Bank of America reiterated its 'Underperform' rating on Five Below, Inc., citing significant tariff-related margin risks for the discount retailer. The firm highlighted that Five Below faces challenges due to its substantial reliance on imports from China.
The analysis indicated that the company's business model, which emphasizes extreme value, could be particularly vulnerable to increased import costs. This pressure is expected to impact Five Below's ability to maintain its current pricing structure and profitability.
The report also pointed to weak pricing power as a contributing factor to the tariff-related margin risks. This suggests that Five Below may struggle to pass on higher costs to consumers without affecting demand, further squeezing its operating margins.
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