Nasdaq:FIVE
FIVE BELOW, INC
A value-driven discount retailer providing trendy lifestyle products to families under $15 across North America.
Key Metrics
Investment Thesis
Bull Case
Five Below offers a compelling value play with strong operating cash flow of $430.6M that funds aggressive growth without heavy reliance on external financing. The company's fixed-price model creates a unique customer experience that is difficult for competitors to replicate, fostering high loyalty among target demographics. With a growing store base and a proven ability to refresh assortments quickly, the brand is well-positioned to capture market share in the expanding discount retail sector.
Bear Case
The decline in net income despite revenue growth highlights potential margin erosion risks that could persist if inflation remains sticky or consumer confidence wanes. The company carries substantial debt obligations with total liabilities of $2.53B against only $1.81B in shareholders' equity, creating leverage concerns during downturns. Heavy capital expenditures of $324.0M required to maintain and expand the store network may dampen free cash flow if sales growth slows or same-store sales stagnate.
About FIVE BELOW, INC
Five Below, Inc. (FIVE) operates as a discount retailer offering trendy products at fixed low price points across the United States, Canada, and Puerto Rico. The company primarily serves families, teens, and young adults through its extensive network of big-box stores and pop-up locations. Key offerings include apparel, home decor, toys, accessories, and seasonal items priced between $5 and $15.
Analysis
Management Discussion
The company reported revenue growth of $320M year-over-year, rising from $3.56B in 2024 to $3.88B in 2025, driven by store count expansion and same-store sales strength. However, net income declined slightly from $301.1M in 2024 to $253.6M in 2025, suggesting margin pressure from increased cost of revenue totaling $2.52B. Cash flow from operations remained robust at $430.6M, allowing for significant capital expenditures of $324.0M and share repurchases of $40.2M.
Industry Overview
The discount retail industry is currently expanding as consumers trade down from premium brands due to economic uncertainty and inflationary pressures. Competitors like Dollar General and TJX Companies are aggressively acquiring locations, intensifying competition for prime real estate and inventory. Success in this sector now depends heavily on digital integration, omnichannel capabilities, and the ability to curate trendy products that resonate with younger generations.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | $3.08B | $3.56B | $3.88B |
| Cost of Revenue | $1.98B | $2.29B | $2.52B |
| Gross Profit | $1.10B | $1.27B | $1.35B |
| Operating Expenses | $750.4M | $888.3M | $1.03B |
| Operating Income | $345.0M | $385.6M | $323.8M |
| G&A | $750.4M | $757.5M | $861.4M |
| Stock-Based Comp | $23.6M | $17.9M | $15.6M |
| D&A | $105.6M | $130.7M | $167.4M |
| Other OpEx | $0 | $130.7M | $167.4M |
| Non-Operating Income | $2.5M | $15.5M | $14.8M |
| Pre-Tax Income | $347.5M | $401.1M | $338.7M |
| Income Tax | $86.0M | $100.0M | $85.1M |
| Continuing Ops | $261.5M | $301.1M | $253.6M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $261.5M | $301.1M | $253.6M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $261.5M | $301.1M | $253.6M |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Current Assets | $1.07B | $1.20B | $1.35B |
| Marketable Securities | $66.8M | $280.3M | $197.1M |
| Inventory | $527.7M | $584.6M | $659.5M |
| Prepaid Expenses | $130.6M | $154.0M | $158.4M |
| Other Current Assets | $341.2M | $184.6M | $336.4M |
| Long-Term Assets | $2.26B | $2.67B | $2.99B |
| PP&E (Net) | $925.5M | $1.13B | $1.26B |
| Operating Leases | $1.32B | $1.51B | $1.71B |
| LT Investments | $0 | $7.8M | $0 |
| Other LT Assets | $13.9M | $17.0M | $19.9M |
| Total Assets | $3.32B | $3.87B | $4.34B |
| Current Liabilities | $602.6M | $715.9M | $756.4M |
| Accounts Payable | $221.1M | $256.3M | $260.3M |
| Current Leases | $199.8M | $241.0M | $274.9M |
| Taxes Payable | $19.9M | $41.8M | $52.0M |
| Other Current Liab | $25.4M | $30.0M | $19.7M |
| Long-Term Liabilities | $1.36B | $1.57B | $1.77B |
| LT Operating Leases | $1.30B | $1.50B | $1.71B |
| Other LT Liab | $63.4M | $73.6M | $68.1M |
| Total Liabilities | $1.96B | $2.29B | $2.53B |
| Shareholders' Equity | $1.36B | $1.58B | $1.81B |
| Retained Earnings | $1.10B | $1.40B | $1.66B |
| Total L&E | $3.32B | $3.87B | $4.34B |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Net Income (CFO) | $261.5M | $301.1M | $253.6M |
| Non-Cash Adjustments | $-38.9M | $45.0M | $58.7M |
| Working Capital Changes | $92.3M | $153.5M | $118.3M |
| Cash from Operations | $314.9M | $499.6M | $430.6M |
| Capital Expenditures | $252.0M | $335.1M | $324.0M |
| Cash from Investing | $-3.9M | $-556.3M | $-232.9M |
| Share Buybacks | $40.0M | $80.5M | $40.2M |
| Cash from Financing | $-43.6M | $-95.9M | $-45.7M |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $267.4M | $-152.6M | $152.0M |
| Beginning Cash | $65.0M | $332.3M | $179.7M |
| Ending Cash | $332.3M | $179.7M | $331.7M |
Frequently Asked Questions
How does FIVE BELOW, INC make money?
The company's revenue is driven by its core retail operations comprising big-box stores, smaller boutique locations, and pop-up shops. Financials indicate a strong focus on merchandise sales of apparel, home goods, toys, and seasonal items with minimal contribution from discontinued operations or non-controlling interests.
What are the main risks for FIVE?
Consumer spending sensitivity to economic inflation could reduce demand for discretionary impulse buys at discount retailers. Rising input costs for apparel and manufacturing materials may compress margins if the company cannot fully pass them on. Competition from online fast-fashion retailers and other off-price chains poses a threat to foot traffic. Supply chain disruptions or delays in new product introductions could lead to inventory obsolescence in a fast-moving category.
What is FIVE's competitive advantage?
Five Below leverages a fixed-price strategy that simplifies decision-making for price-sensitive customers while maintaining consistent margins. The company benefits from a highly optimized supply chain that allows rapid replenishment of trendy inventory and significant economies of scale in purchasing. Its extensive store footprint provides high visibility and accessibility in high-traffic suburban locations.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.