FIVE Below (FIVE) risk factors, FY2025 10-K

Risks Relating to Our Business and Industry

1. 01Inflation and rising commodity prices could adversely affect our business
2. 02Our growth is dependent on our ability to open profitable new stores. We believe we have an opportunity to continue to grow our store base from 1,771 stores in 44 states as of February 1, 2025 to more than 3,500 locations over time
3. 03Any disruption in our ability to select, obtain, distribute and market merchandise attractive to customers at prices that allow us to profitably sell such merchandise could impact our business negatively
4. 04Our sales depend on a volume of traffic to our stores, and a reduction in traffic to, or the closing of, anchor tenants and other destination retailers in the shopping centers in which our stores are located could significantly reduce our sales and leave us with excess inventory
5. 05Our new store growth is dependent upon our ability to successfully expand our distribution network capacity, and failure to achieve or sustain these plans could affect our performance adversely
6. 06A significant disruption to our distribution network or to the timely receipt of inventory could adversely impact sales or increase our transportation costs, which would decrease our profits
7. 07Extreme weather conditions common to areas in which many of our stores are located could negatively affect our business and results of operations, particularly as such extreme conditions occur during what is typically our most profitable quarter
8. 08A significant disruption in our information technology systems and our inability to adequately maintain and update those systems could adversely affect our operations and negatively affect our customers
9. 09We use, and may over time increase the usage of, machine learning and other types of artificial intelligence in our business, and challenges with properly managing its use could adversely affect our business
10. 10We are subject to customer payment-related risks that could increase operating costs or exposure to fraud or theft, subject us to potential liability and potentially disrupt our business
11. 11Our growth from existing stores is dependent upon our ability to increase sales and improve the efficiencies, costs and effectiveness of our operations, and failure to achieve or sustain these plans could affect our performance adversely
12. 12Our profitability and cash flows from operations may be negatively affected if we are not successful in managing our inventory balances and inventory shrinkage
13. 13Our business requires that we lease substantial amounts of space and there can be no assurance that we will be able to continue to lease space on terms as favorable as the leases negotiated in the past
14. 14Operational difficulties, including those associated with our ability to either lease or build and operate our shipcenters, could adversely impact our business
15. 15We operate in a competitive environment and, as a result, we may not be able to compete effectively or maintain or increase our sales, market shares or margins
16. 16Our business is seasonal, and adverse events during the holiday season could have a substantial negative impact on our operating results
17. 17We sell merchandise on the internet, through our fivebelow.com e-commerce website and mobile app. Our ability to successfully execute a further expansion of our e-commerce strategy may suffer if we are unable to sell and fulfill our products in a cost-efficient manner
18. 18Our inability to upgrade or expand, our technology systems as a result of external factors, staffing shortages or difficulties in updating our existing technology or developing or implementing new technology could have a material adverse effect on our business or results of operations
19. 19We are exposed to the risk of natural disasters, adverse weather conditions, pandemic outbreaks, global political events, war and terrorism that could disrupt business and result in lower sales, increased operating costs and capital expenditures
20. 20Changes to federal, state or provincial income tax legislation could have a material adverse effect on our business and results of operations
21. 21Our current insurance programs may expose us to unexpected costs and negatively affect our financial performance
22. 22Product and food safety claims and the effects of legislation and regulations on product safety and quality and food safety and quality could affect our sales and results of operations adversely
23. 23The terms and availability of our revolving credit facility may restrict our current and future operations, which could adversely affect our ability to respond to changes in our business and to manage our operations

Risks Related to Ownership of Our Common Stock

1. 24Our stock price may be volatile or may decline regardless of our operating performance
2. 25Our business and reputation may be adversely affected by environmental, social and governance matters
3. 26Your percentage ownership in us may be diluted by future equity issuances, which could reduce your influence over matters on which shareholders vote
4. 27We do not expect to pay any cash dividends for the foreseeable future
5. 28Certain provisions of our amended and restated articles of incorporation and amended and restated bylaws and applicable provisions of Pennsylvania law may make it more difficult or impossible for a third-party to acquire control of us or effect a change in our Board of Directors and management