Five Below, Inc.

Good day and welcome to the Five Below Fourth Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. Please note this event is being recorded. I would now like to turn the conference over to Christiana Pelz, VP, Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and thanks for joining us today for Five Below's fourth quarter 2025 financial results conference call. On today's call are Winnie Park, Chief Executive Officer, and Dan Sullivan, Chief Financial Officer and Treasurer. After management has made their formal remarks, we will open the call to questions. I need to remind you that certain comments made during this call may constitute forward-looking statements and are made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in the press release and our SEC filings. The forward-looking statements today are as of the date of this call, and we do not undertake any obligation to update our forward-looking statements. In this presentation, we will refer to our SG&A expenses. For us, SG&A means selling general and administrative expenses, including payroll and other compensation, marketing and advertising expense, depreciation and amortization expense, and other selling and administrative expense. Additionally, we will be discussing certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP are included in today's press release. If you do not have a copy of today's press release, you may obtain one by visiting the investor relations page of our website at buybelow.com. I will now turn the call over to Winnie.

Thank you, Christiana. Hello, and thank you all for joining us this afternoon. We're excited to share our outstanding fourth quarter results that capped off a transformational year for Five Below, one that reaffirmed that Five Below is the destination for the kid and the kid in all of us. We are a unique brand, and our incredible financial results in 2025 tell only part of the story, because what made this year truly exceptional is how we achieved the results. We made a fundamental shift in how we operate, how we engage with our customers, and how we strategize and deliver growth of the business and the brand. And our maniacal focus on our target customer has pushed us to be more agile in delivering newness at great value and, as importantly, communicating with our customers in the social media channels they live in. In 2025, we invested in curated product stories bought with authority. Better in-stock positions supported by a store labor model focused on replenishing product and serving customers during peak periods led to a better experience for our customers and drove sales. For the year, we delivered sales growth of 23% to over $4.7 billion. a comp of 12.8%, operating margin expansion of 70 bps to nearly 10%, and adjusted EPS growth of 32%. We grow our store count by 8.5%, opening 150 net new stores with strong results, capped by eight record-breaking grand openings in the Pacific Northwest in the fourth quarter. This performance was achieved during a challenging macro environment that required tremendous urgency and agility from our incredible crew, who are the real secret to our success in 2025. These results incorporate a better-than-expected end to the year with our strongest holiday performance since becoming a public company. We delivered fourth-quarter sales growth of 24%, including a 15.4% comparable sales increase. Importantly, this growth was both broad and balanced as we further strengthened our position as a portfolio-driven product business. We saw strength across all our merchandising worlds, and we grew in all 170 districts, all vintages of stores, and across all income cohorts. We drove both traffic and ticket growth, resulting from improved marketing, amazing new product packed with compelling value, better in-store execution, and positive customer response to our simplified pricing strategy. I'm so proud of our crew for their focus and dedication in producing these results. I'm equally grateful for their hard work and commitment as we united and embraced change. It was a year of transformation as we successfully delivered six curtain-up moments with a new go-to-market process focused on storytelling and product newness, tackled tariffs, overhauled our marketing to focus on social media, expanded our omnichannel capabilities with third-party delivery service, and bolstered the executive team with new leaders in marketing, finance, and merchandising. all of which has laid the foundation for continued growth. And most importantly, over the past year, we defined and executed our new strategy, which is underpinned by three pillars. A maniacal focus on the target customer, delivering a connected customer journey from social to in-store, and collaborating cross-functionally to enhance execution throughout the year. Our strategy reinforces our position as the true destination for the kid and the kid in all of us. First, we further define our target customers, sharpening our focus on Gen Alpha, Gen Z, and millennial moms, and ensuring our product, marketing, and store experience resonate with their needs, and more importantly, what is trending and what they are following. Second, we met our customers where they are, mainly in social. where we can dynamically engage with creator content and amplify viral moments like the current squishy dumpling craze. Speaking to our customer in social channels and following up through targeted content and direct communications by capturing customer records will drive even more resonance and repeat visits as we develop our CRM capabilities. And third, changing how we work. We aligned merchandising, marketing, supply chain, IT, and store teams around six curtain-up moments, operating with urgency and discipline to ensure a seamless flow of content and newness to our stores. This structural change through a disciplined, cross-functional go-to-market process has activated our flywheel at delivering timely newness, compelling storytelling, and great in-store experiences like events and curtain-up floor sets. The result is an improved customer experience generating more visits from new and existing customers. On merchandise, we have systematically delivered relevant newness throughout our worlds with curated assortments at great value. We continue to focus on differentiating our offer through amazing price value for the quality we provide from the hottest license lines to viral trends in beauty, fashion, candy, and collectibles. We've also launched exclusive licensed products for our old favorites like Stitch, as well as newer franchises like Wicked. This holiday, we aspire to be the greatest little toy store in America, and to this end, we offered everything from Legos to crafting kits and remote control cars, all at amazing value. In addition to compelling gifts from toys to beauty sets and yummy holiday PJs to gingerbread house kits, we offer customers a one-stop shop for holiday decor, gift wrap, and party essentials. Value remains a critical linchpin for our offering, and we demonstrated that we can effectively provide exceptional value at $5 and below, as well as at $7, $10, $15, and beyond. Customers recognize the compelling value across the assortment and at all price points, and their receptivity to our expanded offering above $5 reinforces our belief in the tremendous relative value that our products provide. Moving to more rounded price points also helps simplify and improve the shopping experience for our customers and the crew. In terms of marketing, we redirected spend towards social and creator content so that we could be faster and more agile in communicating newness and amplifying viral moments that customers were generating on their own. We have just begun building a customer database, which will sharpen our ability to direct personalized social and direct marketing content to better engage with our customers and develop a relationship with them. While we're still In very early innings with the strategy, we are very pleased with how it drove traffic and sales growth both online and in stores throughout the year. On to the store experience. We bought into newness and trend with conviction, delivering improved in-stock levels. We also invested in labor at peak periods to ensure that our shelves were restocked and customers' needs were met. We made our store easier to shop for our customers by beginning to move 5Beyond products in line with the categories where they logically belonged. As we simplified operations and improved communication and collaboration, our crew was even more engaged, leading to better execution and attentiveness to our customer, the boss. Providing a terrific experience for our customers while also driving greater productivity in our stores remains a priority. We also became more planful in our approach to new stores. We dialed back the pace of unit expansion to sharpen focus on the quality of locations and ensure that grand openings were brilliantly executed. With our customer-centric strategy well underway, strong comp performance, and accelerating new store productivity, we're confident in the long runway of growth ahead. The results of 2025 offer clear proof points that our transformation is gaining traction and we have more runway. As we enter 2026, we believe the business is well positioned for consistent, durable, top and bottom line growth. Continuing to execute on our customer centric strategy provides us great opportunity to further strengthen the Five Below brand and deepen the competitive mode that our unique retail concept provides. With our growing scale, we are focused on expanding our brand and customer reach across our communities, bringing joy to kids, adults, and parents as we help them to play, live, give, and celebrate. As we evolve, I am confident that we will retain our strong customer focus and entrepreneurial culture and remain unrelenting in our commitment to provide unmatched value to our customers. With that, I'll turn it over to Dan.