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Dive Brief:<\/h3>\n\n- \n
Five Below has made \u201cmeaningful progress\u201d optimizing its inventory as the discount retailer develops methods to \u201cimprove our ability to predict demand\u201d and \u201ctrack the movement of product through the supply chain,\u201d CEO and President Joel Anderson recently told analysts on <\/span><\/span><\/span><\/span><\/span><\/span>the company\u2019s earnings call<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/li>\n- \n
In Q3, <\/span><\/span><\/span><\/span><\/span><\/span>inventories rose 8.8%<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>\u00a0year over year. On a per store basis, however, levels fell 5.1% year over year, according to CFO Kristy Chipman. She added that Five Below strategically ordered inventory earlier to ensure strong holiday in-stock position and that management is \u201cpleased with the level and quality of our inventory going into this holiday season.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/li>\n- \n
The retailer has also opened an office in India, where the company has 50 sourcing factories. The office is \u201canother example that will help us innovate,\u201d Anderson said, having recently visited the site. \u201cIt will help us move faster. It will help us keep costing down and it really starts to spread out our supply chain to other countries.\u201d<\/p>\n<\/li>\n<\/ul>\n
Dive Insight:<\/h3>\n
As Anderson explained, Five Below\u2019s efforts around inventory are meant to drive both sales and profits, and revolve around pushing inventory productivity by using \u201cmore sophisticated processes, technology and analytics.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nKenneth Bull, who moved from CFO to COO this year, noted in August that the company was working on a new merchandise financial planning system and replenishment forecasting tool.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n\u201cUsing technology and data analytics, we are focused on improving inventory forecasting, ordering, replenishment and flow with a goal of increasing in-stocks and turns and improving end-to-end visibility,\u201d Bull <\/span><\/span><\/span><\/span><\/span><\/span>told analysts in August<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nAsked by an analyst about where Five Below had the biggest opportunity on inventory, Bull pointed to the company\u2019s buying and merchandising operations.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n\u201cIt’s all about buying better at the end of the day, making sure we’ve got the right inventory in the right location at the right time,\u201d he said. \u201cWe want to make sure we have the ability to continue to place or buy those trends and put them in front of the customers appropriately. So, there’s still opportunity out there. And it’s going to come from process.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nSpeed at various points in the supply chain has helped other retailers \u2014 including <\/span><\/span><\/span><\/span><\/span><\/span>Target<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>, <\/span><\/span><\/span><\/span><\/span><\/span>Burlington<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span> and <\/span><\/span><\/span><\/span><\/span><\/span>Abercrombie & Fitch<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>, among others \u2014\u00a0keep their inventories in check by allowing them to better chase product.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nTo the extent that it helps source products more quickly, Five Below\u2019s India office could aid that effort.\u00a0Anderson told analysts in August that having team members in Asia would help \u201cdrive speed and improve quality along with strengthening strategic partnerships with key suppliers in the region.\u201d\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nDuring 2022, Five Below sourced from about 1,000 vendors, with 60% of purchases coming from domestic vendors and no single vendor accounting for more than 5% of spend, according to <\/span><\/span><\/span><\/span><\/span><\/span>the company\u2019s 10-K<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>.\u00a0 The retailer says its low-cost sourcing and operating model helps it meet its $5 price target for products.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/p><\/div>\n
Five Below has made \u201cmeaningful progress\u201d optimizing its inventory as the discount retailer develops methods to \u201cimprove our ability to predict demand\u201d and \u201ctrack the movement of product through the supply chain,\u201d CEO and President Joel Anderson recently told analysts on <\/span><\/span><\/span><\/span><\/span><\/span>the company\u2019s earnings call<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/li>\n In Q3, <\/span><\/span><\/span><\/span><\/span><\/span>inventories rose 8.8%<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>\u00a0year over year. On a per store basis, however, levels fell 5.1% year over year, according to CFO Kristy Chipman. She added that Five Below strategically ordered inventory earlier to ensure strong holiday in-stock position and that management is \u201cpleased with the level and quality of our inventory going into this holiday season.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/li>\n The retailer has also opened an office in India, where the company has 50 sourcing factories. The office is \u201canother example that will help us innovate,\u201d Anderson said, having recently visited the site. \u201cIt will help us move faster. It will help us keep costing down and it really starts to spread out our supply chain to other countries.\u201d<\/p>\n<\/li>\n<\/ul>\n As Anderson explained, Five Below\u2019s efforts around inventory are meant to drive both sales and profits, and revolve around pushing inventory productivity by using \u201cmore sophisticated processes, technology and analytics.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Kenneth Bull, who moved from CFO to COO this year, noted in August that the company was working on a new merchandise financial planning system and replenishment forecasting tool.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cUsing technology and data analytics, we are focused on improving inventory forecasting, ordering, replenishment and flow with a goal of increasing in-stocks and turns and improving end-to-end visibility,\u201d Bull <\/span><\/span><\/span><\/span><\/span><\/span>told analysts in August<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Asked by an analyst about where Five Below had the biggest opportunity on inventory, Bull pointed to the company\u2019s buying and merchandising operations.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cIt’s all about buying better at the end of the day, making sure we’ve got the right inventory in the right location at the right time,\u201d he said. \u201cWe want to make sure we have the ability to continue to place or buy those trends and put them in front of the customers appropriately. So, there’s still opportunity out there. And it’s going to come from process.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Speed at various points in the supply chain has helped other retailers \u2014 including <\/span><\/span><\/span><\/span><\/span><\/span>Target<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>, <\/span><\/span><\/span><\/span><\/span><\/span>Burlington<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span> and <\/span><\/span><\/span><\/span><\/span><\/span>Abercrombie & Fitch<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>, among others \u2014\u00a0keep their inventories in check by allowing them to better chase product.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n To the extent that it helps source products more quickly, Five Below\u2019s India office could aid that effort.\u00a0Anderson told analysts in August that having team members in Asia would help \u201cdrive speed and improve quality along with strengthening strategic partnerships with key suppliers in the region.\u201d\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n During 2022, Five Below sourced from about 1,000 vendors, with 60% of purchases coming from domestic vendors and no single vendor accounting for more than 5% of spend, according to <\/span><\/span><\/span><\/span><\/span><\/span>the company\u2019s 10-K<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span>.\u00a0 The retailer says its low-cost sourcing and operating model helps it meet its $5 price target for products.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/p><\/div>\nDive Insight:<\/h3>\n