Five Below, Inc. 2025年第一季度前瞻：新的展望

Restricted - External Company UpdateFIVEEQUAL WEIGHTU.S. Broadlines, Hardlines &Food RetailPrice TargetPrice (30-May-25)Potential Upside/DownsideSource: Bloomberg, Barclays ResearchMarket Cap (USD mn)Shares Outstanding (mn)Free Float (%)52 Wk Avg Daily Volume (mn)Dividend Yield (%)Return on Equity TTM (%)Current BVPS (USD)Source: BloombergPrice PerformanceExchange-Nasdaq52 Week rangeUSD 141.69-52.38Source: IDCLink to Barclays Live for interactive chartingU.S. Broadlines, Hardlines & FoodRetailSeth Sigman+1 212 526 7417seth.sigman@barclays.comBCI, USOliver Hu+1 212 526 6180oliver.hu@barclays.comBCI, USTheo Brito+1 212 526 9504theo.brito@barclays.comBCI, US NEUTRALUnchangedUSD 93.00UnchangedUSD 116.57-20.2%641755.0697.522.1N/A14.9532.86 a problem, among other issues; we believe these have mostly been resolved by now (Figures1). iii) Easter was later this year vs. last year, which may have supported an acceleration inApril (Figure 3); iv) Dislocations in the market may have helped, incl. closings at Big Lots andParty City, along with the end of the de-minimis exemption, what seems like a slowdown inTemu, and weakness at TGT. Our analysis of Barclays card data inside looks at consumerswho have shopped at Big Lots in 2022 and observes their purchases across various retailersover time, showing that FIVE and other dollar store peers are gaining wallet share (Figure 4).3.Looking for some upward revision to sales guidance:While 2H visibility remainslimited (incl.tariffs,inflation, consumer demand, jobs, tax bill, etc.), we would expect FIVEto raise its FY25 comp guidance given the strong Q1 trends and exit rate. Taking the +6.7%comp and assuming the remaining quarters of the year comp in-line with the company'soriginal guidance implies FY25 comps of +1-4% vs. the prior 0-3%, which seems like areasonable increase given that there is still plenty of consumer uncertainty. That said, wecan get to >4% for the FY (perhaps a 2-5% range) assuming Q2 comps above the originalguidance range due to the strong exit rate4.For EPS, most of the Q1 sales upside seems to flow straight throughas the updatedguidance embeds minimal increase in opex vs. the original guidance. While thisdemonstrates a high degree of operating leverage as sales improve on a large fixed costbase, we would expect costs to come back eventually if this level of growth is sustained.5.Tariffsworse today than vs. guidance, although assumes better visibility on mitigationby now:The current Chinatariffrate of 30%, while down from the 145% due to the pause, isstill higher than the 20% rate FIVE had assumed when it provided its initial FY25 guidance.The 20% rate was expected to have a -200bps annualized impact on GM, which FIVE willstart to see in 2H (will be -100bps to FY25 GM). Currenttariffrates suggests the annualizedimpact is now closer to ~250bps (~125bps to FY25), which would represent an incremental~$0.30 impact to EPS (~$0.15 this year) before factoring any additional demand destructionor opex deleverage. That said, we would be looking for details on how the company hastaken its exposure to China down, which most companies have been able to speak to in Q1.6.EPS implications:Net/net, we see modest upside to the high end of the $4.10-4.72 FY25guidance range. FY25 opex should deleverage less or potentially even leverage on a highertop-line outlook vs. the current guidance of ~80bps deleverage as we believe costs shouldcome back slower than sales, although we would also expect greater headwinds fromhigher incentive comp vs. the initial guidance of ~50bps. Inventory checks are in Jan. andJuly, and FIVE didn’t incorporate better shrink into their FY25 guidance when they reportedQ4 results, which is an opportunity but also unknown at this point. For FY26, it'sdifficulttoget meaningful EPS upside at this point, although that partly reflects costs wrapping intothe year and EPSeffectivelyre-basing,shiftingthe focus to FY27 normalized EPS power andgrowth. For FY26 specifically, we would look for more normalized comps and opex growth atthis point, but we note thattariffheadwinds should wrap into 1H, driving another ~125 bpsof GM pressure for the year (gross, before any update to mitigation targets); this doesn'tseem to be reflected in Street estimates, which is only modeling GM down -10bps y/y.Model update:We raise Q1 comps to +6.7% from +1.0% and Adj. EPS to $0.83 from $0.55 perthe May business update. For Q2, we raise comps to +4.0% from +3.0% on the strong Q1 exitrate, which brings our EPS to $0.59 from $0.49 and vs. consensus $0.53. For FY25, we increasecomps to +3.5% from +1.6% but partiallyoffsetthis with lower GM from higher Chinatariffs,which brings our Adj. EPS to $4.88 from $4.55 vs. consensus $4.64. For FY26, we maintain compsof +2.5% and Adj. EPS of $5.00, withtariffheadwindsoffsetby the higher FY25 base.2 Encouraged by what seems like improved conversionFIVE's transactions seem to be outperforming actual storetraffic,which suggests conversion isup signi