FIVE - Five Below: A Massive Reset

2024-07-15 12:44:08 ET

Summary

• Five Below, Inc. experienced rapid growth in the 2010s, expanding store count and sales significantly, and subsequently became a Wall Street darling.
• Despite strong growth, shares have recently seen a sharp decline due to challenges such as shrink, softer macroeconomic conditions, and self-inflicted price wounds.
• The updated outlook for 2024 shows lackluster sales growth and profitability, leading to a significant decline in share price, making valuation more reasonable as execution concerns remain.

In 2018, I wondered if it was up, up, up in the case of Five Below, Inc. ( FIVE ) . During the 2010s, I have been appreciative of the discount retailer, but fearful given the premium valuation multiples applied to one of the most promising retail growth stories out there....

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