Five Below (NASDAQ:FIVE) shares fell about 11% at Thursday's market open, as investors looked past a stronger-than-expected first quarter earnings report and instead focused on the assumptions underlying the company's raised full-year guidance.
Five Below raised its full-year fiscal 2026 guidance, projecting net sales of $5.40 billion to $5.48 billion and adjusted diluted earnings per share of $8.65 to $9.05.
The discount retailer said its fiscal 2026 outlook reflects tariff rates currently in place through July 24 and assumes they will revert to levels that existed at the start of the fiscal year for the remainder of the year. The guidance also excludes any potential benefit from tariff refunds or share repurchases.
For the first quarter ended May 2, Five Below reported adjusted diluted earnings per share of $2.22, exceeding the Wall Street consensus estimate of $1.69.
Revenue increased 32.5% year over year to $1.29 billion, above analysts' expectations of approximately $1.20 billion.
Comparable sales rose 22.7% during the quarter, while operating income climbed to $154.2 million from $50.8 million a year earlier. Operating margin expanded to 12% from 5.2% in the prior-year period.
Net income totaled $123.1 million, or $2.21 per diluted share, compared with $41.1 million, or $0.75 per diluted share, in the first quarter of fiscal 2025.
The company opened 49 net new stores during the quarter, ending the period with 1,970 locations across 46 states.
Five Below CEO Winnie Park credited the results to the company's merchandising strategy and focus on value.
"We are thrilled with our outstanding first quarter performance, which is a testament to the team's execution of our customer-centric strategy," Park said in the earnings release. “The result was broad-based growth across our merchandising worlds, new and existing customers, and all demographic and geographic segments.”