Five Below Inc. (NASDAQ:FIVE) shares rose in premarket trading Thursday after the company reported stronger-than-expected second-quarter results and raised its fiscal 2026 outlook.
The retailer reported adjusted earnings of $1.68 per share, beating the analyst estimate of $1.38.
Net sales rose 23% year over year to $1.26 billion, above the $1.22 billion Street estimate.
CEO Winnie Park credited the company’s crew for strong execution, trend-driven assortments and value-focused products. She also cited stores that are easier and more enjoyable for customers to shop.
Comparable Sales Growth Continues
The second quarter marked Five Below’s fifth straight quarter of double-digit comparable sales growth. Two-year stacked sales increased 26.5%.
Comparable sales growth was driven mainly by higher transactions. The company said traffic was strong, with better engagement from both new and returning customers.
Growth was broad-based across customer groups, regions and categories, including Room, Toys, Tech and Snacks.
Adjusted gross profit rose 31% to $449 million. Adjusted gross margin expanded 220 basis points to 35.6%, helped by merchandise margin gains, fixed-cost leverage and a better shrink reserve rate.
Adjusted operating income more than doubled to $113 million. Adjusted operating margin rose about 360 basis points to 9%.
Five Below repurchased about 311,000 shares for about $60 million during the quarter. The board later approved a new $600 million share repurchase authorization with no expiration date.
The company ended the quarter with about $1.2 billion in cash, cash equivalents and investments. That included $170 million in pre-tax IEEPA refunds.
Five Below opened 52 net new stores across 26 states during the quarter, ending the period with 2,022 stores. It also entered Idaho, its 47th state. The company plans to enter Puerto Rico in the second half of 2027.
Outlook Raised
For the third quarter, Five Below expects GAAP earnings of $1.01 to $1.13 per share, above the 83-cent estimate. It expects sales of $1.21 billion to $1.23 billion, above the $1.143 billion consensus estimate.
The company expects third-quarter comparable sales growth of 8% to 10%. It also plans to open about 40 net new stores in the quarter.
For fiscal 2026, Five Below raised its adjusted earnings forecast to $9.83 to $10.31 per share from $8.65 to $9.05. Analysts expected $9.23 per share.
The company also raised its sales forecast to $5.63 billion to $5.71 billion from $5.4 billion to $5.48 billion. Analysts expected $5.541 billion.
Five Below expects fiscal-year comparable sales growth of 24% at the midpoint on a two-year stacked basis. Capital spending is now expected to be $250 million to $260 million.
FIVE Price Action: Five Below shares were trading up 5.73% at $257.02 at the time of publication on Thursday. The stock is approaching its 52-week high of $263.87, according to Benzinga Pro data.
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