Five Below, Inc. (FIVE Quick QuoteFIVE - Free Report) reported impressive fourth-quarter fiscal 2025 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.

During the quarter, performance was driven by broad-based strength across merchandise categories, improved in-stock levels and enhanced in-store execution. The company also benefited from its shift toward social and creator-led marketing, which helped drive higher customer engagement and traffic. Additionally, disciplined cost management and operational efficiencies supported profit growth ahead of sales.

The company continued to see traction from its evolving merchandising strategy, including expanded assortments at price points above $5, greater focus on trend-driven products and increased licensed offerings. These initiatives, along with a stronger customer connection and improved store productivity, reinforced its appeal among younger shoppers and contributed to a successful holiday season.

Management highlighted that the business is entering fiscal 2026 with solid momentum, supported by continued investments in marketing, store experience and growth initiatives. The strong earnings beat, coupled with sustained comparable sales growth and a positive outlook, boosted investor confidence. As a result, shares of Five Below increased 7.3% in the after-hours trading session yesterday.

More on Five Below’s Q4 Results

FIVE posted adjusted earnings per share of $4.31 in the fiscal fourth quarter, which beat the Zacks Consensus Estimate of $3.99. Also, the figure surged 23.9% from $3.48 in the year-ago quarter.

Net sales of $1.73 billion increased 24.3% year over year. Also, this metric surpassed the Zacks Consensus Estimate of $1.69 billion.

Comparable sales (comps) increased 15.4% year over year, driven by an 8% increase in comparable ticket size and a 7% rise in comparable transactions.

Insight Into Margins & Costs of FIVE

Adjusted gross profit grew 23.8% year over year to $697.4 million. We note that the adjusted gross margin decreased approximately 20 basis points (bps) year over year to 40.3%, which beat our estimate of 39%. This decrease was primarily due to temporary tariff costs of 160 basis points, largely offset by fixed cost leverage from strong comparable sales and improved shrink performance. Regarding shrink, results from the physical inventory counts conducted in January were finalized and reconciled across all stores, providing a total year-over-year benefit of 50 basis points.

Selling, general and administrative (SG&A) costs rose 26.2% to $337.1 million. SG&A costs, as a percentage of net sales, increased approximately 30 bps to 19.5%. We estimated SG&A costs to rise 20.2% year over year for the quarter under review.

Adjusted operating income was $312.7 million, up 23.4% year over year. The adjusted operating margin decreased approximately 10 bps to 18.1%, which beat our estimate of 17.1%.

Five Below’s Financial Snapshot: Cash & Equity Overview

The company ended fiscal 2025 with cash and cash equivalents of $723.7 million and short-term investment securities of $208.5 million. Total shareholders’ equity was $2.19 billion as of Jan. 31, 2026.

At the end of fiscal 2025, inventory totaled roughly $847 million, up 28% from last year, alongside an 18% increase in units. This growth reflects both the higher store count and the impact of tariffs on average unit costs. Average units per store rose about 9% at the end of fiscal 2025, driven by inventory pull-forward and the company’s focus on maintaining higher in-stock positions to support growth objectives.

Capital expenditures, excluding tenant allowances, were approximately $175 million, or 3.7% of net sales. This included 115 net new store openings, along with investments in technology and infrastructure. Five Below continues to allocate capital toward initiatives that deliver the highest returns. The company generated strong free cash flow and plans to continue prioritizing working capital reduction in fiscal 2026 as it navigates the impact of tariffs.

FIVE Provides Q4 Store Update

The company opened 14 net new stores and ended the quarter with 1,921 stores across 46 states. This represents an 8.5% increase in the number of stores from the end of the fourth quarter of fiscal 2024.

The company plans to open 150 stores by the end of fiscal 2026, taking the total count to 2,071 stores.

What Lies in Q1 for Five Below?

For the fiscal first quarter, Five Below expects total sales in the range of $1.18 billion to $1.2 billion, representing 23% growth at the midpoint compared with the prior-year quarter, with comparable sales growth of 14% to 16%. This quarter is expected to be the company’s highest comping quarter of the year, partially driven by the unannounced benefits of the rounded price simplification strategy implemented last year. Approximately 45 net new stores are anticipated to open across 24 states.

Gross margin in the fiscal first quarter is expected to benefit from fixed cost leverage on strong comparable sales, higher merchandise margins from the net benefit of pricing and lower shrink. Adjusted operating margin at the midpoint is projected to be 9.7%, up from 6.1% in the fiscal first quarter of last year, with the majority of the 360-basis-point increase driven by gross margin expansion and, to a lesser extent, leverage over SG&A expenses.

Net income is expected to fall between $86 million and $93 million, while adjusted net income is projected between $88 million and $94 million. Earnings per share are expected to be between $1.55 and $1.67. Adjusted earnings per share are forecasted to be in the range of $1.57 to $1.69. This outlook reflects the expected impact of tariffs in effect at the start of the fiscal year and does not account for any potential effects from share repurchases.

FIVE Stock Past Three-Month Performance

Image Source: Zacks Investment Research

Five Below’s FY26 Outlook

For fiscal 2026, Five Below expects total sales for the year to be in the range of $5.2 billion to $5.3 billion, representing 10% growth at the midpoint. Comparable sales growth is projected between 3% and 5%, or approximately 17% on a two-year stack basis at the midpoint.

Adjusted operating margin at the midpoint is anticipated to increase 100 basis points to 10.9%, driven by gross margin expansion, net of higher marketing investments.

Net income is projected to be between $429 million and $457 million, with adjusted net income anticipated in the range of $431 million to $459 million. Earnings per share are expected to fall between $7.69 and $8.20 and adjusted earnings per share are expected between $7.74 and $8.25. 

Capital expenditures are projected between $230 million and $250 million, excluding tenant allowances, supporting roughly 150 net new store openings and additional investments in technology and infrastructure.

Shares of this Zacks Rank #2 (Buy) company have gained 16.7% in the past three months against the industry’s 6.5% decline.

Other Key Picks

We have highlighted three other top-ranked stocks in the retail space, namely, Deckers Outdoor Corporation (DECK Quick QuoteDECK - Free Report) , Tapestry, Inc. (TPR Quick QuoteTPR - Free Report) and FIGS Inc. (FIGS Quick QuoteFIGS - Free Report) .

Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Deckers’ current fiscal-year earnings and sales indicates growth of 8.5% and 8.9%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 36.9%.

Tapestry, which was formerly known as Coach, Inc., is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. It currently sports a Zacks Rank of 1.

The Zacks Consensus Estimate for Tapestry’s current fiscal-year earnings and sales implies growth of 26.5% and 11.2%, respectively, from the year-ago actuals. TPR delivered a trailing four-quarter average earnings surprise of 12.8%.

FIGS is a direct-to-consumer healthcare apparel and lifestyle brand, and it currently has a Zacks Rank #2. The company delivered a trailing four-quarter earnings surprise of 187.5%, on average. 

The Zacks Consensus Estimate for FIGS’s current financial-year sales indicates growth of 11.4% from the year-ago reported number.