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FIVE BELOW, INC (FIVE)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 2026 delivered Five Below’s first-ever $1.0B+ sales quarter outside of Q4, with net sales up 23.7% to $1.0268B and comps +12.4%; adjusted EPS was $0.81, above internal expectations and Street consensus, driven by strong traffic and pricing simplification .
  • Against tariff headwinds, adjusted gross margin expanded ~70 bps to 33.4% on fixed-cost leverage, while comps were powered by +8.7% transactions and +3.4% ticket; management raised FY25 sales and adjusted EPS guidance and lifted the operating margin midpoint by ~60 bps .
  • Q3 guidance embeds ~$950–$970M revenue, adjusted EPS of $0.12–$0.24, and ~5%–7% comp growth, with explicit tariff drag (≈160 bps in gross margin) offset by pricing actions and mix .
  • Stock reaction catalyst: clear beat vs consensus in Q2 on both revenue and adjusted EPS, plus a meaningful FY guide raise and improving execution narrative (traffic, conversion, creator-led marketing), despite continued tariff and shrink mitigation costs .

What Went Well and What Went Wrong

What Went Well

  • Broad-based strength across six of eight “worlds”; strong back-to-school licensed value (e.g., $7 backpacks) and curated “Wow” newness; pricing simplification to whole price points resonated with customers (“the customer is our boss”) .
  • Traffic and conversion gains: comp transactions +8.7% and ticket +3.4%, with improved in-stocks and inventory flow supporting conversion; adjusted operating margin up ~90 bps to 5.4% .
  • Guidance raised: FY25 sales to $4.44–$4.52B (from $4.33–$4.42B), FY25 adjusted EPS to $4.76–$5.16 (from $4.25–$4.72); operating margin midpoint increased ~60 bps, reflecting leverage on higher sales .

What Went Wrong

  • Tariffs remain a material headwind: Q3 outlook includes ~160 bps unmitigated tariff costs in gross margin and elevated inventory receipts to ensure supply, depressing near-term margins .
  • SG&A pressure: higher incentive compensation and store labor (including broad physical inventory counts to address shrink) drive ~100 bps deleverage in Q3 vs last year .
  • Q4 margin caution: management reiterates implied margin pressure in Q4 (~320 bps operating margin decline YoY) with ~70% of the drag in gross margin (tariffs, fixed-cost deleverage on lower comp) and ~30% in SG&A .

Financial Results

MetricQ4 2025Q1 2026Q2 2026
Revenue ($USD Billions)$1.391 $0.971 $1.027
Net Income ($USD Millions)$187.5 $41.1 $42.8
GAAP Diluted EPS ($)$3.39 $0.75 $0.77
Adjusted Diluted EPS ($)$3.48 $0.86 $0.81
Operating Income ($USD Millions)$246.8 $50.8 $52.4
Gross Profit ($USD Millions)$559.3 $323.9 $342.4
EBIT Margin %17.74%*5.24%*5.10%*
Net Income Margin %13.48%*4.24%*4.16%*

Note: Values with * retrieved from S&P Global.

Segment breakdown: Five Below reports as a single retail concept with no disclosed revenue segments .

KPIs

KPIQ4 2025Q1 2026Q2 2026
Comparable Sales Growth %-3.0% +7.1% +12.4%
Comp Transactions Growth %N/AN/A+8.7%
Comp Ticket Growth %N/AN/A+3.4%
Stores (End of Period)1,771 1,826 1,858
Net New Stores (Quarter)22 55 32

Actual vs Consensus (S&P Global)

MetricQ4 2025Q1 2026Q2 2026
Revenue Actual ($USD Billions)$1.391 $0.971 $1.027
Revenue Consensus ($USD Billions)$1.387*$0.967*$0.996*
EPS Actual (Adjusted, $)$3.48 $0.86 $0.81
EPS Consensus ($)$3.37*$0.83*$0.63*
OutcomeRevenue: Beat; EPS: BeatRevenue: Beat; EPS: BeatRevenue: Beat; EPS: Beat

Note: Consensus values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY 2025$4.33–$4.42B $4.44–$4.52B Raised
Adjusted EPSFY 2025$4.25–$4.72 $4.76–$5.16 Raised
Operating Margin MidpointFY 2025N/A~7.9% Raised ~60 bps vs prior midpoint
Comparable SalesFY 2025+3%–+5% +5%–+7% Raised
Gross CapExFY 2025~$210–$230M ~$210M Lowered upper end
Store Openings (Net)FY 2025~150 ~150 Maintained
Net Interest IncomeFY 2025N/A~$19M New detail
Effective Tax RateFY 2025~25% (historical) ~26% Higher vs FY24
Net SalesQ3 2025N/A$950–$970M New
Adjusted EPSQ3 2025N/A$0.12–$0.24 New
Comparable SalesQ3 2025N/A+5%–+7% New
Tariff Impact (Gross Margin)Q3 2025~225 bps (prior implied) ~160 bps Improved

Earnings Call Themes & Trends

TopicQ4 2025 (Prev Mentions)Q1 2026 (Prev Mentions)Q2 2026 (Current Period)Trend
Tariffs & mitigationExecution focus; tariffs in outlook language “Agility navigating tariffs” highlighted Explicit ~160 bps GM headwind in Q3; pricing/mix mitigations; diversified sourcing Headwind persistent; mitigation improving
Pricing simplificationEmphasis on value and simplified pricing Strategy around product/value/experience Shift to whole price points ($1–$5, selective >$5), positive elasticity Scaling execution
Marketing & creator contentOperational execution emphasis Progress across merchandising, marketing Leaning into creator content; improved visits and awareness Increasing focus
Inventory flow & receiptsN/AN/AAccelerating receipts amid trade shifts; elevated inventory positioning for holiday Proactively managed
Store labor & conversionN/AN/AInvestment improved conversion; rationalized workloads; pricing simplification boosts store efficiency Structural efficiency gains
Five Beyond repositioningValue across curated assortment N/AMoving >$5 items in-line; “wow” value at incremental price points, treasure hunt maintained Strategic reposition
LicensingN/AN/ABroader licensed statements (e.g., Stitch Surf Shop), strong back-to-school value Strong contributor
ShrinkN/AN/ABroad physical inventory counts underway to assess initiatives; labor up to support counts Active remediation

Management Commentary

  • “We’re excited to share our second quarter results, which were very strong and exceeded our expectations… achieving our first $1,000,000,000 sales quarter outside of a Q4” .
  • “The majority of items outside of our candy world are now priced at $1, $2, $3, $4 and $5… we’ve been very encouraged by the customer response to the implementation of our pricing strategy” .
  • “We have a new mantra at Five Below: the customer is our boss… focused on simplification and collaboration across our teams to optimize our product assortment and store labor” .
  • “Packing value and price points above $5 is a strategy that has worked for us” .

Q&A Highlights

  • Holiday strategy: gift destination emphasis, front/back-of-store “holiday moments,” strong Halloween set already in place; Q4 guide kept mid-single-digit comp with competitiveness and consumer uncertainty caveats .
  • Comps drivers: unlike past single-trend periods, strength is broad across worlds; pricing simplification and elasticity support sustainable model into 2026 .
  • Tariffs and margins: Q3 gross margin headwind improved to ~160 bps vs ~225 bps implied prior, due to lower unit degradation, mix and refined mitigation; AUR expected similar to Q2, mix-dependent .
  • Shrink actions: chainwide physical inventory counts underway; higher Q3 store labor supports counts; results to be shared on Q3 call .
  • Five Beyond strategy: moving >$5 into inline shopping flow, maintaining “wow” value at incremental price points ($6–$7 and up), fueling treasure hunt while simplifying operations .

Estimates Context

  • Q2 2026 beat: Revenue $1.0268B vs $0.9960B consensus; adjusted EPS $0.81 vs $0.63 consensus, reflecting traffic strength, conversion, and pricing execution despite tariffs . Consensus values retrieved from S&P Global.
  • Prior quarters: Q1 2026 revenue $0.971B vs $0.967B consensus; adjusted EPS $0.86 vs $0.83; Q4 2025 revenue $1.391B vs $1.387B; adjusted EPS $3.48 vs $3.37—consistent multi-quarter beats . Consensus values retrieved from S&P Global.

Key Takeaways for Investors

  • Multi-quarter beat cadence and FY guide raise signal improving execution and demand resilience as pricing simplification, licensed value, and creator-led marketing lift traffic and conversion .
  • Tariff headwinds persist, but mitigation is working (less unit degradation, mix, sourcing diversification); near-term GM pressure explicit in Q3/Q4, yet operating margin midpoint for FY raised ~60 bps .
  • Elevated receipts position FIVE well for holiday; inventory per store up ~12% YoY to support “curtain-up” moments, implying sales opportunity if execution stays tight .
  • Store labor investments are translating into conversion gains and operational simplicity, suggesting more durable comp drivers beyond single-trend hits .
  • Five Beyond repositioning (inline placement) should enhance discovery while maintaining “wow” value at modest price steps, supporting AUR and margin balance .
  • Q3 guide frames tariff drag and incentive compensation/Shrink-count labor costs; watch for conversion sustainability and elasticity as key drivers of outcomes vs guidance .
  • Stock narrative: sustained beats, raised FY guide, and visible operational levers (pricing, marketing, flow) are positive catalysts; monitor tariff policy developments and shrink outcomes into Q3 as risk factors .

Notes:

  • All company-reported figures and guidance from Q2 2026 8-K and press release and Q2 2026 earnings call transcript –.
  • Prior quarter figures from Q1 2026 press release and Q4 2025 press release – –.
  • Consensus estimates marked with * retrieved from S&P Global Capital IQ.