Five Below, Inc. reported second-quarter fiscal 2026 results that surpassed expectations, with net sales increasing 23% to $1.3 billion compared with the prior-year period. Comparable sales grew more than 14%, marking the retailer’s fifth consecutive quarter of double-digit comparable-sales increases. Adjusted diluted earnings per share more than doubled to $1.68 from the year-earlier quarter. Chief Executive Officer Winnie Park attributed the performance to the company’s customer-focused strategy, which emphasizes trend-driven merchandise, social and digital marketing, simplified pricing and an enhanced store experience.
The quarterly results reflected broad-based growth across customer segments, geographic regions and merchandise categories including room decor, toys, technology and snacks. Growth drivers included strong transaction activity, robust store traffic and approximately 9% unit expansion. Popular items included Asian snacks, slime, craft products and squishy collections. Five Below opened 52 net new stores across 26 states during the quarter, compared with 32 in the year-earlier period, bringing the total store count to 2,022 locations across 47 states. The company also announced plans to enter Puerto Rico in the second half of 2027.
Adjusted gross profit rose 31% to $449 million, while adjusted gross margin expanded approximately 220 basis points to 35.6% of sales. Improvements stemmed from merchandise margin expansion, fixed-cost leverage and a better shrink reserve rate. Adjusted operating income more than doubled to $113 million, with adjusted operating margin increasing approximately 360 basis points to 9%. Adjusted operating expenses, as a percentage of sales, declined 140 basis points due to fixed-cost leverage that offset planned marketing increases and incremental labor costs.
Five Below raised its full-year fiscal 2026 outlook to sales of $5.63 billion to $5.71 billion, 10%-12% comparable-sales growth and adjusted diluted EPS of $10.07. The company anticipates opening approximately 115 net new stores during the full year. For the third quarter, management projects sales of $1.21 billion to $1.23 billion, representing approximately 18% growth at the midpoint, with comparable-sales growth of 8% to 10%. The board approved a new $600 million share-repurchase authorization. The company intends to deploy tariff refunds toward accelerating investments in store experience, digital capabilities and merchandise sourcing.
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