Five Below, Inc. Common Stock Goldman Sachs Global Consumer and Retail Conference

Good morning, everyone. Thanks for joining us. It is my pleasure to introduce Five Below and to moderate this fireside chat. Today we have with us Winnie Park, Chief Executive Officer of Five Below, and Dan Sullivan, Chief Financial Officer of Five Below. Thank you so much for joining us today.

Thanks for having us. There is so much to talk about, and so this time is going to go very fast.

But in the past two years, Five Below has undergone quite a bit of change, especially starting with both your new roles. So Winnie, I wondered if you could maybe, now that it has been a year, what has been your biggest learnings about the business? How has your perspective evolved compared to when you first stepped into the role?

Thank you so much, Kate, and we are excited to be here and talk a little bit about the Five Below story, at least for the past two years. I think the biggest surprise I have had in the business is how quickly we were able to turn the business around. If anything, I think it is a testament to the strategy that we put in place, and it is really great to see customers respond to that strategy. But it really started with, one, a maniacal focus on the customer. For us, that meant going back to kids and zoning in on Gen Alpha, really understanding the needs of Gen Z and how they differ from Gen Alpha, and then finally, millennial parents, whom we love, and they are always looking for a quick and easy treat for their kids, and we are kind of a one-stop destination for that.

I think that focus really set us up for success, and embedding that in everything we do. The other learning is if you get the product right, they will come. With product, we are really moving towards an approach of merchandising that is selling a full assortment as opposed to focusing on one key item. With that assortment approach, curated product storytelling has been so critical. You add product focus with a way to communicate with the customers via social media and our first-ever world Chief Marketing Officer. Being able to meet customers where they are in social has done tremendous things in terms of driving traffic, engagement, and interest. We've just begun the journey of actually capturing customer records so that we can get them to come back and communicate more directly with those customers.

The last piece of this is investing in the store experience. We really have invested in terms of getting labor in the stores for kind of the basics of moving products from the back to the front, but also in terms of visual merchandising and making sure that our product stories and that curation of product is really clear. With that, we also simplified pricing. We went back to the good old fashioned whole price points, 1, 2, 3, 4, and 5 being 80% of the assortment. Stepping up and out, Five Beyond doesn't have to be in a corner of the store in a special area and start with $25. We can integrate those products in line. All of those things have been really terrific in terms of getting customers back in the store engaged with us.

I think they're also the formula for a durable growth story in terms of how we sustain our comp growth, along with a ton of white space opportunity with new store growth. It's been really, really tremendous.

Mm-hmm. You can see that in the stores and obviously in the results. Dan, I'm going to have kind of a similar question for you. It's two years, Winnie. One year for you, sorry, I misspoke before. What have been your biggest learnings and surprises and observations that you've made about the business in your role?

Yeah, I was a huge fan of the business from the outside, both with a bit of jealousy as a competitor and then ultimately as a customer of as my kids grew up. So I thought I knew the business fairly well. Having said that, I think when you get into the organization and you learn the business, I think for me, three things became really clear. One is incredibly powerful business model. It is simplistic in terms of how it translates growth at the top efficiently into growth at the bottom. And that profit then converts to cash pretty seamlessly. I haven't seen many models that work this well with this simplicity. So that was one. I think the second thing is around store growth. From the outside, when I joined, we were just shy of 2,000 stores.

We've said publicly we see a runway to 3,500 plus here in the U.S., and certainly, I had a question on that. As I dug in and really got to know the business, spent time with the real estate team, I'm incredibly amazed at the line of sight the team had towards that 3,500 plus. In fact, if I were betting today, I'd bet on the plus. I think that's how convicted we are in terms of unit growth, which you just don't see, basically a business doing this well that has a clear line of sight to double its stores. Then the third piece, I think, for me, is around the uniqueness of this concept. I remember when I met with Winnie and we started talking to each other, I said to her, "Who's our competitive set?

How do we think about that?" She laughed, and it wasn't out of arrogance or anything. It was just when you get this model right, when you do what Winnie and the team have done to the assortment, to the product, to the newness, we are simply a different concept. We are one of one, as Winnie likes to say. For me, you don't really expect that level of brand strength, and it creates a tremendous competitive moat for us. So those were my learnings.

Great. If I can jump back to Winnie. I'm going to go back and forth a little bit. But one thing you had mentioned was the 80% of the one, two, three, four, and five-dollar price point, and then Five Beyond. But you have been, I don't know if aggressive is the right word, but you certainly have pushed towards what you think is appropriate from a higher price point. So could you maybe talk to what you saw that allowed you that confidence to move that direction, and where do you see price points going?

Yeah. Great question. I think never waste a crisis would be my motto for the tariff.

For us, it pushed us to really re-look at every item in the line and relative value. What we discovered is that we could do a lot at Five Below, but we could pack a ton of value in price points like $7.