Five Below: I Was Right (But Still Anxious)

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Right. So, last year I had this theory about Five Below. The teen/pre-teen discount haven. Shares had taken a bit of a beating – down 51%, if you’re keeping score, which, let’s be honest, you probably are if you’re reading this. I figured a 50% bounce in 2025 was… reasonable. Turns out, “reasonable” was a colossal understatement. They didn’t just bounce; they positively launched. A 79% return. The S&P 500 limped in at 16%. I mean, good for them, I guess. But mostly, good for me. And, you know, my portfolio. Don’t judge.

I was right, obviously. It feels good to be right. It really does. But here’s the thing about being right: it doesn’t stop the low-grade anxiety. It just… shifts it. I’d identified the potential turnaround – new CEO, rebounding sales, the usual. But there was one thing I completely missed. And it’s not just about a good stock pick; it’s about understanding how profoundly weird consumer behavior can be.

What I Got (Mostly) Right

Okay, let’s recap. 2024 was… messy. Falling same-store sales, profits dipping, the CEO doing a walk of shame. I predicted a rebound, a new leader restoring faith, the whole shebang. Sales did bounce – a whopping 12.5% jump. Earnings per share? Up from $4.60 to $6.10. Numbers don’t lie, people. And the new CEO, Winnie Park? She’s… competent. Which, in the corporate world, is practically revolutionary. The stock valuation went up under her watch, so, you know, tick that box.

But here’s where it gets interesting. I thought the key was proving they could sell stuff above five bucks. A little section called “Five Beyond” was the test case. I figured it was a smart move, showing they weren’t entirely reliant on rock-bottom pricing. I was so proud of my insight. So, so proud.

What I Didn’t Expect (And Still Don’t Fully Understand)

Five Below, as the name suggests, is built on the premise of cheap thrills. Five dollars or less. It’s a psychological barrier. Like Dollar Tree or Dollar General. You worry about inflation eroding their pricing power. How much can you really discount before there’s nothing left? It’s a valid concern. I had it. Briefly.

Then, Winnie Park came in and… scrapped Five Beyond. Immediately. It felt like a disaster. Like watching someone dismantle a perfectly good plan. I was internally screaming. And then… it worked. Spectacularly. Turns out, they didn’t need a special section to sell higher-priced items. They just… started doing it everywhere. It’s like they were conducting a social experiment, and we were all unwitting participants. And I, apparently, was the only one who didn’t get the memo.

They’re just casually sprinkling higher-priced items throughout the store, and people are buying them. It’s… unnerving. It defies logic. But it’s also incredibly lucrative. I’m starting to suspect the entire consumer base is operating on a different plane of existence.

Why This Is Huge (And Why I’m Still Slightly Panicked)

Last year, I ended my article with a cautious optimism. “Even if the gains don’t materialize, the long-term opportunity is still worth the wait.” Well, the gains materialized. And the long-term opportunity? It’s still incredibly attractive. But now, there’s a different kind of pressure. The pressure of being right. Of having to maintain that success. It’s exhausting, frankly.

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They’ve got over 1,900 locations now, aiming for 3,500. New stores pay for themselves in about a year. That’s… efficient. And now, with this new pricing strategy, margins are going to get even healthier. It’s a beautiful, terrifying cycle.

Look, I’m not saying this is a sure thing. Nothing is ever a sure thing. But I genuinely believe Five Below will outperform the S&P 500 again over the next few years. They’re opening hundreds of new stores, making smart moves, and, most importantly, baffling me with their consumer insights. My position is up substantially, and I’m cautiously optimistic about holding onto my shares. Mostly, I’m just hoping I haven’t jinxed it.

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2026-01-19 02:42