FIVE Earnings Call Transcripts - Five Below, Inc.

Quarter 1

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.

Quarter 2

Q4 2025 Earnings Call — March 18, 2026

a strong quarter for you, and I wanted to ask about the competitive landscape. How do you see your positioning relative to other retailers, especially those targeting similar demographics?

Winnie (CEO): Thank you for the question. I think our positioning is quite unique. We operate as a differentiated specialty store for kids, but with the discipline of an extreme value retailer. This combination allows us to attract a loyal customer base that values both quality and affordability. We are focused on creating a fun shopping experience that resonates with kids and their parents. Our marketing strategies, particularly through social media, have enabled us to engage directly with our customers, which is something that many competitors are still trying to figure out.

The next question will come from Chris Horvers with JPMorgan. Please go ahead.

Chris (Analyst): Thank you. I wanted to ask about your inventory management. Given the strong demand and the growth you're experiencing, how are you managing your inventory levels to ensure you can meet customer needs without overextending?

Management: Great question, Chris. We have been very intentional about our inventory management. We are focused on ensuring that we have the right level of inventory to meet demand while also being disciplined about our purchasing. This means closely monitoring sales trends and adjusting our orders accordingly. We have also invested in our supply chain capabilities to improve our responsiveness to changes in demand. This agility allows us to capitalize on trends quickly and ensures that we can provide our customers with the products they want when they want them.

The next question will come from Laura Champine with Loop Capital. Please go ahead.

Laura (Analyst): Thank you. I wanted to follow up on your marketing strategy. You mentioned a shift towards social media. Can you elaborate on how this has impacted your customer engagement and sales?

Winnie (CEO): Absolutely, Laura. The shift to social media has been transformative for us. By engaging directly with our customers through platforms they frequent, we have seen a significant increase in brand awareness and customer loyalty. This has translated into higher traffic and sales in our stores. We are able to respond to trends in real-time and create marketing campaigns that resonate with our audience. The feedback loop we have established allows us to refine our offerings and ensure that we are meeting customer expectations effectively.

The next question will come from Kevin O'Connell with Baird. Please go ahead.

Kevin (Analyst): Thanks for taking my question. I wanted to ask about your plans for international expansion. Are there any specific markets you are targeting, and what is your timeline for entering those markets?

Management: Great question, Kevin. We are currently evaluating several international markets for potential expansion. Our focus is on markets where we see a strong demand for our unique retail concept and where we can replicate our successful model. While we do not have a specific timeline to announce at this moment, we are committed to ensuring that any expansion is done thoughtfully and strategically to maximize our chances of success.

The next question will come from Sarah Hiner with RBC Capital Markets. Please go ahead.

Sarah (Analyst): Thank you. I wanted to ask about your customer demographics. Have you seen any shifts in your customer base, particularly with younger consumers, and how are you adapting to those changes?

Winnie (CEO): Thank you for the question, Sarah. We have indeed seen shifts in our customer demographics, particularly with younger consumers. We are increasingly attracting Gen Z and millennial parents who are looking for affordable and fun options for their kids. To adapt to these changes, we are continuously refining our product offerings and marketing strategies to ensure they resonate with these demographics. We are also leveraging data analytics to better understand their preferences and shopping behaviors, which allows us to tailor our approach effectively.

The next question will come from Tom Nikic with Wells Fargo. Please go ahead.

Tom (Analyst): Thank you. I wanted to ask about your e-commerce strategy. How do you see the role of online sales evolving for Five Below, and what investments are you making in this area?

Management: Great question, Tom. E-commerce is an important part of our growth strategy. We are investing in our online platform to enhance the customer experience and make it easier for shoppers to find and purchase our products. This includes improving our website functionality, expanding our product assortment online, and enhancing our fulfillment capabilities. We believe that a strong online presence will complement our brick-and-mortar stores and provide additional avenues for growth.

The next question will come from Jennifer Smith with Jefferies. Please go ahead.

Jennifer (Analyst): Thank you. I wanted to ask about your approach to sustainability. How are you incorporating sustainable practices into your operations and product offerings?

Winnie (CEO): Thank you for the question, Jennifer. Sustainability is a key focus for us. We are committed to reducing our environmental impact through various initiatives, including sourcing more sustainable materials for our products and optimizing our supply chain to reduce waste. We also aim to educate our customers about sustainability and encourage them to make environmentally conscious choices. This commitment not only aligns with our values but also resonates with our customer base, particularly younger consumers who prioritize sustainability.

The next question will come from Mark Altschwager with Baird. Please go ahead.

Mark (Analyst): Thank you. I wanted to ask about your competitive advantages. What do you believe sets Five Below apart from other retailers in the space, and how do you plan to maintain those advantages moving forward?

Management: Great question, Mark. Our competitive advantages stem from our unique retail concept and our focus on delivering value to our customers. We offer a fun and engaging shopping experience that is specifically tailored to kids, which sets us apart from traditional retailers. Additionally, our ability to quickly respond to trends and engage with our customers through social media gives us a distinct edge. Moving forward, we will continue to innovate and adapt our strategies to ensure we maintain these advantages in a competitive landscape.

The next question will come from Rachel McNally with Citigroup. Please go ahead.

Rachel (Analyst): Thank you. I wanted to ask about your technology investments. How are you leveraging technology to enhance the customer experience and improve operational efficiency?

Management: Thank you for the question, Rachel. Technology plays a crucial role in our operations. We are investing in various technologies to streamline our processes, enhance inventory management, and improve the overall customer experience. This includes implementing advanced analytics to better understand customer preferences and optimize our product offerings. Additionally, we are exploring new technologies to enhance our in-store experience, making it more interactive and engaging for our customers.

The next question will come from David Schick with Stifel. Please go ahead.

David (Analyst): Thank you. I wanted to ask about your loyalty program. How is it performing, and what are your plans for enhancing customer loyalty moving forward?

Management: Great question, David. Our loyalty program has been performing well and has contributed to increased customer retention and repeat visits. We are continuously looking for ways to enhance the program by offering more personalized rewards and incentives that resonate with our customers. Our goal is to create a strong sense of community among our loyal customers and encourage them to engage with our brand both in-store and online.

The next question will come from Lisa Lee with Credit Suisse. Please go ahead.

Lisa (Analyst): Thank you. I wanted to ask about your financial outlook. Given the strong performance you've seen, how are you adjusting your financial targets for the upcoming quarters?

Management: Thank you for the question, Lisa. We are optimistic about our financial outlook and are adjusting our targets to reflect the strong momentum we are experiencing. We believe that our growth strategy is sound, and we are committed to delivering sustainable growth while also being mindful of the macroeconomic environment. Our focus will remain on executing our strategy effectively and ensuring that we continue to meet the needs of our customers.

The next question will come from Eric Beder with B. Riley. Please go ahead.

Eric (Analyst): Thank you. I wanted to ask about your supply chain. How are you managing supply chain challenges, and what steps are you taking to ensure product availability?

Management: Great question, Eric. We are actively managing our supply chain to address any challenges that arise. We have diversified our supplier base and are working closely with our partners to ensure product availability and timely delivery. Additionally, we are leveraging technology to improve our supply chain visibility and responsiveness, which allows us to adapt quickly to changes in demand. Our goal is to maintain a strong inventory position while minimizing disruptions.

The next question will come from Angela Hsieh with Jefferies. Please go ahead.

Angela (Analyst): Thank you. I wanted to ask about your marketing strategy. How are you planning to evolve your marketing efforts to reach new customers and retain existing ones?

Management: Thank you for the question, Angela. Our marketing strategy is evolving to focus more on digital channels and social media engagement. We are committed to creating targeted campaigns that resonate with our audience and drive traffic to our stores. Additionally, we are exploring partnerships and collaborations that align with our brand values and appeal to our customer base. Our goal is to build a strong brand presence and foster loyalty among our customers.

The next question will come from Brian McGough with KeyBanc. Please go ahead.

Brian (Analyst): Thank you. I wanted to ask about your product assortment. How are you planning to expand your product offerings to meet changing consumer preferences?

Management: Great question, Brian. We are continuously evaluating our product assortment to ensure it aligns with changing consumer preferences. We are focused on introducing new and innovative products that resonate with our target audience, particularly in the kids' space. Additionally, we are leveraging customer feedback and market trends to inform our product development process, ensuring that we stay ahead of the curve and meet the needs of our customers.

The next question will come from Jennifer Lee with UBS. Please go ahead.

Jennifer (Analyst): Thank you. I wanted to ask about your store expansion plans. How are you identifying new locations, and what criteria are you using to determine the best sites for new stores?

Management: Thank you for the question, Jennifer. We have a disciplined approach to store expansion. We evaluate potential locations based on various factors, including demographics, market potential, and proximity to existing stores. Our goal is to ensure that each new store is positioned for success and can effectively serve our target customer base. We are also focused on maximizing the impact of our openings through targeted marketing efforts and ensuring that we have the right inventory in place.

The next question will come from Mark Smith with Wells Fargo. Please go ahead.

Mark (Analyst): Thank you. I wanted to ask about your customer engagement strategies. How are you leveraging customer feedback to improve your offerings and enhance the shopping experience?

Management: Great question, Mark. Customer feedback is invaluable to us. We actively solicit feedback through various channels, including surveys and social media engagement, to understand our customers' needs and preferences. This information informs our product development and marketing strategies, allowing us to make data-driven decisions that enhance the shopping experience. Our goal is to create a customer-centric culture that prioritizes engagement and satisfaction.

The next question will come from Sarah Johnson with Morgan Stanley. Please go ahead.

Sarah (Analyst): Thank you. I wanted to ask about your competitive positioning. How do you see your brand evolving in the next few years, and what steps are you taking to differentiate yourself from competitors?

Management: Thank you for the question, Sarah. We are committed to evolving our brand to meet the changing needs of our customers. Our focus is on delivering a unique shopping experience that sets us apart from competitors, particularly in the kids' retail space. We are continuously innovating our product offerings and marketing strategies to ensure that we remain relevant and appealing to our target audience. Our goal is to build a strong brand identity that resonates with customers and fosters loyalty.

The next question will come from Tom Johnson with Citigroup. Please go ahead.

Tom (Analyst): Thank you. I wanted to ask about your financial performance. How do you plan to sustain your growth trajectory while managing costs effectively?

Management: Great question, Tom. Sustaining our growth trajectory while managing costs is a key focus for us. We are committed to optimizing our operations and finding efficiencies that allow us to invest in growth initiatives without compromising our bottom line. This includes leveraging technology to streamline processes and improve productivity. Our goal is to maintain a balanced approach that supports both growth and profitability.

The next question will come from Lisa Brown with Deutsche Bank. Please go ahead.

Lisa (Analyst): Thank you. I wanted to ask about your customer loyalty program. How is it performing, and what enhancements are you considering to drive engagement?

Management: Thank you for the question, Lisa. Our customer loyalty program has been performing well, and we are seeing increased engagement from our members. We are exploring enhancements to the program, including personalized rewards and exclusive offers that resonate with our customers. Our goal is to create a strong sense of community among our loyal customers and encourage them to engage with our brand both in-store and online.

The next question will come from David Lee with Baird. Please go ahead.

David (Analyst): Thank you. I wanted to ask about your supply chain management. How are you addressing any challenges in the supply chain to ensure product availability?

Management: Great question, David. We are actively managing our supply chain to address any challenges that arise. We have diversified our supplier base and are working closely with our partners to ensure product availability and timely delivery. Additionally, we are leveraging technology to improve our supply chain visibility and responsiveness, which allows us to adapt quickly to changes in demand. Our goal is to maintain a strong inventory position while minimizing disruptions.

The next question will come from Angela Smith with Jefferies. Please go ahead.