Everyone, I am Michael Lasser, the Hardline, Broadline, and Food Retail Analyst from UBS, and I could not be more thrilled to be spending a little time with two fantastic people and a third sitting in the front row. Winnie Park is the CEO of Five Below, having just surpassed her 13th month in this role. Boy, how time flies when you're having fun, and Dan Sullivan has just surpassed his three-month tenure at Five Below, and everybody knows Christiane Pelz. She does not need an introduction as the incredible head of investor relations at Five. I don't know that there's been a management team that's had more of a boom coming out of the gate than Five Below over the last year, so it's been pretty fun to watch. We'll get into the holiday performance, but Winnie, where I want to start is, you've been in this role, as I mentioned, for a year. The business has returned to really compelling growth, capped by quite a remarkable holiday season. What, in your mind, has driven this really notable turnaround over the last year? Thank you so much, Michael. Thank you. Gosh, I can't believe it. We just were reminiscing about being here a year ago, and I think the thing that's so compelling about Five Below is the journey I took with the brand as a customer when I started shopping Five Below 10 years ago, and that was with a kid, my daughter. She's 10 years old, and I think that our true north star is that focus on the customer and reclaiming our position as a destination for the kid and the kid in all of us. It's a special place in retail. There's not a lot of us out there that are focused on the kid and really doubling down on that in every way, getting close to the customer, their needs, getting close to their trends, which are actually multifaceted. It's not about a single item. Getting the team geared to really, really understand that the customer is our boss. I'm not the boss. The customer is our boss. In service of that kid, we also did a second thing this past year when I started, which is let's speak to them in a relevant channel. That's really looking at the fact that we've got Gen Alpha, Gen Z, and Millennials. They're digital natives, but they're really social natives. When we communicate and create that connected customer journey, the journey's got to start in social. It's got to start with storytelling and curated storytelling that's compelling. From there, greet them at the store with the same stories, which leads us to kind of the third pillar of the strategy for growth, and that is how we work. It's not just what you do, but it's how you do it. And collaboration and cross-functional alignment has been so key. I come from years in the fashion industry. We take go-to-market very seriously and bringing the discipline of go-to-market with our six curtain-up moments, where it is around merchandising, working very closely with marketing upfront in terms of what's trending, what's hot, what's new, how are we going to talk about it. But also, we take that same information to the stores. Before we deliver the product, we have a curtain-up call with all of our associates so they really get a feel for what's coming their way. And then, of course, that tight coordination between allocations, our distribution, and our stores, that means everything. So when the customer gets their curtain up, you're walking into holiday, you're walking into Halloween, and it's compelling. Retail is the last great team sport outside of football, and we mean to play and leave it all out on the field. I will stay away from the football comparison given what happened with Philadelphia last night, but Dan, would you say that? We won't speak of these things. Dan, would you say that part of the reason why you got hired was because of your TikTok presence, or that is nothing? Not entirely. That has nothing to do with it. Winnie, so if I were to summarize what you had mentioned, it's number one, reframing of the business back on the core teen, pre-teen consumer, two, speaking to that customer in a more current, relevant way through social media, and three, really unifying the organization, and those are three areas that you've focused on. Presumably, all those three have led to some of the benefits that you saw during the holiday. Were there other factors that drove the holiday result, and you spoke to this not being one particular trend, which I think is important because as you get into next year, there's a constant dialogue from this community, which is, oh, they're going to lap X, they're going to lap Y. But given the diversity of the trends, doesn't that give you a little bit more confidence moving into next year, coupled with the momentum of the business? Absolutely. I think what was terrific about holiday—you take that strategy, focus on those three Cs—but then the way we executed it is to deliver assortments. It wasn't about a single item and delivering really compelling statements across a number of different businesses and worlds and customer worlds, as we like to call it. The trends are now not just about one thing. There are multiple trends, and we're constantly chasing them. Now we have the discipline of test, learn, and ramp. We want to get fewer, bigger, and better ideas and really go after them. That is a way of working that we've brought into Five Below, not just for this holiday, but beyond. The other piece around holiday is we were very intentional and strategic in our investments. We invested in the inventory and in the merchandise. We had full shelves of the right product. We invested in marketing. We made sure that we got the news out there, starting with our holiday toy catalog, which delivered in November, and our vendor community was so wonderful in helping to participate in that. And then the final thing is we invested in the labor and the store experience. If the product is in the back room, they can't see it, they won't buy it. So making sure that we were replenished every day, especially those critical 14 days leading up to Christmas. And so all of those things, it's again a discipline that we apply, and we'll continue to apply that to comp the comp. Got you. Well, we'll talk about that in just a minute because that's top of mind for folks. Dan, I want to bring you into this conversation. Coming in, this has probably been an eye-opening experience on a number of levels, but as you look more and reflect on over the last eight weeks during this holiday period, what outperformed? Because essentially you doubled up, or Five Below doubled up what you had expected to do. Is this across all categories? Were there standouts from a geographic perspective? Anything that you think is important to identify? Yeah, we obviously had a terrific holiday. Look, I think a couple of things jump out to me. One, as you've heard Winnie say, we are a differentiated retail concept. That is who we are. Two, we've got a pretty compelling strategy. The chief architect of it is sitting to my left. And three, we've executed at a really high level. And so when those three things happen, you're going to tend to perform. The way I think about holiday is two words: breadth of growth and balance of growth. The breadth means we grew just about everywhere. We operate in about 170 districts here in the U.S. We grew in all of those districts. We saw consistent growth across every store vintage. We operate across all income cohorts, across all demos. 14 of the 18 departments we operate in grew. So this notion that we are relying on a single trend, a single item, is simply not what we've seen. And this isn't unique to the holiday, by the way. We saw this over the course of the second half of the year. So that's the breadth piece of the discussion. Then you get to the balance side of it, and you unpack that comp. 14.5% comp is what you all would have read this morning. That was our single best holiday performance since we became a public company. And it was driven in a really balanced way. About eight points of that came from ticket, which means about six came from transactions. And so as Winnie talked, as we invest in marketing dollars, we drive traffic. As we get good in-stock position, good labor deployed on the store, we convert well. All of that came together in the holiday period. Super, super proud of the team and the work that they did and obviously excited for the path forward for our business. Very helpful. If there is a debate or a question, it's how are you going to be able to sustain this momentum? Winnie, you've been able to identify some key areas of opportunity early in your tenure as the leader of this business. Where does Five Below stand on this journey, whether it's using social media, making changes to the store experience? And one of the hallmarks of what you've done early in your tenure was to move some of the Five Beyond product from out of the back of the store and move it into relevant sections throughout the store. Those are really interesting and useful examples of giving us a sense of how much more there is to go. So how do you see that from here? We are. Early days. Very, very early days. I truly have only been here a year. We just assembled the team. Dan joining us in October, Michelle, our Chief Merchant, joining us in October. So from a team perspective, we've got the team. We've got the right team. And then beyond that, I will say that what we've done is institute a system in terms of product and product newness that goes after trends. And the trends are not about one thing. It goes across the assortment. And again, it's that test, learn, and ramp approach to how we do things that's so critical. We have, because of the tariffs, never waste a crisis, really taken the opportunity to broaden our store space, invite more vendors to help us identify the trends, really diversify our store space in terms of country of origin, look at goods outside of China. All of that helps us with more information into identify what's right and what's going to happen, what's new. Then I will say that price has been such an important component of us driving comps this year and sales growth, but we were incredibly strategic about where we took price. Again, the tariffs basically forced me to look at every single item. I sat down with the MP&A teams. We spent weeks going item by item so I could understand the role it played in the assortment, literally the volumes. Then again, price value. How much are we paying for it, and how much are we going to put it out in the market for? We walked away from some things, and then we went after others. When we came out of that exercise, we built an assortment, and we said, "Okay, let's go test this, but let's test whole price points. Let's simplify the shopping experience." When I got to Five Below and I was interviewing, there was something like 77 different price points. There were 25 endings, 55 endings. We got rid of all of that. We went to whole dollars, and then we pushed the envelope. If you're going to go above five, you better pack a lot of value in those products. And we tested it. Frankly, we ruled it out in Q2. And what was amazing is that the resistance to the price increases were not what we expected. Customers responded because the product was just so good. From there, in the third and fourth quarters, what we did was we said, "Let's get rid of Five Beyond. Let's put those items in line because that's how the customer shops." If I'm looking for room decor, I do not need to go to the back of store to find a $35 gilt mirror. Let's go ahead and put it in line with the rest of room decor. That paid dividends. It made it easier. We saw those items being picked up better, and it freed up space so we can get more productivity out of the box. We were able to have two curtain-up moments, both in the front of store and back of store, starting with Halloween, and we continue that through the holidays. So all of those things are, again, things that we're going to leverage and continue to grow. We've just started understanding the customer. We just started in social. Of the hundreds of millions of customers who shop us, we only capture a few of them via email, so that work is now just beginning, creating a customer database, understanding things like recency, frequency, monetary value, and finally, omni just started to scratch the surface, so we've got a lot of dry powder in the arsenal that we started to look at this year, but we're ready to really bring it to the fore over the next few years. It does seem like 2025 was a year where Five really solidified that the customer's willing to buy at higher price points. As long as the value is there, what comes to mind is the $45 skeleton. That's a little scary, by the way, I will add. The scarier, the better. The scarier, the better. How far are you willing to push it? How far do you think the customer is willing to accept it? I think the litmus test for us is how good is the product and relative value. So if that animatronic skeleton at $35 is out in the marketplace at $70, that's good value. If it works great, if it's scary enough, that's good value. So that's our constant litmus test. And at Five Below, we are bred in the bone to not go above five. Literally, it is almost like tissue rejection. So it better be really damn good for us to push the price point and the value. And that discipline, again, is something that I really appreciate. Yep. Got you. Dan, another key piece of the story is that Five is still in the middle stages of its life cycle in terms of unit growth. It's interesting now that you're expanding the aperture of what can be sold. Does that influence how you think about the number of units that Five Below could ultimately operate? Right now, it stands, the growth target's 3,000 plus. What's been your impression of that expectation as you come in and studied it? Yeah, super bullish on the opportunity here for further unit growth. 3,500 plus is sort of what we have said. Super confident in that and quite informed by what we're seeing in recent new store performance. We just opened eight stores in a new market for us, Pacific Northwest. Each of those eight stores in and of themselves would have set a record for a grand opening to happen to all launch at the same time. We continue to see robust response to the format and to the offering. So definitely highly convicted upon what the growth could be and how we think about whether it's fill-in or whether it's new market entry. I think what has shifted a bit for us is the pace that we expect here. We're not going to chase a number. We're not going to chase a number of boxes. We're going to be super smart and disciplined. We've raised the bar on what it takes from market intelligence, site selection, all the way through to when we open those doors. Every aspect of that has to work better for us. So we've anchored ourselves a bit. The way we look at growth around high single-digit box growth is probably the right place for us in the near term. That's what we'll be this year, about 9% in new boxes. That's a pretty good proxy for us as we move forward. And again, setting ourselves up to think about what does really good execution look like? Premium sites, great end-to-end execution, and super grand openings. Those eight stores that I mentioned, Pacific Northwest just as an example, those are all former Party City boxes. So we're going to focus on premium location, good four-wall economics, and then we're going to execute super well. Shifting over to the model, one thing that was pretty remarkable in 2025 was how well not only Five performed from a top-line perspective, but how well it was able to manage through the tariff environment. And given the sourcing that Five Below does, it was uniquely exposed to the tariffs. So Dan, give us a sense for how much the tariffs had an impact on the product cost, what were the mitigation strategies, and it's very likely that we're going to be in a dynamic tariff environment moving forward. What do you see as the opportunities and the risks from the tariffs to Five's model moving forward? Yeah, this is Five Below at its best. The way this organization attacked tariffs and all that it could have been, rewind the tape to what we were all thinking back in March and April. And this organization was proactive. It was aggressive. It was solution-oriented. And as a result of all of that work for the full year 2025, we're essentially offsetting all the tariff pressure at the unit economic level. Merch margins are essentially flat year over year. That is an incredible outcome. We've done it through a number of different ways. Certainly, price strategy and price execution, and importantly, less consumer pushback on some of the pricing that we've taken has been an important lever, but we've also done great work on the cost side and good hygiene around re-engineer it, renegotiate it, put it into different countries of origin. Nothing was off the table in terms of the work that we've done. Now, where we felt the pain, less at the unit economic level and more just in operating in a tariff environment. Every aspect of supply chain and distribution and importation had some form of significant cost pressure to it. Surge pricing being a really good example of that. We see that as largely transitory here. It is not structural. We still have to work our way through a bit first half of 2026 because some of those costs are trapped in inventory and will release as the product sells. But I think an important recognition of how this company operates is the work that was done to mitigate what could have been meaningful tariff pressure and then creating an environment where, to your point, Michael, this is fluid and changing and requires great agility, and that's how we operate the business. Dan, is the message, "Hey, let's look at what happened last year with respect to tariffs." Five Below was able to manage it in such a way I think merch margins were flat, which is a remarkable accomplishment. The message for folks should be, "Hey, no matter what happens, that should be a testament that we'll be able to manage through this under a variety of different scenarios. Well, that's right. And you heard the CEO of the company spent her first weeks here tearing through item by item across the full portfolio. That tells you sort of the mindset of how we operate. So yes, I fully agree. It won't stay this way. That we know. There will be more change, more disruption, but we as an organization will stare into that. With all due respect to any Eagles fans, we already know that there's not going to be a repeat for one organization coming out of Philadelphia in 2026. We are hopeful and confident that there can be a repeat for a different organization in 2026. Winnie, how do you comp the comp in 2026? How are you thinking about that? So, Michael, I've alluded to some of the things that we've got in play that we've just begun. And the thing that we did this year was set the base. We set the base. And we set the base not just to drive the growth and drive the year's comp, but to really think about multi-year, how do we repeat this? And I think we've just begun to touch the potential with product and assortments. Some of the ideas that really shine this year, like lounge, went from zero to 60 in the course of nine months, and it was getting behind it. And so I think there's a lot more we can do with regards to product trend. Again, price, thinking about how much more we can do with great value above $5 while keeping that screaming value at the center of how we go to market and who we represent to the customer. The last piece of this really is we've only begun to talk to our customers. We've only begun to talk to them via social. We've only begun to actually email them and bring them back. And we know the value of a customer with an email, and we know how much more we have to do there. And so before we even talk loyalty program, let's just get their names and start talking to them and asking them to come back for every curtain-up moment. We also have an aspiration. You had mentioned earlier that, and you were there for the Five IPO, right? It was pre-teens and teens. I actually pushed this back to a younger customer. We're kids, and we have the ability to ladder up with that kid starting from when they get their first allowance at age five, all the way through to self-expression at 12, 13, to college, decorate your dorm, and when they become parents, and so monitoring that life cycle is something that there's a ton of opportunity in terms of customer lifetime value, and I would say that that differentiates us from most of retail. Even when we look at new store expansion, as we've been talking about beyond comping the comps, just pure growth, kid counts in communities, drive times for kid counts, how you actually delve into communities of kids, so there's a lot more for us to do. Kids and kids at heart, too. Kids and kids at heart. We love our kidult. Yes. It's kidult. kidult. kidult. Not to be used as a nickname. Yes, I'm a kidult. Yes. Some people say I'm not even a kidult, but that's a different story. Dan, your stock's doubled in the last year. Part of the expectation is that profitability is going to continue to improve. At one point, Five had a 12% operating margin. How are you thinking about the profit profile for this business over the long run, and where are the biggest opportunities right now? Yeah, well, look, we're a growth retailer, so any talk of operating margin is going to start with growth. You've heard Winnie. We're highly convicted that we will comp the comp next year, but more importantly, continue to deliver structural, durable growth. We would expect that growth then is going to deliver leverage. That's how we operate the business. You see that in 2025, actually. Despite tariff pressures, other challenges on cost, incentive, and the otherwise, we'll deliver 40-50 basis points of op margin accretion this year. So we're going to grow. We're going to thoughtfully reinvest, continue to direct our investments to where returns are the highest. We're going to stay maniacal on productivity and efficiency. All of that then creates op margin accretion and leverage. That's the model. That's how we operate it. Now, I'm well aware of the 12% metric. I don't think about it personally as a moment in time or a number. I think the path at which we accrete, the path at which we drive that margin, we'll see. But it's going to start with growth, including in 2026, and then from there deliver leverage. The other thing I would say just for 2026 purposes, remember, we will anniversary a lot of these one-time transitory costs. So the leverage requirement threshold, if you will, is a bit lower than it's been historically. That's a 2026 only comment. Long story short, Michael, highly convicted, we'll continue to grow this business, and as we do, we'll lever it at the operating profit. That's awesome. I want to end where we started, which is you're entering your second year as a leader of this remarkable organization. What are you most excited about, and what in your mind is just the opportunity here moving forward? I think, thank you for that, Michael. We have so much more potential. The potential for Five Below is big, and I keep going back to the point that we're a differentiated retailer. We're specialty retail geared towards kids that happens to operate at extreme value. That is an unstoppable combination, and so more to come, but I'm pretty excited, dare I say, psyched and stoked about what we're going to deliver to the customer over the next couple of quarters. It's going to be good. Amazing! This was totally lit. On behalf of me and all the other kidults out there, thank you. Please join me in thanking the team from Five Below. Thank you.