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 transaction counts and a shift toward need-based purchases.

• Adjusted EPS was $0.60, at the low end of guidance, while GAAP diluted EPS was $0.57, reflecting a $2.0 million non-recurring legal expense.

• Net income was $31.5 million, or $33.0 million adjusted, down from $37.5 million last year, primarily due to higher SG&A expenses and a higher effective tax rate.

• Strategic focus remains on store expansion, cost optimization, shrink mitigation, and delivering value, with 61 new stores opened in Q1 and a target of 230 for the year.

• Repurchased $30 million in shares during Q1 2024.

Financial highlights

• Gross profit rose 12.2% to $263.5 million; gross margin increased 20 bps to 32.5%, aided by lower freight costs but offset by higher shrink and fixed cost deleverage.

• Adjusted operating income was $38.2 million (down from $42.4 million), with operating margin down 110 bps 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.

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

• Net cash provided by operating activities was $26.4 million, down from $85.3 million in the prior year period.

Outlook and guidance

• Q2 2024 net sales expected at $830–$850 million, with comparable sales to decline mid-single digits; operating margin forecast at 5.2%.

• Full-year 2024 sales expected at $3.79–$3.87 billion (+7.9% to +10.2%), with comparable sales down 3% to 5%.

• Adjusted net income for 2024 projected at $277–$299 million, and adjusted EPS at $5.00–$5.40, both down about 1% at the midpoint.

• CapEx planned at $345–$355 million, supporting new stores, conversions, and distribution center expansions.

• Management believes cash, investments, and $225 million available under the revolving credit facility are sufficient to fund growth and operations for the next 12 months and beyond.