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FIVE
Earnings call · Jul 2026 (Q2 FY27)

FIVE BELOW Q2 FY27 earnings call FIVE

Sep 2, 2026 Source

Executive summary

Five Below Q2 FY27 — Strong Comps and Raised Full-Year Outlook

Five Below delivered exceptional Q2 FY27 results, driven by its customer-centric strategy and foundational operating model enhancements. The company's operating flywheel, fueled by merchandising, marketing, and store experience improvements, is driving durable top-line growth and strong profitability. Management is confident in its ability to sustain momentum and expand its market presence, including a planned entry into Puerto Rico.

Highlights

5

  • Net sales increased 23% to $1.3 billion, surpassing expectations.

  • Adjusted diluted EPS more than doubled to $1.68, compared to last year's second quarter.

  • Comparable sales grew 14%, marking the fifth consecutive quarter of double-digit comp growth, with a 2-year stack of 26.5%.

  • Opened 52 net new stores, contributing to 9% unit growth and outperforming productivity expectations.

  • Adjusted operating income more than doubled to $113 million, with adjusted operating margin increasing 360 basis points to 9%.

Concerns

3

  • Meaningfully higher fuel costs partially offset gross margin gains in Q2 FY27.

  • Higher fuel costs are expected to offset lower tariff costs in H2 FY27, limiting material flow-through to gross margin.

  • Potential for slightly higher tariff rates in FY27 compared to temporary Section 122 rates.

Guidance & targets

CategoryTargetConfidence
Q3 FY27 Net Sales
$1.21 billion to $1.23 billion
high materiality
High
Q3 FY27 Comparable Sales Growth
8% to 10%
high materiality
High
Q3 FY27 Adjusted Operating Margin
approximately 6%
medium materiality
High
Q3 FY27 Adjusted Diluted EPS
$1.07
high materiality
High
Full-Year FY27 Net Sales
$5.63 billion to $5.71 billion
high materiality
High
Full-Year FY27 Comparable Sales Growth
10% to 12%
high materiality
High
Full-Year FY27 Adjusted Operating Margin
approximately 12.5%
high materiality
High
Full-Year FY27 Adjusted Diluted EPS
$10.07
high materiality
High
Full-Year FY27 Capital Expenditures
$250 million to $260 million
medium materiality
High
Puerto Rico Market Entry
H2 FY27
low materiality
High

FIVE operating KPIs by quarter

FIVE operating KPIs stated on its earnings calls, by fiscal quarter
KPI Jan 2026 Q4 FY26 Apr 2026 Q1 FY27This call Jul 2026 Q2 FY27Change vs prior quarter
New stores opened
14 In the fourth quarter, we opened 14 net new stores across 8 states compared to 22 net new stores in the fourth quarter last year. Source transcript
49 For the first quarter, we are reporting results that exceeded our expectations with sales growth of nearly 33% to $1.3 billion, driven by 23% comp growth and strong new store performance, including 49 net new stores that opened during the quarter. Source transcript
52 we opened 52 net new stores across 26 states, including 4 stores that made our all-time spring and summer grand opening list. Source transcript
+6.1%
Stores
1,921 In 2025, we grew our store count by 8.5% and ended the year with 1,921 stores in 46 states, including the 2 new states of Oregon and Washington. Source transcript
1,970 We grew our store count by 8% year-over-year and ended the quarter with 1,970 stores. Source transcript
2,022 We opened 52 net new stores compared to 32 net new stores in the second quarter last year, ending the quarter with 2022 stores. Source transcript
+2.6%

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

ProductTypeDetails
Puerto Rico Market Entryexpansion
2,000th Store Openingmilestone
Idaho Market Entryexpansion
Store Experience Evolution (Five Beyond Remerchandising)update

Risks & headwinds

Higher fuel costs Q2 FY27, H2 FY27

Meaningfully higher in Q2 FY27; likely higher in H2 FY27

Mitigation:Offsetting lower tariff costs in H2 FY27, limiting material flow-through to gross margin.

Competitive environment during holiday season Q4 FY27

Not quantified, but acknowledged as a factor in Q4 outlook

Mitigation:Thoughtful and prudent outlook construction, balancing momentum with competitive realities.

Potential for higher tariff rates in FY27 FY27

Rates under Section 301 are slightly higher than temporary Section 122 rates

Mitigation:Company has shown ability to address tariffs through cost management; not necessarily expecting a dampening to gross margins.

Omnichannel operational challenges during holiday Holiday season FY27

High volumes and staffing constraints

Mitigation:Working through details to ensure full suite of omnichannel functions can be live; currently seeing nice results with BOPIS and third-party delivery.

What to watch in Q3 FY27

Store Experience Evolution

Next quarter/ongoing
Current Early stages, $40k-$45k CapEx per store for Five Beyond remerchandising
Target Rollout progress, customer acceptance, productivity gains from 'world of play' and 'world of style' areas

Why it matters

Enhances shopping experience, drives basket building, and improves store operational efficiency and sightlines, contributing to overall sales and customer engagement.

Absolutely. And yes, I'm by beyond -- this has been a journey for us, and it really started last year as we started moving the product out of the area and customers were receiving the products better in their own departmental homes -- which left an open space for us to merchandise and try to make more productive. And so we started the work of looking at what could go back there how do we literally tear down the signage and get the gondolas, they're attached to the wall and a pretty high height down. See what that would do for the stores, see what that would do in terms of productivity and customer acceptance as well as crew and the crew experience. And all of that has been positive.

Q&A highlights

How much of the Q2 outperformance came from product and marketing strides, and what is the long-term evolution of these areas to drive customer acquisition and frequency?

Management attributes outperformance to the operating flywheel, which is grounded in a reset strategy focusing on customer intimacy, curated product stories, and social media marketing. They are in early innings of capturing customer data for personalized marketing and improving store experience. The company expects continued growth in new and repeat customers, with significant white space for new stores.

“We are very much in the early innings. And what is really great is we've just begun and we are seeing nice resonance in terms of getting that repeat growth up in the double digits, new customer counts up in the double digits. Our brand awareness, spiking.”

asked by Randal Konik · answered by Winifred Park

2 min read 6 chapters

Detailed narrative

Operating Flywheel and Customer-Centric Strategy

Five Below's strong Q2 performance reinforces the effectiveness of its customer-centric strategy and foundational operating model enhancements. The strategy focuses on clarifying the customer, moving from item-focused to assortment and product storytelling, redirecting marketing to social/digital, simplifying pricing, and improving the store experience. This approach drives an 'operating flywheel' that generates durable top-line growth, with broad-based growth across customer cohorts, geographies, and product categories.

Merchandising and Trend Amplification

The company's merchandising teams are focused on identifying emerging trends, delivering newness at value, and creating compelling product stories. This 'rolling thunder' approach, combined with marketing amplification, drives customer excitement and store visits. The ability to identify, pursue, and scale trends like 'squishy' items, and lean into cultural events, is a significant competitive advantage, bringing new and returning customers to the brand.

Marketing Evolution and Customer Engagement

Five Below is enhancing its marketing efforts to create a connected customer journey, often starting digitally and ending in-store. By meeting social-native customers where they are and growing its customer database, the company aims to deepen relationships and inspire repeat visits. Early results show faster growth in both new and existing customer cohorts, with new customers acquired in 2025 returning in 2026, indicating the strategy's effectiveness in driving brand awareness and retention.

Store Experience Enhancements

The company is evolving its store experience to be easier and more engaging, focusing on making shopping fun for kids and easy for parents. This includes remerchandising the 'Five Beyond' space by integrating items into associated departments and creating immersive 'worlds' of play, style, beauty, and room. These changes, along with improved signage and sightlines, aim to bring the assortment to life and enhance the treasure hunt aspect of the shopping experience, with an estimated CapEx of $40,000-$45,000 per store.

New Store Performance and Expansion

New stores continue to deliver strong performance, with 52 net new stores opened in Q2 FY27, contributing to 9% unit growth. The company celebrated its 2,000th store opening in July and entered its 47th state (Idaho) in August. This success is attributed to a disciplined real estate strategy, focusing on high-bar locations and effective market activation. Five Below plans to enter Puerto Rico in the back half of 2027, seeing it as an attractive market with strong customer fit.

Capital Allocation Strategy

Five Below demonstrated a balanced capital allocation strategy, investing in growth while returning capital to shareholders. CapEx for the first six months was over $110 million, up 36% YoY, primarily for new unit growth and store experience investments. The company repurchased $60 million in shares during Q2 and approved a new $600 million repurchase authorization, reflecting confidence in its business strength and ability to generate healthy free cash flow.

AI-generated summary of the company's earnings call. Not investment advice.