FIVE BELOW, INC SEC 10-K Report

Five Below, Inc., a high-growth value retailer targeting tweens, teens, and beyond, has released its Form 10-K report for the fiscal year 2024. The report highlights the company's financial performance, business operations, strategic initiatives, and the challenges it faces in a competitive retail environment.

Financial Highlights

Five Below, Inc. reported the following key financial metrics for fiscal year 2024:

• Net Sales: $3,876.5 million, an increase of 8.9% from fiscal year 2023, driven by new store openings despite a decrease in comparable sales.
• Gross Profit: $1,352.7 million, representing a gross margin of 34.9%, a decrease of approximately 90 basis points from the previous year due to increased store occupancy costs.
• Operating Income: $323.8 million, a decrease from $385.6 million in fiscal year 2023, reflecting higher selling, general and administrative expenses due to new store growth.
• Net Income: $253.6 million, down from $301.1 million in fiscal year 2023, primarily due to increased operating expenses and a decrease in pre-tax net income.
• Basic Income Per Common Share: $4.61, compared to $5.43 in fiscal year 2023, reflecting the decrease in net income.
• Diluted Income Per Common Share: $4.60, compared to $5.41 in fiscal year 2023, consistent with the decline in net income.

Business Highlights

Five Below, Inc. achieved significant milestones in its business operations during fiscal year 2024:

• Company Overview: Five Below, Inc. operates 1,771 stores across 44 states as of February 1, 2025, and offers products through its e-commerce platform. The company targets tweens, teens, and beyond with trend-right, high-quality products primarily priced at $5 and below.
• Store Expansion: The company opened 227 net new stores, expanding its store base from 1,544 to 1,771 locations. Five Below plans to open approximately 150 new stores in fiscal 2025, with a long-term goal of reaching over 3,500 locations in the United States.
• Product Categories: Merchandise is organized into eight category worlds: Style, Room, Sports, Tech, Create, Party, Candy, and New & Now, designed to appeal to a broad range of age groups beyond the target demographic.
• Merchandising Strategy: The company focuses on a dynamic and frequently changing assortment of products to create a sense of anticipation and excitement for customers, leveraging a broad range of vendors to maximize speed to market.
• Customer Experience: Five Below emphasizes a unique and engaging in-store atmosphere with easy-to-navigate layouts, popular music, and dynamic product displays to enhance customer interaction and convey value pricing.
• Distribution Network: The company operates several large shipcenters across the United States, including facilities in Arizona, Georgia, Indiana, New Jersey, and Texas, to support its retail and e-commerce operations.
• Future Outlook: Five Below expects to continue its strong growth by expanding its store base, driving comparable sales, and increasing brand awareness. The company plans to leverage its cost structure and supply chain efficiencies to enhance operating margins over time.

Strategic Initiatives

Five Below, Inc. has outlined several strategic initiatives and capital management activities:

• Store Base Expansion: The company plans to open approximately 150 new stores in fiscal 2025, aiming to increase its store count from 1,771 to over 3,500 locations in the long term.
• Infrastructure Investments: Investments in infrastructure and systems, including a new ERP system, Oracle Fusion, and a human capital management system, have been made to support future growth.
• Distribution Capabilities: Expansion of shipcenter facilities to enhance distribution capabilities.
• Capital Management: The company has a Revolving Credit Facility with a capacity of $225 million, expiring in September 2027, with no direct borrowings as of February 1, 2025. Additionally, Five Below has a share repurchase program with $100 million authorized for repurchases through November 2026, repurchasing 266,997 shares at an aggregate cost of approximately $40 million in fiscal 2024.
• Future Outlook: The company expects to fund its capital expenditures, including new store openings and infrastructure investments, through cash generated from operations, cash on hand, and its Revolving Credit Facility. Five Below is committed to maintaining a strong liquidity position to support its growth initiatives.

Challenges and Risks

Five Below, Inc. faces several challenges and risks that could impact its business operations and financial performance:

• Inflation and Commodity Prices: Rising inflation and commodity prices could impact net sales and earnings. The company has experienced higher inflation levels due to supply disruptions and increased costs, which may continue to affect consumer behavior and profitability.
• Supply Chain Disruptions: Any disruption in the supply chain, including delays or increased costs, could negatively impact sales and profitability. The company relies on third-party transportation and international vendors, exposing it to risks such as tariffs and political instability.
• Expansion Risks: The company's growth strategy depends on opening new stores, which involves risks related to site selection, lease negotiations, and market saturation. New stores in unfamiliar markets may face challenges in achieving brand recognition and customer acceptance.
• Cybersecurity Threats: Increasingly sophisticated cyberattacks pose a risk to the company's data security. A breach could lead to negative publicity, legal actions, and loss of customer confidence.
• Regulatory and Legal Risks: Changes in trade policies, tariffs, and regulations could increase costs and affect the availability of merchandise. The company also faces potential liabilities related to product safety and intellectual property claims.
• Environmental and Social Governance (ESG) Concerns: Growing investor and regulatory focus on ESG matters could impact the company's reputation and financial performance if it fails to meet expectations.

Management plans to mitigate these risks through strategic pricing, enhancing supply chain efficiency, and expanding its digital presence to complement physical stores. The company is also focused on maintaining a strong brand image and customer engagement to drive sales growth.

SEC Filing: FIVE BELOW, INC [ FIVE ] - 10-K - Mar. 20, 2025