Five Below sold a lot more stuff and kept far more of the sale.
Revenue for the six months ended August 1 rose 22.9%, from $1.0 billion to $1.3 billion. Operating income jumped from $52.4 million to $275.4 million, lifting the operating margin to 21.8% from 5.1%. Net income followed, reaching $221.4 million from $42.8 million.
Cash generation improved too, but cash ended nearly unchanged. Operating cash flow nearly doubled to $442.7 million, while cash ended at $561.1 million, down slightly from $562.7 million a year earlier.
The reason is in the spending. Five Below put $110.4 million into capital expenditures, up 36.4%, and also increased its purchases of investment securities and other investments.
"The increase was primarily due to increases in net purchases of investment securities and other investments and capital expenditures."
Five Below, Form 10-Q, September 3, 2026
In plain English, the business produced more cash while increasing capital expenditures and purchases of investment securities and other investments. That is a different claim from saying the cash engine stalled.
The income statement's improvement also came with a clear expansion footprint. The company attributed the increase in non-comparable sales primarily to new stores opened in fiscal 2026 and stores opened in fiscal 2025 that had not yet been open for 15 full months.
"The increase in non-comparable sales was primarily driven by new stores that opened in fiscal 2026 and the number of stores that opened in fiscal 2025 but have not been open for 15 full months."
Five Below, Form 10-Q, September 3, 2026
That makes the sales growth easier to read, and harder to reduce to a simple same-store productivity story. New locations are doing meaningful work. Occupancy costs rose with new store openings, while higher fuel costs lifted distribution costs. Lower cost of goods sold helped margins.
There was another lift in operating cash flow: IEEPA tariff refunds. Five Below said the increase in operating cash flow came from store performance and the refunds, partly offset by higher income taxes and changes in working capital.
"The increase was primarily due to an increase in operating cash flows from store performance and the impact of IEEPA tariff refunds, partially offset by an increase in income taxes paid and changes in working capital."
Five Below, Form 10-Q, September 3, 2026
The refund matters because it is cash arriving alongside the operating improvement, but it is not the same thing as a recurring sale at the register. The filing does not separate the refund's dollar contribution here, leaving the cash result with two sources that are not equally durable on their face.
Inventory rose 17.7% to $941.2 million, slower than revenue growth, while diluted shares were nearly flat. The company is adding merchandise and stores without materially expanding the share count, but it is also committing more capital as that expansion proceeds.
Source: Five Below Form 10-Q filed September 3, 2026, covering the six months ended August 1, 2026.