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What changed in FIVE BELOW, INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of FIVE BELOW, INC's 2023 and 2024 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 2024 report.

+211 added−195 removedSource: 10-K (2024-03-21) vs 10-K (2023-03-16)

Top changes in FIVE BELOW, INC's 2024 10-K

211 paragraphs added · 195 removed · 176 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

49 edited+3 added−2 removed102 unchanged
Biggest changeWe encourage open, timely communications that help us achieve organizational goals, share information, increase understanding, participate in the decision-making process, enhance our pride in the organization and provide recognition for our work-related successes. We believe our policies and practices are in compliance with all applicable laws and have been designed with significant inputs from the crew themselves.
Biggest changeWe believe our policies and practices are in compliance with all applicable laws and have been designed with significant inputs from the crew themselves. Turnover Retention of our talented crew is an important focus for us.
Our available benefits also include the following: Health and Wellness Medical (with a choice of two high deductible plans and a traditional plan) Prescription drug coverage included with every medical plan Dental (with a choice of three plans) Vision plan (with a choice of two plans) Health savings account with Company match Pre-tax flexible spending account for qualified medical and dependent care expenses Mental health support with medical benefits coverage Crew assistance program with supplemental mental health support Medical option for part-time crew Life and Disability No cost life and disability coverage provided for all full-time crew Supplemental life plan at option and cost of crew 401(k) 401(k) retirement savings option with safe harbor Company match Other In-store crew discount Employee Stock Purchase Plan Paid time off provided to all full-time crew Paid parental leave provided to all full-time crew Identification theft, pet insurance, legal services access, term life, as well as supplemental accident, hospital indemnity, and critical illness coverage Employment Practices 15 We aim to provide challenging, meaningful and rewarding opportunities for personal and professional growth of all crew and encourage all crew to bring their unique backgrounds and experiences to the table to work together.
Our available benefits also include the following: Health and Wellness Medical (with a choice of two high deductible plans and a traditional plan) Prescription drug coverage included with every medical plan Dental (with a choice of three plans) Vision plan (with a choice of two plans) Health savings account with Company match Pre-tax flexible spending account for qualified medical and dependent care expenses Mental health support with medical benefits coverage Crew assistance program with supplemental mental health support Medical option for part-time crew Life and Disability No cost life and disability coverage provided for all full-time crew Supplemental life plan at option and cost of crew 401(k) 401(k) retirement savings option with safe harbor Company match Other In-store crew discount Employee Stock Purchase Plan Paid time off provided to all full-time crew Paid parental leave provided to all full-time crew Identification theft, pet insurance, legal services access, term life, as well as supplemental accident, hospital indemnity, and critical illness coverage at option and cost of crew Employment Practices We aim to provide challenging, meaningful and rewarding opportunities for personal and professional growth of all crew and encourage all crew to bring their unique backgrounds and experiences to the table to work together.
We also compete with online retailers who do not have traditional brick and mortar locations. 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.
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.
Our electronic filings with the Securities and Exchange Commission (including all annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and any amendments to these reports), including the exhibits, are available, free of charge, through our website as soon as reasonably practicable after we electronically file them with, or furnish them to, the Securities and Exchange Commission.
Our electronic filings with the Securities and Exchange Commission (including all annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and any amendments to these reports), including the exhibits, are available, free of charge, through our website as soon as reasonably practicable after we electronically file them with, or furnish them to, the Securities and Exchange Commission. 17
We believe that we 13 compare favorably relative to many of our competitors based on our merchandising strategy, edited product assortment targeted at tweens and teens, store environment, flexible real estate strategy and company culture. Nonetheless, certain of our competitors have greater financial, distribution, marketing and other resources than we do.
We believe that we compare favorably relative to many of our competitors based on our merchandising strategy, edited product assortment targeted at tweens and teens, store environment, flexible real estate strategy and company culture. Nonetheless, certain of our competitors have greater financial, distribution, marketing and other resources than we do.
None of our crew belong to a union or are party to any collective bargaining or similar agreement. Total Rewards We provide a comprehensive suite of benefits designed to help crew and their families stay healthy, meet their financial goals, protect their income and help them balance their work and personal lives.
None of our crew belong to a union or are party to any collective bargaining or similar agreement. 15 Total Rewards We provide a comprehensive suite of benefits designed to help crew and their families stay healthy, meet their financial goals, protect their income and help them balance their work and personal lives.
Based on our management’s experience and industry knowledge, we believe our customer-centric, experience-first, innovative approach to retail has led to a fiercely loyal customer base and has fostered universal appeal across a variety of age groups beyond our target demographic.
Based on our management’s experience and industry knowledge, we believe our customer-centric, experience-first, innovative approach to retail has led to a loyal customer base and has fostered universal appeal across a variety of age groups beyond our target demographic.
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 our executive officers, approves all of our locations before a lease is signed.
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.
The information contained on, or accessible through, our corporate website does not constitute part of this Annual Report. As used herein, “Five Below,” the “Company,” “we,” “us,” “our” or “our business” refers to Five Below, Inc. (collectively with its wholly owned subsidiary), except as expressly indicated or unless the context otherwise requires.
The information contained on, or accessible through, our corporate website does not constitute part of this Annual Report. As used herein, “Five Below,” the “Company,” “we,” “us,” “our” or “our business” refers to Five Below, Inc. (collectively with its wholly owned subsidiaries), except as expressly indicated or unless the context otherwise requires.
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 glitter lamps, posters, frames, fleece blankets, plush items, pillows, candles, incense, lighting, novelty décor, accent furniture and related items.
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.
We work with approximately 1,000 vendors, with no single vendor representing more tha n 5% of our purchases in fiscal 2022. We sourced approximately 60% of our purchases from domestic vendors in fiscal 2022. We typically have no long-term supply agreements or exclusive arrangements with our vendors.
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.
The actual number, location and timing of new store openings in 2023 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 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.
We generally ship merchandise from our shipcenters to our stores one to four times a week, depending on the season and the volume of a specific store. We use either contract carriers or our own private-fleet of trucks to ship merchandise to our stores.
We generally ship merchandise from our shipcenters to our stores one to six times a week, depending on the season and the volume of a specific store. We use either contract carriers or our own private fleet of trucks to ship merchandise to our stores.
We continuously assess ways to maximize the productivity and efficiency of our existing distribution facilities and evaluate opportunities for additional shipcenters. In March 2019, we completed the purchase of an approximately 700,000 square foot shipcenter in Forsyth, Georgia. The total amount paid for the land and building was approximately $42 million. We began operating the shipcenter in April 2019.
We continuously assess ways to maximize the productivity and efficiency of our existing distribution facilities and evaluate opportunities for additional shipcenters. In March 2019, we completed the purchase of an approximately 700,000 square foot shipcenter in Forsyth, Georgia. The total amount paid for the land and building was approximately $42 million.
While we refresh our products frequently, we maintain a floor layout, designed with an easy-to-navigate flow and featuring sight-lines across the entire store enabling customers to easily identify our category worlds. All of our stores feature a sound system playing popular music throughout the shopping day.
While we refresh our products frequently, we maintain a floor layout, designed with an easy-to-navigate flow and featuring sightlines across the entire store enabling customers to easily identify our category worlds. All of our stores feature a sound system playing popular music throughout the shopping day.
We maintain a floor layout designed with an easy-to-navigate flow and featuring sight-lines across the entire store enabling customers to easily identify our category worlds. All of our stores feature a sound system playing popular music throughout the shopping day.
We maintain a floor layout designed with an easy-to-navigate flow and featuring sightlines across the entire store enabling customers to easily identify our category worlds. All of our stores feature a sound system playing popular music throughout the shopping day.
We utilize the survey results to identify strengths and weaknesses and create action plans to improve engagement and, ultimately, team performance. In 2022 a high percentage of our crew participated in the survey, and the results demonstrated that our overall engagement levels exceed Gallup’s averages in retail, 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 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.
Our e-commerce expenses will have components classified as both cost of goods sold and selling, general and administrative expenses. 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 2.0% in fiscal 2022, increased by 30.3% in fiscal 2021, and decreased by 5.5% in fiscal 2020.
Our 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.
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 1,340 locations as of January 28, 2023 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 1,544 locations as of February 3, 2024 to more than 3,500 l ocations within the United States over time.
In August 2019, we acquired land in Conroe, Texas, to build an approximately 860,000 square foot shipcenter. The total amount paid for the land and building was 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.
The total amount paid for the land and building was 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. The total amount paid for the land and building was approximately $65 million.
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 2020 900 122 2 120 1,020 Fiscal 2021 1,020 171 1 170 1,190 Fiscal 2022 1,190 150 — 150 1,340 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 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.
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 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.
We opened 170 net new stores in fiscal 2021 and 150 new stores in fiscal 2022, and we plan to open 200 new stores in fiscal 2023. 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 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.
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 January 28, 2023. 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 3, 2024. 10 Store Design and Layout We present our products in a unique and engaging in-store atmosphere.
As of January 28, 2023, we have executed lease agreements for the opening of 103 new stores in fiscal 2023. • 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 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.
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 150 new stores in fiscal 2022 and we plan to open 200 new stores in fiscal 2023.
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.
Of our total crew, approximately 700 were corporate, approximately 900 were based at our shipcenters in Pedricktown, New Jersey, Forsyth, Georgia, Conroe, Texas, Buckeye, Arizona, and Indianapolis, Indiana and approximately 20,300 were store crew located in 42 states throughout the United States. The number of part-time crew fluctuates depending on seasonal needs.
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.
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.
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.
Human Capital Our Purpose, Beliefs and Core Values The success and growth of Five Below is the direct result of our crew who embrace our purpose, our beliefs and our core values. 14 Why We Exist - Our Purpose - What We Believe - The Five Below Way - How We Behave - Our Five Core Values - Five Below believes life is better when customers are free to Let Go and Have Fun in an amazing experience filled with unlimited possibilities priced so low we make it easy to say YES! to the newest, coolest stuff!
Why We Exist - Our Purpose - What We Believe - The Five Below Way - How We Behave - Our Five Core Values - Five Below believes life is better when customers are free to Let Go and Have Fun in an amazing experience filled with unlimited possibilities priced so low we make it easy to say YES! to the newest, coolest stuff!
Over the same period, our operating income increased from $154.8 million to $345.0 million, representing a compounded annual growth rate of 49.3%. 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 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.
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 2018” or “fiscal 2018” refer to the period from February 4, 2018 to February 2, 2019, 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. 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 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.
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.
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 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.
We believe there is a significant opportunity to expand our store base in the United States. We opened 150 new stores in fiscal 2022 and we plan to open 200 new stores in fiscal 2023 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 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.
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 January 28, 2023, we employed approximately 6,500 full-time and 15,400 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 3, 2024, we employed approximately 7,000 full-time and 15,000 part-time crew.
We maintain a pipeline of real estate sites that have been approved by our real estate committee and have executed 103 leases as of January 28, 2023 for new stores in fiscal 2023.
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 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 January 28, 2023, we operated a total of 1,340 locations across 42 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 3, 2024, we operated a total of 1,544 locations across 43 states.
Comparable sales results in fiscal 2021 and fiscal 2020 were impacted by the COVID-19 pandemic. • We expanded our store base from 1,020 stores at the end of fiscal year 2020 to 1,340 stores at the end of fiscal year 2022, representing a compounded annual growth rate of 14.6%. • Between fiscal 2020 and 2022, our net sales increased from $2.0 billion to $3.1 billion, representing a compounded annual growth rate of 25.2%.
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%.
Our Stores As of January 28, 2023, we operated 1,340 stores throughout the United States. Our new store model assumes a store size of approxim atel y 9,500 sq ua re feet. Our stores are primarily located in power, community and lifestyle shopping centers; approximately 5% of our stores are located in malls.
Our new store model assumes a store size of approxim atel y 9,500 sq ua re feet. Our stores are primarily located in power, community and lifestyle shopping centers; approximately 4% of our stores are located in malls.
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 commenced fulfillment operations in Pedricktown, New Jersey in fiscal 2018, Buckeye, Arizona in fiscal 2021, and Indianapolis, Indiana in fiscal 2022.
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.
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. 16 Seasonality Our business is seasonal in nature with the highest level of net sales and net income generated in the fourth fiscal quarter due to the year-end holiday season and, therefore, operating results for any fiscal quarter are not necessarily indicative of results for the full fiscal year.
Seasonality Our business is seasonal in nature with the highest level of net sales and net income generated in the fourth fiscal quarter due to the year-end holiday season and, therefore, operating results for any fiscal quarter are not necessarily indicative of results for the full fiscal year.
Turnover Retention of our talented crew is an important focus for us. We, therefore, monitor crew turnover, particularly at the store management level and employ various strategies to strive to improve our turnover rate.
We, therefore, monitor crew turnover, particularly at the store management and district management levels and employ various strategies to strive to improve our turnover rate.
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 as well as with an on demand third party delivery service to enable our customers to shop online and receive convenient same day delivery.
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 are committed to maintaining a drug-free workplace and prohibit the manufacture, distribution, sale, purchase, transfer, possession, or use of illegal substances in the workplace, while representing us outside the workplace or if such activity affects work performance or the work environment of the Company.
We are committed to maintaining a drug-free workplace and prohibit the manufacture, distribution, sale, purchase, transfer, possession, or use of illegal substances in the workplace, while representing us outside the workplace or if such activity affects work performance or the work environment of the Company. 16 We encourage open, timely communications that help us achieve organizational goals, share information, increase understanding, participate in the decision-making process, enhance our pride in the organization and provide recognition for our work-related successes.
The total amount paid for the land and building was approximately $65 million. We began operating the shipcenter in August 2021. In March 2021, we acquired land in Indianapolis, Indiana, to build an approximately 1,030,000 square foot shipcenter. The total amount paid for the land and building was approximately $60 million. We began operating the shipcenter in June 2022.
The total amount paid for the land and building was approximately $60 million. We began operating the shipcenter in June 2022.
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 2022 2021 2020 Leisure (1) 47.6 % 49.6 % 49.2 % Fashion and home 29.2 % 30.2 % 35.8 % Snack and seasonal (1) 23.2 % 20.2 % 15.0 % Total 100.0 % 100.0 % 100.0 % (1) Due to realignment of certain products, there was a minor adjustment to historical sales by product group.
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.
Leisure includes items such as sporting goods, games, toys, tech, books, electronic accessories, arts and crafts, and party. Fashion and home includes items such as personal accessories, “attitude” t-shirts, beauty offerings, home goods and storage options. Snack and seasonal includes items such as seasonal goods, greeting cards, candy and other snacks, and beverages.
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.
We evaluate our insurance requirements on an ongoing basis to ensure we maintain adequate levels of coverage.
We evaluate our insurance requirements on an ongoing basis to ensure we maintain adequate levels of coverage. 14 Human Capital Our Purpose, Beliefs and Core Values The success and growth of Five Below is the direct result of our crew who embrace our purpose, our beliefs and our core values.
All e-commerce sales, which includes shipping and handling revenue, are included in net sales and are included in comparable sales.
Additionally, we sell our 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
References to 2023, 2022, 2021, 2020, 2019, and 2018 are to our fiscal years unless otherwise specified.
Added
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.
Removed
Due to the 53rd week in fiscal 2017, the period from January 29, 2017 to February 3, 2018, all comparable sales related to any reporting period during the year ended February 2, 2019 are reported on a restated calendar basis using the National Retail Federation's restated calendar comparing similar weeks.
Added
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.
Added
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

45 edited+16 added−9 removed159 unchanged
Biggest changeWe 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.
Biggest changeWe 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.
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; 19 • 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: 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.
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; 31 • 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; • 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.
Unavailability of attractive store locations, delays in the acquisition or opening of new stores, delays or costs resulting from a decrease in commercial development due to capital constraints, difficulties in staffing and operating new store locations or lack of customer acceptance of stores in new market areas may negatively impact our new store growth and the costs or the profitability associated with new stores.
Unavailability of attractive store locations, delays in the acquisition or opening of new stores, delays or costs resulting from a decrease in commercial development due to landlord capital constraints, difficulties in staffing and operating new store locations or lack of customer acceptance of stores in new market areas may negatively impact our new store growth and the costs or the profitability associated with new stores.
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.
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.
During fiscal 2022, we experienced levels of inflation that are higher than we have experienced in recent years, resulting in part from various supply disruptions, increased shipping and transportation costs, increased commodity costs, increased labor costs in the supply chain, monetary policy actions, and other disruptions caused by the COVID‐19 pandemic and the uncertain economic environment.
During fiscal 2022, we experienced levels of inflation that are higher than we have experienced in recent years, resulting in part from various supply disruptions, increased shipping and transportation costs, increased commodity costs, increased labor costs in the supply chain, monetary policy actions, and other disruptions caused by the uncertain economic environment.
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; • 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. 30 In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price.
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.
Any increase in pricing, alteration of products or reduced product offering could reduce the competitiveness of our products. Furthermore, any retaliatory counter-measures imposed by countries subject to such tariffs, such as China, could increase our, or our vendors’, import expenses.
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.
Additionally, there can be no certainty that we will successfully navigate or manage ESG issues or that we will successfully meet investors or others expectations.
Additionally, there can be no certainty that we will successfully navigate or manage ESG issues or that we will successfully meet investors or others' expectations.
Any delay or prevention of a change of control transaction or changes in our Board of Directors and management could deter potential acquirers or prevent the completion of a transaction in which our shareholders could receive a substantial premium over the then current market price for their shares of our common stock.
Any delay or prevention of a change of control transaction or changes in our Board of Directors and management could deter potential acquirers or prevent the completion of a transaction in which our shareholders could receive a substantial premium over the then current market price for their shares of our common stock. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
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. 29 Complying with these covenants could adversely affect our ability to respond to changes in our business and manage our operations.
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.
We are exposed to the risk of natural disasters, adverse weather conditions, pandemic outbreaks, global political events, war and terrorism that could disrupt business and result in lower sales, increased operating costs and capital expenditures.
We are exposed to the risk of natural disasters, adverse weather conditions, pandemic outbreaks, global political events, war and terrorism that could disrupt business and result in lower sales, increased operating costs and capital expenditures. Climate change could present risks to our operations.
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.
For the foreseeable future, we do not anticipate paying any cash dividends on our common stock.
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 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.
Alternatively, with respect to any third party intellectual property that we use or wish to use in our business (whether or not asserted against us in litigation), we could be required to license the applicable intellectual property rights from third parties, and we may not be able to enter into licensing or other arrangements with the owner of such intellectual property at a reasonable cost or on reasonable terms. 28 We purchase merchandise from vendors that may be subject to copyrights or patents, or that may otherwise incorporate protected intellectual property.
Alternatively, with respect to any third party intellectual property that we use or wish to use in our business (whether or not asserted against us in litigation), we could be required to license the applicable intellectual property rights from third parties, and we may not be able to enter into licensing or other arrangements with the owner of such intellectual property at a reasonable cost or on reasonable terms.
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 16% of our total assets as of January 28, 2023.
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.
As of January 28, 2023, 3.5 million stock options, restricted shares, or restricted stock units were available for grant under our equity incentive plan, and 0.7 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 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.
Cyberattacks and other cyber incidents are occurring more frequently, are constantly evolving in nature, are becoming more sophisticated and are being made by groups and individuals (including criminal hackers, hacktivists, state-sponsored institutions, terrorist organizations and individuals or groups participating in organized crime) with a wide range of expertise and motives (including monetization of corporate, payment or other internal or personal data, theft of trade secrets and intellectual property for competitive advantage and leverage for political, social, economic and environmental reasons).
Cyberattacks and other cyber incidents are occurring more frequently including as a result of ongoing military conflicts, certain U.S. foreign relations, and remote work arrangements, are constantly evolving in nature, are becoming more sophisticated and are being made by groups and individuals (including criminal hackers, hacktivists, state-sponsored institutions, terrorist organizations and individuals or groups participating in organized crime) with a wide range of expertise and motives (including monetization of corporate, payment or other internal or personal data, theft of trade secrets and intellectual property for competitive advantage and leverage for political, social, economic and environmental reasons).
Adverse weather conditions or other extreme changes in the weather, including resulting electrical and technological failures, may disrupt our business and may adversely affect our ability to sell and distribute products.
Adverse weather conditions or other extreme changes in the weather, including as a result of climate change and including resulting electrical and technological failures, may disrupt our business and may adversely affect our ability to sell and distribute products.
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 that are recalled, 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, mis-labeled, expired, defective or otherwise alleged to be harmful.
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. In March 2021, we acquired land in Indianapolis, Indiana, to build an approximately 1,030,000 square foot shipcenter, which we began operating in June 2022.
In March 2021, we acquired land in Indianapolis, Indiana, to build an approximately 1,030,000 square foot shipcenter, which we began operating in June 2022.
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.
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.
We believe we have an opportunity to continue to grow our store base from 1,340 stores in 42 states as of January 28, 2023 to more than 3,500 locations 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 .
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.
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.
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.
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.
In addition, these covenants could affect our ability to invest capital in our new stores and fund capital expenditures for existing stores.
Complying with these covenants could adversely affect our ability to respond to changes in our business and manage our operations. In addition, these covenants could affect our ability to invest capital in our new stores and fund capital expenditures for existing stores.
We also experience inventory shrinkage, and we cannot assure you that incidences of inventory loss and theft will stay at acceptable levels or decrease in the future, or that the measures we are taking will effectively address the problem of inventory shrinkage.
Although we are making every effort to minimize inventory shrinkage, we cannot assure you that incidences of inventory loss and theft will decrease in the future, or that the measures we are taking will effectively address the problem.
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 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.
In addition, our reputation within the business community and with our customers may be affected, which could result in our customers discontinuing the use of debit or credit cards in our stores, or not shopping in our stores altogether.
In addition, our reputation within the business community and with our customers may be affected, which could result in our customers discontinuing the use of debit or credit cards in our stores, or not shopping in our stores altogether. This could cause us to lose market share to our competitors and could have an adverse effect on our financial results.
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.
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.
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.
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.
Our financial performance could be adversely impacted by inflation, which is subject to market conditions. Inflationary pressures on the products we sell could impact our net sales and earnings. If the cost of goods changes as a result of inflation, we may be unable to adjust our retail prices accordingly, which could adversely impact our sales or earnings.
If the cost of goods changes as a result of inflation, we may be unable to adjust our retail prices accordingly, which could adversely impact our sales or earnings.
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.
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.
We continue to focus on ways to reduce these risks, but we cannot assure you that we will be successful in our inventory management.
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.
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.
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.
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.
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.
We generally have been able to select and obtain sufficient quantities of attractive merchandise at prices that allow us to be profitable.
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.
In addition, we operate in markets that are susceptible to pandemic outbreaks, including COVID-19, 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 Our business may be harmed if our ability to sell and distribute products is impacted by any such events, any of which could influence customer trends and purchases and may negatively impact our net sales, properties or operations.
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.
Since we rely on third parties for transportation and use third-party warehouses when we build up inventory, a number of these factors are outside of our control. 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.
Since we rely on third parties for transportation and use third-party warehouses when we build up inventory, a number of these factors are outside of our control. Our holiday sales are also materially impacted by the length of the holiday selling season.
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.
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.
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. We sell merchandise on the internet, through our fivebelow.com e-commerce website.
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.
For example, we and certain of our current and former senior officers had been parties to a securities class action lawsuit filed against us, which was dismissed. This type of litigation, even if it does not result in liability for us, could result in substantial costs to us and divert management's attention and resources.
In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price. For example, we and certain of our current and former senior officers had been parties to a securities class action lawsuit filed against us, which was dismissed.
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.
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.
Our business and reputation may be adversely affected by environmental, social and governance matters. Investor and regulatory focus is intensifying with respect to certain environmental, social and governance ("ESG") matters.
This type of litigation, even if it does not result in liability for us, could result in substantial costs to us and divert management's attention and resources. Our business and reputation may be adversely affected by environmental, social and governance matters. Investor and regulatory focus are intensifying with respect to certain environmental, social and governance ("ESG") matters.
This could cause us to lose market share to our competitors and could have an adverse effect on our financial results. 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 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.
Removed
Risks Relating to Our Business and Industry The COVID-19 global pandemic may continue to have, a material adverse impact on our business, results of operations, financial condition, and cash flows. The COVID-19 global pandemic and related preventative and protective actions have materially adversely impacted our business.
Added
Risks Relating to Our Business and Industry Inflation and rising commodity prices could adversely affect our business. Our financial performance could be adversely impacted by inflation, which is subject to market conditions. Inflationary pressures on the products we sell could impact our net sales and earnings.
Removed
Further resurgences in COVID-19 cases, including from variants, could cause additional restrictions, including temporarily closing all or some of our stores again. An outbreak at one of our stores, even if we follow appropriate precautionary measures, could negatively impact our crew, customers, and brand.
Added
Other new stores may be located in areas where we have existing stores.
Removed
If the pandemic were to worsen or continue, including from variants of COVID-19, for a longer period than currently anticipated, business and consumer responses to the pandemic could adversely affect, among other aspects of our business: • our ability to maintain and increase sales and margins and to execute effectively on our business plans; • our ability to identify and respond effectively to changes in consumer preferences and behavior, including decreased consumer discretionary spending; • our ability to implement and maintain safety measures to keep our crew and customers safe; • our ability to generate increased sales through our e-commerce website and curbside pickup (in the event any store is required to be closed to the public); • our ability to receive products from our vendors and to distribute such products to our store locations; • our vendors’ ability to manufacture and distribute products to us; • our business partners’ ability to operate or manage increases in their operating costs and other supply chain effects that may have an adverse effect on our ability to meet consumer demand and achieve cost targets; • our ability to comply with financial covenants in credit agreements and with credit terms in agreements with our suppliers; and • our ability to restructure our lease obligations.
Added
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.
Removed
Any of the negative impacts of the pandemic, including those described above, alone or in combination with others, may exacerbate many of the risk factors discussed otherwise herein.
Added
In August 2019, we acquired land in Conroe, Texas to building an approximately 860,000 square foot shipcenter, which we began operating in July 2020.
Removed
The full extent to which the pandemic will negatively affect our business, results of operations, financial condition and cash flows will depend on future developments that are highly uncertain and cannot be predicted, including the severity of COVID-19 and its variants, the scope and duration of the pandemic and actions taken by governmental authorities businesses and customers in response to the pandemic. 17 Inflation and rising commodity prices could adversely affect our business.
Added
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.
Removed
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.
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. 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.
Removed
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
Our competitors or other third parties may incorporate AI into their businesses more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.
Removed
We also may have difficulty negotiating real estate purchase agreements or leases on acceptable terms.
Added
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.
Removed
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.
Added
We have historically experienced loss of inventory (also called “inventory shrink”, “shrink”, or "shrinkage") due to damage, theft, and other causes and have recently seen inventory shrink reach higher than historic levels.
Added
Moreover, even if a lease has an early cancellation clause, we may not satisfy the contractual requirements for early cancellation under that lease.
Added
In years where the selling season is shorter than typical due to the timing of the major holidays, our retail sales could be negatively impacted. In addition, the occurrence of any other operational disruptions during a shorter holiday period could have a heightened negative impact.
Added
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.
Added
Military conflicts and wars (such as the ongoing conflicts between Russia and Ukraine, Israel and Hamas, and the Red Sea crisis and its impact on shipping and logistics), terrorist attacks, instability in Venezuela, other geopolitical events, high inflation, increasing interest rates, bank failures and associated financial instability and crises, and supply chain issues can cause exacerbated volatility and disruptions to various aspects of the global economy.
Added
The uncertain nature, magnitude, and duration of hostilities stemming from such conflicts, including the potential effects of sanctions and countersanctions, or retaliatory cyber-attacks on the world economy and markets, have contributed to increased market volatility and uncertainty, which could have an adverse impact on macroeconomic factors that affect our business and operations.
Added
Our business may be harmed if our ability to sell and distribute products is impacted by any such events, any of which could influence customer trends and purchases and may negatively impact our net sales, properties or operations.
Added
We purchase merchandise from vendors that may be subject to copyrights or patents, or that may otherwise incorporate protected intellectual property.

Item 2. Properties

Properties — owned and leased real estate

5 edited+1 added−0 removed5 unchanged
Biggest changeAs 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.
Biggest changeAs 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.
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.
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 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. We began operating the shipcenter in August 2021.
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.
At the end of fiscal 2022, there were 1,340 Five Below store locations in 42 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.
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.
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. 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.
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.
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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 for approximately $56 million, for the land and building. We began operating the shipcenter in July 2020.

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. 33 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. 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 33 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 34 ITEM 6. SELECTED FINANCIAL DATA 35 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 37 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 47 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 48 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 2022: 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 2022 — $ — — $ 100,000,000 October 30, 2022 - November 26, 2022 — $ — — $ 100,000,000 November 27, 2022 - December 31, 2022 — $ — — $ 100,000,000 January 1, 2023 - January 28, 2023 — $ — — $ 100,000,000 Fourth Quarter 2022 — $ — — $ 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 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.
Such returns are based on historical results and are not intended to suggest future performance. 2/1/2013 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 FIVE BELOW, INC. $ 140.00 $ 138.30 $ 125.70 $ 132.90 $ 141.90 $ 237.50 $ 470.70 $ 427.20 $ 663.13 $ 599.40 $ 736.72 NASDAQ GLOBAL MARKET COMPOSITE INDEX $ 107.20 $ 138.40 $ 156.30 $ 155.60 $ 190.90 $ 244.10 $ 244.90 $ 308.50 $ 440.70 $ 464.30 $ 391.84 NASDAQ US BENCHMARK RETAIL INDEX $ 111.00 $ 132.70 $ 161.50 $ 168.00 $ 182.50 $ 242.80 $ 251.70 $ 295.90 $ 457.96 $ 479.00 $ 302.24 34 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. 1/31/2014 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.
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 January 28, 2023, 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 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.
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 27, 2023 (the last trading day of fiscal 2022), the last reported sale price on the Nasdaq Global Select Market of our common stock was $195.23 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 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.
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 repurchase program does not include a specific timetable or price targets and may be suspended or terminated at any time.
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.
As of March 8, 2023, we had approximately 239,069 holders of record of our common stock.
As of March 8, 2024, we had approximately 258,974 holders of record of our common stock.
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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 52 weeks of operations in each of fiscal 2022, 2021, 2020, 2019, and 2018 respectively. 35 Fiscal Year 2022 2021 2020 2019 2018 (in millions, except share and per share data) Consolidated Statements of Operations Data (1) : Net sales $ 3,076.3 $ 2,848.4 $ 1,962.1 $ 1,846.7 $ 1,559.6 Cost of goods sold 1,980.8 1,817.9 1,309.8 1,172.8 994.5 Gross profit 1,095.5 1,030.4 652.3 674.0 565.1 Selling, general and administrative expenses 750.4 650.6 497.5 456.7 377.9 Operating income 345.0 379.9 154.8 217.3 187.2 Interest income (expense) and other income (expense), net 2.5 (13.2) (1.7) 4.3 4.6 Income before income taxes 347.5 366.7 153.1 221.6 191.8 Income tax expense 86.0 87.9 29.7 46.5 42.2 Net income $ 261.5 $ 278.8 $ 123.4 $ 175.1 $ 149.6 Per Share Data: Basic income per common share (2) $ 4.71 $ 4.98 $ 2.21 $ 3.14 $ 2.68 Diluted income per common share (2) $ 4.69 $ 4.95 $ 2.20 $ 3.12 $ 2.66 Weighted average shares outstanding: Basic shares 55,547,267 55,999,713 55,816,508 55,823,535 55,763,034 Diluted shares 55,745,279 56,303,854 56,060,039 56,166,167 56,220,864 Fiscal Year 2022 2021 2020 2019 2018 (in millions, except percentages and total stores data) Consolidated Statements of Cash Flows Data (1) : Net cash provided by (used in): Operating activities $ 314.9 $ 327.9 $ 366.0 $ 187.0 $ 184.1 Investing activities $ (3.9) $ (465.6) $ (286.9) $ (193.6) $ (39.5) Financing activities $ (43.6) $ (66.1) $ (12.8) $ (42.7) $ (5.6) Other Operating and Financial Data (1) : Total stores at end of period 1,340 1,190 1,020 900 750 Comparable sales (decrease) increase (2.0) % 30.3 % (5.5) % 0.6 % 3.9 % Average net sales per store (3) $ 2.4 $ 2.5 $ 2.0 $ 2.2 $ 2.2 Capital expenditures $ 252.0 $ 288.2 $ 200.2 $ 212.3 $ 113.7 Consolidated Balance Sheet Data (1) (4) : Cash and cash equivalents $ 332.3 $ 65.0 $ 268.8 $ 202.5 $ 251.7 Short-term investment securities 66.8 277.1 140.9 59.2 85.4 Total current assets 1,066.4 904.7 755.4 665.7 642.3 Total assets 3,324.9 2,880.5 2,314.8 1,958.7 952.3 Total current liabilities 602.6 586.9 435.7 351.3 253.1 Total liabilities 1,963.0 1,760.2 1,432.9 1,198.9 337.2 Total shareholders’ equity $ 1,361.9 $ 1,120.3 $ 881.9 $ 759.8 $ 615.1 (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 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.
The selected financial data for fiscal 2019 and fiscal 2018, and the selected balance sheet data as of January 30, 2021, February 1, 2020, and February 2, 2019, have been derived from our audited consolidated financial statements that have not been included 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 2022, 2021 and 2020 and selected consolidated balance sheet data as of January 28, 2023 and January 29, 2022 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 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.
(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) Fiscal 2019 Consolidated Balance Sheet data includes adoption of ASU 2016-02 "Leases" based on the modified retrospective method. 36
(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.
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(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 changeFiscal Year 2022 2021 (in millions, except percentages and total stores data) Consolidated Statements of Operations Data (1) : Net sales $ 3,076.3 $ 2,848.4 Cost of goods sold 1,980.8 1,817.9 Gross profit 1,095.5 1,030.4 Selling, general and administrative expenses 750.4 650.6 Operating income 345.0 379.9 Interest income (expense) and other income (expense), net 2.5 (13.2) Income before income taxes 347.5 366.7 Income tax expense 86.0 87.9 Net income $ 261.5 $ 278.8 Percentage of Net Sales (1) : Net sales 100.0 % 100.0 % Cost of goods sold 64.4 % 63.8 % Gross profit 35.6 % 36.2 % Selling, general and administrative expenses 24.4 % 22.8 % Operating income 11.2 % 13.3 % Interest income (expense) and other income (expense), net 0.1 % (0.5) % Income before income taxes 11.3 % 12.9 % Income tax expense 2.8 % 3.1 % Net income 8.5 % 9.8 % Operational Data: Total stores at end of period 1,340 1,190 Comparable sales (decrease) increase (2.0) % 30.3 % Average net sales per store (2) $ 2.4 $ 2.5 (1) Components may not add to total due to rounding.
Biggest changeFiscal 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.
The entire amount of the Revolving Credit Facility is available for the issuance of letters of credit and allows for swingline loans. 44 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 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.
In fiscal 2022, we purchased 247,132 shares at an aggregate costs 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.
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.
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 periods 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 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.
For further information, see Part I, Item 1A “Risk Factors-Risk Relating to our Business and Industry.” Over the past five 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.” 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.
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 2022, 2021 and 2020 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 2023, 2022 and 2021 fiscal years.
As a result of this seasonality, and generally because of variation in consumer spending habits, we experience fluctuations in net sales, net income and working capital requirements during the year. Liquidity and Capital Resources 42 Overview Cash capital expenditures typically vary depending on the timing of new store openings and infrastructure-related investments.
As a result of this seasonality, and generally because of variation in consumer spending habits, we experience fluctuations in net sales, net income and working capital requirements during the year. 43 Liquidity and Capital Resources Overview Cash capital expenditures typically vary depending on the timing of new store openings and infrastructure-related investments.
Our new store model also assumes an average new store investment of approximately $0.4 million. Our new store investment includes our store build-out (net of tenant allowances), inventory (net of payables) and cash pre-opening expenses. 37 Our planned store expansion will place increased demands on our operational, managerial, administrative and other resources.
Our new store model also assumes an average new store investment of approximately $0.4 million. Our new store investment includes our store build-out (net of tenant allowances), inventory (net of payables) and cash pre-opening expenses. 38 Our planned store expansion will place increased demands on our operational, managerial, administrative and other resources.
Our estimates may be impacted by changes in certain underlying assumptions and may not be indicative of future activity. 45 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. 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.
(collectively referred to herein with its wholly owned subsidiary as "we," "us," or "our") is a rapidly growing specialty value retailer offering a broad range of trend-right, high-quality merchandise targeted at the tween and teen customer.
(collectively referred to herein with its wholly owned subsidiaries as "we," "us," or "our") is a rapidly growing specialty value retailer offering a broad range of trend-right, high-quality merchandise targeted at the tween and teen customer.
See Part I, Item 1A “Risk Factors” for a description of these and other important factors that could adversely impact us and our results of operations. How We Assess the Performance of Our Business In assessing the performance of our business, we consider a variety of performance and financial measures.
See Part I, Item 1A “Risk Factors” for a description of these and other important factors that could adversely impact us and our results of operations. How We Assess the Performance of Our Business and Non-GAAP Measures In assessing the performance of our business, we consider a variety of performance and financial measures.
Operating income percentage measures operating income as a percentage of our net sales. 40 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 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.
Accordingly, comparable sales is only one measure we use to assess the success of our growth strategy. 39 Cost of Goods Sold and Gross Profit Gross profit is equal to our net sales less our cost of goods sold. Gross margin is gross profit as a percentage of our net sales.
Accordingly, comparable sales are only one measure we use to assess the success of our growth strategy. 40 Cost of Goods Sold and Gross Profit Gross profit is equal to our net sales less our cost of goods sold. Gross margin is gross profit as a percentage of our net sales.
We plan to make cash capital expenditures of approximately $325 million in fiscal 2023, 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 $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.
The Revolving Credit Facility may be increased up to $150.0 million, subject to certain conditions, including obtaining commitments from one or more Lenders (the "Accordion").
The Revolving Credit Facility may be increased by up to an additional $150.0 million, subject to certain conditions, including obtaining commitments from one or more Lenders (the "Accordion").
This decrease in income tax expense was primarily due to a $19.2 million decrease 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.
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.
Refer to Item 7 "Results of Consolidated Operations" in our Annual Report on Form 10-K for the year ended January 29, 2022 for a comparison of fiscal years 2021 and 2020.
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.
Historically, we have funded our capital expenditures and working capital requirements during the fiscal year with cash on hand, net cash provided by operating activities and borrowings under our Revolving Credit Facility, as needed, and we expect that funding to continue.
Historically, we have funded our capital expenditures and working capital requirements during the fiscal year with cash on hand, net cash provided by operating activities and borrowings under our Revolving Credit Facility, which expires in September 2027, as needed, and we expect that funding to continue.
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 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.
The Second Amendment also replaced the existing LIBOR rate provisions with SOFR rate provisions which converted then outstanding LIBOR loans into SOFR loans and additionally makes a number of other revisions to other provisions of the Credit Agreement.
The Second Amendment also replaced the existing LIBOR (the "London Interbank Offered Rate") provisions with SOFR (the "Secured Overnight Financing Rate") provisions which converted then outstanding LIBOR loans into SOFR loans and additionally makes a number of other revisions to other provisions of the Credit Agreement.
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.
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.
As of January 28, 2023 and January 29, 2022, we were in compliance with the covenants applicable to us under the First Amendment and the Revolving Credit Facility. As of January 28, 2023 and January 29, 2022, we had approximately $192 million and $153 million, respectively, available in the Revolving Credit Facility.
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.
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.
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.
Net sales are usually highest in the fourth fiscal quarter due to the year-end holiday season. 38 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. 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.
We continue to believe we have the opportunity to expand our store base in the United States from 1,340 locations as of January 28, 2023 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 1,544 locations as of February 3, 2024 to more than 3,500 locations over time.
We expect to incur approximately $145 million of our cash capital expenditure budget in fiscal 2023 to construct and open 200 new stores, with the remainder projected to be spent on our store relocations and remodels, distribution facilities and our corporate infrastructure.
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.
As of January 28, 2023, we did not have any direct borrowings under our Revolving Credit Facility and had approximately $192 million available on the line of credit.
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.
The variable component of our cost of goods sold is higher in higher volume quarters because the variable component of our cost of goods sold generally increases as net sales increase. We regularly analyze the components of gross profit as well as gross margin.
The variable component of our cost of goods sold is higher in higher volume quarters because the variable component of our cost of goods sold generally increases as net sales increase.
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. Also contributing to the increase in cost of goods sold was an increase in store occupancy costs resulting from new store openings.
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.
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 2018” or “fiscal 2018” refer to the period from February 4, 2018 to February 2, 2019, 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. 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.
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. 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 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.
We expect to continue our strong growth in the future. By offering trend-right merchandise at a differentiated price points, our stores have been successful in varying geographic regions, population densities and real estate settings. As of January 28, 2023, we operated stores in 42 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 3, 2024, we operated stores in 43 states throughout the United States.
The increase in non-comparable sales was primarily driven by new stores that opened in fiscal 2022 and the number of stores that opened in fiscal 2021 but have not been open for 15 full months. Comparable sales decreased 2.0%.
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%.
These key measures include net sales, comparable sales, cost of goods sold and gross profit, selling, general and administrative expenses and operating income. Net Sales Net sales constitute gross sales net of merchandise returns for damaged or defective goods. Net sales consist of sales from comparable stores, non-comparable stores, and e-commerce, which includes shipping and handling revenue.
These key measures include net sales, comparable sales, cost of goods sold and gross profit, selling, general and administrative expenses (including depreciation and amortization) and operating income. Net Sales Net sales constitute gross sales net of merchandise returns for damaged or defective goods.
This decrease resulted from decreases of approximately 1.9% in the average dollar value of transactions and approximately 0.1% in the number of transactions. 41 Cost of Goods Sold and Gross Profit Cost of goods sold increased to $1,980.8 million in fiscal year 2022 from $1,817.9 million in fiscal year 2021, an increase of $162.9 million, or 9.0%.
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%.
Selling, General and Administrative Expenses Selling, general and administrative, or SG&A, expenses are composed of payroll and other compensation, marketing and advertising expense, depreciation and amortization expense and other selling and administrative expenses. SG&A expenses as a percentage of net sales are usually higher in lower sales volume quarters and lower in higher sales volume quarters.
Selling, General and Administrative Expenses (including Depreciation and Amortization) Selling, general and administrative (including depreciation and amortization), or SG&A, expenses are composed of payroll and other compensation, marketing and advertising expense, depreciation and amortization expense and other selling and administrative 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. We use operating income as an indicator of the productivity of our business and our ability to manage SG&A expenses.
We use operating income as an indicator of the productivity of our business and our ability to manage SG&A expenses.
Revenue from the sale of gift cards is deferred and not included in net sales until the gift cards are redeemed to purchase merchandise or as breakage revenue in proportion to the pattern of redemption of the gift cards by the customer. Our business is seasonal and as a result, our net sales fluctuate from quarter to quarter.
Net sales consist of sales from comparable stores, non-comparable stores, and e-commerce, which includes shipping and handling revenue. Revenue from the sale of gift cards is deferred and not included in net sales until the gift cards are redeemed to purchase merchandise or as breakage revenue in proportion to the pattern of redemption of the gift cards by the customer.
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.
As a result, data in this Annual Report regarding our comparable sales may not be comparable to similar data made available by other retailers.
From January 29, 2023 to March 16, 2023, we committed to 26 new leases with terms of 10 years that have future minimum lease payments of approximately $50.4 million.
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
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. We believe that our business model has resulted in strong financial performance when considered in light of the economic environment.
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).
Cash Used in Investing Activities Net cash used in investing activities for fiscal 2022 was $3.9 million, a decrease of $461.7 million compared to fiscal 2021. 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 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.
Gross profit increased to $1,095.5 million in fiscal year 2022 from $1,030.4 million in fiscal year 2021, an increase of $65.1 million, or 6.3%. Gross margin decreased to 35.6% in fiscal year 2022 from 36.2% in fiscal year 2021, a decrease of approximately 60 basis points.
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.
Cash Provided by Operating Activities Net cash provided by operating activities for fiscal 2022 was $314.9 million, a decrease of $13.0 million compared to fiscal 2021. The decrease was primarily due to an increase in income taxes paid.
Cash 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.
Recently Issued Accounting Pronouncements See "Note 1 - Summary of Significant Accounting Policies" to the consolidated financial statements included in Item 8 "Consolidated Financial Statements and Supplementary Data" of this Form 10-K, for a detailed description of recently issued accounting pronouncements. 46 Contractual Obligations The following table summarizes, as of January 28, 2023, 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) $ 1,790.5 $ 264.4 $ 498.7 $ 433.1 $ 594.3 Purchase obligations (2) 15.8 15.8 — — — Total $ 1,806.3 $ 280.2 $ 498.7 $ 433.1 $ 594.3 (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 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.
The components of our SG&A expenses may not be comparable to those of other retailers. We expect that our SG&A expenses will increase in future periods due to our continuing store growth. In addition, any increase in future share-based grants or modifications will increase our share-based compensation expense included in SG&A expenses.
SG&A expenses as a percentage of net sales are usually higher in lower sales volume quarters and lower in higher sales volume quarters. The components of our SG&A expenses may not be comparable to those of other retailers. We expect that our SG&A expenses will increase in future periods due to our continuing store growth.
As of January 28, 2023, we operated 1,340 stores in 42 states. We also offer our merchandise on the internet, through our fivebelow.com e-commerce website as well as with an on demand third party delivery service to enable our customers to shop online and receive convenient same day delivery.
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.
Our ability to operate improved beginning in the second half of fiscal 2020 and extending into fiscal 2021. 43 Cash Flows A summary of our cash flows from operating, investing and financing activities is presented in the following table (in millions): Fiscal Year 2022 2021 Net cash provided by operating activities $ 314.9 $ 327.9 Net cash used in investing activities (3.9) (465.6) Net cash used in financing activities (43.6) (66.1) Net increase (decrease) during period in cash and cash equivalents (1) $ 267.4 $ (203.8) (1) Components may not add to total due to rounding.
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.
In July 2020, we acquired land in Buckeye, Arizona, to build an approximately 860,000 square foot shipcenter for approximately $65 million. We began operating the shipcenter in August 2021. In March 2021, we acquired land in Indianapolis, Indiana, to build an approximately 1,030,000 square foot shipcenter for approximately $60 million. We began operating the shipcenter in June 2022.
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.
The share repurchase program may be modified or discontinued at any time.
There can be no assurances that any additional repurchases will be completed, or as to the timing or amount of any repurchases. The share repurchase program may be modified or discontinued at any time.
As a percentage of net sales, selling, general and administrative expenses increased approximately 160 basis points to 24.4% in fiscal year 2022 compared to 22.8% in fiscal year 2021. The increase in selling, general and administrative expenses was the result of an increase of $80.7 million in store-related expenses to support new store growth and $19.1 million of corporate-related expenses.
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.
The increase in our effective tax rate was primarily driven by discrete items, which includes the impact of ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting." Net Income As a result of the foregoing, net income decreased to $261.5 million in fiscal year 2022 from $278.8 million in fiscal year 2021, a decrease of approximately $17.3 million, or 6.2%.
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 gross margin was primarily the result of an increase as a percentage of net sales in store occupancy costs. Selling, General and Administrative Expenses Selling, general and administrative expenses increased to $750.4 million in fiscal year 2022 from $650.6 million in fiscal year 2021, an increase of $99.8 million, or 15.3%.
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%.
Our comparable sales decreased by 2.0% in fiscal 2022, increased by 30.3% in fiscal 2021, and decreased by 5.5% in fiscal 2020. Between fiscal 2020 and fiscal 2022, our net sales increased from $1,962.1 million to $3,076.3 million, representing a compounded annual growth rate of 25.2%.
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%.
Interest Income (Expense) and Other Income (Expense), net Interest income and other, net increased to $2.5 million in fiscal year 2022 from interest expense and other, net of $13.2 million in fiscal year 2021, an increase of $15.7 million.
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%.
(2) Only includes stores open before the beginning of the fiscal year. Fiscal Year 2022 Compared to Fiscal Year 2021 Net Sales Net sales increased to $3,076.3 million in fiscal year 2022 from $2,848.4 million in fiscal year 2021, an increase of $227.9 million, or 8.0%.
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.
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.
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.
Cash Used in Financing Activities Net cash used in financing activities for fiscal year 2022 was $43.6 million, a decrease of $22.5 million compared to fiscal 2021. The decrease was primarily the result of a decrease in the repurchase and retirement of common stock.
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.
Over the same period, our operating income increased from $154.8 million to $345.0 million, representing a compounded annual growth rate of 49.3%. In addition, we expanded our store base from 1,020 stores at the end of fiscal 2020 to 1,340 stores at the end of fiscal 2022 and we plan to open 200 new stores in fiscal 2023.
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.
As of January 28, 2023, we have not made any repurchases under this program. Since approval of the share repurchase program in March 2018, we have purchased approximately 1,100,000 shares for an aggregate cost of approximately $150 million. There can be no assurances that any additional repurchases will be completed, or as to the timing or amount of any repurchases.
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.
The impairment loss analysis requires management to apply judgment and make estimates. Leases Leases are accounted for in accordance with the guidance in “Leases" (Topic 842). We are required to recognize an operating lease asset and an operating lease liability for all of our leases (other than leases that meet the definition of a short-term lease).
The impairment loss analysis requires management to apply judgment and make estimates. Income Taxes Income taxes are accounted for under the asset-and-liability method .
The increase was the result of a non-comparable sales increase of $281.7 million, partially offset by a comparable sales decrease of $53.8 million. In fiscal year 2022, we opened 150 new stores compared to 170 net new stores in fiscal year 2021.
In fiscal year 2023, we opened 204 net new stores compared to 150 new stores in fiscal year 2022.
Removed
Historical results are not necessarily indicative of the results to be expected for any future period and results for any interim period may not necessarily be indicative of the results that may be expected for a full year. Overview Five Below, Inc.
Added
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.
Removed
Due to the 53rd week in fiscal 2017, the period from January 29, 2017 to February 3, 2018, all comparable sales related to any reporting period during the year ended February 2, 2019 are reported on a restated calendar basis using the National Retail Federation's restated calendar comparing similar weeks.
Added
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.
Removed
The increase in interest income and other, net was primarily driven by an other than temporary impairment related to an equity method investment in fiscal year 2021. Income Tax Expense Income tax expense decreased to $86.0 million in fiscal year 2022 from $87.9 million in fiscal year 2021, a decrease of $1.9 million, or approximately 2.1%.
Added
We began operating the shipcenter in June 2022.
Removed
Our effective tax rate for fiscal year 2022 was 24.7% compared to 24.0% in fiscal year 2021.
Added
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.
Removed
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.
Added
We regularly analyze the components of gross profit, a non-GAAP financial measure, as well as gross margin as it provides a useful and relevant measure to analyze our financial performance.
Removed
As a result of the COVID-19 pandemic, our business operations and results of operations, including our net sales, earnings and cash flows, were materially impacted in fiscal 2020 as a result of the temporary closures of our stores in the first half of 2020, and decreased customer traffic in stores, as the result of limitations on the number of persons permitted in stores at one time by certain local and state regulations.
Added
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.
Removed
The liability is equal to the present value of lease payments using an estimated incremental borrowing rate, on a collateralized basis over a similar term, that we would have incurred to borrow the funds necessary to purchase the leased asset. The asset is based on the liability, subject to certain adjustments, such as for initial direct costs.
Added
(2) Only includes stores open before the beginning of the fiscal year. (3) Gross margin is equal to our net sales less our cost of goods sold as a percentage of our net sales.
Removed
For income statement purposes, leases are required to be classified as either operating or finance leases. Operating leases result in straight-line expense while finance leases result in a front-loaded expense pattern. Income Taxes Income taxes are accounted for under the asset-and-liability method .
Added
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.
Added
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.
Added
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%.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed5 unchanged
Biggest changeGiving effect to the Second Amendment, outstanding borrowings under the Revolving Credit Facility would accrue interest at floating rates plus an applicable margin ranging from 1.12% to 1.50% for SOFR loans and 0.125% to 0.50% for base rate loans, and letter of credit fees range from 1.125% to 1.50%, in each case based on the average availability under the Revolving Credit Facility.
Biggest changeThe Credit Agreement provides that the interest rate payable on borrowings shall be, at the Company's option, a per annum rate equal to (a) a base rate plus an applicable margin ranging from 0.125% to 0.50% or (b) SOFR plus a margin ranging from 1.12% to 1.50%. Letter of credit fees range from 1.125% to 1.50%.
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
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
As of January 28, 2023, we had approximatel y $192 million available on the line of credit.
As of February 3, 2024, we had approximatel y $216 million available on the line of credit.

Other FIVE 10-K year-over-year comparisons