What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2025-03-20 compared with 2024-03-21 · 129 added, 98 removed, 590 unchanged (28% of the section changed)

14 unchanged sentences

Report of KPMG LLP, Independent Registered Public Accounting Firm ( KPMG LLP , Philadelphia, PA , Audit Firm ID:

Consolidated Balance Sheets as of February 3, 202 4 and January 2 8 , 202 3

Consolidated Balance Sheets as of February 1 , 202 5 and February 3 , 20 24

Consolidated Statements of Operations for Fiscal Years 202 4 , 202 3 and 20 2 2

Consolidated Statements of Changes in Shareholders’ Equity for Fiscal Years 202 4 , 202 3 and 20 2 2

Consolidated Statements of Cash Flows for Fiscal Years 202 3 , 202 2 and 202 1

Consolidated Statem ents of Cash Flows for Fiscal Years 202 4 , 202 3 and 20 2 2

Notes to Consolidated Financial Statements

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We have audited the accompanying consolidated balance sheets of Five Below, Inc.

and subsidiaries (the Company) as of February 3, 2024 and January 28, 2023, the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each of the fiscal years in the three-year period ended February 3, 2024, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of February 3, 2024 and January 28, 2023, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended February 3, 2024, in conformity with U.S.

and subsidiaries (the Company) as of February 1, 2025 and February 3, 2024, the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each of the fiscal years in the three-year period ended February 1, 2025, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of February 1, 2025 and February 3, 2024, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended February 1, 2025, in conformity with U.S.

generally accepted accounting principles.

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(in thousands, except share and per share data)

February 3, 2024 January 28, 2023

February 1, 2025 February 3, 2024

Current assets:

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Operating income 323,817 385,571 345,043

Interest income (expense) and other income (expense), net 15,530 2,491 ( 13,177 )

Interest income and other income, net 14,848 15,530 2,491

Income before income taxes 338,665 401,101 347,534

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Issuance of unrestricted stock awards 3,349 — 523 — 523

1,790 — 335 — 335

Exercise of options to purchase common stock 21,737 — 776 — 776

12,834 — 389 — 389

Vesting of restricted stock units and performance-based restricted stock units 122,349 1 — — 1

1 unchanged sentence

Repurchase and retirement of common stock ( 247,132 ) ( 2 ) ( 40,005 ) — ( 40,007 )

( 368,699 ) ( 4 ) ( 60,007 ) — ( 60,011 )

Issuance of common stock to employees under employee stock purchase plan 6,489 — 824 — 824

— — — 278,810 278,810

Net income — — — 261,528 261,528

Balance, January 28, 2023 55,537,221 $ 555 $ 260,784 $ 1,100,590 $ 1,361,929

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Net income — — — 301,106 301,106

Balance, January 28, 2023 55,537,221 $ 555 $ 260,784 $ 1,100,590 $ 1,361,929

Balance, February 3, 2024 55,197,875 $ 551 $ 182,709 $ 1,401,696 $ 1,584,956

Share-based compensation expense — — 14,939 — 14,939

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Net cash used in financing activities ( 45,741 ) ( 95,859 ) ( 43,635 )

Net (decrease) increase in cash and cash equivalents ( 152,575 ) 267,351 ( 203,810 )

Net increase (decrease) in cash and cash equivalents 151,969 ( 152,575 ) 267,351

Cash and cash equivalents at beginning of year 179,749 332,324 64,973

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Non-cash investing activities

Increase in accounts payable and accrued purchases of property and equipment $ 4,686 $ 1,634 $ 8,810

(Decrease) increase in accounts payable and accrued purchases of property and equipment $ ( 27,963 ) $ 4,686 $ 1,634

See accompanying notes to consolidated financial statements.

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thus, it is not dependent on a single vendor or a group of vendors.

The Company is incorporated in the Commonwealth of Pennsylvania and, as of February 3, 2024, operated in 43 states excluding Alaska, Hawaii, Idaho, Montana, Oregon, Washington and Wyoming.

As of February 3, 2024 and January 28, 2023, the Company operated 1,544 stores and 1,340 stores, respectively, each operating under the name “Five Below.” The Company also sells its merchandise on the internet, through the Company's fivebelow.com e-commerce website, offering home delivery and the option to buy online and pick up in store.

The Company is incorporated in the Commonwealth of Pennsylvania and, as of February 1, 2025, operated in 44 states excluding Alaska, Hawaii, Idaho, Montana, Oregon, and Washington.

As of February 1, 2025 and February 3, 2024, the Company operated 1,771 stores and 1,544 stores, respectively, each operating under the name “Five Below.” The Company also sells its merchandise on the internet, through the Company's fivebelow.com e-commerce website and mobile app, offering home delivery and the option to buy online and pick up in store.

Additionally, the Company sells merchandise through on-demand third-party delivery service to enable our customers to shop online and receive convenient delivery.

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The Company operates on a 52/53-week fiscal year ending on the Saturday closest to January 31.

References to "fiscal year 2023" or "fiscal 2023" refer to the period from January 29, 2023 to February 3, 2024, which consists of a 53-week year.

References to "fiscal year 2022" or "fiscal 2022" refer to the period from January 30, 2022 to January 28, 2023, which consists of a 52-week fiscal year.

References to "fiscal year 2024" or "fiscal 2024" refer to the period from February 4, 2024 to February 1, 2025, which consists of a 52-week year.

References to "fiscal year 2023" or "fiscal 2023" refer to the period from January 29, 2023 to February 3, 2024, which consists of a 53-week fiscal year.

References to "fiscal year 2022" or "fiscal 2022" refer to the period from January 30, 2022 to January 28, 2023, which consists of a 52-week fiscal year.

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For credit card and debit card receivables, the majority of payments due from banks for third-party credit card and debit card transactions resulting from customer purchases at the Company’s retail stores process within 24 to 48 hours, except for transactions occurring on a Friday, which are generally processed the following Monday.

Amounts due from banks for these transactions classified as cash equivalents totaled $ 22.4 million and $ 17.4 million as of February 3, 2024 and January 28, 2023, respectively.

Amounts due from banks for these transactions classified as cash equivalents totaled $ 24.7 million and $ 22.4 million as of February 1, 2025 and February 3, 2024, respectively.

Book overdrafts, which are outstanding checks in excess of funds on deposit, are recorded within accounts payable in the accompanying consolidated balance sheets and within operating activities in the accompanying consolidated statements of cash flows.

As of February 3, 2024 and January 28, 2023, the Company had cash equivalents of $ 154.9 million and $ 313.2 million, respectively.

As of February 1, 2025 and February 3, 2024, the Company had cash equivalents of $ 310.4 million and $ 154.9 million, respectively.

(d) Fair Value of Financial Instruments

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Since quoted prices in active markets for identical assets are not available, these prices are determined by the third-party pricing service using observable market information such as quotes from less active markets and quoted prices of similar securities.

As of February 3, 2024 and January 28, 2023, the Company's investment securities are classified as held-to-maturity since the Company has the intent and ability to hold the investments to maturity.

As of February 1, 2025 and February 3, 2024, the Company's investment securities are classified as held-to-maturity since the Company has the intent and ability to hold the investments to maturity.

Such securities are carried at amortized cost-plus accrued interest and consist of the following (in thousands):

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$ 197,073 $ 115 $ 196,958

Municipal bonds

Total $ 197,073 $ — $ 115 $ 196,958

As of February 3, 2024

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Market Value

Corporate bonds $ 280,067 $ — $ 154 $ 279,913

$ 7,791 $ — $ 8 $ 7,783

Municipal bonds 272 — — 272

Total $ 280,339 $ — $ 154 $ 280,185

As of January 28, 2023

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Market Value

Corporate bonds $ 7,791 $ — $ 8 $ 7,783

$ 66,845 $ — $ 292 $ 66,553

Short-term investment securities as of February 3, 2024 and January 28, 2023 all mature in one year or less.

Total $ 7,791 $ — $ 8 $ 7,783

Short-term investment securities as of February 1, 2025 and February 3, 2024 all mature in one year or less.

Long-term investment securities as of February 3, 2024 all mature after one year but in less than two years.

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Property and equipment, net, consists of the following (in thousands):

February 3, 2024 January 28, 2023

February 1, 2025 February 3, 2024

Land $ 30,371 $ 30,371

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In the event of a store closure, the Company will record an impairment charge, if appropriate, or accelerate depreciation over the revised useful life of the asset.

Based on the Company's analysis performed in fiscal 2023, fiscal 2022 and fiscal 2021, management believes that no impairment of long-lived assets exists for the periods ended February 3, 2024, January 28, 2023 and January 29, 2022.

Based on the Company's analysis performed in fiscal 2024, fiscal 2023 and fiscal 2022, management believes that no impairment of long-lived assets exists for the periods ended February 1, 2025, February 3, 2024 and January 28, 2023.

(i) Deferred Financing Costs

Deferred financing costs are amortized to interest expense over the term of the related credit agreement.

As of February 3, 2024 and January 28, 2023, the Company had $ 0.5 million and $ 0.7 million remaining in the accompanying consolidated balance sheets within Other Assets.

As of February 1, 2025 and February 3, 2024, the Company had $ 0.4 million and $ 0.5 million remaining in the accompanying consolidated balance sheets within Other Assets.

(j) Operating Leases

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(o) Revenue Recognition

Revenue from store operations is recognized at the point of sale when control of the product is transferred to the customer at such time.

Internet sales, through the Company's fivebelow.com e-commerce website, are recognized when the customer receives the product as control transfers upon delivery.

Revenue from store operations, including third-party delivery services, is recognized at the point of sale when control of the product is transferred to the customer at such time.

Internet sales, through the Company's fivebelow.com e-commerce website and mobile app, are recognized when the customer receives the product as control transfers upon delivery.

Returns subsequent to the period end are immaterial;

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Shipping and handling costs, which include fulfillment and shipping costs related to the Company's e-commerce operations, are included in costs of goods sold.

As permitted by applicable accounting guidance, ASU 2014-09 "Revenue from Contracts with Customers," the Company has elected to exclude all sales taxes collected from customers and remitted to governmental authorities from net sales in the accompanying consolidated statements of operations.

(p) Shipping and Handling Revenues and Costs

The Company has elected to exclude all sales taxes collected from customers and remitted to governmental authorities from net sales in the accompanying consolidated statements of operations.

(p) Supply Chain Finance

During the third quarter of fiscal 2024, the Company implemented a supply chain finance program.

The Company utilizes a supply chain finance program whereby qualifying suppliers may elect at their sole discretion to sell the Company's payment obligations to a designated third-party financial institution.

While the terms of these agreements are between the supplier and the financial institution, the financial institution allows the participating suppliers to utilize the Company's creditworthiness in establishing credit spreads and associated costs.

The payment terms that the Company has with participating suppliers under these programs generally range up to 90 days.

The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under these arrangements.

Supplier participation is voluntary, and there are no assets pledged as security or other forms of guarantees provided for the committed payment to the financial institution.

As of February 1, 2025, the amount of obligations outstanding under the supply chain finance program, which are included within Accounts payable in the Consolidated Balance Sheets, was $ 0.7 million.

(q) Shipping and Handling Revenues and Costs

The Company includes all shipping and handling revenue from e-commerce sales in net sales.

Shipping and handling costs, which are included in cost of goods sold in the accompanying consolidated statements of operations, include fulfillment and shipping costs related to the Company's e-commerce operations.

(q) Cost of Goods Sold

(r) Cost of Goods Sold

Cost of goods sold reflects the direct costs of purchased merchandise and inbound freight and tariffs, as well as store occupancy, distribution and buying expenses.

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Buying costs include compensation expense for the Company's internal buying organization.

(r) Selling, General and Administrative Expenses (including Depreciation and Amortization)

(s) Selling, General and Administrative Expenses (including Depreciation and Amortization)

Selling, general and administrative expenses (including depreciation and amortization) include payroll and other compensation, marketing and advertising expense, depreciation and amortization expense, and other selling and administrative expenses.

(s) Vendor Allowances

(t) Vendor Allowances

The Company receives various incentives in the form of allowances, free product and promotional funds from its vendors based on product purchases and advertising activities.

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To the extent these conditions are not met, these allowances are recorded as merchandise allowances.

(t) Store Pre-Opening Costs

(u) Store Pre-Opening Costs

Costs incurred between completion of a new store location’s construction and its opening (pre-opening costs) are charged to expense as incurred.

Pre-opening costs were $ 18.9 million, $ 18.3 million and $ 10.7 million in fiscal 2024, fiscal 2023, and fiscal 2022, respectively, and are recorded in the accompanying consolidated statements of operations based on the nature of the expense.

(u) Advertising Costs

Advertising costs are charged to expense the first time the advertising takes place.

(v) Advertising Costs

Advertising costs are charged to expense as the advertising takes place.

Advertising expenses were $ 64.3 million, $ 62.5 million and $ 54.1 million in fiscal 2024, fiscal 2023 and fiscal 2022, respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of operations.

(v) Income Taxes

(w) Income Taxes

Income taxes are accounted for under the asset-and-liability method.

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Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

(w) Commitments and Contingencies

(x) Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

Legal costs incurred in connection with loss contingencies are expensed as incurred.

(x) Use of Estimates

(y) Use of Estimates

The preparation of consolidated financial statements requires management of the Company to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period.

Actual results could differ from those estimates.

Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, net realizable value for inventories, income taxes, share-based compensation expense, the incremental borrowing rate utilized in operating lease liabilities, equity method investments, and notes receivable.

(y) Recently Issued Accounting Standards

In September 2022, the FASB issued ASU 2022-04, Liabilities-Supplier Finance Programs (Topic 405-50) - Disclosure of Supplier Finance Program Obligations, which requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude.

The amendments in this ASU are effective for the first quarter of 2023, except for the amendment on roll-forward information, which is effective for the first quarter of 2024, with early adoption permitted.

The Company adopted this guidance on January 29, 2023, and the adoption did not impact the Company's disclosures on its consolidated financial statements.

Significant items subject to such estimates and assumptions include the carrying

amount of property and equipment, net realizable value for inventories, income taxes, share-based compensation expense, the incremental borrowing rate utilized in operating lease liabilities, equity method investments, and notes receivable.

(z) Recently Issued Accounting Standards

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures.

This new guidance is designed to improve the disclosures about a public entity’s reportable segments and address requests from investors for more detailed information about a reportable segment’s expenses on an interim and annual basis.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Public entities must adopt the changes to the segment reporting guidance on a retrospective basis.

Early adoption is permitted.

The Company adopted this guidance on February 1, 2025, and the adoption did not significantly impact the Company's disclosures on its consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes - Improvements to Income Tax Disclosures.

This new guidance requires consistent categories and enhanced disaggregation of information in the rate reconciliation and enhanced disaggregation of income taxes paid by jurisdiction.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses.

This new guidance requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory, employee compensation, and depreciation and amortization.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial statements and related disclosures.

(2) Revenue from Contracts with Customers

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All of the Company's leases are classified as operating leases and the associated assets and liabilities are presented as separate captions in the consolidated balance sheets.

As of February 3, 2024 and January 28, 2023, the weighted average remaining lease term for the Company's operating leases was 7.5 years and 7.6 years, respectively, and the weighted average discount rate was 5.3 % and 5.2 %, respectively.

The following table is a summary of the Company's components for net lease costs as of February 3, 2024 and January 28, 2023 (in thousands):

As of February 1, 2025 and February 3, 2024, the weighted average remaining lease term for the Company's operating leases was 7.4 years and 7.5 years, respectively, and the weighted average discount rate was 5.3 % and 5.3 %, respectively.

The following table is a summary of the Company's components for net lease costs as of February 1, 2025 and February 3, 2024 (in thousands):

Fiscal Year Ended

Lease Cost February 3, 2024 January 28, 2023

Lease Cost February 1, 2025 February 3, 2024

Operating lease cost $ 311,841 $ 268,096

9 unchanged sentences

Present value of lease liabilities $ 1,981,569

The following table summarizes the supplemental cash flow disclosures related to leases as of February 3, 2024 and January 28, 2023 (in thousands):

The following table summarizes the supplemental cash flow disclosures related to leases as of February 1, 2025 and February 3, 2024 (in thousands):

Fiscal Year Ended

February 3, 2024 January 28, 2023

February 1, 2025 February 3, 2024

Cash paid for amounts included in the measurement of lease liabilities:

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As of February 1, 2025, the Company has entered into commitments for new stores for which the leases have not yet commenced that have future minimum lease payments of approximately $ 79.0 million.

During the fifty-three weeks ended February 3, 2024, the Company committed to 291 new store leases with average terms of approximately ten years that have future minimum lease payments of approximately $ 543.1 million.

From February 4.

2024 to March 21, 2024, the Company committed to 25 new leases with terms of ten years that have future minimum lease payments of approximately $ 52.2 million.

During the fiscal year ended February 1, 2025, the Company committed to 179 new store leases with average terms of approximately ten years that have future minimum lease payments of approximately $ 249.6 million.

From February 2, 2025 to March 20, 2025, the Company committed to 13 new leases with terms of ten years that have future minimum lease payments of approximately $ 24.0 million.

(4) Income Per Common Share

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Diluted income per common share $ 4.60 $ 5.41 $ 4.69

The effects of the assumed vesting of restricted stock units outstanding as of February 3, 2024, January 28, 2023 and January 29, 2022 for 19,152 , 72,043 and 9,781 shares of common stock, respectively, were excluded from the fiscal 2023, fiscal 2022 and fiscal 2021 calculation of diluted income per common share as their impact would have been anti-dilutive.

The effects of the assumed vesting of restricted stock units outstanding as of February 1, 2025, February 3, 2024 and January 28, 2023 for 99,741 , 19,152 and 72,043 shares of common stock, respectively, were excluded from the fiscal 2024, fiscal 2023 and fiscal 2022 calculation of diluted income per common share as their impact would have been anti-dilutive.

The aforementioned excluded shares do not reflect the impact of any incremental repurchases under the treasury stock method.

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All obligations under the Revolving Credit Facility are guaranteed by 1616 Holdings and secured by substantially all of the assets of the Company and 1616 Holdings.

As of February 3, 2024 and January 28, 2023, the Company was in compliance with the covenants applicable to it under the Revolving Credit Facility.

As of February 1, 2025 and February 3, 2024, the Company was in compliance with the covenants applicable to it under the Revolving Credit Facility.

During fiscal 2024 and fiscal 2023, the Company had no borrowings or interest expense under the Revolving Credit Facility.

As of February 1, 2025, the Company had approximately $ 225 million available on the Revolving Credit Facility.

As of January 28, 2023, the Company had approximately $ 192 million available on the Revolving Credit Facility.

As of February 3, 2024, the Company had approximately $ 216 million available on the Revolving Credit Facility.

(6) Commitments and Contingencies

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Legal Matters

The Company is subject to various proceedings, lawsuits, disputes, and claims arising in the ordinary course of the Company's business.

Many of these actions raise complex factual and legal issues and are subject to uncertainties.

Actions filed against the Company from time to time include commercial, intellectual property, customer, and employment actions, including class action lawsuits.

The plaintiffs in some actions seek unspecified damages or injunctive relief, or both.

Actions are in various procedural stages, and some are covered in part by insurance.

The Company cannot predict with assurance the outcome of actions brought against the Company.

Accordingly, adverse developments, settlements, or resolutions may occur and negatively impact income in the quarter of such development, settlement or resolution.

If a potential loss arising from these lawsuits, claims and pending actions is probable and reasonably estimable, the Company records the estimated liability based on circumstances and assumptions existing at the time.

Although the outcome of these and other claims cannot be predicted with certainty, management does not believe that the ultimate resolution of these matters will have a material adverse effect on the Company's financial condition or results of operations.

On August 1, 2024, a putative class action was filed against Five Below, Inc.

and a certain former senior officer in the United States District Court for the Eastern District of Pennsylvania, purportedly on behalf of a class of the Company's investors who purchased or otherwise acquired our publicly traded securities between March 20, 2024 and July 16, 2024.

On September 16, 2024, a similar action was commenced against Five Below, Inc.

in the same court on behalf of a class of investors who purchased or otherwise acquired our publicly traded securities between December 1, 2022 and July 16, 2024.

The complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder in connection with various public statements made by us.

On October 28, 2024, the court entered an order consolidating the actions and appointing lead plaintiff.

Lead plaintiff filed its Consolidated Amended Complaint against the Company and one former senior officer and one current senior officer on January 13, 2025.

Defendants filed their motion to dismiss the Consolidated Amended Complaint on March 14, 2025.

Lead plaintiff’s opposition to defendants’ motion to dismiss is due on or before May 13, 2025, and any reply in support of defendants’ motion to dismiss is due on or before July 11, 2025.

The Company intends to vigorously defend against this action, which the Company believes to be without merit.

The potential impact of this action, which seeks unspecified damages, attorneys’ fees and expenses, is uncertain.

From time to time, the Company is involved in certain legal actions arising in the ordinary course of business.

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Pursuant to the Company's 2022 Equity Incentive Plan (the “Plan”), the Company’s Board of Directors may grant stock options, restricted shares and restricted stock units to officers, directors, key crew and professional service providers.

The Plan, as amended, allows for the issuance of up to a total of 4.3 million shares under the Plan.

The Plan allows for the issuance of up to a total of 4.3 million shares under the Plan.

As of February 1, 2025, approximately 3.2 million stock options, restricted shares, or restricted stock units were available for grant.

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Balance as of January 29, 2022 39,763 $ 34.48 2.3

Forfeited ( 432 ) 4.28

Exercised ( 21,737 ) 34.11

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Exercised ( 7,800 ) 36.70

Balance as of January 28, 2023 18,026 34.92 1.8

Forfeited ( 100 ) 41.67

Balance as of February 3, 2024 10,126 33.48 1.6

Exercised ( 10,126 ) 33.48

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The total intrinsic value of stock options exercised during fiscal 2024, fiscal 2023 and fiscal 2022 was $ 0.6 million , $ 1.1 million and $ 3.1 million, respectively.

The aggre gate intrinsic value of stock options outstanding and exercisable was $ 1.5 million as of February 3, 2024.

There were no stock options outstanding and exercisable as of February 1, 2025.

In fiscal 2024, fiscal 2023 and fiscal 2022, the Company received cash from the exercise of options of $ 0.3 million, $ 0.3 million and $ 0.8 million, respectively.

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All restricted stock units ("RSU") and performance-based restricted stock units ("PSU") vest in accordance with vesting conditions set by the compensation committee of the Company’s Board of Directors.

RSUs granted to date have vesting periods ranging from less than one year to five years from the date of grant and the fair value of RSUs is the market price of the underlying common stock on the date of grant.

PSUs granted to date have vesting periods ranging from less than one year to five years from the date of grant.

RSUs granted to date generally have vesting periods ranging from less than one year to five years from the date of grant and the fair value of RSUs is the market price of the underlying common stock on the date of grant.

PSUs granted to date generally have vesting periods ranging from less than one year to five years from the date of grant.

PSUs that have a performance condition are subject to satisfaction of the applicable performance goals established for the respective grant.

The Company periodically assesses the probability of achievement of the performance criteria and adjusts the amount of compensation expense accordingly.

The fair value of these PSUs is the market price of the underlying common stock on the date of grant.

Compensation is recognized over the vesting period and adjusted for the probability of achievement of the performance criteria.

PSUs that have a market condition based on our total shareholder return relative to a pre-defined peer group are subject to multi-year performance objectives with vesting periods of approximately three years from the date of grant (if the applicable performance objectives are achieved).

The fair value of these PSUs are determined using a Monte Carlo simulation model, which utilizes multiple input variables such as (i) total shareholder return from the beginning of the performance cycle through the performance measurement date(s);

Compensation is recognized over the vesting period and the Company periodically assesses the probability of achievement of the performance criteria and adjusts the amount of compensation expense accordingly.

PSUs that have a market condition based on the Company's total shareholder return relative to a pre-defined peer group are subject to multi-year performance objectives with vesting periods of approximately three years from the date of grant (if the applicable performance objectives are achieved).

The fair value of these PSUs is determined using a Monte Carlo simulation model, which utilizes multiple input variables such as (i) total shareholder return from the beginning of the performance cycle through the performance measurement date(s);

(ii) volatility;

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Forfeited ( 22,670 ) 152.87 ( 130,918 ) 161.02

Non-vested balance as of January 28, 2023 226,389 142.2 458,062 163.56

Non-vested balance as of February 3, 2024 196,309 163.82 299,394 206.07

Granted 443,967 93.26 214,080 147.04

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Share Repurchase Program

On March 20, 2018, the Company's Board of Directors approved a share repurchase program authorizing the repurchase of up to $ 100 million of the Company's common stock through March 31, 2021, on the open market, in privately negotiated transactions, or otherwise.

This program expired on March 31, 2021.

On March 9, 2021, the Company's Board of Directors approved a new share repurchase program for up to $ 100 million of its common shares through March 31, 2024.

In fiscal 2021, the Company repurchased 368,699 shares under this program at an aggregate cost of approximately $ 60.0 million, or an average price of $ 162.75 per share.

In fiscal 2022, the Company repurchased 247,132 shares under this program at an aggregate cost of approximately $ 40.0 million, or an average price of $ 161.88 per share.

The company has exhausted repurchases under this program.

On June 14, 2022, the Company's Board of Directors approved a new share repurchase program for up to $ 100 million of our common stock through June 30, 2025.

On June 14, 2022, the Company's Board of Directors approved a new share repurchase program for up to $ 100 million of the Company's common stock through June 30, 2025.

In fiscal 2023, the Company repurchased 504,369 shares under this program at an aggregate cost of approximately $ 80.0 million, or an average price of $ 158.63 per share.

1 unchanged sentence

On November 27, 2023, the Company's Board of Directors approved a new share repurchase program for up to $ 100 million of the Company's common stock through November 27, 2026.

As of February 3, 2024, the Company has not made any repurchases under this program.

Since approval of the share repurchase program in March 2018, we have purchased approximately 1,600,000 shares for an aggregate cost of approximately $ 232 million.

In fiscal 2024, the Company repurchased 266,997 shares at an aggregate cost of approximately $ 40.0 million, or an average price of $ 149.79 per share.

Since approval of the share repurchase program in March 2018, the Company has purchased approximately 1.9 million shares for an aggregate cost of approximately $ 270 million.

There can be no assurances that any additional repurchases will be completed, or as to the timing or amount of any repurchases.

20 unchanged sentences

(1) Other line includes excess tax benefits relating to share-based payment accounting.

The effective tax rate for fiscal 2023 compared to fiscal 2022 was primarily driven by changes in the mix of pretax income across state jurisdictions and non-deductible expenses, partially offset by discrete items, which includes the impact of ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting" with respect to the requirements to recognize excess income tax benefits or deficiencies as income tax benefit or expense in the consolidated statements of operations rather than as additional paid-in capital in the consolidated balance sheets.

The effective tax rate for fiscal 2022 compared to fiscal 2021 was primarily driven by discrete items, which includes the impact of ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting."

The effective tax rate for fiscal 2024 compared to fiscal 2023 was primarily driven by discrete items, which includes the impact of share-based accounting, partially offset by non-deductible expenses.

The tax effects of temporary differences that give rise to deferred tax assets and liabilities are (in thousands):

February 3, 2024 January 28, 2023

February 1, 2025 February 3, 2024

Deferred tax assets:

14 unchanged sentences

$ ( 59,891 ) $ ( 66,743 )

The Company had no material accrual for uncertain tax positions or interest or penalties related to income taxes on the Company’s balance sheets as of February 3, 2024 and January 28, 2023, and has not recognized any material uncertain tax positions or interest and/or penalties related to income taxes in the consolidated statements of operations for fiscal 2023, fiscal 2022, or fiscal 2021.

The Company had no material accrual for uncertain tax positions or interest or penalties related to income taxes on the Company’s balance sheets as of February 1, 2025 and February 3, 2024, and has not recognized any material uncertain tax positions or interest and/or penalties related to income taxes in the consolidated statements of operations for fiscal 2024, fiscal 2023, or fiscal 2022.

The Company files a federal income tax return as well as state tax returns.

8 unchanged sentences

(11) Segment Reporting

The Company evaluates performance internally and manages the business on the basis of one operating segment;

therefore, it has only one reportable segment.

All of the Company’s identifiable assets are located in the United States.

Set forth below is data for the following groups of products:

leisure, fashion and home, and snack and seasonal.

The percentage of net sales represented by each product group for each of the last three fiscal years was as follows:

Percentage of Net Sales

The Company has one reportable and operating segment, which derives revenue from sales of the Company’s merchandise to customers at our 1,771 brick & mortar store locations, which operate in 44 states, and online at Fivebelow.com.

No customer accounts for 10% or more of our revenues.

The accounting policies of the reportable segment are the same as those described in “Note 1 – Summary of Significant Accounting Policies.”

The chief operating decision maker (“CODM”) is the Company’s President and Chief Executive Officer, who assesses and evaluates the performance of the reportable segment.

Financial information and data are provided to the CODM on a consolidated basis.

The CODM uses consolidated sales and consolidated net income to evaluate performance, make key operating decisions and allocate resources.

The Company’s significant segment expenses are included on the “Consolidated Statements of Operations” in Item 8 “Consolidated Financial Statements and Supplementary Data” of this Form 10-K.” See “Note 2 – Revenue from Contracts with Customers” for the Company’s disaggregated revenue by groups of products.

Identifiable segment assets, including the significant segment assets of Cash and Cash Equivalents, Inventory and Accounts Payable, are included on the “Consolidated Balance Sheets” in Item 8 “Consolidated Financial Statements and Supplementary Data” of this Form 10-K."

The following table details segment profit and loss for the Company's one reportable segment:

2024 2023 2022

Leisure 46.2 % 47.6 % 49.6 %

Fashion and home 29.3 % 29.2 % 30.2 %

Snack and seasonal 24.5 % 23.2 % 20.2 %

Total 100.0 % 100.0 % 100.0 %

Leisure includes items such as sporting goods, games, toys, tech, books, electronic accessories, arts and crafts, and party.

Fashion and home includes items such as personal accessories, “attitude” t-shirts, beauty offerings, home goods and storage options.

Snack and seasonal includes items such as seasonal goods, greeting cards, candy and other snacks, and beverages.

Net sales $ 3,876,527 $ 3,559,369 $ 3,076,308

Cost of goods sold 2,523,865 2,285,544 1,980,817

Advertising costs 64,338 62,466 54,067

Store and corporate expenses 797,060 695,041 590,764

Depreciation and amortization 167,447 130,747 105,617

Interest income and other income, net 14,848 15,530 2,491

Income tax expense 85,054 99,995 86,006

Net income $ 253,611 $ 301,106 $ 261,528

(12) Quarterly Results of Operations and Seasonality (Unaudited)

22 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk