Sep 2, 2026 earnings call — Strong sales from trend-driven product and stores
Q2 sales were $1.3 billion, up 23%, with adjusted diluted EPS of $1.68.
Revenue $1.3B (est $1.2B) · EPS $1.68 (est $1.40) · Next-quarter revenue outlook $1.2B
Key quotes
"We amplified numerous trends from Asian food and snacks to the return of slime and create, and we continue to build the overall squishy trend with new collections and fresh drops."
"Last year, we worked hard to move our working media spend away from traditional commercial and into social media."
"we plan to enter the market of Puerto Rico in the back half of 2027."
Analyst Q&A 15
product vs marketing drivers
Q (Randal Konik · Jefferies): Analyst asked how much of the strong quarter came from product versus marketing and how those will evolve through 2029 to drive more customers and frequency.
A: Management said the strategy reset and operating flywheel are working. They emphasized remerchandising, social-driven marketing, early work on capturing customer records at checkout, and that the business is still in early innings with room to grow.
"We are a one of one concept that is a destination for kids the kid in all of us at extreme value." — Winifred Park (CEO)
what drove traffic growth
Q (Krisztina Katai · Deutsche Bank): Analyst asked which categories or product stories drove the traffic growth and whether traffic is concentrated on major trends or broad-based; also asked about quarter-to-date and August trends relative to guidance.
A: Management said traffic growth was consistent with Q1 and was broad-based across categories, with the squishy trend driving visits but also converting customers into buying across the assortment. They would not give in-quarter performance color but said their Q3 guide reflects a thoughtful view with comp growth largely driven by transactions.
"The traffic growth that we saw and that we experienced in the quarter was consistent with the traffic growth we saw in quarter 1." — Winifred Park (CEO)
newness strategy and new store results
Q (Matthew Boss · JPMorgan): Analyst asked about the rolling thunder approach to new product drops and how that affects traffic and new customer acquisition, and also asked what is driving the high productivity of recent new stores.
A: Management said rolling thunder means frequent, marketed newness and curated product stories across categories, which drives visits and engagement. For new stores, they cited broad demand across demographics and a more disciplined real estate strategy and execution from site selection to grand opening.
"The rolling thunder approach is something that we have worked really, really hard on, and it's across every single world." — Winifred Park (CEO)
use of tariff refunds
Q (Robert Ohmes · BofA): Analyst asked how to think about using tariff refund cash: reinvest in the business in the back half vs spend into higher trends, and how to model that.
A: Management said they will prioritize investments that support customers and growth. They see the tariff refunds as optionality to accelerate investments in store experience, digital/omnichannel, and product newness, and expect the redeployment to show up disproportionately in CapEx over time.
"Our focus from an investment standpoint has been and is going to continue to be primarily focused against our customers and in support of our growth." — Daniel Sullivan (CFO)
sustainability of growth drivers
Q (Michael Lasser · UBS): Analyst asked if prior quantified run-rate assumptions still hold and whether any unique, hard-to-repeat factors could impede sustaining comps.
A: Management said the operating flywheel is the durable catalyst and highlighted assortment strength over single items. They noted Squishy Dumplings was a low single-digit contributor but provided halo traffic and that their ability to amplify trends is a growing, durable capability.
"Squishy Dumplings, as an example, was a low single-digit contributor to our comp growth." — Daniel Sullivan (CFO)
social media and email targeting
Q (David Bellinger · Mizuho): Analyst asked for data on sales uplift from social in target markets and how sophisticated email capture and personalized paid social could become.
A: Management said they like results from shifting spend into social and that they segment media by customer cohort; they also see connected TV results for Gen Alpha. Email capture and personalization are early-stage; they will invest to improve precision and lifetime value over time.
"We really look at the media spend in social and digital by cohort of customer and what's most applicable." — Winifred Park (CEO)
Five Beyond changes and cost
Q (Joseph Feldman · Telsey Advisory Group): Analyst asked how the Five Beyond wall removal and reallocation will roll out, the effort and timing, and what to expect over coming months.
A: Management said they began moving Five Beyond product into departments to free space and improve sight lines; rollout is disciplined and monitored. They expect better productivity and flexibility and noted the change requires modest CapEx per store and drove their higher annual CapEx outlook.
"It's probably in the range of $40,000 to $45,000 of CapEx per store -- it is at the heart, though, of what led to us increasing our CapEx outlook for the year." — Daniel Sullivan (CFO)
4Q guidance and capacity concerns
Q (Scot Ciccarelli · Truist): Analyst asked why fourth-quarter comps aren't higher given momentum and ability to bring products this year, and whether physical store volume limits or prudence explain the guide.
A: Management said they factored run-rate momentum and new product opportunity but also the 2-year compare and competitive dynamics. They positioned Q4 at about a 3% comp profile and described their view as thoughtful rather than conservative.
"The way we've constructed the fourth quarter, which would position at about a 3% comp growth profile for the quarter." — Daniel Sullivan (CFO)
top-performing stores traits
Q (Charles Grom · Gordon Haskett): Analyst asked if the top 10%–20% of stores share common themes that could be applied to the rest of the fleet to think about 2027 comps.
A: Management said they do not see meaningful variance across the fleet; performance lift is systemwide across vintages and geographies. They emphasized capturing new customers and bringing them back via new stores, existing-store marketing, and trends to keep comping the comp.
"It is amazing in terms of the performance across the fleet regardless of vintage or geography." — Winifred Park (CEO)
labor for curtain-up moments
Q (Jeremy Hamblin · Craig-Hallum Capital): Analyst asked whether they have the labor scheduling formula for the six curtain-up moments and if efficiency can improve so events won't unduly raise labor even if comps moderate.
A: Management said they have increased store labor to support moving product and filling shelves; the current curtain-up success comes from better coordination between corporate and stores across merchandising, marketing, and supply chain. They expect to gain efficiency over time but see visual merchandising and product movement as driving customer engagement now.
"With the curtain up moment, we actually have always had new sets in the front of store." — Winifred Park (CEO)
gross margin drivers and tariffs
Q (Edward Kelly · Wells Fargo): Analyst asked to clarify transactions vs ticket and to unpack gross margin in the quarter by fuel, shrink, and tariffs and how to think about 2027 if tariffs rise.
A: Management said transaction growth was driven by traffic in both quarters. On gross margin, they said Q2 saw 220 basis points of accretion led by merch margin expansion from pricing they hadn't yet anniversaried and lower tariff costs, with slightly better shrink offset by higher fuel; they expect tariff dynamics to evolve and said the company can manage impacts through cost actions.
"Here you saw the benefit of pricing that we hadn't yet anniversaried and lower tariff costs." — Daniel Sullivan (CFO)
role of licensing
Q (Katharine McShane · Goldman Sachs): Analyst asked how licensing contributed to Q2 comps, what the summer movie slate looked like, and whether licensing measurably drives traffic.
A: Management said licensing is growing and they now aim to deliver full 360 collections, citing Toy Story this year as an example and saying more movie titles and new licenses will roll through the year. They view licensing as a complement to toys, games and collectibles and plan to expand it.
"Today, we're taking a slightly different approach in that, one, we have the ability to deliver a 360 experience with a license in a full collection." — Winifred Park (CEO)
how in-store shopping behavior changed
Q (John Heinbockel · Guggenheim): Analyst asked whether management has insight into how customers' in-store paths and time spent have changed and how that will influence operations.
A: Management said current insights come from observation and crew feedback and they have more to learn; they expect changes like removing Five Beyond walls, improving sight lines, grouping adjacencies by cohort, and putting candy and tech up front to make shopping easier and help build baskets, but these efforts are early-stage.
"Right now, it really is through observation and it's observation through our own visits as well as what we hear from our crew in the field." — Winifred Park (CEO)
reaccelerating store growth and capital use
Q (Zhihan Ma · Bernstein): Analyst asked what it would take to reaccelerate store openings and how management balances reinvesting tariff refunds versus returning capital to shareholders.
A: Management said they are not capital constrained and will balance pace with executing to high standards and availability of locations; they will keep investing in growth and customers while also returning excess liquidity to shareholders, noting a raised CapEx outlook and a new $600 million buyback authorization.
"We're going to continue to operate with pace and urgency simply because the returns are too good, but we're not going to sacrifice the standards that we have set because we've seen the results here, and we're quite pleased." — Daniel Sullivan (CFO)
omnichannel readiness for holiday
Q (Phillip Blee · William Blair): Analyst asked whether full omnichannel features (BOPIS, delivery) will be live for holiday, what comp impact to expect, and margin implications from extra in-store labor.
A: Management said they hope to continue omnichannel this holiday but are still finalizing execution details and costs. They reported current positive results from BOPIS and third-party delivery but could not quantify cost or comp impact yet.
"We are hoping to be able to continue with our omni during this holiday season." — Winifred Park (CEO)