Five Below

Sector: Food, drug and mass retailers Country of operation: The US Key product categories: Apparel, general merchandise, and health and beauty products Annual Metrics [caption id="attachment_153592" align="aligncenter" width="700"] Fiscal year ends close to January 31 of the following year
*Trailing twelve months ended April 30, 2022[/caption]   Summary Founded in 2002 and headquartered in Philadelphia, Pennsylvania, Five Below is a specialty value retailer that primarily targets the teen and preteen demographics. Five Below’s product portfolio comprises apparel and accessories, electronic accessories, health and beauty, home decor, sports items, stationery and toys. Five Below operates a variety of trademarks, including Five Below, Five Below Hot Stuff and Ten Below, which the company announced in 2018. The company operates across the Western, Midwestern, Northeastern and Southern regions of the US. As of April 30, 2022, the company operates over 1,225 stores in 40 states and an e-commerce website, fivebelow.com. Company Analysis Coresight Research insight: As a relatively new fixed-price retailer, Five Below saw its impressive revenue growth begin to fluctuate in fiscal 2020, when the company’s inability to fully operate during the pandemic reduced revenue growth to an unprecedented single-digit percentage, 6.3%. Although Five Below revised down its outlook for fiscal 2022 from $3.16–$3.26 billion to $3.04–$3.12 billion in revenue and from $292–$320 million to $271–$293 million in earnings, it still plans to open 160 stores in 2022 and approximately 225 stores in 2023, confirming new stores as Five Below’s main growth driver. Five Below strategically focuses on “trend-right” merchandise targeted at young customers. The company continually monitors youth-market trends, quickly identifying and responding to those that become mainstream. Its low prices resonate with its target demographics, enabling teens and tweens to shop independently. Five Below has made significant progress in the e-commerce space, now offering a same-day delivery service in more than 1,100 stores in partnership with Instacart, in an effort to increase brand awareness, acquire new customers and provide a convenient service. Five Below said it will roll out buy online, pick up in store (BOPIS) starting in the summer of 2022, but has yet to finalize a launch date.

Tailwinds	Headwinds
Diversification of products to avoid any future pandemic-led shutdowns Strong presence on social media leading to high customer engagement Opportunities for sustained expansion in international markets Opportunities to bolster and expand e-commerce capabilities	Higher focus on store expansion and competitive pricing actions weighing on margins Intense competition from other discounters and retail formats, including department stores, drugstores, Internet retailers, mass retailers and warehouse clubs

  Strategy Five Below has outlined the following growth strategy, aiming to increase net sales and earnings: 1. Grow store footprint Take advantage of the significant opportunity to expand its store base in the US 2. Drive comparable sales

• Generate continuous positive comparable sales growth—hone and refine its dynamic merchandising offering and differentiate its in-store shopping experience

3. Increase brand awareness

• Employ a cost-effective marketing strategy to promote brand awareness and drive store and website traffic

4. Enhance operating margins

• Drive margin improvement over time—primarily by leveraging its cost structure as it continues to increase its store base and drive average net sales per store.

Revenue Breakdown (FY21)   Company Developments

Date	Development
June 14, 2022	Five Below announces election of Bernard Kim to Its Board of Directors.
March 31, 2022	Five Below announces plans to triple its store count by 2030.
January 10, 2022	Five Below reports that net sales for the holiday season increased by 20.6% year over year.
October 26, 2021	Five Below announces that the company raised nearly $1.5 million during its recent Five Below fundraising campaign for St. Jude Children’s Research Hospital.
June 24, 2021	Five Below expands its partnership with Instacart nationally, with service now available in 1,100 store locations.
February 1, 2021	Five Below partners with Sweden-based artist and designer Andrea Pippins to launch an exclusive collection of artworks—the collection will be available in more than 1,000 stores and on fivebelow.com.
ember 16, 2020	Five Below announces a partnership with Instacart to offer same-day delivery and curbside pickup from select stores in Baltimore, Buffalo, California, Chicago, Cleveland, Detroit, Florida and Texas.
November 6, 2020	Five Below partners with 2019 Fortnite World Cup Champion Kyle Giersdorf, also known as “Bugha,” to launch seven exclusive gaming products.
May 29, 2020	Five Below announces that it has reopened 75% of its stores with strict and health safety protocols.

  Management Team

• Thomas G. Vellios—Co-Founder and Non-Executive Chairman
• Joel D. Anderson—CEO
• Kenneth R. Bull—CFO and Treasurer
• Michael F. Romanko—Chief Merchandising Officer

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Source: Company reports