Thomas G. Vellios - Co-Founder, President and CEO Kenneth R. Bull - CFO, Secretary and Treasurer Farah Soi - ICR

John Heinbockel - Guggenheim Securities Paul Trussell - Deutsche Bank Charles Grom - Sterne Agee Matthew Nemer - Wells Fargo Securities John Zolidis - Buckingham Research Group Jeremy Hamblin - Dougherty & Company Michael Lasser - UBS Securities Patrick McKeever - MKM Partners

Good day and welcome to the Five Below First Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Farah Soi of ICR. You may begin.

Thank you, operator. Good afternoon, everyone, and thanks for joining us today for Five Below's first quarter 2013 financial results conference call. On today's call are Tom Vellios, Co-Founder, President and Chief Executive Officer; and Ken Bull, Chief Financial Officer, Secretary 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 Five Below's 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. Finally, we may refer to certain adjusted or non-GAAP financial measures on this call. A reconciliation schedule showing the GAAP versus non-GAAP financial measures is available in our press release issued today. If you do not have a copy of today's press release, you may obtain one by visiting the Investor Relations page of our website at fivebelow.com. I will now turn the call over to Five Below's Co-Founder, President and Chief Executive Officer, Tom Vellios. Thomas G. Vellios: Thank you, Farah, and thanks everyone for joining us for our first quarter earnings call. I'll begin by discussing the highlights of our first quarter results. Ken will then review our financial results in more detail, after which I'll provide some closing comments before we open-up the call for your questions. We are pleased with the first quarter results, particularly given that they were delivered against a challenging macro backdrop in the first half of the quarter, and with much cooler weather than we saw in the first quarter 2012. As we said last month, the quarter played out much as we had expected. We've delivered sales for the quarter of $95.6 million, which is an increase of 33% over the first quarter of 2012, with a 30% unit growth as well as a 4.2 comp increase. We opened 14 new stores in Q1 of which six were opened in the last nine days of the quarter. You will recall we indicated in our Q4 call that some planned Q2 openings could get pushed into Q1 and that indeed happened. As a result, we ended the quarter with a store count of 258. More importantly, our non-comp stores, which are predominately the class of 2012, continued to deliver strong performance across new and existing markets alike. It's obviously very early to assess our Q1 openings, but those stores are off to a good start and we are on track for the planned 16 net new openings for 2013. Work for the 2014 class is well underway and we are excited about the new store opportunities we see for this group. In addition to our new store performance, we are pleased with the 4.2 comp we delivered for the first quarter which was again driven largely by increased transactions. This was our 28th consecutive quarter of positive comp store sales growth, beginning with the second quarter of 2006. This timeframe stands both good as well as lean economic times and our performance through it all speaks to the strength and resilience of the Five Below concept. We saw relatively consistent performance across our categories for the quarter with the exception of a seasonal spring and summer merchandize, which was impacted by unfavorable weather. Our strong sales results helped drive a 10% increase in adjusted operating income in the first quarter, even with the planned investments and expenses related to our new distribution center, public company costs and a marketing shift, all of which were anticipated and Ken will discuss in more detail momentarily. In order to support our growth, we continued to invest in infrastructure and I'm pleased to announce the second distribution center in Olive Branch, Mississippi is now fully operational. By the end of the fiscal year, we expect to service approximately 90 stores and we'll continue to increase utilization as we grow our store base. We believe having a great team in place is crucial for our future success and I'm pleased to announce some key new hires that we've made. Building a strong product development and sourcing team is a priority for us at Five Below, and we are thrilled that Michael [Panella] will be joining us in the next two weeks as Senior Vice President to lead that effort. Michael has an extensive background in retail with significant merchandizing expertise at department, discount and specialty retail stores prior to his 13 years as President of JM Manufacturing which is a Hong Kong based company specializing in product development and sourcing for national retailers. I had the benefit of working with Michael in the past and believe he will be a great asset to our organization as we further strengthen our product development and sourcing capabilities. We've also hired Julia [Benhour] as director for product development to support Michael in building these capabilities. Most recently, Julia worked with (inaudible) and prior to that, has had significant product development experience at Avon Products and Victoria's Secret's director. We are also pleased to announce that Sharon Cardinal joined Five Below in April as divisional merchandize manager. Sharon brings significant merchandizing leadership experience from the prior roles of Bath & Body Works, (inaudible), Disney and Eddie Bauer. She will work with her team to drive the continued growth of fashion accessory, groom apparel and beauty categories. We are very excited to have Michael, Julia and Sharon on board as we continue to broaden and strengthen our product development, sourcing and overall merchandizing capabilities. I believe the new additions to the team will further invigorate our offering with compelling trend-right product so that our customers can always look forward to newness and excitement when they shop our stores. So even though we're seeing a cool and wet start to Q2, as we look towards key summer selling weeks in the rest of June and July, I am confident we are well positioned from an inventory standpoint of view with fresh trend-right mix of compelling products at outstanding values delivered in a characteristically fun and differentiated store environment. From boogie boards to pool toys, water guns and flip flops, backyard games and (inaudible), Five Below is the destination for summer merchandize. I feel great about our ability to continue to deliver trend by product because of the strong merchandizing team we have built as well as our vendors partners who have and continue to embrace the Five Below concept, and our significant growth opportunity. There's an abundance of products to choose from and a broad range of vendors will have increased appetite to support us. This helps us continue to deliver the units that is key in driving traffic and as important enhance the Five Below shopping experience. With that, I will now turn the call over to Ken to review financial results in more detail. Ken. Kenneth R. Bull: Thanks, Tom, and good afternoon, everyone. I will begin my remarks with a review of our first quarter results and then discuss our outlook for fiscal 2013. We increased our sales in the first quarter by 33% to $95.6 million from the $71.8 million we reported in the first quarter of last year. We ended the quarter with 258 stores, a net increase of 59 stores or 30% versus the 199 stores we had as of the end of the first quarter of 2012. We have opened 14 net new stores so far this year, and as Tom noted six of these were opened in the last nine days of the quarter. Comparable store sales for the quarter increased by 4.2% versus a 10.4% increase in the first quarter of last year. This comp increase was largely driven by transactions. Gross profit increased 31.2% in the quarter to $30.2 million from the $23 million reported in the first quarter of fiscal 2012. Gross margin decreased by 40 basis points to 31.6% from the 32% reported in the year-ago period. The decrease in gross margin was due to the expected deleverage of distribution expenses, driven by our new Olive Branch distribution center, which was partially offset by occupancy and volume cost leverage. SG&A expense of $27 million increased 8.2% from the $25 million reported in the first quarter of fiscal 2012. As a percentage of sales, SG&A decreased to 28.3% from 34.8%. Excluding the $1.5 million in cost associated with the founders' transaction that was recorded in the first quarter of 2013 and $6.3 million in the first quarter of 2012, adjusted SG&A in the first quarter of 2013 was $25.5 million or 26.7% of sales as compared to $18.7 million or 26.1% of sales in the first quarter of last year. The increase in adjusted SG&A as a percent of sales was due to the planned marketing shift as well as public company costs, partially offset by the timing of compensation and related cost associated with new hires and leveraging of store payroll costs. Our GAAP operating income was $3.2 million. Excluding the $1.5 million and $6.3 million in cost associated with the founders' transaction in the first quarters of 2013 and 2012, respectively, adjusted operating income for the first quarter of 2013 was $4.7 million which was a 9.7% increase from last year's adjusted operating income of $4.3 million. As a percentage of sales, adjusted operating margin was 4.9% compared to 6% for the same period last year with a decline driven by the gross margin and SG&A factors I just described. Our effective tax rate for the quarter was 41.4% compared to 40% in the first quarter of 2012. The increase in our effective tax rate was due primarily to permanent book to tax differences related to fees expected to be incurred for the secondary public offering in the second quarter. Before I discuss net income, I want to point out that I will be referring to adjusted net income in both the current and prior-year periods that excludes the impact of the founders' transaction. When I refer to EPS, it is EPS based on adjusted net income using an adjusted diluted weighted average shares calculation for the quarter. The adjusted diluted weighted average shares outstanding assumes the IPO transaction took place at the beginning of each respective period, thus eliminating the lack of comparability due to the IPO taking place towards the end of the second quarter of 2012. A reconciliation of GAAP net income and net income per share to these adjusted numbers on an adjusted weighted share basis can be found in the financial tables included in our earnings press release issued today. As a result of the factors I just described, adjusted net income for the quarter was $2.5 million or $0.05 per share based on $54.5 million adjusted diluted weighted average shares outstanding as compared to $2.6 million or $0.05 per share based on $54.1 million adjusted diluted weighted average shares outstanding in the first quarter of last year. We ended the first quarter of fiscal 2013 with $36.7 million in cash and cash equivalents on our balance sheet, $34.5 million in outstanding term loan borrowings and availability of approximately $19 million under our revolving credit facility. Our ending inventory balance was $75.3 million as compared to $51.5 million in ending inventory in the first quarter of 2012. Ending inventory on a per store basis increased approximately 13% year-over-year due primarily to the initial inventory build at our new distribution facility, as well as the timing of shipments of imported merchandize. We expect inventory to continue to increase at a faster pace in sales through the balance of the year and into next year as we ramp up utilization of our new distribution center. Now I would like to turn to our outlook. For the second quarter ending August 3, 2013, net sales are expected to be between $112 million and $114 million, assuming a 4% to 5% comparable store sales increase and the opening of 14 new stores. GAAP net income is expected to be in the range of $2.7 million to $3.2 million with the GAAP EPS of $0.05 to $0.06. Adjusted net income, which excludes expenses related to the founders' transaction and the estimated cost associated with the secondary public offering, is expected to be $4.6 million to $5.1 million or an adjusted EPS of $0.08 to $0.09. I want to provide some color on certain Q2 income statement items that will help you for modeling purposes. First with respect to gross margin. As we mentioned on our Q4 earnings call, we expect the cadence of store openings by quarter in 2013 to be different than 2012. Specifically in Q2, we plan to open 14 new stores as compared to 27 new stores opened in the prior-year period. This results in lower preopening rent which is included in cost of goods sold and this benefit more than offsets the expected drag from the cost associated with our new distribution center in the second quarter. On the SG&A line, we will incur public company cost in Q2 that were not incurred in the prior period, and we'll also incur some hiring-related costs that got pushed into Q2 from Q1, but both of these will be largely offset by lower preopening expenses associated with the fewer store openings compared to the prior-year period. The net impact of all this is an expected year-over-year operating margin increase of approximately 50 basis points in the second quarter. As we saw in Q1 where six stores originally planned for Q2 were opened in the last nine days of the quarter. There is a possibility that a handful of Q3 openings could get pushed up into the last few weeks of Q2. Should this occur, we do not expect it to have a material impact on revenue or earnings for Q2. For the full fiscal year 2013, we are raising our guidance. Sales are expected to be in the range of $524 million to $529 million, with 60 net new store openings and a comparable store sales increase of 4%. This sales outlook for 2013 compares to net sales of $418.8 million for fiscal 2012, representing a growth rate range of 25% to 26%. GAAP net income is expected to be in the range of $31 million to $32 million with a GAAP diluted income for common share of $0.57 to $0.60. Adjusted net income is expected to be in the range of $36 million to $37 million or $0.65 to $0.68 per diluted share. This represents a growth rate range for adjusted net income of 29% to 35% over last year. To help you with your quarterly forecasts, I would now like to speak to some Q3 timing factors that are contemplated in our full year guidance. The first timing issue relates to the cadence of store openings that I just described when speaking to Q2. While Q2 benefits from a preopening rent and preopening expense standpoint given fewer openings year-over-year, we will see a reversal of this dynamic in Q3 as we expect to open more stores than we did in Q3 last year. In addition, the calendar shift in 2013 could impact the timing of certain marketing spend that could move into late Q3 this year from early Q4 in 2012. And of course, we will also have the leverage associated with the new distribution center in Q3. As a result, adjusted EPS in the third quarter could be down from the prior-year period. Our guidance for 2013 assumes roughly flat operating margins for the full year as any leverage associated with the 4% forecasted comp is expected to be offset by the 50 basis points of deleverage associated with our new distribution center. For all other details related to our guidance, please refer to our press release. With that, I would like to turn the call back over to Tom to provide some closing comments before we open it up to questions. Tom? Thomas G. Vellios: Thanks, Ken. In summary, we're pleased with our results for the quarter, particularly given the environment in which they were delivered. As always, our focus continues to be on [increasing] customer with trend-right products priced at $1 to $5 delivered in a fun and differentiated store environment. Our stores are filled with great summer products to delight our customers and we look forward to some warmer, dryer weather and the real start of the summer selling season. With the opening of our new distribution center and the great new hires as I spoke to, we continue to invest in our infrastructure to support the significant growth that lies ahead of us. Our track record of consistent profitable growth has been driven by the uniqueness of the concept but also by a disciplined approach that we've always taken to make new investments in merchandize, new stores, systems and talent. As we capitalize on the 2,000 store opportunities that lies ahead to Five Below, we will remain disciplined and continue to invest in a responsible and thoughtful manner to support our planned growth. Thank you for your ongoing support. And with that, I would like to turn the call over to the operator to begin the Q&A.

Thank you. (Operator Instructions). We'll go first to John Heinbockel with Guggenheim Securities. John Heinbockel - Guggenheim Securities: Hi, guys. A couple of things. Tom, what are the few things you want Michael to focus on at the outset, and how quickly do you think that he and his new team can make a difference in the stores? Thomas G. Vellios: Well, I think as I mentioned in my notes I've had the pleasure of working with Michael in the past and I believe he's just a terrific, terrific addition to the team. We certainly have our own internal strategy of what we believe to be the big opportunities that we want to focus on. I think, John, you'll hear quite a bit about our plans in future calls and in conversations that we'll have with each of you. Not a lot to say today but I'll tell you this. Certainly we don't anticipate a lot of things happening for the balance of this year but I'm confident Michael's impact, Michael, the team working together with merchandizing won't take long and I would say that as we get into next year, you'll start seeing some of the impact of the product development and sourcing capability that we're bringing on and the impact that it will have on the units and the excitement that we push into the stores. John Heinbockel - Guggenheim Securities: All right. Then secondly, so Texas is I guess about two months away give or take. As you're close to those and probably your most important openings to-date, have you thought about how you want to merchandize those differently to the market and market a bit differently from what you might have done in the past to generate greater brand awareness or is it going to be very similar to what we did in Atlanta and other markets or do you think there is some new wrinkle there? Thomas G. Vellios: That's a good point. I'll answer two-way, John. When you look at Atlanta, Detroit, Chicago, we opened 10 stores in a single day. The overall market is going to be very similar. We've seen it's worked consistently across all markets. The merchandizing side given obviously [regionality] particularly around teen, some of the teen sport categories as well as some other small tweaks that we're doing to the offering. The team's working on that. You'll see some minor changes to the offering for that market. But for the most part, again one of the strengths of Five Below is our ability to really export these concepts to other markets without really having to change it by much. The distribution's up and running, the hires are in place, regional managers' in place, they're ready to go. John Heinbockel - Guggenheim Securities: All right. And then I guess just lastly, is it fair to say when I look at the slow start after the second quarter where you came out, you probably exited the quarter north of 5% and I don't know if that's still where you're running. Summer season kicks in here but is it that close to being right? Thomas G. Vellios: As we've done in the past, John, I think you know us well enough now. What we do is we look at how we started, how we fair today. We combine the two and we give a best thinking of what we think the quarter-to-date plus anticipated go forward and that's how we came up with a 4%, 5%. I will tell you we feel good with our guidance of 4% to 5%. John Heinbockel - Guggenheim Securities: Okay. Thanks guys. Thomas G. Vellios: Thanks, John.

We'll now move to our next question from Paul Trussell with Deutsche Bank. Paul Trussell - Deutsche Bank: Good afternoon. There's a lot of moving parts certainly with quarter-to-quarter volatility given the cadence of the store openings and the distribution center, et cetera. But big picture just kind of stepping back, I see the full year guidance I notice that the margins, right, the absolute margin is expected to be a little bit higher than what the original plan was coming into the year. Can you just speak to what has improved whether it's in more efficiency on the expense side, whether you're getting some better merchandize margins, just kind of speak to what occurred in 1Q with respect to see going forward that is better than your original plan? Thanks. Kenneth R. Bull: Well, with respect to the full year I think I mentioned we're looking for flat operating margins for the most part year-over-year. I do want to emphasize that we do – we have the impact of the distribution center deleveraging, but really what we're seeing is some leveraging on that 4% comp and our increase in sales that's offsetting that to land at a relatively flat operating margin year-on-year which is, as we mentioned, slightly higher than what our initial guidance was for the year. Paul Trussell - Deutsche Bank: Okay, thank you. And then just a follow-up on the second quarter guidance. It looks like new store – in order to get to your sales numbers for 2Q, new store productivity needs to be quite a bit higher. Can you just run through what we should expect on that line and then how that should – the cadence on new store productivity of the balance of the year? Kenneth R. Bull: Yeah, I think from an expectation standpoint I think we would see similar performance in productivity from the new stores that we saw in Q1. There's two factors that really drive that. Obviously the initial performance that we saw in Q1 and as Tom pointed out, looking at trends and then guiding to that into Q2. And then also from a store weeks perspective, the stores were opened for more store weeks that we had estimating assumed in our guidance. So you should expect that continuing on into Q2. Paul Trussell - Deutsche Bank: Thank you.

We'll move to our next question from Chuck Grom with Sterne Agee. Charles Grom - Sterne Agee: Hi. Thanks. Can you just remind us when you dropped that extra circular during the quarter, I'm just curious what the impact was to SG&A and also to the comp there in the quarter? Kenneth R. Bull: Yeah, we had mentioned we had that additional plan in marketing drop, an ad drop. It was at the end of Q1. And I think Tom also mentioned we saw through the quarter how we got off to a challenging start with some of the issues there and then we saw an improvement in the back half. That improvement started before we dropped the ad in the back half at the end of Q1. Thomas G. Vellios: I would just answer that again. The reason for that ad it's really – I'm probably going to call that an ad, we drop our circulars just as a reminder particularly during the key times of the year to announce new arrivals in our stores and new seasons. Due to the Easter shift and a very early Easter this year what we typically will do as we probably have done in the past when Easter fell in a similar schedule is run that circular to really announce some arrivals. Even from a sales (inaudible) I think there really was a material impact at all just to the quarter. Is that fair to say, Ken? Kenneth R. Bull: Yeah, I'd just say a modest positive. And I think Chuck your other question was with regards to the expense impact. I think we mentioned the combination of that shift in the ad, that brand shift in the ad and the public company cost was offset partially by the timing of new hires which will shift into Q2 and some also additional store leveraging. Charles Grom - Sterne Agee: Okay, fair enough. And then as Paul noted, there's a lot of moving parts in the quarter particularly in the gross profit margin line. I believe the expectations for [DC] cost pressure in the quarter was supposed to be about 70 bips. Was that about where it fell out and are you anticipating a similar hit over the next couple of quarters? Kenneth R. Bull: Yes, that's about where it landed for Q1, again offset by some leveraging on occupancy and some [minor] cost. And I think we mentioned before from a full year perspective, we would expect that deleverage to be about 50 basis points; weighted heavier in the first three quarters. The next two quarters most like similar to Q1 and then trailing off in Q4. Charles Grom - Sterne Agee: Okay. And then with regards to that DC, obviously there's a 50 basis point drag this year, like you said, but when you look to '14 and beyond, can you maybe speak to some of the benefits you expect to reap from the distribution center? Thomas G. Vellios: We certainly start leveraging as we go into next year and a goal as we continue to add stores the market supported by the DC, obviously the leverage is going to be quite material against this year, because remember the facility just to remind everybody, the 600,000 square foot facility and by the end of this year by comparison our facility in Delaware is about 400,000 square feet. We will have 90 stores a year again, so we have quite a ways to go to really fully utilize that distribution center. So as we continue to add stores into 2014 and beyond, we will definitely be leveraging… Charles Grom - Sterne Agee: Okay, great. And then one more question just with regards to the 45% for the second quarter. Is that with the NII shift this year, is there any swing because of the later – the weaker back-to-school that I guess in theory moves into the second quarter from the third quarter or is it material? Kenneth R. Bull: No material impact to that. I mean we normally do our initial back-to-school – initial estimate in the middle of July consistent with everyone else, but no impact in Q2 as a lot of those sales are really in Q3. Charles Grom - Sterne Agee: Okay, great. Congrats on a good start to the year. Thomas G. Vellios: Thank you. Kenneth R. Bull: Thanks Chuck.

We'll now move to Matt Nemer with Wells Fargo Securities. Matthew Nemer - Wells Fargo Securities: Good afternoon, everyone. I just wanted to quickly in on the weather. Just wondering if you made any tactical changes during the quarter as the weather played out the way it did? And now that we've seen some warmer weather, what kind of demand are you seeing in your seasonal categories? Does it spike way above normal, whether it's potentially pent-up demand or are the volumes kind of similar to what they should have been? Thomas G. Vellios: Well, Matt, I'll say two things. We don't like unseasonably cold and wet weather but if we're going to have it, we prefer to have it early in the season when it's not that big for us as we really kick start the summer season as we get into the month of June, June, July are really the biggest months of the season for us. It's very hard to say. I'll tell you we've had a couple of warm days and then the next thing you know, the next day it starts raining again. Too early to tell, we've not made any tactical shifts out for the years but we feel really good about the product, the mix that we have, how well we are positioned. And we want to be ready when the weather turns. And when the weather turns, we think our customer as they have each and every year, I mean we've had consistently terrific performance in years passed in our spring, summer business. Our customer looks to us. We've become a destination for that business. Beach, pool, backyard particularly as schools get out round this week or next. The Five Below is the go-to place and we need to be ready for that and not overreact because of an early set of slow start to the seasonal business. So we're ready for the business and we believe we're ahead of us. Matthew Nemer - Wells Fargo Securities: And then as we remove seasonal from the mix, if we look at the other seven worlds that you're operating in, can you talk about where you're seeing success, where there's strength in those other seven categories? Thomas G. Vellios: I think relative to other quarters and I think as I mentioned the category is said to be pretty consistent and the performance across the categories has been pretty consistent in the rest of the world. Seasonal was the one that really stood out as a category that we felt was worth mentioning. Matthew Nemer - Wells Fargo Securities: Okay. And then just lastly, it sounds like you're already doing some good work on your class of 2014 openings. Can you talk to the mix of new markets, new island type markets that are sort of farther away from your existing footprint, contiguous markets and then maybe kind of sell in stores in your existing markets? Thomas G. Vellios: For '13 or '14? Matthew Nemer - Wells Fargo Securities: For '14. Thomas G. Vellios: Well, as you know, take Texas and we're putting up this traditional facility in Olive Branch, Mississippi kind of sea area is a big market for us for a lot of stores. So we got to look further into the year and we finalized our plan for next year, we'll share that with you. But as of this moment, no additional new larger markets to announce. Matthew Nemer - Wells Fargo Securities: Okay, thanks so much. Thomas G. Vellios: And the base and the balance stores obviously or the mix of stores for next year you can expect would be definitely a combination of both existing and new stores. We haven't finalized the mix yet as to give you an actual percentage and a breakdown of new versus existing, but we will do that as we go a little further along. Matthew Nemer - Wells Fargo Securities: Okay, fair enough. Thanks again. Thomas G. Vellios: Thank you.

We'll now go to John Zolidis with Buckingham Research. John Zolidis - Buckingham Research Group: Good start to the year, guys. A question on the guidance as a follow-up question to Paul's earlier question. 2Q you got about 20% square footage growth or store growth compared to 30% in the first quarter and yet you're guiding to about 30% top line sales growth compared to 33% in 1Q on a similar comp performance. So, 10 points difference in store growth but only 3 points difference in revenue growth. And so that would imply that new stores were coming in at about 120% productivity which doesn't seem right. So, I was wondering if you could talk about that a little bit more. And then also, are there any changes in the size of the stores that you're opening, that would be helpful? Thanks. Kenneth R. Bull: Okay. I'll take your second question first. We haven't seen any material shift in the size of the stores that we're opening at this stage. Relative to I guess your comments about the percentage increases in sales, I guess, Q2 estimated over Q1, again I think – the productivity that were assuming and we're guiding to is similar to what we saw in Q1 and I think there is still effects really going on that has to be taken in play. One is just the additional performance in sales and productivity with stores that we saw in Q1 but also the weeks versus our original guidance. So the two of them is really driving that productivity level. We don't like to spend too much on a quarterly basis on productivity, we like to look at that over a longer period of time because that will then even out the impact of productivity based on the timing of openings, but I think you're seeing some of the that quarter-to-quarter.

We'll move to our next question from Jeremy Hamblin with Dougherty & Company. Jeremy Hamblin - Dougherty & Company: Good evening, guys. I wanted to just follow-up on the questions on the seasonal business and just get some context. I think that category world typically is about 13% and 14% of sales. I was wondering if you could just give a little bit of detail on that category in Q1 versus Q2 and Q3. Is it more or less than the average for the year? Thomas G. Vellios: What we define as seasonal – category seasonal really is spread across every category world with the exception of maybe a couple. There's the seasonal part of our business in everything from party to fashion to sports, games, et cetera. So when we aggregate that that we call it now world. No question about it, Q2 is really the largest single biggest quarter for us for the seasonal business side. Q1 is a – and late Q1 really is when it kicks in but Q2 is the large quarter and the important quarter for us for seasonal. Not a good quarter for us in Q3. Jeremy Hamblin - Dougherty & Company: And then also just in looking at your comps, were there anything noticeable – again tying us back to poor weather, was there anything noticeable among your geographies whether your stores that are a little more in the South performed better relative to those that are a little bit further North or the Midwest, any color there? Thomas G. Vellios: I'll turn it over to Ken. Before I do that, just want to be clear on the seasonal. I assume you were saying seasonal, you meant the spring, summer because seasonal could be holiday when we get into Christmas, but with regard to seasonal that we defined as spring, summer seasonal, this is the quarter that matters just to clarify the point. Ken, you can comment. Kenneth R. Bull: Just with regard to the geographies and the performance, we saw relatively consistent performance across the various regions. Keep in mind I think you mentioned comps, regions like the south in Atlanta, that's a newer area for us and that wouldn't be in the comps yet. But again, we did see consistencies for the most part across the regions. Jeremy Hamblin - Dougherty & Company: Thank you. Kenneth R. Bull: Thank you.

Now we'll go to Michael Lasser with UBS. Michael Lasser - UBS Securities: Good afternoon. Thank you for taking my question. First on the gross margin performance in the first quarter, you mentioned the 70 basis point drag from distribution centers, so that would imply you got about 25 bips from occupancy leverage and purchasing leverage. On a 4% comp, is that a good rule of thumb to think about or was there something happening in the first quarter that made it unique? Kenneth R. Bull: Michael, I think that would be and we've said it before, the 4% comp is something we've always looked at that's somewhat of a point where we start to see that slight leverage, and those numbers are relatively small and you're pretty close in terms of the occupancy and the buying cost in there. But yeah, I think at a 4% comp we see slight leverage in those fixed areas. Now for the other piece too, you mentioned occupancy of fixed cost there the buying, that ties into I mentioned some of the timing of the compensation costs that will move into Q2 and Q3, so that's what drove that. That was more of a timing issue than a full on leverage. Michael Lasser - UBS Securities: Okay. On some of the new hires, I think in the past you said that about 90% of your sales are domestically sourced. Should we expect that to change over time as you're building out new competent fees? And do you view these competent fees more as a sales driver from product development or more of a margin driver? Thomas G. Vellios: Again, I think we've been very consistent what we believe drives the most success is the delight that we provide for our customers through the newness and the excitement of our product. That's why customers shop us frequently, that's why our top line is driven primarily by transactions. We feel good as to where we are with our gross margin today. Our goal is to continue to move forward and as we leverage scale of the company and the growth business to reinvest that and to continue to deliver amazing products for our customers. Michael Lasser - UBS Securities: Tom, on a difference of objective has been notoriously of (inaudible) markets for retailers. What have been your initial observations as you move very close to launching in that market? And do you think that all indications are that you're going to achieve just as much success there that you've achieved in other areas? Thomas G. Vellios: We haven't opened up yet, so time will tell. But our feeling internally has been and continues to be as we get closer even more so, it's a great market for us. From a profile standpoint of view, it has the makeup of what makes us a terrific and successful company as we've been in all the other markets. The audience is right, the profile of customers is right, tons of kids. What we provide is a destination in a fun environment, trendy product for kids and all those that want to be kids. We think Texas is going to play really well for us. We haven't opened the stores yet but I think we feel really bullish on the market. And we really feel good about that market. Michael Lasser - UBS Securities: And my last question is on the productivity of some of the oldest stores. Where are you in terms of sales per store and what does that say about the long-term potential for the entire organization in terms of what the productivity of the average location could be? Thank you very much. Thomas G. Vellios: Well, as you know and as we've said in the past we have – the vintage stores continue to comp, so I think that speaks to just the opportunity that we have ahead for a lot of our stores. And we have stores that are north of $2.5 million to $3 million in our base of stores across the chain. I think we believe that there's a lot of potential but we have seen a little bit and particularly somewhat earlier markets as we continue to add stores and feed those markets, because we think there's demand for the concept that on a isolated base not a material number, we're don't expect it to be a material number for this year. We see a little bit of cannibalization on a handful of stores in some of those markets where we've gone in by design when we look at demand to try and add extra sites. But when you look at the volume that we do in some of those sites, particularly some of these earlier vintage stores, we think these stores over time – we have a ways to go before we max out on the stores. Michael Lasser - UBS Securities: Great. Thank you so much. Thomas G. Vellios: Thank you.

We'll now move to Patrick McKeever with MKM Partners. Patrick McKeever - MKM Partners: Thanks. I know there was a question earlier on merchandize margins, but just wondering if you could provide a little color around merchandize margin in the quarter and what the outlook might be there, looking into the back half of the year and what you're seeing just from a product cost standpoint? Are cost going up, are they going down, do you continue to reinvest in the product to kind of hold merchandize margin flat which I think what you've discussed in the past? Thanks. Thomas G. Vellios: Yeah, I think in a way you pretty much sort of answered it. Probably what we have seen and we continue to see one of the advantages that we spoke to in the past and I think we continue to see today is the benefit of scale that Five Below has. And as we continue to grow and we look at the rate of which we're growing. The better community has embraced Five Below in a fashion that has given us some leverage, no question about it. We just made a cautious decision and we'll continue to do so as a company to take that leverage and the benefit and to really reinvest it in amazing product. Although margin I think has been very consistent and particular, but very consistent with our plan and we don't see any issue with the margin on a go-forward basis. To be clear we really don't see – on the other side, we don't see anything today that would give us a pause or concern around price increases, et cetera. On the contrary I think we see quite the opportunity to really go out and harvest the preferred product that's available to us. Kenneth R. Bull: Just to add to what Tom said, no issues that we see in terms of our gross margins and again, he mentioned and he mentioned it before we seen them remain relatively consistent over the prior year and that's our expectations as we go through this year. Patrick McKeever - MKM Partners: Okay. And then a question on the secondary that was announced in mid-May, that has not priced yet, correct? Kenneth R. Bull: Correct. Patrick McKeever - MKM Partners: Any color you can provide there? It just seems – I mean it's been longer – I know these things take time, but it's been a lot longer since the one that you did back in January from announcement to pricing? Kenneth R. Bull: Unfortunately we can't really provide any color given the data for that filing at this point. Patrick McKeever - MKM Partners: Okay, thanks. Kenneth R. Bull: Thank you.

At this time, there are no further questions. I'd like to turn the call back over to Thomas Vellios. Thomas G. Vellios: Terrific. Thanks, everyone. I know we got a little bit of a hiccup earlier but I'm sure you wanted to hear Ken repeat himself on the earnings and the results. We appreciate your patience, your time and thank you for your support as always. Kenneth R. Bull: Thank you.

This does conclude today's conference. Thank you for your participation.