Five Below (NASDAQ:FIVE) closed fiscal 2025 with what management described as a “transformational” year, highlighted by strong holiday demand, broad-based comparable sales gains, and margin expansion. On the company’s fourth quarter earnings call, CEO Winnie Park and CFO Dan Sullivan attributed the performance to a sharper focus on core customers, a revamped go-to-market process centered on “curtain up” product moments, improved in-stocks and in-store execution, and a marketing shift toward social media and creator content.
Fourth-quarter results topped expectations
In the fourth quarter, Five Below reported net sales of $1.7 billion, up 24% year over year, supported by a comparable sales increase of just over 15%. Sullivan said the comp was driven by comparable ticket growth of 8% and comparable transactions growth of 7%, with momentum extending into January as stronger traffic “converted well” and basket size increased, fueled by average unit retail (AUR) expansion.
Adjusted SG&A was $385 million, or 22.3% of sales, flat as a rate compared to the prior year. Fixed cost leverage offset higher incentive costs and incremental store labor hours added during the holiday peak. Adjusted operating income rose 23% to $313 million, with adjusted operating margin down about 10 basis points to 18.1%.
Adjusted EPS increased 24% to $4.31, with net interest income of about $6 million, aided by higher average cash balances.
Fiscal 2025: strong comps, margin expansion, and store growth
For the full year, Five Below posted net sales of $4.8 billion, up 23%, driven by a comparable sales increase of nearly 13%. Sullivan said the annual comp was “largely equally driven by both transactions and ticket growth.” Adjusted operating income grew 33% to $472 million, and adjusted operating margin improved about 70 basis points to approximately 10%. Adjusted EPS rose 32% to $6.67.
The company ended fiscal 2025 with about $932 million in cash, equivalents, and investments. Inventory finished at approximately $847 million, up 28% in dollars and 18% in units, reflecting a higher store count and tariff impacts on average unit costs. Sullivan said average per-store units were up about 9% as the company pulled forward inventory and prioritized improved in-stocks.
Five Below opened 150 net new stores in fiscal 2025, growing store count 8.5% to 1,921 locations in 46 states. Park highlighted strong results from eight “record-breaking” grand openings in the Pacific Northwest during the fourth quarter, and Sullivan noted the company entered two new states, Oregon and Washington.
Strategy shift: customer focus, social-first marketing, and “curtain up” execution
Park said the company’s updated strategy is built on three pillars: a “maniacal focus” on its target customer, delivering a connected customer journey from social media to stores, and increased cross-functional collaboration to improve execution. Management said the target customer has been sharpened to Gen Alpha, Gen Z, and millennial moms.
Park emphasized that Five Below is leaning into social media to communicate product “newness” and amplify viral trends, citing the “squishy dumpling craze” and other trend moments. The company has also begun building a customer database to support targeted communications and expand CRM capabilities, which Park said is still in “very early innings.”
Operationally, Park said the company aligned merchandising, marketing, supply chain, IT, and stores around six “curtain up moments,” described as major floor set and seasonal storytelling events. She said the cross-functional process is designed to improve the flow of content and newness, strengthen in-stock positions, and enhance in-store experiences, including events.
In stores, management said improved in-stocks and a labor model aimed at replenishment and serving customers during peak periods helped support conversion and customer experience. Park also said Five Below has begun moving “Five Beyond” products into the aisles alongside related categories to simplify shopping and highlight “wow value” items.
Pricing and assortment: value at $5 and beyond
Park reiterated that value remains central, stating that $5-and-below represents about 80% of units sold. At the same time, she said the company is seeing strong customer receptivity to expanded price points such as $7, $10, $15, and higher, supported by a “simplified pricing strategy” using more rounded price points.
Park said the company evaluated items individually to ensure products priced above $5 “deserve” the higher price, citing holiday gift sets and bundles at $10 as an example. She also emphasized a focus on relative value versus competition and said placement of higher-priced items within relevant store categories (rather than a separate back-of-store zone) has helped customers recognize value.
Outlook: measured 2026 guidance amid macro uncertainty
Sullivan described the macro backdrop as “highly dynamic and increasingly complex,” citing geopolitical uncertainty and pressure on consumers, and said the company took a “measured, prudent” approach to guidance. For fiscal 2026, Five Below expects:
- Sales of $5.2 billion to $5.3 billion
- Comparable sales growth of 3% to 5%
- Adjusted operating margin of 10.9% at the midpoint (up 100 basis points)
- Adjusted EPS of $8.00 at the midpoint (about 20% growth), based on 55.7 million shares outstanding
- Capital expenditures of $230 million to $250 million, excluding tenant allowances, supporting about 150 net new stores plus technology and infrastructure investments
Sullivan said the guidance assumes tariff rates in place at the start of the fiscal year (February 1) remain in place all year and does not include the impact of recently enacted Section 122 tariffs, which are in place for 150 days. He also said the company’s outlook does not include the impact of share repurchases.
For the first quarter of fiscal 2026, the company guided for sales of $1.18 billion to $1.2 billion and comparable sales growth of 14% to 16%. Sullivan said the first quarter is expected to be the highest comping quarter of the year, partly due to unanniversary benefits from the rounded price simplification implemented last year. Adjusted operating margin is expected to be 9.7% at the midpoint, compared with 6.1% in the year-ago quarter, and adjusted EPS is expected to be $1.63 at the midpoint. The company expects to open about 45 net new stores across 24 states in the quarter.
In Q&A, Sullivan noted that the company is only seven to eight weeks into the quarter, with relatively low-volume weeks behind it, and said Easter remains a key selling period. He also said tax refunds arrived earlier than prior years and have been favorable to early-quarter results.
Management repeatedly pointed to the durability of the model, citing broad-based comps across merchandise “worlds,” growth across districts and income cohorts, and continued gains from both new and repeat customers. Park said the company plans to run six curtain up moments again in 2026, while layering newness between those seasonal events and leaning into categories such as games, toys, crafts, beauty, accessories, and “room and dorm.”
About Five Below (NASDAQ:FIVE)
Five Below, Inc (NASDAQ:FIVE) is an American specialty discount retailer offering a broad assortment of merchandise priced primarily at $5 or below. Since its founding in 2002 by David Schlessinger and Tom Vellios, the company has pursued a value-focused retail model targeting tweens, teens and beyond, with stores designed to deliver trend-driven products at an accessible price point. Headquartered in Philadelphia, Pennsylvania, Five Below has grown into a national chain operating in dozens of U.S.
