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What changed in FIVE BELOW, INC's 10-K — 2025 vs 2026

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Paragraph-level year-over-year comparison of FIVE BELOW, INC's 2025 and 2026 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2026 report.

+209 added−205 removedSource: 10-K (2025-03-20) vs 10-K (2024-03-21)

Top changes in FIVE BELOW, INC's 2026 10-K

209 paragraphs added · 205 removed · 181 edited across 10 sections

Item 1. Business

Business — how the company describes what it does

48 edited+1 added−2 removed104 unchanged
Biggest changeOur e-commerce expenses will have components classified as both cost of goods sold and selling, general and administrative expenses (including depreciation and amortization). 6 We believe that our business model has resulted in strong financial performance when considered in light of the economic environment: • Our comparable sales increased by 2.8% in fiscal 2023, decreased by 2.0% in fiscal 2022, and increased by 30.3% in fiscal 2021.
Biggest changeOur e-commerce expenses will have components classified as both cost of goods sold and selling, general and administrative expenses (including depreciation and amortization). 6 We believe that our business model has resulted in strong financial performance when considered in light of the economic environment: • Our comparable sales decreased by 2.7% in fiscal 2024, increased by 2.8% in fiscal 2023, and decreased by 2.0% in fiscal 2022. • We expanded our store base from 1,340 stores at the end of fiscal year 2022 to 1,771 stores at the end of fiscal year 2024, representing a compounded annual growth rate of 15.0%. • Between fiscal 2022 and 2024, our net sales increased from $3.1 billion to $3.9 billion, representing a compounded annual growth rate of 12.3%.
Our marketing team, which reports into our Chief Merchandising Officer, works with our merchandising team to develop novel and dynamic techniques to display our products, including distinctive merchandise fixtures and colorful and stimulating signage, which attract customers, encourage hands-on interaction with our quality products and convey our value pricing.
Our marketing team, which reports into our Chief Executive Officer, works with our merchandising team to develop novel and dynamic techniques to display our products, including distinctive merchandise fixtures and colorful and stimulating signage, which attract customers, encourage hands-on interaction with our quality products and convey our value pricing.
We realize cost savings by working with our vendors to streamline and reduce packaging to diminish shipping costs. 12 For our direct-to-customer e-commerce business, we distribute our merchandise from our shipcenters in Buckeye, Arizona and Indianapolis, Indiana.
We realize cost savings by working with our vendors to streamline and reduce packaging to diminish shipping costs. For our direct-to-customer e-commerce business, we distribute our merchandise from our shipcenters in Buckeye, Arizona and Indianapolis, Indiana.
References to 2024, 2023, 2022, 2021, 2020, and 2019 are to our fiscal years unless otherwise specified. Our Company Five Below is a leading high-growth value retailer offering trend-right, high-quality products loved by tweens, teens and beyond. We believe life is better when customers are free to “let go & have fun” in an amazing experience filled with unlimited possibilities.
References to 2025, 2024, 2023, 2022, 2021, and 2020 are to our fiscal years unless otherwise specified. Our Company Five Below is a leading high-growth value retailer offering trend-right, high-quality products loved by tweens, teens and beyond. We believe life is better when customers are free to “let go & have fun” in an amazing experience filled with unlimited possibilities.
Additionally, we rely on the strong visibility and the presence of our store locations, email messaging and philanthropic community fundraising to promote and further our brand image and drive traffic.
Additionally, we rely on the strong visibility and the presence of our store locations, email messaging and philanthropic community fundraising to promote and further our brand image and awareness to drive traffic.
For example, ou r New & Now offerings are located in the front of the store with the goal of catching customers’ attention and being “top of mind,” and specially featured value items and other key items are positioned along the center aisle. Impulse items and “dollar value” items surround the checkout areas to capture add-on purchases.
For example, ou r New & Now offerings are located in the front of the store with the goal of catching customers’ attention and being “top of mind,” and specially featured extreme value items and other key items that are positioned along the center aisle. Impulse items and “dollar value” items surround the checkout areas to capture add-on purchases.
We believe that we have the opportunity to grow our store base to more than 3,500 locations over time. We also offer our merchandise on the internet, through our fivebelow.com e-commerce website, offering home delivery and the option to buy online and pick up in store.
We believe that we have the opportunity to grow our store base to more than 3,500 locations over time. We also offer our merchandise on the internet, through our fivebelow.com e-commerce website and mobile app, offering home delivery and the option to buy online and pick up in store.
In the summer season, our sports offering also includes pool, beach and outdoor toys, games and accessories. • Tech : Consists of a selection of accessories for cell phones, tablets, audio and computers. The offering includes cases, chargers, headphones and other related items.
In the summer season, our sports offering also includes pool, beach and outdoor toys, games, and accessories. • Tech : Consists of a selection of accessories for cell phones, tablets, audio, computers, and automobiles. The offering includes cases, chargers, cables, headphones, and other related items.
Our digital experience, anchored by our mobile e-commerce website, app and social media presence is growing rapidly as we utilize TikTok, Instagram, Facebook, YouTube and Snapchat to engage our customers with compelling digital content on a frequent basis.
Our digital experience, anchored by our mobile e-commerce website, mobile app and social media presence is growing rapidly as we utilize Instagram, TikTok and Facebook to engage our customers with compelling digital content on a frequent basis.
The actual number, location and timing of new store openings in 2024 will depend on a number of factors, such as retail trends, competition, the general economic environment and our ability to hire and retain new store managers and crew.
The actual number, location, and timing of new store openings in 2025 will depend on a number of factors, such as retail trends, competition, the general economic environment, and our ability to hire and retain new store managers and crew.
Our new store model targets an average payback period of less than one year on our initial investment. Store Operations Each of our stores is managed by a store manager and one or two assistant managers who oversee full-time and part-time crew within each store.
Our new store model targets an average payback period of approximately one year on our initial investment. Store Operations Each of our stores is managed by a store manager and one or two assistant managers who oversee full-time and part-time crew within each store.
Growth Strategy We believe we can grow our net sales and earnings by executing on the following strategies: • Grow Our Store Base. We believe there is significant opportunity to expand our store base throughout the United States from 1,544 locations as of February 3, 2024 to more than 3,500 l ocations within the United States over time.
Growth Strategy We believe we can grow our net sales and earnings by executing on the following strategies: • Grow Our Store Base. We believe there is significant opportunity to expand our store base throughout the United States from 1,771 locations as of February 1, 2025 to more than 3,500 l ocations within the United States over time.
Our strategy predominantly includes the use of digital marketing, streaming video, television, philanthropic and local community marketing to support existing and new market entries. We leverage our growing e-mail database, mobile website and social media presence to drive brand engagement and increased store visits within existing and new markets.
Our strategy predominantly includes the use of digital marketing, streaming video, seasonal campaigns, philanthropic and local community marketing to support existing and new market entries. We leverage our growing e-mail database, mobile website, mobile app and social media presence to drive brand engagement and increased store visits within existing and new markets.
The percentage of net sales represented by each product group for each of the last three fiscal years was as follows: Percentage of Net Sales 2023 2022 2021 Leisure 46.2 % 47.6 % 49.6 % Fashion and home 29.3 % 29.2 % 30.2 % Snack and seasonal 24.5 % 23.2 % 20.2 % Total 100.0 % 100.0 % 100.0 % Leisure includes items such as sporting goods, games, toys, tech, books, electronic accessories, arts and crafts, and party.
The percentage of net sales represented by each product group for each of the last three fiscal years was as follows: Percentage of Net Sales 2024 2023 2022 Leisure 44.3 % 46.2 % 47.6 % Fashion and home 30.2 % 29.3 % 29.2 % Snack and seasonal 25.5 % 24.5 % 23.2 % Total 100.0 % 100.0 % 100.0 % Leisure includes items such as sporting goods, games, toys, tech, books, electronic accessories, arts and crafts, and party.
Our senior management team, led by Joel Anderson, our President and Chief Executive Officer, has extensive retail experience across a broad range of disciplines, including merchandising, real estate, finance, store operations, digital, supply chain management and information technology.
Our senior management team, led by Winnie Park, our President and Chief Executive Officer, has extensive retail experience across a broad range of disciplines, including merchandising, real estate, finance, store operations, digital, supply chain management and information technology.
Our stores have been successful in varying geographic regions, population densities and real estate settings and our new stores have achieved average payback periods of less than one year.
Our stores have been successful in varying geographic regions, population densities and real estate settings and our new stores have achieved average payback periods of approximately one year.
The following map shows the number of stores in each of the states in which we operated and the locations of our shipcenters as of February 3, 2024. 10 Store Design and Layout We present our products in a unique and engaging in-store atmosphere.
The following map shows the number of stores in each of the states in which we operated and the locations of our shipcenters as of February 1, 2025. 10 Store Design and Layout We present our products in a unique and engaging in-store atmosphere.
Fashion and home include items such as personal accessories, “attitude” t-shirts, beauty offerings, home goods and storage options. Snack and seasonal include items such as seasonal goods, greeting cards, candy and other snacks, and beverages. Our Stores As of February 3, 2024, we operated 1,544 stores throughout the United States.
Fashion and home include items such as personal accessories, “attitude” t-shirts, beauty offerings, home goods and storage options. Snack and seasonal include items such as seasonal goods, greeting cards, candy and other snacks, and beverages. Our Stores As of February 1, 2025, we operated 1,771 stores throughout the United States.
We opened 150 new stores in fiscal 2022 and 204 net new stores in fiscal 2023, and we plan to open between 225 and 235 new stores in fiscal 2024. Our new store model assumes approximately 9,500 square feet and is primarily in-line locations within power, community and lifestyle shopping centers across a variety of urban, suburban and semi-rural markets.
We opened 204 net new stores in fiscal 2023 and 227 net new stores in fiscal 2024, and we plan to open approximately 150 new stores in fiscal 2025. Our new store model assumes approximately 9,500 square feet and is primarily in-line locations within power, community and lifestyle shopping centers across a variety of urban, suburban and semi-rural markets.
Our recent store growth is summarized in the following table: Period Stores at Start of Period Stores Opened Stores Closed Net Store Increase Stores at End of Period Fiscal 2021 1,020 171 1 170 1,190 Fiscal 2022 1,190 150 — 150 1,340 Fiscal 2023 1,340 205 1 204 1,544 Opening stores within existing markets enables Five Below to benefit from enhanced brand awareness and to achieve advertising, operating and distribution efficiencies.
Our recent store growth is summarized in the following table: Period Stores at Start of Period Stores Opened Stores Closed Net Store Increase Stores at End of Period Fiscal 2022 1,190 150 — 150 1,340 Fiscal 2023 1,340 205 1 204 1,544 Fiscal 2024 1,544 228 1 227 1,771 Opening stores within existing markets enables Five Below to benefit from enhanced brand awareness and to achieve advertising, operating and distribution efficiencies.
Merchandising, Sourcing and Distribution We have developed a disciplined approach to buying and a dynamic inventory planning and allocation process to support our merchandising strategy. Merchandising Our merchandising team consists of a Chief Merchandising Officer, who reports directly to our Chief Executive Officer, and is supported by an extensive team of merchandising crew.
Merchandising, Sourcing and Distribution We have developed a disciplined approach to buying and a dynamic inventory planning and allocation process to support our merchandising strategy. Merchandising Our merchandising team consists of a Senior Vice President of Merchandising, Product Design and Development, who reports directly to our Chief Executive Officer, and is supported by an extensive team of merchandising crew.
These values guide all of our decisions and actions. • Wow Our Customers • Unleash Your Passion • Hold the Penny Hostage • Achieve the Impossible • Work Hard, Have Fun and Build a Career Crew As of February 3, 2024, we employed approximately 7,000 full-time and 15,000 part-time crew.
These values guide all of our decisions and actions. • Wow Our Customers • Unleash Your Passion • Hold the Penny Hostage • Achieve the Impossible • Work Hard, Have Fun and Build a Career Crew As of February 1, 2025, we employed approximately 7,300 full-time and 15,900 part-time crew.
Our new store model assumes a store size of approximately 9,500 square feet and is typically located within power, community and lifestyle shopping centers across a variety of urban, suburban and semi-rural markets. We opened 204 net new stores in fiscal 2023 and we plan to open between 225 and 235 new stores in fiscal 2024.
Our new store model assumes a store size of approximately 9,500 square feet and is typically located within power, community and lifestyle shopping centers across a variety of urban, suburban and semi-rural markets. We opened 227 net new stores in fiscal 2024 and we plan to open approximately 150 new stores in fiscal 2025.
We began operating the shipcenter in August 2021 and will expand to approximately 1,200,000 square feet in the second half of 2024. The total construction cost of the expansion is expected to be approximately $26 million. In March 2021, we acquired land in Indianapolis, Indiana, to build an approximately 1,030,000 square foot shipcenter.
We began operating the shipcenter in August 2021 and expanded to approximately 1,200,000 square feet in the second half of 2024. The total construction cost of the expansion was approximately $26 million. In March 2021, we acquired land in Indianapolis, Indiana, to build an approximately 1,030,000 square foot shipcenter.
Of our total crew, approximately 800 were corporate, approximately 1,000 were based at our shipcenters in Pedricktown, New Jersey, Forsyth, Georgia, Conroe, Texas, Buckeye, Arizona, and Indianapolis, Indiana and approximately 20,200 were store crew located in 43 states throughout the United States. The number of part-time crew fluctuates depending on seasonal needs.
Of our total crew, approximately 600 were corporate, approximately 1,000 were based at our shipcenters in Pedricktown, New Jersey, Forsyth, Georgia, Conroe, Texas, Buckeye, Arizona, and Indianapolis, Indiana and approximately 21,500 were store crew located in 44 states throughout the United States. The number of part-time crew fluctuates depending on seasonal needs.
We opened the first Five Below store in the greater Philadelphia area in 2002 and, since then, have been expanding throughout the United States. As of February 3, 2024, we operated a total of 1,544 locations across 43 states.
We opened the first Five Below store in the greater Philadelphia area in 2002 and, since then, have been expanding throughout the United States. As of February 1, 2025, we operated a total of 1,771 locations across 44 states.
We began operating the shipcenter in April 2019 and will expand to approximately 1,000,000 square feet in the first half of 2024. The total construction cost of the expansion is expected to be approximately $21 million. In August 2019, we acquired land in Conroe, Texas, to build an approximately 860,000 square foot shipcenter.
We began operating the shipcenter in April 2019 and expanded to approximately 1,100,000 square feet in the first half of 2024. The total construction cost of the expansion was approximately $21 million. In August 2019, we acquired land in Conroe, Texas, to build an approximately 860,000 square foot shipcenter.
References to "fiscal year 2022" or "fiscal 2022" refer to the period from January 30, 2022 to January 28, 2023, which consists of a 52-week fiscal year. References to "fiscal year 2021" or "fiscal 2021" refer to the period from January 31, 2021 to January 29, 2022, which consists of a 52-week fiscal year.
References to "fiscal year 2021" or "fiscal 2021" refer to the period from January 31, 2021 to January 29, 2022, which consists of a 52-week fiscal year. References to "fiscal year 2020" or "fiscal 2020" refer to the period from February 2, 2020 to January 30, 2021, which consists of a 52-week fiscal year.
We maintain a pipeline of real estate sites that have been approved by our real estate committee and have executed 137 leases as of February 3, 2024 for new stores in fiscal 2024.
We maintain a pipeline of real estate sites that have been approved by our real estate committee and have executed 77 leases as of February 1, 2025 for new stores in fiscal 2025.
As of February 3, 2024, we have executed lease agreements for the opening of 137 new stores in fiscal 2024. • Drive Comparable Sales. We expect to continue generating positive comparable sales growth by continuing to hone and refine our dynamic merchandising offering and differentiated in-store shopping experience.
As of February 1, 2025, we have executed lease agreements for the opening of 77 new stores in fiscal 2025. • Drive Comparable Sales. We expect to generate positive comparable sales growth by continuing to hone and refine our dynamic merchandising offering and differentiated in-store shopping experience.
Our merchandising team works directly with our product development team and our central planning and allocation group to ensure a consistent delivery of products across our store base. Our Chief Merchandising Officer has over 30 years of experience within the retail sector.
Our merchandising team works directly with our product development team and our central planning and allocation group to ensure a consistent delivery of products across our store base. Our Senior Vice President of Merchandising, Product Design and Development has over 25 years of experience within the retail sector.
Our style offering also includes products such as nail polish, lip gloss, fragrance, and branded cosmetics. • Room : Consists of items used to complete and personalize our customer’s living space, including trendy lamps, posters, frames, fleece blankets, plush items, pillows, candles, incense, lighting, novelty décor, accent furniture and related items.
Our style offering also includes an assortment of beauty products such as personal care essentials, skincare, fragrance, and branded cosmetics. • Room : Consists of items used to complete and personalize our customer’s living space, including trendy lamps, posters, frames, fleece blankets, plush items, pillows, candles, incense, lighting, novelty décor, accent furniture and related items.
References to "fiscal year 2024" or "fiscal 2024" refer to the period from February 4, 2024 to February 1, 2025, which consists of a 52-week fiscal year. References to "fiscal year 2023" or "fiscal 2023" refer to the period from January 29, 2023 to February 3, 2024, which consists of a 53-week fiscal year.
References to "fiscal year 2023" or "fiscal 2023" refer to the period from January 29, 2023 to February 3, 2024, which consists of a 53-week fiscal year. References to "fiscal year 2022" or "fiscal 2022" refer to the period from January 30, 2022 to January 28, 2023, which consists of a 52-week fiscal year.
Crew on our real estate team spend considerable time evaluating prospective sites before bringing a proposal to our real estate committee. Our real estate committee, which is composed of senior management including some of our executive officers, approves all of our locations before a lease is signed.
Our real estate team spends considerable time evaluating prospective sites before bringing a proposal to our real estate committee. Our real estate committee, which is composed of senior management including many of our executive officers, reviews and approves all of our locations before a lease is signed.
We believe there is a significant opportunity to expand our store base in the United States. We opened 204 net new stores in fiscal 2023 and we plan to open between 225 and 235 new stores in fiscal 2024 through expansion in existing markets and by entering new markets.
We believe there is a significant opportunity to expand our store base in the United States. We opened 227 net new stores in fiscal 2024 and we plan to open approximately 150 new stores in fiscal 2025 through expansion in existing markets and by entering new markets.
We also compete with online retailers who do not have traditional brick and mortar locations. 13 The principal basis upon which we compete is by offering a dynamic, edited assortment of trend-right products, with most priced at $5 and below and also inclusive of select brands and licensed merchandise, targeted at the tweens, teens and beyond.
The principal basis upon which we compete is by offering a dynamic, edited assortment of trend-right products, with most priced at $5 and below and also inclusive of select brands and licensed merchandise, targeted at the tweens, teens and beyond.
Distribution and Fulfillment We distribute approximately 85% of our merchandise for our retail stores from our approximately 1,030,000 square foot shipcenter in Indianapolis, Indiana, our approximately 1,000,000 square foot shipcenter in Pedricktown, New Jersey, our approximately 860,000 square foot shipcenter in Conroe, Texas, our approximately 860,000 square foot shipcenter in Buckeye, Arizona and our approximately 700,000 square foot shipcenter in Forsyth, Georgia, with the remaining merchandise shipped directly from the vendor to our stores.
We typically have no long-term supply agreements or exclusive arrangements with our vendors. 12 Distribution and Fulfillment We distribute approximately 85% of our merchandise for our retail stores from our approximately 1,200,000 square foot shipcenter in Buckeye, Arizona, our approximately 1,100,000 square foot shipcenter in Forsyth, Georgia, our approximately 1,030,000 square foot shipcenter in Indianapolis, Indiana, our approximately 1,000,000 square foot shipcenter in Pedricktown, New Jersey, and our approximately 860,000 square foot shipcenter in Conroe, Texas, with the remaining merchandise shipped directly from the vendor to our stores.
We utilize the survey results to identify strengths and weaknesses and create action plans to improve engagement and, ultimately, team performance. In 2023 a high percentage of our crew participated in the survey, and the results demonstrated that our overall engagement levels exceed Gallup’s overall company averages in the United States and worldwide.
We utilize the survey results to identify strengths and weaknesses and create action plans to improve engagement and, ultimately, team performance. In 2024 a large percentage of our crew participated in the survey, and the results demonstrated that our overall engagement levels continue to outperform the Gallup Retail Industry Company Database Levels in the United States.
We also carry a range of media products including books, video games and DVDs. • Create : We offer an assortment of craft activity kits, as well as arts and crafts supplies such as crayons, markers and stickers.
We also carry a range of affordable products for audio, gaming, and gadgets. • Create : We offer an assortment of craft activity kits, as well as arts and crafts supplies such as crayons, markers, and stickers.
Over the same period, our operating income increased from $379.9 million to $385.6 million, representing a compounded annual growth rate of 0.7%. Our Competitive Strengths We believe the following strengths differentiate Five Below from competitors and are the key drivers of our success: • Unique Focus on the Tween and Teen Customer.
Over the same period, our operating income decreased from $345.0 million to $323.8 million. Our Competitive Strengths We believe the following strengths differentiate Five Below from competitors and are the key drivers of our success: • Unique Focus on the Tween and Teen Customer.
In July 2014, Joel Anderson joined the Five Below senior management team, and he was appointed Chief Executive Officer effective February 1, 2015. 8 Our Market Opportunity As a result of our unique merchandise offering and value proposition, we believe we have effectively tapped the tween and teen markets. According to the U.S.
In December 2024, Winnie Park joined the Five Below as President and Chief Executive Officer. 8 Our Market Opportunity As a result of our unique merchandise offering and value proposition, we believe we have effectively tapped the tween and teen markets. According to the U.S.
Marketing and Advertising Our cost-effective marketing strategy is designed to promote brand awareness and drive store and website traffic with our target demographic, as well as other value-oriented customers.
Marketing and Advertising Our cost-effective marketing strategy is designed to promote brand awareness, enhance customer engagement, and drive store and website traffic with our target demographic, as well as other value-oriented customers. Our marketing efforts focus on promoting our unique experience whether in-store, online, or through our mobile app.
References to "fiscal year 2020" or "fiscal 2020" refer to the period from February 2, 2020 to January 30, 2021, which consists of a 52-week fiscal year. References to “fiscal year 2019” or “fiscal 2019” refer to the period from February 3, 2019 to February 1, 2020, which consists of a 52-week fiscal year.
References to "fiscal year 2025" or "fiscal 2025" refer to the period from February 2, 2025 to January 31, 2026, which consists of a 52-week fiscal year. References to "fiscal year 2024" or "fiscal 2024" refer to the period from February 4, 2024 to February 1, 2025, which consists of a 52-week fiscal year.
We work with approximately 1,000 vendors, with no single vendor representing more tha n 5% of our purchases in fiscal 2023. We sourced approximately 60% of our purchases from domestic vendors in fiscal 2023. We typically have no long-term supply agreements or exclusive arrangements with our vendors.
We work with ap proximately 1,000 vendo rs, with no single vendor representing more tha n 5% of our purchases in fiscal 2024. We sourced approxi mately 60% of our purchases from domestic vendors in fiscal 2024.
Product Mix We organize the merchandise in our stores into the following category worlds: • Style : Consists primarily of accessories such as novelty socks, sunglasses, jewelry, scarves, gloves, hair accessories, athletic tops and bottoms and “attitude” t-shirts.
Product Mix We organize the merchandise in our stores into the following category worlds: • Style : Consists primarily of apparel, accessories, and beauty products. We offer an assortment of trend-right socks, jewelry, hair accessories, cozy loungewear, and “snarky” t-shirts.
Competition We compete with a broad range of retailers including discount, mass merchandise, grocery, drug, convenience, variety and other specialty stores with both physical locations and online stores. Many of these retail companies operate stores in many of the areas where we operate, and many of them engage in extensive advertising and marketing efforts.
Many of these retail companies operate stores in many of the areas where we operate, and many of them engage in extensive advertising and marketing efforts. We also compete with online retailers who do not have traditional brick and mortar locations.
In addition to our marketing and advertising efforts described above, we also maintain an e-commerce website ( www.fivebelow.com ) and, over the last few years, our online following has grown substantially. We use both our website and social media channels to highlight our featured products, value/quality proposition, store locations, employment opportunities, and grand openings.
In addition to our marketing and advertising efforts described above, we also maintain an e-commerce website ( www.fivebelow.com ).
Our strategy includes highlighting our brand, exceptional value and quality proposition predominantly through the use of digital advertising, commercials (on television and through streaming), affiliate marketing, social influencers, content creators, syndicated talk show integrations and local marketing, with a focus on peak selling seasons.
Our strategy includes highlighting our brand, exceptional value and quality proposition predominantly through the use of digital advertising, influencer partnerships, seasonal campaigns, and local marketing efforts to maximize our reach and growth objectives.
Removed
Comparable sales results in fiscal 2021 were impacted by the COVID-19 pandemic. • We expanded our store base from 1,190 stores at the end of fiscal year 2021 to 1,544 stores at the end of fiscal year 2023, representing a compounded annual growth rate of 13.9%. • Between fiscal 2021 and 2023, our net sales increased from $2.8 billion to $3.6 billion, representing a compounded annual growth rate of 11.8%.
Added
We use both our website and social media channels to highlight our featured products, value/quality proposition, store locations, employment opportunities, and grand openings. 13 Competition We compete with a broad range of retailers including discount, mass merchandise, grocery, drug, convenience, variety and other specialty stores with both physical locations and online stores.
Removed
The results also reflected that we are a mission-driven company with crew’s response on our strength of purpose far exceeding Gallup’s measurement for world class.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

53 edited+11 added−4 removed163 unchanged
Biggest changeBecause of our low-price model, we may have limited ability to increase prices in response to increased costs without losing competitive position which may adversely affect our margins and financial performance. In addition, price reductions by our competitors may result in the reduction of our prices and a corresponding reduction in our profitability.
Biggest changeThis competitive environment subjects us to various risks, including the ability to provide quality, trend-right merchandise to our customers at competitive prices that allow us to maintain our profitability. Because of our low-price model, we may have limited ability to increase prices in response to increased costs without losing competitive position which may adversely affect our margins and financial performance.
Such events or circumstances include, but are not limited to: 19 • political and economic instability; • the financial instability and labor problems of the manufacturers of our merchandise; • the availability and cost of raw materials; • merchandise quality or safety issues; • changes in currency exchange rates; • the regulatory environment in the countries in which the manufacturers of our merchandise are located; • work stoppages or other employee rights issues; • inflation or deflation; and • transportation availability, costs and disruptions.
Such events or circumstances include, but are not limited to: • political and economic instability; • the financial instability and labor problems of the manufacturers of our merchandise; • the availability and cost of raw materials; • merchandise quality or safety issues; 19 • changes in currency exchange rates; • the regulatory environment in the countries in which the manufacturers of our merchandise are located; • work stoppages or other employee rights issues; • inflation or deflation; and • transportation availability, costs and disruptions.
In particular, these provisions, among other things: • provide that only the chairman of the Board of Directors, the chief executive officer or a majority of the Board of Directors may call special meetings of the shareholders; • classify our Board of Directors into three separate classes with staggered terms; • provide for supermajority approval requirements for amending or repealing provisions in our amended and restated articles of incorporation and amended and restated bylaws; • establish certain advance notice procedures for nominations of candidates for election as directors and for shareholder proposals to be considered at shareholders’ meetings; and • permit the Board of Directors, without further action of the shareholders, to issue and fix the terms of preferred stock, which may have rights senior to those of the common stock.
In particular, these provisions, among other things: • provide that only the chairman of the Board of Directors, the chief executive officer or a majority of the Board of Directors may call special meetings of the shareholders; • classify our Board of Directors into three separate classes with staggered terms; 31 • provide for supermajority approval requirements for amending or repealing provisions in our amended and restated articles of incorporation and amended and restated bylaws; • establish certain advance notice procedures for nominations of candidates for election as directors and for shareholder proposals to be considered at shareholders’ meetings; and • permit the Board of Directors, without further action of the shareholders, to issue and fix the terms of preferred stock, which may have rights senior to those of the common stock.
Our revolving credit facility contains, and any additional debt financing we may incur would likely contain, covenants requiring us to maintain or adhere to certain financial ratios or limits and covenants that restrict our operations, which may include limitations on our ability to, among other things: • incur additional indebtedness; • pay dividends and make certain distributions, investments and other restricted payments; • create certain liens or encumbrances; • enter into transactions with our affiliates; • redeem our common stock; and • engage in certain merger, consolidation or asset sale transactions.
Our revolving credit facility contains, and any additional debt financing we may incur would likely contain, covenants requiring us to maintain or adhere to certain financial ratios or limits and covenants that restrict our operations, which may include limitations on our ability to, among other things: • incur additional indebtedness; • pay dividends and make certain distributions, investments and other restricted payments; 29 • create certain liens or encumbrances; • enter into transactions with our affiliates; • redeem our common stock; and • engage in certain merger, consolidation or asset sale transactions.
An unsuccessful fourth quarter, or holiday season, will have a substantial negative impact on our financial condition and results of operations for the entire fiscal year. 26 We may not be successful in our continued expansion into online retail and if we are successful, we will face new risks and challenges, which could adversely affect our results of operations.
An unsuccessful fourth quarter, or holiday season, will have a substantial negative impact on our financial condition and results of operations for the entire fiscal year. We may not be successful in our continued expansion into online retail and if we are successful, we will face new risks and challenges, which could adversely affect our results of operations.
Furthermore, if our vendors are unable or unwilling to recall products failing to meet standards, we may be required to recall those products at a substantial cost to us. 29 We purchase a portion of our products on a closeout basis. Some of these products are obtained through brokers or intermediaries rather than through manufacturers.
Furthermore, if our vendors are unable or unwilling to recall products failing to meet standards, we may be required to recall those products at a substantial cost to us. We purchase a portion of our products on a closeout basis. Some of these products are obtained through brokers or intermediaries rather than through manufacturers.
Factors that could cause fluctuation in the price of our common stock may include, among other things: • actual or anticipated fluctuations in quarterly operating results or other operating metrics, such as comparable sales, that may be used by the investment community; • changes in financial estimates by us or by any securities analysts who might cover our stock; • speculation about our business in the press or the investment community; • conditions or trends affecting our industry or the economy generally, including, without limitation, the systemic failure of the banking system in the United States or globally; • stock market price and volume fluctuations of other publicly traded companies and, in particular, those that are in the retail industry; • announcements by us or our competitors of new product offerings, significant acquisitions, strategic partnerships or divestitures; • our entry into new markets; 30 • timing of new store openings; • percentage of sales from new stores versus established stores; • additions or departures of key personnel; • actual or anticipated sales of our common stock, including sales by our directors, officers or significant shareholders; • significant developments relating to our relationships with business partners, vendors and distributors; • customer purchases of new products from us and our competitors; • investor perceptions of the retail industry in general and our Company in particular; • major catastrophic events; • volatility in our stock price, which may lead to higher share-based compensation expense under applicable accounting standards; and • changes in accounting standards, policies, guidance, interpretation or principles, for example, the adoption of Financial Accounting Standards Board (“FASB”) ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting," which involves employee share-based payment accounting and the volatility of the effective tax rate.
Factors that could cause fluctuation in the price of our common stock may include, among other things: • actual or anticipated fluctuations in quarterly operating results or other operating metrics, such as comparable sales, that may be used by the investment community; • changes in financial estimates by us or by any securities analysts who might cover our stock; • speculation about our business in the press or the investment community; • conditions or trends affecting our industry or the economy generally, including, without limitation, recession risks and potential effects and the systemic failure of the banking system in the United States or globally; • stock market price and volume fluctuations of other publicly traded companies and, in particular, those that are in the retail industry; • announcements by us or our competitors of new product offerings, significant acquisitions, strategic partnerships or divestitures; • our entry into new markets; • timing of new store openings; • percentage of sales from new stores versus established stores; • additions or departures of key personnel; • actual or anticipated sales of our common stock, including sales by our directors, officers or significant shareholders; • significant developments relating to our relationships with business partners, vendors and distributors; • customer purchases of new products from us and our competitors; • investor perceptions of the retail industry in general and our Company in particular; • major catastrophic events; • volatility in our stock price, which may lead to higher share-based compensation expense under applicable accounting standards; and 30 • changes in accounting standards, policies, guidance, interpretation or principles, for example, the adoption of Financial Accounting Standards Board (“FASB”) ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting," which involves employee share-based payment accounting and the volatility of the effective tax rate.
If weather conditions are not favorable during these periods, our operating results and cash flow from operations could be adversely affected. 22 A significant disruption in our information technology systems and our inability to adequately maintain and update those systems could adversely affect our operations and negatively affect our customers.
If weather conditions are not favorable during these periods, our operating results and cash flow from operations could be adversely affected. A significant disruption in our information technology systems and our inability to adequately maintain and update those systems could adversely affect our operations and negatively affect our customers.
In addition, we operate in markets that are susceptible to pandemic outbreaks, or terrorist acts, and our operations may be affected by disruptive political events, both global and domestic, such as civil unrest in countries in which our vendors are located or products are manufactured, and in the US, where protests and other disturbances have affected, and may continue to affect, our ability to operate our stores. 27 Further, recent global events have adversely affected and are continuing to adversely affect workforces, organizations, economies, and financial markets globally, leading to economic downturns, inflation, and increased market volatility.
In addition, we operate in markets that are susceptible to pandemic outbreaks, or terrorist acts, and our operations may be affected by disruptive political events, both global and domestic, such as civil unrest in countries in which our vendors are located or products are manufactured, and in the US, where protests and other disturbances have affected, and may continue to affect, our ability to operate our stores. 27 Further, recent global events have adversely affected and are continuing to adversely affect workforces, organizations, economies, and financial markets globally, leading to economic downturns, inflation, increased market volatility, and recession risks.
Any decline in the volume of consumer traffic at shopping centers, whether because of consumer preferences to shop on the internet or at large warehouse stores, an economic slowdown, a decline in the popularity of shopping centers, the closing of anchor stores or other destination retailers or otherwise, could result in reduced sales at our stores and leave us with excess inventory, which could have a material adverse effect on our financial results or business. 20 Our new store growth is dependent upon our ability to successfully expand our distribution network capacity, and failure to achieve or sustain these plans could affect our performance adversely.
Any decline in the volume of consumer traffic at shopping centers, whether because of consumer preferences to shop on the internet or at large warehouse stores, recession risks and potential effects, an economic slowdown, a decline in the popularity of shopping centers, the closing of anchor stores or other destination retailers or otherwise, could result in reduced sales at our stores and leave us with excess inventory, which could have a material adverse effect on our financial results or business. 20 Our new store growth is dependent upon our ability to successfully expand our distribution network capacity, and failure to achieve or sustain these plans could affect our performance adversely.
Currently, we lease all of our store locations, as well as our corporate headquarters and distribution facilities in Pedricktown, New Jersey (and own our shipcenters in Forsyth, Georgia, Conroe, Texas, Buckeye, Arizona and Indianapolis, Indiana).
Currently, we lease all of our store locations, as well as our corporate headquarters and distribution facility in Pedricktown, New Jersey (and own our shipcenters in Forsyth, Georgia, Conroe, Texas, Buckeye, Arizona and Indianapolis, Indiana).
We may be subject to product liability claims from customers or actions brought or penalties assessed by government agencies relating to products, including food products or over-the-counter drug products that are recalled, mis-labeled, expired, defective or otherwise alleged to be harmful.
We may be subject to product liability claims from customers or actions brought or penalties assessed by government agencies relating to products, including food products or over-the-counter drug products that are recalled, mislabeled, expired, defective or otherwise alleged to be harmful.
Additionally, commodities can be subject to availability constraints and price volatility caused by weather, supply conditions, political instability, government regulations, tariffs, energy prices and general economic conditions and other unpredictable factors. Changes in commodity prices could also negatively impact our sales and earnings if our competitors react more aggressively.
Additionally, commodities can be subject to availability constraints and price volatility caused by weather, supply conditions, political instability, government regulations, tariffs, energy prices, recession risks and potential effects, general economic conditions and other unpredictable factors. Changes in commodity prices could also negatively impact our sales and earnings if our competitors react more aggressively.
In July 2020, we acquired land in Buckeye, Arizona, to build an approximately 860,000 square foot shipcenter, which we began operating in August 2021, and will expand to approximately 1,200,000 square feet in the second half of 2024.
In July 2020, we acquired land in Buckeye, Arizona, to build an approximately 860,000 square foot shipcenter, which we began operating in August 2021, and expanded to approximately 1,200,000 square feet in the second half of 2024.
We do not currently maintain key person life insurance policies with respect to our executive officers or key personnel. 24 Our profitability and cash flows from operations may be negatively affected if we are not successful in managing our inventory balances and inventory shrinkage. Our inventory balance represented approximately 15% of our total assets as of February 3, 2024.
We do not currently maintain key person life insurance policies with respect to our executive officers or key personnel. Our profitability and cash flows from operations may be negatively affected if we are not successful in managing our inventory balances and inventory shrinkage. Our inventory balance represented approximately 15% of our total assets as of February 1, 2025.
Adverse events, such as inclement or unusual weather, deteriorating economic conditions, higher unemployment, increased wage rates, higher gas prices or public transportation disruptions, could result in lower-than-planned sales during the holiday season which may lead to unanticipated markdowns.
Adverse events, such as inclement or unusual weather, deteriorating economic conditions, recession risks and potential effects, higher unemployment, increased wage rates, higher gas prices or public transportation disruptions, could result in lower-than-planned sales during the holiday season which may lead to unanticipated markdowns.
Our future success depends to a significant degree on the skills, experience and efforts of our executive officers, senior management, district, store, and shipcenter managers, and other key personnel, including Joel Anderson, our President and Chief Executive Officer.
Our future success depends to a significant degree on the skills, experience and efforts of our executive officers, senior management, district, store, and shipcenter managers, and other key personnel, including Winnie Park, our President and Chief Executive Officer.
In March 2019, we completed the purchase of an approximately 700,000 square foot shipcenter in Forsyth, Georgia, which we began operating in April 2019, and will expand to approximately 1,000,000 square feet in the first half of 2024.
In March 2019, we completed the purchase of an approximately 700,000 square foot shipcenter in Forsyth, Georgia, which we began operating in April 2019, and expanded to approximately 1,100,000 square feet in the first half of 2024.
For the foreseeable future, we do not anticipate paying any cash dividends on our common stock.
We do not expect to pay any cash dividends for the foreseeable future. For the foreseeable future, we do not anticipate paying any cash dividends on our common stock.
As of February 3, 2024, 3.4 million stock options, restricted shares, or restricted stock units were available for grant under our equity incentive plan, and 0.5 million shares of our common stock are issuable upon the exercise of options outstanding, the vesting of restricted stock units and the vesting of performance-based restricted stock units under that plan.
As of February 1, 2025, 3.2 million stock options, restricted shares, or restricted stock units were available for grant under our equity incentive plan, and 0.6 million shares of our common stock are issuable upon the exercise of options outstanding, the vesting of restricted stock units and the vesting of performance-based restricted stock units under that plan.
In fiscal 2019, we implemented price increases (including beyond $5 per item) in an effort to mitigate some or all of the risks of such operational cost increases. We can offer no assurances that price increases will be accepted by our customers, or that price increases will be sufficient to offset the impact of future cost increases.
From time to time, we may implement price increases (including beyond $5 per item) in an effort to mitigate some or all of the risks of operational cost increases. We can offer no assurances that price increases will be accepted by our customers, or that price increases will be sufficient to offset the impact of future cost increases.
We use, and may over time increase the usage of, machine learning and other types of artificial intelligence in our business, and challenges with properly managing its use could adversely affect our business. 23 Like many businesses, we utilize machine learning and other types of artificial intelligence (collectively, “AI”) and advancements in technology may allow us to expand the use of AI, including generative AI, into key operational and/or administrative aspects of our business with the result that applications of AI may become important in our operations over time.
Like many businesses, we utilize machine learning and other types of artificial intelligence (collectively, “AI”) and advancements in technology may allow us to expand the use of AI, including generative AI, into key operational and/or administrative aspects of our business with the result that applications of AI may become important in our operations over time.
We believe we have an opportunity to continue to grow our store base from 1,544 stores in 43 states as of February 3, 2024 to more than 3,500 locations over time .
We believe we have an opportunity to continue to grow our store base from 1,771 stores in 44 states as of February 1, 2025 to more than 3,500 locations over time.
In addition, most of our products are sold to us on a non-exclusive basis. As a result, our current and future competitors may be able to duplicate or improve on some or all of our in-store experience or product offerings that we believe are important in differentiating our stores and our customers’ shopping experience.
As a result, our current and future competitors may be able to duplicate or improve on some or all of our in-store experience or product offerings that we believe are important in differentiating our stores and our customers’ shopping experience.
Such unauthorized use of our trademarks, trade secrets, or other proprietary rights may cause significant damage to our brands and have an adverse effect on our business. The loss or reduction of any of our significant intellectual property or proprietary rights could have an adverse effect on our business.
Such unauthorized use of our trademarks, trade secrets, or other proprietary rights may cause significant damage to our brands and have an adverse effect on our business.
Exercises of these options or issuances of common stock or preferred stock could reduce your influence over matters on which our shareholders vote and, in the case of issuances of preferred stock, likely could result in your interest in us being subject to the prior rights of holders of that preferred stock. 31 We do not expect to pay any cash dividends for the foreseeable future.
Exercises of these options or issuances of common stock or preferred stock could reduce your influence over matters on which our shareholders vote and, in the case of issuances of preferred stock, likely could result in your interest in us being subject to the prior rights of holders of that preferred stock.
We are continuing to expand, upgrade and develop our information technology capabilities, including, most recently, our core-enterprise resource planning system (or "ERP") which we implemented through Oracle software in fiscal 2020, the re-launch of our e-commerce website on the Hollar platform in fiscal 2020, and the implementation of a new enterprise wide human capital management system, Workday, in 2021.
We are continuing to expand, upgrade and develop our information technology capabilities, including, most recently, with the implementation of a new core-enterprise resource planning system (or "ERP"), Oracle Fusion, in fiscal 2024 for use in fiscal 2025, the implementation of a new enterprise wide human capital management system, Workday, in 2021, the implementation of our Retail Merchandising System in fiscal 2020, and the launch of our e-commerce website in fiscal 2020.
In addition, if we are successful, we will encounter risks and difficulties frequently experienced by internet-based businesses, including risks related to our ability to attract and retain customers on a cost-effective basis and our ability to operate, support, expand and develop our internet operations, website and software and other related operational systems.
Our ability to successfully execute a further expansion of our e-commerce strategy may suffer if we are unable to sell and fulfill our products in a cost-efficient manner. 26 In addition, if we are successful, we will encounter risks and difficulties frequently experienced by internet-based businesses, including risks related to our ability to attract and retain customers on a cost-effective basis and our ability to operate, support, expand and develop our internet operations, website and software and other related operational systems.
A significant majority of our merchandise is manufactured outside of the United States, and changes in the prices and flow of these goods for any reason could have an adverse impact on our operations.
A significant majority of our merchandise is manufactured outside of the United States, with China as the single largest source of merchandise we import and source from domestic vendors. Changes in the prices and flow of the goods we import and source from domestic vendors, for any reason could have an adverse impact on our operations.
Additionally, if the types of information that AI applications assist in producing are or are alleged to be deficient, inaccurate, or biased, our business, financial condition, and results of operations may be adversely affected. The rapid evolution of AI, including potential government regulation of AI, may require significant resources to develop, test and maintain our implementations of AI.
Additionally, if the types of information that AI applications assist in producing are or are alleged to be deficient, inaccurate, or biased, our business, financial condition, and results of operations may be adversely affected.
Acceptance of these payment options subjects us to rules, regulations, contractual obligations and compliance requirements, including payment network rules and operating guidelines, data security standards and certification requirements, and rules governing electronic funds transfers.
We accept payments using a variety of methods, including cash, credit and debit cards and gift cards. Acceptance of these payment options subjects us to rules, regulations, contractual obligations and compliance requirements, including payment network rules and operating guidelines, data security standards and certification requirements, and rules governing electronic funds transfers.
Increased tariffs as well as any newly imposed tariffs on items imported from China or elsewhere would likely result in lower gross margins on impacted products, unless we are able to successfully take any one or more of the following mitigating actions: negotiate lower product costs with our vendors, purchase products produced in countries with no or lower tariffs or transition away from domestic vendors who source from China or other tariff impacted countries, increase our prices, or alter or cease offering certain products.
In particular, recent U.S. tariffs imposed or threatened to be imposed on China, Mexico, Canada, and other countries and any retaliatory actions taken by such countries could result in lower gross margins on impacted products, unless we are able to successfully take any one or more of the following mitigating actions: negotiate lower product costs with our vendors, purchase products produced in countries with no or lower tariffs or transition away from domestic vendors who source from China or other tariff impacted countries, increase our prices, or alter or cease offering certain products.
If we experience a greater number of these losses than we anticipate, it could have a material adverse effect on our business, financial condition and results of operations. 28 If we are unable to enforce our intellectual property rights, if we are accused of infringing a third party’s intellectual property rights, or if the merchandise we purchase from brand partners is alleged to have infringed a third party’s intellectual property rights, our business or results of operations may be adversely affected.
If we are unable to enforce our intellectual property rights, if we are accused of infringing a third-party’s intellectual property rights, or if the merchandise we purchase from brand partners is alleged to have infringed a third-party’s intellectual property rights, our business or results of operations may be adversely affected.
Defending against any such claims could have an adverse effect on our business or results of operations and cause us to incur significant litigation costs and expenses.
Such claims could be time consuming and expensive to defend, may divert management’s attention and resources, and could harm our brand image. Defending against any such claims could have an adverse effect on our business or results of operations and cause us to incur significant litigation costs and expenses.
We maintain a network of shipcenters and are planning to lease or build new shipcenters in the future to support our growth objectives. Delays in opening these new shipcenters could adversely affect our future financial performance by slowing store growth, which may in turn reduce revenue growth, or by increasing transportation costs.
Delays in opening these new shipcenters could adversely affect our future financial performance by slowing store growth, which may in turn reduce revenue growth, or by increasing transportation costs.
Our business requires that we lease substantial amounts of space and there can be no assurance that we will be able to continue to lease space on terms as favorable as the leases negotiated in the past.
If we are not successful in managing our inventory balances, our profitability and cash flows from operations may be negatively affected. 24 Our business requires that we lease substantial amounts of space and there can be no assurance that we will be able to continue to lease space on terms as favorable as the leases negotiated in the past.
These direct and indirect impacts of increased tariffs or trade restrictions implemented by the United States, both individually and cumulatively, could have a material adverse effect on our business, financial condition and results of future operations. It has also been suggested that the United States may materially modify or withdraw from some of its existing trade agreements.
These direct and indirect impacts of increased tariffs or trade restrictions implemented by the United States, both individually and cumulatively, could have a material adverse effect on our business, financial condition and results of future operations. In addition, our ability to conduct business could be significantly impacted if the United States materially modifies or withdraws from its existing trade agreements.
If we fail to successfully implement our growth strategy, we will not be able to sustain the rapid growth in sales and profits that we expect, which would likely have an adverse impact on the price of our common stock.
If we fail to successfully implement our growth strategy, we will not be able to sustain the rapid growth in sales and profits that we expect, which would likely have an adverse impact on the price of our common stock. 18 Any disruption in our ability to select, obtain, distribute and market merchandise attractive to customers at prices that allow us to profitably sell such merchandise could impact our business negatively.
We do not possess exclusive rights to many of the elements that comprise our in-store experience and product offerings. Our competitors may seek to copy our business strategy and in-store experience, which could result in a reduction of any competitive advantage or special appeal that we might possess.
Our competitors may seek to copy our business strategy and in-store experience, which could result in a reduction of any competitive advantage or special appeal that we might possess. In addition, most of our products are sold to us on a non-exclusive basis.
We continue to focus on ways to reduce these risks, but we cannot assure you that we will be successful in our inventory management. If we are not successful in managing our inventory balances, our profitability and cash flows from operations may be negatively affected.
We continue to focus on ways to reduce these risks, but we cannot assure you that we will be successful in our inventory management.
If we are unable to secure our customers’ confidential or credit card information, or other private data relating to our crew or our Company, we could be subject to negative publicity, costly government enforcement actions or private litigation, which could damage our business reputation and adversely affect our financial results. As with other companies, we are periodically subject to cyberattacks.
The potential problems and interruptions associated with implementing technology initiatives, as well as providing training and support for those initiatives, could disrupt or reduce our operational efficiency, and could negatively impact customer experience and customer confidence. 22 If we are unable to secure our customers’ confidential or credit card information, or other private data relating to our crew or our Company, we could be subject to negative publicity, costly government enforcement actions or private litigation, which could damage our business reputation and adversely affect our financial results.
Although we have experience in these markets, increasing the number of locations in these markets may result in inadvertent over-saturation of markets and temporarily or permanently divert customers and sales from our existing stores, thereby adversely affecting our overall financial performance. 18 Accordingly, we cannot guarantee that we will achieve our planned growth or, even if we are able to grow our store base as planned, that any new stores will perform as planned.
Other new stores may be located in areas where we have existing stores. Although we have experience in these markets, increasing the number of locations in these markets may result in inadvertent over-saturation of markets and temporarily or permanently divert customers and sales from our existing stores, thereby adversely affecting our overall financial performance.
Any disruption in our ability to select, obtain, distribute and market merchandise attractive to customers at prices that allow us to profitably sell such merchandise could impact our business negatively. We generally have been able to select and obtain sufficient quantities of attractive merchandise at prices that allow us to be profitable.
We generally have been able to select and obtain sufficient quantities of attractive merchandise at prices that allow us to be profitable.
Although a partial trade deal has been reached between the United States and China, the trade issues between these countries are not fully resolved. The trade issues between the United States and China may continue to be volatile and difficult to predict or forecast.
The trade issues between the United States and China and other countries may continue to be volatile and difficult to predict or forecast.
We also may have difficulty negotiating real estate purchase agreements or leases on acceptable terms. Failure to manage these and other similar factors effectively may affect our ability to timely build or lease new facilities, which could have a material adverse effect on our future growth and profitability.
Failure to manage these and other similar factors effectively may affect our ability to timely build or lease new facilities, which could have a material adverse effect on our future growth and profitability. 25 We operate in a competitive environment and, as a result, we may not be able to compete effectively or maintain or increase our sales, market shares or margins.
Accordingly, we may face periods of intense competition in the future, which could have a material adverse effect on our profitability and results of operations. Consolidation among retailers, changes in pricing of merchandise or offerings of other services by competitors could have a negative impact on the relative attractiveness of our stores to consumers.
Consolidation among retailers, changes in pricing of merchandise or offerings of other services by competitors could have a negative impact on the relative attractiveness of our stores to consumers. We do not possess exclusive rights to many of the elements that comprise our in-store experience and product offerings.
Additionally, third parties may assert claims against us alleging infringement, misappropriation or other violations of their intellectual property or other proprietary rights, whether or not the claims have merit. Such claims could be time consuming and expensive to defend, may divert management’s attention and resources, and could harm our brand image.
The loss or reduction of any of our significant intellectual property or proprietary rights could have an adverse effect on our business. 28 Additionally, third parties may assert claims against us alleging infringement, misappropriation or other violations of their intellectual property or other proprietary rights, whether or not the claims have merit.
We are subject to customer payment-related risks that could increase operating costs or exposure to fraud or theft, subject us to potential liability and potentially disrupt our business. We accept payments using a variety of methods, including cash, credit and debit cards and gift cards.
The rapid evolution of AI, including potential government regulation of AI, may require significant resources to develop, test and maintain our implementations of AI. 23 We are subject to customer payment-related risks that could increase operating costs or exposure to fraud or theft, subject us to potential liability and potentially disrupt our business.
We operate in a competitive environment and, as a result, we may not be able to compete effectively or maintain or increase our sales, market shares or margins. We operate in a highly competitive retail environment with numerous competitors, including online retailers, some of which have greater resources or better brand recognition than we do.
We operate in a highly competitive retail environment with numerous competitors, including online retailers, some of which have greater resources or better brand recognition than we do. We compete with respect to customers, price, store location, merchandise quality and supply, assortment and presentation, in-stock consistency, customer service and crew.
In addition, if we are not able to enter into new leases or renew existing leases on terms acceptable to us, this could have an adverse effect on our results of operations. 25 Operational difficulties, including those associated with our ability to either lease or build and operate our shipcenters, could adversely impact our business.
Moreover, even if a lease has an early cancellation clause, we may not satisfy the contractual requirements for early cancellation under that lease. In addition, if we are not able to enter into new leases or renew existing leases on terms acceptable to us, this could have an adverse effect on our results of operations.
Any increase in pricing, alteration of products or reduced product offering could reduce the competitiveness of our products. Furthermore, any retaliatory countermeasures imposed by countries subject to such tariffs, such as China, could increase our, or our vendors’, import expenses.
Furthermore, in response to the recent tariffs announced by the United States, China and other countries have imposed or proposed additional tariffs on certain exports from the United States. These and any other retaliatory countermeasures imposed by countries subject to such tariffs, such as China, could increase our, or our vendors’, import expenses.
We continually invest to maintain and update our information technology systems. Implementing significant system changes increases the risk of system disruption. The potential problems and interruptions associated with implementing technology initiatives, as well as providing training and support for those initiatives, could disrupt or reduce our operational efficiency, and could negatively impact customer experience and customer confidence.
We continually invest to maintain and update our information technology systems. Implementing significant system changes increases the risk of system disruption.
We sell merchandise on the internet, through our fivebelow.com e-commerce website. Our ability to successfully execute a further expansion of our e-commerce strategy may suffer if we are unable to sell and fulfill our products in a cost-efficient manner.
We sell merchandise on the internet, through our fivebelow.com e-commerce website and mobile app.
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Other new stores may be located in areas where we have existing stores.
Added
Accordingly, we cannot guarantee that we will achieve our planned growth or, even if we are able to grow our store base as planned, that any new stores will perform as planned.
Removed
For example, in 2018 and 2019 the United States imposed increased tariffs on certain imports from China (up to 30%), and the then-President of the United States, at one point, directed United States companies to immediately begin to look for alternatives to China and suggested he had the authority to order United States companies to cease production in, and importation from, China.
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Any increase in pricing, alteration of products or reduced product offering could reduce the competitiveness of our products, particularly if our competitors do not keep pace with any such changes or are able to offset the impact of tariffs through other actions.
Removed
Moreover, even if a lease has an early cancellation clause, we may not satisfy the contractual requirements for early cancellation under that lease.
Added
As with other companies, we are periodically subject to cyberattacks.
Removed
We compete with respect to customers, price, store location, merchandise quality and supply, assortment and presentation, in-stock consistency, customer service and crew. This competitive environment subjects us to various risks, including the ability to provide quality, trend-right merchandise to our customers at competitive prices that allow us to maintain our profitability.
Added
In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position.
Added
Moreover, our proprietary, confidential, and/or sensitive information could be leaked, disclosed, or revealed as a result of or in connection with the use of generative artificial intelligence technologies.
Added
Even if we are not targeted directly, cyberattacks on the U.S. government, financial markets, financial institutions, or other businesses, including our vendors, software creators, cloud providers, cybersecurity service providers, and other third parties with whom we work, may occur, and such events could disrupt our normal business operations and networks in the future.
Added
We use, and may over time increase the usage of, machine learning and other types of artificial intelligence in our business, and challenges with properly managing its use could adversely affect our business.
Added
Operational difficulties, including those associated with our ability to either lease or build and operate our shipcenters, could adversely impact our business. We maintain a network of shipcenters and are planning to lease or build new shipcenters in the future to support our growth objectives.
Added
We also may have difficulty negotiating real estate purchase agreements or leases on acceptable terms.
Added
In addition, price reductions by our competitors may result in the reduction of our prices and a corresponding reduction in our profitability. Accordingly, we may face periods of intense competition in the future, which could have a material adverse effect on our profitability and results of operations.
Added
If we experience a greater number of these losses than we anticipate, it could have a material adverse effect on our business, financial condition and results of operations.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+2 added−2 removed7 unchanged
Biggest changeThese plans are tested on an annual basis. 32 We periodically engage qualified third parties to perform external assessments and audits of our overall security program, as well as to perform detailed security assessments of various components of our overall technology infrastructure.
Biggest changeWe periodically engage qualified third parties to perform external assessments and audits of our overall security program, as well as to perform detailed security assessments of various components of our overall technology infrastructure.
Our Board of Directors considers cybersecurity risks through interaction with our management team and the Audit Committee, as well as through quarterly updates with our CISO. Management informs the Audit Committee of material aspects of our cybersecurity program on a quarterly basis.
Our Board of Directors considers cybersecurity risks through interaction with our management team and the Audit Committee, as well as through quarterly updates with our CISO. 32 Management informs the Audit Committee of material aspects of our cybersecurity program on a quarterly basis.
We also supplement our own internal expertise with qualified third parties to engage in varying security operational functions aiding in the identification and remediation of potential cybersecurity threats. We require employees and temporary staffing to complete annual training on information security, including cybersecurity, global data privacy requirements and compliance measures.
We also supplement our own internal expertise with qualified third parties to engage in varying security operational functions aiding in the identification and remediation of potential cybersecurity threats. We require the crew and temporary staffing to complete annual training on information security, including cybersecurity, global data privacy requirements and compliance measures.
Cybersecurity technology and practices are in place to enable the protection of consumer and employee personal data and confidential information. We maintain incident response plans and playbooks that allow for cybersecurity incident response, management and recovery in the event of an incident.
Cybersecurity technology and practices are in place to enable the protection of consumer and employee personal data and confidential information. We maintain incident response plans and playbooks that allow for cybersecurity incident response, management and recovery in the event of an incident. These plans are tested on an annual basis.
Removed
We have an experienced and dedicated CISO, who has served in various roles in information technology, technology audit and security over the past 38 years, including serving as a senior partner in charge of various information security and business resiliency practices at one of the Big 4 Accounting consultancies, advising some of the largest public company leadership teams and boards of directors on cyber related issues and projects.
Added
We have an experienced and dedicated CISO with over 25 years of Information Technology experience in retail for several globally recognized brands, with the majority of their career focused on all aspects of cybersecurity from delivery to operations including incident response.
Removed
The CISO also served as the CISO for one of the Big 4, as well as a retail ecommerce business virtual CISO. The CISO holds an undergraduate degree in Management Information Systems and has attained the professional certification of Certified Information Systems Auditor.
Added
The CISO holds a Master’s Degree in Information Technology, has attained the professional certifications of Chief Information Security Manager and National Association of Corporate Directors, and actively participates in the cybersecurity industry through advisory boards and forums that promote peer to peer collaboration.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe total construction cost of the expansion is expected to be approximately $21 million. In August 2019, we acquired land in Conroe, Texas, to build an approximately 860,000 square foot shipcenter for approximately $56 million, for the land and building. We began operating the shipcenter in July 2020.
Biggest changeIn August 2019, we acquired land in Conroe, Texas, to build an approximately 860,000 square foot shipcenter for approximately $56 million, for the land and building. We began operating the shipcenter in July 2020. In July 2020, we acquired land in Buckeye, Arizona, to build an approximately 860,000 square foot shipcenter for approximately $65 million, for the land and building.
As a result of the significant expansion of our network of distribution facilities over the last several years, including the opening of our Indianapolis, Indiana shipcenter in June 2022, we ceased operations at our shipcenters in Olive Branch, Mississippi and Cincinnati, Ohio in the first half of fiscal 2022 as well as the e-commerce operations in our Pedricktown, New Jersey shipcenter in the first half of fiscal 2023. 33 At the end of fiscal 2023, there were 1,544 Five Below store locations in 43 states.
As a result of the significant expansion of our network of distribution facilities over the last several years, including the opening of our Indianapolis, Indiana shipcenter in June 2022, we ceased operations at our shipcenters in Olive Branch, Mississippi and Cincinnati, Ohio in the first half of fiscal 2022 as well as the e-commerce operations in our Pedricktown, New Jersey shipcenter in the first half of fiscal 2023.
In March 2019, we completed the purchase of an approximately 700,000 square foot shipcenter in Forsyth, Georgia for approximately $42 million, for the land and building. We began operating the shipcenter in April 2019 and will expand to approximately 1,000,000 square feet in the first half of 2024.
In March 2019, we completed the purchase of an approximately 700,000 square foot shipcenter in Forsyth, Georgia for approximately $42 million, for the land and building. We began operating the shipcenter in April 2019 and expanded to approximately 1,100,000 square feet in the first half of 2024. The total construction cost of the expansion was approximately $21 million.
The total construction cost of the expansion is expected to be approximately $26 million. In March 2021, we acquired land in Indianapolis, Indiana, to build an approximately 1,030,000 square foot shipcenter for approximately $60 million, for land and building. We began operating the shipcenter in June 2022.
We began operating the shipcenter in August 2021 and expanded to approximately 1,200,000 square feet in the second half of 2024. The total construction cost of the expansion was approximately $26 million. In March 2021, we acquired land in Indianapolis, Indiana, to build an approximately 1,030,000 square foot shipcenter for approximately $60 million, for land and building.
All of our stores are leased from third parties. These leases typically have ten-year terms with additional five-year renewal options, and many provide us with the option to terminate early under specified conditions.
At the end of fiscal 2024, there were 1,771 Five Below store locations in 44 states. All of our stores are leased from third parties. These leases typically have ten-year terms with additional five-year renewal options, and many provide us with the option to terminate early under specified conditions.
Removed
In July 2020, we acquired land in Buckeye, Arizona, to build an approximately 860,000 square foot shipcenter for approximately $65 million, for the land and building. We began operating the shipcenter in August 2021 and will expand to approximately 1,200,000 square feet in the second half of 2024.
Added
We began operating the shipcenter in June 2022.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAlthough the outcome of these and other claims cannot be predicted with certainty, management does not believe that the ultimate resolution of these matters will have a material adverse effect on our financial condition or results of operations. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 34 PART II
Biggest changeAlthough the outcome of these and other claims cannot be predicted with certainty, management does not believe that the ultimate resolution of these matters will have a material adverse effect on our financial condition or results of operations. 33 Securities Class Action Proceedings On August 1, 2024, a putative class action was filed against Five Below, Inc. and a certain former senior officer in the United States District Court for the Eastern District of Pennsylvania, purportedly on behalf of a class of the Company's investors who purchased or otherwise acquired our publicly traded securities between March 20, 2024 and July 16, 2024.
Added
On September 16, 2024, a similar action was commenced against Five Below, Inc. in the same court on behalf of a class of investors who purchased or otherwise acquired our publicly traded securities between December 1, 2022 and July 16, 2024.
Added
The complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder in connection with various public statements made by us. On October 28, 2024, the court entered an order consolidating the actions and appointing lead plaintiff.
Added
Lead plaintiff filed its Consolidated Amended Complaint against the Company and one former senior officer and one current senior officer on January 13, 2025. Defendants filed their motion to dismiss the Consolidated Amended Complaint on March 14, 2025.
Added
Lead plaintiff’s opposition to defendants’ motion to dismiss is due on or before May 13, 2025, and any reply in support of defendants’ motion to dismiss is due on or before July 11, 2025. The Company intends to vigorously defend against this action, which the Company believes to be without merit.
Added
The potential impact of this action, which seeks unspecified damages, attorneys’ fees and expenses, is uncertain. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 34 PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES 34 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 35 ITEM 6. SELECTED FINANCIAL DATA 36 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 38 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 48 ITEM 8.
Biggest changeITEM 4. MINE SAFETY DISCLOSURES 34 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 35 ITEM 6. SELECTED FINANCIAL DATA 36 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 38 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 47 ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The table below sets forth information regarding repurchases of our common stock during the fourth fiscal quarter of 2023: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased As Part of a Publicly Announced Program (1) Maximum Dollar Value of Shares that May Yet be Purchased Under the Program Third Quarter 2023 — $ — — $ 20,000,000 October 29, 2023 - November 25, 2023 — $ — — $ 20,000,000 November 26, 2023 - December 30, 2023 — $ — — $ 100,000,000 December 31, 2023 - February 3, 2024 — $ — — $ 100,000,000 Fourth Quarter 2023 — $ — — $ 100,000,000 (1) On March 21, 2018, we announced that our Board of Directors approved a share repurchase program authorizing the repurchase of up to $100 million of our common stock through March 31, 2021.
Biggest changeIssuer Purchases of Equity Securities The table below sets forth information regarding repurchases of our common stock during the fourth fiscal quarter of 2024: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased As Part of a Publicly Announced Program (1) Maximum Dollar Value of Shares that May Yet be Purchased Under the Program November 3, 2024 - November 30, 2024 — $ — — $ 60,006,492 December 1, 2024 - January 4, 2025 — $ — — $ 60,006,492 January 5, 2025 - February 1, 2025 — $ — — $ 60,006,492 Fourth Quarter 2024 — $ — — $ 60,006,492 (1) On November 27, 2023, our Board of Directors approved a new share repurchase program for up to $100 million of our common shares through November 27, 2026.
Performance Graph This performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any future filing under the Securities Act of 1933 or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.
Performance Graph This performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any future filing under the Securities Act of 1933 or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.
Such returns are based on historical results and are not intended to suggest future performance. 1/31/2014 1/30/2015 1/29/2016 1/27/2017 2/2/2018 2/1/2019 1/31/2020 1/29/2021 1/28/2022 1/27/2023 2/2/2024 FIVE BELOW, INC. $ 138.30 $ 125.70 $ 132.90 $ 141.90 $ 237.50 $ 470.70 $ 427.20 $ 663.13 $ 599.40 $ 736.72 $ 683.43 NASDAQ GLOBAL MARKET COMPOSITE INDEX $ 138.40 $ 156.30 $ 155.60 $ 190.90 $ 244.10 $ 244.90 $ 308.50 $ 440.70 $ 464.30 $ 391.84 $ 526.95 NASDAQ US BENCHMARK RETAIL INDEX $ 132.70 $ 161.50 $ 168.00 $ 182.50 $ 242.80 $ 251.70 $ 295.90 $ 457.96 $ 479.00 $ 302.24 $ 411.13 35 Dividends During the past five fiscal years, we have not declared, and currently do not plan to declare in the foreseeable future, dividends on shares of our common stock.
Such returns are based on historical results and are not intended to suggest future performance. 1/30/2015 1/29/2016 1/27/2017 2/2/2018 2/1/2019 1/31/2020 1/29/2021 1/28/2022 1/27/2023 2/2/2024 1/31/2025 FIVE BELOW, INC. $ 125.70 $ 132.90 $ 141.90 $ 237.50 $ 470.70 $ 427.20 $ 663.13 $ 599.40 $ 736.72 $ 683.43 $ 353.89 NASDAQ GLOBAL MARKET COMPOSITE INDEX $ 156.30 $ 155.60 $ 190.90 $ 244.10 $ 244.90 $ 308.50 $ 440.70 $ 464.30 $ 391.84 $ 526.95 $ 661.77 NASDAQ US BENCHMARK RETAIL INDEX $ 161.50 $ 168.00 $ 182.50 $ 242.80 $ 251.70 $ 295.90 $ 457.96 $ 479.00 $ 302.24 $ 411.13 $ 551.05 35 Dividends During the past five fiscal years, we have not declared, and currently do not plan to declare in the foreseeable future, dividends on shares of our common stock.
The following graph compares the cumulative total shareholder return on our common stock from July 19, 2012 (the date our common stock commenced trading on the Nasdaq Global Select Market) through February 3, 2024, with the return on (i) the Nasdaq Global Market Composite Index and (ii) the Nasdaq US Benchmark Retail Index over the same period.
The following graph compares the cumulative total shareholder return on our common stock from July 19, 2012 (the date our common stock commenced trading on the Nasdaq Global Select Market) through February 1, 2025, with the return on (i) the Nasdaq Global Market Composite Index and (ii) the Nasdaq US Benchmark Retail Index over the same period.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the Nasdaq Global Select Market under the symbol “FIVE.” On February 2, 2024 (the last trading day of fiscal 2023), the last reported sale price on the Nasdaq Global Select Market of our common stock was $181.11 per share.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the Nasdaq Global Select Market under the symbol “FIVE.” On January 31, 2025 (the last trading day of fiscal 2024), the last reported sale price on the Nasdaq Global Select Market of our common stock was $93.78 per share.
As of March 8, 2024, we had approximately 258,974 holders of record of our common stock.
As of March 11, 2025, we had approximately 138,486 holders of record of our common stock.
On November 27, 2023, our Board of Directors approved a new share repurchase program for up to $100 million of our common shares through November 27, 2026. This repurchase program does not include a specific timetable or price targets and may be suspended or terminated at any time.
In fiscal 2024, the Company repurchased 266,997 shares under this program at an aggregate cost of approximately $40 million or an average price of $149.79 per share. This repurchase program does not include a specific timetable or price targets and may be suspended or terminated at any time.
Removed
This program expired on March 31, 2021. On March 9, 2021, our Board of Directors approved a new share repurchase program for up to $100 million of our common shares through March 31, 2024. We have exhausted repurchases under this program.
Removed
On June 14, 2022, our Board of Directors approved a new share repurchase program for up to $100 million of our comm stock through June 30, 2025. This program was retired on November 27, 2023.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeThe reporting periods contained in the following table consist of 53 weeks of operations in fiscal 2023 and 52 weeks of operations in each of fiscal 2022, 2021, 2020, and 2019, respectively. 36 Fiscal Year 2023 2022 2021 2020 2019 (in millions, except share and per share data) Consolidated Statements of Operations Data (1) : Net sales $ 3,559.4 $ 3,076.3 $ 2,848.4 $ 1,962.1 $ 1,846.7 Cost of goods sold (exclusive of items shown separately below) 2,285.5 1,980.8 1,817.9 1,309.8 1,172.8 Selling, general and administrative expenses 757.5 644.8 565.7 428.2 401.7 Depreciation and amortization 130.7 105.6 84.8 69.3 55.0 Operating income 385.6 345.0 379.9 154.8 217.3 Interest income (expense) and other income (expense), net 15.5 2.5 (13.2) (1.7) 4.3 Income before income taxes 401.1 347.5 366.7 153.1 221.6 Income tax expense 100.0 86.0 87.9 29.7 46.5 Net income $ 301.1 $ 261.5 $ 278.8 $ 123.4 $ 175.1 Per Share Data: Basic income per common share (2) $ 5.43 $ 4.71 $ 4.98 $ 2.21 $ 3.14 Diluted income per common share (2) $ 5.41 $ 4.69 $ 4.95 $ 2.20 $ 3.12 Weighted average shares outstanding: Basic shares 55,487,252 55,547,267 55,999,713 55,816,508 55,823,535 Diluted shares 55,621,619 55,745,279 56,303,854 56,060,039 56,166,167 Fiscal Year 2023 2022 2021 2020 2019 (in millions, except percentages and total stores data) Consolidated Statements of Cash Flows Data (1) : Net cash provided by (used in): Operating activities $ 499.6 $ 314.9 $ 327.9 $ 366.0 $ 187.0 Investing activities $ (556.3) $ (3.9) $ (465.6) $ (286.9) $ (193.6) Financing activities $ (95.9) $ (43.6) $ (66.1) $ (12.8) $ (42.7) Other Operating and Financial Data (1) : Total stores at end of period 1,544 1,340 1,190 1,020 900 Comparable sales increase (decrease) 2.8 % (2.0) % 30.3 % (5.5) % 0.6 % Average net sales per store (3) $ 2.5 $ 2.4 $ 2.5 $ 2.0 $ 2.2 Gross margin (4) 35.8 % 35.6 % 36.2 % 33.2 % 36.5 % Capital expenditures $ 335.1 $ 252.0 $ 288.2 $ 200.2 $ 212.3 Consolidated Balance Sheet Data (1) (5) : Cash and cash equivalents $ 179.7 $ 332.3 $ 65.0 $ 268.8 $ 202.5 Short-term investment securities 280.3 66.8 277.1 140.9 59.2 Total current assets 1,203.5 1,066.4 904.7 755.4 665.7 Total assets 3,872.0 3,324.9 2,880.5 2,314.8 1,958.7 Total current liabilities 715.9 602.6 586.9 435.7 351.3 Total liabilities 2,287.1 1,963.0 1,760.2 1,432.9 1,198.9 Total shareholders’ equity $ 1,585.0 $ 1,361.9 $ 1,120.3 $ 881.9 $ 759.8 (1) Components may not add to total due to rounding.
Biggest changeThe reporting periods contained in the following table consist of 53 weeks of operations in fiscal 2023, and 52 weeks of operations in each of fiscal 2024, 2022, 2021, and 2020, respectively. 36 Fiscal Year 2024 2023 2022 2021 2020 (in millions, except share and per share data) Consolidated Statements of Operations Data (1) : Net sales $ 3,876.5 $ 3,559.4 $ 3,076.3 $ 2,848.4 $ 1,962.1 Cost of goods sold (exclusive of items shown separately below) 2,523.9 2,285.5 1,980.8 1,817.9 1,309.8 Selling, general and administrative expenses 861.4 757.5 644.8 565.7 428.2 Depreciation and amortization 167.4 130.7 105.6 84.8 69.3 Operating income 323.8 385.6 345.0 379.9 154.8 Interest income (expense) and other income (expense), net 14.8 15.5 2.5 (13.2) (1.7) Income before income taxes 338.7 401.1 347.5 366.7 153.1 Income tax expense 85.1 100.0 86.0 87.9 29.7 Net income $ 253.6 $ 301.1 $ 261.5 $ 278.8 $ 123.4 Per Share Data: Basic income per common share (2) $ 4.61 $ 5.43 $ 4.71 $ 4.98 $ 2.21 Diluted income per common share (2) $ 4.60 $ 5.41 $ 4.69 $ 4.95 $ 2.20 Weighted average shares outstanding: Basic shares 55,055,064 55,487,252 55,547,267 55,999,713 55,816,508 Diluted shares 55,156,342 55,621,619 55,745,279 56,303,854 56,060,039 Fiscal Year 2024 2023 2022 2021 2020 (in millions, except percentages and total stores data) Consolidated Statements of Cash Flows Data (1) : Net cash provided by (used in): Operating activities $ 430.6 $ 499.6 $ 314.9 $ 327.9 $ 366.0 Investing activities $ (232.9) $ (556.3) $ (3.9) $ (465.6) $ (286.9) Financing activities $ (45.7) $ (95.9) $ (43.6) $ (66.1) $ (12.8) Other Operating and Financial Data (1) : Total stores at end of period 1,771 1,544 1,340 1,190 1,020 Comparable sales (decrease) increase (2.7) % 2.8 % (2.0) % 30.3 % (5.5) % Average net sales per store (3) $ 2.3 $ 2.5 $ 2.4 $ 2.5 $ 2.0 Gross margin (4) 34.9 % 35.8 % 35.6 % 36.2 % 33.2 % Capital expenditures $ 324.0 $ 335.1 $ 252.0 $ 288.2 $ 200.2 Consolidated Balance Sheet Data (1) : Cash and cash equivalents $ 331.7 $ 179.7 $ 332.3 $ 65.0 $ 268.8 Short-term investment securities $ 197.1 $ 280.3 $ 66.8 $ 277.1 $ 140.9 Total current assets $ 1,351.4 $ 1,203.5 $ 1,066.4 $ 904.7 $ 755.4 Total assets $ 4,339.6 $ 3,872.0 $ 3,324.9 $ 2,880.5 $ 2,314.8 Total current liabilities $ 756.4 $ 715.9 $ 602.6 $ 586.9 $ 435.7 Total liabilities $ 2,531.2 $ 2,287.1 $ 1,963.0 $ 1,760.2 $ 1,432.9 Total shareholders’ equity $ 1,808.3 $ 1,585.0 $ 1,361.9 $ 1,120.3 $ 881.9 (1) Components may not add to total due to rounding.
(2) Please see Note 4 in our consolidated financial statements included elsewhere in this Annual Report for an explanation of per share calculations. (3) Only includes stores open before the beginning of the fiscal year. (4) Gross margin is equal to our net sales less our cost of goods sold as a percentage of our net sales.
(2) Please see Note 4 in our consolidated financial statements included elsewhere in this Annual Report for an explanation of per share calculations. (3) Only includes stores open before the beginning of the fiscal year. (4) Gross margin is equal to our net sales less our cost of goods sold as a percentage of our net sales. 37
The selected financial data for fiscal 2023, 2022 and 2021 and selected consolidated balance sheet data as of February 3, 2024 and January 28, 2023 have been derived from our consolidated financial statements audited by KPMG LLP, our independent registered public accounting firm, included elsewhere in this Annual Report.
The selected financial data for fiscal 2024, 2023 and 2022 and selected consolidated balance sheet data as of February 1, 2025 and February 3, 2024 have been derived from our consolidated financial statements audited by KPMG LLP, our independent registered public accounting firm, included elsewhere in this Annual Report.
The selected financial data for fiscal 2020 and fiscal 2019, and the selected balance sheet data as of January 29, 2022, January 30, 2021, and February 1, 2020, have been derived from our audited consolidated financial statements that have not been included in this Annual Report.
The selected financial data for fiscal 2021 and fiscal 2020, and the selected balance sheet data as of January 28, 2023, January 29, 2022, and January 30, 2021, have been derived from our audited consolidated financial statements that have not been included in this Annual Report.
Removed
(5) Fiscal 2019 Consolidated Balance Sheet data includes adoption of ASU 2016-02 "Leases" based on the modified retrospective method. 37

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCash Provided by Operating Activities Net cash provided by operating activities for fiscal 2023 was $499.6 million, an increase of $184.7 million compared to fiscal 2022. The increase was primarily due to changes in working capital, an increase in operating cash flows from store performance and a decrease in income taxes paid.
Biggest changeThe decrease was primarily due to changes in working capital, a decrease in operating cash flows from store performance and an increase in income taxes paid. 44 Cash Used in Investing Activities Net cash used in investing activities for fiscal 2024 was $232.9 million, a decrease of $323.4 million compared to fiscal 2023.
For stores that are relocated or expanded, the following periods are excluded when calculating comparable sales: • The period beginning when the closing store receives its last merchandise delivery from one of our shipcenters through: ▪ the last day of the fiscal year in which the store was relocated or expanded (for stores that increased significantly in size); or ▪ the last day of the fiscal month in which the store re-opens (for all other stores); and • The period beginning on the first anniversary of the date the store received its last merchandise delivery from one of our shipcenters through the first anniversary of the date the store re-opened.
For stores that are relocated or expanded, the following periods are excluded when calculating comparable sales: • The period beginning when the closing store receives its last merchandise delivery from one of our shipcenters through: ▪ the last day of the fiscal year in which the store was relocated or expanded (for stores that increased significantly in size); or ▪ the last day of the fiscal month in which the store re-opens (for all other stores); and • The period beginning on the first anniversary of the date the store received its last merchandise delivery from one of our shipcenters through the period ending on the first anniversary of the date the store re-opened.
Our business is seasonal and as a result, our net sales fluctuate from quarter to quarter. Net sales are usually highest in the fourth fiscal quarter due to the year-end holiday season. 39 Comparable Sales Comparable sales include net sales from stores that have been open for at least 15 full months from their opening date, and e-commerce sales.
Our business is seasonal and as a result, our net sales fluctuate from quarter to quarter. Net sales are usually highest in the fourth fiscal quarter due to the year-end holiday season. Comparable Sales Comparable sales include net sales from stores that have been open for at least 15 full months from their opening date, and e-commerce sales.
Comparable stores include the following: • Stores that have been remodeled while remaining open; • Stores that have been relocated within the same trade area, to a location that is not significantly different in size, in which the new store opens at about the same time as the old store closes; and • Stores that have expanded, but are not significantly different in size, within their current locations.
Comparable stores include the following: • Stores that have been remodeled while remaining open; 39 • Stores that have been relocated within the same trade area, to a location that is not significantly different in size, in which the new store opens at about the same time as the old store closes; and • Stores that have expanded, but are not significantly different in size, within their current locations.
Our estimates may be impacted by changes in certain underlying assumptions and may not be indicative of future activity. 46 Impairment of Long-Lived Assets Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
Our estimates may be impacted by changes in certain underlying assumptions and may not be indicative of future activity. Impairment of Long-Lived Assets Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
Amounts under the Revolving Credit Facility may become due upon events of default (subject to any applicable grace or cure periods). All obligations under the Revolving Credit Facility are guaranteed by 1616 Holdings and secured by substantially all of the assets of the Company and 1616 Holdings.
Amounts under the Revolving Credit Facility may become due upon events of default (subject to any applicable grace or cure periods). 45 All obligations under the Revolving Credit Facility are guaranteed by 1616 Holdings and secured by substantially all of the assets of the Company and 1616 Holdings.
Operating income percentage measures operating income as a percentage of our net sales. 41 Results of Consolidated Operations The following tables summarize key components of our results of consolidated operations for the periods indicated, both in dollars and as a percentage of our net sales.
Operating margin measures operating income as a percentage of our net sales. 41 Results of Consolidated Operations The following tables summarize key components of our results of consolidated operations for the periods indicated, both in dollars and as a percentage of our net sales.
In the event of a store closure, we will record an impairment charge, if appropriate, or accelerate depreciation over the revised useful life of the asset. Based on the analysis performed, our management believes that there was no impairment of long-lived assets for each of the 2023, 2022 and 2021 fiscal years.
In the event of a store closure, we will record an impairment charge, if appropriate, or accelerate depreciation over the revised useful life of the asset. Based on the analysis performed, our management believes that there was no impairment of long-lived assets for each of the 2024, 2023 and 2022 fiscal years.
We have a proven and highly profitable store model that has produced consistent financial results and returns, and our new stores have achieved average payback period of less than one year. Our new store model assumes a store size of approximately 9,500 square feet that achieves annual sales of approximately $2 million in the first full year of operation.
We have a proven and profitable store model that has produced consistent financial results and returns, and our new stores have achieved average payback period of approximately one year. Our new store model assumes a store size of approximately 9,500 square feet that achieves annual sales of approximately $2 million in the first full year of operation.
We plan to make cash capital expenditures of approximately $365 million in fiscal 2024, which exclude the impact of tenant allowances, and which we expect to fund from cash generated from operations, cash on-hand, investments and, as needed, borrowings under our Revolving Credit Facility.
We plan to make cash capital expenditures of approximately $210 million to $230 million in fiscal 2025, which exclude the impact of tenant allowances, and which we expect to fund from cash generated from operations, cash on-hand, investments and, as needed, borrowings under our Revolving Credit Facility.
We continue to believe we have the opportunity to expand our store base in the United States from 1,544 locations as of February 3, 2024 to more than 3,500 locations over time.
We continue to believe we have the opportunity to expand our store base in the United States from 1,771 locations as of February 1, 2025 to more than 3,500 locations over time.
By offering trend-right merchandise at differentiated price points, our stores have been successful in varying geographic regions, population densities and real estate settings. As of February 3, 2024, we operated stores in 43 states throughout the United States.
By offering trend-right merchandise at differentiated price points, our stores have been successful in varying geographic regions, population densities and real estate settings. As of February 1, 2025, we operated stores in 44 states throughout the United States.
Refer to Item 7 "Results of Consolidated Operations" in our Annual Report on Form 10-K for the year ended January 28, 2023 for a comparison of fiscal years 2022 and 2021.
Refer to Item 7 "Results of Consolidated Operations" in our Annual Report on Form 10-K for the year ended February 3, 2024 for a comparison of fiscal years 2023 and 2022.
The entire amount of the Revolving Credit Facility is available for the issuance of letters of credit and allows for swingline loans. 45 The Credit Agreement contains customary covenants that limit, absent lender approval, the ability of the Company and certain of its affiliates to, among other things, pay cash dividends, incur debt, create liens and encumbrances, redeem or repurchase stock, enter into certain acquisition transactions with affiliates, merge, dissolve, repay certain indebtedness, change the nature of our business, enter sale or leaseback transactions, make investments or dispose of assets.
The Credit Agreement contains customary covenants that limit, absent lender approval, the ability of the Company and certain of its affiliates to, among other things, pay cash dividends, incur debt, create liens and encumbrances, redeem or repurchase stock, enter into certain acquisition transactions with affiliates, merge, dissolve, repay certain indebtedness, change the nature of our business, enter sale or leaseback transactions, make investments or dispose of assets.
As of February 3, 2024 and January 28, 2023, we were in compliance with the covenants applicable to us under the First Amendment and the Revolving Credit Facility. As of February 3, 2024 and January 28, 2023, we had approximately $216 million and $192 million, respectively, available in the Revolving Credit Facility.
As of February 1, 2025 and February 3, 2024, we were in compliance with the covenants applicable to us under the First Amendment and the Revolving Credit Facility. As of February 1, 2025 and February 3, 2024, we had approximately $225 million and $216 million, respectively, available in the Revolving Credit Facility.
The increase in selling, general and administrative expenses (including depreciation and amortization) was the result of an increase of $107.1 million in store-related expenses to support new store growth and $30.7 million of corporate-related expenses.
The increase in selling, general and administrative expenses (including depreciation and amortization) was the result of an increase of $126.1 million in store-related expenses primarily to support new store growth.
For further information, see Part I, Item 1A “Risk Factors-Risk Relating to our Business and Industry.” Over the past nine years, we have invested a significant amount of capital in infrastructure and systems necessary to support our future growth and we expect to incur additional capital expenditures related to expansion of our infrastructure and systems in future periods.
For further information, see Part I, Item 1A “Risk Factors-Risk Relating to our Business and Industry.” We have invested a significant amount of capital in infrastructure and systems necessary to support our future growth and we expect to incur additional capital expenditures to expand, upgrade, and develop our infrastructure and systems in future periods.
The increase was primarily the result of increases in the repurchase and retirement of common stock and common shares withheld for taxes.
The decrease was primarily the result of decreases in the repurchase and retirement of common stock and common shares withheld for taxes.
References to "fiscal year 2024" or "fiscal 2024" refer to the period from February 4, 2024 to February 1, 2025, which consists of a 52-week fiscal year. References to "fiscal year 2023" or "fiscal 2023" refer to the period from January 29, 2023 to February 3, 2024, which consists of a 53-week fiscal year.
References to "fiscal year 2023" or "fiscal 2023" refer to the period from January 29, 2023 to February 3, 2024, which consists of a 53-week fiscal year. References to "fiscal year 2022" or "fiscal 2022" refer to the period from January 30, 2022 to January 28, 2023, which consists of a 52-week fiscal year.
Fiscal Year 2023 2022 (in millions, except percentages and total stores data) Consolidated Statements of Operations Data (1) : Net sales $ 3,559.4 $ 3,076.3 Cost of goods sold (exclusive of items shown separately below) 2,285.5 1,980.8 Selling, general and administrative expenses 757.5 644.8 Depreciation and amortization 130.7 105.6 Operating income 385.6 345.0 Interest income and other income, net 15.5 2.5 Income before income taxes 401.1 347.5 Income tax expense 100.0 86.0 Net income $ 301.1 $ 261.5 Percentage of Net Sales (1) : Net sales 100.0 % 100.0 % Cost of goods sold (exclusive of items shown separately below) 64.2 % 64.4 % Selling, general and administrative expenses 21.3 % 21.0 % Depreciation and amortization 3.7 % 3.4 % Operating income 10.8 % 11.2 % Interest income and other income, net 0.4 % 0.1 % Income before income taxes 11.3 % 11.3 % Income tax expense 2.8 % 2.8 % Net income 8.5 % 8.5 % Operational Data: Total stores at end of period 1,544 1,340 Comparable sales increase (decrease) 2.8 % (2.0) % Average net sales per store (2) $ 2.5 $ 2.4 Gross margin (3) 35.8 % 35.6 % (1) Components may not add to total due to rounding.
Fiscal Year 2024 2023 (in millions, except percentages and total stores data) Consolidated Statements of Operations Data (1) : Net sales $ 3,876.5 $ 3,559.4 Cost of goods sold (exclusive of items shown separately below) 2,523.9 2,285.5 Selling, general and administrative expenses 861.4 757.5 Depreciation and amortization 167.4 130.7 Operating income 323.8 385.6 Interest income and other income, net 14.8 15.5 Income before income taxes 338.7 401.1 Income tax expense 85.1 100.0 Net income $ 253.6 $ 301.1 Percentage of Net Sales (1) : Net sales 100.0 % 100.0 % Cost of goods sold (exclusive of items shown separately below) 65.1 % 64.2 % Selling, general and administrative expenses 22.2 % 21.3 % Depreciation and amortization 4.3 % 3.7 % Operating income 8.4 % 10.8 % Interest income and other income, net 0.4 % 0.4 % Income before income taxes 8.7 % 11.3 % Income tax expense 2.2 % 2.8 % Net income 6.5 % 8.5 % Operational Data: Total stores at end of period 1,771 1,544 Comparable sales (decrease) increase (2.7) % 2.8 % Average net sales per store (2) $ 2.3 $ 2.5 Gross margin (3) 34.9 % 35.8 % (1) Components may not add to total due to rounding.
Contractual Obligations The following table summarizes, as of February 3, 2024, our minimum rental commitments under operating lease agreements including assumed extensions, minimum payments for long-term debt and other obligations in future periods: (In millions) Payments Due By Period Total Less than 1 year 1-3 years 3-5 years More than 5 years Operating lease obligations (1) $ 2,099.2 $ 305.6 $ 591.4 $ 507.3 $ 694.8 Purchase obligations (2) 5.6 5.6 — — — Total $ 2,104.8 $ 311.2 $ 591.4 $ 507.3 $ 694.8 (1) Our store leases generally have initial lease terms of 10 years and include renewal options on substantially the same terms and conditions as the original lease.
Contractual Obligations The following table summarizes, as of February 1, 2025, our minimum rental commitments under operating lease agreements including assumed extensions, minimum payments for long-term debt and other obligations in future periods: (In millions) Payments Due By Period Total Less than 1 year 1-3 years 3-5 years More than 5 years Operating lease obligations (1) $ 2,401.8 $ 361.9 $ 688.6 $ 589.2 $ 762.1 Purchase obligations (2) 2.1 2.1 — — — Total $ 2,403.9 $ 364.0 $ 688.6 $ 589.2 $ 762.1 (1) Our store leases generally have initial lease terms of 10 years and include renewal options on substantially the same terms and conditions as the original lease.
As a percentage of net sales, selling, general and administrative expenses (including depreciation and amortization) increased approximately 60 basis points to 25.0% in fiscal year 2023 compared to 24.4% in fiscal year 2022.
As a percentage of net sales, selling, general and administrative expenses (including depreciation and amortization) increased approximately 150 basis points to 26.5% in fiscal year 2024 compared to 25.0% in fiscal year 2023.
References to "fiscal year 2020" or "fiscal 2020" refer to the period from February 2, 2020 to January 30, 2021, which consists of a 52-week fiscal year. References to “fiscal year 2019” or “fiscal 2019” refer to the period from February 3, 2019 to February 1, 2020, which consists of a 52-week fiscal year. Overview Five Below, Inc.
References to "fiscal year 2021" or "fiscal 2021" refer to the period from January 31, 2021 to January 29, 2022, which consists of a 52-week fiscal year. References to "fiscal year 2020" or "fiscal 2020" refer to the period from February 2, 2020 to January 30, 2021, which consists of a 52-week fiscal year. Overview Five Below, Inc.
We use operating income as an indicator of the productivity of our business and our ability to manage SG&A expenses.
Operating income excludes interest expense or income, other expense or income, and income tax expense or benefit. We use operating income as an indicator of the productivity of our business and our ability to manage SG&A expenses.
We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.
We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.
We occupy approximately 1,000,000 square feet at this shipcenter, having expanded from 800,000 square feet in September 2018. In fiscal 2016, we signed a 15-year lease for a new corporate headquarters location in Philadelphia, Pennsylvania. We currently occupy approximately 230,000 square feet of office space with multiple options to expand in the future.
In fiscal 2015, we opened a shipcenter in Pedricktown, New Jersey and currently occupy approximately 1,000,000 square feet, having expanded from 800,000 square feet in September 2018. In fiscal 2016, we signed a 15-year lease for a new corporate headquarters location in Philadelphia, Pennsylvania, and currently occupy approximately 230,000 square feet of office space.
In fiscal 2015, we invested in a new ERP and began the multi-year implementation of the ERP, which is designed to enhance functionality and provide timely information to the Company's management team related to the operation of the business.
In fiscal 2024, we invested in a new ERP, Oracle Fusion, which is designed to enhance functionality and provide timely information to our management team related to the operation of the business.
We expect to incur approximately $170 million of our cash capital expenditure budget in fiscal 2024 to construct and open between 225 and 235 new stores, with the remainder projected to be spent on our store relocations and remodels, distribution facilities, which includes the expansion of two facilities, and our corporate infrastructure.
We expect to incur approximately $120 million of our cash capital expenditure budget in fiscal 2025 to construct and open approximately 150 new stores, with the remainder projected to be spent on our store relocations and remodels, corporate infrastructure and shipcenter facilities.
Selling, General and Administrative Expenses (including Depreciation and Amortization) Selling, general and administrative expenses (including depreciation and amortization) increased to $888.3 million in fiscal year 2023 from $750.4 million in fiscal year 2022, an increase of $137.8 million, or 18.4%.
Selling, General and Administrative Expenses (including Depreciation and Amortization) Selling, general and administrative expenses (including depreciation and amortization) increased to $1,028.8 million in fiscal year 2024 from $888.3 million in fiscal year 2023, an increase of $140.5 million, or 15.8%.
The increase in non-comparable sales was primarily driven by new stores that opened in fiscal 2023, and the number of stores that opened in fiscal 2022 but have not been open for 15 full months and includes approximately $48.1 million of sales contributed by the 53rd week in fiscal 2023. Comparable sales increased 2.8%.
The increase in non-comparable sales was primarily driven by new stores that opened in fiscal 2024, and the number of stores that opened in fiscal 2023 but have not been open for 15 full months. Comparable sales decreased 2.7%.
In fiscal 2020, we invested in a new Retail Merchandising System and began the multi-year implementation of the Retail Merchandising System, which is designed to manage, control, and perform seamless execution of day-to-day merchandising activities, including purchasing, distribution, order fulfillment, and financial close. In fiscal 2015, we opened a shipcenter in Pedricktown, New Jersey.
In fiscal 2020, we launched our e-commerce website and invested in a new Retail Merchandising System, which is designed to manage, control, and perform seamless execution of day-to-day merchandising activities, including purchasing, distribution, order fulfillment, and financial close.
From February 4, 2024 to March 21, 2024, we committed to 25 new leases with terms of 10 years that have future minimum lease payments of approximately $52.2 million. 47
From February 2, 2025 to March 20, 2025, we committed to 13 new leases with terms of 10 years that have future minimum lease payments of approximately $24.0 million.
This increase resulted from an increase of approximately 3.9% in the number of transactions, partially offset by a decrease of approximately 1.0% in the average dollar value of transactions. 42 Cost of Goods Sold and Gross Profit Cost of goods sold increased to $2,285.5 million in fiscal year 2023 from $1,980.8 million in fiscal year 2022, an increase of $304.7 million, or 15.4%.
This decrease resulted from a decrease of approximately 2.7% in the number of transactions. 42 Cost of Goods Sold and Gross Profit Cost of goods sold increased to $2,523.9 million in fiscal year 2024 from $2,285.5 million in fiscal year 2023, an increase of $238.4 million, or 10.4%.
As a result, data in this Annual Report regarding our comparable sales may not be comparable to similar data made available by other retailers.
There may be variations in the way in which some of our competitors and other retailers calculate comparable or “same store” sales. As a result, data in this Annual Report regarding our comparable sales may not be comparable to similar data made available by other retailers.
The increase in cost of goods sold was primarily the result of increases in the merchandise costs of goods resulting from increases in net sales and inventory shrinkage, and store occupancy costs primarily resulting from new store openings.
The increase in cost of goods sold was primarily the result of an increase in the merchandise costs of goods resulting from an increase in net sales and included the impact of a non-recurring inventory write-off. Also contributing to the increase in costs of goods sold was an increase in store occupancy costs primarily resulting from new store openings.
As of February 3, 2024, we operated 1,544 stores in 43 states. We also offer our merchandise on the internet, through our fivebelow.com e-commerce website, offering home delivery and the option to buy online and pick up in store. Additionally, we sell merchandise through on-demand third-party delivery services to enable our customers to shop online and receive convenient delivery.
As of February 1, 2025, we operated 1,771 stores in 44 states. We also offer our merchandise on the internet, through our fivebelow.com e-commerce website and mobile app, offering home delivery and the option to buy online and pick up in store.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Our management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.
Our management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.
There can be no assurance that equity or debt financing will be available to us when we need it or, if available, that the terms will be satisfactory to us and not dilutive to our then-current shareholders. 44 Cash Flows A summary of our cash flows from operating, investing and financing activities is presented in the following table (in millions): Fiscal Year 2023 2022 Net cash provided by operating activities $ 499.6 $ 314.9 Net cash used in investing activities (556.3) (3.9) Net cash used in financing activities (95.9) (43.6) Net (decrease) increase during period in cash and cash equivalents (1) $ (152.6) $ 267.4 (1) Components may not add to total due to rounding.
Cash Flows A summary of our cash flows from operating, investing and financing activities is presented in the following table (in millions): Fiscal Year 2024 2023 Net cash provided by operating activities $ 430.6 $ 499.6 Net cash used in investing activities (232.9) (556.3) Net cash used in financing activities (45.7) (95.9) Net increase (decrease) during period in cash and cash equivalents (1) $ 152.0 $ (152.6) (1) Components may not add to total due to rounding.
References to "fiscal year 2022" or "fiscal 2022" refer to the period from January 30, 2022 to January 28, 2023, which consists of a 52-week fiscal year. References to "fiscal year 2021" or "fiscal 2021" refer to the period from January 31, 2021 to January 29, 2022, which consists of a 52-week fiscal year.
References to "fiscal year 2025" or "fiscal 2025" refer to the period from February 2, 2025 to January 31, 2026, which consists of a 52-week fiscal year. References to "fiscal year 2024" or "fiscal 2024" refer to the period from February 4, 2024 to February 1, 2025, which consists of a 52-week fiscal year.
Gross profit increased to $1,273.8 million in fiscal year 2023 from $1,095.5 million in fiscal year 2022, an increase of $178.3 million, or 16.3%. Gross margin increased to 35.8% in fiscal year 2023 from 35.6% in fiscal year 2022, an increase of approximately 20 basis points.
Gross profit increased to $1,352.7 million in fiscal year 2024 from $1,273.8 million in fiscal year 2023, an increase of $78.9 million, or 6.2%. Gross margin decreased to 34.9% in fiscal year 2024 from 35.8% in fiscal year 2023, a decrease of approximately 90 basis points.
We began operating the shipcenter in August 2021 and will expand to approximately 1,200,000 square feet in the second half of 2024. The total construction costs of the expansion is expected to be approximately $26 million. In March 2021, we acquired land in Indianapolis, Indiana, to build an approximately 1,030,000 square foot shipcenter for approximately $60 million.
In July 2020, we acquired land in Buckeye, Arizona, to build an approximately 860,000 square foot shipcenter for approximately $65 million, and currently occupy approximately 1,200,000 square feet after expanding in the second half of 2024. In March 2021, we acquired land in Indianapolis, Indiana, to build an approximately 1,030,000 square foot shipcenter for approximately $60 million.
Fiscal Year 2023 Compared to Fiscal Year 2022 Net Sales Net sales increased to $3,559.4 million in fiscal year 2023 from $3,076.3 million in fiscal year 2022, an increase of $483.1 million, or 15.7%. The increase was the result of a non-comparable sales increase of $400.7 million and a comparable sales increase of $82.4 million.
Fiscal Year 2024 Compared to Fiscal Year 2023 Net Sales Net sales increased to $3,876.5 million in fiscal year 2024 from $3,559.4 million in fiscal year 2023, an increase of $317.1 million, or 8.9%. The increase was the result of a non-comparable sales increase of $407.6 million, partially offset by a comparable sales decrease of $90.5 million.
Our effective tax rate for fiscal year 2023 was 24.9% compared to 24.7% in fiscal year 2022. The increase in our effective tax rate was primarily driven by changes in the mix of pretax income across state jurisdictions and non-deductible expenses, partially offset by discrete items, which includes the impact of ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting.
The decrease in income tax expense was primarily due to a $62.4 million decrease in pre-tax net income and non-deductible expenses, partially offset by discrete items, which includes the impact of share-based accounting. Our effective tax rate for fiscal year 2024 was 25.1% compared to 24.9% in fiscal year 2023.
Cash Used in Investing Activities Net cash used in investing activities for fiscal 2023 was $556.3 million, an increase of $552.4 million compared to fiscal 2022. The increase was primarily due an increase in net purchases of investment securities and other investments and an increase in capital expenditures.
The decrease was primarily due an increase in net sales, maturities, and redemptions of investment securities and a decrease in capital expenditures. Cash Used in Financing Activities Net cash used in financing activities for fiscal year 2024 was $45.7 million, a decrease of $50.1 million compared to fiscal 2023.
In addition, any increase in future share-based grants or modifications will impact our share-based compensation expense included in SG&A expenses. Operating Income Operating income equals gross profit less SG&A expenses. Operating income excludes interest expense or income, other expense or income, and income tax expense or benefit.
Variability in performance-based compensation expense related to our business performance may cause SG&A expenses to be higher or lower than comparable periods. In addition, any increase in future share-based awards, modifications, or forfeitures will impact our share-based compensation expense included in SG&A expenses. Operating Income Operating income equals gross profit less SG&A expenses.
Income Tax Expense Income tax expense increased to $100.0 million in fiscal year 2023 from $86.0 million in fiscal year 2022, an increase of $14.0 million, or 16.3%.
Income Tax Expense Income tax expense decreased to $85.1 million in fiscal year 2024 from $100.0 million in fiscal year 2023, a decrease of $14.9 million, or 14.9%.
On November 27, 2023, our Board of Directors approved a new share repurchase program for up to $100 million of our common stock through November 27, 2026. Since approval of the share repurchase program in March 2018, we have purchased approximately 1.6 million shares for an aggregate cost of approximately $230 million.
As of February 1, 2025, we did not have any direct borrowings under our Revolving Credit Facility and had approximately $225 million available on the line of credit. On November 27, 2023, our Board of Directors approved a new share repurchase program for up to $100 million of our common stock through November 27, 2026.
Between fiscal 2021 and fiscal 2023, our net sales increased from $2,848.4 million to $3,559.4 million, representing a compounded annual growth rate of 11.8%. Over the same period, our operating income increased from $379.9 million to $385.6 million, representing a compounded annual growth rate of 0.7%.
Between fiscal 2022 and fiscal 2024, our net sales increased from $3,076.3 million to $3,876.5 million, representing a compounded annual growth rate of 12.3%. Over the same period, our operating income decreased from $345.0 million to $323.8 million. We expect to continue our strong growth in the future.
We record a valuation allowance to reduce our deferred tax assets when uncertainty regarding their realizability exists. In assessing the realizability of deferred tax assets, our management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
In assessing the realizability of deferred tax assets, our management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible.
The increase in gross margin was primarily the result of a decrease as a percentage of net sales in distribution costs. Also contributing to the increase in gross margin was a decrease in merchandise cost of goods sold, which includes the impact of higher inventory shrinkage.
The decrease in gross margin was primarily the result of an increase as a percentage of net sales in store occupancy costs, partially offset by a decrease as a percentage of net sales in distribution costs.
In March 2019, we completed the purchase of an approximately 700,000 square foot shipcenter in Forsyth, Georgia. We began operating the shipcenter in April 2019 and will expand to approximately 1,000,000 square feet in the first half of 2024. The total construction cost of the expansion is expected to be approximately $21 million.
In March 2019, we completed the purchase of an approximately 700,000 square foot shipcenter in Forsyth, Georgia for approximately $42 million, and currently occupy approximately 1,100,000 square feet after expanding in the first half of 2024. In August 2019, we acquired land in Conroe, Texas, to build an approximately 860,000 square foot shipcenter for approximately $56 million.
All e-commerce sales, which includes shipping and handling revenue, are included in net sales and are included in comparable sales. Our e-commerce expenses will have components classified as both cost of goods sold and selling, general and administrative expenses (including depreciation and amortization).
Our e-commerce expenses will have components classified as both cost of goods sold and selling, general and administrative expenses (including depreciation and amortization). We believe that our business model has resulted in strong financial performance when considered in light of the economic environment.
In addition, we expanded our store base from 1,190 stores at the end of fiscal 2021 to 1,544 stores at the end of fiscal 2023 and we plan to open between 225 and 235 new stores in fiscal 2024. We expect to continue our strong growth in the future.
Our comparable sales decreased by 2.7% in fiscal 2024, increased by 2.8% in fiscal 2023, and decreased by 2.0% in fiscal 2022. We expanded our store base from 1,340 stores at the end of fiscal 2022 to 1,771 stores at the end of fiscal 2024 and we plan to open approximately 150 new stores in fiscal 2025.
Net Income As a result of the foregoing, net income increased to $301.1 million in fiscal year 2023 from $261.5 million in fiscal year 2022, an increase of approximately $39.6 million, or 15.1%.
The increase in our effective tax rate was primarily driven by discrete items, which includes the impact of share-based accounting, partially offset by non-deductible expenses. Net Income As a result of the foregoing, net income decreased to $253.6 million in fiscal year 2024 from $301.1 million in fiscal year 2023, a decrease of approximately $47.5 million, or 15.8%.
In the 52-week fiscal year subsequent to a 53-week fiscal year, we exclude the sales in the non-comparable week from the same-store sales calculation on a restated calendar basis using the National Retail Federation's restated calendar comparing similar weeks There may be variations in the way in which some of our competitors and other retailers calculate comparable or “same store” sales.
Comparable sales exclude the 53rd week of sales for 53-week fiscal years. In the 52-week fiscal year subsequent to a 53-week fiscal year, we exclude the sales in the non-comparable week from the same-store sales calculation. Due to the 53rd week in fiscal 2023, comparable sales for the year ended February 1, 2025 are reported on a restated calendar basis.
On March 9, 2021, our Board of Directors approved a new share repurchase program for up to $100 million of our common stock through March 31, 2024. In fiscal 2021, we purchased 368,699 shares under this program at an aggregate cost of approximately $60.0 million, or an average price of $162.75 per share.
In fiscal 2024, we purchased 266,997 shares at an aggregate cost of approximately $40.0 million, or average price of $149.79 per share. Since approval of the share repurchase program in March 2018, we have purchased approximately 1.9 million shares for an aggregate cost of approximately $270 million.
Removed
We believe that our business model has resulted in strong financial performance when considered in light of the economic environment. Our comparable sales increased by 2.8% in fiscal 2023, decreased by 2.0% in fiscal 2022, and increased by 30.3% in fiscal 2021.
Added
Additionally, we sell merchandise through on-demand third-party delivery services to enable our customers to shop online and receive convenient delivery. All e-commerce sales, which includes shipping and handling revenue, are included in net sales and are included in comparable sales.
Removed
In August 2019, we acquired land in Conroe, Texas, to build an approximately 860,000 square foot shipcenter for approximately $56 million. We began operating the shipcenter in July 2020. In July 2020, we acquired land in Buckeye, Arizona, to build an approximately 860,000 square foot shipcenter for approximately $65 million.
Added
In fiscal 2021, we invested in a new enterprise wide human capital management system which is designed to manage our workforce by providing a comprehensive suite of tools for human resources, talent management, payroll, time tracking, benefits administration and workforce planning.
Removed
We began operating the shipcenter in June 2022.
Added
Reference to the "restated calendar” is based on using the National Retail Federation's restated calendar comparing similar weeks, which are the fifty-two weeks from February 4, 2024 to February 1, 2025 as compared to the fifty-two weeks from February 5, 2023 to February 3, 2024.
Removed
As a result of the significant expansion of our network of distribution facilities over the last several years, including the opening in the first half of fiscal 2022 of our Indianapolis, Indiana shipcenter, we ceased operations at our shipcenters in Olive Branch, Mississippi and Cincinnati, Ohio in the first half of fiscal 2022 as well as the e-commerce operations in our Pedricktown, New Jersey shipcenter in the first half of fiscal 2023.
Added
Also contributing to the increase in selling, general and administrative expenses (including depreciation and amortization) was an increase of $14.4 million in corporate-related expenses, which included the impact of retention awards, partially offset by lower compensation expenses and the impact of a non-recurring stock compensation benefit.
Removed
Comparable sales exclude the 53rd week of sales for 53-week fiscal years. Therefore, Fiscal 2023 comparable sales were calculated using a 52-week comparable period through the week ending January 27, 2024.
Added
There can be no assurance that equity or debt financing will be available to us when we need it or, if available, that the terms will be satisfactory to us and not dilutive to our then-current shareholders.
Removed
In fiscal year 2023, we opened 204 net new stores compared to 150 new stores in fiscal year 2022.
Added
Cash Provided by Operating Activities Net cash provided by operating activities for fiscal 2024 was $430.6 million, a decrease of $69.0 million compared to fiscal 2023.
Removed
The increase in income tax expense was primarily due to a $53.6 million increase in pre-tax net income, partially offset by discrete items, which includes the impact of ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting" with respect to the requirements to recognize excess income tax benefits or deficiencies as income tax benefit or expense in the consolidated statements of operations rather than as additional paid-in capital in the consolidated balance sheets.
Added
The entire amount of the Revolving Credit Facility is available for the issuance of letters of credit and allows for swingline loans.
Removed
As of February 3, 2024, we did not have any direct borrowings under our Revolving Credit Facility and had approximately $216 million available on the line of credit.
Added
Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. 46 We record a valuation allowance to reduce our deferred tax assets when uncertainty regarding their realizability exists.
Removed
On March 20, 2018, our Board of Directors approved a share repurchase program authorizing the repurchase of up to $100 million of our common stock through March 31, 2021, on the open market, in privately negotiated transactions, or otherwise. This program expired on March 31, 2021.
Removed
In fiscal 2022, we purchased 247,132 shares at an aggregate cost of approximately $40.0 million, or an average price of $161.88 per share. We have exhausted repurchases under this program. On June 14, 2022, our Board of Directors approved a new share repurchase program for up to $100 million of our common stock through June 30, 2025.
Removed
In fiscal 2023, we purchased 504,369 shares at an aggregate cost of approximately $80.0 million, or average price of $158.63 per share. On November 27, 2023, our Board of Directors retired this share repurchase program.
Removed
The increase in capital expenditures was primarily for our new store construction and our corporate infrastructure. Cash Used in Financing Activities Net cash used in financing activities for fiscal year 2023 was $95.9 million, an increase of $52.2 million compared to fiscal 2022.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed6 unchanged
Biggest changeAs of February 3, 2024, we had approximatel y $216 million available on the line of credit.
Biggest changeAs of February 1, 2025, we had approximatel y $225 million available on the line of credit.
We do not use derivative financial instruments for speculative or trading purposes, but this does not preclude our adoption of specific hedging strategies in the future. 48
We do not use derivative financial instruments for speculative or trading purposes, but this does not preclude our adoption of specific hedging strategies in the future. 47

Other FIVE 10-K year-over-year comparisons