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 fewer transactions and lower average ticket size.

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

• Leadership acknowledged underperformance, citing macro pressures and strategic missteps, and is executing a comprehensive operational reset with a focus on core customers and improved store experience.

• CEO transition is ongoing, with an interim leader in place and a search for a permanent CEO active; retention awards granted to key individuals.

• Store count increased 18.5% year-over-year to 1,667 as of August 3, 2024, with continued e-commerce and third-party delivery expansion.

Financial highlights

• Gross margin declined to 32.7% from 34.9% year-over-year, mainly due to higher store occupancy costs and increased inventory shrinkage.

• Operating income dropped to $41.5 million from $58.6 million, with operating margin down to 5.0% from 7.7%.

• Diluted EPS was $0.60, with adjusted EPS at $0.54, compared to $0.84 last year.

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

• Ended Q2 with $209.0 million in cash and cash equivalents, and no debt; inventory rose to $640 million.

Outlook and guidance

• FY 2024 net sales forecasted at $3.73–$3.80 billion, with comparable sales down 4%–5.5%.

• Adjusted operating margin for the year expected at 8.6%, down 210 basis points.

• CapEx planned at $335–$345 million, supporting 230 new stores and 180 Five Beyond conversions.

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

• Store growth moderated for 2025 to 150–180 new stores to focus on execution.