Five Below, Inc. Q4 FY2025 earnings call

Winnie Park stated that 2025 was a transformational year. The company achieved sales growth, had store count growth. There was a fundamental shift in operations, engaging with customers in social media, investing in curated product stories, and having better in - stock positions and a store labor model. Dan Sullivan reviewed fourth - quarter and full - year 2025 results, and discussed the outlook for fiscal 2026. The company has a customer - centric strategy with three pillars: maniacal focus on the target customer, a connected customer journey from social to in - store, and cross - functional collaboration. Marketing spend was redirected to social and creator content, the store experience was improved.

For the year 2025, sales grew 23% to over $4.7 billion, with a comp of 12.8%. Operating margin expanded by 70 basis points to nearly 10%, and adjusted EPS grew by 32%. In the fourth quarter, sales grew by 24%, including a 15.4% comparable sales increase. Adjusted gross profit in the fourth quarter increased by 24% to $697 million, with a rate of sale of 40.3%. Adjusted SG&A expenses in the fourth quarter totaled $385 million, at a rate of sale of 22.3%. Adjusted operating income in the fourth quarter grew by 23% to $313 million, and adjusted operating margin decreased by approximately 10 basis points to 18.1%. For the full year 2025, net sales increased by 23% to $4.8 billion. Adjusted gross profit increased by 25% to $1.7 billion, with a rate of sale of 36.1%. Adjusted SG&A totaled $1.2 billion in fiscal 2025, at a rate of sale of 26%. Adjusted operating income grew by 33% for the year to $472 million, and adjusted operating margin increased by 70 basis points to approximately 10%.

For fiscal 2026, sales are expected to be in the range of $5.2 billion to $5.3 billion, with a 10% increase at the midpoint. Comparable sales growth is expected to be between 3% and 5%, or approximately 17% on a two - year stack at the midpoint. Adjusted operating margin is expected to increase by 100 basis points to 10.9% at the midpoint. Adjusted diluted earnings per share is expected to be $8 at the midpoint, a 20% growth compared to 2025. Net interest income is expected to be approximately $26 million, and the full - year effective tax rate is approximately 26%. Capital expenditures are expected to be between $230 and $250 million. For the first quarter of 2026, total sales are expected to be in the range of $1.18 billion to $1.2 billion, a 23% growth at the midpoint compared to last year's first quarter. Comparable sales growth is between 14% and 16%. Gross margin benefits from fixed cost leverage, higher merchandise margins, and lower shrink. Adjusted operating margin at the midpoint is expected to be 9.7%. Adjusted diluted earnings per share at the midpoint is expected to be $1.63 per share, a 90% growth compared to last year.

Q: Matthew Boff with JP Morgan asked about drivers behind comps magnitude, structural changes, and new customer acquisition metrics.

A: Winnie Park said the crew is key, focusing on customer, connected customer journey in social media, and cross - functional collaboration.

Q: Edward Kelly with Wells Fargo asked about comp momentum and bridging quarters.

A: Winnie and Dan Sullivan discussed broad - based growth, trends, and math of comping tough growth quarters.

Q: Simeon Gutman with Morgan Stanley asked about prior strong growth periods and learnings.

A: Winnie Park mentioned seeing strong growth in prior roles, toolkit for durable growth, strong execution, and direct customer engagement.

Q: Michael Lasser with UBS asked about gross margin expansion and investment stance.

A: Dan Sullivan broke down gross margin drivers and said the company is committed to growth with investments in marketing, labor, and capital.

Q: Scott Ciccarelli with Truist Securities asked about first quarter guide conservatism.

A: Dan Sullivan said it's about context, low - volume weeks, and consumer state.

Q: Paul Adjouz with Citi asked about AUR and ticket assumptions.

A: Dan Sullivan talked about comp growth, moderation in Q2 and beyond.

Q: Robbie Ohms with Bank of America asked about first quarter storm impact and tax refunds.

A: Dan Sullivan said tax proceeds and Easter factored into first quarter guide.

Q: Chuck Grom with Gordon Haskett asked about traffic and store growth.

A: Winnie Park said growth in new and existing customers, and disciplined store growth.

Q: Zihan Ma with Bernstein asked about pricing beyond $5.

A: Winnie Park said evaluated products, relative value, and merchandise store as customers shop.

Q: Brian Nagel with Oppenheimer asked about key sales drivers in 2026.

A: Winnie Park said amplifying seeds, reacting to trends, and tariff benefits.

Q: Jeremy Hamblin with Craig Hallam Capital Group asked about tariffs and EBIT margin.

A: Dan Sullivan clarified tariff modeling and said focus on durable growth.

Q: Christina Katai with Deutsche Bank asked about six curtain - up moments.

A: Winnie Park said six moments, newness in assortments, and key categories.

Q: Anthony Chukumba with Loop Capital asked about Winnie's name.

A: Winnie Park said it's like Winnie the Pooh.

Q: David Bellinger with Mizuho asked about social media marketing economics.

A: Winnie Park said redirected spend, multi - pronged strategy.

Q: John Heinbacher with Guggenheim asked about store events and parties.

A: Winnie Park said continuing events, and thoughts on birthday parties.

Q: Michael Montani with Evercore ISI asked about tariff headwinds.

A: Dan Sullivan said offsetting tariffs at item level.

Q: Brad Thomas with KeyBank Capital Markets asked about CapEx.

A: Dan Sullivan said CapEx for new stores, distribution, and technology.

Q: Philip Lee with William Blair asked about staffing and omnichannel.

A: Winnie Park said continuing labor model, test - learn - ramp for omnichannel.

Q: Spencer Hannes with Wolf Research asked about new and existing customers.

A: Winnie Park and Dan Sullivan talked about growth in new and existing customers and comp outlook.

Q: Joel Feldman with Telsey Advisory Group asked about new store format.

A: Winnie Park said looking at new format for better shopping experience