Five Below Q2 Earnings Call Highlights

Five Below NASDAQ: FIVE reported second-quarter fiscal 2026 results that exceeded its expectations, with sales rising 23% to $1.3 billion and adjusted diluted earnings per share more than doubling to $1.68. Chief Executive Officer Winnie Park said the retailer’s performance reflected progress in its customer-focused strategy, which emphasizes trend-driven merchandise, social and digital marketing, simplified pricing, and a more engaging store experience. The company raised its full-year outlook following strong first-half results and an improved view of the second half. Comparable sales increased more than 14% in the quarter, marking Five Below’s fifth consecutive quarter of double-digit comparable-sales growth. The two-year comparable-sales stack was 26.5%. Sales growth was driven primarily by transaction gains, including robust traffic, as well as approximately 9% unit growth. Park said growth was broad-based across customer groups, regions and merchandise categories, including room decor, toys, technology and snacks. She pointed to customer response to new products and trends, such as Asian snacks, slime, craft products and the retailer’s squishy collections. Chief Financial Officer and Treasurer Dan Sullivan said the company’s outperformance versus its prior outlook was driven by stronger-than-expected transaction growth, continued demand for trend merchandise, improved in-stock positions and better-than-anticipated performance during seasonal and cultural moments including the Fourth of July, the World Cup and early back-to-school shopping. Five Below opened 52 net new stores across 26 states during the quarter, compared with 32 net new stores in the year-earlier period, ending the quarter with 2,022 locations. The company opened its 2,000th store in July and entered its 47th state, Idaho, in August. Park also announced plans to enter Puerto Rico in the second half of 2027, initially with a handful of stores. The company said it sees a strong customer fit and attractive real estate opportunities in the U.S. territory. Adjusted gross profit rose 31% to $449 million, while adjusted gross margin expanded about 220 basis points to 35.6% of sales. Sullivan attributed the improvement to merchandise margin expansion, leverage of fixed costs on strong comparable sales, and an improved shrink reserve rate based on 2025 physical inventory results. Higher fuel costs partially offset those gains. Adjusted selling, general and administrative expense was $336 million, or 26.6% of s...