Five Below (FIVE)
Key Statistics
EV/EBIT = 19.8x
ROE = 17.93%
Debt/Equity = 122%
FCF Yield = 2%
Dividend Yield = 0%
Market Cap = $5.16 billion
The Company
Five Below (FIVE) was founded in 2002 and is headquartered in Philadelphia, Pennsylvania. It is a fast-growing discount retailer that specializes in affordable, trend-driven merchandise.
Originally focused on selling products priced at $5 or less, the company has recently expanded its offerings to include select items priced at $10 or less, largely in response to inflation.
Five Below primarily targets adolescents, a demographic that values trendy, Instagram-worthy products at extremely low prices.
Five Below has experienced rapid growth over the past decade, expanding from 244 stores to over 1,500 locations by early 2024. The company plans to increase its store count to over 3,500 locations in the coming years, focusing on both existing and new markets. In fiscal 2024 alone, Five Below intends to open 225–235 new stores, targeting high-visibility, high-traffic locations in urban, suburban, and semi-rural shopping centers.
The typical customer who shops at Five Below is between 13 and 18 years old, budget-conscious, and driven by a desire for trendy, affordable products that align with their interests and personal style. They often have a limited budget, likely relying on allowance money or part-time job earnings, and are drawn to Five Below for its fun, upbeat shopping experience and low prices.
Five Below’s product lineup is organized into eight distinct categories—Style, Room, Sports, Tech, Create, Party, Candy, and New & Now. These categories are specifically designed to appeal to younger lifestyles and interests, though the store also attracts families and adults looking for affordable, high-quality products. The carefully curated product range ensures there is something for everyone, enhancing the store’s broad appeal.
The Style category features fashionable accessories such as jewelry, socks, sunglasses, and hair products, along with cosmetics like nail polish and lip gloss.
Room focuses on home decor and organizational products, including trendy lamps, fleece blankets, storage bins, and accent furniture, allowing customers to personalize their living spaces. The Sports category includes fitness accessories, sports equipment, and seasonal outdoor items like pool floats and beach toys, catering to active lifestyles.
In the Tech category, shoppers can find phone cases, chargers, headphones, and even media like books and video games, all priced affordably. Create appeals to artistic customers with craft kits, school supplies, and DIY project materials. The Party category offers decorations, gag gifts, and supplies for celebrations, while Candy includes novelty treats, movie-sized candy boxes, and seasonal snacks.
Finally, New & Now highlights holiday and event-specific items, displayed prominently at the front of the store to capture customer attention.
The business itself is divided into three main segments: leisure, fashion & home, and snack and seasonal.
The leisure segment, which accounts for 46.2% of sales, encompasses products for entertainment, relaxation, and hobbies. This includes items from the Sports, Tech, and parts of the Create categories, such as games, puzzles, tech gadgets, and creative kits. These products cater to customers looking for affordable ways to have fun or explore their interests, making leisure a cornerstone of the company’s revenue.
The fashion & home segment contributes 29.3% of sales and includes trendy clothing, accessories, and decor. Items from the Style and Room categories, such as jewelry, T-shirts, lamps, and blankets, allow shoppers to express their personal style and enhance their living spaces without breaking the bank.
The snack and seasonal segment, representing 24.5% of sales, includes candy, snacks, and holiday-themed merchandise. This segment ties into the Candy, Party, and New & Now categories, offering everything from classic treats to festive decorations. By positioning these items near store entrances and checkout areas, Five Below captures impulse buyers and creates excitement during seasonal shopping periods.
Five Below is known for its vibrant store layouts and engaging shopping atmosphere. Each store is carefully designed with easy navigation in mind, featuring colorful signage and strategically placed product displays. Seasonal and holiday items from the New & Now category are prominently positioned at the front of the store to attract attention, while impulse items like candy and small gadgets are located near the checkout area to encourage last-minute purchases.
The stores also use unique fixtures, such as wheelbarrows, bins, and oil drums, to creatively display merchandise, enhancing customer interaction with products. Popular music plays throughout the store to create a fun and upbeat environment, making shopping at Five Below an enjoyable experience. This combination of visual appeal, engaging layouts, and affordable pricing encourages frequent visits and builds customer loyalty.