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All right, we're going to get started. Good morning, everyone. My name is Seth Sigmund. I am the U.S. Hardline Broadline Food Retail Analyst at Barclays. My pleasure to have the Five Below Management Team at our conference this year. Dan Sullivan, CFO, also in the audience. We have Christiana Pell's VP IR. Thank you guys for being here. Appreciate it. Five Below has delivered incredible top-line growth over the last 18 months. Double-digit comps in 2025. Record start to 26. On the second quarter earnings, you also raised guidance again for 2026. So there's a lot happening here. It seems to be a very different growth story in the last 18 months. Something is really changing here. So, Dan, I'd love to hear from your perspective, key top-line drivers, what's driving the growth right now, what is new, what's different in the business, and ultimately, what do you think is having the most impact on these strong results? Yeah, good morning, Seth. Good to see you. Good morning, everyone. Thank you for spending the time with us. Leah, we've got a lot of great news and a lot of great things to share and talk about. I think for me, if I sort of unpack this, what you're seeing in the business right now is a very clear strategy that was put in place by Winnie Park, our CEO, when she joined just under two years ago. You're seeing proof points that that strategy is resonating quite well. So let me try to talk to you a little bit about that. I think first and most importantly, it is a strategy absolutely grounded in clear focus who the customer is. And I say that because I think that is super important. We welcome all customers, obviously, to our brand and our franchise, but we are focused on Gen Alpha, Gen Z, and millennial moms and dads. And when you have that clarity at your core, you start to design and execute a strategy that resonates with that set of cohorts. The strategy itself is sort of three-pronged. First and foremost, it is about a relentless focus on trend right, new, interesting product. If you know Winnie's background and you tracked her career, you would certainly see CEO capabilities, but you would see at the heart a merchant and someone who lives for product and who really understands customer. And so I think the first thing that you would see that she did in her time over the last 18 months is reinvigorate the brand through the product lens. That means new, that means different, that mean trend right, and that has sort of been the guidepost for what we've been doing. I think the second element then is the in-store experience, and how do we bring the product to life? How do we create for our customers the treasure hunt and the newness and the discovery that is so important to our brand. And then the third piece is how do we talk to our customers differently? The marketing muscles that we are building in the organization around better understanding not only who that customer is, where do they live, and how do We continue to bring our brand to them in that space? And so all three of these are at different stages in their maturation. All three are contributing to what you are seeing in the results. And then I would probably add a fourth piece, which is how we operate as an organization. It is all about collaboration. It is a relentless focus on executing against the strategy. And so we've got a very clear strategy, Seth. We've got an extremely clear strategy. We've had a very, very clear customer we're trying to serve, and we are executing that strategy better. And so what you see then in the last 12 months to 15 months and we just posted these results last week. It was our fifth straight double-digit comp quarter. I would argue you could look at it as almost our strongest quarter to date because it was a double-digit comp quarter while cycling a double digit comp quarter and in the quarter we anniversary pricing. So we didn't have that tailwind behind us. So we are seeing really clear proof points that this strategy is resonating and that this growth is durable. We'll talk about some of the specific product drivers, but I think one of the other takeaways has been the breadth of the performance. Can you elaborate on that, maybe across the store base, across cohorts, across categories as a starting point? Sure. Yeah, this is perhaps one of the more exciting parts to the story is the breadth of growth that we're delivering. And what we're seeing here is across all income cohorts across all demos across all geographies across all vintages of stores we're seeing this growth so so it gives you sort of an idea of of how widely this strategy is resonating um this this new focus on assortment and product and newness is resonading because you just don't see that level of growth across all of those dynamics and and so we're certainly encouraged with what we're seeing. And I will continue to say it is early in what we're doing. The proof points that we are delivering here, we still see as early proof points as we're starting to build capabilities and durability. Okay, great. And then you talked a lot about this on the last call, but trend items. So in this case, it's squishy dumpling, which I think we have some here somewhere. That's played a large role in the strong comp growth. Can you talk about the trend, the impact it's having on your business, and how do you think about the contribution? Yeah. Look, we get this question a lot, and you probably are aware of this specific trend item that Seth is referencing, the squishy dumpling. We were very clear in the earnings call that it contributed about low single digits to our comp profile, and that was pretty consistent in Q1 and Q2. I think if I ladder back, though, I think it's important to understand we are a trend business. We have always been a trend business. We will continue to be a trend business. What is new and different, and this I think goes to the capabilities component I was speaking to, is we are better at detecting the trend earlier than we had been in the past and we are far better at amplifying the trend when we see it. And so if you look at this squishy dumpling item, which certainly has been a great catalyst for traffic driving and brand awareness, I'll make clear on that. But what you see is an item that was in the assortment for a couple of years. This wasn't a new item that we discovered or someone else discovered and we bought into. It was there. Our ability to detect trend, our ability to scrape online, ourability to listen socially pointed us in this direction in the fourth quarter, calendar quarter of last year. We saw some interesting things around how our customers were engaging with this product. And so early detection was key. And then we amplified it. And when I say amplified it, that means we, in a very unique five below way, brought this product to life. We brought it to life in terms of the story around the product, which I think is important for us when we think about our brand. We brought het to life instore and how we executed against it. We brought et to life as we widened the assortment and brought newness and new interesting products, which we will continue to do over the back half of this year. And so, yes, there is an interesting trend item. But I think maybe unlike the past where we may have bought into something and sold through, we see this as an interesting catalyst because we detected it early and we've amplified it in a pretty meaningful way. And I'm sure it's top secret, but maybe you could shed some light on maybe the future trends that you see or how you're thinking about that. Yeah, top secret is a good way to describe it. We don't discuss the pipeline. We don' t discuss what could be coming next. What I would say is because of this trend detection capability that we' ve always had, the merchants have always had a skill as we' v worked with vendors and with partners. I think seeing trend early has been core to what we' ive done. We have now added science to that in some of the tools and the technology that we are building and deploying. And if you know Winnie, you would know she spends a lot of her time on social. She is seeing things early. She has passing things along to the merchant team. So you've got this ecosystem now that is sort of historical muscles based on great experience and terrific relationships with vendors. You've got new and emerging capabilities that are being enhanced with science and tech all coming together, we've got a pretty interesting and robust pipeline of things that we think could become something new and different down the road. So as you think about the growth profile of the business, I think you used the term durable in the past, right? How do you think about the birth rate of this business going forward? Yeah, look, we're super excited. We're five quarters at double digit. We've got an updated outlook, as you mentioned, Seth, for the back half of the year. we get the question a lot, how do you comp the comp? And candidly, we see that as a very narrow question. We think the better question is, how Do we know this growth is durable? And our conviction that the growth is Durable is based on two things, the strategy I described, and the proof points that we're seeing in that strategy as it gets executed. But then also this realization, we are so early in this journey. We are so early in building out our marketing capabilities. Our chief marketing officer has only been with us 15, 16 months. And he's certainly the first pure and proper chief marketing officer that we've had. Winnie hasn't even yet hit her two-year work anniversary. And so as you see these results, which we certainly see through the lens of proof around the strategy, we're equally excited that it is early early innings in each of these lanes that that we're executing against what that means as we go forward uh time will tell right whether that is a low single digit mid single digit today is not the day for us to provide that that update we're simply staying focused on executing the strategy we've got an exciting outlook for the balance of this year and then certainly in march of next year we'll talk about 2027 but i think more than the number that we attach to it i hope you all take away. It's a really compelling strategy, and it's very early in our development. Given the momentum that you have, especially around some of these product drivers, how do you think about getting that customer back? You mentioned marketing. It seems like it's very early inning. So talk about the approach today. What's different about what you've done historically? Because it seems like a big opportunity, a big unlock here. Yeah, it sure is, Seth. You're right. Look, I think the encouraging piece is we are seeing accelerated growth against both retained and new customers right and so that as a macro data point is exciting it it sort of gives you confidence that we're driving that traffic to the store admittedly in part fueled by our execution on the the trend but also that that we are seeing really healthy retention rates that customer maybe they are being introduced to five for the first time through that experience they like what they are finding they are coming back like we see that in the early reads and in the early data. Having said that, going back to sort of where we are in the marketing journey, we've really just begun. We're only a year into collecting email capture from our customers and starting to gain some insights on who they are and sort of when they shopped. But we're still doing it through a very general lens. We don't yet have the data or the insights or even the capabilities to talk to that customer uniquely, to curate for that customer specifically, to personalize. So the good news is we're starting on the journey to be able to speak to the customer. And what we do know is when we speak to that consumer, that customer whose email capture we've succeeded, successfully gathered, the LTV of that customer is bigger. The frequency of store visit is more, and the basket they build when they're with us is more. So that we know. Now we've got to start to build the capabilities and the infrastructure, the talent profiles internally to better talk to that individual. And it's going to take us some time. But again, you can sort of see in the journey here of where we've been a year ago, we didn't have email capture. 18 months ago, we didn't have a chief marketing officer. Now we're starting to progress on a proper CRM journey. And as we build those skills and build those capabilities and are able to talk to our customer cohorts uniquely, we think that's a big unlock. Okay, great. I want to shift to store growth. Obviously, the business is comping, but you also have still one of the biggest unit growth opportunities in the retail sector today. Previously, you've talked about over 3,500 store opportunities in The U.S., doubling, or almost doubling where you are today. How do you think about that target? Why is that the right target? And if there's anything else you can tell us about how the new store economics are playing out, I think that would be helpful. Sure. Yeah, this is perhaps one of the underrepresented interesting facts around Five Below is the new stor growth. We have committed to a high single-digit growth profile for new units, put that at 8%, 9%. It's 150 new stores this year as that denominator grows. It'll be more next year. And admittedly, when I joined the company, it was probably one of the areas that I underappreciated and may have been a bit skeptical about because the comp story is so clear, and you see that. But we are actually growing units now at just over 2,000 stores with a really clear line of sight to 3,500-plus stores. We just entered the Pacific Northwest. that was white space for us a year ago, nine new stores in that space, in theory to a cohort who'd never shopped us. Every one of those nine stores would have set a record for a grand opening at five below, but they all opened at the same time. We just moved into our 47th state in Idaho in the quarter that we're in. We have a really, really strong line of sight and strong conviction to that 3,500 plus. Now, the economics upon which we do it is simply astonishing. It is absolutely the best dollar return i can get by putting a dollar into new store growth we are seeing 12 to 15 month return timelines uh and and really compelling growth profiles and so yes we have this this wonderful comp story equally we're at 2000 plus stores today and we have a clear line of sight that we can almost double that uh with it with a u.s focused deployment so that's the plan i think we're super encouraged and if anything over the last 12 months, you've seen better execution against our new stores. You've seen new store productivity now in the 90% range from it was in the 70s, even 18 months ago. So we love all the signs that we're seeing and highly, highly convicted that that 3,500 plus is there to be had. That strong new store productivity, I assume, is also benefiting from some of the trends that existing stores are seeing. So maybe speak to where you think new store connectivity can normalize. And then just related to that, it sounds like there has been a change in the real estate process under your leadership. So just walk us through what is actually changing there as you think about site selection. Yeah. And you're absolutely right. Listen, when you're comping double digits, rising tides are going to lift all boats. Your new store productivity is going to feel the effects of that and benefit from that. But your second point, Seth, I think is a really important one. unrelated to that, we took a very different approach to real estate, a very different approach to how we deploy new stores. And it was a bit informed by the learnings that maybe in the past we had gone too far too fast. We had settled for less than A properties and were focused on quantity and needed to rebalance ourselves to also focus on quality. So we sort of re-engineered the process internally. We've held a much higher bar to the real estate team on everything from site selection as you look at a market all the way through grand opening. We've put a much stronger criteria on execution, inventory levels, labor in the store, just putting our best foot forward as a brand. That process predated me. That started probably 15, 18 months ago. And it's not a coincidence that you are seeing this level of performance in the 25 and 26 vintages. Now, can we start to speed that up? I think we can over time. We're certainly not capital constrained, so we have the capital to deploy. We want to make sure that the muscles we're building across real estate, dealmaking, site selection, execution are structurally strong. We feel really good about that. Now you're left to the third variable of availability of properties, right? And sort of how do you think about new stores and inventory in the market, which is mixed at this point. So we're pleased with the strategy. We see the proof that it's working. We think over time we can accelerate that. But in the near term, I think that high single digit growth profile for new units is the right one for us. Okay. And at the same time, you're rolling out some new store prototypes and redesigns. Maybe walk through what you're changing there? Yeah, this is something we discussed in our earnings call a week ago. I think it's a really important catalyst for that in-store experience element of our strategy. We know that so important to our offer is the experience in- store for our customers. How do we bring our brand to life? And so we have been studying this for the better part of 12 months, looking at shopping experience, simplification, how do we yell and scream the brand and make the engagement with our customers stronger. We use the word immersion. We want our customers to be immersed in the Five Below world when they enter the store. So that has taken shape in a number of different prototypes. Where we have landed is a very clear answer where sight lines and signage are better end-to-end within the store, we have taken down the Five beyond element of the store. We've been on this journey for about 12 months because we just didn't think that was how our customers shopped the store, and so this program you're referencing, Seth, was sort of in search of what do we do with this space, and so better signage, better flow through the store and better site lines for both our crew and our customers, and then it ultimately lands in a better immersion within the Five Below brand for our customers with a really clear play world or world of play anchor now in the back of the store. So you've got better synergies and alignment and adjacencies among categories, and you've Got a really compelling in-store experience for our Gen Alpha and Gen Z around toy and around play. These prototypes are starting to be deployed. We're super excited about it. I think the early reads are encouraging, and it'll just be a question of the pace at which we can do this efficiently. And there have been a few iterations of the front-end experience in the stores over time. Where does that stand today as you think about that checkout process? Yeah, I think it's important, right? How you merchandise the front of the store, how the customer experiences you when you walk in the store is part of this new redesign. As to is simplifying and improving the checkout experience, the line queue. How do we bring product into that experience? How do мы make sure that the throughput is there for our customers? How do we also make sure that the service and our employees and our crew are engaging the customer? So all of that from the in-store experience, the product assortment, the line queue, and bringing interesting items to the customer through that queue, all the way through the checkout experience is all part of this new experience that we are designing and running with. Okay, great. I wanted to ask about price points. What are you seeing from customers that gives you confidence in the five beyond strategy, which is clearly evolving, your ability to sort of sell product above that typical $5 price point? And what's different than, you know, prior attempts to grow that business? Yeah, I think this has been a super interesting part of the last 12 to 18 months, partly a catalyst from the tariff experience where all bets were off, right? And you had to really look at the assortment end to end. And I think what the team did incredibly well through that lens was reestablish the importance of value within the offering. Winnie operates with a very clear direction on two levels. One is items need to be new and interesting and trend right for the customer. That's a non-negotiable. And two is they need to being stuffed with, as she calls it, value. They need to scream relative value. And when you get those two elements right, the thesis was we have the license to go above $5. Over the last 18 months, we've proven that. Now, we are still a value retailer. That is our core. Eighty percent of the items in a given store will be at $5 or less. That is unlikely to change. That is who we are and how we operate. Having said that, this insight and equally this requirement of newness, trend right, and value has demonstrated we can go above $5. We think probably the sweet spot is in $7 to $10, and that's where we have disproportionately focused. But equally, you will have seen items in the store that go above 15, 20, $25 selectively. All of that sort of fits into how we think about the assortment. And even look at the quarter we just exited. You actually saw AUR growth without price as we had fully anniversary of the price. That's mix, right? That's coming from how we mix out this assortament at the $5 price point and above the $4. So we're super excited that our strategy has real proof behind it. We're super excited the customer has given us license to play in this space, but we're equally committed to staying true to who we are, both as a value retailer but committed to relative value for the customer. We'll talk about your favorite topic, tariffs. Tariff refunds came up a lot on the last call. How are you deploying those dollars today? And then any other context on how you're thinking about tariff rates? Yeah, it's been an interesting journey for all of us, right? So we did disclose in the second quarter that we have received almost entirely all of our expected refunds. It was $165 million, plus or minus, plus another $6 million-ish of interest income on those proceeds. And we think that is the lion's share of what we will receive. Now, the question is, what do you do with those proceeds? And our focus has always been, and will continue to be, we're going to invest in the customer. We're going to invest in the customer experience and we're going to invest in this growth profile that I talked about earlier. And so the refund proceeds haven't shifted our thinking at all. What they have given us is an opportunity to accelerate that. And so those items play out or that strategy plays out in three distinct ways. One is investing in the consumer experience that I talked about earlier and how do we think about redeploying this capital in-store to augment and transform the stores. That's one. I think equally or secondarily is around our online platform and how do we make sure that the shopping experience online is commensurate with the shopping experienced in-store and represents the brand the way that we want to make sure we're representing the brand. So you'll see the investment there digitally. And then the third is continuing to reinvest behind the product. And that is around newness, that is around trend, that is around price value equation. Those are our three primary focus areas. The IEPA refunds have allowed us or will allow us to accelerate that. I think it will disproportionately be seen in CapEx, and obviously it will play out over time. As far as the second part of your question, Seth, tariff environment, you know, it's changing for sure. I think we have to recognize that what we think we know today might be different 90, 120 days from now. But as it sits today, our back half of the year outlook includes a bit of tariff tailwinds, as the rates that have come along now with the new Section 301s are slightly lower than what we had previously expected. So on a tariff front, a bitof a tailwind to our outlook. We think that'll get largely absorbed by higher fuel costs, by the way, in the back half of theyear, but that's a separate topic. And then as we look to next year, I think it's reasonable to assume a slight headwind simply because the rates that are in place today now under 301 are slightly higher than the temporary rates that were put in place that expired July 24th. Do I anticipate a meaningful issue next year? I do not, and I don't want to signal that we think there's a cost challenge coming. I think this organization has shown a great skill at solving for any potential tariff headwinds, but just on the math right now, it could be a slight a slight headwind as we work our way into next year. Okay. Thanks for that. I wanted to ask about the long-term growth profile of the business. So there's been a lot of debate in the past about whether Five can get back to that 13% operating margin that it had a few years ago. This year, you'll be around 12.5% if you hit the guidance. So how do you think about the long- term profile of a business? Yeah. I mean, I'm certainly super excited about how we have built this model. And let me explain that to you all and how we're running this business. We obviously think this growth is durable. You've heard me talk about that. And this model is uniquely dependent on growth. And so our commitment is to continue to drive sustainable comp growth at the core. Equally important, though, we have a mindset and an algorithm that says profit growth will outpace top line growth. And so that is our model. That is our mindset. That is how we run this business. And that comment holds true whether we're seeing double-digit comp growth or high single-digits or mid-single-digites. That's how we're running this business now. To get there, you have to think about our business on two distinct levels. There is an element of our business where you would expect us to continue to drive productivity, efficiency, and leverage. Supply chain as a great example. Shrink as a great example. Fixed costs in our overhead structure. We're going to continue to be ruthless on costs. We are going to drive the organization to be more and more productive. And we are going lever as we grow this business. On the other side, we want to continue to invest. We want to feed all of the elements I'm talking about today. Predominantly through the marketing lens is how you can expect us to do that. But also I think store labor and store payroll will play an important part because, again, back to that store experience, they're not unrelated, right? We want to make sure we've got the right labor complement serving the customer, delivering on that great experience. So if you put the two of those together, what can you expect from us? You can expect profit growth to continue to outpace top-line growth. You can expect us to be incredibly rigorous and diligent on driving productivity at the core, and you can expect us to continue to invest in the growth of this business. We're going to feed this. We think we're at a super interesting time here with a compelling strategy that we're goingto leverage. So at the end of the day, op profit margin will continue to expand. At what pace, how fast, how far, like, we'll see as we work our way through this. But the model will continueto deliver accretion. And as you think about capital allocation, how is that changing you announced 600 million dollar authorization recently any shift in focus or priorities yeah the the priority has not shifted which is disproportionately investing capital in growth that was maybe largely a new store conversation previously as we've talked today we've added now more committed capital against the in-store experience we're going to continue to build out our supply chain, our DC network to handle the growth. But first and foremost, we're going to deploy capital against growth that is unchanged, that is consistent with where we've been. I think the situation that we are in with tremendous excess liquidity, the team has done an unbelievable job of managing the balance sheet with care. And obviously, when you grow the way we have over the last two years, and you deliver the profit levels we have, and that throws off tremendous cash flow, we're sitting today with a really interesting excess liquidity. And so that led us to announce a new share repurchase program that has led us to find alternatives to redeploy excess liquidity to deliver better returns. We think we have struck that balance with the new authorization, but we think both of these work together. This is an and capital allocation strategy, not an or. And I think the board, with following the confidence that management has to continue to grow this business durably, supported that authorization. Okay, great. Just a couple minutes left here. Obviously, it's been a great turnaround story, transformation story over the last several quarters. Any final messages that you want to leave with the audience here? Yeah, thank you, Seth. Look, I probably would like to go back to where we started, which is while the last 12 to 18 months and the growth and sort of the magnitude of that growth has been simply amazing, I think what excites the team and I think what Winnie is holding us accountable to is the durability of that growth. The list of things that we haven't yet done or the capabilities that we are building or the catalyst that we see to continue this growth is long. And so while we're super excited about what we have seen, we're equally confident in the path forward. And our job is obviously to continue this growth, to build the capabilities, to continue to execute at a high level. But hopefully if we leave you with no other message today, it's not just the excitement of what you have seen looking back over the last 12 months. It's the durability that this strategy that we're deploying allows us. So that would be the message I would leave you with. Okay, great. And congrats on all the progress and thank you for being here. Appreciate it. Thank you. Thanks, everyone. Appreciate it, All right.