FIVE - Earnings call transcript Q2 2025

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Operator

Good day, and welcome to the Five Below Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Christiane Pelz. Vice President of Investor Relations. Please go ahead.

Christiane Pelz

Thank you, Drew. Good afternoon, everyone, and thanks for joining us today for Five Below's Second Quarter 2024 Financial Results Conference Call. On today's call are Tom Vellios, Executive Chairman and Founder; and Ken Bull, Interim President and Chief Executive Officer and Chief Operating Officer; and Kristy Chipman, Chief Financial Officer and Treasurer. After management has made their formal remarks, we will open the call to questions. the you forward-looking comments pursuant Reform statements within meaning remind call during to Act to of the constitute provisions amended. may and of of need XXXX that Securities made certain this and the as I Private harbor Litigation safe are made both are materially risks from statements. and and results uncertainties Such forward-looking known actual differ statements that to subject to unknown could cause such uncertainties are SEC described in release press our and the filings. and risks Those are as and expenses, today will and amortization depreciation, the marketing date undertake The obligation administrative call, made other forward-looking our and our SG&A expense we of of this general compensation, and and this expenses, we any advertising SG&A expenses. statements selling, refer administrative selling to presentation, not including expense, do means other forward-looking payroll to update statements. In and

certain be to press measures. Additionally, U.S. discussing are reconciliation items release. included GAAP we non-GAAP in today's of these financial will The

release, of the call of If our turn fivebelow.com. I now you Tom. page don't will one press website Relations copy have at today's over visiting you Investor obtain a the by to may

Thomas Vellios

results Thank our you, thank for quarter all us path to Christiane, discuss second fiscal forward. you today. our joining and and

our transition and to weeks, CEO X and Over the for challenges, vision store kids thoroughly for a teens, launched the for we clear. the and search engaged heavily the as permanent store the working with the for have past and CEO. When cool and I closely been company, team Ken business with assessed was David navigated our parents. Below, the Five a go-to founded be I destination preteens YES

environment. products fun deliver to extreme assortment of mission value shopping trend-right, always in high-quality Our exciting has an a been

the We retailer. standout have Five always a Below intensely has successful made growth on customer and commitment focused this been

XXX remodeled macro a which Over We over assortment. are this core resulting fixable. lost expanded our new new consumer format, stores, locations Since product sharp few while our opened store years, some We the stretched XXX launched challenging customers. issues managing on environment past we and teams. we over over that know and focus of our XXXX, did the the all shifts,

In fact, and an work to refocus are operational strategic we business. underway, committed of our already is and

forward, on our Going refocusing are we customers. core

prioritizing improve streamline enhance are that operations We evolving of we shopping our ensure value, customers. experience, meet initiatives that our the needs and the

Specifically, and speed intersection stores quality Below Five we is intensity more our identifying for and trend, regain key which need our customers. We to bringing WOW our of trend the items delight and price. in value, in need deliver into to that and

are understand energized We at fortunate task motivated who and steps to hand to have engaged, and necessary an the team execute. the

well knowledge We business. experience, of our our execute us Kenneth leadership keen with are confident to of culture Bull, in of position operational the business understanding our reset this and his

you more we with will forward, deliver we the are As than to hand initiatives. vibrant information of committed emerge ever. And to more move to we making factor stronger give and to our Ken associates over and fully wow shareholders and will that, changes the Together, deserve. it strategy, I Ken? on necessary customers

Kenneth Bull

Tom. Thanks,

how spent thoroughly weeks short fell last this outlook. Tom of know the team and I the have of learnings I discuss call, the of a results quarter Second weeks several details last assessing On business. the of business. delivering. and what business Kristy the our performance then refocus the financial provide today's of will is X And and capable will and are we the approaching we

inflation as last supply macro here. pandemic, business. that over stimulus saw Post and We the demand, experienced pressures we have as how our share we the I several to want I are issues well to identified, evolving discuss of customer how driven where Before we take We prices significantly and minute to we our key many years that addressing a impacted chain disruptions the how and preferences worked. To margins, the past without of overexpanded number impact teams our our editing strict process focus and without inflationary expanded we increased and points. changes across world the years differentiation. price our screen item a got in and value manage assortments

also Triple-Double we double time, this During store vision by set XXXX our to triple by XXXX. EPS and our count

time goals benefit these put line aggressive of organization. the With tremendous of hindsight, on a amount and to for was the pressure the

plan and experience. Starting includes supporting a further issues, store as well complexity with these overhead, have increased of store value. shrink product prices across labor. Recent place as product we addition, initiatives efforts workload To weight raise, In areas and and for that we key also address mitigation tighten corporate and and in stores. added retail our focus value

are customer always core an We core wow assortment to for will commitment being our and delivering that that universal refocus kids And our to we and this will work store demographic. The preteen is while to teen appeal, we parents. renewing need on YES customer. demographic deliver

We are achieve to this. following focused the on actions

We return reduce will the of our significantly and pre-pandemic levels. assortment breadth to

are price our will amplifying points lead value, with core most customer. for We impactful that the

We below key price will emphasize items points. at and $X

the price We to strengthen points reduce number and drive experience simpler our competitive will customer pricing. and of store also execution

all across We flow increase will the of worlds. newness

reinvent businesses. maximize We will and our seasonal

and on of and greater trend. degree far our relationships Beyond bar the items accomplish focusing we vendor amplifying scale this. on And a to will leverage raise will value to We key Five all

for the our renew customers. And wow better culture we for delivering am drive performance we're when know means that all to returning broader and all we office will at As performance what this items excited collaboration work we work We merchandise across margin as as innovation allow our SKUs while together. our to the product organization I value focus return I our in-person key us this, driven within and maintaining has merchandising Philadelphia. success. our sales will in we about this help and better a world, our stable on in to reduce price of are on reinvest refocus achieve particularly of profile. To

to and this, accomplish successful Our with only reducing labor. tasks will be we experience our simplifying be goal our our our are deliver and product store necessary. evaluating customers To model improve store will strategies a work store and outcome energizing. The the if we store brand, complexity of adding hours of operating that reflects this the optimizing fun labor where

product do partial each we offset just labor optimize are these also implement as Over As this these and we as to and experience. will investments cost structure as all the initiatives cost time, value work, continuing sharpening serve approach savings well we our mentioned. as a to our I store of across investment to

leading best-in-class new with be economics. to store continue will growth we a retailer Finally,

better holiday work optimize summary, upcoming all-important and issues address in to business, actions last to moderating the growth areas outlay and open our XXX be we the reset execution. In in more real key we on our us in understand I them, the This our capital the digging We estate our stores. our overall several locations, a deep issues lot outlined. focus deliver As fixable. allows selective us to currently to for expect our store we season. moderation have of It weeks, allows are have believe on execution focus done XXX implementing are including that store to XXXX also and to

value and And to across for assortment. I to work against thank would newness are helping to with are Kristy? that, I'll organization Kristy. improvement our in added and it moving their the like in hand our urgency will the the teams see dedication us We we goals. product and execute hard business over as with

Kristy Chipman

nearly outlook. my of a stores by X.X%. comp to X.X% comp by will as remarks I Ken, the of comp the the ticket quarter begin good was lower per results retail comp in quarter Sales ticket our our positive first sales categories second average to Many decline X.X% the driven in driven the discerning spending. in by an with conversion X.X%, their unit quarter discuss afternoon, discretionary million with underpinned and units down the remained transaction, with performance negative and The our transactions in customers everyone. of then comp. $XXX Thanks, second increase driver that review of with increased decrease price. offset of Traffic comparable continued the a was and

and summerset with trend. but across quarter opened more new We XX including result other offset approximately XX quarter consumables worlds the was of an Now than We Squishmallows by stores in the the in or of candy XX%. slowing of and stores, in to worlds, sports results, compared as increase X,XXX ended stores XX style states opened world the a new including and World, quarter version Our delivered last the positive underperformance year. toys second in XXX second our stores games

XXX $XXX.X partially deleverage by inbound costs to basis negative a XXXX was primarily for profit comp margin quarter Gross driven of year-over-year decreased the offset approximately up million. of to Gross the accrual, shrink freight. by XX.X%, higher by X.X% on fixed and lower second points

As percentage compensation and versus compensation new sales, cost nonrecurring by fixed stock impact of XX on XXXX quarter. negative to quarter retention year's SG&A for awards partially comp and of XX.X% increased primarily incentive last by the points was approximately benefit. the This deleverage a basis driven lower expenses a second offset the of

for the of income was operating million nonrecurring approximately $X.XX decreased X.X%. As was compared end inventory second points the the quarter last $X.XX. diluted diluted $X.XX, quarter at and second end quarter second operating in a and per-store $XX decreased quarter net million as million the share and adjusted million XXXX the last income income debt. Inventory second million approximately cash, quarter second XXXX, margin income quarter Average was share basis second the quarter million. diluted equivalents operating to a and versus for year. was investments last of versus We result, to was diluted per $XXX XXX million and Adjusted was $XX.X adjusted X.X%. second $XX.X margin quarter last with net year. Adjusted operating -- for the million for at excluding Earnings of per $XXX cash quarter the X% the Net the of in share $XX.X year's earnings earnings per on was versus items million to $XX.X year. $XX.X basis of no ended of compared $XXX the was second margin,

guidance. to Turning

$XX comparisons XXXX $X.XX comparing XXXX adjusted or year, are of XXXX disposals, with the asset our approximately fiscal the million the in refer initiatives. basis to against that year costs associated as and week awards will in nonrecurring extra and including basis fiscal fiscal retention added in sales a we items on approximately year an EPS. I XX-week optimization impact For full excludes to on noncash also cost

guidance store Our and for sales, XXXX. outlines QX press year new release full and our earnings the

a be on interest assumes income XX%. taxes on prior the centers is approximately gross margin my adjusted drivers midpoint and negative that efficiencies details than in store is expected worse additional to the deleverage to will small be third reserve due approximately the well the our timing year, driven commentary modest quarter focus approximately benefits the or for true-up for on an primarily as cost cost comp. SG&A basis, midpoint XXX points, I and distribution offset be lapping million some guidance $X by timing comp, our partially of to on deleverage and of quarter expected shift the fixed basis margin, improvement prior points shrink basis So XXX third a product as labor guidance. On fixed year's expected negative are marketing. Net at investments the to by in

higher than to year. full deleverage year prior cost the is basis is true-up are Now to XX due than adjusted of year's shrink the reserve inbound delevers the benefits cost negative last negative guidance savings lapping our year on freight comp. SG&A an the store offset and comp as points fixed from comp at modest on to higher fixed gross optimization benefits than full the as deleverage investments more in more be by the labor. margin XXX incentive basis assumes and expected midpoint On points and by cost midpoint offset basis,

X.X% we is expected As interest of in and adjusted a be items a be $XX approximately or year excluding approximately XX%. million or $XX points forecasted XX-week margin, to a basis to year, rate on approximately operating deleverage XXXX nonrecurring for is of XXX effective million approximately full expect result, income tax for noncash basis. Net the

infrastructure. and new now we CapEx, spend the $XXX the $XXX allowances. about tenant gross and XXX reflects systems and the in of Beyond of stores, million, excluding Georgia to locations to to opening of Arizona respect in Five This XXX impact approximately converting plan and our With format, investments completion distribution the in million centers between expansions store

decline adjusted deleverage lapping the year-over-year last quarter the operating the and incentive due business compensation. To it That on the and quarter well lower between year an implied Total offset a fourth a sales done partially with work be the to needs know with the and decline week sales a XXX and shrink the also X% X line in shopping fourth the to guidance. range year realize comp potential. basis Christmas. comp, fixed extra cost XXXX, in results true-up up, to XX-week following: year-over-year implies This of For Thanksgiving full quarter X% increased -- basis, this between excludes we a mid-single-digit implies its third underway. by approximately at the range, wrap return in roots is to second and which its days in to reflects midpoint margin quarter guide fewer points this negative It range

take financial to However, it in reflected will results. be time our

ahead, significant is a this. meaningful Five on entire to our opportunity coupled have against trajectory opportunity comp executing with and focused a Below growth We the improve team

call For over question-and-answer our press all turn other like guidance, refer that, release. And the the to to back I'd for earnings our please the Operator? details with related operator to session. results and to

Operator

question The Wells from first from Kelly Fargo. [Operator Edward comes Instructions]

Edward Kelly

the step I about been margin, XXXX, right aren't more the then of you maybe that Obviously, but in structural about you some wanted why taking been It you bit the back, problems the looks well and more sounds this the And as almost settles? of here? value. fixable, XX% a like -- there's in like shifted. margin to it to EBIT in what some think lot as when investment think worry there's is pressure labor. lot there a a just how X.X% there's ask of has macro you are going talk here about year, challenges business it's What's like investment believe be self-inflicted. Can competition a dust seems you, it

Kenneth Bull

that Ed, There's for Thanks, Okay. there. lot a question.

strategies a structural back Just teens, not really, of delivered over in results us we we go what core for consequences. And really but they fixable. and the and around our a challenges. kind value I the and bit several issue We things to -- to the mentioned of that, was the at business when is away edited there what had focused that's at the about environment. drove extreme time, the our was. got it way beginning on and delivering comment of exciting from longer-term post-pandemic. high-quality just really I I as product, kind we about mean as this mentioned all. back And pressures assortment, part and around went preteens in an past actually a trend macro mission little the and were on also, that weeks lost We at your were based mentioned that fun looked business, of spoke Tom have the that do this is you structural believe

days impact and out that been to you was people to go there. today, Regarding a billion you competition, to going us are Amazon, the where about back were on speaking $X we and when stores. Whether company always fast X,XXX a with have there's huge forward competition

to is competition level I or So at well, we're and really our know got customers, we has not. we're seen our performing the always in we'll last do the you've and the to there have competition think delivering us at day. and get we what when best And up over kind to lead and the like push years, and the back few of inched to out we used

Operator

question The the with Goldman next Kate McShane Sachs. comes from next

Katharine McShane

we curious change you based wiggle soon around change could influence would have imagine holiday or would store? how holiday, how for impact? much actions. on product new can of the And We the much some for -- see of But these I wondered kind not you change room wouldn't these strategic how there be if if soon any at see there.

Kenneth Bull

Kate. Thanks, Yes.

been given overwhelming times, you guess, would product of holiday the As purchased. has majority lead already

and Although I here some about at a of also, opportunity heard, go to we the business return kind we have end an to of the day. being and basis to Again, spoke do items. our chase you and have Tom item-driven

in to So to those marketplace of we us. chase try will the some help

get see an -- think see our lead the them that in see we In the were we we would that obviously start in the the and point our improvement think I spring see with terms going And as we'd of looking in at you're say when in to to I when our now. we as see where business business, improvement times. to we assortment, the summer But improvement and to start assortment. value a I newness improvements that's

Operator

The comes next question John Guggenheim. with Heinbockel from

John Heinbockel

Multipart.

you've you're talked need any a about that kind that maybe organizational know department. Do has brand to years do of always right, with changes, speed structuring one. Number these gone had of work internally X the you've anything that speed. make was Number newness? do get you two, to did you You you made it the or consumer, make the were? and the get of get trend ago? how to I X with and kind changed as where when changes, just you changes your then back customer the lastly, -- you you've And recognize, how how you what from merchandising, perception do

Kenneth Bull

your around speed, John. first interesting. Yes. part Thanks, question -- the the it's On of

the I think last it few we over quarters. about talked

operating. in back here We buying our kind teams getting teams, the roots in are the of again, through have to how internally teams, teams, gone transformation, those of merchandising terms allocation organization planning

of middle that putting the in we're So place. into

and going surveys I forward for the again. From intercepts. a to quality was and really historically clear have analysis think with it's that way we customer price. of have at back we not And customers for price. to at I looking it pull looking and which advantage, get And of standpoint, of the help the metrics end It's to just the a but customer trend think did lot to and perception a data at as that's an combination part some of used one speed, us we value also and so really only we internal was that's more things that the value, not day. And look

to to going have our be that's think do tests. know challenges know going for to some customers to with we pull ability us. Kristy about marketing but traffic talk where then to We in, that's heard we better, working I We've back we're and on. And the conversion. testing So marketing we with be have you done improve

focus the ability drive of product improve after the the on we'll So it marketing conversion. to piece have we and

Operator

comes next JPMorgan. Matthew question Boss The from with

Matthew Boss

questions, So two Ken.

you seen customer elaborate exit First, unit just saw looking maybe growth, the then to behaviors August for and be you've could could you speak for in across growth maybe quarter, that trends XXXX potentially time? you'll on what to And what the growth? to on store reaccelerate world? And over comp you reduction

Kenneth Bull

to income with I it outperforming, similar customer income some we actually just we better along the saw -- demographic Around behaviors, which getting was income One, other probably down us on. more the have Matt. where lower higher mentioned around to was do that were the which And demographic. what higher there we X value, was And was information. things our we which Thanks, from lower-income tells very in trade our underperforming. QX demographic

dynamics those have So continued.

But probably into that -- same continued see and that I income kicked back-to-school that QX heard out there, disperse As between August, I traffic. lower between retailers. to higher in improvements mean we've and have dynamic that's other we performance. customers seen we still that from you've think And it's have that's it's income and gone in. whether exited

are In of moderate we part, give through in the most growth that we'll to terms we when We're it we move the you talk execution the of as But come have near growth outlining initiatives. XXXX, we year. store the to that to growth, so on these as can about of stores. I more But probably going for to the primarily and XXX the rates right, year And in we we're fourth mentioned that more detail to focus end quarter. get term rate are XXX to similar for we'll on XXXX. get doing the that that

Operator

question with from Simeon next comes Gutman Stanley. Morgan The

Simeon Gutman

run about to then for did you deeper for growth do I the is evaluate anything it's throughout unit order 'XX. now the And ask you're store that order? once have even is growth Ken, unit the at cutting much seeing I the come to that of just reflect harsh land in operations think Question you number? stabilization, as part does don't back get that at X% current to business, least question, how at the in a to everything of such how now, growth? wanted the a whatever, more and it And you do rate, right

Kenneth Bull

Right. all deep the Simeon. dive did Thanks, deals. on We a

there's know, real time a long you As estate. Simeon, pretty lead for

the we've those. us pipeline. that and are one we in historically things of got back deals are the and at those looked to closely to the because that want So look those seen other we've get from reinforce returns improve we to lot And of a

again, I we and real be sure said ability to I'll have deep estate dive all reason you have we focus the deals make because, need real with the that a So company. before, locations. But as mention number the selective the wanted did to we we on we taxing weren't to really was across a the organization the around

the focus real of can was number out and again that So there. after the initiatives organization go the driver stores of the in we've have that put we terms

Operator

next with The Michael comes from Lasser question UBS.

Michael Lasser

making next there as on year? you're this then some not as of value both you what but only year that investments And that be well expenses. expect the presumably, that, from impact in collective the quantify you Can are top labor to

assumptions that are your help that can incentive blocks business change This less but we bonus more going model formulate make that P&L or the next at retention will building least this effectively to we down back mentioned are as P&L. You year. comp the up impacting and year come the

Kenneth Bull

of that, in Thanks, details. of add Michael. will of terms kind and start Kristy then the some I'll with to that

I in think improvements modest the the in least perspective, going the I we're to labor stores from in a labor our what term, would make term. call at near in near out

which next on we'll value pricing, to build is of an throughout of not as perspective mentioned across would overall my and line top improvement we can improvement expect worlds things whether what that will year, fund that. From into the move drive it but in our only a company all I that prepared merchandise, help we're do should in it's see remarks, going also we or kind help other to As -- the investments reinvest. pricing we to

would and kind I merch get then that a anything... to from of year-over-year, our being relatively have to to consistent performance investments. But a offset be Again, So any Kristy, using margins overall able worlds you our if broader expect price

Kristy Chipman

this for on my basis. are on comments And that adjusted Yes, to add I'll that. year just

heard you included any in has pricing expecting partially and reflected are hit included we've to investment labor be the with can cost margin on All guide neutral we the forward a of through, savings with margin expecting if bit. those adjusted it also From this are actions been that SG&A in higher with effect perspective, that neutral, offset would modest guide. our we store we into go XXXX, guide. you've are working a an nil basis, me move as has lens talk we labor and again, but you our mentioned, investments full that an a in And year again, basis. When widened on to that this for about but before you optimization year be

prepared about typically you to that much X% now. this where right a we in begin And time scenario isn't we're to business I leverage XXXX have would too where is the not But to comp the tell will start we'll we that future. a into Obviously, guiding. again the when really so talk be

year. I $XX that about about take repeated asked the have, the you will of if million those I other adjustments next piece of think was half be we

Kenneth Bull

Next year. Yes. Thanks, Mike.

Operator

from comes The Scot next question Truist. with Ciccarelli

Scot Ciccarelli

everything everything quarters. of about true terms for in the ken, business in of of the challenges you about So that really talked been should the you kind of facing, business talked several is have -- terms

do digits question I guess why sounds So focus guess kind of more on quickly, that, to price properly. you it related the slow to the I And like single to understood so I negative you're somewhat seemed think mid-single positive is, your points, comments business going to lower low digits? if

So ASP start that expect notable you should we to process? undergo compression as

Kenneth Bull

Scot. Thanks,

Your timing was a over years again, of things it culmination that question we I macro a really of the to had. around of post-pandemic that of kind pressures of this, discussed, period reactions kind

information adjust looking we $X. And back income pressures the going feel One then think -- they're those points it our to on product also we just around more of $X, late going value we for lower to an product, is selectively the that quarter. The for It's our why it started the price. $X, things where and and around price value. it's underperforming saw be challenges we'll customer. prices customers. And lower Kristy be as see and that in that on versus that here well. because as summer. underperformance that quarter may that income forward. give be large is gets reintroduction be -- around gets back around price. and we're I'm probably And that's at first to quality and at, and in key higher need of this speculating through to delivering the And that and going time. customers we're in you and seeing That the focus price seasonal this we with data but price And there those then second working into year. be to that's the this, us, we're discussed to trend and you product just our move I mentioned, again, It's and what again, points, I wasn't not value just We'll on don't lower refocusing to, points, introducing trend we'll there's But us the for

continue to on focus So we'll that.

Operator

Sigman question next with Seth from The comes Barclays.

Seth Sigman

I just perhaps in then certain issues speak of those And has about more price think wanted specifically that Beyond performance locations. for the Five in should what points? strategy. the price in customers perception call that store, the range I'm played ultimately, added see Maybe type it, it's wide challenges? role in changes assortment? complexity you And to of focus strategy we any curious, on do just or shopping even you to Do the think that just

Kenneth Bull

I'll Yes, in need start, day still in the where we a that, to and realize that position Below. at Tom, could end of Beyond We in around too. also restrategize add Five thanks. we the product you Five the but we're believe on

we're that's that. then to what you if Tom, on have comments be working any other on. And So going

Thomas Vellios

something specifically Five at, looking value key that, I overall of the opportunity. Beyond lens, -- and business. we very discipline think, Five trend think same same forward. as around our have that's the we And Ken, But the to it items, same say as focus is correct. We we the focus, the customer. rest actively believe more important apply focused, do but think about we're as core around I to the I our relook trying strategy assortment, in And at we'll at have that's extreme has equally narrow move Beyond are to to we

Kristy Chipman

from add, relates the previously what the supercharge and as of product. it range similar to performance just the in well as itself lift the in to versus non as And I been penetration has shared first sales quarter we've would Yes. pretty mid-single-digit being the

Operator

Paul next Citi. comes The from question with Lejuez

Paul Lejuez

Are consumer to more of Or terms you it's more say characterize ] trend Do being think Or income [ right you your strong it not that issues out consumer lower conversion a of a back an issue? a it very on? tied very trend? to to. in like to driving is stores? that And you trends of traffic and more there trend. isn't slack relate the out you there conversion now I spoke there feel you're is just would would where maybe capitalizing not environment you environment there of how some guess strong Curious

Kenneth Bull

that, you the Paul. can in beginning that, weigh Tom, Yes. take of Thanks, I'll and too. on

something One we buyers world the they deliver whatever going if do think gives which time we another ability drives may the shift on And drive after then X with continue Tom we go those may trends. traffic be to have And out the newness, realize our obviously of to on so that one from newness, we goes which flexibility but there's trends always worlds that is as to in the our customers. But there. important have to the those And for reasons it trends customer. you... is

Thomas Vellios

store. We bring what that. stores to to the necessarily is the to need this needs in create inside Below is not and what is trend relate our to obviously focused customer X. add out a that speed, element would move ability units assortment, trend shift focused into and and ability itself. on and is it assortment, for. but newness think I I built narrow our quickly And looking constantly the to a separate a a the trend to does be Five was right there of Through

we as So an it's drive newness we benefit. trend into how our reinvigorate upside, items obviously, the how a we biggest inject fruition, key and how business. added And a on then that will world, then believe, focus for comes that's we

Operator

comes next Haskett. Grom Gordon from with Chuck The question

Charles Grom

the specifically, strategy? if to back Five about talk Beyond to having we question. any wanted And just moving sort Seth $X level I philosophically, about of about of talk that, And thoughts guys how just you internal you your away just there's you circle and can -- think of and maybe, below onetime been Five if on commitment can the being margins? sales store. And to do were its get core priced do across back applications it the the Below and to from Tom,

Thomas Vellios

customers, for Five and that feel coming our impulse for exists our Five point that core are important, stores, value. all $X I'll Below. into very environment and Ken think think and and and the value And is price and that is points extreme then especially just value especially in creates to opportunity jump equally Five can We in. dad for Beyond mom Below start arrival. We kids $X We key. about price at

as the how edit rest make what in applies to we to to product, strategy try of want we how we store we in select been sure focusing that in believe we is on Beyond So do Five and what our of that how do the principles same and we've the product, the it. we the present

Kenneth Bull

I add what's terms to think Beyond at Chuck, our And the relook product. obviously, then, for with Tom, that's for we're Beyond Five another going that. related product. customer we've forward thing then the the to Five in -- got that appropriate mean presentation to prototype, I'll going I'll that's And of I just

Operator

The next Chukumba question Markets. Capital comes Loop from Anthony with

Anthony Chukumba

to being So and assistant you you did the make issue. reference mentioned that reference a And the in self-checkout. store [indiscernible] an complexity

my are effort? part I self-checkout So assisted question you as this guess reassessing is, restructuring of

Kenneth Bull

in shrink over in went focus a did that the Yes. then associate of a will better and stores to work here. mentioned going of did things do. We lot also take an now years checkout. that ability shrink, were, Anthony. We're done. we're think the time, where going lot probably looking we more what stores. of them right? that systems on the to associate ACO, we're I them I to be And at the our all Thanks, where to at front looking extent we it the services. put We us monitored that them needs where to and the the at I for mean, out at to complexity to at of To that but the I gives that look are critical we we the there's back store process stores that doing. around which scanning mentioned. probably Related introduced We're repurpose the to stores work the to actually it's required other things can efficiencies is time, around. But save to

workload we're in lot that's a to that, labor. in a we're doing going to stores. And of of things with going reinvesting goes one be really, kind to on reducing also, them then for mentioned, also, along where that it's Kristy be the as of but So -- piece hopefully X-sided simplify that it's the work

Operator

comes Group. question next Feldman from with The Advisory Joe Telsey

Joseph Feldman

And and capturing improve demand trying we me loyalty from program talked makes to prices about -- understand on think they we've You about they it when have program? further thoughts want, they And collectively better I'm focus about, want, years. loyalty that wondering the been a what accelerating your customer. have could the a how in helping understand, customer, your the on for any customer want, to asked guys effective better you

Kenneth Bull

Yes. Thanks, Joe.

had right. You're talked We about while. a that for

working years, today, early that macro a post-pandemic. caught on the a I over for goes the too. think your -- We'll into the to But the pressures very as and Fast do we to that up last dealt because end didn't with that we other a year. year. few see work potential things are where of developing of have we have driver did looks we like a It refocused of us, that possibly that program. with next those lot on got we point, kind really a by that we view done and we done, forward should test test a on probably

Operator

from Nagel with comes The Brian next Oppenheimer. question

Brian Nagel

you growth from guess, there's want Should the I lot moderation a here, potentially store but of we looking you any pause? X-part in in So strategy that question you're be standpoint, here on. recognize mean previously, just not stores target a to in I growth how is which nearer as that I store I -- a is mean, thinking the opening? to look then maybe broad-based? this about Is about -- at I onetime going now your be first, you new store and question some have going had thinking it the focus Is is, is in the talked growth on forward? And behind the 'XX. second understand this Or term, we're are Or you growth there should part the at way? that the changing better,

Kenneth Bull

Brian. Thanks,

You're right.

more to out these our XXXX. be to more of forward. as around Again, As able provide are And key we extent I that. focus on we more to detail initiatives. If now on talk store see most mentioned, We'll value is and to we'll to move about moderate that to we the for going But we're when company. to experience, and great details for focus what that that build doing we had it, for And a provide similar, focus be and we'll -- success able from now be back coming product the a do. specific would questions I need is very seeing. answer us to think that, see what it likely, the a growth similar term But a then rate really right we growth. near that's the see to we perspective. able from around go be growth That's we in

Your comment around.

at typical able in successful we're centers that's And other your the various that's areas. continue locations, in day. I shopping We've for was be mean around urban had I around being model flexibility a in in to to think us store I it been semi-rural, successful going always locations. locations. end think of the rural

us. still opportunity I there a as remain out is we growth for And company. think mentioned, that I

for opportunity us. still that, is white area feel So for space growth that in very we confident and all there

Operator

The with Michael comes next Evercore Montani ISI. from question

Michael Montani

Just of wanted X through to lines think questioning.

more happy one $XX that. to were with an need go then they $XX where We you're other don't I on comment you'd in store the of know, the hours? as specific wages. of out is focus? And better experience investment things first see understand single-digit that, low like, pre-pandemic, part kind is to get thinking store question hour. kind if if moving Are on kind average that? forward, than second count the ask mentioned, of model and to The can is what the was the was of intensifying Ken, care gotten kind then X And store I'd you trying increases the now right? you labor SKU guess hourly it shaking of average it if the share I high one hours to I it material about had front. how or know to you And SKU where and was Or talking a we the

Kenneth Bull

Okay. Michael. Thanks,

and On versus us increase double-digit call say, we're And last to the things the it, details I back. give around you pre-pandemic. we to get not had overassorted, I and several that. SKU over would becoming like that as discussed But it front, a that's suffice percentage going I'm a, years, going to the and counts overskewed SKU

As Tom of mentioned, we're end an at day. the item-driven the business

reducing terms of to and we're So renew focus in those a that renew SKUs. going focus also

the marketplace In terms competitive We always always and we've to and remain want hourly of in labor store way. wages. that been

of about to the be a at day, in We're that. to stores But be takes for of workloads. it continue So and to standards hours, hours the experience looking that be delivering crude we've because to coming various looking we have how country. we within will customer the experience store accordingly it the store like that long around going to to going process are the to our the had the that with need. be things great to them. terms we at competitive. And going end to and remain regards our in markets do rates labor reinvest at We're We're to to perform in adjust the necessary able deliver has

So drive we hours model. the the back that into put that will

Operator

The next from with Mizuho. Bellinger David question comes

David Bellinger

parter. Two

biggest is there this should So customer to, core store? edited get be onset And beauty, et of Ken, of near-term connected toys, category, you out for leads across laid gears within watching What's that that younger the up, the that? as remarks. cetera, then of more also spending back it, a that assortment to part specific and we in order a number initiatives at eventually maybe call opportunity prepared complete your to

Kenneth Bull

listen, the business at the of David. always David, day. been merchandise-driven Thanks, end a we've

mentioned think I value, mentioned when be again, store I And I everything. product is critical leads that too. So to experience and going across

on So we're going sure to we make focus that.

to another. these the all humming, ability across to where has And business -- as business. do going can isn't I we worlds, before, edited X what Five do. we and the ability That's when assortment that's the against model have that this X and the effect it In This versus for area then cumulative trend on of worlds. to impact back that a of Below, to have worlds. or all and targeted beauty the we're we have across mentioned we're that got get areas targeted of terms And our the the beauty of we've quality,

So department we scenarios it after are definitely to in categories of the and all go going business.

Operator

Capital The Markets. with Brad next KeyBanc comes from Thomas question

Bradley Thomas

topics. follow-ups some Two on earlier

do you as The initiatives just first know that merchandising, be back changing and if impacting is yourselves we you be go it I we and think turning you under right to $X. directly? And any how started secondly, XXXX. around $X? inflation, adjust shrink work if but have the this would be here. look out into you the you Or when quantification Tom, now do just Do don't to there? much can self-checkout $X would throw I the then at if underway sales Below, quantified efforts should it, to closer a Ten and of in that business We sense there's on just address still for

Kenneth Bull

efficiency through impact have you an terms work we've Tom, on rank done, done first you self-checkout, second. the take and among of of pretty I'll part, intercepts surveyed speed to high And other Around part that Brad. Thanks, and the if processing? that in we've and Brad, and we take actually mentioned, does want customers the retailers self-checkout.

the our think that's of seem appreciate day, appropriate do customers the So stores we at it. and the to for end

try to shrink continue just opposed what to scanning the going go associate a while. to think recently area we've monitored that been that and of having we to it, about different we're we we doing mitigate in shrink mitigate going side because control a that. We're by can way for obviously, to were doing self-checkout as than So

XX say, that to going product... then on over institute we're the to So next, the XX days. And

Thomas Vellios

set deliver I by than a great tell with and price and seen points team think to put starting been I've enough best you, to think we different organization. focus we've that To did very we would confidence opportunity, we merchandising be had them few you, today, to the ready as I and to a ability with the their their outlined, I regard in us point. ready and areas on think create less is tell inside the time But value, back the to destruction. have would impressed narrow position. that, whole move point, away what's and I as a a stores on way I've discipline, focus this answer team inside I as I've they're to and spent look so energized. which it, company, you, important the Maybe raised what we honest need seen product, product, just to we with you move And Ken engage on from the

this I them be Ken team that take time. highlighted, So It to to tell believe. support I able we initiatives And concern place, you, that have and with just some will must will a some I of we'll need deliver. don't good any in the be

Operator

The comes with Group. next Hamblin question Capital Jeremy Craig-Hallum from

Jeremy Hamblin

first, say, bit. XXXX as let's all that, had expectations? do So And new terms up in X-wall new thinking going your sure wanted expect markets forward, a store And just think profitable of your next productivity a little development if is be How you about unit kind that still of always to that's you of, overlap kind infill? on your stood. look year, you stores to into is then something in cannibalization basis, in versus of come what want do ask just to you've make I

Kenneth Bull

Jeremy. Thanks,

In on profit terms position where stores, across stores board we're our of a deliver of in X-wall the still the profitability the that basis.

pleased new in And very there still the leading. though recent a So as off retail. bit there's Even are they've still our mentioned in we with we're before, little that. fallen out store tops economics past,

similar to that were But know to think recall I range, probably In do in years, we have how that reasonable long which this to would appropriate. is at given mind would expect see things got productivity. measurements XX% markets, more one of unit in we consider we're levels and we're day, going in what do, to densification more the and now look to say, pretty to able those But we've base doing and recently cannibalization will last. I XX% for Keeping XX% the your to in always having of point productivity, is of be. in estimating back the I if I forward. would XXX% levels that to we as don't can experienced data you a we performance. We've in it's And -- that good say locations determining and we cannibalization the that go terms like be in it's

we'll term, But So productivity. mentioned the would we'll that. last Kristy I to in think has be the that take of couple looking that quarters in around I into say XX% XX% And it consideration. near at

I near reasonable the think in term. that's

Operator

next of America. comes Bank question from The Melanie Nunez with

Melanie Nunez

you've frame So could in being talked past, was summer the talk you if given of as time events wondering know just I spring the bit a about lull through assortment I then these know the a of and about more holidays? Obviously, aren't midst entering the changes I back-to-school you're feeling the coming as typically performance any has just a in of but been yet thoughts And how we're this? driver. lack

Kenneth Bull

and seasonal where it too, The important Tom a us. The store us present to to Now in for the Thanks, are it newness section we And Yes. is Melanie. mentioned of that gives about we're present chance product. seasons our all the store. newness

the and and an I say, the of will value. see much mentioned again, lull, customer the a drive the a actually going kind that bought the can and length the for after, the of to outlined to should we're be some I of core school of regards go assortment, business. of a some up in to the the spring things terms we forward. and not there. With in on to to what we've that season, that ability summer improvement and pretty we're think we put going confident would items are product. we forward, big in have to refocus back go kids back-to-school, again, the in that to affect and after chance out feel -- I going and season product go Again, holiday spring WOW assortment I our until we're mentioned adjust we and You us, we've go after summer given chase But But going and go the assortment

the to work it's a lot going terms together know But analysis as weeks of done. But of I put only we've there's been we've that done. in talked about, several all be we've and the we're a going as plan to work done. And team again, it. on. be extremely a But and that after work to motivated energized mentioned, of lot I needs is

Operator

call conference our to turn Ken and concludes this like remarks. to session. Q&A I'd time, At the any This closing over call Bull the back for

Kenneth Bull

you months. Thanks, look today, you for and on call on our progress Thanks, everyone. updating us all thank operator, joining forward the in a few we and to

Operator

has for presentation. today's attending you now conference The concluded. Thank

may You disconnect. now

Five Below (FIVE) 28 Aug 242025 Q2 Earnings call transcript