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(mark one)

☑    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of shares of the registrant’s common stock, $0.01 par value, outstanding as of December 3, 2025 was 55,157,085.

  

Consolidated Balance Sheets

(Unaudited)

Consolidated Statements of Operations

(Unaudited)

Consolidated Statements of Shareholders’ Equity

(Unaudited)

(in thousands, except share data)

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

			Thirty-Nine Weeks Ended
			November 1, 2025						November 2, 2024
Operating activities:
Net income			$	120,415					$	66,154
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			143,131						121,933
Share-based compensation expense			26,172						11,303
Deferred income tax (benefit) expense			(5,608)						1,410
Other non-cash expenses			946						861
Changes in operating assets and liabilities:
Inventories			(452,763)						(233,205)
Prepaid income taxes and tax receivable			(7,878)						(15,514)
Prepaid expenses and other assets			45,564						(6,889)
Accounts payable			256,202						96,900
Income taxes payable			(51,916)						(41,772)
Accrued salaries and wages			37,840						(1,270)
Operating leases			(4,697)						45,914
Other accrued expenses			38,125						21,288
Net cash provided by operating activities			145,533						67,113
Investing activities:
Purchases of investment securities and other investments			(246,311)						(4,508)
Sales, maturities, and redemptions of investment securities			258,608						245,696
Capital expenditures			(133,960)						(271,855)
Net cash used in investing activities			(121,663)						(30,667)
Financing activities:
Net proceeds from issuance of common stock			477						600
Repurchase and retirement of common stock			—						(40,226)
Proceeds from exercise of options to purchase common stock and vesting of restricted and performance-based restricted stock units			1						1
Common shares withheld for taxes			(5,083)						(6,868)
Net cash used in financing activities			(4,605)						(46,493)
Net increase (decrease) in cash and cash equivalents			19,265						(10,047)
Cash and cash equivalents at beginning of period			331,718						179,749
Cash and cash equivalents at end of period			$	350,983					$	169,702
Supplemental disclosures of cash flow information:
Non-cash investing activities
Increase (Decrease) in accrued purchases of property and equipment			$	493					$	(23,715)

(1) Summary of Significant Accounting Policies

(a)Description of Business

Five Below, Inc. is a specialty value retailer offering merchandise targeted at the tween and teen demographic. The Company offers an edited assortment of products, with most priced at $5 and below. As used herein, “Five Below,” the “Company,” refers to Five Below, Inc. (collectively with its wholly owned subsidiaries), except as expressly indicated or unless the context otherwise requires. As used herein, references to “Crew” refer to the Company's employees, and references to “Shipcenters” refer to the Company's distribution and logistics centers.

The Company’s edited assortment of products includes select brands and licensed merchandise. The Company believes its merchandise is readily available, and that there are a number of potential vendors that could be utilized, if necessary, under approximately the same terms the Company is currently receiving; thus, it is not dependent on a single vendor or a group of vendors.

The Company is incorporated in the Commonwealth of Pennsylvania and, as of November 1, 2025, operated in 44 states, excluding Alaska, Hawaii, Idaho, Montana, Oregon, and Washington. As of November 1, 2025 and November 2, 2024, the Company operated 1,907 stores and 1,749 stores, respectively, each operating under the name “Five Below.”

The Company sells its merchandise on the internet, through the Company's fivebelow.com e-commerce website and mobile app, offering home delivery and the option to buy online and pick up in store. Additionally, the Company sells merchandise through on-demand third-party delivery services to enable its customers to shop online and receive convenient delivery.

(b)Fiscal Year

The Company operates on a 52/53-week fiscal year ending on the Saturday closest to January 31. References to "fiscal year 2025" or "fiscal 2025" refer to the period from February 2, 2025 to January 31, 2026, which is a 52-week fiscal year. References to "fiscal year 2024" or "fiscal 2024" refer to the period from February 4, 2024 to February 1, 2025, which is a 52-week fiscal year. The fiscal quarters ended November 1, 2025 and November 2, 2024 refer to the thirteen weeks ended as of those dates. The year-to-date periods ended November 1, 2025 and November 2, 2024 refer to the thirty-nine weeks ended as of those dates.

(c)Basis of Presentation

The consolidated balance sheets as of November 1, 2025 and November 2, 2024, the consolidated statements of operations for the thirteen and thirty-nine weeks ended November 1, 2025 and November 2, 2024, the consolidated statements of shareholders’ equity for the thirteen and thirty-nine weeks ended November 1, 2025 and November 2, 2024 and the consolidated statements of cash flows for the thirty-nine weeks ended November 1, 2025 and November 2, 2024 have been prepared by the Company in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim reporting and are unaudited. In the opinion of management, the aforementioned financial statements include all known adjustments (which consist primarily of normal, recurring accruals, estimates and assumptions that impact the financial statements) necessary to present fairly the financial position at the balance sheet dates and the results of operations and cash flows for the periods ended November 1, 2025 and November 2, 2024. The balance sheet as of February 1, 2025, presented herein, has been derived from the audited balance sheet included in the Company's Annual Report on Form 10-K for fiscal 2024 as filed with the Securities and Exchange Commission on March 20, 2025 and referred to herein as the “Annual Report,” but does not include all annual disclosures required by U.S. GAAP. These consolidated financial statements should be read in conjunction with the consolidated financial statements for the fiscal year ended February 1, 2025 and footnotes thereto included in the Annual Report. The consolidated results of operations for the thirteen and thirty-nine weeks ended November 1, 2025 and November 2, 2024 are not necessarily indicative of the consolidated operating results for the year ending January 31, 2026 or any other period. The Company's business is seasonal and as a result, the Company's net sales fluctuate from quarter to quarter. Net sales are usually highest in the fourth fiscal quarter due to the year-end holiday season.

(d)Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes - Improvements to Income Tax Disclosures. This new guidance requires consistent categories and enhanced disaggregation of information in the rate reconciliation and enhanced disaggregation of income taxes paid by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. This new guidance requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory, employee compensation, and depreciation and amortization. In January 2025, the FASB issued ASU 2025-01, which clarifies the effective date of ASU 2024-03. The amendment is effective for fiscal years beginning after December 15, 2026 and interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software. This new guidance amends certain aspects of the accounting for and disclosure of costs incurred to develop internal use software by removing references to project stages of a software development project, which better aligns with current software development methods. The amendments are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of ASU 2025-06 on its consolidated financial statements.

(e)Use of Estimates

The preparation of the consolidated financial statements requires management of the Company to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, net realizable value for inventories, income taxes, share-based compensation expense, and the incremental borrowing rate utilized in operating lease liabilities.

(f)Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation at the measurement date:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Inputs, other than Level 1, that are either directly or indirectly observable.

Level 3: Unobservable inputs developed using the Company’s estimates and assumptions which reflect those that market participants would use.

The classification of fair value measurements within the hierarchy are based upon the lowest level of input that is significant to the measurement.

The Company’s financial instruments consist primarily of cash equivalents, investment securities, accounts payable, and borrowings, if any, under a line of credit. The Company believes that: (1) the carrying value of cash equivalents and accounts payable are representative of their respective fair value due to the short-term nature of these instruments; and (2) the carrying value of the borrowings, if any, under the line of credit approximates fair value because the line of credit’s interest rates vary with market interest rates. Under the fair value hierarchy, the fair market values of cash equivalents and the investments in corporate bonds are Level 1 while the investments in municipal bonds are Level 2. The fair market values of Level 2 instruments are determined by management with the assistance of a third-party pricing service. Since quoted prices in active markets for identical assets are not available, these prices are determined by the third-party pricing service using observable market information such as quotes from less active markets and quoted prices of similar securities.

As of November 1, 2025, February 1, 2025 and November 2, 2024, the Company had cash equivalents of $317.0 million, $310.4 million and $150.3 million, respectively. The Company’s cash equivalents typically consist of cash management solutions, credit and debit card receivables, money market funds, corporate bonds and municipal bonds with original maturities of 90 days or less. Fair value for cash equivalents was determined based on Level 1 inputs.

As of November 1, 2025, February 1, 2025 and November 2, 2024, the Company's investment securities are classified as held-to-maturity since the Company has the intent and ability to hold the investments to maturity. Such securities are carried at amortized cost plus accrued interest and consist of the following (in thousands):

Short-term investment securities as of November 1, 2025, February 1, 2025 and November 2, 2024 all mature in one year or less. Long-term investment securities as of November 1, 2025 all mature after one year but less than two years.

(g)Prepaid Expenses and Other Current Assets

Prepaid expenses as of November 1, 2025, February 1, 2025 and November 2, 2024 were $38.2 million, $37.7 million, and $42.0 million, respectively. Other current assets as of November 1, 2025, February 1, 2025 and November 2, 2024 were $72.6 million, $120.7 million, and $115.4 million, respectively.

(h)Other Accrued Expenses

Other accrued expenses include accrued capital expenditures of $23.1 million, $25.7 million, and $25.5 million as of November 1, 2025, February 1, 2025 and November 2, 2024, respectively.

(i)Deferred Compensation

The Five Below, Inc. Nonqualified Deferred Compensation Plan (the "Deferred Comp Plan") and a related, irrevocable grantor trust (the "Trust") provides eligible key crew with the opportunity to elect to defer up to 80% of their eligible compensation. The Company may make discretionary contributions, at the discretion of the Board. Payments under the Deferred Comp Plan will be made from the general assets of the Company or from the assets of the Trust, funded by the Company. The related liability is recorded as deferred compensation and included in other long-term liabilities in the consolidated balance sheets.

(j)Supply Chain Finance

The Company utilizes the supply chain finance program whereby qualifying suppliers may elect at their sole discretion to sell the Company's payment obligations to a designated third party financial institution. The amount of obligations outstanding under the supply chain finance program was $9.3 million, $0.7 million, and $1.4 million as of November 1, 2025, February 1, 2025 and November 2, 2024, respectively.

(2)Revenue from Contracts with Customers

Revenue from store operations, including third party delivery services, is recognized at the point of sale when control of the product is transferred to the customer at such time. Internet sales, through the Company's fivebelow.com e-commerce website and mobile app, are recognized when the customer receives the product as control transfers upon delivery. Returns subsequent to the period end are immaterial; accordingly, no significant reserve has been recorded. Gift card sales to customers are initially recorded as liabilities and recognized as sales upon redemption for merchandise or as breakage revenue in proportion to the pattern of redemption of the gift cards by the customer in net sales.

The transaction price for the Company’s sales is based on the item’s stated price. To the extent that the Company charges customers for shipping and handling on e-commerce sales, the Company records such amounts in net sales. Shipping and handling costs, which include fulfillment and shipping costs related to the Company's e-commerce operations, are primarily included in costs of goods sold. As permitted by applicable accounting guidance, ASU 2014-09 "Revenue from Contracts with Customers," the Company has elected to exclude all sales taxes collected from customers and remitted to governmental authorities from net sales in the accompanying consolidated statements of operations.

The following table provides information about disaggregated revenue by groups of products: leisure, fashion and home, and snack and seasonal (dollars in thousands):

(3) Leases

The Company determines if an arrangement contains a lease at the inception of a contract. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

During the thirteen weeks ended November 1, 2025, the Company committed to 28 new store leases with average terms of approximately 10 years that have future minimum lease payments of approximately $44.6 million.

All of the Company's leases are classified as operating leases and the associated assets and liabilities are presented as separate captions in the consolidated balance sheets. As of November 1, 2025 and November 2, 2024, the weighted average remaining lease term for the Company's operating leases was 7.1 years and 7.5 years, respectively, and the weighted average discount rate was 5.4% and 5.3%, respectively.

The following table is a summary of the Company's components for net lease costs (in thousands):

* Excludes short-term lease cost, which is immaterial.

The following table summarizes the maturity of lease liabilities under operating leases as of November 1, 2025 (in thousands):

The following table summarizes the supplemental cash flow disclosures related to leases (in thousands):

(1) Included within operating activities in the Company's Consolidated Statements of Cash Flows.

(4) Income Per Common Share

Basic income per common share amounts are calculated using the weighted average number of common shares outstanding for the period. Diluted income per common share amounts are calculated using the weighted average number of common shares outstanding for the period and include the dilutive impact of exercised stock options as well as assumed vesting of restricted stock awards and shares currently available for purchase under the Company's Employee Stock Purchase Plan, using the treasury stock method. Performance-based restricted stock units are considered contingently issuable shares for diluted income per common share purposes and the dilutive impact, if any, is not included in the weighted average shares until the performance conditions are met. The dilutive impact, if any, for performance-based restricted stock units, which are subject to market conditions based on the Company's total shareholder return relative to a pre-defined peer group, are included in the weighted average shares.

The following table reconciles net income and the weighted average common shares outstanding used in the computations of basic and diluted income per common share (in thousands, except for share and per share data):

The effects of the assumed vesting of restricted stock units for 20,040 shares of common stock for the thirteen weeks ended November 1, 2025 were excluded from the calculation of diluted income per share, as their impact would have been anti-dilutive.

The effects of the assumed vesting of restricted stock units for 153,344 shares of common stock for the thirteen weeks ended November 2, 2024 were excluded from the calculation of diluted income per share, as their impact would have been anti-dilutive.

The effects of the assumed vesting of restricted stock units for 83,636 shares of common stock for the thirty-nine weeks ended November 1, 2025 were excluded from the calculation of diluted income per share, as their impact would have been anti-dilutive.

The effects of the assumed vesting of restricted stock units for 111,239 shares of common stock for the thirty-nine weeks ended November 2, 2024 were excluded from the calculation of diluted income per share, as their impact would have been anti-dilutive.

The aforementioned excluded shares do not reflect the impact of any incremental repurchases under the treasury stock method.

(5)Line of Credit

On September 16, 2022, the Company entered into a Second Amendment to Credit Agreement (the "Second Amendment") which amended the Fifth Amended and Restated Credit Agreement, dated as of April 24, 2020, as previously amended by that certain First Amendment to Credit Agreement, dated as of January 27, 2021 (the "First Amendment"; the Fifth Amended and Restated Credit Agreement as amended by the First Amendment and the Second Amendment, the “Credit Agreement”), among the Company, 1616 Holdings, Inc., a wholly-owned subsidiary of the Company ("1616 Holdings" and together with the Company, the "Loan Parties"), Wells Fargo Bank, National Association as administrative agent (the "Agent"), and other lenders party thereto (the "Lenders").

The Credit Agreement provides for a secured asset-based revolving line of credit in the amount of up to $225.0 million (the "Revolving Credit Facility"). Advances under the Revolving Credit Facility are tied to a borrowing base consisting of eligible credit card receivables and inventory, as reduced by certain reserves in effect from time to time. Pursuant to the Credit Agreement, inventory appraisals and certain other diligence items are deferred, with reduced advance rates during the period that such appraisals have not been delivered. Pursuant to the Second Amendment, the Revolving Credit Facility expires on the earliest to occur of (i) September 16, 2027 or (ii) an event of default.

The Second Amendment also replaced the existing London Interbank Offered Rate ("LIBOR") provisions with Secured Overnight Financing Rate ("SOFR") provisions which converted then outstanding LIBOR loans into SOFR loans and additionally makes a number of other revisions to other provisions of the Credit Agreement. Giving effect to the Second Amendment, outstanding borrowings under the Revolving Credit Facility would accrue interest at floating rates plus an applicable margin ranging from 1.12% to 1.50% for SOFR loans and 0.125% to 0.50% for base rate loans, and letter of credit fees range from 1.125% to 1.50%, in each case based on the average availability under the Revolving Credit Facility.

The Revolving Credit Facility may be increased by up to an additional $150.0 million, subject to certain conditions, including obtaining commitments from one or more Lenders (the "Accordion"). Pursuant to the First Amendment, the Company obtained commitments from the Lenders that would allow the Company at its election (subject only to satisfaction of certain customary conditions such as the absence of any Event of Default), to increase the amount of the Revolving Credit Facility by an aggregate principal amount up to $50.0 million within the Accordion (the "Committed Increase"). The entire amount of the Revolving Credit Facility is available for the issuance of letters of credit and allows for swingline loans.

The Credit Agreement contains customary covenants that limit, absent lender approval, the ability of the Company and certain of its affiliates to, among other things, pay cash dividends, incur debt, create liens and encumbrances, redeem or repurchase stock, enter into certain acquisition transactions with affiliates, merge, dissolve, repay certain indebtedness, change the nature of the Company’s business, enter sale or leaseback transactions, make investments or dispose of assets. In some cases, these restrictions are subject to certain negotiated exceptions or permit the Company to undertake otherwise restricted activities if it satisfies certain conditions. In addition, the Company will be required to maintain availability of not less than (i) 12.5% of the lesser of (x) aggregate commitments under the Revolving Credit Facility and (y) the borrowing base (the "loan cap") during the period that inventory appraisals have not been delivered as described above and (ii) at all other times 10.0% of the loan cap.

If there exists an event of default or availability under the Revolving Credit Facility is less than 15% of the loan cap, amounts in any of the Loan Parties’ or subsidiary guarantors' designated deposit accounts will be transferred daily into a blocked account held by the Agent and applied to reduce outstanding amounts under the Revolving Credit Facility (the "Cash Dominion Event"), so long as (i) such event of default has not been waived and/or (ii) until availability has exceeded 15% of the loan cap for sixty (60) consecutive calendar days (provided that such ability to discontinue the Cash Dominion Event shall be limited to two times during the term of the Credit Agreement).

The Credit Agreement contains customary events of default including, among other things, failure to pay obligations when due, initiation of bankruptcy or insolvency proceedings, defaults on certain other indebtedness, change of control, incurrence of certain material judgments that are not stayed, satisfied, bonded or discharged within 30 days, certain ERISA events, invalidity of the credit documents, and violation of affirmative and negative covenants or breach of representations and warranties set forth in the Credit Agreement. Amounts under the Revolving Credit Facility may become due upon events of default (subject to any applicable grace or cure periods).

All obligations under the Revolving Credit Facility are guaranteed by 1616 Holdings and secured by substantially all of the assets of the Company and 1616 Holdings.

As of November 1, 2025, the Company had no borrowings under the Revolving Credit Facility and had approximately $220 million available on the Revolving Credit Facility, net of $5 million in outstanding letters of credit.

As of November 1, 2025 and November 2, 2024, the Company was in compliance with the covenants applicable to it under the Credit Agreement.

(6)Commitments and Contingencies

As of November 1, 2025, the Company has other purchase commitments of approximately $3.3 million consisting of purchase agreements for materials that will be used in the construction of new stores.

The Company is subject to various proceedings, lawsuits, disputes, and claims arising in the ordinary course of the Company's business. Many of these actions raise complex factual and legal issues and are subject to uncertainties. Actions filed against the Company from time to time include commercial, intellectual property, customer, and employment actions, including class action lawsuits. The plaintiffs in some actions seek unspecified damages or injunctive relief, or both. Actions are in various procedural stages, and some are covered in part by insurance. The Company cannot predict with assurance the outcome of actions brought against the Company. Accordingly, adverse developments, settlements, or resolutions may occur and negatively impact income in the quarter of such development, settlement or resolution. If a potential loss arising from these lawsuits, claims and pending actions is probable and reasonably estimable, the Company records the estimated liability based on circumstances and assumptions existing at the time. Although the outcome of these and other claims cannot be predicted with certainty, management does not believe that the ultimate resolution of these matters will have a material adverse effect on the Company's financial condition or results of operations.

On August 1, 2024, a putative class action was filed against the Company and a certain former senior officer in the United States District Court for the Eastern District of Pennsylvania, purportedly on behalf of a class of the Company's investors who purchased or otherwise acquired the Company's publicly traded securities between March 20, 2024 and July 16, 2024. On September 16, 2024, a similar action was commenced against the Company in the same court on behalf of a class of investors who purchased or otherwise acquired the Company's publicly traded securities between December 1, 2022 and July 16, 2024. The complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder in connection with various public statements made by the Company. On October 28, 2024, the court entered an order consolidating the actions and appointing lead plaintiff. On January 13, 2025, lead plaintiff filed its Consolidated Amended Complaint. On March 14, 2025, Defendants filed their Motion to Dismiss the Consolidated Amended Complaint. On May 13, 2025, lead plaintiff filed a response in opposition to Defendants' Motion to Dismiss. Defendants filed their reply in support of their Motion to Dismiss on June 12, 2025. The Motion to Dismiss was granted in part and denied in part on August 25, 2025 and the parties are now in the discovery phase.

In October 2024, the Company received two separate letters from purported shareholders demanding that the Company investigate certain potential derivative claims relating to the same circumstances and allegations included in the shareholder class action. The Company subsequently received four additional separate letters from purported shareholders making similar demands. In response, the Board of Directors formed a Special Litigation Committee, which has investigated the allegations contained in each of these letters, and on September 10, 2025, the Special Litigation Committee completed its investigation and determined that it would not be in the best interests of the Company to pursue litigation or take other steps in response to the demand letters. In October 2025, three of the purported shareholders filed derivative suits based on the allegations in their demand letters, two of which were filed in the United States District Court for the Eastern District of Pennsylvania and one of which was filed in Philadelphia County Court of Common Pleas.

The Company intends to vigorously defend against the foregoing actions, which the Company believes to be without merit. The potential impact of these actions, which seek unspecified damages, attorneys’ fees and expenses, is uncertain.

(7)Share-Based Compensation

Pursuant to the Company's 2022 Equity Incentive Plan (the “Plan”), the Company’s Board of Directors may grant stock options, restricted shares, and restricted stock units to officers, directors, key crew and professional service providers. The Plan allows for the issuance of up to a total of 4.3 million shares under the Plan. As of November 1, 2025, approximately 2.9 million stock options, restricted shares, or restricted stock units were available for grant.

All stock options have a term not greater than ten years. Stock options vest and become exercisable in whole or in part, in accordance with vesting conditions set by the Company’s Board of Directors. Options granted to date generally vest over four years from the date of grant.

The fair value of each option award granted to crew, including outside directors, is estimated on the date of grant using the Black-Scholes option-pricing model. There were no stock options granted, forfeited or exercised during the thirty-nine weeks ended November 1, 2025, and there were no stock options outstanding as of November 1, 2025.

All restricted stock units ("RSU") and performance-based restricted stock units ("PSU") vest in accordance with vesting conditions set by the compensation committee of the Company’s Board of Directors. RSUs granted to date generally have vesting periods ranging from less than one year to five years from the date of grant. The fair value of RSUs is the market price of the underlying common stock on the date of grant. PSUs granted to date generally have vesting periods ranging from less than one year to five years from the date of grant.

PSUs that have a performance condition are subject to satisfaction of the applicable performance goals established for the respective grant. The Company periodically assesses the probability of achievement of the performance criteria and adjusts the amount of compensation expense accordingly. The fair value of these PSUs is the market price of the underlying common stock on the date of grant. Compensation is recognized over the vesting period and adjusted for the probability of achievement of the performance criteria.

PSUs that have a market condition based on the Company's total shareholder return relative to a pre-defined peer group are subject to multi-year performance objectives with vesting periods of approximately three years from the date of grant (if the applicable performance objectives are achieved). The fair value of these PSUs are determined using a Monte Carlo simulation model, which utilizes multiple input variables such as (i) total shareholder return from the beginning of the performance cycle through the performance measurement date(s); (ii) volatility; (iii) risk-free interest rates; and (iv) the correlation of the pre-defined peer group's total shareholder return.

RSU and PSU activity during the thirty-nine weeks ended November 1, 2025 was as follows:

In connection with the vesting of RSUs and PSUs during the thirty-nine weeks ended November 1, 2025, the Company withheld 43,238 shares with an aggregate value of $5.1 million in satisfaction of minimum tax withholding obligations due upon vesting.

In connection with the vesting of RSUs and PSUs during the thirty-nine weeks ended November 2, 2024, the Company withheld 36,249 shares with an aggregate value of $6.9 million in satisfaction of minimum tax withholding obligations due upon vesting.

As of November 1, 2025, there was $41.7 million of total unrecognized compensation costs related to non-vested share-based compensation arrangements (including RSUs and PSUs) granted under the Plan. The cost is expected to be recognized over a weighted average vesting period of 1.9 years.

On November 27, 2023, the Company's Board of Directors approved a new share repurchase program for up to $100 million of the Company's common stock through November 27, 2026. In fiscal 2024, the Company purchased 266,997 shares at an aggregate cost of approximately $40.0 million, or an average price of $149.79 per share. There were no repurchases during the thirty-nine weeks ended November 1, 2025. There can be no assurances that any additional repurchases will be completed, or as to the timing or amount of any repurchases. The share repurchase program may be modified or discontinued at any time.

Since March 2018, the Company has purchased approximately 1.9 million shares for an aggregate cost of approximately $270 million.

(8)Income Taxes

The following table summarizes the Company’s income tax expense and effective tax rates for the thirteen and thirty-nine weeks ended November 1, 2025 and November 2, 2024 (dollars in thousands):

The effective tax rates for the thirteen and thirty-nine weeks ended November 1, 2025 and November 2, 2024 were based on the Company’s forecasted annualized effective tax rates and were adjusted for discrete items that occurred within the periods presented. The effective tax rate for the thirteen weeks ended November 1, 2025 was higher than the thirteen weeks ended November 2, 2024 primarily due to non-deductible expenses, partially offset by discrete items, which includes the impact of share-based accounting. The effective tax rate for the thirty-nine weeks ended November 1, 2025 was higher than the thirty-nine weeks ended November 2, 2024 primarily due to non-deductible expenses and discrete items, which includes the impact of share-based accounting.

The Company had no material accrual for uncertain tax positions or interest and/or penalties related to income taxes on the Company’s balance sheets as of November 1, 2025, February 1, 2025 and November 2, 2024 and has not recognized any material uncertain tax positions or interest and/or penalties related to income taxes in the consolidated statements of operations for the thirteen and thirty-nine weeks ended November 1, 2025 and November 2, 2024.

The Company files a federal income tax return as well as state tax returns. The Company’s U.S. federal income tax returns for the fiscal years ended January 29, 2022 and thereafter remain subject to examination by the U.S. Internal Revenue Service. State returns are filed in various state jurisdictions, as appropriate, with varying statutes of limitation and remain subject to examination for varying periods up to three years to four years depending on the state.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law. The OBBBA contains numerous amendments to federal income tax provisions and has varying effective dates. The Company has evaluated and incorporated the effects of the legislation in its income tax provision for the thirty-nine weeks ended November 1, 2025. The legislation did not materially impact the Company's consolidated financial statements.

(9)Segment Reporting

The Company has one reportable and operating segment, which derives revenue from sales of the Company’s merchandise to customers at its 1,907 brick & mortar store locations, which operate in 44 states, and online at Fivebelow.com. No customer accounts for 10% or more of its revenues.

The accounting policies of the reportable segment are the same as those described in “Note 1 – Summary of Significant Accounting Policies.”

The chief operating decision maker (“CODM”) is the Company’s President and Chief Executive Officer, who assesses and evaluates the performance of the reportable segment. Financial information and data are provided to the CODM on a consolidated basis. The CODM uses consolidated sales and consolidated net income to evaluate performance, make key operating decisions and allocate resources. The Company’s significant segment expenses are included on the “Consolidated Statements of Operations” in Item 1 “Consolidated Financial Statements” of this Form 10-Q. See “Note 2 – Revenue from Contracts with Customers” for the Company’s disaggregated revenue by groups of products.

Identifiable segment assets, including the significant segment assets of Cash and Cash Equivalents, Inventory and Accounts Payable, are included on the “Consolidated Balance Sheets” in Item 1 “Consolidated Financial Statements" of this Form 10Q.

The following table details segment profit and loss for the Company's one reportable segment:

This Quarterly Report on Form 10-Q contains forward-looking statements pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts or present facts or conditions, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the introduction of new merchandise, and the implementation of our marketing and branding strategies. Forward-looking statements frequently are identified by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or the negative of these terms or other comparable terminology.

The forward-looking statements contained in this Quarterly Report on Form 10-Q reflect our views as of the date of this report about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to, those factors described in Part I, Item 1A “Risk Factors” in our Annual Report, as amended by the risk factors included in Part II, Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q. These factors include without limitation:

•the impacts of inflation and increasing commodity prices;

•failure to successfully implement our growth strategy;

•disruptions in our ability to select, obtain, distribute and market merchandise profitably;

•reliance on merchandise manufactured outside of the United States;

•the direct and indirect impact of current and potential tariffs imposed, threatened and proposed by the United States on foreign imports, including, without limitation, the tariffs themselves, any counter-measures thereto and any indirect effects on consumer discretionary spending, which could increase the cost to us of certain products, lower our margins, increase our import related expenses, and reduce consumer spending for discretionary items, each of which could have a material adverse effect on our business, financial condition and results of future operations;

•the impact of price increases, such as, a reduction in our unit sales, damage to our reputation with our customers, and our becoming less competitive in the marketplace;

•dependence on the volume of traffic to our stores and website;

•inability to successfully build, operate or expand our shipcenters or network capacity;

•disruptions to the global supply chain, increased cost of freight, constraints on shipping capacity to transport inventory or the timely receipt of inventory;

•extreme weather conditions in the areas in which our stores are located could negatively affect our business and results of operations;

•disruptions in our information technology systems and our inability to maintain and update those systems could adversely affect operations and our customers;

•systemic failure of the banking system in the United States or globally;

•the risks of cyberattacks or other cyber incidents, such as the failure to secure customers' confidential or credit card information, or other private data relating to our crew or our Company, including the costs associated with protection against or remediation of such incidents;

•increased usage of machine learning and other types of artificial intelligence in our business, and challenges with properly managing its use;

•increased operating costs or exposure to fraud or theft due to customer payment-related risks;

•inability to increase sales and improve the efficiencies, costs and effectiveness of our operations;

•dependence on our executive officers, senior management and other key personnel or inability to hire additional qualified personnel;

•inability to successfully manage our inventory balances and inventory shrinkage;

•inability to meet our lease obligations;

•the costs and risks of constructing and owning real property;

•changes in our competitive environment, including increased competition from other retailers and the presence of online retailers;

•the seasonality of our business;

•inability to successfully implement our expansion into online retail;

•natural disasters, adverse weather conditions, pandemic outbreaks, global political events, war, terrorism or civil unrest;

•the impact of changes in tax legislation;

•the impact to our financial performance related to insurance programs;

•inability to protect our brand name, trademarks and other intellectual property rights;

•the impact of product and food safety claims and effects of legislation; and

•restrictions imposed by our indebtedness on our current and future operations.

Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements. All of the forward-looking statements we have included in this Quarterly Report on Form 10-Q are based on information available to us on the date of this report. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as otherwise required by law.

Five Below, Inc. (collectively referred to herein with its wholly owned subsidiaries as "we," "us," or "our") is a rapidly growing specialty value retailer offering a broad range of trend-right, high-quality merchandise targeted at the tween and teen customer. We offer a dynamic, edited assortment of exciting products, with most priced at $5 and below, including select brands and licensed merchandise across our category worlds. In fiscal 2019, we rolled out new pricing to our full chain, increasing prices on certain products over $5. Most of our products remain at $5 and below. As of November 1, 2025, we operated 1,907 stores in 44 states.

We offer our merchandise on the internet, through our fivebelow.com e-commerce website and mobile app, offering home delivery and the option to buy online and pick up in store. Additionally, we sell merchandise through on-demand third-party delivery services to enable our customers to shop online and receive convenient delivery. All e-commerce sales, which includes shipping and handling revenue, are included in net sales and are included in comparable sales. Our e-commerce expenses will have components classified as both cost of goods sold and selling, general and administrative expenses (including depreciation and amortization).

In assessing the performance of our business, we consider a variety of performance and financial measures. These key measures include net sales, comparable sales, cost of goods sold and gross profit, selling, general and administrative expenses (including depreciation and amortization) and operating income.

Net sales constitute gross sales net of merchandise returns for damaged or defective goods. Net sales consist of sales from comparable stores, non-comparable stores, and e-commerce, which includes shipping and handling revenue. Revenue from the sale of gift cards is deferred and not included in net sales until the gift cards are redeemed to purchase merchandise or as breakage revenue in proportion to the pattern of redemption of the gift cards by the customer.

Our business is seasonal and as a result, our net sales fluctuate from quarter to quarter. Net sales are usually highest in the fourth fiscal quarter due to the year-end holiday season.

Comparable sales include net sales from stores that have been open for at least 15 full months from their opening date, and e-commerce sales. Comparable stores include the following:

•Stores that have been remodeled while remaining open;

•Stores that have been relocated within the same trade area, to a location that is not significantly different in size, in which the new store opens at about the same time as the old store closes; and

•Stores that have expanded, but are not significantly different in size, within their current locations.

For stores that are relocated or expanded, the following periods are excluded when calculating comparable sales:

•The period beginning when the closing store receives its last merchandise delivery from one of our shipcenters through:

▪the last day of the fiscal year in which the store was relocated or expanded (for stores that increased significantly in size); or

▪the last day of the fiscal month in which the store re-opens (for all other stores); and

•The period beginning on the first anniversary of the date the store received its last merchandise delivery from one of our shipcenters through the period ending on the first anniversary of the date the store re-opened.

Comparable sales exclude the 53rd week of sales for 53-week fiscal years. In the 52-week fiscal year subsequent to a 53-week fiscal year, we exclude the sales in the non-comparable week from the same-store sales calculation. Due to the 53rd week in fiscal 2023, all comparable sales related to any reporting period during the year ended February 3, 2024 are reported on a restated calendar basis using the National Retail Federation's restated calendar comparing similar weeks.

Due to the 53rd week in fiscal 2023, comparable sales for the thirteen and thirty-nine weeks ended November 2, 2024 are reported on a restated calendar basis. Reference to the "restated calendar" is based on using the National Retail Federation's restated calendar comparing similar weeks, which are the thirteen weeks from August 4, 2024 to November 2, 2024 as compared to the thirteen weeks from August 6, 2023 to November 4, 2023 and the thirty-nine weeks from February 4, 2024 to November 2, 2024 as compared to the thirty-nine weeks from February 5, 2023 to November 4, 2023.

There may be variations in the way in which some of our competitors and other retailers calculate comparable or “same store” sales. As a result, data in this Quarterly Report on Form 10-Q regarding our comparable sales may not be comparable to similar data made available by other retailers. Non-comparable sales are comprised of new store sales, sales for stores not open for a full 15 months, and sales from existing store relocation and expansion projects that were temporarily closed (or not receiving deliveries) and not included in comparable sales.

Measuring the change in fiscal year-over-year comparable sales allows us to evaluate how we are performing. Various factors affect comparable sales, including:

•consumer preferences, buying trends and overall economic trends;

•our ability to identify and respond effectively to customer preferences and trends;

•our ability to provide an assortment of high-quality, trend-right and everyday product offerings that generate new and repeat visits to our stores;

•the customer experience we provide in our stores and online;

•the level of traffic near our locations in the power, community and lifestyle centers in which we operate;

•competition;

•changes in our merchandise mix;

•pricing;

•our ability to source and distribute products efficiently;

•the timing of promotional events and holidays;

•the timing of introduction of new merchandise and customer acceptance of new merchandise;

•our opening of new stores in the vicinity of existing stores;

•the number of items purchased per store visit;

•weather conditions; and

•the impacts associated with the COVID-19 pandemic, including closures of our stores, adverse impacts on our operations, and consumer sentiment regarding discretionary spending.

Opening new stores is an important part of our growth strategy. As we continue to pursue our growth strategy, we expect that a significant percentage of our net sales will continue to come from new stores not included in comparable sales. Accordingly, comparable sales are only one measure we use to assess the success of our growth strategy.

Gross profit is equal to our net sales less our cost of goods sold. Gross margin is gross profit as a percentage of our net sales. Cost of goods sold reflects the direct costs of purchased merchandise and inbound freight and tariffs, as well as shipping and handling costs, store occupancy, distribution and buying expenses. Shipping and handling costs include internal fulfillment and shipping costs related to our e-commerce operations. Store occupancy costs include rent, common area maintenance, utilities and property taxes for all store locations. Distribution costs include costs for receiving, processing, warehousing and shipping of merchandise from our shipcenters and between store locations. Buying costs include compensation expenses and other costs for our internal buying organization, including our merchandising and product development team and our planning and allocation group. These costs are significant and can be expected to continue to increase as our Company grows.

The components of our cost of goods sold may not be comparable to the components of cost of goods sold or similar measures of our competitors and other retailers. As a result, data in this Quarterly Report on Form 10-Q regarding our gross profit and gross margin may not be comparable to similar data made available by our competitors and other retailers.

The variable component of our cost of goods sold is higher in higher volume quarters because the variable component of our cost of goods sold generally increases as net sales increase. We regularly analyze the components of gross profit, a non-GAAP financial measure, as well as gross margin as it provides a useful and relevant measure to analyze our financial performance. Any inability to obtain acceptable levels of initial markups, a significant increase in our use of markdowns, and a significant increase in inventory shrinkage or inability to generate sufficient sales leverage on the store occupancy, distribution and buying components of cost of goods sold could have an adverse impact on our gross profit and results of operations. In addition, current global supply chain disruptions, the cost of freight and constraints on shipping capacity to transport inventory may have an adverse impact on our gross profit and results of operations, as well as our sales. Changes in the mix of our products may also impact our overall cost of goods sold.

Selling, general and administrative (including depreciation and amortization), or SG&A, expenses are composed of payroll and other compensation, marketing and advertising expense, depreciation and amortization expense and other selling and administrative expenses. SG&A expenses as a percentage of net sales are usually higher in lower sales volume quarters and lower in higher sales volume quarters.

The components of our SG&A expenses may not be comparable to those of other retailers. We expect that our SG&A expenses will increase in future periods due to our continuing store growth. Variability in performance-based compensation expenses related to our business performance may cause SG&A expenses to be higher or lower than comparable periods. In addition, any increase in future share-based grants, modifications or forfeitures will impact our share-based compensation expense included in SG&A expenses.

Operating income equals gross profit less SG&A expenses. Operating income excludes interest expense or income, other expense or income, and income tax expense or benefit. We use operating income as an indicator of the productivity of our business and our ability to manage SG&A expenses. Operating margin percentage measures operating income as a percentage of our net sales.

The following tables summarize key components of our results of consolidated operations for the periods indicated, both in dollars and as a percentage of our net sales.

(1)Components may not add to total due to rounding.

(2)Only includes stores that opened before the beginning of the thirteen weeks ended and thirty-nine weeks ended.

(3)Gross margin is equal to our net sales less our cost of goods sold as a percentage of our net sales.

Net sales increased to $1,038.3 million in the thirteen weeks ended November 1, 2025 from $843.7 million in the thirteen weeks ended November 2, 2024, an increase of $194.6 million, or 23.1%. The increase was the result of a comparable sales increase of $113.8 million and a non-comparable sales increase of $80.8 million. The increase in non-comparable sales was primarily driven by new stores that opened in fiscal 2025 and the number of stores that opened in fiscal 2024 but have not been open for 15 full months.

Comparable sales increased 14.3%. This increase resulted from increases of approximately 7.2% in the number of transactions and approximately 6.7% in the average dollar value of transactions.

Cost of goods sold increased to $686.9 million in the thirteen weeks ended November 1, 2025 from $585.7 million in the thirteen weeks ended November 2, 2024, an increase of $101.2 million, or 17.3%. The increase in cost of goods sold was primarily the result of increases in merchandise cost of goods sold resulting from an increase in net sales and store occupancy costs resulting from new store openings.

Gross profit increased to $351.4 million in the thirteen weeks ended November 1, 2025 from $258.0 million in the thirteen weeks ended November 2, 2024, an increase of $93.4 million, or 36.2%. Gross margin increased to 33.8% in the thirteen weeks ended November 1, 2025 from 30.6% in the thirteen weeks ended November 2, 2024, an increase of approximately 320 basis points. The increase in gross margin was primarily the result of a decrease as a percentage of net sales in merchandise cost of goods sold, which included lapping the impact of a non-recurring inventory write-off and the impact of lower inventory shrinkage. Also contributing to the increase in gross margin was a decrease as a percentage of net sales in store occupancy costs.

Selling, general and administrative expenses (including depreciation and amortization) increased to $308.1 million in the thirteen weeks ended November 1, 2025 from $258.6 million in the thirteen weeks ended November 2, 2024, an increase of $49.5 million, or 19.1%. As a percentage of net sales, selling, general and administrative expenses (including depreciation and amortization) decreased approximately 100 basis points to 29.7% in the thirteen weeks ended November 1, 2025 from 30.7% in the thirteen weeks ended November 2, 2024. The increase in selling, general and administrative expenses (including depreciation and amortization) was the result of an increase of $39.8 million in store-related expenses primarily to support new and existing stores. Also contributing to the increase in selling, general and administrative expenses (including depreciation and amortization) was an increase of $9.7 million in corporate-related expenses primarily due to higher incentive compensation.

Income tax expense increased to $12.6 million in the thirteen weeks ended November 1, 2025 from $0.5 million in the thirteen weeks ended November 2, 2024, an increase of $12.1 million. The increase in income tax expense was primarily due to the $46.9 million increase in pre-tax income.

Our effective tax rate for the thirteen weeks ended November 1, 2025 was 25.7% compared to 23.4% in the thirteen weeks ended November 2, 2024. Our effective tax rate for the thirteen weeks ended November 1, 2025 was higher than the comparable prior year period primarily due to non-deductible expenses, partially offset by discrete items, which includes the impact of share-based accounting.

As a result of the foregoing, net income increased to $36.5 million in the thirteen weeks ended November 1, 2025 from $1.7 million in the thirteen weeks ended November 2, 2024, an increase of $34.8 million.

Net sales increased to $3,035.7 million in the thirty-nine weeks ended November 1, 2025 from $2,485.6 million in the thirty-nine weeks ended November 2, 2024, an increase of $550.1 million, or 22.1%. The increase was the result of a non-comparable sales increase of $282.6 million and a comparable sales increase of $267.5 million. The increase in non-comparable sales was primarily driven by the number of stores that opened in fiscal 2024 but have not been open for 15 full months and new stores that opened in fiscal 2025.

Comparable sales increased 11.3%. This increase resulted from increases of approximately 7.4% in the number of transactions and approximately 3.7% in the average dollar value of transactions.

Cost of goods sold increased to $2,018.0 million in the thirty-nine weeks ended November 1, 2025 from $1,692.3 million in the thirty-nine weeks ended November 2, 2024, an increase of $325.7 million, or 19.2%. The increase in cost of goods sold was primarily the result of increases in merchandise cost of goods sold resulting from an increase in net sales and store occupancy costs resulting from new store openings.

Gross profit increased to $1,017.7 million in the thirty-nine weeks ended November 1, 2025 from $793.3 million in the thirty-nine weeks ended November 2, 2024, an increase of $224.4 million, or 28.3%. Gross margin increased to 33.5% in the thirty-nine weeks ended November 1, 2025 from 31.9% in the thirty-nine weeks ended November 2, 2024, an increase of approximately 160 basis points. The increase in gross margin was primarily the result of decreases as a percentage of net sales in store occupancy costs and merchandise cost of goods sold, which included lapping the impact of a non-recurring inventory write-off.

Selling, general and administrative expenses (including depreciation and amortization) increased to $871.2 million in the thirty-nine weeks ended November 1, 2025 from $716.3 million in the thirty-nine weeks ended November 2, 2024, an increase of $154.9 million, or 21.6%. As a percentage of net sales, selling, general and administrative expenses (including depreciation and amortization) decreased approximately 10 basis points to 28.7% in the thirty-nine weeks ended November 1, 2025 from 28.8% in the thirty-nine weeks ended November 2, 2024. The increase in selling, general and administrative expenses (including depreciation and amortization) was the result of an increase of $110.4 million in store-related expenses primarily to support new and existing stores. Also contributing to the increase in selling, general and administrative expenses (including depreciation and amortization) was an increase of $44.5 million in corporate-related expenses primarily due to higher incentive compensation.

Income tax expense increased to $43.1 million in the thirty-nine weeks ended November 1, 2025 from $21.8 million in the thirty-nine weeks ended November 2, 2024, an increase of $21.3 million or 98.2%. The increase in income tax expense was primarily due to the $75.6 million increase in pre-tax income, non-deductible expenses, and discrete items, which includes the impact of share-based accounting.

Our effective tax rate for the thirty-nine weeks ended November 1, 2025 was 26.4% compared to 24.7% in the thirty-nine weeks ended November 2, 2024. Our effective tax rate for the thirty-nine weeks ended November 1, 2025 was higher than the comparable prior year period primarily due to non-deductible expenses and discrete items, which includes the impact of share-based accounting.

As a result of the foregoing, net income increased to $120.4 million in the thirty-nine weeks ended November 1, 2025 from $66.2 million in the thirty-nine weeks ended November 2, 2024, an increase of $54.2 million or 82.0%.

Cash capital expenditures typically vary depending on the timing of new store openings and infrastructure-related investments. We plan to make cash capital expenditures of approximately $200 million in fiscal 2025, which exclude the impact of tenant allowances, and which we expect to fund from cash generated from operations, cash on hand, investments and, as needed, borrowings under our Revolving Credit Facility. We expect to incur approximately $110 million of our cash capital expenditure budget in fiscal 2025 to construct and open approximately 150 net new stores, with the remainder projected to be spent on our store relocations and remodels, corporate infrastructure and shipcenter facilities.

Our primary working capital requirements are for the purchase of store inventory and payment of payroll, rent, other store operating costs and distribution costs. Our working capital requirements fluctuate during the year, rising in the third and fourth fiscal quarters as we take title to increasing quantities of inventory in anticipation of our peak, year-end holiday shopping season in the fourth fiscal quarter. Fluctuations in working capital are also driven by the timing of new store openings.

Historically, we have funded our capital expenditures and working capital requirements during the fiscal year with cash on-hand, net cash provided by operating activities and borrowings under our Revolving Credit Facility, which expires in September 2027, as needed, and we expect that funding to continue. When we have used our Revolving Credit Facility, the amount of indebtedness outstanding under it has tended to be the highest in the beginning of the fourth quarter of each fiscal year. To the extent that we have drawn on the facility, we have paid down the borrowings before the end of the fiscal year with cash generated during our peak selling season in the fourth quarter. As of November 1, 2025, we did not have any direct borrowings under our Revolving Credit Facility and had approximately $220 million available on the line of credit, net of $5 million in outstanding letters of credit.

On November 27, 2023, our Board of Directors approved a new share repurchase program for up to $100 million of our common stock through November 27, 2026. In fiscal 2024, we purchased 266,997 shares at an aggregate cost of approximately $40.0 million, or an average price of $149.79 per share. There were no repurchases during the thirty-nine weeks ended November 1, 2025. There can be no assurances that any additional repurchases will be completed, or as to the timing or amount of any repurchases. The share repurchase program may be modified or discontinued at any time.

Since March 2018, we have purchased approximately 1.9 million shares for an aggregate cost of approximately $270 million.

Based on our growth plans, we believe that our cash position, which includes our cash equivalents and short-term investments, net cash provided by operating activities and availability under our Revolving Credit Facility, which expires in September 2027, will be adequate to finance our planned capital expenditures, authorized share repurchases and working capital requirements over the next 12 months and for the foreseeable future thereafter. If cash flows from operations and borrowings under our Revolving Credit Facility are not sufficient or available to meet our requirements, then we will be required to obtain additional equity or debt financing in the future. There can be no assurance that equity or debt financing will be available to us when we need it or, if available, that the terms will be satisfactory to us and not dilutive to our then-current shareholders.

A summary of our cash flows from operating, investing and financing activities is presented in the following table (in millions):

(1) Components may not add to total due to rounding.

Net cash provided by operating activities for the thirty-nine weeks ended November 1, 2025 was $145.5 million, an increase of $78.4 million compared to the thirty-nine weeks ended November 2, 2024. The increase was primarily due to an increase in operating cash flows from store performance, partially offset by an increase in income taxes paid and changes in working capital.

Net cash used in investing activities for the thirty-nine weeks ended November 1, 2025 was $121.7 million, an increase of $91.0 million compared to the thirty-nine weeks ended November 2, 2024. The increase was primarily due to an increase in net purchases of investment securities and other investments, partially offset by a decrease in capital expenditures.

Net cash used in financing activities for the thirty-nine weeks ended November 1, 2025 was $4.6 million, a decrease of $41.9 million compared to the thirty-nine weeks ended November 2, 2024. The decrease was primarily due to a decrease in the repurchase and retirement of common stock.

See "Note 5 - Line of Credit” to the unaudited consolidated financial statements included in "Part I. Financial Information, Item 1. Consolidated Financial Statements" of this Form 10-Q, for a detailed description of the Company's line of credit.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions. Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. Actual results may vary from estimates in amounts that may be material to the financial statements. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our consolidated financial statements. Our critical accounting policies and estimates are discussed in the Annual Report.

Except as set forth below, there have been no material changes to our contractual obligations as disclosed in the Annual Report, other than those which occur in the ordinary course of business.

From February 2, 2025 to November 1, 2025, we have entered into 102 new fully executed retail leases with average terms of approximately 10 years and other lease modifications that have future minimum lease payments of approximately $193.5 million.

For the thirteen weeks ended November 1, 2025, we were not party to any material off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, net sales, expenses, results of operations, liquidity, capital expenditures or capital resources.

See "Note 1 - Summary of Significant Accounting Policies" to the unaudited consolidated financial statements included in "Part I. Financial Information, Item 1. Consolidated Financial Statements" of this Form 10-Q, for a detailed description of recently issued accounting pronouncements.

Our principal market risk relates to interest rate sensitivity, which is the risk that future changes in interest rates will reduce our net income or net assets. We have investment securities that are interest-bearing securities and if there are changes in interest rates, those changes would affect the interest income we earn on these investments and, therefore, impact our cash flows and results of operations. However, due to the short term nature of our investment portfolio, we do not believe an immediate 100 basis point increase or decrease in interest rates would have a material effect on the fair market value of our portfolio, and accordingly we do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates.

We also have a Revolving Credit Facility which includes a revolving line of credit, which bears interest at a variable rate. Because our Revolving Credit Facility bears interest at a variable rate, we will be exposed to market risks relating to changes in interest rates, which could materially impact our consolidated statements of operations should we have any material borrowings under our Revolving Credit Facility.

As of November 1, 2025, we had approximately $220 million available on the line of credit, net of $5 million in outstanding letters of credit. The Credit Agreement provides that the interest rate payable on borrowings shall be, at the Company’s option, a per annum rate equal to (a) a base rate plus an applicable margin ranging from 0.125% to 0.50% or (b) SOFR plus a margin ranging from 1.12% to 1.50%. Letter of credit fees range from 1.125% to 1.50%. We do not use derivative financial instruments for speculative or trading purposes, but this does not preclude our adoption of specific hedging strategies in the future.

Our results of operations and financial condition are presented based on historical cost. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we believe the effects of inflation, if any, on our historical results of operations and financial condition have been immaterial. We seek to minimize the impact of increasing prices and general inflation in a variety of ways, including, with respect to our merchandise, by sourcing from different vendors and changing our product mix. However, we cannot assure that our results of operations and financial condition will not be materially impacted by inflation in the future.

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act"), as of the end of the period covered by this Quarterly Report on Form 10-Q pursuant to Rule 13a-15(b) of the Exchange Act. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q are effective at a reasonable assurance level in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent or detect all errors and all fraud. While our disclosure controls and procedures are designed to provide reasonable assurance of their effectiveness, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

There were no changes to our internal control over financial reporting during the thirteen weeks ended November 1, 2025, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

We are subject to various proceedings, lawsuits, disputes, and claims arising in the ordinary course of our business. Many of these actions raise complex factual and legal issues and are subject to uncertainties. Actions filed against us from time to time include commercial, intellectual property, customer, and employment actions, including class action lawsuits. The plaintiffs in some actions seek unspecified damages or injunctive relief, or both. Actions are in various procedural stages, and some are covered in part by insurance. We cannot predict with assurance the outcome of actions brought against us. Accordingly, adverse developments, settlements, or resolutions may occur and negatively impact income in the quarter of such development, settlement or resolution. If a potential loss arising from these lawsuits, claims and pending actions is probable and reasonably estimable, we record the estimated liability based on circumstances and assumptions existing at the time. Although the outcome of these and other claims cannot be predicted with certainty, management does not believe that the ultimate resolution of these matters will have a material adverse effect on our financial condition or results of operations.

On August 1, 2024, a putative class action was filed against us and a certain former senior officer in the United States District Court for the Eastern District of Pennsylvania, purportedly on behalf of a class of our investors who purchased or otherwise acquired our publicly traded securities between March 20, 2024 and July 16, 2024. On September 16, 2024, a similar action was commenced against us in the same court on behalf of a class of investors who purchased or otherwise acquired our publicly traded securities between December 1, 2022 and July 16, 2024. The complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder in connection with various public statements made by us. On October 28, 2024, the court entered an order consolidating the actions and appointing the lead plaintiff. On January 13, 2025, lead plaintiff filed its Consolidated Amended Complaint. On March 14, 2025, Defendants filed their Motion to Dismiss the Consolidated Amended Complaint. On May 13, 2025, lead plaintiff filed a response in opposition to Defendants' Motion to Dismiss. Defendants filed their reply in support of their Motion to Dismiss on June 12, 2025. The Motion to Dismiss was granted in part and denied in part on August 25, 2025 and the parties are now in the discovery phase.

In October 2024, we received two separate letters from purported shareholders demanding that we investigate certain potential derivative claims relating to the same circumstances and allegations included in the shareholder class action. We subsequently received four additional separate letters from purported shareholders making similar demands. In response, the Board of Directors formed a Special Litigation Committee, which has investigated the allegations contained in each of these letters, and on September 10, 2025, the Special Litigation Committee completed its investigation and determined that it would not be in our best interests to pursue litigation or take other steps in response to the demand letters. In October 2025, three of the purported shareholders filed derivative suits based on the allegations in their demand letters, two of which were filed in the United States District Court for the Eastern District of Pennsylvania and one of which was filed in Philadelphia County Court of Common Pleas.

We intend to vigorously defend against the foregoing actions, which we believe to be without merit. The potential impact of these actions, which seek unspecified damages, attorneys’ fees and expenses, is uncertain.

Risk factors that affect our business and financial results are discussed in Part I, Item 1A "Risk Factors" in our Annual Report. There have been no material changes in our risk factors from those previously disclosed in our Annual Report. The risks described in our Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.

The following table below sets forth the information with respect to repurchases of our common stock for the thirteen weeks ended November 1, 2025:

(1) On November 27, 2023, our Board of Directors approved a new share repurchase program for up to $100 million of our common stock through November 27, 2026. In fiscal 2024, we purchased 266,997 shares at an aggregate cost of approximately $40.0 million, or an average price of $149.79 per share. This repurchase program does not include a specific timetable or price targets and there can be no assurances that any additional repurchases will be completed, or as to the timing or amount of any repurchases. The share repurchase program may be modified or discontinued at any time. Shares may be repurchased through open market or privately negotiated transactions at the discretion of management based on its evaluation of market conditions and other factors. There were no repurchases during the thirty-nine weeks ended November 1, 2025.

On September 12, 2025, George Hill, Chief Retail Officer of the Company, adopted a trading plan that (i) is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Securities Exchange Act of 1934, as amended; (ii) provides for the sale of up to 7,500 shares of the Company's common stock; and (iii) expires on June 12, 2026.

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.