Five Below, Inc.

For Q1, net sales increased nearly 33% to $1.3 billion, comparable sales rose approximately 23%, and adjusted EPS was $2.22 versus last year’s first quarter. Adjusted gross profit increased 46% to $479 million, or 37.2% of sales, up about 340 basis points year over year; adjusted SG&A was $324 million, or 25.2% of sales, down about 250 basis points; and adjusted operating income rose 160% to $155 million with margin up about 600 basis points to 12%. The quarter ended with about $1.1 billion in cash, cash equivalents and investments, inventory of $813 million, and 1,970 stores. For Q2, the company expects sales of $1.18 billion to $1.2 billion, comp growth of 7% to 9%, adjusted operating margin around 7%, adjusted net income of $68 million at the midpoint, and adjusted EPS of $1.23. For the full year, sales are expected to be $5.4 billion to $5.48 billion, comps up 6% to 8%, adjusted operating margin at 11.6% at the midpoint, adjusted EPS of $8.85, net interest income of about $31 million, and capex of $230 million to $250 million excluding tenant allowances.

Winnie Park framed the quarter as evidence that Five Below’s operating flywheel is working, emphasizing better product storytelling, social-first marketing, and easier in-store shopping. She said the company is still in the early innings of building awareness and customer engagement, especially through social media, email capture, and future loyalty tools. Her tone was upbeat and confident, but she also stressed that the business is being built for durable growth rather than depending on a single product trend.

Dan Sullivan said Q1 results exceeded expectations despite a more cautious consumer environment, with strong fixed-cost leverage driving margin expansion. He cited adjusted gross profit of $479 million, adjusted SG&A of $324 million, operating margin of 12%, and ending cash of about $1.1 billion. He also pointed to inventory of $813 million, up about 16%, as a deliberate position for summer and holiday, and noted that fuel-related supply chain pressure of 20 to 25 basis points is being offset by tariff benefits and distribution efficiencies. He said marketing investment is also up about 20 to 25 basis points this year, but remains discretionary if conditions worsen.

Analysts focused on how much of Q1’s comp strength came from trends like Squishy Dumpling or Pokemon, whether the traffic surge is sustainable, and how management is thinking about costs if comps slow. Management said the underlying flywheel, plus higher tax refunds, represented a high-single-digit run rate, while Squishy Dumpling was an amplifier rather than the core driver. On costs, Dan Sullivan highlighted two main items: fuel/supply chain pressure and intentional marketing spend, both of which are included in guidance and largely offset or adjustable. He also said the Q2 guide is cautious because the company is cycling tougher comparisons, anniversarying pricing actions, and facing a more challenging macro backdrop, not because it is seeing a clear deterioration in current demand.