Five Below, Inc.

Second-quarter net sales increased 23% to $1.3 billion. Comparable sales grew just over 14%, driven by increased transactions and approximately 9% new unit growth; this marked the fifth straight quarter of double-digit comp growth and a 26.5% two-year stack. Adjusted gross profit rose 31% to $449 million, with gross margin up about 220 basis points year over year to 35.6%. Adjusted SG&A was $336 million, or 26.6% of sales, down 140 basis points year over year. Adjusted operating income more than doubled to $113 million, adjusted operating margin was 9%, and adjusted diluted EPS was $1.68. The company opened 52 net new stores and ended the quarter with 2,022 stores; inventory was $941 million, up 18%. For Q3, management expects sales of $1.21 billion to $1.23 billion, comp growth of 8% to 10%, adjusted operating margin of about 6%, and adjusted diluted EPS of $1.07. For the full year, sales are expected to be $5.63 billion to $5.71 billion, comp growth of 10% to 12%, adjusted operating margin around 12.5%, and adjusted diluted EPS of $10.07. Capex is now expected to be $250 million to $260 million, reflecting 150 net new store openings plus investment in store experience, infrastructure, and technology.

Winnie Park said the quarter validated the company’s transformation and that Five Below is still in the early innings of its operating ‘flywheel.’ She emphasized a shift from item-focused merchandising to product storytelling, plus heavier use of social and digital marketing, simplified pricing, and better store presentation. Her tone was upbeat and confident, with repeated comments that customers are responding, trends are converting into traffic, and the brand has a long runway through new stores and market expansion, including Puerto Rico in back-half 2027.

Dan Sullivan framed the quarter as strong execution across sales, margin, and cash generation. He cited adjusted gross margin of 35.6%, about 220 basis points of year-over-year expansion, driven by merch margin, fixed-cost leverage, and a better shrink reserve rate, while Q2 adjusted SG&A leveraged 140 basis points to 26.6% despite higher marketing and inventory-count labor. He highlighted about $1.2 billion in cash, cash equivalents, and investments, including $170 million in pretax IEEPA refunds, and said the company bought back about 311,000 shares for about $60 million in Q2 before the board approved a new $600 million repurchase authorization. He also said the company plans to keep prioritizing customer and growth investment, with expected redeployment of tariff refunds likely showing up mostly in CapEx over time.

Analysts pressed on what was driving the traffic strength, how much came from product versus marketing, and whether the business can sustain comps into 2027 and beyond. Management said traffic gains were broad-based, with Squishy Dumplings and other trends helping, but that the bigger story is the new model of combining trend spotting, social amplification, and repeatable product storytelling. On guidance, management said Q3 and full-year assumptions are intentionally thoughtful rather than conservative, with the comp outlook still largely transaction-driven and holiday benefiting from products that were unavailable last year because of tariffs. Questions also focused on tariffs, cash deployment, and store productivity; management said lower tariff costs help in the back half, but higher fuel costs may offset the benefit, and that new store productivity is being helped by a more disciplined real estate approach.