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FIVE BELOW, INC (FIVE)·Q3 2025 Earnings Summary

Executive Summary

  • Pre-release recap: Q3 FY2025 results are scheduled for Dec 3, 2025; no Q3 2025 8‑K or call transcript has been posted yet. This report anchors on Q1–Q2 actuals and the company’s Q3/FY guidance, and notes available external consensus ahead of the print .
  • Strong 1H momentum: Q2 net sales rose 23.7% to $1.027B with comps +12.4% and adjusted EPS $0.81; Q1 net sales rose 19.5% to $970.5M with comps +7.1% and adjusted EPS $0.86 .
  • Guidance raised post-Q2: FY25 sales lifted to $4.44–$4.52B and adjusted EPS to $4.76–$5.16 (from $4.33–$4.42B and $4.25–$4.72 initially); Q3 guide implies $950–$970M sales, comps +5–7%, and adjusted EPS $0.12–$0.24 .
  • Tariffs are the key margin headwind: management quantified ~150 bps op margin drag for FY25 net of mitigation (pricing simplification, vendor diversification, sourcing shift away from China by ~10 percentage points in 2H) .
  • Street context: S&P Global consensus could not be retrieved at this time; an external preview points to Q3 EPS ~$0.17 and revenue ~$801M. Values from non‑S&P sources are indicative only . S&P Global data were unavailable due to a temporary limit.

What Went Well and What Went Wrong

  • What Went Well

    • Broad beat vs internal expectations in Q2 with net sales +23.7% to $1.027B, comps +12.4%, adjusted EPS $0.81; CEO highlighted execution in an “ever‑changing tariff environment” and assortment/value/flow initiatives .
    • Q1 momentum was transaction-led (transactions +6.2%), with adjusted gross margin up ~140 bps to 33.8% on inventory health and fixed-cost leverage; adjusted EPS $0.86 .
    • FY25 guidance raised on better 1H trends: sales to $4.44–$4.52B and adjusted EPS to $4.76–$5.16; capex plan intact at ~$210M .

  • What Went Wrong

    • Margin pressure from tariffs and SG&A deleverage: management expects ~150 bps full-year operating margin drag from tariffs net of mitigation; higher incentive comp and store labor also weigh on SG&A .
    • Gross margin sensitivity in 2H: company flagged ~350 bps deleverage in the back half (about 70% in gross margin) versus 1H due to tariff flow-through and mix/pricing assumptions .
    • Elevated shrink reserves maintained pending inventory counts; no near-term benefit assumed versus last year’s accruals .

Financial Results

  • Quarterly performance (reported) and comparables
MetricQ1 FY2025Q2 FY2025
Net Sales ($M)$970.5 $1,026.8
GAAP Diluted EPS$0.75 $0.77
Adjusted Diluted EPS$0.86 $0.81
Operating Income ($M)$50.8 $52.4
Comparable Sales (%)+7.1% +12.4%
  • Q3 FY2025 outlook vs. external consensus (pre‑release)
MetricGuidance LowGuidance HighExternal Consensus
Net Sales ($M)$950 $970 $801
GAAP Diluted EPS$0.09 $0.21 $0.17
Adjusted Diluted EPS$0.12 $0.24 n/a
Comparable Sales (%)+5% +7% n/a
Net New Stores (Q3)~50 ~50 n/a

Note: S&P Global consensus could not be retrieved at this time; values shown under “External Consensus” are from a third‑party preview and for context only. S&P Global values unavailable.

  • KPIs and operating metrics
KPIQ1 FY2025Q2 FY2025
Transactions Growth (comp drivers)+6.2% n/a
Stores Opened (Net)55 32
Ending Store Count1,826 1,858
Adjusted Operating Income ($M)$59.6 $55.1
  • Non‑GAAP adjustments (illustrative magnitudes)
    • Q2: Adjusted EPS $0.81 vs GAAP $0.77; adjustments include retention awards ($0.03), non‑recurring lease acquisition costs ($0.01) .
    • Q1: Adjusted EPS $0.86 vs GAAP $0.75; adjustments include retention awards ($0.04), inventory write‑off ($0.01), cost‑optimization initiatives ($0.07) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($B)FY2025$4.33–$4.42 $4.44–$4.52 Raised
Adjusted EPSFY2025$4.25–$4.72 $4.76–$5.16 Raised
GAAP EPSFY2025$4.04–$4.51 $4.56–$4.96 Raised
Comparable SalesFY2025+3% to +5% (implied) +5% to +7% (for full year sales assumption rationale) Raised via top line
Capex ($M)FY2025~$210–$230 ~$210 Maintained (narrowed)
Net New StoresFY2025~150 ~150 Maintained
Net Sales ($M)Q3 FY2025n/a$950–$970 New
GAAP EPSQ3 FY2025n/a$0.09–$0.21 New
Adjusted EPSQ3 FY2025n/a$0.12–$0.24 New
CompsQ3 FY2025n/a+5% to +7% New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 FY2025)Current Period (Q3 FY2025 Pre‑release)Trend
Tariffs/macro~150 bps FY op margin drag from tariffs net of mitigation; slight GM pressure in Q2; heavier 2H deleverage (70% GM/30% SG&A) Q3 guide explicitly includes tariff impact; focus on mitigation in 2H Persistent headwind; mitigation ongoing
Pricing simplificationTouching ~15% of SKUs up/down; maintain 80% of units at $5 & below; simplify endings (keep $5.55 heritage) Embedded in 2H assumptions; no change signaled pre‑call In flight; watch elasticity
Sourcing diversificationReduce China mix by ~10 percentage points in 2H; leverage India office and broader vendor base Continued mitigation referenced in guidance Improving resilience
Store labor/experienceHigher store hours; process simplification; better in‑stocks; Q1 comps were transaction-led Executional focus reiterated into holiday Positive execution tailwind
Marketing/socialShift toward social/creator content aligned to “curtain‑up” moments (Easter, summer, back‑to‑school, holiday) Holiday storytelling likely key; pre‑release only Building brand awareness
Category strengthBeauty, novelty food/candy, style (loungewear/graphics), collectibles; better tech in‑stocks Seasonal mix (Halloween to holiday) emphasized Momentum into Q3 seasonal peaks

Management Commentary

  • “We are excited to deliver second quarter results that exceeded our sales and earnings expectations… specifically curating Wow! newness in our assortment, simplifying our pricing while maintaining extreme value, improving in-stock levels and optimizing product flow.” – Winnie Park, CEO .
  • On strategy and momentum: “Adjusted gross margin increased by approximately 140 basis points to 33.8%, driven primarily by improved inventory health… and fixed cost leverage on the strong comp sales.” – CFO commentary (Q1 call) .
  • On tariffs/mitigation: “Our plans include vendor negotiations, diversification of sourcing… as well as assortment and pricing adjustments… We were able to… reduce goods sourced from China by about 10 percentage points for the back half of the year.” – Management (Q1 call) .

Q&A Highlights

  • Tariffs and margin cadence: ~150 bps FY operating margin impact from tariffs net of mitigation; 2H carries ~350 bps deleverage vs 1H, ~70% in gross margin and ~30% in SG&A .
  • Pricing and elasticity: ~15% of SKUs to be repriced (both up/down); assumption that pricing benefit is offset by unit degradation, leading to margin erosion embedded in outlook .
  • Store operations: Ongoing investments in store labor and workload simplification to enhance conversion and customer experience .
  • Shrink: Reserves maintained at last year’s rate until more consistent improvement is verified in upcoming inventories .
  • Sourcing: Active diversification, leveraging India sourcing office; pause/release approach used around tariff spikes to manage cost exposure .

Estimates Context

  • S&P Global consensus (EPS/revenue) could not be retrieved at this time due to a temporary limit. Values retrieved from S&P Global are unavailable at the moment.
  • External preview indicates Q3 FY2025 consensus EPS of ~$0.17 and revenue of ~$801M; treat as indicative until S&P Global data are refreshed .
  • Company guidance implies Q3 comps +5–7% and adjusted EPS $0.12–$0.24; FY guidance raised post‑Q2, signaling confidence despite tariff headwinds .

Key Takeaways for Investors

  • 1H execution has re‑accelerated the story: transaction-led comps, improved inventory health, and better in‑stocks underpinning margin recovery levers despite tariff headwinds .
  • Q3 will be a “proof point” on elasticity and mitigation: watch gross margin, ticket/transactions, and the balance of pricing vs unit volumes through holiday .
  • Tariffs remain the principal risk to FY margins; management has quantified the impact and outlined mitigation (pricing simplification, vendor diversification, sourcing mix) – monitor any update to the ~150 bps drag assumption .
  • Raised FY guide sets a higher bar: top-line momentum must carry into holiday; any slippage in comps or mix could challenge the new adjusted EPS range .
  • Operational investments (store labor, workload simplification) appear to be driving conversion; sustaining these gains through peak weeks is critical .
  • Category strength in beauty, novelty candy/food, and collectibles plus better tech in‑stocks could support traffic and basket; look for commentary on sell‑through and replenishment cadence .
  • Near-term trading setup: with external consensus pointing below company Q3 sales guide midpoint, a print near/above guidance midpoints on sales/EPS and confident holiday commentary could be a positive catalyst; conversely, any step-up in tariff pressure or weaker-than-expected holiday trends would likely pressure shares .

Additional references:

  • Q2 FY2025 8‑K press release and financials .
  • Q1 FY2025 press release and financials .
  • Q3 FY2025 earnings release/call date announcement (Dec 3, 2025) .