Key takeaways:
- Five Below posted a 22.9% jump in Q2 sales and a 14.1% rise in comparable sales, its fifth straight quarter of double-digit comp growth, prompting the company to raise its full-year revenue outlook to $5.63 billion to $5.71 billion.
- CEO Winnie Park credits the company’s “operating flywheel,” a strategy linking trend-driven merchandising, social and digital marketing and an in-store experience designed to keep kids and parents coming back.
- Five Below maintained its plan to open approximately 150 net new stores this fiscal year while also setting its sights on Puerto Rico as a new market in the second half of 2027.
Five Below’s “maniacal” focus on its young customers appears to be paying off, CEO Winnie Park noted during the company’s Q2 earnings call on Wednesday.
The retailer’s push to become more trend-driven and digitally savvy sparked a 22.9% increase in second-quarter sales and a 14.1% rise in comparable sales, its fifth straight quarter of double-digit comp growth, prompting the company to raise its full-year outlook.
In Q2 Five Below added two executives: Rodney Lastinger as Chief Retail Officer and Christos Yatrakis as Chief Legal Officer. Lastinger’s most recent role was Chief Operating Officer at GNC while Yatrakis was previously the Chief People and Legal Officer at Allbirds.
In the second quarter ended Aug. 1, net sales for the Philadelphia-based discount retailer for teens and tweens soared to $1.26 billion while net income rocketed to $221.4 million, up from $42.8 million in the first quarter. Diluted earnings per share increased to $3.99 from 77 cents and the company ended the quarter with 2,022 stores across 46 states after opening 52 net new stores in the second quarter.
“We are thrilled with our second quarter performance and the continued momentum of our customer-centric strategy,” Park said in the company’s Q2 earnings release. “Our crew delivered strong results by collaborating on trend-right product stories at amazing value in stores that are fun and easy to shop. We remain maniacally focused on delivering our brand promise to be the destination for the kid and the kid in all of us.”
Five Below is on track to open approximately 150 net new stores in 2026.
“The balance between new store growth and double-digit comparable sales growth for the past five quarters is a testament to our operating flywheel gaining momentum,” Park said. “With a strong first half behind us and significant opportunities ahead, we are raising our full year outlook and look forward to delivering special curtain up moments for our customers through the holiday season and beyond.”
Five Below’s Flywheel: Merchandising, Marketing and Store Experience
Park believes the company’s flywheel concept focused on merchandising, marketing and store experience are positively reinforcing one another.
Five Below’s “operating flywheel” is built around a simple idea: stay relentlessly focused on the customer, identify what they’re interested in and quickly turn those trends into compelling product stories. Five Below’s merchandising teams monitor social media and cultural trends, then curate newness around everything from squishy toys and Asian snacks to blockbuster movies, entertainment trends and seasonal moments. Park calls the approach a “rolling thunder” of newness designed to continually give customers compelling reasons to visit.
Marketing then amplifies those trends, with Five Below shifting more of its media spending toward social and digital channels. The company is also beginning to capture more customer data, allowing it to follow up with shoppers through email and other targeted marketing. Park said the early results are encouraging, noting that customers acquired in 2025 returned during the first half of 2026.
The third piece is the store experience, where Five Below aims to turn online interest into transactions and repeat business. The company is investing in signage, visual merchandising, immersive displays and in-store events to make stores fun for kids and easy for parents to shop. The idea is to bring the product stories to life and reinforce the treasure-hunt experience that is central to the brand.
“It’s a strategy we put into place last year that’s working and customers are really responding to,” Park said during the Q&A session. “There is nothing more gratifying as a merchant and marketer when things are really working. The operating flywheel was grounded in a strategy that was reset. The transformation happened quickly. What we did was put a maniacal focus on our customers.”
As part of that strategy, Park said, company officials remerchandised and thought about telling great stories, curating product stories grounded in what’s happening in social media.
“We’re still in the early innings of trying to capture customers at the till and capture their records,” she added. “With those records we’ll be able to better direct that content. If you have the right content and the right value proposition, those messages when they hit really drive great business.”
Transaction growth came in ahead of expectations, CFO Dan Sullivan said, as demand for trend-driven merchandise remained strong. Traffic growth was consistent with the first quarter, Park noted, and gains were broad-based across categories, suggesting the momentum is extending beyond any single product trend.
That was particularly evident with customers who came to Five Below for its squish merchandise but then expanded their purchases across the broader assortment. Park said the key is not simply identifying a trend, but acting on it quickly. Five Below watches social media for emerging trends, engages with customers and rapidly builds assortments around those interests, continually dropping newness into its stores.
 Five Below’s commitment to newness is being amplified through marketing and more intentional product storytelling. The company is pairing fresh merchandise with social and digital marketing, visual merchandising and in-store experiences designed to make the trends more visible and compelling.
“Five Below has always been about newness and refreshing the assortment,” Park explained. “The other piece of rolling thunder is being intentional about product storytelling. There is a lot of hard work between merchandising, visual merchandising, marketing and stores and customers are picking up on these cues and it’s driving customers into our stores.”
Puerto Rico Is Next Target for Five Below
Five Below is also looking beyond its existing footprint for growth. The retailer opened its 2,000th store in July and entered its 47th state, Idaho, in August. It plans to enter Puerto Rico in the second half of 2027, with Park calling the market a highly attractive opportunity for the brand. Five Below plans to open a handful of stores as part of its initial launch, saying it sees no other retail concept in the market offering the same combination of value, trend-driven merchandise and a fun, kid-focused experience.
Park said she is particularly excited to see the flywheel driving results as Five Below adds stores and reaches new customers. The company believes its ability to combine trend-driven newness, marketing and a differentiated store experience gives it room to continue expanding both within its existing markets and into new ones such as Puerto Rico.
“It’s a highly attractive opportunity for our brand,” Park said.
Q3 and Full-Year Outlook
The strong first half prompted Five Below to raise its full-year outlook. The retailer now expects fiscal 2026 sales of $5.63 billion to $5.71 billion, up from its previous forecast of $5.40 billion to $5.48 billion, with comparable sales growth of 10% to 12%, compared with its prior outlook of 6% to 8%.
For the third quarter, Five Below expects sales of $1.21 billion to $1.23 billion, with comparable sales growth of 8% to 10% and approximately 40 net new stores. The company forecasts net income of $56 million to $63 million, or $1.01 to $1.13 per diluted share.
For the full year, Five Below now expects net income of $672 million to $698 million and diluted earnings of $12.10 to $12.58 per share, up significantly from its previous forecasts of $480 million to $502 million and $8.62 to $9.02 per share, respectively. Adjusted net income is expected to reach $546 million to $572 million.
