What changed in this filing

/stocks — the workspaceLOADING

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2026-03-19 compared with 2025-03-20 · 148 added, 150 removed, 569 unchanged (34% of the section changed)

6 unchanged sentences

Because our Revolving Credit Facility bears interest at a variable rate, we will be exposed to market risks relating to changes in interest rates, which could materially impact our consolidated statements of operations should we have any material borrowings under our Revolving Credit Facility.

As of February 1, 2025, we had approximatel y $225 million available on the line of credit.

As of January 31, 2026, we had approximately $214 million available on the Revolving Credit Facility, net of $11 million in outstanding letters of credit.

The Credit Agreement provides that the interest rate payable on borrowings shall be, at the Company's option, a per annum rate equal to (a) a base rate plus an applicable margin ranging from 0.125% to 0.50% or (b) SOFR plus a margin ranging from 1.12% to 1.50%.

5 unchanged sentences

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

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

Consolidated Balance Sheets as of January 31, 2026 and February 1, 2025

Consolidated Statements of Operations for Fiscal Years 2025, 2024 and 2023

Consolidated Statements of Changes in Shareholders’ Equity for Fiscal Years 2025, 2024 and 2023

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

Consolidated Statements of Cash Flows for Fiscal Years 2025, 2024 and 2023

Notes to Consolidated Financial Statements

4 unchanged sentences

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

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.

and subsidiaries (the Company) as of January 31, 2026 and February 1, 2025, 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 January 31, 2026, 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 January 31, 2026 and February 1, 2025, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended January 31, 2026, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of February 1, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 20, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 19, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

14 unchanged sentences

Slow-moving and obsolete inventories at net realizable value

As discussed in Note 1 to the consolidated financial statements, the Company monitors inventory levels in order to identify slow-moving or obsolete merchandise as these factors can indicate a decline in the market value of the inventory on hand.

The Company’s inventory balance was $660 million as of February 1, 2025.

The Company’s inventory balance was $847 million as of January 31, 2026.

Inventory cost is reduced to net realizable value when cost exceeds the selling price less the cost of disposal.

The market value is subject to the effects of consumer demands, customer preferences, and the broader economy.

The net realizable value is subject to the effects of consumer demands, customer preferences, and the broader economy.

We identified the evaluation of slow-moving and obsolete inventories at net realizable value as a critical audit matter because a high degree of auditor judgment was required to evaluate the Company’s ability to sell certain products.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter.

• We evaluated the design and implementation and tested the operating effectiveness of certain internal controls related to the critical audit matter.

This included controls related to the review of historical product sales and inventory quantities on hand, and the estimate of net realizable value of slow-moving and obsolete inventories and adjustments of inventory cost to net realizable value.

• We evaluated the Company’s methodology for determining slow-moving and obsolete merchandise.

We selected certain products determined to be slow-moving or obsolete and considered current market trends or seasonal impacts by assessing the nature of the slow-moving and obsolete merchandise.

• We selected certain products determined to be slow-moving and obsolete and considered current market trends or seasonal impacts by assessing the nature of the slow-moving and obsolete merchandise.

• We assessed the Company’s adjustments of inventory costs to net realizable value for certain slow-moving and obsolete inventories by (1) comparing the historical estimate for net realizable value adjustments to actual adjustments of inventory costs, and (2) analyzing sales subsequent to the measurement date.

5 unchanged sentences

(in thousands, except share and per share data)

February 1, 2025 February 3, 2024

January 31, 2026 February 1, 2025

Current assets:

7 unchanged sentences

Operating lease assets 1,765,704 1,706,542

Long-term investment securities — 7,791

Other assets 20,261 19,937

59 unchanged sentences

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

15 unchanged sentences

Net income 358,641 358,641

Balance, February 1, 2025 55,028,682 $ 549 $ 152,471 $ 1,655,307 $ 1,808,327

Balance, January 31, 2026 55,228,735 $ 551 $ 178,791 $ 2,013,948 $ 2,193,290

See accompanying notes to consolidated financial statements.

8 unchanged sentences

Share-based compensation expense 34,680 15,589 17,859

Deferred income tax expense ( 6,852 ) 7,592 22,995

Deferred income tax (benefit) expense ( 9,876 ) ( 6,852 ) 7,592

Other non-cash expenses 2,985 1,312 351

15 unchanged sentences

Financing activities:

Cash paid for Revolving Credit Facility financing costs — — ( 248 )

Net proceeds from issuance of common stock 941 1,079 980

17 unchanged sentences

Five Below, Inc.

(collectively referred to herein with its wholly-owned subsidiaries as the "Company") is a specialty value retailer offering merchandise targeted at the tween and teen demographic.

(collectively referred to herein with its wholly-owned subsidiaries as the "Company") is a specialty value retailer offering a broad range of trend-right, high-quality products loved by the kid and the kid in all of us.

The Company offers an edited assortment of products, with most priced at $ 5 and below.

2 unchanged sentences

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 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.

The Company is incorporated in the Commonwealth of Pennsylvania and, as of January 31, 2026, operated in 46 states excluding Alaska, Hawaii, Idaho and Montana.

As of January 31, 2026 and February 1, 2025, the Company operated 1,921 stores and 1,771 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 services to enable its customers to shop online and receive convenient delivery.

The Company's consolidated financial statements include the accounts of Five Below, Inc.

3 unchanged sentences

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

References to "fiscal year 2025" or "fiscal 2025" refer to the period from February 2, 2025 to January 31, 2026, which consists of a 52-week 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.

The Company considers all highly liquid investments purchased with a maturity date of three months or less when purchased to be cash equivalents.

Our cash equivalents consist of cash management solutions, credit and debit card receivables, money market funds, corporate bonds and municipal bonds with original maturities of 90 days or less, which are classified as cash and cash equivalents in the accompanying consolidated balance sheets.

Our cash equivalents consist of cash management solutions, credit and debit card receivables, money market funds, and corporate bonds with original maturities of 90 days or less, which are classified as cash and cash equivalents in the accompanying consolidated balance sheets.

The cash management solutions relate to cash deposit products that provide credit generally processed the next business day for cash deposited in third-party tech-enabled solutions.

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 $ 24.7 million and $ 22.4 million as of February 1, 2025 and February 3, 2024, respectively.

Amounts due from banks for these transactions classified as cash equivalents totaled $ 32.2 million and $ 24.7 million as of January 31, 2026 and February 1, 2025, 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 1, 2025 and February 3, 2024, the Company had cash equivalents of $ 310.4 million and $ 154.9 million, respectively.

As of January 31, 2026 and February 1, 2025, the Company had cash equivalents of $ 700.4 million and $ 310.4 million, respectively.

(d) Fair Value of Financial Instruments

5 unchanged sentences

The classification of fair value measurements within the hierarchy are based upon the lowest level of input that is significant to the measurement.

The Company’s financial instruments consist primarily of cash equivalents, investment securities, accounts payable, borrowings, if any, under a line of credit (as defined in note 5), equity method investments, and notes receivable.

The Company’s financial instruments consist primarily of cash equivalents, investment securities, accounts payable, and borrowings, if any, under a line of credit.

The Company believes that:

4 unchanged sentences

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 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.

As of January 31, 2026 and February 1, 2025, 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):

As of February 1, 2025

As of January 31, 2026

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Market Value

5 unchanged sentences

Corporate bonds $ 197,073 $ — $ 115 $ 196,958

Municipal bonds 272 — — 272

Total $ 197,073 $ — $ 115 $ 196,958

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

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.

Short-term investment securities as of January 31, 2026 and February 1, 2025 all mature in one year or less.

(e) Inventories

6 unchanged sentences

(f) Prepaid Expenses and Other Current Assets

Prepaid expenses in fiscal 2024 and fiscal 2023 were $ 37.7 million and $ 30.5 million, respectively.

Other current assets in fiscal 2024 and fiscal 2023 were $ 120.7 million and $ 123.5 million, respectively.

Prepaid expenses as of January 31, 2026 and February 1, 2025 were $ 36.1 million and $ 37.7 million, respectively.

Other current assets as of January 31, 2026 and February 1, 2025 were $ 96.6 million and $ 120.7 million, respectively.

(g) Property and Equipment

7 unchanged sentences

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

February 1, 2025 February 3, 2024

January 31, 2026 February 1, 2025

Land $ 30,371 $ 30,371

14 unchanged sentences

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 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.

Based on the Company's analysis performed in fiscal 2025, fiscal 2024 and fiscal 2023, management believes that no impairment of long-lived assets exists for the periods ended January 31, 2026, February 1, 2025 and February 3, 2024.

(i) Deferred Financing Costs

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

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.

As of January 31, 2026 and February 1, 2025, the Company had $ 0.2 million and $ 0.4 million remaining in the accompanying consolidated balance sheets within Other Assets.

(j) Operating Leases

11 unchanged sentences

The lease agreement expires in early 2033 with three successive options to renew for additional terms up to approximately fifteen years .

The shipcenter in Pedricktown, New Jersey is leased under a lease agreement expiring in 2025 with options to renew for three successive five-year periods.

The shipcenter in Pedricktown, New Jersey is leased under a lease agreement expiring in 2030 with options to renew for two successive five-year periods.

Generally, the Company’s store leases have expected lease terms of ten years , which are comprised of an initial term of ten years or an initial term of five years and one assumed five-year extension, resulting in a ten-year life.

4 unchanged sentences

(k) Other Accrued Expenses

Other accrued expenses include accrued capital expenditures of $ 25.7 million and $ 48.3 million in fiscal 2024 and fiscal 2023, respectively.

Other accrued expenses include accrued capital expenditures of $ 16.0 million and $ 25.7 million as of January 31, 2026 and February 1, 2025, respectively.

(l) Deferred Compensation

5 unchanged sentences

The related liability is recorded as deferred compensation and included in other long-term liabilities in the consolidated balance sheets.

(m) Equity Method Investments

The Company uses the equity method to account for its investments in which the Company is deemed to have the ability to exercise significant influence over an investee’s operating and financial policies or in which the Company holds a significant partnership or limited liability company interest.

Equity method investments are initially recorded at cost in other assets in the consolidated balance sheets.

The cost is adjusted to recognize the Company's proportionate share of the investee’s net income or loss after the date of investment and is also adjusted for any impairments resulting from other-than-temporary declines in fair value that is less than its carrying value.

During fiscal 2021, the Company recorded an other-than-temporary impairment utilizing the market and cost approach considering historical and projected financial results to calculate fair value.

Also related to this investment, management recorded a reserve against outstanding debt owed to the Company based on management’s evaluation of collectability.

The total amount of impairment and reserve was approximately $ 9.7 million and was recorded in interest income (expense) and other income (expense), net in the consolidated statements of operations.

(n) Share-Based Compensation

(m) Share-Based Compensation

The Company measures the cost of crew services received in exchange for share-based compensation based on the grant date fair value of the employee stock award.

6 unchanged sentences

The fair value of restricted stock awards are based on the closing price of the Company's common stock on the grant date and the fair value of stock options are based on the Black-Scholes option-pricing model utilizing the closing price of the Company's common stock on the grant date as the fair value of common stock in the model.

Future share-based compensation cost will increase when the Company grants additional equity awards.

Modifications, cancellations or repurchases of awards after the grant date may require the Company to accelerate any remaining unearned share-based compensation cost or incur incremental compensation costs.

Share-based compensation cost recognized and included in expenses for fiscal 2025, fiscal 2024 and fiscal 2023, was $ 34.7 million, $ 15.6 million and $ 17.9 million, respectively.

(o) Revenue Recognition

(n) Revenue Recognition

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.

7 unchanged sentences

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.

(o) Supply Chain Finance

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.

3 unchanged sentences

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 amount of obligations outstanding under the supply chain finance program, which are included within a ccounts payable in the Consolidated Balance Sheets, was $ 6.2 million and $ 0.7 million as of January 31, 2026 and February 1, 2025, respectively.

The following table is a reconciliation of the obligations outstanding under the Company’s supply chain finance program for fiscal 2025 (in thousands):

Obligations outstanding as of February 1, 2025 $ 734

Obligations confirmed during the period 32,826

Obligations settled during the period 27,358

Obligations outstanding as of January 31, 2026 $ 6,202

(p) 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.

(r) Cost of Goods Sold

(q) 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.

2 unchanged sentences

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

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

(r) 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.

(t) Vendor Allowances

(s) 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.

3 unchanged sentences

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

(u) Store Pre-Opening Costs

(t) 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 $ 14.8 million, $ 18.9 million and $ 18.3 million in fiscal 2025, fiscal 2024, and fiscal 2023, respectively, and are recorded in the accompanying consolidated statements of operations based on the nature of the expense.

(v) Advertising Costs

(u) Advertising Costs

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

Advertising expenses were $ 76.2 million, $ 64.3 million and $ 62.5 million in fiscal 2025, fiscal 2024 and fiscal 2023, respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of operations.

(w) Income Taxes

(v) Income Taxes

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

9 unchanged sentences

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

(x) Commitments and Contingencies

(w) 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.

(y) Use of Estimates

(x) 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.

(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.

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, and the incremental borrowing rate utilized in operating lease liabilities .

(y) Recently Issued Accounting Standards

In December 2023, the FASB issued ASU 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.

1 unchanged sentence

Early adoption is permitted.

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

The Company adopted this guidance prospectively on January 31, 2026, and enhanced the disclosures included in Note 9 - Income Taxes.

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.

In January 2025, the FASB issued ASU 2025-01, which clarifies the effective date of ASU 2024-03.

The amendment is effective for fiscal years beginning after December 15, 2026 and interim reporting periods within fiscal years 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.

In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software.

This new guidance amends certain aspects of the accounting for and disclosure of costs incurred to develop internal use software by removing references to project stages of a software development project, which better aligns with current software development methods.

The amendments are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted.

The Company is currently evaluating the impact of ASU 2025-06 on its consolidated financial statements.

(2) Revenue from Contracts with Customers

26 unchanged sentences

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 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):

As of January 31, 2026 and February 1, 2025, the weighted average remaining lease term for the Company's operating leases was 7.0 years and 7.4 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 January 31, 2026 and February 1, 2025 (in thousands):

Fiscal Year Ended

Lease Cost February 1, 2025 February 3, 2024

Lease Cost January 31, 2026 February 1, 2025

Operating lease cost $ 346,481 $ 311,841

2 unchanged sentences

* Excludes short-term lease cost, which is immaterial

The following table summarizes the maturity of lease liabilities under operating leases as of February 1, 2025 (in thousands):

The following table summarizes the maturity of lease liabilities under operating leases as of January 31, 2026 (in thousands):

Maturity of Lease Liabilities Operating Leases

4 unchanged sentences

Present value of lease liabilities $ 2,032,189

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

The following table summarizes the supplemental cash flow disclosures related to leases as of January 31, 2026 and February 1, 2025 (in thousands):

Fiscal Year Ended

February 1, 2025 February 3, 2024

January 31, 2026 February 1, 2025

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

4 unchanged sentences

(1) Included within operating activities in the Company's Consolidated Statements of Cash Flows.

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 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.

As of January 31, 2026, 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 $ 126.8 million.

During the fiscal year ended January 31, 2026, the Company committed to 141 new store leases with average terms of approximately ten years that have future minimum lease payments of approximately $ 258.0 million.

From February 1, 2026 to March 19, 2026, the Company committed to 27 new leases with terms of ten years that have future minimum lease payments of approximately $ 48.0 million.

1 unchanged sentence

Basic income per common share amounts are calculated using the weighted-average number of common shares outstanding for the period.

Diluted income per common share amounts are calculated using the weighted-average number of common shares outstanding for the period and include the dilutive impact of exercised stock options as well as assumed vesting of restricted stock awards and shares currently available for purchase under the Company's Employee Stock Purchase Plan, using the treasury stock method.

Diluted income per common share amounts are calculated using the weighted-average number of common shares outstanding for the period and include the dilutive impact of assumed vesting of restricted stock awards and shares currently available for purchase under the Company's Employee Stock Purchase Plan, using the treasury stock method.

Performance-based restricted stock units are considered contingently issuable shares for diluted income per common share purposes and the dilutive impact, if any, is not included in the weighted-average shares until the performance conditions are met.

4 unchanged sentences

Weighted average common shares outstanding - basic 55,112,281 55,055,064 55,487,252

Dilutive impact of options, restricted stock units, and employee stock purchase plan 101,278 134,367 198,012

Dilutive impact of restricted stock units and employee stock purchase plan 324,691 101,278 134,367

Weighted average common shares outstanding - diluted 55,436,972 55,156,342 55,621,619

2 unchanged sentences

Diluted income per common share $ 6.47 $ 4.60 $ 5.41

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 effects of the assumed vesting of restricted stock units outstanding as of January 31, 2026, February 1, 2025 and February 3, 2024 for 62,733 , 99,741 and 19,152 shares of common stock, respectively, were excluded from the fiscal 2025, fiscal 2024 and fiscal 2023 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.

18 unchanged sentences

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

As of January 31, 2026 and February 1, 2025, the Company was in compliance with the covenants applicable to it under the Revolving Credit Facility.

During fiscal 2025 and fiscal 2024, 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 31, 2026, the Company had approximately $ 214 million available on the Revolving Credit Facility, net of $ 11 million in outstanding letters of credit.

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

2 unchanged sentences

The Company has an executive severance plan that is applicable to certain key crew that provide for, among other things, salary, bonus, severance, and change-in-control provisions.

As of February 1, 2025, the Company has other purchase commitments of approximately $ 2.1 million consisting of purchase agreements for materials that will be used in the construction of new stores.

As of January 31, 2026, the Company has other purchase commitments of approximately $ 3.9 million consisting of purchase agreements for materials that will be used in the construction of new stores.

Contingencies

Legal Matters

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

The Company is subject to various proceedings, lawsuits, investigations, 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 filed against the Company from time to time include commercial, intellectual property, customer, consumer, and employment proceedings, including class action lawsuits.

The plaintiffs and government authorities in some actions may seek unspecified damages, injunctive relief, penalties and cost reimbursement.

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

3 unchanged sentences

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.

In management’s opinion, the outcome of such actions will not 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 the Company 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 the Company's publicly traded securities between March 20, 2024 and July 16, 2024.

On September 16, 2024, a similar action was commenced against the Company in the same court on behalf of a class of investors who purchased or otherwise acquired the Company's publicly traded securities between December 1, 2022 and July 16, 2024.

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

On January 13, 2025, lead plaintiff filed its Consolidated Amended Complaint.

On March 14, 2025, Defendants filed their Motion to Dismiss the Consolidated Amended Complaint.

On May 13, 2025, lead plaintiff filed a response in opposition to Defendants' Motion to Dismiss.

Defendants filed their reply in support of their Motion to Dismiss on June 12, 2025.

The Motion to Dismiss was granted in part and denied in part on August 25, 2025.

On October 3, 2025, the Company filed an Answer to the Consolidated Amended Complaint.

Plaintiffs filed a motion for class certification on January 16, 2026, and Defendants filed an opposition to class certification on March 13, 2026, for which briefing will conclude in April 2026.

Discovery is ongoing.

In October 2024, the Company received two separate letters from purported shareholders demanding that the Company investigate certain potential derivative claims relating to the same circumstances and allegations included in the shareholder class action.

The Company subsequently received four additional separate letters from purported shareholders making similar demands.

In response, the Board of Directors formed a Special Litigation Committee, which has investigated the allegations contained in each of these letters, and on September 10, 2025, the Special Litigation Committee completed its investigation and determined that it would not be in the best interests of the Company to pursue litigation or take other steps in response to the demand letters.

In October and December 2025, four of the purported shareholders filed derivative suits based on the allegations in their demand letters, two of which were filed in the United States District Court for the Eastern District of Pennsylvania (and have been consolidated into one action) and two of which were filed in Philadelphia County Court of Common Pleas (which the Company is in the process of consolidating into one action).

The action in the United States District Court for the Eastern District of Pennsylvania has been stayed pending the outcome of the class action.

The Company has agreed with the plaintiffs to a stay of the state court proceedings in the Philadelphia County Court of Common Pleas and is working with them to seek Court approval.

The Company intends to vigorously defend against the foregoing actions, which the Company believes to be without merit.

The potential impact of these actions, which seek unspecified damages, attorneys’ fees and expenses, is uncertain.

(7) Shareholders’ Equity

As of February 1, 2025, the Company is authorized to issue 120 million shares of $ 0.01 par value common stock and 5 million shares of $ 0.01 par value preferred stock.

As of January 31, 2026, the Company is authorized to issue 120 million shares of $ 0.01 par value common stock and 5 million shares of $ 0.01 par value preferred stock.

The holders of the common stock are entitled to one vote per share of common stock and are entitled to receive dividends if declared by the Board of Directors.

12 unchanged sentences

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.

As of January 31, 2026, approximately 2.9 million stock options, restricted shares, or restricted stock units were available for grant.

Common Stock Options

6 unchanged sentences

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

Exercised ( 21,737 ) 34.11

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

Forfeited ( 100 ) 41.67

3 unchanged sentences

Balance as of February 1, 2025 — — —

Exercisable as of February 1, 2025 — —

Balance as of January 31, 2026 — — —

Exercisable as of January 31, 2026 — $ — —

The fair value of each option award granted to crew, including outside directors, is estimated on the date of grant using the Black-Scholes option-pricing model.

4 unchanged sentences

Treasury yield curve in effect at the time of grant.

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.

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.

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

There were no stock options outstanding and exercisable as of January 31, 2026.

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

Upon option exercise, the Company issued new shares of common stock.

18 unchanged sentences

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

Non-vested balance as of January 28, 2023 226,389 142.20 458,062 163.56

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

5 unchanged sentences

Forfeited ( 60,239 ) 91.17 ( 60,217 ) 154.17

Non-vested balance as of February 1, 2025 462,779 $ 104.60 183,864 $ 178.44

In connection with the vesting of RSUs and PSUs during fiscal 2024, the Company withh eld 37,047 shares with an aggregate value of $ 6.9 million in satisfaction of minimum tax withholding obligations due upon vesting.

Non-vested balance as of January 31, 2026 400,203 $ 98.27 311,402 $ 179.81

In connection with the vesting of RSUs and PSUs during fiscal 2025, the Company withheld 65,085 shares with an aggregate value of $ 9.2 million in satisfaction of minimum tax withholding obligations due upon vesting.

In connection with the vesting of RSUs during fiscal 2024, the Company withheld 37,047 shares with an aggregate value of $ 6.9 million in satisfaction of minimum tax withholding obligations due upon vesting.

In connection with the vesting of RSUs during fiscal 2023, the Company withheld 85,594 shares with an aggregate value of $ 16.6 million in satisfaction of minimum tax withholding obligations due upon vesting.

As of February 1, 2025, there was $ 36.2 million of total unrecognized compensation costs related to non-vested share-based compensation arrangements (including stock options, RSUs and PSUs) granted under the Plan.

As of January 31, 2026, there was $ 35.3 million of total unrecognized compensation costs related to non-vested share-based compensation arrangements (including RSUs and PSUs) granted under the Plan.

The cost is expected to be recognized over a weighted average vesting period of 2.0 years.

Share Repurchase Program

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.

This program was retired on November 27, 2023.

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.

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 were no repurchases in fiscal 2025.

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

The share repurchase program may be modified or discontinued at any time.

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.

(9) Income Taxes

2 unchanged sentences

The ultimate realization of deferred tax assets is dependent upon generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible.

As of February 1, 2025, there were no material valuation allowances that have been provided for net deferred tax assets as management believes that it is more likely than not that the Company will realize all material deferred tax assets before any expirations as of February 1, 2025.

As of January 31, 2026, there were no material valuation allowances that have been provided for net deferred tax assets as management believes that it is more likely than not that the Company will realize all material deferred tax assets before any expirations as of January 31, 2026.

The components of the income tax expense are as follows (in thousands):

7 unchanged sentences

Income tax expense $ 121,730 $ 85,054 $ 99,995

The reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate is as follows:

The reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate is as follows (dollars in thousands):

Amount Percent

Statutory federal tax rate $ 100,878 21.0 %

State and local income taxes, net of federal income tax effect (1)

Foreign tax effects 32 — %

Tax credits ( 3,274 ) ( 0.7 ) %

Nontaxable or non-deductible items

Non-deductible compensation 5,281 1.1 %

Other ( 1,802 ) ( 0.4 ) %

Changes in unrecognized tax benefits 1,088 0.2 %

Other 263 0.1 %

$ 121,730 25.3 %

(1) State and Local Taxes in California, New York, Illinois, Texas, New York City, and New Jersey make up the majority of this category.

As previously disclosed for fiscal 2024 and fiscal 2023, prior to the adoption of ASU 2023-09, the reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate is as follows:

Statutory federal tax rate 21.0 % 21.0 %

State taxes, net of federal benefit 3.8 % 3.8 %

Other 0.3 % 0.1 %

25.1 % 24.9 %

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

The effective tax rate for fiscal 2025 compared to fiscal 2024 was primarily driven by non-deductible expenses, partially offset by discrete items, which includes the impact of share-based 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 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 share-based accounting.

The amounts of income taxes paid, net of refunds is as follows:

U.S federal $ 98,760

U.S state and local (1)

(1) No states have met the disclosure requirements outlined in ASU 2023-09

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

February 1, 2025 February 3, 2024

January 31, 2026 February 1, 2025

Deferred tax assets:

14 unchanged sentences

$ ( 50,015 ) $ ( 59,891 )

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 had no material accrual for uncertain tax positions or interest or penalties related to income taxes on the Company’s balance sheets as of January 31, 2026 and February 1, 2025, 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 2025, fiscal 2024, or fiscal 2023.

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

3 unchanged sentences

State returns are filed in various state jurisdictions, as appropriate, with varying statutes of limitation and remain subject to examination for varying periods up to three years to four years depending on the state.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law.

The OBBBA contains numerous amendments to federal income tax provisions and has varying effective dates.

The Company has evaluated and incorporated the effects of the legislation in its income tax provision for the fiscal year ended January 31, 2026.

The legislation did not have a material impact on the Company's effective tax rate but results in a reduction to the Company's tax liability position for the fiscal year ended January 31, 2026.

(10) Employee Benefit Plan

9 unchanged sentences

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.

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.

9 unchanged sentences

Net income $ 358,641 $ 253,611 $ 301,106

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

Quarterly financial results for fiscal 2024 and fiscal 2023 were as follows (in thousands except for per share data):

Fiscal Year 2024 (1)

Fiscal Year 2023 (1)

Quarter Third

Quarter Second

Quarter First

Quarter Fourth

Quarter Third

Quarter Second

Quarter First

Net sales $ 1,390,885 $ 843,710 $ 830,069 $ 811,863 $ 1,337,736 $ 736,405 $ 758,981 $ 726,247

Operating income $ 246,764 $ ( 606 ) $ 41,509 $ 36,150 $ 268,442 $ 16,123 $ 58,594 $ 42,412

Net income $ 187,457 $ 1,687 $ 33,000 $ 31,467 $ 202,199 $ 14,594 $ 46,835 $ 37,478

Basic income per common share $ 3.41 $ 0.03 $ 0.60 $ 0.57 $ 3.66 $ 0.26 $ 0.84 $ 0.67

Diluted income per common share $ 3.39 $ 0.03 $ 0.60 $ 0.57 $ 3.65 $ 0.26 $ 0.84 $ 0.67

(1) The sum of the quarterly per share amounts may not equal per share amounts reported for the fiscal year due to rounding.

The Company's business is seasonal in nature and demand is generally the highest in the fourth fiscal quarter due to the fourth quarter holiday season and, therefore, operating results for any fiscal quarter are not necessarily indicative of results for the full fiscal year.

To prepare for the holiday season, the Company must order and keep in stock more merchandise than it carries during other parts of the year.

The Company expects inventory levels, along with an increase in accounts payable and accrued expenses, generally to reach their highest levels in the third and fourth fiscal quarters in anticipation of the increased net sales during the year-end holiday season.

As a result of this seasonality, and generally because of variation in consumer spending habits, the Company experiences fluctuations in net sales and working capital requirements during the fiscal year.

(12) Subsequent Events

Supreme Court Tariff Ruling

In February 2026, the Supreme Court of the U.S.

issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA").

The ultimate availability, timing, and amount of any potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory, and administrative developments.

presidential administration subsequently invoked additional tariffs under other laws resulting in a rapidly changing tariff environment.

At this time the Company cannot reasonably estimate the total financial impact of this ruling, however it, and any additional tariffs, may materially affect the Company’s future results of operations and cash flows.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

1 unchanged sentence

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