Five Below (FIVE) Q2 2025 earnings summary

Executive summary

• Net sales for Q2 2024 rose 9.4% year-over-year to $830.1 million, driven by new store openings, but comparable sales declined 5.7% due to lower transactions and units per transaction.

• Net income for Q2 was $33.0 million, down 29.5% from last year, reflecting higher costs and lower gross margin; diluted EPS was $0.60, adjusted EPS $0.54.

• Leadership acknowledged underperformance due to self-inflicted issues and is moderating 2025 store growth to 150–180 new stores to focus on execution and operational improvements.

• The company operated 1,667 stores as of August 3, 2024, up 18.5% year-over-year, and continued to expand e-commerce and third-party delivery channels.

• CEO transition and leadership changes are underway, with a renewed emphasis on in-person collaboration.

Financial highlights

• Gross margin for Q2 was 32.7%, down 220 basis points year-over-year, mainly due to higher store occupancy costs and increased shrink.

• Operating income was $41.5 million, down from $58.6 million last year; operating margin dropped to 5.0% from 7.7%.

• Year-to-date net sales increased 10.6% to $1.64 billion, but net income dropped 23.5% to $64.5 million.

• Cash and cash equivalents at quarter-end were $209.0 million; inventory increased to $640 million from $544 million last year.

• Company repurchased 267,000 shares year-to-date for $40 million; $10 million in Q2.

Outlook and guidance

• Q3 2024 net sales expected between $780–$800 million, with a mid-single digit comparable sales decline and net loss projected at $2–$13 million.

• FY 2024 net sales forecasted at $3.73–$3.80 billion, with comparable sales down 4%–5.5% and adjusted diluted EPS $4.35–$4.71.

• CapEx for FY 2024 projected at $335–$345 million, supporting 230 new stores, format conversions, and distribution center expansions.

• Management believes current liquidity, including $225 million available under the revolving credit facility, is sufficient for planned growth.

• Q4 sales expected to rise 1–5% year-over-year, with mid-single digit comp decline; adjusted operating margin to decline ~200 basis points.