Five Below (FIVE) Q1 2025 earnings summary

Executive summary

• Net sales rose 11.8% year-over-year to $811.9 million in Q1 2024, driven by new store openings, but comparable sales declined 2.3% due to lower transactions and macroeconomic pressures.

• Net income decreased 16% to $31.5 million, or $33.0 million adjusted for a $2.0 million non-recurring legal expense, with adjusted EPS at $0.60, at the low end of guidance.

• Sales slowed in the back half of the quarter, especially among lower-income customers and older merchandise trends.

• The company operated 1,605 stores at quarter-end, up 17% year-over-year, with 61 new stores opened in Q1.

• Strategic focus remains on store expansion, cost optimization, shrink mitigation, and value initiatives through pricing and marketing.

Financial highlights

• Gross profit rose 12.2% to $263.5 million, with gross margin improving by 20 bps to 32.5% due to lower freight costs, partially offset by higher shrink and fixed cost deleverage.

• Adjusted operating income was $38.2 million (down from $42.4 million), with operating margin down to 4.7%.

• Adjusted net income was $33.0 million and adjusted diluted EPS was $0.60, compared to $37.5 million and $0.67 last year.

• SG&A expenses increased 18.2% to $227.4 million, or 28.0% of net sales, impacted by fixed cost deleverage, legal expense, and higher pre-opening costs.

• Cash and cash equivalents at quarter-end were $96.3 million, down from $179.7 million at the start of the quarter.

Outlook and guidance

• Q2 2024 net sales expected at $830–$850 million, with comps down mid-single digits and operating margin at 5.2%.

• Full-year 2024 sales forecasted at $3.79–$3.87 billion (+7.9% to +10.2%), with comps down 3% to 5% and 230 new stores planned.

• Adjusted operating margin expected at 9.8% (down 90 bps), adjusted net income $277–$299 million, and adjusted EPS $5.00–$5.40.

• CapEx planned at $345–$355 million for new stores, conversions, DC expansions, and systems.

• Management believes cash, investments, and $225 million available under the revolving credit facility are sufficient to fund growth and operations.