Please note this event is being recorded. I would now like to turn the conference over to Ms. Christiane Pelz, Vice President, Investor Relations and Treasury. Please go ahead, ma'am. Thank you. Good afternoon, everyone, and thanks for joining us today for Five Below's Q1 2024 financial results conference call. On today's call are Joel Anderson, President and Chief Executive Officer, and Kristy Chipman, Chief Financial Officer and Treasurer. After management has made their formal remarks, we will open the call to questions. I need to remind you that certain comments made during this call may constitute forward-looking statements and are made pursuant to and within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in the press release and our SEC filings. The forward-looking statements made today are as of the date of this call, and we do not undertake any obligation to update our forward-looking statements. In this presentation, we will refer to our SG&A expenses. For us, SG&A means selling, general, and administrative expenses, including payroll and other compensation, marketing and advertising expense, depreciation and amortization expense, and other selling and administrative expenses. Additionally, we will be discussing certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP are included in today's press release. If you do not have a copy of today's press release, you may obtain one by visiting the Investor Relations page of our website at fivebelow.com. I will now turn the call over to Joel. Thank you, Christiane, and thanks, everyone, for joining us for our Q1 of 2024 earnings call. In the Q1, we delivered total sales growth of 12%, a comparable sales decline of 2.3%, and adjusted earnings per share of $0.60. These results fell short of our expectations as we experienced a meaningful slowdown in sales during the back half of the quarter. Despite the sales shortfall, we delivered adjusted earnings at the low end of our outlook range. As we analyzed our Q1 sales performance, the following factors were apparent. First, our negative comp results were driven by a decline in comp transactions. Second, consumers were more discerning with their dollars, increasingly buying to need. We saw this in the types of products they purchased, choosing more items in our version of consumable categories such as candy, food and beverage, beauty, and HBA. Each of these areas contributed positively to the quarterly comp. Additionally, declining sales in older merchandise trends, led by Squishmallows, presented greater comp headwinds than planned. Finally, we achieved positive comps in our higher income cohorts, suggesting some trade down of these customers seeking value at our stores. However, we saw underperformance in the lower income demographic that more than offset these results. The quarter solidified that consumers are feeling the impact of multiple years of inflation across many key categories such as food, fuel, and rent, and are therefore far more deliberate with their discretionary dollars. While we are tracking this behavior and noted some pressures over the last several quarters, the degree to which it was affecting consumers at the beginning of the Q1 was masked by the noise created from tax refund timing and an earlier Easter. I would also call out that the slowdown we experienced was across all geographies, further suggesting there was a broader macro impact. Five Below has always stood for wow products at extreme value, and we will lean into this mission even more heavily as we contend with the pressures faced by our core customer. The vast majority, or about 85% of our units sold, are priced at or below $5. While we believe we are currently delivering value for our customers, we will continue to look for ways to bring even more distorted value to them. Our number one focus is on driving sales as well as driving cost optimization to maximize margins. I will give you some examples of exactly what we are doing. First, chasing trends has always been a strength of ours, and we will continue to quickly identify and capitalize on trends, bringing them in store quickly and communicate the value we provide to customers across our social media channels. Second, we recently kicked off a pricing test in about 100 stores to measure the impact of price reductions on driving sales. Third, we launched a marketing test in late May that will run over the next three months in one of our regions. Fourth, we have been working on optimizing our cost structure across the entire organization, including both operating expenses and capital spending. To drive these results, Ken Bull assumed leadership of the teams within the Store Expansion and Store Potential pillars while maintaining oversight of the Inventory Optimization pillar. We have line of sight into significant savings over the next 18-24 months, with some savings benefiting 2024. Finally, I want to comment on our shrink mitigation efforts. We are cautiously optimistic about the progress we made in Q1. Recently, we completed approximately 200 physical inventories and believe we now have a firmer handle on how to mitigate shrink. These early reads demonstrated several examples of our operating efforts working, and have put us on a path to reducing our shrink levels. I want to thank the many teams dedicated to our shrink task force, especially our asset protection and operations team. Kristy will give you a more detailed update in a moment. Now, let me update you on the strategic pillars that serve as the foundation for our Triple-D ouble growth strategy. While we are implementing changes to address recent sales trends and offset shrink, we remain committed to our strategic pillars and continue to see a long runway of growth for Five Below. Our first pillar is store expansion. With over 1,600 stores currently, and a roadmap to 3,500 Five Below locations nationwide by the end of 2030, the opportunity to open in new markets and densify in existing markets remains significant. In the Q1 alone, we opened 61 new stores, and we continue to see customers excited to have Five Below nearby. New store productivity delivered at our target level in the mid-80s, and this quarter, one of our new locations in Goldsboro, North Carolina, was among our top all-time spring grand openings. Our differentiated concept and strong balance sheet continue to provide us with many opportunities to drive our growth, despite a tight real estate market. We are confident in our path to achieve approximately 230 new store openings this year, and have already built a strong pipeline for 2025. Our second pillar is Store potential. We've been focused on growing our fleet of Five Beyond format stores and product offering. In addition, we continue our relentless focus on simplifying the operating model for our stores by reducing tasks and improving communications while mitigating shrink. One of the biggest changes we made to mitigate shrink was moving to associate-led checkouts, and the customer feedback from the new process has been overwhelmingly positive. On our conversion strategy, we ended the Q1 with over 60% of our comp base in the Five Beyond format, of which more than half were in their second year as a Five Beyond store. Comps for converted stores in the Five Beyond format outperformed non-converted stores by mid-single digits in both sales and transactions, with stronger transactions still the primary driver of the outperformance. We completed 84 conversions in the Q1 of the approximately 180 conversions planned for this year, and we now expect nearly 80% of our store base to be in the Five Beyond format by the end of the year. This will significantly improve our 2025 buying leverage and simplify our marketing efforts going forward. Our third pillar is Product and Brand Strategy. Our merchants remain passionate and are committed to bringing the best trend-right, amazing value products to our customer. While newness is part of our DNA, and I am really pleased with the latest trends they have identified, as well as the lineup we have for back to school, Halloween, and this coming holiday. As for brand awareness, our marketing and customer analytics teams are working closely together to ensure our message of value, fun, and trend is emphasized and reaches the right customers to spur repeat visits, as well as attract new audiences to Five Below. We have invested in this area for several years and have far more customer intelligence than we previously did, allowing us to quickly push relevant content and optimize targeting. We also have more specific store detail than we did before, which has helped us dissect our Q1 results. In fact, based on this data, as I previously stated, we created and are rolling out a marketing test in a major region, which we expect will help drive sales and increase customer awareness of Five Below. The fourth pillar is focused on inventory optimization. This pillar continues to be a key component to creating both sales and operating efficiencies for Five Below. Given our emphasis on reducing shrink, this pillar is particularly important. Our focus is on implementing capabilities to enable scale, driving optimal inventory levels and sell-throughs, while balancing operating costs and enabling simplification. The progress we have made in this area is exemplified by our in-line inventory levels, despite lower than planned comp sales. With our 5-node ship center infrastructure and upgraded ship systems for retail merchandising, inventory ordering, and distribution management in place, we're delivering more accurate forecasting, ordering, and replenishment, which will lead to improved turns, in stocks and end-to-end visibility. Overall, we have better control over our inventory. Utilizing newer AI-powered tools, we expect this to continue to improve, and we will benefit from more real-time information as a result. Our fifth pillar is Crew.... Much of our focus this quarter has been on our shrink mitigation efforts. We are so pleased with how our Crew has embraced the changes we have made to self-checkout and other store processes. I want to thank everyone involved for their part in helping improve the shrink rate of the stores we counted this quarter, and expect this to have a broader impact on the full chain going forward. I want to conclude my remarks with a few comments on our plans for the rest of the year. Q1 fell short for the reasons I outlined at the beginning of the call, and we have adjusted our guidance for the year to reflect the current run rate of sales. While there is a larger macro consumer backdrop dynamic, we always play offense at Five Below and will not sit back idly waiting for the consumer economics to improve on their own. We are focused on the overall opportunities we have to drive the business while leaning into value that our customers expect us to deliver. We have undertaken a deep dive into our product, pricing, and marketing strategies to understand where we can be more effective as we maintain our focus on shrink mitigation and cost optimization opportunities. We look forward to providing updates next quarter. With that, I'll turn it over to Christiane to review the financials in more detail. Christiane? Thanks, Joel, and good afternoon, everyone. I will begin my remarks with a review of our Q1 results and then provide guidance for the Q2 and the full year. Our sales for the Q1 of 2024 increased 11.8% to $811.9 million, from $726.2 million reported in the Q1 of 2023. Comparable sales decreased by 2.3%, with a comp transaction decrease of 2.8%, partially offset by a comp ticket increase of 0.5%. The increase in comp ticket was driven by an increase in the average unit retail price, which was largely offset by lower units per transaction. We opened 61 new stores across 23 states in the Q1, compared to 27 new stores opened in the Q1 last year, and continue to see new productivity in line with our target in the mid-80s. We ended the quarter with 1,605 stores, an increase of 238 stores, or approximately 17%, versus 1,367 stores at the end of the Q1 of 2023. Gross profit for the Q1 of 2024 was up 12.2% to $263.5 million, versus $234.8 million in the Q1 of 2023. Gross margin increased by approximately 20 basis points to 32.5%, driven primarily by lower than expected inbound freight costs, partially offset by higher shrink accrual that we mentioned last quarter, and deleverage of fixed costs on the negative comps. As a percentage of SG&A for the Q1 of 2024 increased approximately 150 basis points to 28.0% versus last year's Q1, driven primarily by fixed cost deleverage as well as a non-recurring legal expense, higher pre-opening expenses due to more openings versus last year, and a planned marketing shift into the Q1. The non-recurring legal expense added approximately 20 basis points to SG&A as a percentage of sales. As a result, adjusted operating income for the quarter was $38.2 million versus $42.4 million in the Q1 of 2023, while adjusted operating margin decreased approximately 110 basis points to 4.7%. Net interest income was $5.0 million, as compared to $3.6 million in the Q1 of 2023, as we benefited from higher interest rates. Our effective tax rate for the Q1 of 2024 was 23.5%, compared to 18.6% in the Q1 of 2023, due to a lower share-based accounting benefit this year. Adjusted net income for the Q1 of 2024 was $33.0 million, and adjusted diluted earnings per share was $0.60, versus net income of $37.5 million and EPS of $0.67 in the Q1 last year. During the Q1, we repurchased about 182,000 shares at an average price of $164.56 for about $30 million. We ended the Q1 with approximately $370 million in cash, cash equivalents, and investments, and no debt, including nothing outstanding on our $225 million line of credit. Inventory at the end of the Q1 was approximately $630 million, as compared to $534 million at the end of the Q1 last year. Average inventory on a per store basis increased by 0.4% compared to the Q1 last year. While sales did not meet our expectations for the Q1, we are pleased with the team's ability to quickly react to the dynamic environment as expense discipline, as well as operations and inventory management, allowed us to deliver adjusted earnings per share slightly above the low end of our guidance range. Before I move on to guidance, I'd like to say a few words about the changes we have made in the stores to combat shrink and the early results we have seen thus far. As a reminder, on the fourth quarter call, we shared that we were moving to associate-led checkout, with a goal of 75% of all transactions to be associate-led, with 100% associate-led transactions in our highest shrink stores, which we have now successfully implemented. We also conducted additional tests in about 70 stores, which included changes like receipt checking at the door, adding guards, and incremental upfront labor. We counted physical inventories in about 250 stores in May, including those with these additional tests, and saw positive results in the shrink rate overall. The subset of stores that had an associate-led checkout, along with another mitigation measure, experienced greater improvement in the rate of shrink. We're happy to see our efforts working. We will be evaluating the returns on these various initiatives and will then quickly roll them out to the stores we believe will benefit from these additional measures. As a reminder, we will count about half of our chain in August in the normal course of business. May inventories provided us an early read, and we are cautiously optimistic our efforts will show continued improvement in the August results when completed. We are not including any changes to our shrink assumptions in our guidance and will update you on the August inventory results during our Q2 call. Now, I would like to turn to our guidance. Please note, our estimates do not include any potential impact from future share repurchases or share-based accounting. For the full year, we are comparing against fiscal 2023 on a 52-week basis, as the extra week in fiscal 2023 added approximately $48 million in sales and approximately $0.15 in earnings per share. I will refer to comparisons to fiscal year 2023 on a 52-week adjusted basis, which excludes the one-time legal settlement mentioned earlier. For the Q2 of 2024, net sales are expected to be in the range of $830 to 850 million, an increase of 9.4% to 12% compared to the Q2 last year. We plan to open approximately 60 new stores in the Q2 this year, as compared to 40 stores opened in the Q2 last year, and are assuming a Q2 comparable sales decrease in the mid-single, single-digit range. The midpoint of our Q2 comp guidance assumes the current trends we are experiencing will continue into the Q2. We expect operating margin of 5.2% at the midpoint in the Q2 of 2024, or deleverage of approximately 250 basis points, as higher shrink and higher fixed cost deleverage on the negative comp is only partially offset by lower freight expenses and lower incentive compensation compared to last year. Net interest income is expected to be approximately $3 million for the Q2, and taxes are expected to be 25.8%, which does not include any potential impact from share-based accounting. Net income for the Q2 is expected to be between $32 million and $38 million versus $46.8 million in the Q2 last year. Diluted earnings per share for the Q2 are expected to be $0.57 to 0.69 versus $0.84 in the Q2 of 2023. Now on to the full year. For fiscal 2024, sales are now expected to be in the range of $3.79 to $3.87 billion, an increase of 7.9% to 10.2% on a 52-week basis. The comparable sales decrease is expected to be in the range of -5% to -3%. We plan to open approximately 230 stores to end the year with 1,774 stores, or unit growth of approximately 15%. Our new store cadence has now fully normalized, returning to about 50% opening in the H1 of the year. For the full year, adjusted operating margin is expected to be 9.8% at the midpoint of guidance or deleverage of 90 basis points on a 52-week basis. This decline is primarily due to deleverage of fixed costs on the lower sales outlook, offset in part by benefits associated with lower inbound freight, lower incentive comp, and certain cost optimization strategies. Given the lower sales and related cash flow estimates, we are now lowering our net interest income forecast to approximately $13 million for the year, and we expect a full year effective tax rate for 2024 of 25.8%. Adjusted net income for fiscal 2024 is expected to be in the range of $277 to $299 million, representing a decline of 1.7% at the midpoint over 2023. Adjusted diluted earnings per share are expected to be in the range of $5 to 5.40, implying an approximate 1% decline versus the prior year at the midpoint. The diluted share count is expected to be 55.34 million, excluding any impact from future share repurchases. With respect to gross CapEx, we now plan to spend between $345 and 355 million, excluding the impact of tenant allowances. This reflects the opening of approximately 230 new stores, converting about 180 store locations to the Five Beyond format, the completion of expansions in our distribution centers in Georgia and Arizona, and investments in systems and infrastructure. In summary, the Q1 sales re-reflected a more difficult macro backdrop than expected. We have adjusted our outlook for the rest of the year, assuming the current environment continues, and we are proactively tightening expenses and managing inventory receipts and allocations to help mitigate the bottom line impact of the lower sales. Should we see discretionary spending patterns of our core customers increase, we will respond quickly. We believe this guidance reflects a prudent and realistic way to plan the rest of fiscal 2024. For all other details related to our results and guidance, please refer to our earnings press release. Before I turn the call over to the operator, we know you have a lot of questions about our results. We would ask that you limit yourself to one question so we can get through everyone in our allotted time. With that, I'll turn it over to the operator for the question-and-answer session. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. And again, please limit yourself to one question, and if you have further questions, you may reenter the question queue. And at this time, we'll pause momentarily to assemble our roster. And our first question will come from Simeon Gutman with Morgan Stanley. Please go ahead. Good afternoon, Joel. I wanted to ask about the customer. You said they're becoming more discerning, and I wanted to ask, like, chicken versus the egg, if it's possible, because of some of the price point increases and through Five Beyond, if that's causing it or not. And then the second part of it is, you know, this business hasn't really comped negative outside of that 2022 period. So how do you kind of forecast the dimensions on the downside now as you go forward? Meaning, how do you know you've captured, you know, the current run rate appropriately, or if it can actually get worse from here? Thank you. Yeah, Simeon, a great question. As for the Five Beyond part of it, we've had Five Beyond, as you know, for, you know, a couple years now, and we continue to do studies every quarter about the customer's reaction to Five Beyond. And we haven't seen any change in those studies from when we started in 2022 to this final quarter here in the beginning of 2024. And the comments have been overwhelmingly positive, and the quantifiable data has been overwhelmingly confident positive. So I don't think that's really the answer to the customer. In fact, Five Beyond has performed the best in our lower household income stores. So I think that is another example that they really see the value the further they have to try and stretch their dollar. And then in terms of framing up, you know, have we seen the worst? You know, we saw a big decline in the H2 of the quarter, and, you know, I think somebody even asked us on the last call if we were within the range of our guidance, and we were squarely in the middle of it. So, you know, Easter was disappointing, and then it continued into spring, as well as then into May here. So on one hand, the decline we've seen has been very steady, for a couple months now. It also, as we get out of spring, summer, and start to get into more need state with our customer, in other words, back to school is a reason they have to come in our stores, and certainly holiday, our entire store becomes a need store. I think it'll begin to moderate, but it's been pretty consistent since the Easter period. Thanks, Simeon. The next question will come from Seth Sigman with Barclays. Please go ahead. Hey, everyone. Thanks for taking the question. I wanted to follow up on the sales performance, the decline in comps and the pressure you're seeing. I don't think it's unique to Five Below. You know, we've obviously seen declines in discretionary demand at many of your peers, but as the changes up until this quarter, Five had outperformed a lot of those peers, and it does seem like that gap has narrowed, a lot this quarter. Just any more perspective on, on that and why it seems like there's been a sharper slowdown here. And, and I know, like, part of that is there's a lot happening within the box. Do you feel like there could be anything self-inflicted here? Thank you. Yeah. Look, Seth, in terms of self-inflicted, you know, we're never perfect on that. What I would tell you, I think the one change that's happened is, you know, it, it's proven harder for us to lap some of the big trends from last year, namely Squishmallows. You know, and this relates to Simeon's question, and how do we know we have seen the top? Squishmallow penetration begins to moderate here, in the back half of the year. So, the front half, H1 of the year was much bigger than the back half of the year last year, and so I think that moderation will start to help as well. But, I think that's probably been the biggest difference from last year's outperformance to this year being, you know, more in line, with those that have discretionary categories. Thanks, Seth. The next question will come from Paul Lejuez with Citi. Please go ahead. Hi, guys. This is Kelly on for Paul. Thanks for taking our question. I'm just looking a little bit more color on your pricing that you're testing currently. Where exactly are you taking down price points, what categories? And, you know, if you do see the reaction you're expecting from the pricing test- Would we expect that to be rolled out, you know, this year, and, and how would you kind of account for that in guidance? Yeah. Look, yeah, you bet, Kelly. You know, I've always said to all of you when I've talked that the last place we like to raise, you know, gain margin is through raising prices, and we've been consistent, you know, throughout the inflation years of going to price increases last. Having said that, we did have to make several price changes throughout the last couple of years. The focus right now is mainly on the front end of the store so that we can continue to deliver, you know, low prices in the front, their initial reaction, initial price point. So, you know, obviously, seasonal is a big focus on that area. Yes, Kelly, if we do see, you know, positive increases that offset the price declines, we will look to start to roll that out. But at this point in time, you know, it's a test. And like I said in my prepared remarks, you know, we're gonna play offense. We're not gonna sit back. We know where the issues are, and we're gonna really focus on some of those categories to see if we can change the trajectory and drive sales faster. Thanks, Kelly. Thank you. The next question will come from Matthew Boss with JP Morgan. Please go ahead. Great, thanks. So Joel, just given the macro backdrop that you laid out and the bifurcation that you're seeing across your income cohorts, I guess, how best to think about initiatives across worlds, and what's the timing that you see in order to stabilize comps? Yeah. Look, I think the prudent thing to do, Matt, was, you know, provide the guidance that we, we did for all of you that, you know, really, in order to beat those numbers, we really don't have to see any change. So between what Michael's doing in merchandising and then the new product coming in, our pricing tests that I just talked about, as well as marketing tests, some of those are gonna stick. No different than everything we did to, you know, turn around shrink. And so I, I would expect, you know, by the back half of the year, we start to see some that we believe in, that we can roll out. Clearly, as we get, you know, past the election and into fourth quarter, you know, the pressure should start to subside from what we're seeing today. But, you know, make no doubts about it, Matt, the lower-end customer is really being stretched, and we gotta deliver value, and we've gotta really display that in, you know, how we go to market and, you know, when you walk in the store, what you see. But all that's in flight right now and, you know, expect to see some of those changes improve by the back half of the year. Thanks, Matt. The next question will come from Scot Ciccarelli with Truist. Please go ahead. Hey, guys. Scot Ciccarelli. Joel, I know you've had some questions on self-inflicted wounds versus consumer behavior, but obviously, you guys have had a huge shift in behavior just over the last couple months, I guess. You know, there's other companies you tend to co-locate with, like the off-price retailers, are actually performing well. Like, you know, is there any reason to better understand why that would be occurring? Is it just, you know, maybe your product's gotten a little bit stale? Could it be some of the shrink mitigation efforts? I know some of it would be speculation on your part, but we'd love the, you know, kind of color. Thanks. Yeah, that's a good question, and I think, you know, even the off-price, you know, a large percentage of their business is apparel, and, you know, apparel is still more in that needs-based and at incredible value. And I think that's, you know, contributes theirs. We've seen positive trends in our apparel business as well. It's just not a big piece of our business. And then, you know, in terms of self-inflicted, you know, I think the entire team is being... is dissecting every piece of their business to see, you know, which pieces of it, you know, they can improve. And then, I, you know, I think if you compare it to the dollar stores, you know, both Dollar General and Dollar Tree called out that, like us, they're seeing negative comps in discretionary categories. Hopefully, that gives you some help there, Scot. Thank you. Thanks. The next question will come from John Heinbockel with Guggenheim. Please go ahead. Hey, Joel. Two things: What type of mid-course corrections, you know, does Michael think is appropriate here in terms of... I know you're kind of set for holiday, but bringing in new product, you know, that might be more value-oriented, you know, and/or maybe dialing back some inventory you had planned. And then, you know, obviously, you've got to reset labor for lower comps. How do you do that without impacting the experience for those who are coming in? Yeah. Look, it's a good question, John, and, you know, we have made, you know, some investments in labor, and it has had a positive impact on shrink. And I think we're gonna continue down that path because it seems to be offsetting shrink more. And then in terms of Michael, I think the real change you're seeing is, you know, historically, we brought in new hot trends at $5.55 or $5.95, and, you know, we're really focused at trying to deliver those at $5. And it's just another example of trying to really dial up that shrink. I've had a precursor look into back to school, and it feels like we've really differentiated there this year, and it's at really good value. As we move past this, you know, spring, summer timeframe, which like a couple other retailers have called out, there's just been a little bit of a malaise there. That honestly has been something we've seen since COVID, and we've talked about that a couple of years now, and I think we now have to just assume that's gonna happen in the spring, summer timeframe. So where Michael's really looking at is how to reinvent that space next year. But as we get past that, we should begin to start to see some improvement in sales. Thanks, John. The next question will come from Michael Lasser with UBS. Please go ahead. Good evening. Thank you so much for taking my question. Joel, why isn't the slowdown that you've been experiencing caused by simply increased competition, whether it's some new dollar store competitors or inexpensive Asian direct sellers or marketplaces that are gaining increased traction in the United States? And if you see a prolonged period of negative comps, how does this change your thinking about the long-term margin potential for the business? Thank you. Yeah. Yeah. No, look, it's a great question, Michael, and it's a question we've asked ourselves. And we ask ourselves it in multiple ways. One of the ways we ask it is when we do our quarterly research, you know, and one of the questions we ask is, you know, where do you go when you want fun, you know, trend-right, high-value items? And, you know, we were top of mind on that. And so that has not changed quarter over quarter, and we have not seen some of the retailers you just mentioned move up the list on that. Secondly, I would tell you, we have sliced our sales performance by where our competition is, and we're not. And I mentioned this in my prepared remarks: this decline was broad-based. It was across all geographies, and so we didn't really see any trend that would, you know, lead it to say when we're near these retailers or those retailers are closer to us, that our performance was worse. So those are just two data points, both on our research and then also us just dissecting our sales here the last few weeks. And also, if it really was competition, the bifurcation we saw from the H1 of the quarter to the H2 would have never dropped off instantly because there wasn't an event that was competitive driven that happened in the middle of the quarter. This change we saw literally happened, you know, the week of Easter and then the back half of the quarter into May here. So both, all three of those lead to saying this is not a competition-driven change. This isn't something structural that we can't overcome. Thanks, Michael. The next question will come from Edward Kelly with Wells Fargo. Please go ahead. Yeah, hi. Good morning, everyone. Joel, I wanted to ask you a question about shrink. And the question I have is: Are you confident that the adjustments that you're making to self-checkout have not impacted sales? And I ask that because I think the timing of moving to assisted checkout and the sales decline were somewhat similar. I'm just curious if you're confident around that. And then secondly, you know, when do you think you'll begin to see some benefit coming to the gross margin related to recent shrink improvements? Yeah, Michael, I mean, Ed, sorry. Great, great question, and it is something we looked at a couple ways ourselves. One, again, this change in sales was. It dropped off a cliff at that Easter week. So again, we put those self-checkout mitigations where we switched to associate checkouts more closer to the beginning of February. And then, like I said, the sales trajectory changed more like the middle of March, late half of March. And then in terms of confidence of when we'll make changes, and Kristy, please jump in, I think it would be more along once we complete our August physical inventories, we're doing about 7- Yeah, we're doing about 750 inventories at the beginning of August, and so we will have time to reflect those results in our Q2 results. Yeah. We'll provide that feedback, obviously, as how it impacts the future quarters at that time as well. So that'll be—that'd be the time when you begin to see the inflection point. Ed, thank you. The next question will come from Chuck Grom with Gordon Haskett. Please go ahead. Hi, this is Eric on for Chuck. Thanks for taking the question. Just want to ask about your inventory and just how you feel about the quality inventory. The growth really accelerated versus last quarter, and the spread to sales growth also accelerated. Just curious if you're taking any additional markdowns to get through some of this inventory, or if you can continue to get through it at, without having to discount it over the course of the year. Yeah, good question. The health of our inventory is still in great shape. The teams did an excellent job of managing down once we saw the change. Any of our categories that have you know limited lifespan, you know, like candy and food, those are actually the businesses that outperform. So, you know, no liabilities there in terms of spoilage or anything like that. And then, any areas where we were long, very easy to hold those items back in the distribution center. And, you know, as we add new stores, we can easily absorb that. So not a big concern there at all from our part. Our aged inventory level is pretty consistent to where it was a year ago, looking forward. Thanks, Eric. The next question will come from David Bellinger with Mizuho. Please go ahead. Hey, thanks for the question. So Joel, it seemed like certain parts of the store still tracked positive for the full quarter, where we had others drop off pretty meaningfully. Just absent some of the macro commentary from your prepared remarks, have you had any internal discussions around some merchandising, maybe flexing some space down in areas like apparel that are not specifically unique to Five, and maybe putting the core focus back on that younger demographic, you know, kids product, toys, things of that nature? Is there anything we can expect before, you know, the end of the years and as we get into the holiday period? Yeah, look, David, I mean, what's been unique about this box since the beginning of time and since I've been here for 10 years, we're always flexing the box and growing it. And so, as we see those opportunities, you know, we will flex the box. I think a good example of where you're gonna see that in the back half is Halloween's gonna grow for us. That's a business we've seen really nice positive gains the last couple of years, and we think that's a business we can really grow, and especially in this environment, where the customer is looking for value. There's not a strong, you know, value player in that space. And so that's just one example where you're gonna see us continue to grow. But Michael and the merchants do a great job on that. The merchants' bonus isn't based on how their department does, it's based on how the box does. So there's no territorial concerns about, you know, shrinking one department and growing another. But I'll just give you one example, and as we see other opportunities, we'll do the same. Thanks, David. The next question will come from Kate McShane with Goldman Sachs. Please go ahead. Hi, thanks for taking our question. We wondered if you could talk to any impact from cannibalization this quarter, and how that maybe compares to what we've seen, in previous quarters, and if that's having any kind of impact with this slowdown in the back half of the quarter. Yeah. Thanks, Kate. Look, our cannibalization, you know, rate has gone up, but it's been in the last couple of years, it's more and more in the 80-100 basis points annually. Whereas, you know, pre-COVID, it was probably more in the 50 basis points. That's something we manage, and we try and hold it to that number. I haven't specifically looked at cannibalization rate, you know, Q1 of 2024 versus cannibalization rate of 2023. What I would tell you and remind everybody is, you know, we opened a large majority of our stores last year, the back half of the year, so you aren't gonna see as many new stores enter our, our comp pipeline as you would normally see. But as far as cannibalization goes, I, I don't expect that to be, any contributing factor to it. Again, because front half of the quarter was one set of comps, and second half was a very different set, so cannibalization wouldn't have played out like that. Thanks, Kate. The next question will come from Brad Thomas with KeyBanc Capital Markets. Please go ahead. Hi, thanks for taking my question. Just wanted to confirm that the outlook as we kind of back into it. Christiane, it looks like your comp guidance is calling for the mid-single digit decline to continue through both 3Q and 4Q. Just wanted to confirm that is what's based on your guidance, and then hoping you could talk a little bit about the margin implications, you know, what you're assuming for the back half with those new comp assumptions. Thanks. Yeah, yeah. So we don't—we're not gonna guide for the, for the back half, but on a full year basis, down 3% to down 5%. As you look to the Q3 and Q4 and just the implied there, it's probably closer to the lower end of mid-single digits. So you can use that. And then, your question on margin, specifically, was that for the... I'm sorry, the full year? Essentially, it was what the implications are from the comp declines. Yeah. continuing as we go through the year. Thanks. Yeah. So what we shared last quarter with you was, you know, certainly, we would see, on a full year basis, some margin benefits. But the deleverage on the comp right now is really what we're looking at. And so when you look at it across the full year, we're expecting, as we said, 9.8% at the midpoint or 90 basis points below. So, and how that kind of plays out for the full year, this quarter is probably the heaviest burden at the 250 basis points, and then it moderates substantially through Q3 and Q4 as our cost optimization initiatives help offset a big part of the fixed cost deleverage. ... All right. Thank you. The next question will come from Michael Montani with Evercore ISI. Please go ahead. Hey, thanks for taking the question. I had one question and a follow-up. So just first, in terms of the margins that Kristy just outlined, can you give some more color in terms of the gross margin trajectory versus SG&A? And then the follow-up was on the new store productivity front. You know, just wanted to see any incremental evidence there, you know, that gives you conviction to maintain kind of the robust opening schedule in light of the comp trajectory. So I'll take the first part and then send it over to Joel for a little bit of commentary on NSP. So from a gross margin perspective, if you recall what we had shared last quarter, we had said, you know, we expected gross margin to be, you know, flat in Q1, Q2, and Q4, with a benefit in Q3 related to the reversal of the shrink accrual that we took in the prior year. And so as you look going forward now, again, Q2 being the most difficult gross margin, declining about 130 basis points at the midpoint, and then you will still—and again, that's all fixed cost deleverage coming because of the negative comp. And as you move forward into Q3, Q4, you're getting closer to what we previously guided, which was about 200 basis points of improvement on Q3, and then flat to Q4. And so that'll generally get you from a gross margin perspective. We will see, you know, continued deleverage on the negative comp in Q2, again, about 120 basis points. And then as you move into Q3 and Q4, Q3 has the, the heaviest, is carrying the heaviest burden on the negative comp with, you know, overall, op margin being relatively flat, but the offset is coming in SG&A of over 200 basis points. Then when you look at Q4, again, some deleverage on the negative comp that we've moved to, about 50 basis points in SG&A, with full year margin being relatively op margin being relatively flat. And then, Michael- Sorry, that was fourth quarter op margin being relatively flat. Michael, in terms of NSP, you know, last year, you know, I think the way you guys calculated it, it was just above 80, and we adjust for weeks. It's, you know, mid-80s. That's where Q1 was. You can see, that's where the full year is, you know, based on the guide we just gave you at the midpoint. So, you know, we've, we've seen our NSP, you know, post-COVID, you know, start to really land in those mid-80s, and, and that's what we're projecting, and, and we're pleased with that. And so, you know, as, as long as that continues in that, there's, you know, really no reason to pull back. In fact, if anything, that's probably the area that we haven't spent a lot of time talking about. But our new store pipeline is not only, you know, back hitting the numbers, but, you know, Kristy shared with you, we're back to that 50% in the front half of the year, which is really where we wanna be going forward. This year is complete. Next year, we're largely done with already and starting to work on 2026. So we feel really good about the pipeline. A lot of opportunities out there, and I think as, you know, we've continued to see some more retail bankruptcies, they'll present ourselves with more opportunities to take advantage of. Thanks, Michael. All right. Thank you. You bet. The next question will come from Joe Feldman with Telsey Advisory Group. Please go ahead. Great. Thanks for taking my question, guys. I wanted to go back to something you said, Joel, about value and needing to just be able to keep delivering value. And I was curious what your latest survey work with your customers or interactions or focus groups or however you speak with your customers, you know, what that's suggesting about the perceived value. Has it changed again, given the push with the Five Beyond product in the stores? Maybe you could just chat about that for a minute. Yeah. Thanks. Yeah, it's great, Joe. And no, it hasn't changed. And you know, it's more of we really believe this was a macro-induced change. And you know, for all the reasons I've shared with everybody. But you know, too many retailers you know play defense. And certainly we'll do that, cut costs and do some things, but we're gonna play offense. And we're gonna figure out a way to take market share in a time like this, and we're gonna figure out a way to you know make our business healthier so that as the consumer backdrop improves, you know we're already a better and stronger company. As far as value, specifically, Joe, you know, one of the things we look at, and we look at it every quarter, is our NPS scores, and our NPS scores have actually gone up this year over last year. And that is a really positive sign that, you know, customers are starting to, you know, really rely on us. We happen to be in probably the period of our year where we're the most discretionary, the least a number of reasons you have to go to a Five Below. But that doesn't mean we don't, you know, look at self-inflicted wounds. We don't look at ways that our marketing can be stronger. We need to look at ways our pricing can be sharper. And Michael and the merchants are definitely looking at new trends, chasing trends, finding new ways to drive footsteps. So, I didn't mean to, you know, allude to any of you that I'm concerned about it. In fact, I think the biggest difference between a quarter ago and now is we have a lot more answers that we didn't have before. And we know how to bend the curve on shrink now. We know what the right level of labor to put in the store is, and, you know, that is a big change from where it was. We have a lengthy trendline of, you know, knowing where the bottom is on sales, and now we build back from that. But we're not gonna sit and wait until it comes to us. We gotta go after it. So hopefully, Joe, that'll give you a little background there. Thank you. Yeah, that helps. Thank you. Good luck this quarter. You bet. Yeah, thank you, Joe. The next question will come from CJ Dipollino with Craig-Hallum Capital Group. Please go ahead. Hey, everyone. CJ on for Jeremy Hamblin. Thanks for taking my question. Wanted to touch on shrink again. It seems like you've made some good progress in the 70 stores where you really stepped up shrink mitigation efforts. I'm curious on kinda like the timing on rolling that out to additional stores, if you're thinking about doing that, and, you know, when you might start implementing, you know, more labor and higher security measures in the rest of the store base. Thanks. Yeah. Hey, CJ, let me just clarify for you and the whole team on the call. We have implemented shrink mitigation in the entire chain, namely around the shift from self-checkout to associate checkout. So that has happened chain-wide. In addition to that, which is the 70 stores you were referring, we put in extra shrink mitigation, like guards and receipt checking and you know, more video cameras and that type of thing. So that's above and beyond, and those 70 stores saw even bigger declines than the stores that just had the associate checkout. So now we're looking at those 70 and seeing how the ROI works. Then you always ask, you know, does it labor cost you more than the shrink? In the chain-wide, we've got that balance right, but in the extra 70, where you've got outside guard services and things like that, that's a real focus on our highest shrink stores. So the team has just done an amazing job. You gotta remember, this only showed up in our purview less than 12 months ago. It was last, end of last August. So I really applaud asset protection, you know, store operations, and, you know, everybody here working on the task force to bend on the curve so quickly. So hopefully that helps you understand the difference between the 70 and what we've actually done for the entire chain. Thanks, CJ. The next question will come from Brian Nagel with Oppenheimer. Please go ahead. Hey, this is William Dossett on for Brian. Thanks for taking our question. So our quick question here is just on the efforts to optimize your cost structure. You've identified savings over the next 18 to 24 months, and we just wanted to know the key areas of the cost structure in which you would realize these savings. Thank you. Yes, certainly. So, you know, they're really across the board in both operating expenses as well as capital spending. So looking at everything from consumption to specs to distribution expenses on the last mile, so we are really—we have really kind of peeled away every cost that we have with nearly every supplier, and we're going hard after in-year savings, as well as more significant savings that will be realized next year in our, you know, indirect procurement area specifically. Look, I, I think, just adding on to that, Kristy, you know, is the one thing, this is where our, our growth has to work to our advantage. Yeah. You know, as we look at everything that we haven't reviewed a contract on in a couple of years, it should have different terms to it. We're, you know, we went into COVID a $2 billion-dollar company, and five years later, here, we're about a $4 billion-dollar company. So with that comes, you know, basis point change, and then that begins to add up significantly over the next two years. Thanks, William. Thanks. This concludes our question and answer session. I would like to turn the conference back over to Mr. Joel Anderson for closing remarks. Please go ahead. Thank you, operator, and thanks, everybody. Look, you know, I just end with by saying and repeating some of the things I said. Our core customer, they are clearly prioritizing needs over wants, and that had a big impact on our performance in Q1. The guidance that Kristy shared with you reflects the entire year in this more cautious core customer. And as I said, we're playing offense. We're leaning further into value, and we're gonna ensure this value message is emphasized in all of our marketing. We're also focused on ensuring our assortment adequately reflects categories that are being prioritized by our customers, so we're really gonna focus on growing those. As we do this, our focus on executing our store growth plans with excellence is unwavering, as is our commitment to managing the cost side of the business with a typical Five Below rigor. We've asked a lot of our teams as we navigate this current environment and implement processes and procedures to improve efficiency and manage shrink, and I just wanna thank the entire crew for their hard work and commitment. Thanks, everybody, for joining us today, and we look forward to speaking again on our Q2 call in September. Thank you. The conference is now concluded. Thank you for attending today's presentation.