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Can Five Below Stock Turn a 50% Drop in 2024 Into a 50% Gain in 2025?
FIVEFive Below(FIVE) The Motley Fool·2024-12-16 13:35

Core Viewpoint - Five Below has experienced a significant decline in stock performance in 2024, down 51% year to date, despite strong long-term returns since its IPO in 2012 [1][4]. Sales Performance - Same-store sales for Five Below have decreased nearly 3% in the first three quarters of 2024 compared to the same period in 2023, indicating weaker sales than investors expected [2]. - Total net sales for 2024 are projected to be 2.5billion,reflectinga122.5 billion, reflecting a 12% increase, but this is overshadowed by a 27% drop in operating cash flow from 92 million last year to 67millionthisyear[3].ManagementChanges−TheabruptdepartureofCEOJoelAndersoninJulycreateduncertaintyamonginvestors,contributingtothestock′sdecline[4].−FiveBelowhasappointedWinnieParkasthenewCEO,whichmayhelprestoreinvestorconfidenceandstabilizethecompany′sstockperformance[9].FutureOutlook−FiveBelowplanstoincreaseitsstorecountto1,771bytheendoffiscal2024andaimstoopenatleast150additionallocationsin2025,representingover867 million this year [3]. Management Changes - The abrupt departure of CEO Joel Anderson in July created uncertainty among investors, contributing to the stock's decline [4]. - Five Below has appointed Winnie Park as the new CEO, which may help restore investor confidence and stabilize the company's stock performance [9]. Future Outlook - Five Below plans to increase its store count to 1,771 by the end of fiscal 2024 and aims to open at least 150 additional locations in 2025, representing over 8% growth [6]. - The company’s third-quarter same-store sales showed a surprising increase of almost 1%, suggesting a potential rebound in sales [7]. - Full-year net income for 2024 is expected to be between 240 million and 250million,downfrom250 million, down from 301 million in 2023, but further declines in profits are not anticipated for 2025 [8]. - If Five Below achieves double-digit profit growth in 2025 and its valuation improves, the stock could realistically gain 50% or more [10]. Long-term Growth Potential - Five Below is expected to continue opening hundreds of new locations in the coming years, with a short payback period for stores and zero debt, indicating strong long-term growth potential [12]. - Even if gains do not materialize in 2025, the long-term investment opportunity remains promising [13].