Five Below is doubling down on play, just months after being crowned “Retailer of the Year (Mass/Mass Specialty)” in The Toy Book’s 2026 Pulse of Play Awards.
Following another quarter of double-digit comparable sales growth, the value retailer says it’s gaining traction as toys, games, collectibles, craft, and licensed products draw shoppers into its stores.
“We’re … seeing that our aspiration to be America’s Greatest Little Toy Store is definitely coming to life,” Five Below CEO Winnie Park told investors during the company’s second-quarter earnings call this week. “That’s something that I put out as an aspiration last year, and we certainly highlighted in holiday, and we’re following up now.”
The toy push comes amid a strong quarter for Five Below. Net sales rose 22.9% to $1.26 billion during the second quarter ended Aug. 1, while comparable sales increased 14.1%. The company opened 52 net-new stores during the quarter and ended the period with 2,022 locations. Adjusted diluted earnings per share reached $1.68, up from $0.81 a year earlier.
Toys are part of a broader assortment strategy, but several play-driven trends stood out during the quarter. Five Below continued to expand its squishy business with fresh collections and product drops, while also seeing renewed interest in its slime and create assortment. The retailer leaned into licensed merchandise connected to FIFA, the NBA, Toy Story 5, Spider-Man: Brand New Day, and Netflix’s KPop Demon Hunters.
Park says the squishy craze has done more than sell individual products.
“I think that the squishy trend has made our games, toys, collectibles, and even our create and crafting departments really relevant,” she said.
Five Below’s Squishy Dumplings from RMS contributed a low-single-digit percentage to comparable sales growth during the quarter, according to Chief Financial Officer Dan Sullivan, but management believes the products delivered an even bigger halo by generating traffic and exposing shoppers to the rest of the assortment.
The company has worked to keep that momentum rolling. In May, Five Below staged a one-day Golden Ticket squishy dumpling event across the chain, then extended the promotion online by sending Goldie, an exclusive golden dumpling, “on the road” through social content while introducing additional exclusive drops.
Licensing is becoming another bigger piece of the toy strategy.
“Licensing is definitely growing and of growing importance to us,” Park said. She pointed to Stitch as an example of how Five Below historically incorporated popular IP into toys and games, but said the retailer is increasingly building complete collections around properties. Five Below took that approach with Toy Story this year and plans additional entertainment-driven programs through the back half of 2026.
The company is also looking for ways to stretch toy properties into other departments. Park cited Fugglers as one example, taking a brand rooted in toys and games and applying it to tech products.
Five Below is backing its toy ambitions with changes to the physical store.
After moving Five Beyond merchandise out of its former walled-off section and into corresponding departments, the retailer began testing a new use for that space. The plan is to create what Park calls a “world to play,” bringing toys, games, collectibles, and crafts together while opening sightlines and making the store easier for families to shop in.
“By opening up the space and merchandising a world to play in this area, co-locating toys, games, collectibles, and craft, we believe we can make our aspiration to be America’s Greatest Little Toy Store come to life,” Park said.
Five Below has begun rolling the concept into stores following positive early results. Sullivan estimates the changes will require approximately $40,000-$45,000 in capital spending per store. The initiative contributed to Five Below raising its fiscal 2026 capital expenditure forecast to $250-$260 million.
The retailer also raised its full-year outlook. Five Below now expects fiscal 2026 net sales of $5.63-$5.71 billion and comparable sales growth of 10%-12%.
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