Five Below, Inc. Q2 FY2025 earnings call

• Achieved first $1 billion sales quarter outside of Q4, with total sales up ~24% and comparable sales up 12.4%.
• Comparable transactions increased 8.7%. Adjusted EPS rose to $0.81 due to strong fixed cost leverage and disciplined expense management.
• Opened 32 net new stores across 21 states, with new stores like Reading, California, and Columbia, Tennessee among top openings.
• Strategies driving results: curating relevant assortment, simplifying pricing to whole price points, improving in stocks and inventory flow, and initiating marketing campaigns with creator content.

Total sales in the second quarter of 2025 increased nearly 24% to over $1 billion, with comparable sales up 12.4% and comparable transactions up 8.7%. Adjusted EPS rose 50% to $0.81. The company grew its store base by 32 net new stores across 21 states. Adjusted gross profit increased 26% to $343.3 million, with adjusted gross margin at 33.4%. Adjusted SG&A was 28.1% of sales, down 20 basis points, leading to adjusted operating income growing nearly 50% to $55.1 million.

• For fiscal 2025, total sales expected to be in $4,440,000,000 to $4,520,000,000 range with comparable sales up 5%-7%. Adjusted operating margin midpoint increased to ~7.9%. Adjusted diluted EPS expected $4.7 to $5.16.
• Q3 2025: Total sales guidance range not specified, comparable sales expected up 5-7%, expect to open ~50 net new stores. Adjusted operating margin midpoint expected 5.4%, adjusted net income expected $6.7M to $13.2M, adjusted diluted EPS $0.12 to $0.24.
• Full year 2025: Sales guidance increased due to better than expected Q2 performance. Net interest income expected ~$19M, effective tax rate ~26%.

• Tariff environment volatility, which impacts gross margin. Management working to optimize inventory and receipt flow.
• Consumer uncertainty, especially in a competitive retail landscape. Impact on sales and traffic not fully known but managed through differentiated in-store experience.
• Shrinkage management, with ongoing physical inventory counts and initiatives to address, currently in progress during Q3.

Q: Edward Kelly from Wells Fargo asked about holiday assortments and Q4 guidance.

A: Winnie Park discussed exciting holiday assortments focusing on gifting, lounge, decor, etc. Ken Bull mentioned Q4 implied comp is mid single digits, unchanged from年初 plan.

Q: Michael Lasser from Morgan Stanley asked about trend vs price simplification driving success.

A: Winnie Park said there was a flywheel effect with curated assortment, execution of in stocks and inventory flow, and price simplification working together.

Q: Simeon Gutman from Morgan Stanley asked about boiling down success drivers.

A: Winnie Park cited balance of curated assortment, execution, and price simplification as key drivers.

Q: Kate McShane from Goldman Sachs asked about licensing role and SKU rationalization.

A: Winnie Park said licensing is key, with success in back to school licensed backpacks, and SKU rationalization is ongoing with fewer, bigger, better product statements.

Q: Chuck Grom from Gordon Haskett asked about store growth reacceleration and ticket increase breakdown.

A: Winnie Park talked about selective new store criteria, and Ken Bull said Q2 ticket increase was mostly from average unit retail (AUR) due to price adjustments.