Five Below, Inc.

What they do

Five Below opened its first store in the greater Philadelphia area in 2002 and operates small-format stores averaging about 9,500 square feet, typically in power, community and lifestyle shopping centers. Merchandise is organized across eight worlds: Candy, Style, Party, Room, Create, Tech, Sports and New & Now. The company also sells through fivebelow.com, its mobile app with home delivery and buy-online-pick-up-in-store, and on-demand third-party delivery services.

Revenue drivers

• Store base (in-store sales) — The company operated 1,921 locations across 46 states as of January 31, 2026 and 2,022 stores as of August 1, 2026; it opened 150 net new stores in fiscal 2025 and 101 net new stores in the first half of fiscal 2026.
• Comparable sales — Comparable sales increased 14.1% in Q2 fiscal 2026 and 18.3% for the year-to-date period ended August 1, 2026, driving net sales growth of 22.9% and 27.5% respectively.
• E-commerce — Sales through fivebelow.com, the mobile app and third-party delivery are included in net sales and in comparable sales, with shipping and handling revenue included.
• Trend-right merchandise assortment — Products are purchased in reaction to existing marketplace trends, described as "trend-right" and "dynamic," spanning the eight worlds and including select brands and licensed merchandise.

Recent performance

For the second quarter ended August 1, 2026, net sales rose 22.9% to $1.26 billion from $1.03 billion a year earlier, with comparable sales up 14.1%. Operating income was $275.4 million versus $52.4 million, net income was $221.4 million versus $42.8 million, and GAAP diluted EPS was $3.99 versus $0.77. Adjusted operating income was $113.2 million and adjusted diluted EPS was $1.68, compared with $55.1 million and $0.81 in the prior-year quarter. The company opened 52 net new stores in the quarter, ending with 2,022 stores in 46 states, an 8.8% increase in store count year over year, and repurchased approximately 311,000 shares for about $60.0 million.

Strategy

Management describes a customer-centric, experience-first approach built on trend-right product stories at value prices in stores that are fun and easy to shop. The company plans to open approximately 150 net new stores in fiscal 2026 and believes it can grow its store base to more than 3,500 locations over time. It continues to invest in new store growth and execution, and CEO Winnie Park cited the balance between new store growth and double-digit comparable sales growth over the past five quarters. The company raised its full-year fiscal 2026 sales and EPS outlook on September 2, 2026, and repurchased shares in the second quarter.

Risks

• Inflation and commodity costs — Five Below states that if the cost of goods changes as a result of inflation it may be unable to adjust retail prices accordingly, which could adversely impact sales or earnings.
• Tariffs on foreign imports — The company cites current and potential U.S. tariffs on foreign imports and any counter-measures, which could increase product costs, lower margins, raise import expenses and reduce discretionary consumer spending.
• Growth strategy execution — Five Below states its growth depends on opening profitable new stores and that failure to implement its growth strategy on a timely basis or at all could harm growth and results of operations.
• Supply chain and freight — Risks include disruptions to the global supply chain, increased freight costs, constraints on shipping capacity to transport inventory, and delayed receipt of inventory.

Outlook

For the third quarter of fiscal 2026, Five Below expects net sales of $1.21 billion to $1.23 billion, approximately 40 net new stores, and comparable sales of +8% to a level not fully disclosed in the excerpt provided. The company raised its full-year fiscal 2026 sales and EPS outlook, and management said the outlook includes the expected impact of tariff rates currently in place while excluding future tariff refunds and share repurchases. Management cited momentum from the first half and opportunities ahead, including the holiday season.