the focus on fun and customers are really resonating with that. And having something to do is kind of the word we're hearing out there and staying relevant is really important.

The next question will come from Paul Trussell with Deutsche Bank. Please go ahead.

Wanted to ask about customer response, both in the pre-COVID period, as well as in recent weeks to your tech items above $5, as well as the Five Beyond items. Maybe give us an update on what you're seeing in regards to that as a percent of the mix? And how you're kind of buying for that going forward? And then second would just be any update on Nerd Street Gamers?

Honestly, Paul, you're probably not going to like my answer, because I just don't have a lot of data to give you, given how much we've been closed. If it had been a normal quarter, we'd have two Nerd Street locations open right now. We obviously had to pause those and now we're looking at more of the end of second quarter to get those open. So there's one there's no answer. And the same with Five Beyond, the majority of those stores we were putting them in and we no more got those in there, Paul and we had to closest stores down. So I don't have a pre and post to kind of understand the penetration. So bear with us a little bit on that one but we really need another quarter to kind of come back at it and understand the difference and penetrations, more to come. Thanks Paul.

The next question is from Brian Nagel with Oppenheimer. Please go ahead.

I guess to follow-up really to from the other questions. But you'd mentioned in your prepared comments, and understanding that it's been a short amount of time, it's a dynamic environment and you had the stimulus benefits, maybe pent up demand, so things may not prove sustainable. But I guess the question I have is if you look at how consumers are initially shopping your stores and in particular, the products they're buying. You know your business well and you know your consumers well. Is there anything there to suggest that there's an element of unsustainability or something odd in those trends?

Look, there's nothing there to suggests that it's odd but at the same time, we've never in our history seen such a significant shift to less transactions, much-much bigger baskets, I mean unprecedented shift. And so on one hand I could say, yes, this is the new normal, it's going to stay that way. And on the other hand, I can easily say to you, it's going to go back to smaller basket size more transactions. We just, honestly, Brian, need more time. But what I can tell you is the customer's coming in, they're talking about the value, they're excited to see us open and they're buying across the box. So those are all good and great signs. And what we just need is more time to kind of tell you whether how these trends are going to be over a long period of time, but everything we've seen so far has been great.

The next question will come from Jeremy Hamblin with Craig-Hallum. Please go ahead.

I wanted to just follow-up here on the customer information and in terms of how model has changed, you've had more digital engagement clearly. But wanted to just get some clarification on customer data collection, whether it's mobile numbers, email addresses, et cetera, that you've been able to gain during this time. Could you give a better sense of what the year-over-year growth of that is? How many inactive customers you've had? But any additional clarity and whether or not the environment that we're in right now is inhibiting your ability to collect some of that information. Thanks.

Look, I don't want to get into the specifics of the number, just A, because the number is so small. And remember, we don't have a loyalty program, so we can't tie it to the stores. What I will tell you is that the overwhelming majority of online transactions that took place over the last 60 days here were new customers to our online channel. I can't differentiate for you whether they're new to Five Below, or they're just new to the online channel. But a significant majority, way closer to 100% than 50%, are new to the Five Below channel and that's great. We'll take the customer any way they can go and with us being closed and really force us to pivot and grow that channel. But as far as doing cohort analysis and all that, this is way too early to kind of be talking about those results publicly but we're pleased with the new customers.

Our next question is from Michael Montani with Evercore ISI. Please go ahead.

First off, just from a modeling perspective, I wanted to see if you could give some additional color about what percentage of the 20 percentage point drop-off in gross margin was more related to kind of mark downs versus just natural de-leverage given the store closures? And then on the SG&A front, I know you guys had ratcheted back expenses to be down three for the quarter. Do we anticipate that SG&A dollars would be down once again in 2Q, even as you open up given efficiency gains?

On the gross margin portion, I think you asked about the lower of cost of market inventory write downs there. A small percentage of the deleverage for the quarter, really the overwhelming percentage, is probably close to 80% of the delever that took place in gross margin year-over-year, was due to the six costs included in cost of goods sold. So things like occupancy, the fixed components in the distribution center operating model and buying costs, so that's really the key driver and that write down was really a small portion of the overall deleverage. With respect to SG&A, similar of what we saw in the first quarter again at a fixed cost deleverage as we kind of move forward into the rest of the year, we move into Q2. Given the estimated loss in operating days, in Q2, I expect that to be less than what we had seen in Q1. We do expect significant operating margin deleverage again and a portion of that obviously is going to be in the fixed cost components in SG&A. And then if you really roll it forward for the full year, when you look at operating margin, again, would expect meaningful deleverage on overall basis with that significant loss of sales in the first half of the year, and then also the reduction in new stores. We reduced, our original estimate was 180 new stores for the year and as you heard, we reduced that down to a range of 100 to 120. So that the combination of those two things will drive the fixed cost deleverage for the full year also, which I expect to be meaningful and then split between cost of goods sold and SG&A.

The next question will come from Joe Feldman with Telsey Advisory Group. Please go ahead.

I also wanted to follow up, it's been asked around this a couple of times, but with regard to the various waves, say wave one, two, three. Are the earliest waves still comping at a high single digit rate quarter-to-date or is that like the comps at that rate for a week or two and then it starts to normalize back down to the 3% or 4% or something? Just trying to get an better understanding of kind of how that’s, we should think about the flow going forward?

Well, as I said, they're all comping relatively the same rate. And remember that about half of that comp though is ecommerce comp that's in there. And so I think, Joe, it's a little too early for us to speculate on what the rest of the quarter is going to look like due to those puts and takes in terms of whether it's pent up demand or stimulus checking, we just honestly need more time. But as of right now, really all the waves are comping the same. And we feel really good getting the stores back open on it. But I don't want to try and speculate on what's going to happen on it, because this is just unprecedented. We've never experienced something like this where we've been shutdown like this this long.

The next question comes from Scot Ciccarelli with RBC Capital Markets. Please go ahead.

It’s Beth Reed on for Scot. Just given that comps are down 50% in 1Q, just curious how you guys are thinking about the capacity you'll need in 1Q '21 to generate what would be like 100% plus comp to get back to your historical store productivity levels. Just any thoughts you have around about the ability of your stores to handle that kind of volume? Thank you.

Well, if I understood the question right, our stores are already back to historical volume. I mean that's the, and when there’s pause comping positive that's relative to last year. So as we reopen stores they're back to the historical volume.

And Beth, I mean said it t different way, what drove the significant negative comp in Q1 was really the reduction in operating days, it was the store closures. And then next year the assumption would be that the chain would be open for the full quarter. So, on an average whether it's weekly basis or daily basis, obviously, you get a much, a pretty significant increase in overall volume for the first quarter next year.

Remember that the decline also includes the new stores that didn't open this year, but stores are back to their historical volume and have no challenges there. I believe that's our last call. And look, I'll just wrap up and say, hey, thanks for joining us today and a couple concluding comments. Look hopefully what you've heard from us is that we're a nimble organization. The business model is very flexible and Ken and I couldn't be more pleased with how quickly we're able to adjust to this new environment. We continue to innovate and our focus will always be on making the store experience even more amazing. Value, value, value, that's what we've been talking about. And we're still on a path to build out and support a infrastructure that supports 2,500 plus stores here in the U.S. And I'd be remiss if I didn't end by just saying, thank you so much to all our associates and their dedication during this unprecedented time, especially our store and distribution associates who and many of them have worked throughout this pandemic and they've made Five Below so special to our customers. We look forward to speaking to all of you again, after the summer. Stay well and be safe. Thanks everybody. Have a great night.

And thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.