Hello, and thank you for joining us. As we announced last month, we had a strong first quarter with financial results that exceeded our expectations. I am incredibly proud of the Five Below team for driving these results with a maniacal focus on delivering a great customer experience, grounded in fun and extreme value. We remain committed to putting our customer first with a focus on product, value, and store experience in order to achieve our vision to be the destination for the kid and the kid in all of us. We are the cool store for kids and the yes store for parents. What differentiated this past quarter was our heightened focus on the customer and working as a tight-knit multidisciplinary team from merchandising, planning, and allocations to marketing, store operations, and supply chain. We made great strides on one sourcing amazing product focused on Easter, spring break, trend-right beauty, novelty food and candy, as well as relevant cultural zeitgeist moments like Minecraft. Two, amplifying these products with end-to-end storytelling that started with social media, through to compelling in-store floor sets. Three, ensuring better in-stock positions with tight alignment between our teams at WowTown, our ship centers, and the store fleet. And four, continuing to benefit from investment in labor hours and operating efficiencies, all while planning for the future within a dynamic tariff environment. The result was a strong first quarter led by product that resonated with our customers. We had broad-based outperformance across the majority of our world, proving that our customer-centric strategies focus on product, value, and experience are working. The Five Below team demonstrated that they can execute at a very high level in service of our customer and we will carry this forward into the balance of the year. Our customers have validated our…

Thanks, Winnie, and good afternoon, everyone. I want to thank you, the Board, and the team at Five Below for their support. I am proud of what we have accomplished during my time here and I am confident in the management team and the growth opportunities that lie ahead for this company. I will begin my remarks with a review of our first quarter results and then Ken will discuss our outlook for the second quarter and full year. My comments will refer to results on an adjusted GAAP basis, excluding the impact of non-recurring or non-cash items as outlined in our earnings press release. Please refer to our earnings press release for GAAP results and all reconciliations. Total sales in the first quarter of 2025 increased 19.5% to $970.5 million from $811.9 million in the first quarter last year. Comparable sales increased 7.1% driven by an increase in comp transactions of 6.2% and comp ticket of 0.9%. On a two-year stacked basis, comparable sales increased 4.8% driven primarily by comparable transactions, which increased 3.4%. These results reflect better than expected performance in the key selling weeks leading up to Easter, and this momentum continued through the end of the quarter. We opened 55 new stores compared to 61 new stores in the first quarter last year. We ended the quarter with 1,826 stores, an increase of 221 stores or 13.8% over last year. We were pleased with the productivity of our new stores at 87%, slightly above our targeted percentage range of the mid-80s. Adjusted gross profit for the first quarter of 2025 was $328.4 million, an increase of 24.6% over the first quarter of 2024. Adjusted gross margin increased by approximately 140 basis points to 33.8% driven primarily by improved inventory health requiring less reserves for aged inventory…

Thanks, Christie. Echoing Winnie's words, I am grateful for your contributions to Five Below. Your dedication to the company for the past two years and your passion for developing our people will have long-lasting benefits. Since issuing full-year fiscal 2025 guidance last quarter, there have been changes in the tariff rate environment. Our updated guidance provided today reflects the impact of tariff rates that are currently in place. This guidance also reflects the outperformance we delivered in the first quarter and a better than originally planned sales outlook for the second quarter. And as Winnie noted, our customer-centric strategy and focus on product, value, and store experience are driving the desired outcomes. For the second quarter of 2025, we expect total sales in the range of $975 million to $995 million or growth of 18.7% at the midpoint versus last year's second quarter. Comparable sales are expected to increase between 7% and 9% compared to a negative 5.7% comp in the second quarter of last year. And we expect to open approximately 30 net new stores in the second quarter. Adjusted operating margin at the midpoint is expected to be 3.9% versus 4.5% in the second quarter of last year. This decline is being driven primarily by SG&A deleverage related to higher incentive compensation costs and our investments in store labor. The majority of tariff-related costs in the second quarter will impact gross margin. And these costs are largely expected to be offset by fixed cost leverage resulting in only slight gross margin pressure year on year. Net interest income is expected to be approximately $4 million for the second quarter and taxes are expected to be approximately 26%. Adjusted net income for the second quarter is expected to be between $28 million and $34 million versus $29.7 million in…

We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. If you have further questions, you may reenter the question queue. At this time, we will pause momentarily to assemble our roster. The first question comes from Michael Lasser with UBS. Please go ahead.

Good morning. Thank you so much for taking my question. There's been a pretty remarkable pivot in the comp cadence of the business over the last this quarter and last quarter. How much of it would you attribute to actions that Five Below has taken versus other factors, and what would need to happen in the back half of the year in order for the momentum to slow as it is embedded in your guidance currently? Thank you very much.

Thank you so much, Michael, for your question. So I think starting with the first question in terms of the momentum in sales, and how much is this attributable to action versus other factors. I think that the teams have worked incredibly hard and the actions that we have taken are definitively paying off. We have seen sequential improvement in the business from the back half of last year Q3 through Q4 to Q1. And specifically, what is really resonating is the selections we have made for product and the assortment. I think that the team has done a terrific job of identifying relevant trends and distorting them. We also had the benefit of great storytelling that started again in social and worked its way through to the site all the way through to in-store execution with our floor sets. That were really terrific. We also refocused on value and ensured that we had really great outstanding value and relevant value and the relative value in the marketplace. That the customers have definitely reacted to. I will say also that the teams have worked very hard to ensure that we have got the appropriate flow of inventory and product. We have added labor to the stores, but what we have also done is really worked very tight and tight formations between merchandising, planning, our ship centers, as well as allocations and the stores to ensure that everyone was aware of when that inventory was coming. They moved quickly from the back to the front, and we improved processes in the stores so that our associates could actually engage with customers at a higher and better level than they have in the past. So I think a lot of really added up to the current results and I think the second part of your question is what would need to happen for the back half of the year. We are just looking at the back half of the year with great prudence. We are looking at two-year stack comps across the next upcoming quarters of 2%. And certainly, every action we have taken thus far will apply to the back half of the year. With that said, we acknowledge that there still is macroeconomic uncertainty, and so we wanted to take a very prudent approach to how we guided for the back half of the year.

Thank you, Michael. The next question comes from Matthew Boss with JPMorgan. Please go ahead.

Great. Thanks, and congrats on a really nice quarter.

Thanks, Ashley. So Winnie or Ken, maybe just on the magnitude of comp strength in the first quarter and the momentum across the world that you are seeing in the second quarter. Are you seeing new customer acquisition, are you seeing a basket build from existing customers? Just trying to explain the magnitude of comps that you are producing in the first half of the year. And then for the back half, I guess maybe could you just walk through the incremental opportunities that you see across product value and marketing as potential improvement in the back half as well?

So in the front half in terms of the comp structure, from a customer point of view, we did see a really nice lift in terms of transactions. They are up 6.2%. And we are actually seeing a nice growth both in terms of new customers and comp stores as well as existing customers. We are returning to us and so all of that has really buoyed the business. And I will say that, you know, to get the traffic to cross the threshold is one thing and to get them to convert is a second. And we have also seen really nice progress in terms of conversion. And customers are greeted with fresh new product that they can see, especially with some of the cleanup we did in the latter part of last year and the beginning of this year. And again, execution in terms of what the customer is greeted with at store level has been a key to our success. In terms of the back half of the year, in terms of what we anticipate we will continue to drive some of this positive momentum we are seeing in the business. The majority of our merchandising worlds actually saw really great comp increases, and we are seeing some trends now that kind of began at the beginning of the year. That we will actually continue to distort through the back half of the year. Those trends include some of the new beauty product and the flow of new beauty product, the really great flow of new relevant food product and novelty candy has been terrific for our business. And then we also are seeing really great progress in terms of growth in terms of our style business that's been buoyed by our focus on lounge and lounge pants along with our great graphic tees. So all of those things have been nice additions to the business. And then finally, I will say that in the younger segments of the business like toys and games, it's just been terrific to see collectibles take off. The last piece of this is our in-stock positions are so much better this year than last year, and we will continue to drive that. We have, because of the great success of Q1, pulled forward receipts and continue to ensure that we have got great in stocks specifically intact. And that's been a really nice win in terms of some of the comps we have achieved. So again applying the same set of actions and distorting trends that we are seeing right now through the back half of the year is what we intend to do.

And just and Matt, just to add to that too, when he mentioned the store experience piece of it, which is important. We are going to continue to invest in the stores as we mentioned before we started that last year. That's continued through this quarter, whether it's in hours for the stores or the more of those customer-facing activities. And so Wendy's point keeping the keeping the stores fresh and those in stocks high.

The next question comes from Chuck Grom with Gordon Haskett. Please go ahead. Hey. Thanks. Good afternoon, and, Christy, best of luck. Ken, just on the guide, can you unpack the annual compression and operating margins it looks like it's roughly the same down about one hundred and eighty to two hundred basis points relative to your prior guide. But it sounds like your tariff expectation might be up another maybe sixty basis points to about a hundred and sixty basis points pressure. Can you talk to that? And then if you're embedding any shrink improvement in the back half of the year? Thanks. Yep.

Thanks, Chuck. And you're pretty on a full-year basis, in terms of the impact of tariffs net of any mitigation activities, we see it as about a hundred and fifty basis points for the full year. And you're right. We're pretty much maintaining that two hundred basis point operating margin deleverage for the full year. About sixty percent of that resides in gross margin and the remainder is in SG&A. Relative to shrink, we've continued to maintain our reserves at the same level that we exited last year, so we haven't changed that yet. We've got inventories coming up in August. So in the third quarter, we're gonna be able to see if we've made improvements. You recall, we did see improvement in the at the you know, the January inventories last year. But decided to maintain our accrual level at the same rate until we see more of that consistent performance. And we should see that later in the year, but we've maintained that same shrink rate through the year from consistent with our last guide. Thanks Chuck.

The next question comes from Scott Ciccarelli with Truist. Please go ahead. Good afternoon, everyone. I guess I just got a follow-up to Chuck's question. When we kinda think about the tariff impact, that you just outlined, Ken, can you help us kinda think about on a go-forward basis, like, you know, how much is, you know, kinda this is a hit now. We're able to mitigate. As Winnie referenced earlier, you're able you're already expecting the back half to source a lot. Fewer products, from China. So, like, the right way to think about this as we kinda, like, try to model out the following year?

Yep. Thanks, Scott. Yeah. I'll try to I'll walk you through it here to give you a little bit of help. Based on what I mentioned in my prepared remarks around the second quarter guidance, Again, on an overall basis, we are looking for about sixty basis points of deleverage on operating margin. A significant portion of that is coming from higher incentive compensation. And also about one hundred and fifty basis points embedded in Q2 of tariff-related costs net of mitigation. Again, the majority of the deleverage that's occurring in Q2 is gonna be in SG&A, again, with a higher in cost and investments in store labor. Again, a lot of that's gonna be offset by some fixed cost leverage. And then up in gross margin for Q2, just slight deleverage there where the majority of any impact in Q2 for tariff costs are embedded in gross margin and that too is gonna be almost fully offset by leverage on fixed costs. Now when we move through the rest of the year, just looking at what we've provided so far through Q2 and then you look at what we did for the full year, We're looking at pretty significantly leverage in the back half of the year. It's about three fifty basis points of deleverage in the back half of the year and about seventy percent of that is in gross margin. Obviously, driven by the tariff costs and about thirty percent of that is in SG&A. Just to give you a sense kind of of how it how it flows as we go from the second quarter through to the end of the year.

Thanks Scott. Next question comes from Simeon Gutman with Morgan Stanley. Please go ahead. Hi, everyone. So it's a little bit related to the prior question. The question is regarding pricing and the approach. I think, Winnie, you talked about simplifying pricing and our understanding some prices going up, some going down. Now you have tariffs part of the picture. How much more complex is it you feel confident on the elasticity? And then can to the point you just made, it I guess it doesn't sound like there's mitigating activities built into the guidance for the back half. So you're it sounds like you're not changing price that much or you're absorbing cost if you can you know, connect those thoughts if you can. Thanks. Yep.

Thanks so much, Simeon. Great question. So the mitigation activities that we got include as I mentioned earlier, vendor diversification and you know, the other piece of this is actually assortment mix. And then as you mentioned, price adjustments. What we have done is modeled out the entire year. We've actually gone SKU by SKU, product by product, to just look at what we should and would price things at. And we are looking at touching about fifteen percent in terms of price, both up and down. And it's not just for tariffs, it's really looking at relative value in the marketplace. What we wanted to hold to was this notion of delivering value. And so we will still have eighty percent of the units that we offer in store at five dollars and below. So a lot of this was a rounding exercise in terms of getting ready at some of the scent ending. We are gonna be holding on to the heritage price point of five five five by fifty-five. But outside of that, we're really looking at just simplifying the shopping experience for customers and also simplifying workload for the crew. So and I'm I'll turn it over to Ken to Yeah. Help with the answer.

Yeah. Simeon, just around kind of the assumptions based on what Winnie mentioned in terms of the mitigation activities. Relative to pricing, as we mentioned, we're going to maintain the same level of sales guidance we provided on our last call. And the assumption there is that any benefit that we would get from pricing adjustments would be offset by unit degradation. So that when you do the math, that would lead to some margin erosion and that's what in one of the prior questions that I responded to. You know, that hundred and fifty basis points of operating margin drag, a big portion of that is due to the margin erosion from that assumption related to related to price. And so the tariff mitigation efforts and initiatives are embedded in the guidance. Yeah. So just to be just to double down on that point. Yeah. Thanks, Simeon.

The next question comes from Edward Kelly with Wells Fargo. Please go ahead. Hi. Good afternoon, everyone. I wanted to ask I guess, sort of, you know, similar question, but bigger picture. Obviously, a lot of headwinds in the business from, you know, a margin perspective. Particularly this year, but, you know, you've seen over the last couple of years, I guess. I'm curious as you take a step back and think about, you know, tariff mitigation, changes in vendors, sourcing, geographies, that type of stuff. And some pricing, you know, where you think margin, you know, recapture could be moving forward? And what you think, you know, is the appropriate level of EBIT margin for the business to the extent that you have some decent visibility on that?

So Yeah. I've of the things I'll just say upfront is we've been really focused on driving sales and growth at the top line and which actually does a lot of great things. I said sales solve problems, and so that's one of the key pieces in this in terms of the future. The second piece of it is, you know, I will say that some of the challenges we faced with the tariffs have accelerated work that we're doing on the merchandising front. Both in terms of vendor mix and diversifying our vendors, and that's domestic vendors as well as you know, factories that we work with abroad. And really looking at price through the lens of relative value and I really think that we're gonna deliver great value pound for pound for competition for the product that we offer. We're also in a super lucky place in that our assortments change constantly, and so we're able to bring new things in and really test at different levels of price and value. And so those things are, I think, very unique to Five Below. And again, great acceleration in the work that we were gonna do based on tariffs in the recent news.

And then, Ed, I'll just I'll add to that. I mean, with Winnie mentioned there around the acceleration of our efforts around product and value, that was definitely accelerated. I mean, that's gonna present opportunities for us down the road. And as Wayne mentioned also, our focus is on this year. Right? This is a pretty challenging environment for us, so we're staying close to that. However, if, you know, we were to look longer term in a more normalized environment, I think we would see operating margin expansion. As we, you know, reap more of the benefits around the work that we're doing now, and then we maintain those disciplines in the business that we've always had. We feel that would drive operating margin expansion for us. Yep. And leveraging offset freight sales, strong sales. Yep. Thanks, Ed.

The next question comes from Seth Sigman with Barclays. Please go ahead. Hey, thanks. Good afternoon, everyone. I'm curious if you could speak a little bit more about some of the operational changes you've made. You talked about adding labor hours, where are we there? You also mentioned some other operating efficiencies. Things that do seem to be improving the customer experience in the stores. And I guess related, if you step back and think about the level of investment you're making this year, can you just remind us on that? And I guess given the early success, is there a thought that you could actually increase the level of investment at some point? Thank you.

Great. Thanks, Seth. Yeah, it's one of the things if you recall that we really kind of shifted in the middle of last year and focused more on the in-store experience. And one of the things that we did, we added on some additional labor hours when we looked at the work that needed to be done. We put some more hours out there for the stores that they could complete those jobs. You know, getting the product to the floor and any customer engagement interaction. That's continued on into this year. But there's also the other side of the equation that to the extent that we're able to make work easier for them, more efficient, and actually eliminate any work, that creates more time for them even within the same number of labor hours. So we continue to do that. I think we did some things last year around making it easier for them to close out on the registers. If you recall, we updated shrink procedures where we moved from checking out customers to just to being up there and monitoring what the customers were doing from a shrink perspective, but it actually gives them more focus on the customer too and ended up being a benefit for customer service. You know, those we feel can continue we're gonna continue to get more efficient as we move forward and again continue to push on the experience for the customer. Thanks Seth.

The next question comes from Kate McShane with Goldman Sachs. Please go ahead. Hi, good afternoon. Thanks for taking our question. The strength of your business sounds more category-led than maybe trend-led. I.e., strengthen, like, beauty and apparel than one specific trend, like, Squishmallows. Would you agree with that? And our follow-up question is just can you talk about what's sustaining the comp into May given April mostly had the benefit of Easter? Thank you.

Thanks, Kate. Thanks for your question. It's actually both trend as well as category. That we're seeing really win in terms of the strong comps that we've seen. And I'll, you know, point to one trend which is this notion, again, with the younger segment of customers and collectibles. And we've seen a really great lift in terms of games and toys in our business there because of collectibles. Which is definitively a trend business. Also, novelty candy, so much of this the growth that we've seen is in specific items, like peelers, and squashies. And so we're very excited about some of the trends. And, again, taking a trend from ground level and just making sure we chase it and maximize it. And being very, very specific about what we represent when you cross the threshold. So I would say that it is actually both that's helped us. And I think it's always gonna be a balancing act between the two. We're also seeing some really nice trends right now in the business. We'll speak to next quarter that are specific to licensed business and some of the cultural zeitgeist moments. Like Minecraft and stitch that we really went after in a big way and represented in store. And, again, told the customer about in advance drove traffic to the store so that they had this great presence on the floor. Thank you, Kate.

The next question comes from John Heinbockel with Guggenheim. Please go ahead. Hey, guys. Can you talk about I think you talked about chasing some trends, but chasing inventory this holiday. And because obviously you don't want too much. How long can you wait right, in terms of trying to assess demand? Can you reduce, compress the door-to-door time from Asian factories, which I think is, like, eight weeks? And then what role do you think closeout could or should play this year?

John, thanks so much for your question. First of all, closeouts have been very important to us. And they will continue to be important, if not more important as we move forward. And so we have actually amplified the team with some specific additions that are who are exactly focused on closeouts. And going after business and going after existing trends and making them even bigger but also just taking advantage of available product. In terms of inventory flow, I would say this year is a little unusual given the tariff situation and kind of the stop starts and the pauses that we've seen. We specifically paused when the one hundred and forty-five percent tariff hit on China and we have re-upped that the pause at thirty and are bringing product in. We're actually ahead of time in terms of ordering product, and just ensuring we've got the right flow. On a go-forward basis, it goes back to diversification of the sources and the vendors, both domestically as well as what we get from partners and vendor partners abroad. And so that's been a big push for us. We are looking, we'll be adding for instance we've got a great global sourcing office out of India that we're finally really able to leverage. The team was on the ground in India within days of the tariffs going up. And so for us, it's about how many different sources we have both domestically and abroad to basically provide ample product but also give us agility in terms of getting that product in shorter periods of time.

And John, the other piece there too when he mentioned kind of the you know, accelerating the shipments and making sure we're doing everything we to kinda move that product as quickly as possible. You know, the capacity that we have from a container perspective and with our distribution centers, we made sure that we have ample capacity to handle this because there is to Winnie's point, there are shifts that have taken place here where it was a pause for a while and now we're kind of you know, moving a lot faster and we're making sure we've got the capacity there to handle all this activity. Thanks, John.

The next question comes from Brian Nagel with Oppenheimer. Please go ahead. Hi, good afternoon. Thank you for taking my question. Chris, thanks for it's been nice working here. Appreciate it. So the question I have, and I apologize, I'm gonna bounce back to, I think, where the Q&A started. But you know, just the acceleration we saw we've seen here, you know, in the business and, you know, Q4 to Q1 and now into Q2. And I'm sorry about it just won't be repetitive. But, you know, can you say maybe explain better? I mean, is there what drove the actually, if you look at the numbers, it's almost like a flip to switch type. Well, where the business has got stronger quickly and stayed that way. And this has all happened, you know, if you look across retail in a time when retail spending seemed to be generally more sluggish. So kudos, Jira. Is there anything more you can explain really what happened in the business?

I think that on a two-year stack comp basis, we did have easier compares in the front half of the year. And there is definitely underlying strength in the business and we're excited for it. But on a two-year stack basis, and on a last year basis, we actually had easier compares. And so that gets a little harder in the back half of this year, notably. I will say that I think the thing that has made the biggest difference for us is just us maniacally focusing on our strategy service, value, and experience. So ensuring we've got the right and relevant trends ensuring that we've got a clear point of view in terms of what we stand for with the product, ensuring that we've got value-packed product, and again, it's all about relative value. We did roll back prices on key items for our spring and summer sets. And with really great reactions from the customers. And then the last piece is, you know, just a much better store experience. Where we were able to clean up you know, dead inventory. The newness really is able to show through, and we've got the right level of hours to move the product from the back to the front. And greater coordination between our teams in terms of flowing product from DC all the way through to the stores. So it's a bit of retail time blocking and tackling, but we're in better fighting position and we're doing much better and exercise a lot of muscles across the last few quarters. And that will not stop.

The next question comes from David Bellinger with Mizuho. Please go ahead. Hey, everyone. Thanks for the question. Another one on tariffs and reducing your reliance on China. So a ten percent reduction for sourcing in the back half. What's the end goal there? Could you get to something materially below fifty percent over time? And which countries are you pivoting that volume to now? What country has the most capacity for the back half? Thank you.

So we are down ten percent and it really is ten percentage points. And so the important piece there is, again, we were able to leverage our global sourcing office and hit the ground running. That had been established a year ago, and we are actively leveraging that resource. We're also looking at broadening and have added a lot of vendors across domestic as well as looking outside of China in particular. So, you know, all of those things have helped us. We've also have a lot of flexibility built up in terms of how we drive business and chase trends. In the back half of the year, the trends that are really working right now are less reliant on purely coming from a single source and a single country of origin. So all of those things are working in our favor. But it was very intentional by the team. And when I say that we sprung into action, we literally sprung into action. We have been working actively on mitigation. It is a daily cross-functional meeting, and literally a hit list of things that we're gonna do and target and that's all come you know, we're manifesting all of that now through the back half this year. Thanks, David.

The next question comes from Paul Lejuez with Citi. Please go ahead. Two quick ones. I just want to understand what happened when China tariffs were at one forty-five. You said that you put a pause. What ended up happening with that product? Did you eventually take it once the rates were reduced, or did you end up having to cancel a bunch? Then second, I'm just curious if you could with any color about income cohort and any performance difference that you might have seen versus lower versus upper income folks? Thanks.

Yep. Absolutely. Thanks, Paul. When the tariffs hit a hundred and forty-five percent, which I think was around April ninth, we basically just paused shipment of the product so we could let things settle and understand better what the environment would be. And since then, we've released that product. They were absolutely we weren't canceling product. We let it go and it's flowing now. So and we because we had good business in the first quarter of the year, we actually were actively pulling forward receipts especially for our replenishment products. So I feel like we took the right actions to ensure that, you know, we didn't get hit with outsized tariffs in this quarter and in Q2. But that product is now flowing. And then in terms of income cohort, we actually saw growth evenly across all of our cohorts. And so it's been nice to see not only great growth across you know, the majority of our product worlds, but also across our customer base, you know, agnostic of socioeconomic level. Thanks Paul.

The next question comes from Jeremy Hamblin with Craig Hallum Capital Group. Please go ahead. To sourcing here and ask a little bit of a follow-up. It would appear like, based on typical seasonality, in your Q1 performance that kind of the underlying EPS for the business is about six dollars a share, so fairly significant tariff drag. Here even as you make that you know, kind of ten percentage point reduction in sourcing from China. As you look ahead to twenty twenty-six, how much further do you think that you can get that sourcing down if tariffs at an elevated level should persist? And then kind of as a related question, wanted to understand whether or not you've seen any notable change you know, as kind of the de minimis exemption has gone away, whether or not that's changed, you know, some of the competition.

So in terms of mean, actually start with our last issue, which is the minimum. It's unclear whether or not de minimis has had any impact on our business. I will say that Five Below is an interesting business. It's pretty unique in terms of its focus on kids. And so I think just less impact overall. From de minimis. And then in terms of goaling for twenty twenty-six with sourcing, really, what we do is try and chase the best trends and get the most relevant assortment of products. And so a lot of what we've done some part of it is intentional in terms of really looking at what's out there outside of, you know, China, but the other piece of it is ensuring that we get more vendors into the mix. And we've been working on that actually since the back half of last year. And ensuring that we've got really, really great product. And we're finding really great domestic sources, for instance, and we're exploiting that. We're definitely going after closeouts. So it's a combination of all things. And then I'll let Ken speak to the last question.

Yeah. Jeremy, I think you mentioned kind of the tariff impact for this year. And kind of rolling that forward. Yeah. You're probably just under a dollar based on the hundred and fifty basis points of that net tariff impact. And again, we're gonna focus on twenty twenty-five for now, but given a lot of the benefits it's coming out of this work based on this tariff challenge, and as Winnie mentioned, kind of accelerating a lot of these activities that were strategies for us, but we've really pulled that forward. We do feel, again, in a more normalized environment that we should be able to deliver operating margin expansion as we move forward. Thanks Jeremy.

The next question comes from Brad Thomas with KeyBanc Capital Markets. Please go ahead. Hi. Good afternoon, and congrats on the results here. My question is around store openings and store growth. You know, we know that you've slowed growth and paused for models as you focused on stabilizing the business. Presuming the consistency in comps continues, is this still the right level of store growth to think about going forward?

Thanks for your question, Brad. I think that we will accelerate store growth as we move forward. This year, we're gonna be entering markets. We're frankly, we have a lot of white space. We have no stores in the Pacific Northwest, and so we've got a lot ahead of us in terms of potential and white space in the market and with improvements in terms of our execution and our ability to deliver consistently both sales and profit. We will be looking at further expansion or more assertive expansion of our stores moving forward.

Yeah. And Brad, we mentioned a while ago what we see as the opportunity in the United States of, like, the three thousand stores. We still feel really good about that. And as you can see from these results, we're also seeing improvement in the productivity of these new stores. So that's a good thing to see and a little bit more consistency in terms of performance. So that gives us even more confidence as we move forward. Thanks, Brad.

The next question comes from Anthony Chukumba with Loop Capital. Please go ahead. Good afternoon, and thanks for squeezing me in. I guess my question is just around the cadence of comps during the first quarter of twenty sort of noticeable difference between, you know, the different months and if you saw any you know, sense of, like, acceleration in April, you know, post liberation day with folks maybe trying to get in in front of potential price increases. Thank you.

So, Anthony, we saw a really nice improvement in comps month in month out. I think we had a couple of interesting nuances to the core. Number one, February we had bad weather throughout the country, which definitely impacted traffic and comps. And then we have a shift in eastern timing between consider kind of March and April together in terms of a year-on-year comparison. But again, coming out of the holiday, we have continued to see nice growth and, you know, actually, our comp performance has been very good and yeah. The Eagle rate. Yeah. So it's been you know, continuing to accelerate week in week out, and that's you know, really great testament to everything that the teams have done. Thanks, Anthony.

The next question comes from Michael Montani with Evercore. Please go ahead. Yes. Hi. Thanks for taking the question. I was just going to ask on the EBIT margin pressure, I think one hundred and fifty of tariffs. So then should we take the other fifty and kinda allocate it evenly between incentive comp, you know, marketing spend and then store labor hours? Or is there any extra kind of clarity you can provide on that?

Yeah. Michael, on the you're right. On a full-year basis, as we mentioned, one hundred and fifty basis points in op margin deleverage, again, about sixty percent of that is going to be up in gross margin. Again, that's where the overwhelming majority of any tariff costs are gonna be. And about forty percent of that deleverage for the year is going to be sitting in SG&A. And again, you've got the higher incentive comp for the year, the investment in labor hours, and it's offset slightly by some fixed cost leverage on a full-year basis. So that gives you a little bit of the geography of that full year. Thanks for taking the question.

Thanks, Michael. And the last question will come from Joe Feldman with Telsey Advisory Group. Please go ahead. Yeah. Thanks for taking the question guys and congrats on a very good quarter. Again, I know you've been asked a lot about this. And I understand all the changes you've made in the stores, and I can see them when we're in the stores. They and those look like, the assortment's better, tighter, everything you've described. But how did customers know? Like, I mean, did marketing step up measurably? I don't recall hearing you say anything too much about the marketing, but it seems like customers would have had to have known that things got better to then start to come back more frequently and the traffic was great. So was there more stimulus or was it?

Thanks, Joe. We didn't increase our level of spend. What we did do was actually look at the channels and we did really invest in social media and cater content. And with that investment and redirecting the spend in that direction, we thought we were doing the right thing by the customer in terms of starting their journey where most customers start today, which is on social and in digital. And connecting that journey through to what they saw in stores. We were very specific about where we invested. We invested in trends that we were seeing that we thought were relevant be it beauty, be it novelty, candy. We did a lot in social around, you know, building your own Easter basket and you know, I'll just take that example of the Easter basket. What you saw on social connected to what you saw on the site in terms of literally building one, choose a vessel. Two, what goes in it? And you saw that all the way through to the store. So it is that end to end and looking at the storytelling and starting with social. And stepping up our creator content. Thank you.

This concludes our question and answer session. I would like to turn the conference back over to Winnie Park for closing remarks.

Thank you so much for joining us. We're so excited by the progress we've made across product, value, and experience, and I want to thank all of our teams for their hard work and dedication to delivering our results. Five Below continues to be a destination for our customers for fun, trend-right products at amazing value and we're committed to continuing to provide the magic that is Five Below. In summary, we feel really good about where the business is today, we're excited for the future. Wish everyone a great summer and hope to see y'all in our stores. Thank you so much.

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