Five Below, Inc.

Q2 2026 Earnings Call — September 2, 2026

Randy Koenig (Jefferies): Hey, good afternoon, everybody. I guess, Winnie, first to you, I've been doing this for 26 years. I've only seen transformational changes like this very rarely in my career. So congratulations to you guys. I guess what I want to kind of unpack is the word flywheel and the different kind of ingredients that go into that flywheel. Let's kind of focus on two of them in product and marketing. And if you think about the outperformance of your quarter, on the top line. Maybe kind of give us some perspective and get a little deeper on how much of it you thought came from the strides you're making in product and the balance in marketing. And then really kind of give us some perspective on your journey, on how you're thinking about the evolution of product and marketing into 27, 28, and 29, 2029. and how you're kind of thinking about that journey and how that kind of leads to, you know, more customers coming into the business and then your existing customer cohorts, how they continue to kind of drive more frequency of shop to the box as well. That would be very helpful. Thank you.

Winnie (Executive): Thanks so much, Randy. And thank you for the congratulations. I just want to one more time thank the crew here at Five Below for a tremendous quarter. It's actually our fifth consecutive double-digit comp quarter, which makes us all incredibly proud. But what it really reinforces for me is that the strategy that we put into place last year is working and that the customers are really responding. And so there's nothing more gratifying than to see as a merchant and a marketer that things are really, really working. And I would say that we've got this amazing operating flywheel and it's grounded in a strategy that was reset. And thank you for acknowledging that the transformation happened quickly. I think that it's a testament to our overall value proposition in the marketplace. We are a one of one concept. that is a destination for kids and the kid in all of us at extreme value. There's really no one like Five Below. And what we did last year was first put that maniacal focus on the customer. Who is our customer? And got really intimate with what it means to be Gen Alpha, Gen Z, and a millennial parent and what their needs are.

And with that, we re-merchandised and we really kind of took a step back and up and thought about not just merchandising items and chasing great one-off ideas, but how do we do our jobs telling really great stories and curated product stories that are grounded in what's happening out there, especially in social media. And we've always been a business of trend. But it's exciting to see that products that we've had in the line for five years, like the squishy dumpling, when it gets acknowledged in social, we now can not only build it from a product perspective, but also meet customers where they are from a marketing perspective. And last year, we worked hard to move our working media spend away from traditional commercials and into social media. And with that, at the end of last year, we could really amplify those trends. as well as create our own content on those trends. And we saw a lot of goodness come with that, including better brand awareness. And then right now we're hard at work and in the very early innings of trying to capture customers at the till and capture their records. When I started, we were at roughly 0% and we're making great progress in the stores.

It's a concerted effort with everyone involved. But with those records, we're able to better direct great content to those individuals and start to build a relationship through email marketing. And we're going to refine that even further. But again, very early innings. and what's really great to see is the customers we captured in 2025 are coming back in 26. Those that we gained new in the first quarter of 26 are coming back in the second quarter of 26. So really great stuff and I would say that if you got the right content and the right value proposition, those messages when they hit, they drive great visits. The third aspect is really around our stores and the store experience and again, we're just are getting started here in some ways. We're so excited to have Rodney lead the troops and our crews. But in terms of store experience, we are beginning a journey of just making it that much more fun, simpler for customers to shop, starting with our price simplification last year, but also just making these product stories come to life. And these six curtain-up moments really have galvanized the crew to work together.

And this is where you see merchandising, you see marketing and stores, as well as our wonderful supply chain and distribution crew come together to deliver goodness to the customer, to celebrate these magical moments in the year. So, you know, you ask the question with regards to how much further can we take this? We are very much in the early innings. And what is really great is we've just begun and we are seeing nice resonance in terms of getting that repeat growth up in the double digits, new customer counts up in the double digits, our brand awareness spiking and it is, again, the operating flywheel in effect and we have a lot more ahead of us. And you add on all the white space opportunity we've got with new stores and it's a very nice position to be in as a growth brand. And I'm also going to pass it on to Dan to fill in some of the details here.

Dan (Executive): Thanks, Winnie. Hey, Randi, you asked about the over delivery against our outlook for Q2. Remember when we spoke back in June, we had one month in the books essentially for the quarter. We were also looking out, trying to anticipate and predict a couple of unknowns, one around what would happen as we cycled an anniversary, the pricing of a year ago. And then second was, of course, the trend profile, particularly as school would be letting out and trying to be thoughtful about that. So that was the backdrop. I would point to three things that really were the catalyst for the over-delivery against our expectations. Transaction growth was simply more robust than we anticipated. We drove significant traffic to the store. That traffic converted and we saw transaction growth that was above what we had expected. I think secondly, part and parcel to that, the trend demands continued. And so we were excited. We had new products to offer. We had a better in-stock position. We did some really cool stuff in-store to activate. and we saw a really, really strong response from the customer.

And then thirdly, and Winnie highlighted some of the special moments, if you look at the quarter that was, there are some moments in time, Fourth of July would be an example, World Cup would be an example, even early back to school. where we knew we would have great, new, interesting product. We knew we would execute at a high level. And even with that as the inputs, those moments outperformed what we had expected. So super excited, obviously, about the results and the over-delivery, and we're heading into the back half of the year with clear momentum. Thanks so much, Randy.

Christina Cattell (Deutsche Bank): Hey guys, congratulations on yet another very strong quarter. I wanted to ask about the composition of the better than expected traffic growth a bit more. Yes, Winnie or Dan, can you unpack sort of like the categories or product stories that were the biggest traffic drivers? Are you seeing traffic increasingly concentrated around major trends events or the visits becoming more broad based across the assortment? If I could just throw in a second one, just when we look at obviously quarter to date, you gave us an 8 to 10% guidance. Is there anything you can comment on as it relates to the exit rate or how maybe August has trended and if anything from a composition perspective might be changing or you're seeing that continue? Thank you.

Winnie (Executive): Thanks so much, Christina. I'll start and then I'll let Dan speak in terms of the guidance. The traffic growth that we saw and that we experienced in the quarter was consistent with the traffic growth we saw in quarter one. And what's been really great is to see that actually we saw broad-based growth across all of our categories. Certainly, we had really, really nice effect of the squishy trend. And it did survive quarter in, quarter out, which has been terrific. And I think, you know, what's been very telling about seeing the traffic that's come from the squishy trend is that those customers have converted into broader five below. And we're seeing them buy across the assortment. We're also seeing that our aspiration to be America's greatest little toy store is definitely coming to life. That's something that I put out as an aspiration last year. And we certainly highlighted it in holiday and we're following up now. And I think that the squishy trend has made our games, toys, collectibles, and even our create and crafting departments really relevant. And so it's been great.

I think the key with any trend now at Five Below is, while there always have been trends, is what we do with them. And I think that we have new ways of managing them. First and foremost, listening to social and seeing what pops up. Secondly, being able to engage with customers really, really fast through social media and amplify and boost those trends. And then thirdly, you know, provide a product assortment where we're dropping newness and continuing to engage the customer. And we're doing that throughout the store. So that's what's been really, really exciting. And again, we saw nice growth across our worlds and a lot of resonance. And so I think Five Below is just becoming a brand that's known for, you know, affordable, great fun for the kid and kid and all of us. and I'm going to pass it on to Dan to talk about the quarter.

Dan (Executive): Yeah, thanks, Winnie. Thanks for the question, Christina. I'm not going to get into necessarily the in-quarter performance to date or color. What I would say is, you know, just maybe to pivot back as we thought about how we constructed the guide. Let me take you through a bit of the thinking. Obviously, we started with a very strong underlying growth rate. You've heard some of the reasons why here already on the call. some of the points that Winnie has made, but certainly with an 18% growth, half one, 28% on a two-year stack. We've got new store productivity levels that we're super pleased with. We have real increased proof points that the strategy is resonating and the execution is strong. So that was the basis. We then did factor in, of course, the impact of trend, both on a, let's say a direct comp basis, but also indirect as it continues to drive traffic and brand awareness. And so you put those elements together for the third quarter, we have profiled what we think is a thoughtful outlook, 9% at the midpoint, over 20% on a two-year stack. And I would say that we would expect the composition of that comp growth to be very similar to the first two quarters of the year, which means largely driven by transaction growth. Thank you.

Matthew Boss (J.P. Morgan): Thanks and congrats on another great quarter. So two questions. Two questions. Winnie, could you elaborate on the rolling thunder approach to newness across categories that you cited and how you see this impacting traffic frequency and new customer acquisition? And then Dan, you touched on it, but could you speak to the drivers of this new store performance from the recent cohorts and Thank you so much, Matt.

Winnie (Executive): The Rolling Thunder approach is something that we have worked really, really hard on, and it's across every single world. I think that Five Below has always been about newness and has been about refreshing the assortments at very specific times during the year. But I think what's different about what we're doing today is, one, we're acknowledging that newness is what's driving those visits and that excitement from the customers, and we're talking about it. So along with the newness drops, we're actually engaging in marketing. We're messaging it. We're talking about it. and it's working. Customers acknowledge when we have it. It is driving the visits. We're able to communicate with them now with the growth of our email file as well. The other piece of the Rolling Thunder approach is being intentional about, again, product storytelling and instead of just launching a bunch of new stuff, really build out a story with connective tissue and think about things with a collections mindset. And so this has been a lot of hard work in the background between merchandising, visual merchandising, marketing, stores to get this right. And I really applaud the teams because we see that the customers are picking up on these cues and it's driving them into the stores. So it's been terrific.

Dan (Executive): Yeah, Matt, picking up on your second question around new store productivity, look, we're obviously super pleased with the results and the trend that we're on. It makes what was already a very exciting investment profile outstanding for us. I would point to two main drivers. One, I think just the acknowledgement, the reality of the breadth and depth of the growth that we are seeing. When you see this type of growth across all geographies, all income cohorts, all demographics. There's certainly a rising tide element to this that plays out in your NSP. I think more importantly, though, is I think this is a great reflection of the more disciplined real estate strategy that we put in place about 18 months ago and really applied that strategy not only in white space thinking, which you saw in Pacific Northwest last year, but also as we thought about fill-in. And this strategy is based upon the notion of much more discipline up front, really engaging from site selection all the way through to grand opening, holding a really high bar on location, on lease terms, on our ability to then activate an execution the minute we open the doors, and knowing how to seed the market both ahead of the entry and as part of the execution. I think we are meaningfully better on all elements of that than we were 18 months ago, and those results are playing out in our new store productivity. Thanks for the question.

Robbie Owens (Bank of America): Oh, hey. Hey, Winnie. Hey, Dan. Thanks for taking my question. I was hoping this might be more for Dan. Just if you could speak to the tariff refunds and how you think about that cash or how we should think about the back half and sort of investing the tariff refunds as expenses in the back half versus You know, expenses, you know, because your traffic is so much higher. So sort of spending into the higher comp trends that you guys keep coming up with and how we should think about that in our models.

Dan (Executive): Yeah, sure. Robbie, thanks for the question. Look, our focus from an investment standpoint has been and is going to continue to be primarily focused against our customers and in support of our growth. That is at the heart of our strategy, that is how we have prioritized and will continue to. Now, I think what the IEPA refunds offer us is an ability to accelerate that and with some optionality. And so, you know, the areas that I would expect that we would think to redeploy these funds first is going to be to continuing to invest in the customer experience in store and making sure we are offering our customers the best experience possible. And Winnie's talked about that in her prepared remarks around the importance of how we bring our product to life, how we simplify and improve the shopping experience for our customers, and really reinforce the treasure hunt aspect of our offering, which is so important.

I think the second one sort of following on that is applying the same thinking and importance to our digital platform as we think about ourselves through the lens of omnichannel and really improving the online shopping experience for our customers and making sure that that experience lives up to our brand and matches the in-store experience. And then thirdly, I would point to we're going to continue to invest in the product, in our hunt, in our search for newness, and in our value proposition. And so I think as you put all three of those together, I would expect that it will disproportionately be seen in CapEx. and it will be seen over time. Thanks, Robbie.

Michael Lasser (UBS): Good evening. Thank you so much for taking my question last quarter. You quantified what the flywheel meant to your business in that the underlying run rate was in the high single digit range inclusive of some pricing, now that you've seen second quarter play out, as well as having some time to reflect on that number, is that still a good way to think about the underlying run rate for the business? And as you look to next year and the coming quarters, do we take pause that there are any unique factors that we should consider as we model over the next few quarters that are just going to be difficult to repeat and will act as an impediment to Five Below's ability to sustain a positive comp in the periods ahead. Thank you so much.

Winnie (Executive): Thanks, Michael. I'm just going to start in terms of taking a step up and back as we look at what's coming for the balance of the year. What's great about the operating flywheel is that the momentum is starting to speed up and carry itself. And I think the aspects that we've been really pleased with are, you know, our disciplined approach of delivering great relevant newness at extreme value with a very focused intention of being a destination for kids. And I think that one of one concept and that focus on value is going to be even more resonant as we move through the year. We also have the ability this year versus last year, especially as we look forward to holiday, of bringing in products that the tariffs did not allow us to bring in last year. So we have a full assortment of goodness coming through, both for Halloween and holiday, that we feel really excited about and we think is going to be incredibly compelling to the customer. We've seen really nice new customer acquisition, both through trend as well as our marketing efforts. And that just continues to grow.

And I would say that what's nice is to be able to take those customers and see them repeat with us. And so as we capture more customer records and are able to communicate with those customers and build relationships with them over time, I think that that is going to be a huge tailwind for us in the quarters coming up. So very, very excited about those elements. And again, early innings on those pieces. And I'm going to pass it on to Dan to lean in here.

Dan (Executive): Thanks, Winnie. Yeah, Michael, I would only add a couple of things. I think the operating flywheel that Winnie talks about, which is really the heart of a winning strategy that is being executed at a really high level, that's obviously the catalyst here. I point out that the result of this is also reflected in a business that is much more about assortment than it is about item. In the quarter itself, Squishy Dumplings, as an example, was a low single-digit contributor to our comp growth. And that's similar to what we saw in the first quarter. Now, we recognize, obviously, it had a bigger impact from a halo perspective and from its ability to contribute to our traffic gains. But I think the other point I would highlight here is the importance of our ability as an organization to self-amplify this trend. We've almost taken now what's become a commodity item and made it so unique and so compelling and so interesting that it is actually a five below item. And so I think these are all examples of durable elements to this growth story. And while we don't underestimate the impact of squishy dumplings, the math would tell us it was a low single digit contributor and our capabilities here to amplify this trend and drive traffic around the trend are new and growing muscles, which we think also play well into the future. Thanks, Michael.

David Bellinger (Mizuho): Hey guys. Thank you very much. Two follow-ups on the social media piece. Any data points you can share around the sales uplift, maybe from certain target markets where this has turned on more than others? And then as you look out further, you mentioned being still early innings with the email capture rates. How sophisticated can the marketing program ultimately get? Can we eventually see much more precision on these paid posts, paid sponsorships on even a household-by-household basis? Thank you.

Winnie (Executive): Thank you so much, David. So on the social media side, I can't share exact figures, but what I can share with you is that we like the results we've seen in terms of pivoting our spend from traditional commercials into social. We really look at the media spend in social and digital by cohort of customer and what's most applicable. And we're also seeing some nice results through connected TV for Gen Alpha through YouTube. So we continue to really mix modify the mix of media in order to optimize ROAS, but more importantly, to capture customer attention and to engage with them in a relevant way. And yes, I think we are very early innings on email capture, and we're able to batch and blast at this point to lots of customers, our ability to really hone in and personalize and dial in our marketing is early stages and we will be making those investments over time because we know that they will pay off as we try to grow lifetime value of our customers. We've also got a neat value proposition at Five Below in that we capture customers young and we ladder them through their preteen and teen years and you know, we would love to see them be on that, but certainly as they grow up and out and have their own families, they come back. And so the true lifetime journey of Five Below is one that I think is exceptional. And once we build out our marketing toolkit and our tools, we'll be able to do a lot more to bridge those moments for the customers. Thank you, David.

Joe Feldman (Tulsi Advisory Group): Good afternoon, guys, and also congrats on a strong quarter. Amazing quarter, really. And the question I had was, you talked a bit about the Five Beyond section in the back of the store and sort of tearing down that wall and allocating some more space. Can you talk a little bit about how that will be rolled out and implemented and the cost to do it or the effort or the time? I'm just trying to get a better sense of what we should expect to see over the next, you know, coming months and a couple of quarters, I would assume. It's not going to be an overnight thing. So maybe you could share some thoughts on that. Thank you.

Winnie (Executive): Absolutely. Thank you, Joe. And yes, on Five Beyond, this has been a journey for us, and it really started last year as we started moving the product out of the area. And customers were receiving the product better and their own departmental homes, which left an open space for us to merchandise and try to make more productive. And so we started the work of looking at what could go back there, how do we literally tear down the signage and get the gondolas that are attached to the wall and are pretty high height down. See what that would do for the stores, see what that would do in terms of productivity and customer acceptance, as well as crew and the crew experience. And all of that has been positive. So we've just begun that journey of moving through stores to make these adjustments. And we think it's going to do great things from a couple of points. One, we do believe we will make a very productive splash with the world of play. It's part of a broader strategy to again, really think about our adjacency to the product so they make sense for the customer and the customer's shopping so that they can more effectively build their baskets.

I think secondly, we want to make sure that whatever we do, keeps us incredibly flexible because the business changes all the time. Trends change, needs change for our customers. So we really want to keep it flexible and agile. And then I think the third thing is from an overall experience, being able to see back to front for a store is important, especially if you're shopping as a family and you've got young kids, you want line of sight. For our crew, it's important in terms of being able to track customers and understand what their needs are. So we think there's a lot of goodness that's going to come out of some of these changes, but we're being very disciplined in terms of how we roll it out, monitor it, and move forward that way. So I'll let Dan talk a little bit more about that.

Dan (Executive): Yeah, thanks, Monique. Yeah, Joe, you know, we think this is a fairly modest level of capital investment per store. It's probably in the range of $40,000 to $45,000 of CapEx per store. It is at the heart, though, of what led to us increasing our CapEx outlook for the year, now in a range of $250 to $260 million is our conviction to start investing in this program. And so that has begun and is the cause for us taking up our guidance. Thanks, Joe.

Scott Ciccarelli (Truist Securities): Hi, guys. Appreciate the time. So based on the midpoint of your 3Q guide and the full year outlook, it looks like you're still embedding a low single-digit comp in the fourth quarter. I think we recognize 4Q always has some pressures because of the amount of volume that has to flow through the boxes. But just given the momentum of your trends and the ability to bring in product that you couldn't have last year, why wouldn't you expect 4Q comps to be quite a bit higher than what seems to be implied in the guide? And specifically, do you have real concerns around the physical volume limitations of the stores, or is this just taking more of a prudent or conservative approach in the outlook? Thanks.

Dan (Executive): Yeah, hey Scott, thanks for the question. Look, as we've constructed the guide, certainly run rate, momentum of the business factored into that. I think you're right. We've talked about certain opportunities that we left on the cutting room floor last year in the fourth quarter, largely as a result of tariff decisions that we had to make around products. We're certainly super excited about, you know, the programs and the products that we're bringing in for the holidays, and the teams have already began planning for and executing. So certainly a lot there to like. The way we've constructed the fourth quarter, which would position at about a 3% comp growth profile for the quarter, I think, to be fair, you also have to look at that on a two-year basis, given that we have now anniversary the pricing and we are cycling, as you know, a fairly big 15% quarter a year ago. So on a two-year stack, this quarter, our biggest quarter of the year, profiles at an 18%. And just, we haven't tried to be conservative or prudent.

We've just been thoughtful here, weighing all of the things I just mentioned, and also the reality that we're in, in terms of the competitive set in that time period, and the amount of business we and others will do over a very, very short period of time. We just wanted to be thoughtful, balancing the obvious underlying run rate of this business, some of the things we're super excited about, and the fact that it is the holiday season. That's all that went into the guide. We don't see it as conservative. We see it as thoughtful. Thanks, Scott.

Chuck Grom (Gordon Haskett): Hey, great. Thanks a lot. When you look at your store fleet and overall sales per store this year, which is going to be about 2.7 million, is it possible to speak to maybe your top 10 to 20% of the store base and I guess any common themes between those locations, whether it be brand awareness or others that you can apply to the rest of the fleet? I'm trying to sort of approach the comping the comp question for 2027 from a slightly different angle.

Winnie (Executive): So, in terms of the store fleet, it's a great question, Chuck, and it's a great way of thinking through it. We don't see a meaningful variance. It is amazing in terms of the performance across the fleet, regardless of vintage or geography. We've seen lift throughout. and we don't see a huge meaningful swing between the top percentile versus the bottom either in terms of brand awareness or any other factors. It's been kind of like good throughout the system. I think the bigger piece around comping the comp as we look at 2027 is thinking through how we take these new customers that we've acquired and bring them back and then how we continue to acquire new. Both are new store openings, but also in existing because we're increasing our brand awareness. And that can be through marketing, but it also can be through a trend and relevance. And I think that's where we're winning currently.

Jeremy Hamblin (Craig Hallam Capital): Thanks, and I'll add my congratulations, and especially on your operating margins blowing right past the 11 to 12% legacy level and hitting mid-teens this year. I wanted to get into the curtain-up moments and kind of those six times of year. I think we recently have kind of seen that for your post-back-to-school and kind of early Halloween set. In terms of the efficiency around doing those sets, it seems like your labor investment is quite a bit more than what you've put into it in the past. And given th

Q1 2026 Earnings Call — June 3, 2026

Analyst John Heinbuckle (Guggenheim): Hey, Winnie, can you talk to, you know, the results you're seeing are obviously incredibly strong, particularly as it relates to traffic. Can you talk to brand awareness and then maybe brand awareness around certain elements of your go forward strategy and the degree to which you're acquiring new customers because it would appear that you're acquiring them at a much more rapid pace than even you had six months ago?

Executive Winnie (Title): Thanks, John, thanks for your question. A really good one. We actually did see really, really great lift this quarter out of transactions driven by traffic and actually nice double digit growth, both the new customers as well as retained. Our awareness still remains both aided and unaided, remains pretty low relative to our competitors. So we've just started this journey. I think what we're very pleased with is the fact that we're making good strides and it was really a switch in our marketing strategy, moving from more traditional marketing and directing our media spend into social. Coupled with that, we have really tried to build our customer database and to ensure that our stores are capturing customer emails because that just makes us that much more effective, both in driving the appropriate media messages to our customers, but also hopefully growing a lifetime relationship with them and eventually being able to personalize or reach out to them. But traffic has been tremendous, and we certainly had a nice lift from our messaging resonated with our customers and social, and it was across Valentine's, Easter, our health and fitness trends, which focus on Pilates, all the way through to squishy things and squish dumplings. So really pleased with the initial results we've seen.

Analyst Matthew Boss (JP Morgan): Great, thanks, and congrats on another nice quarter. So two questions. Winnie, with four straight quarters now of double-digit comps, could you touch on foundational changes you've made, which you think provides confidence to comp the comp? I guess how best to think about merchandise opportunity remaining across your worlds today? And can you just touch on the momentum that you've seen continue so far in May?

Executive Winnie (Title): Thanks so much for the question, Matthew, and it's a really, really good one. We feel really good about the strategy we put in place and what we think is a lot of dry powder in order to go after continued growth of the top line. I have a simple saying around here at the office, and it's sales solve problems. And I'm a tried and true merchant, and I'm incredibly excited about the momentum I see in the business, but also what our merchants have brought to the table. We have taken what used to be a very item-focused merchandising approach to really an assortment merchandising approach, looking across assortments, targeting our core customers, and really thinking through how do we tell stories around the product. The majority of our assortment, you know, over 80% is still $5 and below. We did switch to simplify pricing, and those whole price points are much easier to shop. Frankly, it's a lot easier to merchandise to as well. As we look at price points above $5, we've seen really great resonance because we pack so much value into anything that's above $5.

We also abolish the Buy Beyond section, move that product in line, and we've actually seen that product perform better because it's basically merchandised the way the customer wants to shop the product. If you have a $35 gilt floor mirror, it's in the room section and not tucked away in the back of the store. So all of those changes have made a real difference. We also, in terms of store execution, we're very, very focused on these sex curtain up moments. And what it has done is galvanized the organization to work together to make sure we've got the right product at the right place at the right time, in-stock levels are good, and that our stores are educated about the product stories that they're going to be hosting for all of our customers. So all of that has been foundational work. We have ways to go early innings in terms of what more we can do, both in terms of marketing, via database, via social.

And then in terms of merchandising and specific to your question, I am really excited about the newness that I see and the opportunities we have in every single world. We had outsized growth this quarter in terms of toys, collectibles, and games. But I also see so many green shoots and so much strength across the assortment from beauty to fashion and very, very strong food and candy business that continues to be a cornerstone for us at Buy Below. So a lot ahead of us. And I think the big thing with my coming here, we've unleashed the merchants. And the vendors really do love us, and we've worked very hard to diversify that vendor base. So I think we've got a lot ahead of us in terms of growth, and I feel very confident about our ability to comp.

Analyst Michael Lasser (UBS): Good evening. Thank you so much for taking my question. A, is there a way that you can quantify some of the unique contributions to the comp from things like squish dumplings or Pokemon that may be more trend related and not necessarily continue for an extended period of time? And B, could you break down some of the unique costs that you are experiencing today such that if the market were to assume you comp flat as you anniversary some of these strong growth rates, we can get a baseline of what Five Below's earnings outlook would be even a more conservative scenario as you get into 2027?

Executive Winnie (Title): Thanks for the question, Michael. And I'll kick off and talk about quantifying the comp for Q1. I would characterize our strategy at work the flywheel operating model, great product, great value, stores that look great or fun to shop, easier to shop, as well as our ability to really engage with customers via social media. I would quantify that as being high single digits in terms of kind of run rate and what we're seeing. In addition to that, we had a quarter where we enjoyed the benefit of higher tax refunds that the customer spent with us. That was terrific. The final thing is, you know, everyone's been talking about the squishy dumpling. And what's really interesting to me about this particular trend, because we've always had cyclical trends in the business that come in and out, is not the what but the how. And I think that the big driver of how this trend went from zero to hero was one, our doing a lot of social listening, seeing what was popping. Two, amplifying, reposting, and then engaging with customers. And then three, really thinking through not just a dumpling, but a full assortment of squishy things.

And that has driven some really nice traffic, and we're going to continue to use that mental model to drive traffic in the future. And we're constantly looking at what next trend can we amplify. The good thing about our business today, however, is that, again, we've gotten a soar in business. Every world is working very well and positively, and we continue to drive traffic. what new ideas are out there in every single world, and then how can we talk and engage with our customers about it? That is really a new tool for us. And then I'll let Dan speak to cost.

Executive Dan (Title): Yeah. Hey, Michael. Thanks for the question. I would probably highlight two topics to your question on the cost profile. One is clearly transitory, and that is around the supply chain, and in particular, the rising cost of fuel and the rising cost of diesel fuel per gallon. We've sized that for the year at 20 to 25 basis points of an increase. Important to note, though, within our outlook for the year, we have fully offset those costs through a combination of better tariff cost flow through and better productivity and efficiency across our distribution centers. But that's clearly, to your point, one of the outliers. And then I think the second one that I would highlight, which is absolutely intentional, is around the marketing investments that we're making. Winnie has described so much of the incredible outcomes that we are seeing, and that's coming from our stated desire to really feed this capability. It's about a 20 to 25 basis point year-over-year increase this year. The beauty of that is we're seeing terrific returns. And if we get to a place in whatever circumstance, hypothetically, where we are in a more challenged environment, we would obviously be able to pull that back as well. So hopefully that answers your question.

Analyst David Bellinger (Mizuho): Hey, everyone. Thank you for the questions. I want to ask about the trading card category, something that's very on trend right now. Is that an opportunity to chase product? And can you talk about that? Any conversations you've had with larger brands or manufacturers to get even more allocation across the store base?

Executive Winnie (Title): David, trading cards are a great business driver for us, and we were really happy with the results of our National Pokemon Day. And we are definitely looking at further opportunities to chase Pokemon but other trading cards. You know, that is actually one of the trends that has a more enduring effect. And what I'm also seeing is that we're just looking at what does that mean beyond just the trading cards and looking at the impact of anime collectibles in growing those assortments accordingly as well. So it's something that we are looking at very carefully and having daily discussions about increasing the supply.

Analyst Edward Kelly (Wells Fargo): Yeah. Hi, good afternoon. Thanks for taking the question and congrats on, you know, really amazing results. Dan, you mentioned in your prepared marks around the outlook, just about a bit more caution, I guess, on the macro and the consumer. Could you just maybe give a little bit more color around, you know, why that's worked its way and sort of like your way of thinking? Is it anything that you're seeing in the business yourself currently, and then as it pertains to all this and the outlook for the back half, because that hasn't changed, can you just maybe talk about some of the things you might be excited about for the holiday period as it pertains to how you're thinking about the back half?

Executive Dan (Title): Yeah, absolutely. Look, I think there's a couple of things here within the business that are worth commenting on. One, and you've heard Winnie unpack the Q1 results, we are incredibly pleased and confident with the results that our strategy is delivering in terms of sustainable growth. We're four quarters now of double digit growth and five quarters of comp growth. And that's a great reflection of the execution of this strategy. I think as we look forward from here, and we talked about it in our last call, we are certainly cognizant of the fact that we are cycling stronger year over year performance in the quarter we're in, let alone the back half of the year. And that factored into our thinking as well. I mean, half two of this year we'll be cycling 15% comp growth from a year ago, and we'll be doing it having fully anniversary the pricing activities that we initiated a year ago. And so as we thought about that, you know, we see an incredibly healthy business that is absolutely delivering durable growth. We see a more challenging back half of the year simply based on what we will cycle.

And then that leads to the point of your question, which is the environment in which we're operating. And I would say here, we're being cautious and we're looking at the environment. We're looking at the world that our customers are living in with rising fuel costs, with very sticky inflation, with a somewhat soft labor market. And we think a piece of that pain that they are feeling wasn't felt in the first quarter purely because of tax proceeds year over year that were significantly up. And so I think you have to look at all three of those together. We don't have data that would suggest there's trade down happening. We don't have data that would suggest there's been a shift in behavior. That's certainly not what we're saying. But I do think we transparently have to look at the environment we're operating in and the world our customers are living in. in the reality of some of the points that I made. So that's how we shaped it and thought about both the near term and the back half of the year. Winnie, I'll let you talk about what you're excited about.

Executive Winnie (Title): Absolutely. And Edward, I would also add to Dan's comment to say that as he mentioned, we actually have seen growth across all of our income cohorts. And I think the beauty of our model is we have a very unique value proposition that's pretty much one of one. We are a brand that is delivering a specialty experience for kids and doing it at extreme value. The notion that the price of entry is a buck is something that we think is going to really help us gain market share as we move through the quarters and should the customer feel more pressured. With that, in holiday, it's very interesting being part of the Five Below team because one characteristic is that no one's ever satisfied. And with the great holiday results that we posted last year, we walked away hindsighting 15 or 16 things we could be doing better. There are certainly things that we executed really well. And I would say from a product ammunition point of view, we were still light in certain areas because of tariffs. And I think we believe we can buy back into those categories. So there will be additional goodness that we couldn't necessarily afford last year.

The other piece of this is that like I said earlier, the product storytelling and bringing together really fulsome product stories that engage with the customers at the beginning of the holiday season, ending with an amazing stocking stuffer type of event. We've got a lot going, and our job is to pull it together to make sure that it's curated and that we're messaging it correctly. So we're actually quite excited. We think we've got a lot of really great dry powder for the season.

Analyst Scott Ciccarelli (Truist Securities): Good afternoon, guys. Dan, I think that last call you used the phrase, we're seeing what you're seeing in terms of your sales growth versus maybe what some of the 3P services would have suggested. Given that context, it appears your 2Q guide is below, I think, what we're seeing from the outside. So given the magnitude of outperformance in 1Q and what we at least believe is a higher current run rate, are you actually expecting a slowdown in the back part of the quarter, or is it more of that kind of cushion for the macro dynamics that you were earlier referencing?

Executive Dan (Title): Yeah, no, of course. Look, let me spend a minute on how we thought about the second quarter. I'm not going to get into necessarily the specifics of the quarter of where we are, but I'm happy to put some color to it and connect it to how we built the outlook. I'll start by saying we're certainly pleased with the start to the quarter. The team has executed at a very, very high level. And you've had some interesting holiday moments, whether they be Mother's Day or grad or early summer that certainly we're excited about and we've seen good results. So from that standpoint, off to a good start. You know, the way the quarter shapes, though, May is the smallest of the three months. June and July is where the heavy lift is. We have a lot of work left to do here as we get deeper into summer, the heart of grad, Father's Day, Fourth of July, et cetera. And so you know, we've got a long way ahead of us here in terms of the quarter.

As a reminder, at this moment, we've almost entirely cycled the pricing actions of a year ago.

And so for the back half of the quarter and rest of the year, we will have fully anniversary that. And so look, all in all, again, we're pleased with the start of it. We're about halfway through it. We have a lot of A lot to do for sure. And look, while I'm on the quarter, let me just comment for a second on the squishy event that took place in mid-May. Look, you heard Winnie describe it in her prepared remarks. It was an absolutely amazing, amazing program. Cultural zeitgeist is what we've called it, and I think that's the right way to describe it. We saw tremendous response from customers and really brilliant, flawless execution from our team. And so if you look at that event through the lens of the Five Below brand, how we engage customers, create a unique retail moment and ultimately execute terrific on absolutely all accounts. I would caution against the notion of this event being a meaningful catalyst to the comp profile for the quarter that we've built, right? It's a one day event essentially of one item with, you know, intentionally constrained supply.

And so I want to just sort of make clear for everyone it was an absolutely terrific event that was not designed to be a meaningful catalyst to the comp profile for the quarter. So hopefully that gives you a bit of color of how we thought about it. And I would say the last thing is just price and the role of price because I think Dan mentioned this, but pricing – impacts a little bit of Q2, but then we will have anniversary for the second half of Q2.

Analyst Zihan Ma (Bernstein): Hi, thank you. I wanted to ask about the traffic versus ticket dynamic with the great traffic result that you guys achieved in Q1. I'm assuming part of that is linked to Squishy, wondering if there's additional color you can provide there. And meanwhile, ticket growth did seem to have decelerated somewhat. Despite in Q1, I'm assuming you still had some tariff-driven price increases in there. So was UPT down? Are people buying smaller baskets? And how do we see the balance for the rest of the year?

Executive Winnie (Title): So for the first quarter, Jihan, you hit the nail on the head pretty much. So the traffic, we had... A couple of things going on. We saw really nice increases. We did see nice increases that were generated by all the marketing actions we took to amplify the squish trend. And with that trend, we did drive footsteps that crossed the threshold. And those baskets typically are smaller than the broader baskets. And that kind of explains why you see ticket not being quite as high or equally as high as other quarters. So that's effectively it. With that said, one of the things that we're seeing, we continue to see, is nice traffic lift. And it really is. We think our marketing strategy is working and our ability to be agile, to really think about what's happening, reflect on those trends, react very quickly, and drive footsteps across the threshold. So all good stuff. But we did see a nice benefit and a smaller basket in the quarter because of the squish trend.

Analyst Simeon Gutman (Morgan Stanley): Hey, everyone. First question, new space productivity was outstanding. I assume part of it is how strong the core comp is. So you're opening stores with product and trend you probably didn't have in the base. So how to think about it if there's any change or things that you're doing on your side outside of the strong comp. And then, Dan, just to paraphrase, you left back half unchanged, but you're not seeing anything different about the consumer and some of the cost things that you cited. It sounds like they're mostly or fully offset other than increase in marketing.

Executive Dan (Title): Yeah, Simeon, so thanks for the questions there. On new store productivity, of course, you're right. When you see widespread growth like this, comp growth, you're going to see the step up in productivity, and, of course, that's worth seeing. I do think it's worth highlighting we are seeing outsized performance in our 2025 and 2026 classes of stores, which directly feeds back to the strategy that we've put in place, which is we want to be incredibly good from site selection, to pre-opening, to grand opening, to post-opening. We've intentionally shifted our approach here. It's about quality of properties and locations, not just quantity. We still are committed to the high single digit unit growth profile, but we want to do it in a really, really compelling way. And I think that's a piece of what you're seeing here as well. And then yes, I think the way that you described it is right. I think we haven't changed our back of year outlook. We had contemplated when we spoke three months ago that we were expecting a bit of a choppy environment with our consumer and a challenging macro environment. And that's certainly what we've seen play out.

I would point out, though, that holding our comps outlook consistent for the half two reflects an incredible confidence and belief in how we are running this business and delivering results while also acknowledging that it is a challenging environment right now for our consumers. And so we want to be thoughtful about that. We want to be balanced about that, which we think is the appropriate stance given the operating environment.

Analyst Robbie Holmes (Bank of America): Oh, hey, congrats. And thanks for taking my question. My question is, how much of online growth was a driver in the first quarter? And how do you see going forward? And, you know, was digital a bigger contributor than expected, you know, in the first quarter? And is that because of the squishy trend? And, you know, just how do we think about that momentum continuing for the rest of the year?

Executive Winnie (Title): Thanks so much for the question, Robbie. We did see some nice growth online, but it's still a very small percentage to the total business. And again, this is another white space opportunity as we move forward and really think about this connected customer journey and the role of Omnichannel. We are seeing nice pickup, but it's still a small percentage. Really where we at have leveraged online is the social media and influencer creator marketing that we put out there. It really points most customers directly to the site, which becomes kind of a window to Five Below and drives then the traffic into the stores. But again, potential white space opportunity for us in the future.

Analyst Chuck Grom (Gordon Haskett): Hey, thanks a lot. Winnie, on the outside looking in, it's sometimes hard to contextualize the marketing upside. So could you perhaps size up what's worked well so far? What's next as you leverage loyalty and more influencers to modernize the social spend? And can you touch on the email database that you're building out? I guess where that stands, say, relative to, say, a year ago?

Executive Winnie (Title): Chuck, thanks for the question. So I'm going to actually start with the marketing spend. It's really interesting. We just started on this journey with social last year. And so I think, you know, first steps was just trying on different types of content, both creator content, you know, boosting UGC. And what has really, really helped us is that we have a lot of stories to tell. The marketing and merchandising teams work really closely together, pretty much from the inception of the line. And they start thinking through what would really hit. The second piece of social though that we've really enjoyed is social listening and just paying attention to what our customers are talking about and then being able to really lean into those trends. And we see it not just in the squish phenomenon, but we also see it in our food world with candy. And even with what's happening with our beauty programs and beauty dupes. So those are new muscles that we're just beginning to really take advantage of. We also have seen a nice pickup in terms of customer growth through connected TV.

And here I mentioned that we are doing more AI, more AI generated content that just allows us to be fast, nimble, but also really use our imagination and touch kids, and really in terms of the channels they're looking at, like YouTube. The customer file is beginning to grow, and we are in very early stages. But we are seeing that the value of those customers in our file are growing pretty much geometrically as we go quarter in, quarter out. So the key to this is how do we get more customers, capture more at the till, but then also start to really think through what loyalty could look like for five below. And what we're working on is, you know, is it going to be through the app? Is it reward points for spending and visits? We think that our customers will actually really enjoy being first in terms of knowing about new releases and new products. So there's a lot more to explore there. And again, we're early stages in that journey, but excited about what we've seen so far.

Analyst Michael Montani (Evercore ISI): Yes, hi. Thanks for taking the question. I just wanted to ask for a moment about the IEPA tariff rebates. We were basically coming to about 150 basis points of potential tailwind from that, which assumed about 85%, 90% import, and then about 30%, 35% foreign direct import. Just wondering if you guys would, you know, comment at all on that. And then also you had mentioned the 10% tariff rate coming back into play that could go up to where it was last year, you know, pre-IEPA. We had that at like 18 to 20%. So I'm just curious if you'd be willing to comment at all on how you see that margin in employee playing out.

Executive Dan (Title): Yeah, Michael, happy to do so. Look, on the AIPA tariffs, we've not publicly sized or quantified that, and I'm certainly not going to do that here. What I would say is we've taken all the appropriate steps to secure the claims and avail ourselves to these claims. And so from an administrative perspective, I think we're in very good standing here towards the refunds. Now, of course, the if and the when to that conversation is still to be determined, but we've done all the right things that we need to do. On the broader tariff discussion, just to be completely clear, what we have assumed for the back half of the year is tariff rates that return to levels that they were at the start of our fiscal year. Certainly what's been in the news the last couple of days would tell us that's probably a pretty good assumption, how the administration intends to get back to this some way, likely through Section 301 tariffs. So we think we're in a good position there. What we have updated in our outlook at this point is we have flowed through the benefit of lower tariffs that we have experienced over the 150-day period that will end in late July.

You know, so it is an incredibly fluid and complicated topic. We have resisted the temptation to quantify every element of it because I think for us, we want to just make sure that we're being clear with how we thought about it and what we've included in our outlook or not. This has a lot to play out as we work through the year.

Analyst Brad Thomas (KeyBank Capital Markets): Hi, thank you. Congrats on the momentum. I wanted to ask about the strong customer traffic that you've had over the last year. Wondering if you've looked at or could share with us any insights into what kind of repeat visits you're seeing from new customers that are coming in. And then as we think about a world where perhaps tariffs are more benign. Curious if there are any investments in price on the more favorable side for the customer that you may be considering, you know, should the savings stay in place?

Executive Winnie (Title): Thank you for your question, Brad. On the repeat, from new customers we are seeing a nice growth from repeat from new customers and we've seen double digit growth both in terms of repeat as well as new customer acquisition so really nice results thus far and more to do again early innings on this one in terms of price it's a great question last year we really made a move to simplify prices and to round everything up and down to whole price points. And our customers responded very favorably to that move. It's a much easier shopping experience, much easier for our crew as well. With that, we kept the majority of our prices at five below, and we made sure to invest in the five and above and make sure that we had great relative value. The final thing was we got rid of five beyond and put those products in line. Those two things gave us a real insight into how customers respond to price, and we have not seen resistance on prices above $5 if we can pack enough relative value. So we feel good about the strategy we've got, and the customers have definitely voted for it, both in terms of a lot on offer at five and below, but again, at five and beyond, they have responded very favorably to the value we've packed into those products.