Five Below, Inc. FIVE reported impressive first-quarter fiscal 2026 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Also, net sales and earnings increased year over year, supported by strong comparable sales growth driven by gains in both traffic and average ticket.
More on Five Below’s Q1 Results
FIVE posted adjusted earnings per share of $2.22 in the fiscal first quarter, which beat the Zacks Consensus Estimate of $1.70. Also, the figure surged 158% from 86 cents in the year-ago quarter.
Five Below, Inc. Price, Consensus and EPS Surprise
Five Below, Inc. price-consensus-eps-surprise-chart | Five Below, Inc. Quote
Net sales were $1,285.6 million, which increased 32.5% year over year from $970.5 million. Also, this metric surpassed the Zacks Consensus Estimate of $1,205 million.
Comparable sales (comps) increased 22.7% year over year, surpassing our estimated growth of 15.6% growth. Comps growth was driven by a 4% increase in ticket and a 19% rise in transactions.
Insight Into Margins & Costs of FIVE
Adjusted gross profit grew 46% year over year to $478.6 million from $328.4 million. The adjusted gross margin increased approximately 340 basis points (bps) year over year to 37.2%. The improvement was primarily driven by fixed-cost leverage from strong comparable sales growth, along with distribution efficiencies and a lower shrink accrual, which further supported profitability during the quarter.
Selling, general and administrative (SG&A) costs stood at $324 million. While SG&A costs, as a percentage of net sales, decreased approximately 250 bps to 25.2%. The improvement was primarily driven by strong comparable sales growth, which enabled fixed costs to be spread across a larger revenue base. These benefits were partially offset by higher incentive compensation expenses and increased store labor costs associated with April's physical inventory counts.
Adjusted operating income was $154.8 million, up 160% year over year from $59.6 million. The adjusted operating margin increased approximately 600 bps to 12%.
FIVE Provides Q1 Store Update
The company opened 49 net new stores and ended the quarter with 1,970 stores across 46 states. This represents a 7.9% increase in the number of stores from the end of the first quarter of fiscal 2025. The company expects to open approximately 50 new stores in the fiscal second quarter and 150 new stores for fiscal 2026.
Five Below’s Financial Snapshot: Cash & Equity Overview
The company ended the fiscal first quarter with cash and cash equivalents of $638.9 million and short-term investment securities of $474.4 million. Total shareholders’ equity was $2,312.5 million as of May 02, 2026.
Inventory totaled $813.3 million, increasing approximately 16% year over year, alongside a 10% increase in units and a 7% rise in average inventory per store. Management attributed the inventory build to opportunistic purchasing in a favorable tariff environment and efforts to maintain a consistent flow of products amid a more challenging global supply chain environment.
What to Expect from FIVE in the Future?
For the fiscal second quarter of fiscal 2026, the company expects total sales of $1.18 billion to $1.20 billion, supported by comparable sales growth of 7% to 9%. The company expects fiscal second-quarter gross margin improvement to be supported by higher merchandise margins, fixed-cost leverage and a lower shrink accrual. These benefits are expected to be partially offset by higher supply chain and fuel-related transportation costs. Adjusted SG&A is projected to delever slightly due to increased marketing investments and higher store labor expenses.
Adjusted operating margin is expected to improve to 7% at the midpoint, a 160-basis point increase driven by gross margin expansion. The adjusted net income is expected to be in the range of $65 million to $72 million, with adjusted earnings per share (EPS) expected to be between $1.17 and $1.29.
The company increased its full-year outlook following stronger-than-expected first-quarter results and an improved second-quarter sales forecast. Management expects sales of $5.4 billion to $5.48 billion compared with the previously guided range of $5.2 billion to $5.3 billion, and comparable sales growth of 6% to 8% for the year, compared with the previously guided range of 3% to 5%. Adjusted operating margin is projected to expand 170 bps to 11.6% at the midpoint compared with 10.9% guided previously, driven by gross margin improvement.
Adjusted net income is expected to be in the range of $482 million to $504 million, compared with the previously guided range of $431 million to $459 million. Adjusted EPS is expected to be in the range of $8.65 to $9.05 compared with the previously guided range of $7.74 to $8.25, supported by continued sales and profitability growth. Capital expenditures are expected to be in the range of $230 million to $250 million.
FIVE’s shares have gained 28.7% in the past six months against the industry’s decline of 18.8%. FIVE currently carries a Zacks Rank #2 (Buy).
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