Discount retailer Five Below (NASDAQ: FIVE) reported Q4 CY2025 results topping the market’s revenue expectations, with sales up 24.3% year on year to $1.73 billion. On top of that, next quarter’s revenue guidance ($1.19 billion at the midpoint) was surprisingly good and 8.4% above what analysts were expecting. Its non-GAAP profit of $4.31 per share was 7.6% above analysts’ consensus estimates.
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Five Below (FIVE) Q4 CY2025 Highlights:
- Revenue: $1.73 billion vs analyst estimates of $1.71 billion (24.3% year-on-year growth, 1.1% beat)
- Adjusted EPS: $4.31 vs analyst estimates of $4.00 (7.6% beat)
- Adjusted EBITDA: $368.4 million vs analyst estimates of $347.2 million (21.3% margin, 6.1% beat)
- Revenue Guidance for Q1 CY2026 is $1.19 billion at the midpoint, above analyst estimates of $1.10 billion
- Adjusted EPS guidance for the upcoming financial year 2026 is $8.00 at the midpoint, beating analyst estimates by 13.4%
- Operating Margin: 18%, in line with the same quarter last year
- Free Cash Flow Margin: 23.1%, similar to the same quarter last year
- Locations: 1,921 at quarter end, up from 1,771 in the same quarter last year
- Same-Store Sales rose 15.4% year on year (-3% in the same quarter last year)
- Market Capitalization: $11.8 billion
Winnie Park, CEO of Five Below, said, "Our outstanding fourth quarter results capped off a transformational year that firmly established Five Below as THE destination for the Kid and the Kid in all of us. These exceptional, broad-based results reflect our Crew’s amazing execution of our customer-centric strategy and demonstrate the progress we’ve made building a stronger, more agile brand."
Company Overview
Often facilitating a treasure hunt shopping experience, Five Below (NASDAQ: FIVE) is an American discount retailer that sells a variety of products from mobile phone cases to candy to sports equipment for largely $5 or less.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $4.76 billion in revenue over the past 12 months, Five Below is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers. On the bright side, it can grow faster because it has more white space to build new stores.
As you can see below, Five Below grew its sales at an impressive 15.7% compounded annual growth rate over the last three years as it opened new stores and increased sales at existing, established locations.
This quarter, Five Below reported robust year-on-year revenue growth of 24.3%, and its $1.73 billion of revenue topped Wall Street estimates by 1.1%. Company management is currently guiding for a 22.6% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 9.5% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is healthy and indicates the market is forecasting success for its products.
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Store Performance
Number of Stores
Five Below operated 1,921 locations in the latest quarter. It has opened new stores at a rapid clip over the last two years, averaging 13.9% annual growth, much faster than the broader consumer retail sector. This gives it a chance to scale into a mid-sized business over time.
When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.
Same-Store Sales
A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
Five Below has been one of the most successful retailers over the last two years thanks to skyrocketing demand within its existing locations. On average, the company has posted exceptional year-on-year same-store sales growth of 4.8%. This performance along with its meaningful buildout of new stores suggest it’s playing some aggressive offense.
In the latest quarter, Five Below’s same-store sales rose 15.4% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.
Key Takeaways from Five Below’s Q4 Results
We were impressed by Five Below’s optimistic EPS guidance for next quarter, which blew past analysts’ expectations. We were also glad its revenue guidance for next quarter trumped Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 2.8% to $219.53 immediately following the results.
Indeed, Five Below had a rock-solid quarterly earnings result, but is this stock a good investment here? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
