I don't know if this is sad news or good news that that Easter candy sales are down, but where are you noticing that most. Well, it's pretty much on chocolate. People see I know.It's it's one of the biggest share compared to non candy non chocolate. So, obviously, the hit is mostly on them, and it's mostly on volumes. People are pushing back on price increases that has been have been happening for the past eighteen months, and they're being strategic about their spending.Is it because chocolate is getting m ...

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]