Five Below Rises Above The Dollar Store Image And Shoppers Are All In

Five Below is raising the $5 roof on prices, and instead of getting customer backlash, it is being rewarded. Since expanding its price range last year and rounding prices to the nearest dollar, Five Below’s sales have been on fire.

After a 3% drop in comparable sales in the fourth quarter 2024, comps jumped 7.1% in the first quarter of 2025, then surged 12.4% in the second and 14.3% in the third. And to cap the year off, holiday comp sales through January 3 climbed 14.5%.

It’s all thanks to a strategy put in place by CEO Winnie Park, appointed at the end of 2024, to elevate Five Below above the dollar-store crowd and reposition it as a specialty gift retailer offering playful, on-trend merchandise with a value-edge.

Upon her appointment, co-founder and executive chairman Thomas Vellios said, “Winnie is a passionate retail visionary with a deep understanding of the consumer and the power at the intersection of trend and value.”

Five Below’s Makeover

He couldn’t have been more right. Park stepped into her role at Five Below after three years as CEO of Forever 21, leading the fast-fashion chain through the tumultuous period after it was acquired by Authentic Brands, Simon Property and Brookfield and before its 2025 bankruptcy and store closings.

Prior to that, she served as CEO of Paper Source, the stationery specialty chain, guiding it through the 2021 acquisition by Elliott Investment, owner of Barnes & Noble.

Both roles equipped Park to make decisive executive decisions in the face of rapidly changing market dynamics and increased competitive pressure.

Also during those years, she joined the Dollar Tree board, giving her an inside track in the dollar store retail segment.

Ironically, the experience that may be more impactful for Five Below is her nine years spent with luxury powerhouse LVMH, where she held senior executive positions with the DFS Group, its travel-retail division.

The airport duty-free retail environment is defined by high traffic, impulse-driven purchases and tightly curated merchandising—dynamics that closely parallel Five Below’s operating model for its value-oriented core customers.

“We are in the business of desire,” she shared with me. “We bring all of this cool, fun, quality stuff at amazing prices. You go in looking for one thing and leave with way more things. There’s a treasure hunt aspect that’s emotionally driven.”

She understands that people across all income brackets will spend more when the merchandise is right and the emotional experience triggers purchases.

Pricing Pivot

Truth be told, Park didn’t introduced merchandise priced above $5 to Five Below, but she strategically repositioned higher-priced offerings to be fully integrated into the shopping experience.

Before her arrival, products over $5 were pushed to the back of the store and separated from regular-priced merchandise in a Five Beyond section. That effectively forced customers to choose a price point first, rather than shop the category they came looking for.

Park changed all that by cross-merchandising higher-priced offerings into their appropriate category sections. That simple move effectively unlocked the opportunity to upsell products priced over $5 and increase the overall basket size.

Higher-priced products have to work harder to find shelf space at Five Below. “At Five Below, we are bred in the bone to not go above five. But for some of our products approaching $50, even $10 or $15, it’s got to be part of the cultural moment and be something really special that you can’t find anywhere else,” she said.

The company told the Wall Street Journal in December that roughly 80% of its products were sold at the $5-and-under price point. However, that share has fallen from about 85% in 2023, according to William Blair analyst Phillip Blee, and he believes higher-priced goods could reach 25% in the future.

Another pricing change Park introduced was rounding prices to the nearest dollar—a smart move, given that the government no longer produces pennies. She said the company had over 80 different price points upon her arrival with prices ending in 25, 55 and nine. Rounding to the nearest dollar simplified prices for customers and the company, yielding a bit more margin when it rounded up.

Mapping The Customer Journey

Park has good sightlines into Five Below’s target customer and how to keep them engaged throughout their customer lifecycle, or more accurately, their lifestage bound loosely by age, not income. Unlike traditional dollar stores, which focus on more functional, necessity items, Five Below has always been about fun and has built a strong following among kids and goes from there.

“We’ve redoubled our efforts to be a destination for kids up through college, but in reality, there’s a kid in every single person,” Park said.

Five Below has carved out three phases in a customers’ lifetime. “We start in the world of play, at about five years, with games and toys, with a lot of excitement around Asian toys and collectibles,” Park explained,

Then it moves into the teen years as they transition into what Park describes as the express-yourself phase, offering beauty, fashion, and home décor products that teens can experiment and play with. She points to a $35 mirror they can buy “guilt free.”

And then the customer circles back once they have their own kids, even grandkids. “So we’ve got Gen Alpha, Gen Z, millennials parents and onward. We’re a place you can bring your child and really have a ball for $5,” she said, adding that collectibles, in particular, appeal to adults just as much as to kids—the so-called “kidulting” trend.

“We’ve become a destination, a one-stop shop for gifts,” she asserts. And customers can find top brands, like Lego, Disney, Stitch, Blue, SpongeBob and Pokémon in stores.

Five Below also spans across a wide swath of product categories, showcasing New & Now, along with toys and games, tech, party, beauty, style, home, arts and crafts, candy, pets, sports and holidays—consumers spent $23.6 billion on Easter last year, 5% more than the year before, according to the National Retail Federation.

“We lean into catering to convenience and time and money savings with a great customer experience, easy to navigate stores, trend-right products and storytelling,” she said.

Room For Growth

Having perfected Five Below’s differentiation strategy and carved out a unique position in the specialty retail market, Five Below is on the move.

It opened 136 new stores through the first three quarters of 2025 and by end of year, it plans to reach 150. In November, during fiscal fourth quarter, it made its first inroads into the Pacific Northwest with nine stores opened in November, filling prime retail locations abandoned by Party City.

Currently, Five Below operates 1,850 stores in 44 states and while it hasn’t announced openings in 2026, some 40 new locations are set to open in February and March. It has yet to announce the date for full year 2025 reporting, but it’s expected to be late in March.

In comments at the recent January ICR Conference, newly appointed CFO Daniel Sullivan said the aim is to reach 3,500 stores, growing at a high-single-digit rate each year.

“We’re highly convicted upon what our growth could be. We’re going to be super smart and disciplined—not just chase a number,” he shared.

Remarkable Record

Park has made a remarkable contribution to Five Below since joining the company a little over a year ago. Fiscal 2024 revenues ended up 9% to $3.9 billion and virtually all that growth was fueled by some 227 new stores—comp sales were down nearly 3% in the year.

In first quarter, Five Below turned up the heat, increasing net sales by 20%, followed by 24% in second quarter and 23% in third quarter. Through the first three quarters revenues reach $3 billion and it is guiding on $4.75 billion by year end.

Net income has also been moving in a positive direction, nearly doubling from $66 million through third quarter last year to $120.4 million this year.

Keeping The Momentum Going

Jefferies analyst Randal Konik is cautious about fiscal 2026 performance, given the exceedingly strong comparisons it will meet.

“The company faces a tougher setup in F’26 as it will be lapping double-digit, ticket-driven comp growth, while historically, results have leaned more on traffic and transactions, making sustained momentum harder to achieve,” he wrote in a research note.

But then, Park and her Five Below team are throwing out the old playbook and bringing in a new one with a long runway for sustainable growth.

Commenting on recent consumer sentiment surveys, GlobalData’s Neil Saunders observed that consumers overwhelmingly feel financial strain, yet at the same time they also feel a desire to treat and indulge themselves and their families.

“For many, the solution is to seek nice things that cost less. Cue Five Below,” he observed.

“No retailer can chuck cheap stuff out there and expect to win. Behind the scenes, Five Below has engineered growth with smart buying, jumping on product trends, making sure merchandising is solid, creating great experiences in store and being extremely active in opening new outlets,” he continued.

Saunders is betting on Park and team to keep the momentum going. “The energy, which has always been a hallmark of Five Below, has increased under Winnie Park. Under her leadership, the firm has done a great job of driving operational discipline while keeping ‘fun’ a core part of the mission.”

That’s a recipe for retail success in 2026.