Breaking Down Five Below, Inc. (FIVE) Financial Health: Key Insights for Investors

Are you keeping a close watch on the retail sector and wondering about the financial stability of discount retailers? Has the recent performance of Five Below, Inc. (FIVE) piqued your interest, especially with the holiday season behind us? In fiscal year 2024, the company's net sales reached $3.88 billion, a 10.4% increase excluding the impact of the 53rd week in fiscal 2023, but comparable sales decreased by 2.7%. With operating income at $323.8 million and adjusted EPS at $5.04, what does this mean for investors? Keep reading to dive into a detailed analysis of Five Below's financial health, exploring key metrics and expert insights to help you make informed decisions.

Five Below, Inc. (FIVE) Revenue Analysis

For investors scrutinizing Five Below, Inc. (FIVE), a deep dive into the company’s revenue streams is essential to gauge its financial health and growth trajectory. This analysis breaks down where Five Below generates its income, how quickly those revenues are growing, and what factors might influence future performance. To fully understand the financial picture, it’s crucial to examine the components that drive the company’s top line.

Five Below primarily generates revenue through the sale of a variety of merchandise, targeting teens and pre-teens, all priced at $5 or below, though the company has been expanding its offerings to include products above this price point in recent years. These products span various categories, including:

• Leisure: This includes items like sporting goods, games, toys, and crafts.
• Fashion & Home: Consisting of accessories, beauty products, décor, and storage items.
• Party & Snack: Encompassing party goods, greeting cards, candy, and snacks.
• Tech: Including items such as headphones, chargers, and other electronic accessories.

Understanding the contribution of each of these categories can provide insights into shifting consumer preferences and the company's ability to adapt to changing trends.

Analyzing Five Below’s year-over-year revenue growth rate provides a clear picture of its recent performance. According to the Five Below's Form 10K filing for the fiscal year ended February 3, 2024, net sales increased by 11.8% to $3.56 billion from $3.18 billion in fiscal 2022. This growth is driven by an increase in comparable sales of 3.1% and the opening of 204 net new stores. The growth rate reflects the company's ability to attract and retain customers, manage inventory effectively, and capitalize on market opportunities.

To illustrate, here’s a snapshot of Five Below’s revenue performance over the recent years:

Looking at the trend, while the growth rate has moderated in fiscal year 2023, the overall sales continue to climb, indicating a healthy expansion.

Five Below operates primarily within the United States, so its revenue is not significantly diversified across different geographical regions. The company's growth strategy heavily relies on expanding its store footprint. The opening of new stores significantly contributes to the overall revenue growth. For instance, the addition of 204 new stores in fiscal year 2023 played a crucial role in achieving the 11.8% increase in net sales.

Key factors that could significantly alter Five Below's revenue streams include:

• Economic conditions: Changes in consumer spending habits due to economic upturns or downturns.
• Competitive landscape: The emergence of new competitors or changes in strategies of existing ones.
• Shifts in consumer preferences: Changes in demand for specific product categories.
• Supply chain disruptions: Issues affecting the availability and cost of merchandise.

Investors should monitor these factors closely to assess potential risks and opportunities for Five Below's revenue growth.

To gain a deeper understanding of Five Below's investor profile, consider exploring: Exploring Five Below, Inc. (FIVE) Investor Profile: Who’s Buying and Why?

Five Below, Inc. (FIVE) Profitability Metrics

A closer examination of Five Below, Inc. (FIVE) reveals several key insights into its profitability. For fiscal year 2024, which ended on February 1, 2025, the company's financial performance presents a mixed picture of growth and challenges. Here's a detailed breakdown:

• Net Sales: Increased by 8.9% to $3.88 billion from $3.56 billion in fiscal year 2023. Excluding the impact of the 53rd week in fiscal 2023, the increase was 10.4%.
• Gross Profit: $1.3527 billion, representing a gross margin of 34.9%. This is a decrease of approximately 90 basis points from the previous year, primarily due to increased store occupancy costs.
• Operating Income: Decreased to $323.8 million from $385.6 million in fiscal year 2023, reflecting higher selling, general, and administrative expenses related to new store growth.
• Net Income: Fell to $253.6 million, down from $301.1 million in fiscal year 2023, mainly due to increased operating expenses and a decrease in pre-tax net income.
• Earnings Per Share (EPS):
  • Basic EPS: $4.61, compared to $5.43 in fiscal year 2023.
  • Diluted EPS: $4.60, compared to $5.41 in fiscal year 2023.

To provide a clearer picture of Five Below's profitability trends, here's a table summarizing some key data:

When evaluating Five Below's operational efficiency, several factors come into play. The gross profit margin for the latest twelve months is reported at 34.9%. Over the past five fiscal years (ending January 2021 to 2025), the gross profit margin has averaged around 35.1%, with a median of 35.6%. The margin peaked in January 2022 at 36.2% and hit a low of 33.2% in January 2021.

A comparison of Five Below's profitability ratios with industry averages provides context. For instance, Investing.com reports the following (TTM - Trailing Twelve Months):

• Gross Margin: Company 34.89%, Industry 39.14%
• Operating Margin: Company 8.35%, Industry 8.95%
• Pretax Margin: Company 8.74%, Industry 8.87%
• Net Profit Margin: Company 6.54%, Industry 7.49%

Macrotrends data indicates Five Below's net profit margin for the quarter ending October 31, 2024, was 7.01%. The average net profit margin for 2024 was 7.78%, reflecting a 6.49% decrease from 2023. The operating margin as of April 2025 (TTM) is 8.35%, while the operating margin at the end of 2024 was 11.27%.

Interested in learning more about Five Below's investors? Check out this related article: Exploring Five Below, Inc. (FIVE) Investor Profile: Who’s Buying and Why?

Five Below, Inc. (FIVE) Debt vs. Equity Structure

Understanding how Five Below, Inc. (FIVE) finances its operations and growth is crucial for investors. This involves analyzing the company’s debt levels, its debt-to-equity ratio, and how it strategically uses debt versus equity.

Here’s a detailed look at Five Below's debt and equity structure:

Five Below, Inc. (FIVE) primarily uses a mix of debt and equity to fund its expansion and operations. As of the fiscal year 2024:

• The company's financial statements provide a detailed breakdown of its liabilities, including both short-term and long-term debt.
• Five Below's approach to balancing debt and equity is reflective of its growth-oriented strategy, ensuring financial flexibility while capitalizing on expansion opportunities.

Overview of Debt Levels

As of the latest fiscal year 2024:

• Long-term debt: Five Below has approximately $294.2 million in long-term debt.
• Short-term debt: The company holds about $7.9 million in short-term debt.

Debt-to-Equity Ratio

The debt-to-equity ratio is a key metric for assessing financial leverage. For Five Below:

• Debt-to-equity ratio: The company's debt-to-equity ratio stands at 0.14.
• Industry comparison: This ratio is relatively low compared to industry standards, indicating a conservative approach to debt financing.

Recent Financing Activities

Recent financial activities provide insights into Five Below's strategic financial management:

• Credit rating: Five Below’s credit rating was recently affirmed by Standard & Poor's (S&P) at BB+ with a stable outlook.
• Refinancing: There have been no major refinancing activities reported.

The following table summarizes Five Below's debt and equity position based on the 2024 fiscal year data:

Balancing Debt and Equity

Five Below, Inc. (FIVE) strategically manages its debt and equity to support growth while maintaining financial stability:

• Equity funding: The company primarily relies on equity to fund its operations, as evidenced by its strong equity base of $2.1 billion.
• Strategic approach: Five Below's approach to financing balances the need for growth capital with the prudence of maintaining a healthy balance sheet.

For more insights into Five Below's values and mission, check out: Mission Statement, Vision, & Core Values of Five Below, Inc. (FIVE).

Five Below, Inc. (FIVE) Liquidity and Solvency

Liquidity and solvency are critical indicators of a company's financial health, revealing its ability to meet short-term obligations and sustain long-term operations. For Five Below, Inc. (FIVE), assessing these metrics provides insights into its operational efficiency and financial stability.

Current and Quick Ratios: These ratios are essential for evaluating a company's liquidity position. The current ratio, calculated by dividing current assets by current liabilities, indicates whether a company has enough short-term assets to cover its short-term liabilities. For the fiscal year 2024, Five Below reported a current ratio of 1.75, suggesting a healthy liquidity position. The quick ratio, which excludes inventory from current assets, provides a more conservative measure of liquidity. Five Below's quick ratio for 2024 was 0.63. A lower quick ratio compared to the current ratio is typical for retail companies like Five Below, which rely on inventory to generate sales.

Analysis of Working Capital Trends: Working capital, the difference between current assets and current liabilities, is a key metric for assessing operational efficiency. A positive working capital balance indicates that a company has enough liquid assets to cover its short-term liabilities. As of February 3, 2024, Five Below's working capital was $426.1 million, compared to $356.4 million as of January 28, 2023, reflecting a year-over-year increase. This increase suggests improved short-term financial health and efficiency in managing its current assets and liabilities.

Cash Flow Statements Overview: Analyzing cash flow statements provides a comprehensive view of a company's liquidity by tracking cash generated from operating, investing, and financing activities.

• Operating Cash Flow: This indicates the cash a company generates from its core business operations. For the fiscal year 2024, Five Below reported net cash from operating activities of $473.0 million, compared to $328.1 million for the fiscal year 2023.
• Investing Cash Flow: This section reflects cash used for investments in assets, such as property, plant, and equipment (PP&E). In 2024, Five Below’s net cash used for investing activities was $247.4 million, primarily due to capital expenditures related to new store openings and infrastructure investments.
• Financing Cash Flow: This involves cash flow related to debt, equity, and dividends. For 2024, Five Below’s net cash used for financing activities was $12.3 million.

Potential Liquidity Concerns or Strengths: Five Below’s strong operating cash flow and positive working capital indicate a solid liquidity position. However, the company’s growth strategy, which involves significant capital expenditures for new store openings, requires careful monitoring of cash flow and debt levels. Effective management of inventory and accounts payable will be crucial to maintaining healthy liquidity ratios.

Here’s a summary of Five Below's key liquidity metrics based on its 2024 financial data:

For more insights into Five Below, Inc. (FIVE), explore: Exploring Five Below, Inc. (FIVE) Investor Profile: Who’s Buying and Why?

Five Below, Inc. (FIVE) Valuation Analysis

Assessing whether Five Below, Inc. (FIVE) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst sentiment. Let's delve into these aspects to provide a clearer picture for investors. You might also be interested in: Mission Statement, Vision, & Core Values of Five Below, Inc. (FIVE).

One of the primary methods for evaluating a stock's worth is through valuation ratios:

• Price-to-Earnings (P/E) Ratio: This ratio indicates how much investors are willing to pay for each dollar of earnings. A high P/E ratio might suggest overvaluation, while a low one could indicate undervaluation, relative to industry peers or the company's historical average.
• Price-to-Book (P/B) Ratio: The P/B ratio compares a company's market capitalization to its book value of equity. It can help identify whether a stock is trading at a premium or discount to its net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA): This ratio is used to assess a company's total value (including debt) relative to its earnings before interest, taxes, depreciation, and amortization. It provides a more comprehensive valuation measure than P/E, especially when comparing companies with different capital structures.

Analyzing Five Below, Inc. (FIVE)'s stock price trends over the past year or longer provides context on market sentiment and investor confidence. A consistent upward trend may reflect positive expectations, while volatility or a downward trend could signal concerns. For instance, the stock has shown varied performance, influenced by factors such as earnings reports and broader economic conditions.

As of today, April 20, 2025, Five Below does not offer a dividend. Therefore, dividend yield and payout ratios are not applicable in this valuation analysis.

Here's a look at potential analyst ratings for Five Below, Inc. (FIVE):

Analyst consensus plays a significant role in valuation assessment. Ratings such as buy, hold, or sell reflect the collective opinion of financial analysts regarding a stock's potential. These ratings are typically based on in-depth analysis of the company's financials, industry trends, and future prospects.

Keep in mind that these ratings are based on analysts’ expectations and models, which may not always materialize. Consider these insights as part of a broader due diligence process.

Five Below, Inc. (FIVE) Risk Factors

Five Below, Inc. (FIVE) faces a variety of internal and external risks that could significantly impact its financial health. These risks range from industry-specific challenges, such as intense competition and shifting consumer preferences, to broader macroeconomic factors like economic downturns and regulatory changes.

Industry Competition: The retail sector is highly competitive, with numerous players vying for market share. Five Below, Inc. (FIVE) competes with other discount retailers, department stores, and online marketplaces. This intense competition can put pressure on pricing, marketing expenses, and overall profitability. Maintaining a unique value proposition and effectively managing costs are crucial for sustaining a competitive edge.

Economic Downturns: As a discretionary retailer, Five Below, Inc. (FIVE)'s sales are sensitive to economic conditions. During economic downturns or periods of uncertainty, consumers may reduce their spending on non-essential items, which could negatively impact the company's revenue and earnings. Monitoring economic indicators and adapting inventory and promotional strategies can help mitigate this risk.

Supply Chain Disruptions: Disruptions in the global supply chain, such as those caused by geopolitical events, natural disasters, or pandemics, can significantly affect Five Below, Inc. (FIVE)'s ability to source and distribute products. These disruptions can lead to increased costs, delays in inventory arrival, and potential stockouts, all of which can negatively impact financial performance. Diversifying suppliers and implementing robust inventory management practices are essential for minimizing supply chain risks.

Shifting Consumer Preferences: Consumer tastes and preferences are constantly evolving, particularly among the younger demographic that makes up a significant portion of Five Below, Inc. (FIVE)'s customer base. Failing to anticipate and respond to these changes can lead to decreased sales and brand relevance. Continuous market research, trend analysis, and a flexible merchandising strategy are vital for staying ahead of shifting consumer preferences.

Regulatory Changes: Changes in regulations, such as minimum wage laws, tariffs, and trade policies, can impact Five Below, Inc. (FIVE)'s operating costs and profitability. For example, increases in minimum wages can raise labor expenses, while tariffs can increase the cost of imported goods. Staying informed about regulatory developments and adapting business practices accordingly is crucial for managing regulatory risks.

Operational Risks: These include risks related to store operations, such as inventory management, security, and employee training. Inefficient inventory management can lead to stockouts or excess inventory, both of which can negatively impact profitability. Security breaches and theft can result in financial losses and reputational damage. Investing in robust operational systems and employee training programs can help mitigate these risks.

Financial Risks: These encompass risks related to the company's financial structure and capital management. Maintaining adequate liquidity, managing debt levels, and effectively allocating capital are crucial for financial stability. Failure to manage these risks can lead to financial distress or an inability to fund growth initiatives.

Strategic Risks: These involve risks associated with the company's long-term strategic plans. This includes risks related to expansion, acquisitions, and new product development. Poorly executed strategic initiatives can result in financial losses and a diversion of resources. Thorough planning, due diligence, and risk assessment are essential for managing strategic risks.

Mitigation strategies for these risks often include:

• Diversifying the supply chain to reduce reliance on any single supplier or region.
• Investing in technology and data analytics to improve inventory management and demand forecasting.
• Implementing robust cybersecurity measures to protect against data breaches and cyberattacks.
• Developing a strong brand reputation and customer loyalty to withstand competitive pressures.
• Maintaining a strong balance sheet with adequate liquidity to weather economic downturns.

For additional insights into Five Below, Inc. (FIVE) and its investors, explore: Exploring Five Below, Inc. (FIVE) Investor Profile: Who’s Buying and Why?

Five Below, Inc. (FIVE) Growth Opportunities

Five Below, Inc. (FIVE) is a leading high-growth value retailer that has a unique opportunity to deliver amazing value across a curated assortment featuring consistent newness with simplified pricing. The company is focused on affordability and value, and is a place where customers can find joy and excitement at WOW prices.

Here's an analysis of the key growth drivers, future revenue growth projections, strategic initiatives, and competitive advantages that position Five Below, Inc. (FIVE) for growth:

• Key Growth Drivers:
• Product Innovations: Five Below is focused on delivering fresh, trend-right products at great price value, with a unique opportunity to deliver amazing value across a curated assortment featuring consistent newness with simplified pricing.
• Market Expansions: Five Below plans to open approximately 150 new stores in fiscal year 2025, ending in February 2026. The company ended fiscal year 2024 with 1,771 brick-and-mortar locations and believes that there is an opportunity for 3,500 stores overall. The company is also densifying existing markets and expanding into new ones like the Pacific Northwest.
• Acquisitions: There is no strategic acquisition as a key growth driver mentioned in the search results.

For additional insights into Five Below, Inc. (FIVE)'s financial health, you can explore Breaking Down Five Below, Inc. (FIVE) Financial Health: Key Insights for Investors.

Future Revenue Growth Projections and Earnings Estimates:

• Net Sales: For fiscal year 2025, Five Below expects net sales to be in the range of $4.21 billion to $4.33 billion.
• Comparable Sales: The company expects comparable sales to be approximately flat to a 3% increase.
• Net Income: Net income is expected to be in the range of $216 million to $250 million.
• Adjusted Net Income: Adjusted net income is expected to be in the range of $227 million to $261 million.
• Diluted Income per Common Share: Diluted income per common share is expected to be in the range of $3.90 to $4.52.
• Adjusted Diluted Income per Common Share: Adjusted diluted income per common share is expected to be in the range of $4.10 to $4.72.

Strategic Initiatives or Partnerships That May Drive Future Growth:

• Refocusing on Core Customers: Five Below is prioritizing initiatives that enhance value, improve the shopping experience, streamline operations, and ensure that they meet the evolving needs of their core customers.
• Product Lineup: Simplifying the product lineup and emphasizing lower price points that have historically been popular among Five Below's young shoppers. The company plans to significantly reduce the breadth of its assortment and return to pre-pandemic levels by concentrating on $5 and below price points.
• Store Experience: Reintroducing elements of surprise and delight into the shopping experience, aiming to 'get the wow back' into their assortment.
• Cost-optimization: Cost-optimization initiatives amounted to $3,879 in fiscal year 2024.

Competitive Advantages That Position the Company for Growth:

• Value Proposition: Five Below offers a strong value proposition appealing to price-conscious young consumers.
• Unique Positioning: The company has a unique positioning in the specialty value retail segment.
• Dynamic Assortment: A dynamic, edited assortment of products.
• Fun and Exciting Atmosphere: Customers consider its unique merchandising and high-energy store atmosphere to be fun and exciting.
• Adaptability: The ability to respond quickly to trends.

The following table summarizes Five Below, Inc. (FIVE)'s financial performance and projections:

Five Below's strategic initiatives, focus on core customers, and expansion plans position it well for future growth. However, the company faces challenges such as declining comparable sales and the impact of tariffs on margins. By addressing these challenges and capitalizing on its competitive advantages, Five Below can continue to grow and deliver value to its shareholders.