Five Below: Multiple Levers For Future Growth

Nov. 22, 2022 6:28 PM ETFive Below, Inc. (FIVE)1 Comment
Boring Capital profile picture
Boring Capital
5 Followers

Summary

  • Five Below represents a compelling opportunity to invest in a leading national specialty value retailer with access to multiple levers to drive sustainable growth over the next ~5+ years.
  • This is underpinned by an aggressive store rollout strategy, positive SSSG from a shift in store format (Beyond Five), and the expected continuation of attractive store economics.
  • While the market seems to be pricing in some doubt over the ability to fully execute on the planned store rollout, management has so far been conservative on operational leverage.
  • This provides substantial incremental upside, even if only 50%-60% of the target rollout plan (3x today's network by 2030) is achieved.
  • Based on historical performance and management guidance, the business is also expected to perform strongly through recessionary periods as customers trade down.

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Five Below Retail Store. Five Below is a chain that sells products that cost up to 5 dollars.

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FIVE - Peer Multiples

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This article was written by

Boring Capital profile picture
5 Followers
Value investor with c.10 years of experience across global markets. Always keen to adopt a sector agnostic approach but have spent most of my career in the Consumer, Healthcare, Technology, Retail sectors.

Disclosure: I/we have a beneficial long position in the shares of FIVE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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