Five Below has officially eliminated its above-$5 section
The Philly-based discount retailer is continuing to rebound under a new CEO, who is pivoting from her predecessor’s strategy of pushing higher-priced items.
Five Below, the Philadelphia-based discount retailer, has officially done away with its above-$5 section.
But all its products aren’t below $5.
Those higher-priced items — which had been set apart in stores’ “Five Beyond” sections and account for less than 20% of inventory — are now interspersed with the rest of the merchandise, according to chief executive officer Winnie Park.
“We’ve actually seen that product perform better” when placed throughout the store, Park said last week on the company’s earnings call. “If you have a $35 gilt floor mirror, it’s in the room section and not tucked away in the back of the store.”
The move came during a strong quarter for Five Below, which sells toys, games, decor, tech accessories, candy, party supplies, sporting goods, and more to kids, teens, and their parents.
The company’s net sales rose nearly 33% and its net income increased to $123 million, triple the $41 million it recorded in the first quarter last year, according to the latest earning report.
Executives attributed some of this growth to the popularity of games and toys, “underpinned by strong support of squishy trends and collectibles,” said Dan Sullivan, chief financial officer.
“Everyone has been talking about the squishy dumplings,” the viral fidget toys that Five Below capitalized on, Park said. Pokemon and other trading cards also flew off the shelves.
“We’re constantly looking at what next trend we can amplify,” the CEO said.
Other factors contributed to higher sales, too, said the executives, citing higher tax refunds and broader economic pressures that are attracting more consumers to discount retailers.
Off-price stores, such as Dollar General and South Jersey-based Burlington, have thrived in recent years amid rising costs of gas, groceries, utilities, and other essentials.
Secondhand shops like Goodwill, which recently opened a giant new store in South Jersey, are also seeing stronger sales.
» READ MORE: At a new Goodwill in South Jersey, customers are flocking for the deals and the resale potential
At Five Below, executives said they have seen growth across all customer demographics, including millennial moms. Park said exercise gear, including yoga and Pilates equipment, has been a big seller.
Sullivan said he’s curious to see what happens the rest of the year.
“We’re being cautious,” the CFO said. “We’re looking at the world that our customers are living in with rising fuel costs, with very sticky inflation, with a somewhat soft labor market.”
“And we think a piece of that pain that they are feeling wasn’t felt in the first quarter purely because of tax proceeds year-over-year that were significantly up,” he added.
Five Below was founded in Wayne in 2002 and has since grown to include 1,970 stores in 46 states. In 2018, the company opened a massive three-story headquarters in the former Lit Bros. building at 701 Market St. in Center City.
After a period of rapid expansion, Five Below has experienced some upheaval in recent years. Former CEO Joel D. Anderson stepped down in 2024 after two quarters of disappointing profits. Anderson, now CEO of Petco, had pushed to expand Five Below’s selection of above-$5 products.
Park, the former top boss at Forever 21, took the helm in December 2024, with a mission to reaffirm Five Below’s reputation as an “extreme-value retailer,” as the company called itself in her hiring announcement.
By last summer, the company was rebounding, thanks in part to viral toys like plush Squishmallows and artificial-intelligence tools that now help with inventory.
» READ MORE: How Five Below used AI to target tweens and cut costs
Analysts told industry publication RetailDive that Five Below’s latest earning report showed the business in a strong position. They noted that stock prices fell initially, however, over concerns about the company’s ability to sustain this growth.
“Looking ahead, the outlook remains very positive but is tempered by a dose of caution,” GlobalData managing director Neil Saunders told the outlet.
