Group 1 - Five Below reported better-than-expected Q1 results, prompting UBS to raise its target price to $160, which is 25% higher than the average analyst expectation of $128 [1] - The strong performance of Five Below was driven by increased foot traffic, sustained growth in transaction volume, and enhanced product appeal, particularly in categories like collectibles, candy, beauty, and select apparel [1] - The company is adopting a conservative growth forecast for the year, anticipating same-store sales growth of 3%-5%, while planning to adjust prices on 15% of its products, ensuring that 80% remain under $5 [1] Group 2 - UBS highlighted that Five Below's 6.2% year-over-year increase in transaction volume sets a benchmark in the industry, with few retailers like Costco and Sprouts Farmers Market achieving similar growth [2] - Following the positive report, Five Below's stock rose over 5% on Thursday, with a year-to-date increase exceeding 20% [2]

Core Viewpoint - Five Below reported strong first-quarter results for fiscal 2025, with significant revenue and earnings growth despite macroeconomic challenges [3][4]. Financial Performance - Revenue increased from $811.9 million in Q1 FY24 to $970.5 million in Q1 FY25, representing a growth of 19.5% and beating expectations [2]. - Adjusted earnings per share rose from $0.60 to $0.86, marking a 43% increase and also surpassing analyst estimates [2]. - Comparable sales growth improved from a decline of 2.3% to an increase of 7.1%, a positive change of 9.4 percentage points [2]. Store Operations - Five Below opened 55 new stores in the first quarter, which is a 10% decrease compared to the previous year [2]. - The new stores are reportedly performing well, contributing to the overall positive sales growth [3]. Future Outlook - For Q2 FY25, Five Below anticipates opening around 30 net new stores and expects comparable sales growth between 7% and 9% [5]. - Total revenue for Q2 is projected to be between $975 million and $995 million, with adjusted EPS expected to range from $0.50 to $0.62 [5]. - For the full fiscal year, the company forecasts comparable sales growth of 3% to 5%, 150 net new stores, total revenue between $4.33 billion and $4.42 billion, and adjusted EPS between $4.25 and $4.72 [5]. Market Reaction - Following the release of the first-quarter report, Five Below's share prices rose approximately 2% in after-hours trading, reflecting positive investor sentiment due to the earnings beat and solid Q2 outlook [8]. Economic Context - The company is currently managing tariffs and global economic uncertainty, which have not significantly impacted its business thus far [4]. - Five Below sources about 60% of its purchases from domestic vendors, although the exposure of these vendors to tariffs remains uncertain [9].

Store Operations - As of May 3, 2025, the company operated 1,826 stores across 44 states[81]. - The company emphasizes the importance of opening new stores as a significant part of its growth strategy[92]. - The company plans to make cash capital expenditures of approximately $210 million to $230 million in fiscal 2025, primarily for new store openings[114]. Sales Performance - The company reported that net sales are typically highest in the fourth fiscal quarter due to the year-end holiday season[86]. - Net sales increased to $970.5 million for the thirteen weeks ended May 3, 2025, up 19.5% from $811.9 million in the prior year[105]. - Comparable sales rose by 7.1%, driven by a 6.2% increase in the number of transactions and a 0.9% increase in the average dollar value of transactions[106]. - E-commerce sales are included in net sales and comparable sales, reflecting the company's strategy to enhance online presence[82]. - The company acknowledges that its business is seasonal, impacting net sales fluctuations throughout the fiscal year[86]. Cost and Profitability - Gross profit is calculated as net sales minus cost of goods sold, with gross margin being gross profit as a percentage of net sales[95]. - Cost of goods sold increased to $646.6 million, a rise of 17.9% from $548.3 million, primarily due to higher merchandise costs associated with increased net sales[107]. - Gross profit increased to $323.9 million, up 22.9% from $263.5 million, with gross margin improving to 33.4% from 32.5%[108]. - Selling, general and administrative expenses rose to $273.1 million, an increase of 20.1% from $227.4 million, representing 28.1% of net sales[109]. - Operating income is defined as gross profit minus SG&A expenses, serving as an indicator of business productivity[100]. Financial Health - Net income increased to $41.1 million, a 30.8% rise from $31.5 million in the prior year[112]. - Cash provided by operating activities was $132.7 million, an increase of $106.3 million compared to the previous year[121]. - As of May 3, 2025, the company had approximately $225 million available on its Revolving Credit Facility[135]. - The Board of Directors approved a new share repurchase program for up to $100 million of common stock through November 27, 2026[117]. Risks and Challenges - The company faces risks including inflation, supply chain disruptions, and increased competition from other retailers[78]. - SG&A expenses are expected to increase in future periods due to ongoing store growth and variability in performance-based compensation[99].

Core Insights - Five Below, Inc. (FIVE) reported strong first-quarter fiscal 2025 results, with both net sales and earnings exceeding expectations, leading to a 4.6% increase in share price during after-market trading [1][2]. Financial Performance - Adjusted earnings per share (EPS) for Q1 were 86 cents, surpassing the Zacks Consensus Estimate of 83 cents, and reflecting a 43.3% increase from 60 cents in the same quarter last year [2]. - Net sales reached $970.5 million, a 19.5% year-over-year increase, also exceeding the Zacks Consensus Estimate of $968 million. Comparable sales grew by 7.1% year over year [2]. - Adjusted gross profit increased by 24.6% year over year to $328.4 million, with the adjusted gross margin rising approximately 130 basis points to 33.8% [3][4]. Cost Management - Selling, general and administrative (SG&A) costs rose 19.1% to $226.5 million, but as a percentage of net sales, SG&A costs decreased by approximately 10 basis points to 23.3% [3]. Operational Metrics - Adjusted operating income was $59.6 million, up from $38.1 million in Q1 of fiscal 2024, with an adjusted operating margin increase of approximately 140 basis points to 6.1% [4]. - The company opened 55 net new stores, bringing the total to 1,826 stores across 44 states, marking a 13.8% increase from the previous year [6]. Future Outlook - For Q2 fiscal 2025, Five Below anticipates net sales between $975 million and $995 million, indicating a 7-9% increase in comparable sales [7]. - The updated fiscal 2025 outlook projects net sales of $4.33-$4.42 billion, an increase from the previous estimate of $4.21-$4.33 billion, with expected net income between $223 million and $249 million [12][13]. - Adjusted EPS for fiscal 2025 is expected to be between $4.25 and $4.72, up from earlier projections [14].

Market Overview - Major market indexes showed mixed performance with the Dow closing down by 0.18%, S&P 500 up by 0.01%, Nasdaq up by 0.32%, and Russell 2000 down by 0.08% [2] - The market activity was influenced by a weaker-than-expected private-sector payrolls report and ongoing trade uncertainties [1][2] Economic Indicators - The Federal Reserve's Beige Book for May indicated a slight economic slowdown, with half of the 12 regions reporting negative growth [3] - Economic activity increased in Richmond, Atlanta, and Chicago, while other regions remained flat or showed declines [4] - All districts reported increased economic and policy uncertainty, with manufacturing activity slowing down [4] Services Sector Performance - S&P Services PMI for May improved to 53.7 from 50.8 in the previous month, while ISM Services dipped to 49.9, indicating a contraction [5][6] - The S&P PMI reflects a stable domestic business environment, whereas ISM Services showed shrinking orders and inventories with rising prices [6] Company Earnings - Five Below reported Q1 earnings of 86 cents per share, exceeding the Zacks consensus of 83 cents, with revenues of $970.5 million, surpassing expectations [7] - Comparable store sales increased by 7.1%, and Q2 guidance for comps is set between 5-7% [7] - The company raised its lower end of earnings guidance for the full year, despite a leadership change with the COO stepping down [8] Upcoming Economic Data - Jobless Claims data will be released tomorrow, following an unexpected rise in JOLTS job openings to 7.4 million [9] - An update on the April U.S. trade deficit is expected, with projections indicating an improvement to -$63.3 billion from -$140.5 billion [9]

Core Insights - Five Below reported revenue of $970.53 million for the quarter ended April 2025, reflecting a year-over-year increase of 19.5% [1] - The company's EPS for the quarter was $0.86, up from $0.60 in the same quarter last year [1] - Revenue exceeded the Zacks Consensus Estimate of $967.56 million by 0.31%, while EPS surpassed the consensus estimate of $0.83 by 3.61% [1] Performance Metrics - Comparable sales growth was 7.1%, outperforming the estimated 5.9% by analysts [4] - Total stores at the end of the period reached 1,826, slightly above the estimated 1,825 [4] - New store openings totaled 55, exceeding the estimate of 53 [4] Stock Performance - Five Below's shares have returned +50.8% over the past month, significantly outperforming the Zacks S&P 500 composite's +5.2% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Group 1 - Five Below reported quarterly earnings of $0.86 per share, exceeding the Zacks Consensus Estimate of $0.83 per share, and up from $0.60 per share a year ago, representing an earnings surprise of 3.61% [1] - The company posted revenues of $970.53 million for the quarter ended April 2025, surpassing the Zacks Consensus Estimate by 0.31%, and an increase from $811.86 million year-over-year [2] - Five Below has outperformed the S&P 500 with a 16.4% gain since the beginning of the year compared to the S&P 500's 1.5% gain [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is $0.54 on revenues of $954.74 million, and for the current fiscal year, it is $4.76 on revenues of $4.38 billion [7] - The Zacks Industry Rank for Retail - Miscellaneous is in the top 19% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

Financial Data and Key Metrics Changes - Total sales in Q1 2025 increased by 19.5% to $970.5 million from $811.9 million in Q1 2024 [22] - Comparable sales rose by 7.1%, driven by a 6.2% increase in transactions and a 0.9% increase in average ticket size [22] - Adjusted EPS for Q1 2025 was $0.86 compared to $0.60 in Q1 2024 [25] - Adjusted operating income increased to $59.6 million from $38.1 million in the previous year [24] - Adjusted gross margin improved by approximately 140 basis points to 33.8% [23] Business Line Data and Key Metrics Changes - The company opened 55 new stores in Q1 2025, compared to 61 in Q1 2024, ending the quarter with 1,826 stores, a 13.8% increase year-over-year [23] - New stores showed productivity at 87%, slightly above the targeted mid-80s range [23] - Inventory at the end of Q1 2025 was approximately $702 million, up from $630 million in Q1 2024, with average inventory per store decreasing by about 2% [26] Market Data and Key Metrics Changes - The company experienced broad-based outperformance across most product categories, particularly in beauty, novelty food, and collectibles [10][13] - The focus on customer-centric strategies has validated the company's market position as a resource for fun and great value [11] Company Strategy and Development Direction - The company aims to enhance customer experience through product value and store experience, positioning itself as a destination for both kids and parents [8] - Plans include vendor negotiations, diversification of sourcing, and adjustments in pricing strategies to mitigate tariff impacts [16][17] - The company is committed to maintaining a strong in-stock position in key areas like tech products [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties while focusing on executional excellence [18] - The tariff environment presents challenges, but the company is actively working on mitigation strategies [16] - Management anticipates continued sales growth and improved customer engagement through enhanced store experiences and marketing efforts [15][19] Other Important Information - The CFO announced her departure for personal reasons, with an interim CFO appointed while a national search for a new CFO is underway [20] - The company has reduced its reliance on Chinese sourcing by approximately 10 percentage points for the back half of the year [17][99] Q&A Session Summary Question: How much of the comp cadence improvement is attributed to Five Below's actions versus other factors? - Management attributed the sales momentum to the team's hard work, effective product selection, and improved in-store execution [35][36] Question: Are you seeing new customer acquisition or basket build from existing customers? - The company reported a 6.2% increase in transactions, with growth in both new and returning customers contributing to the business [43] Question: Can you unpack the annual compression in operating margins? - Management indicated that tariff-related costs and higher incentive compensation are driving the expected operating margin compression [50][56] Question: How is the company addressing pricing complexity due to tariffs? - The company is simplifying pricing while maintaining a focus on delivering value, with adjustments made to about 15% of SKUs [62] Question: What is the company's strategy for sourcing and reducing reliance on China? - The company is diversifying its vendor base and sourcing from multiple countries to mitigate tariff impacts and improve agility [99][100]

Financial Data and Key Metrics Changes - Total sales in Q1 2025 increased by 19.5% to $970.5 million from $811.9 million in Q1 2024 [19] - Comparable sales increased by 7.1%, driven by a 6.2% increase in transactions and a 0.9% increase in ticket size [19] - Adjusted EPS for Q1 2025 was $0.86 compared to $0.60 in Q1 2024 [22] - Adjusted operating income rose to $59.6 million from $38.1 million in the previous year [21] - Adjusted gross profit increased by 246% to $328.4 million, with adjusted gross margin rising by approximately 140 basis points to 33.8% [20] Business Line Data and Key Metrics Changes - The company opened 55 new stores in Q1 2025, compared to 61 in Q1 2024, ending the quarter with 1,826 stores, a 13.8% increase year-over-year [20] - New stores showed productivity at 87%, slightly above the targeted mid-80s range [20] - The focus on product assortment included licensed products for Easter and spring break essentials, contributing to sales growth [10][11] Market Data and Key Metrics Changes - The company reported broad-based outperformance across most product categories, indicating strong customer validation of its market position [8] - Inventory levels at the end of Q1 2025 were approximately $702 million, up from $630 million in Q1 2024, with a 2% decrease in average inventory per store [22] Company Strategy and Development Direction - The company aims to enhance customer experience through a focus on product, value, and store experience, positioning itself as a destination for both kids and parents [5][9] - Plans to mitigate tariff impacts include vendor negotiations, diversification of sourcing, and pricing adjustments, with a goal to reduce reliance on Chinese sourcing by 10 percentage points [13][95] - The company is committed to maintaining a strong in-stock position and improving store experience through increased labor hours and operational efficiencies [11][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategies and the positive momentum observed in sales, while acknowledging macroeconomic uncertainties [33] - The company anticipates total sales for Q2 2025 to be between $975 million and $995 million, reflecting an 18.7% growth at the midpoint compared to Q2 2024 [25] - For the full year, sales guidance has been increased to a range of $4.33 billion to $4.42 billion, with comparable sales expected to rise by 3% to 5% [27] Other Important Information - The CFO announced her departure for personal reasons, with an interim CFO appointed while a national search for a new CFO is underway [15][16] - The company is focused on maintaining a strong cash position, ending Q1 2025 with approximately $624 million in cash and no debt [22] Q&A Session Summary Question: How much of the comp strength is attributed to actions taken by Five Below versus other factors? - Management attributed the sales momentum to the hard work of the teams and effective product selection, storytelling, and improved inventory flow [30][31] Question: Are you seeing new customer acquisition or basket build from existing customers? - The company reported a lift in transactions, with growth in both new and returning customers contributing to the business [37][38] Question: Can you unpack the annual compression in operating margins? - Management indicated that the operating margin compression is primarily due to tariff-related costs and higher incentive compensation, with a focus on maintaining sales guidance [44][50] Question: What is the end goal for reducing reliance on China for sourcing? - The company aims to further reduce sourcing from China while diversifying its vendor base and leveraging global sourcing offices [94][95] Question: How has the de minimis exemption impacted competition? - Management noted that the impact of the de minimis exemption on their business is unclear, but they believe Five Below's unique focus on kids mitigates any significant effects [105]

Financial Performance - Q1 net sales increased by 19.5% to $970.5 million, with comparable sales rising by 7.1%[6] - Q1 GAAP diluted EPS was $0.75, while adjusted diluted EPS was $0.86, compared to $0.57 and $0.60 in Q1 fiscal 2024 respectively[6] - Operating income for Q1 was $50.8 million, up from $36.2 million in Q1 fiscal 2024; adjusted operating income was $59.6 million compared to $38.1 million[6] - Net income for Q1 was $41.1 million, an increase from $31.5 million in Q1 fiscal 2024; adjusted net income was $47.5 million compared to $33.0 million[6] - Net income increased to $41,148, up 30.8% from $31,467 year-over-year[20] - Adjusted net income for the period was $47,505, compared to $32,977 in the prior year, reflecting a 43.7% increase[26] - Basic and diluted income per common share rose to $0.75, a 31.6% increase from $0.57 in the same quarter last year[20] - Adjusted diluted income per common share was $0.86, up from $0.60 in the same quarter last year, reflecting a 43.3% increase[27] Store Expansion - The company opened 55 new stores, ending the quarter with 1,826 stores, representing a 13.8% increase in store count from Q1 fiscal 2024[6] Cash Flow and Assets - Net cash provided by operating activities was $132,662, significantly higher than $26,439 in the same period last year[22] - Cash and cash equivalents at the end of the period were $427,462, up from $96,308 at the end of the same period last year[22] - The company reported a net increase in cash and cash equivalents of $95,744, compared to a decrease of $83,441 in the same period last year[22] Guidance and Projections - The company expects Q2 net sales to be between $975 million and $995 million, with a comparable sales increase of approximately 7% to 9%[13] - Full year net sales guidance is projected to be between $4.33 billion and $4.42 billion, with an expected comparable sales increase of 3% to 5%[13] - Full year net income is expected to range from $223 million to $249 million, with adjusted net income projected between $235 million and $261 million[13] Tax and CFO Transition - The effective tax rate for Q1 was 27.2%, up from 23.5% in Q1 fiscal 2024[6] - The company announced a CFO transition, with COO Ken Bull serving as interim CFO during the search for a new CFO[4]