stockrowWhat it does
Five Below is a specialty value retailer that sells a changing assortment of products, most priced at $5 and below. It was founded in 2002 and is headquartered in Philadelphia. Winnie Y. Park is its president and chief executive officer.
The company organizes its merchandise into eight areas: Candy, Style, Party, Room, Create, Tech, Sports, and New & Now. These include snacks, clothing and beauty products, room décor, crafts, phone accessories, toys, games and seasonal merchandise. Its typical store carries in excess of 4,000 products, including selected brands and licensed goods.
Five Below targets young shoppers as well as parents and others shopping for them. Its prices allow younger customers to make purchases with their own money. The assortment also includes everyday products intended for customers across age groups.
Stores are designed around browsing and discovering products, with featured seasonal items near the front and smaller impulse purchases near checkout. The company refreshes its merchandise frequently and monitors customer and sales trends when selecting products. Customers can also shop through its website and app, with home delivery or pickup in store, and through third-party delivery services.
How it makes money
Five Below makes money by purchasing merchandise and selling it to customers through stores and online. Net sales include store and e-commerce sales, including shipping and handling revenue, less merchandise returns. Gift card revenue is deferred until cards are redeemed or recognized as breakage in proportion to customer redemption patterns.
Fiscal 2025 net sales were $4.8 billion; second-quarter fiscal 2026 net sales were $1.3 billion.
Most products are priced at $5 and below, although the company also sells items above that price. Its merchandise spans leisure, fashion and home, and snack and seasonal products. The mix includes both core items and products bought to respond to trends or particular seasons. Five Below also uses selected opportunistic purchases when vendors have excess inventory available on favorable terms.
The model relies on customers returning to shop, rather than on subscriptions or long-term customer contracts. The company refreshes its assortment and uses seasonal displays, digital advertising and social media to encourage store and website visits. It also places smaller items around checkout to encourage additional purchases.
E-commerce orders can be delivered to customers or picked up in stores. The company includes e-commerce sales in its comparable-sales measure, along with sales from eligible established stores. Comparable sales increased by 12.8% in fiscal 2025. In the second quarter of fiscal 2026, comparable sales increased by just over 14%, primarily due to an increase in comparable transactions.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Retail | $3.9 billion | — | — |
Customers and how it sells
Five Below designs its assortment and store experience for young customers, their parents and others who shop for them. Its merchandise also appeals to shoppers outside its target age group. The company sells both everyday items and trend-driven products, including licensed merchandise and seasonal collections.
Customers can buy in stores, through the company’s website and mobile app, or through third-party delivery services. Online options include home delivery and buying online for pickup in a store. Five Below uses digital advertising, influencer partnerships, seasonal campaigns and local marketing to reach shoppers. It is also building a customer database for marketing and repeat engagement.
As of January 31, 2026, Five Below operated 1,921 locations across 46 states. Its stores are primarily in shopping centers in urban, suburban and semi-rural markets, rather than enclosed malls. The company entered its 47th state with its first Idaho store in August. It plans to enter Puerto Rico in the back half of 2027, initially with a handful of stores.
Five Below reported that customers gained in 2025 returned throughout the first half of 2026. It does not identify a major individual customer or give a customer-concentration share.
Suppliers and costs
Five Below buys from approximately 1,000 vendors. No single vendor represented more than 5% of its purchases in fiscal 2025, and approximately 60% of purchases came from domestic vendors. The company typically has no long-term supply agreements or exclusive arrangements with vendors. It buys core merchandise regularly and can also purchase selected excess inventory when products and terms fit its plans.
Five Below distributes approximately 85% of merchandise for its retail stores from its shipcenters; vendors send the remainder directly to stores. Merchandise for direct-to-customer e-commerce orders is distributed from Indianapolis. The company uses contract carriers or its own truck fleet to deliver to stores and works with vendors to reduce packaging and shipping costs.
Its working-capital needs include inventory, payroll, rent, other store operating costs and distribution costs. They rise ahead of the year-end holiday season as the company takes title to more inventory. E-commerce expenses are included in both cost of goods sold and selling, general and administrative expenses.
Higher fuel costs offset some gross-margin gains in the second quarter of fiscal 2026. The company also identifies inflation and commodity-price increases as potential sources of cost and margin pressure.
- Revenue$4.8B
- Cost of revenue−$3.0B
- Selling, general and administrative−$1.1B
- Other operating costs−$192.1M
- Operating income$457.4M
Competitive position
Five Below competes with discount, mass merchandise, grocery, drug, convenience, variety and other specialty retailers. These competitors sell through physical locations and online stores; Five Below also competes with online-only retailers. It does not identify specific competing companies.
The company competes through a frequently changing selection of merchandise, most priced at $5 and below, and through a store experience aimed at younger customers. It monitors trends and uses its merchandising, marketing and store teams to bring products to customers. Some competitors have greater financial, distribution, marketing and other resources than Five Below.
Our reading: The combination of low prices, a youth-oriented assortment and frequent product changes provides a differentiated reason to visit, but it depends on continuing to identify and supply products customers want.
Our reading: The store network and distribution system support Five Below’s reach, while larger rivals’ resources limit how much protection scale alone provides.
Our reading: The brand and shopping experience may encourage repeat visits, but the company still has to compete for attention across many types of retailer. Five Below uses digital marketing, seasonal campaigns and store locations to build awareness and bring customers back.
Growth opportunities
Five Below plans to grow by opening stores in existing and new markets, increasing comparable sales and building brand awareness. It uses clusters of stores in existing markets to support marketing, operating and distribution efficiencies. The company believes it has the opportunity to grow to more than 3,500 locations in the United States over time.
The company opened 150 net new stores in fiscal 2025. Its fiscal 2026 plan calls for 150 net new store openings, along with investments in store experience, infrastructure and technology. In the second quarter of fiscal 2026, it opened 52 net new stores and ended the quarter with 2,022 stores. It also plans to enter Puerto Rico in the back half of 2027.
Five Below expects comparable-sales growth to benefit from its merchandising and shopping experience. It is shifting marketing toward social and digital channels and growing its customer database to reach shoppers and encourage repeat visits. It is also reworking store space to group related toys, games, collectibles and crafts, and to place style, beauty and room products together.
The company expects fiscal 2026 sales of $5.63 billion to $5.71 billion and comparable-sales growth of between 10% and 12%. It expects capital expenditures of between $250 million and $260 million, excluding tenant allowances.
- $2.8BFY2022
- $3.1BFY2023
- $3.6BFY2024
- $3.9BFY2025
- $4.8BFY2026
Structural risks
- Trends and demand: Five Below may not identify and respond effectively to changing customer preferences. Products that are popular can change, and the company’s sales depend on offering merchandise customers want.
- Expansion execution: Profitable new stores depend on finding suitable sites, negotiating acceptable leases, sourcing and distributing merchandise, and hiring and retaining qualified staff. Growth also places demands on distribution capacity and operating systems.
- Costs and pricing: Inflation, commodity prices and transportation costs can increase expenses. Five Below may not be able to pass higher product costs on to customers without reducing sales or putting pressure on margins.
- Supply and distribution: Transportation disruptions, raw-material availability, manufacturer financial or labor problems and merchandise quality issues can affect the flow of products. Distribution facilities also face property risks, including damage and operational disruption.
- Seasonality: Sales and net income are highest in the fourth fiscal quarter because of year-end holidays. Five Below must order and hold more inventory beforehand, increasing working-capital needs and making individual quarters less representative of the full year.
Bottom line
Our reading
Our reading: Five Below’s business rests on turning low-priced, frequently changing merchandise into repeat store visits, supported by a growing store and distribution network. Its opportunity to add locations sits alongside the need to keep finding relevant products, manage seasonal inventory and maintain margins when sourcing or transportation costs rise. The breadth of retail competition means its customer appeal must be renewed rather than assumed.