Five Below, Inc.

Good day and welcome to the Five Below Second Quarter 2026 Earnings Conference Call. All participants will be in 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 touchtone phone. Please note, today's event is being recorded. I'd now like to turn the conference over to Christiane Pelz. VP, Investor Relations. Please go ahead.

Thank you. Good afternoon, everyone, and thanks for joining us today for Five Below's second quarter 2026 financial results conference call. On today's call are Woody 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. Certain comments made during this call may constitute forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from such statements, including those described in the press release and our SEC filings. In this presentation, we will refer to our SG&A expenses, which for us include depreciation and amortization. Additionally, we will be discussing certain non-GAAP financial measures. Please review today's press release, which is posted on our Investor Relations website, for a reconciliation of these items to the most directly comparable U.S. GAAP measure and a cautionary statement regarding forward-looking statements. I will now turn the call over to Winnie.

Thank you, Christiane, and hello, all. I want to start by thanking our amazing Fibolo crew. They continue to deliver tremendous energy, fun, and executional excellence in service of our customer, The Boss. Their focused collaboration and drive are what truly delivered our exceptional Q2 results. We are so excited to welcome two new leaders, Rodney Lastinger, our Chief Retail Officer, and Christos Yatrakis, our Chief Legal Officer, both of whom joined us during the second quarter. Our leadership team is now complete and I'm looking forward to seeing the impact we can continue to make on our customer and the crew experience. The results in the quarter exceeded our expectations and reinforced the progress we are making in transforming the business, strengthening the brand and deepening 5 Below's position as the destination for the kid and the kid in all of us. With our strong first half performance, and increased outlook for the second half, we are again raising our full-year outlook, which Dan will discuss shortly. The second quarter results further demonstrate that our customer-centric strategy and the foundational enhancements we made to our operating model are working. The strategy is focused on clarifying who our customer is and what we can uniquely offer them moving from more item-focused merchandising approach to an assortment and product storytelling approach, redirecting marketing spend towards social and digital, simplifying pricing, and improving the store experience. The key to our success is speed to market and close collaboration between merchandising, marketing, and supply chain and stores to deliver compelling new product stories, Together, these are driving our operating flywheel, which serves as a basis for our durable topline growth. Now, on to the second quarter results. Sales surpassed our expectations, delivering $1.3 billion, up 23% versus last year, with adjusted diluted EPS of $1.68, more than double last year's second quarter. Sales growth was driven by both comparable sales growth of 14% and continued unit growth of approximately 9%. Notably, we lapped last year's double-digit comps with double-digit comps and a 26.5% two-year stack. These results give us even greater conviction in the power of our model. This growth was driven by transactions with robust traffic growth and increased customer engagement from both new and returning customers. We saw broad-based growth across customer cohorts, geographies, and product categories. The breadth of the world that grew is a testament to our assortment strategy, from room to toys to tech to snacks, and we saw amazing response to newness and trends across price points. We have deployed a repeatable operating capability that enables us to detect customer trends early, amplify these trends with our emerging marketing muscles, and execute consistently across the store experience. New stores also continue to deliver strong performance. We opened 52 net new stores across 26 states, including four stores that made our all-time spring and summer grand opening list. The success and productivity of our new stores is a testament to the strength of our brand and the unique place we occupy in retail as a kid-focused, value-driven destination where newness and trend drive visits and loyalty. We have a long runway to bring Fibolo to more customers and more communities, and new stores continue to fuel our growth. In July, we celebrated the opening of our 2000th store An important milestone for Five Below and our crew. In August, we entered our 47th state with our first score in Idaho, and we continue to explore fill-in opportunities to support our successful launch in the Pacific Northwest less than 12 months ago. And we are super excited to announce that we plan to enter the market of Puerto Rico in the back half of 2027. This U.S. territory represents a highly attractive opportunity for our brand with a strong customer fit and desirable real estate opportunities. There's currently no retail concept in the market that delivers the same combination of kid-focused fun and value that are hallmarks of Five Below. We expect to open a handful of stores as part of the initial launch and will remain thoughtful and disciplined in how we build our presence in the market over time. We're excited to see our flywheel driving these results. As our merchants identify trend-right product, our marketing team amplifies the story in real time, creating excitement for our customers and driving trips to our stores, where we provide a fun and easy experience that converts interest into transactions and repeat visits. As our capabilities grow, the flywheel becomes more powerful, driving continued customer engagement and durable growth. We are still in the early innings of unlocking the full potential of each capability. And while each stands on its own in terms of importance to the model, the relationship and connectivity between all three is key to unleashing the full power of the Five Below brand and driving durable growth. With respect to merchandising, our teams remain focused on what Five Below does well. Listening to customers and social, spotting emerging trends, and delivering compelling newness at great value through product stories that feel fresh, fun and relevant. Our ability to identify, pursue and scale trends is a meaningful competitive advantage. It brings new customers into the brand and when they experience the breadth, value and benefit below, it gives them reasons to come back. During the second quarter, our teams delivered a rolling thunder of newness across the store. We amplified numerous trends from Asian food and snacks to the return of slime and create. And we continued to build the overall squishy trend with new collections and fresh drops. We also leaned into cultural events and curtain-up moments that mattered to our customers. From World Cup madness to blockbuster movie releases to music and entertainment trends, Our teams moved quickly to bring relevant products to market, including licensed items like FIFA and the NBA, as well as a toy story in Spider-Man movies and Netflix K-pop Demon Hunter series. With both the summer and back-to-school curtain-up moments following during the second quarter, we had lots to celebrate. We helped kick off summer with a full lineup of products for the pool and beach, from inflatables to craft kits and all things squishy. For Back to School, we offered strong value across assortment that feature both need-to-have pencils and notebooks to must-have novelty giant calculators. We brought the season to life through a series of trend-forward destinations designed to inspire both our Gen Alpha and Gen Z customers. For Gen Z, for example, we launched our first-ever Dorm Glow Up, where trend met value. Making it easy to create a stylish, personalized dorm room without stretching the budget. We curated two collections grounded in pink, gold, and leopard print with washable rugs, full-length mirrors, and amazing storage solutions like our plush storage ottomans. The response to this collection has fueled continued interest in Five Below as a destination for room decor and accessories. On the marketing front, we continue to focus on creating a connected customer journey, which often starts in digital and ends in a store visit. Our customers are social natives, and meeting them where they are strengthens our connection with them and improves the relevance of the Five Below brand. Beyond social, we are also growing our customer database to further develop a relationship with the customer and inspire repeat visits. This is an emerging capability for Five Below and one that we are excited to develop. Our marketing efforts are helping to drive brand awareness while deepening engagement with new and existing customers. Both customer cohorts grow faster than we had historically experienced, and we were pleased to see new customers gained in 2025 return to Five Below throughout the first half of 2026. We are still early in our journey to fully unlock the potential of our marketing strategy, and the capabilities we are developing will become increasingly important drivers of customer acquisition, retention, and brand strength. Turning to the store experience, we are focused on making our stores easier to shop and more engaging for customers. We aim to make shopping fun for kids and easy for their parents to say yes. Our customers thrive on newness, We are all about the treat and the treasure hunt. We are continuing to evolve the Five Below store experience. The first step began last year as we moved Five Beyond items in line with their associated departments rather than merchandising them on the back of the store. We have an opportunity to re-merchandise this space, which was walled off in the balance of the store. By opening up the space and merchandising a world of play in this area, co-locating toys, games, collectibles, and craft, we believe we can make our aspiration to be America's greatest little toy store come to life. Similarly, we believe that Gen Z customers will appreciate shopping a world of style, beauty, and room that are co-located in the store and offer an immersive and engaging experience tailored to this important customer cohort. We believe that creating these immersive worlds in the store with intuitive product adjacencies, clearer and more inspiring signage, and improved sight lines from the front to the back of stores will bring our assortment to life and provide inspiration and excitement for our customers as they build their baskets. The store environment combined with our trend right product assortment and exceptional value is what makes Five Below a 101 concept and a destination for discovery. Our stores have also become an increasingly important element of how we are able to amplify trends. Our merchants, marketers, and store teams are working together to amplify trends and activate them with impactful in-store events. A great example from the quarter was our Golden Ticket Squishy Dumpling event in May. This one-day event created excitement for our customers and communities and was flawlessly executed across the chain. It was a great example of building an engaging community at the local store level with a viral trend that has swept across multiple generations, from parents to kids and young adults. After the event, our marketing team continued the story in social by taking Goldie, our exclusive golden dumpling, on the road with her friends, introducing new exclusive dumpling drops through social storytelling and keeping customers connected to our brand. Together, the product, social engagement, and store execution has helped us to continue capitalizing on the squishy trend, driving traffic to our stores and leading a cultural zeitgeist. In summary, we are very pleased with our second quarter performance and are encouraged by the strength we are seeing in the business, driven by the continued progress across merchandising, marketing, and store experience. As we move through the rest of the year and into 2027, We will remain maniacally focused on our customer, the boss, and on continued growth and executing our strategy at a consistently high level. The scale of our growth opportunity across the business and the brand is exciting, and we believe the effectiveness of our flywheel positions us well for the future. With that said, I'd like to turn it over to Dan for a deeper discussion of our financial results and our updated outlook for 2026. Take it away, Dan.