Five Below, Inc. (FIVE): history, ownership, mission, how it works & makes money

A Brief History of Five Below

Five Below, Inc. has established itself as a prominent player in the retail sector, offering a wide range of products targeted towards tweens and teens. As of 2024, the company operates 1,667 stores across the United States, showcasing significant growth from previous years.

Financial Performance Overview

For the twenty-six weeks ended August 3, 2024, Five Below reported net sales of $1,641.9 million, an increase of 10.6% compared to $1,485.2 million in the same period the previous year. This growth was driven by a non-comparable sales increase attributed to new store openings.

Cost Structure and Profitability

During the same period, the cost of goods sold rose to $1,106.6 million, reflecting a 12.3% increase from $985.8 million. Despite the increase in sales, gross profit also increased to $535.3 million, although the gross margin decreased to 32.6% from 33.6% year-over-year.

Operating Expenses

Selling, general, and administrative expenses increased to $457.6 million for the twenty-six weeks ended August 3, 2024, up from $398.4 million in the prior year. This increase was driven by higher store-related expenses as the company expanded its store base.

Net Income and Earnings Per Share

Net income for the twenty-six weeks ended August 3, 2024, was $64.5 million, representing a decrease of 23.5% from $84.3 million in the same period of the previous year. The decline in net income is reflective of increased operating costs and a lower effective tax rate of 24.8%, compared to 22.6% in the previous year.

Share Repurchase Program

As part of its capital management strategy, Five Below initiated a share repurchase program in November 2023, authorizing the buyback of up to $100 million in common stock. During the twenty-six weeks ended August 3, 2024, the company repurchased 266,997 shares at an average cost of approximately $149.79 per share, totaling around $40 million.

Liquidity and Capital Resources

As of August 3, 2024, Five Below had approximately $225 million available under its revolving credit facility, with no outstanding borrowings. The company anticipates capital expenditures between $335 million and $345 million for fiscal 2024, primarily for new store openings and infrastructure improvements.

Store Growth and Expansion Plans

Five Below plans to open approximately 230 new stores in fiscal 2024, contributing to its growth strategy and expanding its footprint in key markets across the United States.

A Who Owns Five Below, Inc. (FIVE)

Major Shareholders

As of 2024, Five Below, Inc. (FIVE) has several significant shareholders, including institutional investors and company insiders. The following table summarizes the major shareholders and their respective ownership percentages:

Executive Leadership

The executive team of Five Below plays a crucial role in the company's operations and strategic direction. Key executives include:

• Joel Anderson - President and CEO
• Michael Romanko - Chief Operating Officer
• John Hsu - Chief Financial Officer
• Jill M. Dwyer - Chief Human Resources Officer

Recent Stock Performance

As of August 2024, Five Below's stock performance has shown fluctuations in line with broader market trends. The stock price has experienced the following movements:

Share Repurchase Program

In 2024, Five Below has continued its share repurchase program, which was initially approved for up to $100 million. The following details summarize the repurchases:

Financial Overview

Financial performance metrics for Five Below as of August 2024 reflect a mixed outlook:

Conclusion on Ownership and Financial Position

Five Below's ownership structure is characterized by significant institutional investment and a dedicated executive team, which together influence the company's strategic decisions and overall market performance. The financial metrics indicate a robust sales performance but also highlight challenges in net income growth.

Five Below, Inc. (FIVE) Mission Statement

Company Overview

Five Below, Inc. (FIVE) is a leading retailer that specializes in offering a wide range of products aimed primarily at teens and pre-teens, all priced at $5 and below. The company's mission emphasizes delivering an exciting shopping experience with a variety of products, including toys, games, fashion accessories, and more, all designed to be fun and accessible.

Mission Statement

The mission statement of Five Below is to provide "the coolest stuff at the best prices." The company aims to deliver a unique shopping experience that resonates with its target demographic, offering products that are trendy, fun, and affordable.

Financial Performance

As of August 3, 2024, Five Below reported significant financial metrics:

Key Operational Highlights

During the twenty-six weeks ended August 3, 2024, Five Below's operational metrics included:

Market Strategy and Growth Plans

Five Below plans to continue expanding its store footprint while enhancing the in-store and online shopping experience. The company has committed to significant capital expenditures to support new store openings and infrastructure improvements.

Shareholder Returns

As part of its commitment to shareholders, Five Below has initiated share repurchase programs, with the following details:

Financial Ratios

The financial health of Five Below can be summarized through key ratios as of Q2 2024:

Conclusion

Five Below continues to focus on its mission of providing affordable products while navigating the challenges of a competitive retail environment. The company’s dedication to its target demographic and strategic growth plans position it for continued expansion and market relevance.

How Five Below, Inc. (FIVE) Works

Business Model and Revenue Streams

Five Below, Inc. operates a retail chain offering a variety of products at prices typically under $5, with a focus on products appealing to pre-teens and teenagers. The company generates revenue through sales in physical stores and its e-commerce platform, fivebelow.com. The product categories include leisure, fashion, home, snacks, and seasonal items.

Financial Performance Overview

For the twenty-six weeks ended August 3, 2024, Five Below reported the following financial results:

Operational Metrics

As of August 3, 2024, Five Below operated 1,667 stores, an increase from 1,407 stores the previous year. The company reported a comparable sales decrease of 4.1% for the twenty-six weeks ended August 3, 2024, attributed to a reduction in the number of transactions.

Cost Structure

The cost structure for Five Below includes significant expenses related to cost of goods sold and selling, general, and administrative expenses (SG&A). For the twenty-six weeks ended August 3, 2024, SG&A expenses increased to $379.0 million from $338.3 million in the prior year.

Cash Flow and Liquidity

Five Below's cash flow from operating activities for the twenty-six weeks ended August 3, 2024, was $97.7 million, compared to $169.3 million in 2023. The company reported cash and cash equivalents of $209.0 million as of August 3, 2024.

Share Repurchase Program

As of August 3, 2024, Five Below has repurchased 266,997 shares at an aggregate cost of approximately $40.0 million, with an average price of $149.79 per share. The current share repurchase program allows for up to $100 million of common stock repurchases through November 27, 2026.

Income Tax Expense

For the twenty-six weeks ended August 3, 2024, Five Below reported an income tax expense of $21.2 million, with an effective tax rate of 24.8% compared to 22.6% in the prior year.

How Five Below, Inc. (FIVE) Makes Money

Revenue Streams

Five Below, Inc. generates revenue primarily through its retail operations, offering a wide array of products priced at $5 and below. The key categories of products include:

• Leisure
• Fashion and Home
• Snack and Seasonal

As of the thirteen weeks ended August 3, 2024, the revenue breakdown was as follows (in thousands):

Net Sales and Growth

Five Below reported net sales of $1,641.9 million for the twenty-six weeks ended August 3, 2024, an increase of 10.6% compared to $1,485.2 million for the same period in 2023. This growth was supported by:

• Non-comparable sales increase of $215.8 million
• Offset by a comparable sales decrease of $59.1 million

Comparable sales decreased by 4.1% due to a 4.2% drop in the number of transactions, partially offset by a 0.1% increase in the average transaction value.

Cost of Goods Sold and Gross Profit

For the twenty-six weeks ended August 3, 2024, the cost of goods sold increased to $1,106.6 million, up from $985.8 million in the prior year, reflecting a 12.3% rise. Gross profit was reported at $535.3 million, a 7.2% increase from $499.4 million, resulting in a gross margin of 32.6%, down from 33.6%.

Selling, General and Administrative Expenses

Selling, general and administrative expenses (SG&A), including depreciation and amortization, rose to $457.6 million for the twenty-six weeks ended August 3, 2024, compared to $398.4 million in the previous year. This equates to 27.9% of net sales, an increase of approximately 110 basis points.

Operating Income and Net Income

Operating income for the twenty-six weeks ended August 3, 2024, was $77.7 million, down from $101.0 million the previous year. The net income decreased to $64.5 million from $84.3 million, a decline of 23.5%.

Income Tax Expense

Income tax expense for the twenty-six weeks ended August 3, 2024, was $21.2 million, down from $24.7 million in 2023, resulting in an effective tax rate of 24.8%, compared to 22.6% in the prior year.

Store Expansion and Capital Expenditures

Five Below plans to continue its expansion with a projected cash capital expenditure of approximately $335 million to $345 million for fiscal 2024, primarily for the construction and opening of about 230 new stores.

Cash Flow Overview

For the twenty-six weeks ended August 3, 2024, net cash provided by operating activities was $97.7 million, while net cash used in investing activities was $22.0 million.

Share Repurchase Program

As of August 3, 2024, Five Below had repurchased 266,997 shares at an aggregate cost of approximately $40 million, averaging $149.79 per share.

Financial Summary

The following table summarizes key financial data for Five Below for the twenty-six weeks ended August 3, 2024: