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CEO Winnie Park confirmed there is significant opportunity ahead, emphasizing the team's increased agility in chasing new trends and moving away from underperforming ones. She specifically highlighted personal and holiday celebrations, including the party category, as areas with future growth potential within an evolving merchandising strategy.

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CEO Winnie Park explained the 10 percentage point reduction in China sourcing for the back half was achieved by leveraging their global sourcing office, adding new domestic and international vendors, and capitalizing on current trends that are less reliant on a single country. She emphasized the team's swift, cross-functional action in response to the tariff environment.

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CEO Winnie Park explained that the balance is achieved by focusing on strong *relative* price value. For items above $5, the value is clear when compared to competitors. For items at or below $5, the company leverages its dynamic buying model, vendor partnerships, and global sourcing to flow in new, trend-right products that maintain a compelling value proposition, calling this flexibility a 'secret weapon' against tariff pressures.

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Interim President and CEO Kenneth Bull identified "product and value" as the biggest overarching opportunity, as Five Below is a merchandise-driven company. He pushed back on focusing on a single category, emphasizing that the beauty of the model is applying the new, disciplined approach across all eight of its 'worlds' to create a cumulative, store-wide impact.

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EVP & CFO Brandon Sink described FBM's customer base as diverse, with 40,000 customers and no single one accounting for more than 1% of revenue, highlighting the stable 45% residential and 55% commercial mix. President, CEO & Chairman Marvin Ellison noted the vision is to combine FBM and ADG to offer a comprehensive interior solution for large builders. Regarding guidance, Sink reiterated that the outlook assumes a flat home improvement market with gradual improvement driven by Lowe's strategic initiatives. Ellison added that pricing remains dynamic and competitive, with a focus on providing value to drive traffic.

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EVP, Merchandising, Bill Boltz stated there was no evidence of a sales pull-forward in appliances, describing the strength as a continuation of a positive trend that began in the second half of last year. CFO Brandon Sink supported this, noting the trend predates recent trade policy discussions, and the company is not seeing indications of a widespread pull-forward but will continue to monitor it.

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EVP, Merchandising Bill Boltz stated there was no significant indication of sales being pulled forward in appliances. He attributed the category's sustained strength to a trend of product innovation and a superior delivery network that can reach nearly any U.S. zip code within two days. EVP and CFO Brandon Sink supported this, noting that the acceleration in appliance unit growth began in Q3 of the previous year, well before recent trade policy discussions, suggesting the performance is based on fundamental business drivers rather than a pull-forward effect.

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CEO Jason McDonell stated that a full review of the store footprint is part of the ongoing strategic review. He explained that a formal cost-cutting plan is being developed with external support, with details to be shared in November. He stressed the importance of stores as cash-generating assets, particularly during the peak season, as a reason for the deliberate approach.

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CEO Jason McDonell explained that Q2's top-line challenge was traffic-related due to weather, but the benefit of improved in-stocks was evident in the higher conversion rate. He stated the new Uber partnership is driven by the core pillars of customer centricity and convenience, aiming to fulfill customer needs in 'minutes and hours, not days.' He also highlighted that local fulfillment via Uber offers a cost-saving alternative to shipping products across the country.

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CEO Jason McDonell responded that the company monitors states with minimum wage growth and has factored in moderate, mid-single-digit overall wage growth, noting a normalization post-COVID. Regarding store optimization, McDonell stated that while the team has a disciplined approach to evaluating all assets and potential closures or relocations as part of its asset utilization strategy, there was nothing specific to announce at this time.

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CEO Jason McDonell stated that additional investment dollars are not yet determined, as the focus is first on reallocating the existing marketing budget more efficiently using data and analytics. CFO Scott Bowman reiterated that debt paydown is the #1 capital allocation priority but declined to provide a full-year target beyond the $25 million planned for Q1, emphasizing the commitment to this goal over near-term M&A or store growth.

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CEO Lori Flees clarified that franchisee pricing can be higher due to geography and that a specific large franchisee's price adjustment was the primary driver of the comp differential. CFO J. Kevin Willis confirmed the company expects SG&A leverage to improve throughout fiscal 2026 as tech investments are lapped, but stated it was too early to provide a specific quantum for the benefit.

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CFO Mary Meixelsperger confirmed SG&A is on plan, with deleverage driven by technology investments and refranchising, and expects leverage to return going forward. On oil prices, Meixelsperger noted lubricant costs trail crude prices, and CEO Lori Flees added that Valvoline does not historically lower posted prices when input costs decline.

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CFO Mary Meixelsperger and CEO Lori Flees confirmed that underlying transaction and ticket growth remain good entering Q2, although the overall comp will be impacted by lapping initiatives and the leap day. Regarding buybacks, Meixelsperger revealed an additional $20 million was repurchased post-quarter-end, bringing the year-to-date total to around $60 million. She stated the company accelerated repurchases to capitalize on what it views as an undervalued share price.

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CFO Mary Meixelsperger attributed the Q4 comp softness to one-off events like the Crowdstrike outage and hurricanes, expecting a rebound. CEO Lori Flees explained the pause on updating the long-term comp guide is due to political and economic uncertainties like potential tariffs and labor market changes. Meixelsperger noted the FY25 margin outlook reflects a conservative view on costs and significant G&A investments in technology and talent to scale the business for future growth.

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CFO Kate Gulliver noted solid Q2 growth and continued momentum into Q3, driven by order volume rather than price increases, which she attributed to the competitive marketplace model. CEO Niraj Shah detailed that GenAI is improving search, product descriptions, and imagery, with more rich, engaging content and discovery features in development.

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President Bradley Paulsen attributed Spartan's success to a strategic shift in focus toward higher-specification sectors like healthcare, education, and hospitality, and away from multifamily. He also credited the addition of talented sales personnel, which is yielding nice returns on investment. CEO Tom Taylor previously noted the company is pleased with Spartan's trajectory and book of bids.

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CFO Bryan Langley clarified the guidance assumes universal tariffs remain in place for the rest of the year, but reciprocal tariffs would primarily impact 2026 due to inventory lead times. CEO Tom Taylor explained that the sourcing shift is not to one or two specific countries but is spread globally. He highlighted that the U.S. is now their largest manufacturing country at 27% of sales and that the company has increased its total number of vendors and countries it sources from, demonstrating a broad-based diversification strategy.

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Executive VP & CFO Kurt Barton explained the decision reflects prudent capital allocation in a higher interest rate environment. Capital is being shifted to support inventory, particularly with the impact of tariffs. He emphasized that the move is consistent with their opportunistic buyback strategy and their target of retiring 1-2% of shares annually, and it does not change the full-year EPS guidance.

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CFO Kurt Barton stated the Q4 gross margin performance was in line with expectations, coming up against a 129 basis point expansion in the prior year. He noted that while promotions were up, vendor partnerships helped offset the impact, and the slight decline was mainly due to minor factors like product mix. For 2025, he forecasts modestly higher gross margin performance in the first half, as the company will begin to lap recent transportation efficiencies around mid-year.

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EVP and CFO Enrique Mayor-Mora confirmed that efficiency gains enable the marketing push, making the company more confident in advertising its differentiated experience. President & CEO Bill Nash added that recent experience enhancements, like order processing, make it the right time to highlight CarMax's superior omni-channel offerings.

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SVP Jon Daniels characterized the lending environment as 'steady as she goes,' with partners remaining careful. CFO Enrique Mayor-Mora affirmed that CarMax is now positioned to 'harvest' past investments, suggesting strong operating leverage is achievable and that the company aims for robust top and bottom-line growth.

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SVP Jon Daniels suggested that lower Tier 3 volume is more an issue of consumer affordability than just lender tightening. President & CEO William Nash added that they feel good about their proactive measures and see future opportunity as lower-income consumer participation is still below historical levels. Regarding digital tools, Mr. Nash confirmed the new order processing system is fully rolled out, creating a more seamless experience, and noted that while it's early to quantify, overall conversion was up in stores and CECs.

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CFO David Aufderhaar explained that the significant AOV growth was primarily driven by the increased penetration of larger Fixes (6-8 items), which more than doubled from Q1 to Q3. While this momentum is expected to continue, he cautioned about tougher year-over-year comps in FY26. Regarding advertising, Aufderhaar stated that a further increase in ad spend is not necessary to achieve active client growth, citing positive trends in acquisition and re-engagement. He noted that spending follows a CAC-to-LTV model and is seasonally higher in Q1 and Q3.

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CFO John David Rainey expressed confidence in landing the year within the guided range, despite short-term volatility from tariffs and accounting impacts, citing the team's ability to manage the situation. International CEO Kathryn McLay described the international quarter as a 'good result' with room for improvement, noting some market weakness but also strategic investments. She reaffirmed the full-year goal of growing international profit faster than sales.

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CEO John Lai stated that while competitive intrusion is slowing, strong execution is still required to win business, noting that impacted stores typically rebound and outperform within two years. CFO Jedidiah Gold provided data showing fewer new competitor openings. Gold also explained that the UWC mix decline is a positive sign, driven by strong retail growth, which in turn fuels new member sign-ups.

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CFO Jed Gold attributed the Q4 outperformance to favorable weather, particularly in October, which drove strong retail and a double-digit total comp for that month. He noted January was similarly strong. Regarding Titanium, Gold explained the Q3 peak was aided by promotions and some members churned post-promo. While they see long-term opportunity, the 2025 guide does not assume significant further penetration. CEO John Lai added that 60% of members are now in premium tiers.

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Executive John Lai stated that while marketing initiatives likely had some impact, it was difficult to quantify, and favorable weather creating pent-up demand was a significant factor. Executive Jedidiah Gold clarified that the change in CapEx guidance was purely due to the timing of spending and did not reflect a change in new store build costs or the development pipeline.

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CEO Sumit Singh attributed the strong active customer growth to enhanced marketing execution, including a rebuilt internal bidding model, which capitalized on Q4's seasonal shopping intent. Executive David Reeder clarified that Q4 gross margin performance was in line with internal expectations and that the drivers for margin expansion in fiscal 2025 are expected to be similar to those in 2024, with contributions from both gross margin improvements and operating expense leverage.

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CEO Sumit Singh described ramping up the mobile app's revenue share to the 40-45% level as a multi-year effort, highlighting benefits like higher AOV, better retention, and superior cross-category attachment. Executive David Reeder clarified that the new IT project is a capability-enhancing migration of planning engines to a new suite for improved analytics and AI application, confirming it has no material P&L impact and is not correcting any system deficiencies.

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CFO David Reeder clarified that normalized gross margin expanded 60 basis points year-over-year, driven by sponsored ads, product mix accretion, and fixed cost absorption, with no weakening in the core business. He explained that lower Q1 advertising spend was due to campaign timing and that the company still expects to deliver SG&A leverage for the full year, with advertising expense normalizing to 6.7-6.8% of sales.

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CFO David Reeder clarified that on a normalized basis, gross margin expanded by 60 basis points year-over-year and is expected to improve sequentially in Q2. He identified sponsored ads and product mix as the primary drivers. Regarding OpEx, he stated that lower Q1 advertising spend was a matter of timing and that the full-year expense rate is expected to align with prior years, at 6.7-6.8% of net sales.

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CFO David Reeder clarified that on a normalized basis, gross margin expanded 60 basis points year-over-year, primarily driven by sponsored ads and product mix, not weakened by promotions. He stated that lower advertising spend in Q1 was due to campaign timing and that full-year ad spend is expected to align with prior years at 6.7-6.8% of sales, with OpEx leverage continuing through the year.

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CFO David Reeder explained that normalized gross margin expanded by 60 basis points year-over-year, primarily driven by sponsored ads, followed by favorable product mix and fixed cost absorption. Regarding OpEx, he noted that lower Q1 advertising spend was due to campaign timing and that the full-year rate is expected to align with prior years at 6.7-6.8% of sales.

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CFO David Reeder explained that on a normalized basis, gross margin expanded by 60 basis points year-over-year, driven primarily by sponsored ads, followed by product mix and fixed cost absorption. Regarding operating expenses, he noted that lower Q1 advertising spend was due to timing and that for the full year, advertising is expected to be in line with prior years, with leverage coming from other SG&A lines.

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CFO David Reeder explained that on a normalized basis, gross margin expanded 60 bps year-over-year, driven by sponsored ads and product mix, not weakened by promotions. He expects sequential gross margin improvement in Q2. Regarding OpEx, he noted that lower Q1 advertising spend was a matter of timing and that full-year ad spend will be consistent with prior years.

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Executive Philip Daniele stated that to date, there is no empirical evidence of a sales impact similar to the 'Hispanic hibernation' of 2017. He explained that the new distribution centers will enhance supply chain efficiency, with the Virginia DC adding direct import capacity and the California DC improving distribution of slower-moving parts, ultimately getting products to stores faster.

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Executive Philip Daniele explained that in large metro areas, adding multiple Mega-Hubs reduces delivery times and boosts sales with minimal cannibalization. He clarified that the deeper assortment consists mainly of hard parts, which reduces delivery times from hours to under an hour, benefiting both commercial and DIY customers.

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President Brent Kirby described the use of goods-to-person automation in recent DC relocations as an 'evolution of distribution technology' rather than a one-size-fits-all strategy, emphasizing that each facility is optimized for its specific market. On energy costs, CFO Jeremy Fletcher explained that fuel prices are not a significant driver of SG&A, stating that prices must move substantially to have a material impact on company-wide results.

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