Five Below Reports 14.6% Increase in Net Sales but 88.4% Decline in Net Income

Five Below, Inc. reported its financial results for the thirteen and thirty-nine weeks ended November 2, 2024, revealing a notable increase in net sales but a significant decline in profitability compared to the previous fiscal period. For the thirteen weeks, net sales rose to $843.7 million, a 14.6% increase from $736.4 million in the same period last year. However, net income fell sharply to $1.7 million, down 88.4% from $14.6 million, primarily due to increased costs and lower transaction volumes.

The company's cost of goods sold (COGS) also increased, reaching $585.7 million for the quarter, up 14.0% from $513.6 million. This rise was attributed to higher merchandise costs and a non-recurring inventory write-off. Gross profit increased to $258.0 million, reflecting a gross margin of 30.6%, slightly up from 30.3% in the prior year. Despite the increase in sales, selling, general, and administrative expenses surged by 25.1% to $258.6 million, driven by higher store-related costs and corporate expenses, which contributed to the decline in operating income.

In terms of operational metrics, Five Below opened 38 new stores during the quarter, bringing the total to 1,749 locations across 44 states. The company reported a comparable sales increase of 0.6%, driven by a rise in the average transaction value, although the number of transactions decreased. The company’s strategic focus on expanding its store footprint and enhancing its e-commerce capabilities continues, with plans to open approximately 227 new stores in fiscal 2024.

Looking ahead, Five Below anticipates continued growth, supported by its expansion strategy and a robust product assortment aimed at the tween and teen demographic. The company plans to invest approximately $340 million in capital expenditures for fiscal 2024, primarily for new store openings and infrastructure improvements. Despite the challenges faced in the current fiscal period, management remains optimistic about future performance, emphasizing the importance of adapting to market conditions and consumer preferences.