Executive Summary

Q1 2026 delivered a clean beat on revenue and EPS, driven by broad-based merchandising strength and transaction-led comps; net sales rose 19.5% to $970.5M, comps +7.1%, GAAP EPS $0.75, adjusted EPS $0.86 . EPS and revenue were modest beats vs consensus (EPS $0.86 vs $0.83*, revenue $970.5M vs $966.5M*) and the company raised full-year sales guidance while lifting the low end of EPS guidance .*
Management emphasized execution on product newness, value, improved in-stock positions, and pricing simplification; comps were transaction-driven (+6.2%) with conversion improvements, underpinned by store labor and operational changes .
Tariffs are a key headwind; mitigation includes vendor negotiations, sourcing diversification (China mix cut by ~10 percentage points in H2), and SKU-level price adjustments while maintaining 80% of units at $5 and below .
Catalyst: The beat-and-raise quarter, plus narrative of sustainable demand across “worlds” and executional improvements, are near-term positives; CFO transition to interim CFO Ken Bull is designed to be seamless given his prior decade-long CFO tenure .

What Went Well and What Went Wrong

What Went Well

Transaction-led growth and conversion improvements: comps +7.1% driven by transactions +6.2%; management cited better in-stock positions and store-process simplification lifting conversion .
Broad-based product outperformance: strength across beauty, style, novelty food/candy, toys/collectibles, and tech accessories; “we drove sales by consistently flowing newness” and “maintaining our in-stock positions in key areas like tech” .
Clean beat and guidance lift: adjusted EPS $0.86 and net sales $970.5M beat consensus*, and FY 2025 sales guidance increased to $4.33–$4.42B with EPS range raised at the low end .*
- Quote (CEO): “Our first quarter results demonstrate the effectiveness of our strategy, grounded in trend-right product, extreme value and a fun store experience” .

What Went Wrong

Tariff headwinds and margin pressure: management reiterated meaningful tariff drag on gross margin (embedded in FY guide), with price elasticity assumptions implying margin erosion even as units hold better than expected .
Elevated SG&A from store labor and incentives: Q2 outlook called out SG&A deleverage from higher incentive comp and continued labor investments; operating margin guide reflects these pressures .
CFO transition: Kristy Chipman stepped down (personal reasons); while interim coverage is strong, leadership turnover presents near-term uncertainty for investors focused on continuity in finance .

Financial Results

Core P&L vs Prior Periods and Estimates

Metric	Q3 2025	Q4 2025	Q1 2026	Q2 2026
Net Sales ($USD Millions)	$843.7	$1,390.9	$970.5	$1,026.8
GAAP Diluted EPS ($)	$0.03	$3.39	$0.75	$0.77
Adjusted Diluted EPS ($)	$0.42	$3.48	$0.86	$0.81
Operating Income ($USD Millions)	$(0.6)	$246.8	$50.8	$52.4
Adjusted Operating Income ($USD Millions)	$27.6	$253.3	$59.6	$55.1
Revenue Consensus Mean ($USD Millions)	n/a	$1,387.3*	$966.5*	$996.0*
Primary EPS Consensus Mean ($)	n/a	$3.37*	$0.83*	$0.63*

Values with asterisks retrieved from S&P Global.*

Notes:

Q1 2026 YoY: Net sales +19.5% (from $811.9M), comps +7.1%, GAAP diluted EPS $0.75 vs $0.57; adjusted EPS $0.86 vs $0.60 .
Q2 2026 delivered outsized beats: net sales $1,026.8M vs $996.0M*, adjusted EPS $0.81 vs $0.54 LY, also above EPS consensus $0.63* .*

Margins

Metric	Q4 2025	Q1 2026	Q2 2026
Adjusted Gross Margin (%)	40.5% (–60bps YoY)	33.8% (+140bps YoY)	33.4% (+70bps YoY)

Drivers cited: improved inventory health requiring fewer reserves and fixed cost leverage on strong comps, partially offset by tariff costs .

KPIs

KPI	Q4 2025	Q1 2026	Q2 2026
Comparable Sales (%)	–3.0%	+7.1%	+12.4%
Comp Transactions (%)	–1.9%	+6.2%	+8.7%
Comp Ticket (%)	–1.0%	+0.9%	+3.4%
New Stores Opened (Quarter)	22	55	32
Ending Store Count	1,771	1,826	1,858

Non-GAAP adjustments (Q1 2026)

Adjusted gross profit adds retention awards ($0.39M) and cost-optimization charges ($4.1M) .
Adjusted operating income adds retention awards ($2.94M), inventory write-off ($0.83M), and cost-optimization ($4.96M) .
Adjusted net income adds retention awards net of tax ($2.14M), inventory write-off net of tax ($0.61M), and cost-optimization net of tax ($3.61M) .

Guidance Changes

Metric	Period	Previous Guidance (Mar 19, 2025)	Current Guidance (Jun 4, 2025)	Change
Net Sales ($USD Billions)	FY 2025	$4.21–$4.33	$4.33–$4.42	Raised
Adjusted Diluted EPS ($)	FY 2025	$4.10–$4.72	$4.25–$4.72	Raised low end
Operating Margin (Midpoint)	FY 2025	~7.3%	~7.3% (unchanged)	Maintained
Gross Capex ($USD Millions)	FY 2025	~$210–$230	~$210–$230	Maintained
Net New Stores	FY 2025	~150	~150	Maintained
Net Sales ($USD Millions)	Q2 2025	n/a	$975–$995	New
Adjusted Diluted EPS ($)	Q2 2025	n/a	$0.50–$0.62	New
Tax Rate (%)	Q2/FY 2025	~25% FY	~26% Q2	Updated Q2
Notes on Tariffs	FY 2025	~100bps gross margin impact in FY; larger in H2	Tariff costs largely offset by fixed cost leverage in Q2; FY OM midpoint unchanged	Clarified timing

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2025, Q4 2025)	Current Period (Q1 2026)	Trend
Tariffs/Macro	Introduced as significant headwind; modeled ~100bps FY GM impact and ~200bps in H2; mitigation via pricing/vendor mix	Embedded in Q2/FY guidance; mitigation through vendor diversification, sourcing (China –10ppt in H2), SKU-level pricing, fixed-cost leverage	Headwind persists, mitigation accelerating
Pricing Simplification	Plan to focus on whole $1–$5 price points and clarify value	Implemented SKU-by-SKU adjustments; ~15% of SKUs touched; maintained 80% units ≤$5; elasticity better than expected	Executed; positive customer response
Supply Chain & In-stocks	Aimed at better flow/in-stocks; chasing inventory where needed	Tight alignment across DCs/stores; accelerated receipts to navigate tariffs; improved in-stocks particularly in tech	Execution improving
Marketing/Creators	Hiring new CMO; increase social/creator emphasis	Creator content and end-to-end storytelling from social to floor sets driving traffic and conversion	Scaling social-led marketing
Store Labor & Operations	Added labor in H2 2024; paused remodels; operational reset	Continued labor investment; process simplification; planned physical inventories to tackle shrink	Sustained investment; shrink actions
Product/“Worlds” breadth	Q3 improvements across more worlds; holiday opportunities	Broad-based strength across majority of worlds; licensing “statements” (e.g., Stitch), beauty/style/novelty food, tech accessories	Broadening, less single-trend reliance

Management Commentary

“Sales and comps exceeded our updated guidance, with sales of $971 million and comparable sales increase of 7.1%. We were excited to drive these comps through increased transactions of 6.2%.” — CEO Winnie Park .
“Our plans include vendor negotiations, diversification of sourcing… and pricing adjustments with a focus on reducing the number of price points… we were able to accelerate the work… reduction in goods sourced from China by about 10 percentage points for the back half of the year.” — CEO Winnie Park .
“Adjusted operating income was $59.6 million versus $38.1 million… adjusted operating margin increased approximately 140 basis points to 6.1%.” — CFO/COO remarks (Chipman/Bull) .
“While we search for a new CFO… our COO Ken Bull will also take on the role of interim CFO. Previously, Ken was our CFO for more than ten years, which gives us a seamless transition.” — CEO Winnie Park .

Q&A Highlights

Comps drivers and sustainability: Momentum attributed to product assortment, storytelling, value focus, in-stocks, and store labor; prudently guided H2 given macro uncertainty .
Pricing elasticity: SKU-level adjustments (~15% touched) with better-than-expected elasticity; assumption that pricing benefits offset by unit degradation leading to margin erosion .
Tariff impact cadence: ~150bps FY operating margin drag, ~60% gross margin / ~40% SG&A; back-half deleverage larger (~350bps in H2) .
Shrink and inventories: Physical counts in Q3 to validate shrink improvements; reserves maintained pending sustained improvement .
Five Beyond strategy: Move above-$5 items in-line (not isolated), ensure “wow” value, use back-of-store for statements (Halloween/holiday) .

Estimates Context

Q1 2026 actual vs consensus:
- Revenue: $970.5M vs $966.5M* (beat) .*
- EPS (Primary): $0.86 vs $0.83* (beat) .*
- EBITDA: $97.4M vs $100.5M* (slight miss).*
Q4 2025 and Q2 2026 were also beats on revenue and EPS vs consensus means, reinforcing estimate momentum into Q2 .*
Implications: Street models likely need higher sales (mix of transactions and AUR), but margin trajectories should reflect tariff headwinds and incremental SG&A/incentive comp, limiting EPS flow-through despite higher top-line .

Values retrieved from S&P Global.*

Key Takeaways for Investors

Near-term: Beat-and-raise quarter, transaction-led comps, and improved conversion/in-stocks are positive trading catalysts; expect continued momentum into Q2/Q3 with creator-led marketing and licensing “statements” supporting traffic .
Margins: Tariff costs and SG&A/incentives temper operating margin expansion; watch gross margin cadence and pricing elasticity in H2 as mitigation initiatives scale .
Execution: Store labor/process simplification continues to pay off; monitor Q3 physical inventory results for evidence of sustained shrink improvement .
Product breadth: Less reliance on single trends (e.g., fidget spinners); broad multi-world strength suggests more durable demand across beauty/style/tech/candy/toys .
Sourcing risk management: China exposure reduction (~10ppt in H2) and vendor diversification reduce tariff sensitivity; accelerated receipts build inventory readiness for holiday .
Leadership continuity: Interim CFO Ken Bull’s prior decade-long CFO experience mitigates transition risk; search for permanent CFO ongoing .
FY posture: Raised sales and EPS floor, but OM midpoint unchanged underscores a realistic stance on tariff/incentive headwinds; upside optionality tied to sustained traffic, pricing carry, and shrink improvements .

FIVE BELOW, INC (FIVE)·Q1 2026 Earnings Summary