Five Below, Inc. FIVE and Macy’s, Inc. M are operating in the retail space with strong momentum and improving operational execution. Five Below is a fast-growing value retailer targeting Gen Alpha, Gen Z and millennial families through trend-right merchandise and rapid store expansion. Meanwhile, Macy’s is executing its Bold New Chapter strategy, focused on revitalizing its department store business through investments in digital capabilities, premium nameplates and high-performing stores. The key question for investors is which retailer offers the stronger long-term growth opportunity.
The Case for FIVE
Five Below continues to strengthen its position in the value retail space through disciplined execution, robust traffic and deeper engagement. Higher store visits and increased average ticket size reflect the company’s growing appeal among consumers. Management also highlighted broad-based strength across new and existing shoppers, demographic groups and merchandise categories, reinforcing Five Below’s ability to gain market share in a highly competitive retail environment.
A major strength behind Five Below's momentum is its customer-centric operating strategy. The company continues to sharpen its focus on Gen Alpha, Gen Z and millennial families through compelling product storytelling, constant newness and an engaging shopping experience. At the same time, it has adopted a social-first marketing strategy by increasing investments in creator content, direct customer engagement and AI-powered advertising, while expanding convenience through buy online, pick up in store and third-party delivery.
The company's merchandising and pricing strategy continues to reinforce its value proposition. More than 80% of its assortment remains priced at $5 or below, while higher price points have been integrated throughout stores rather than separated into dedicated Five Beyond sections. This approach has improved merchandising productivity while supporting higher average unit retail. Combined with strength across categories such as games, toys, beauty, fashion, room decor, food and seasonal products, Five Below continues to generate healthy traffic and sustained customer demand.
Another attractive feature of the investment story is Five Below's long runway for expansion. The company opened 49 net new stores during the first quarter, ending the period with 1,970 stores, while management remains committed to opening approximately 150 net new stores during fiscal 2026. Investments in technology, distribution capabilities and store execution further strengthen the company's ability to scale efficiently while maintaining a consistent customer experience across its growing footprint.
Management's confidence is reflected in its higher fiscal 2026 outlook. It had guided net sales of $5.40-$5.48 billion, comparable sales growth of 6-8% and adjusted EPS of $8.65-$9.05, while maintaining plans to invest $230-$250 million in store expansion, supply chain improvements and technology. Supported by strong comparable sales momentum, market share gains and significant whitespace opportunities, Five Below appears well positioned to deliver durable long-term shareholder value.
The Case for Macy's
Macy's is reshaping its business through the Bold New Chapter strategy, which is focused on creating a stronger, more profitable operating model. The initiative is improving execution across merchandising, store operations and customer service while enabling the company to allocate capital toward its highest-return opportunities.
A key strength of Macy's is its diversified portfolio of retail banners. Bloomingdale's continues to strengthen the company's position in luxury retail through premium assortments and brand elevation, while Bluemercury is benefiting from sustained demand in prestige beauty and expansion of new and remodeled stores. These businesses provide exposure to faster-growing retail categories and enhance the overall quality of Macy's revenue mix.
The Reimagine initiative has become the company's primary store optimization program. Expanded to 200 locations, these stores now account for nearly 60% of Macy's go-forward fleet and approximately 75% of Macy's go-forward sales. The initiative focuses on localized assortments, improved visual presentation, better staffing and elevated service standards, creating a scalable model that management intends to replicate across its most productive stores.
Beyond merchandise sales, the company is building additional earnings streams through its credit card business and Macy's Media Network, which together generated $210 million of other revenues in the first quarter of fiscal 2026. At the same time, it continues investing in technology, including automation at its China Grove distribution center, artificial intelligence for inventory management and forecasting, and Ask Macy's, an AI-powered shopping assistant designed to enhance product discovery across digital and physical channels.
Management expects these strategic initiatives to support continued progress through fiscal 2026. On its last earnings call, Macy’s guided net sales of $21.5-$21.75 billion, comparable sales growth of 0.5%-1.2% and adjusted EPS of $2.00-$2.20. The guidance also incorporates continued investment in Reimagine 200 locations and the company's luxury businesses, underscoring Macy's focus on strengthening long-term growth while maintaining flexibility in an evolving retail environment.
How Does the Zacks Consensus Estimate Compare for FIVE & Macy's?
The Zacks Consensus Estimate for Five Below’s current fiscal-year sales and EPS implies growth of 15.1% and 36.1%, respectively, from the year-ago period’s actuals. For the next fiscal year, the consensus estimate indicates a 9.2% rise in sales and 9.1% growth in earnings. The consensus estimates for EPS for the current and next fiscal year have increased 12 cents over the past 30 days to $9.08 and $9.91, respectively.
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The Zacks Consensus Estimate for Macy's current fiscal-year sales is expected to remain almost flat year over year, while EPS is expected to decrease 5.6% from the year-ago period's actuals. For the next fiscal year, the consensus estimate indicates a 0.1% decline in sales and 6.1% growth in earnings. The consensus estimate for EPS for the current and next fiscal year has increased 3 cents and 5 cents over the past 30 days to $2.19 and $2.33, respectively.
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Stock Performances of FIVE & Macy's
Shares of Five Below have jumped 49.7% in the past year, whereas Macy’s has skyrocketed 100.4%.
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Stock Valuations of FIVE & Macy's
Five Below is trading at a forward price-to-sales (P/S) multiple of 2.01, above its median of 1.98 in the past year. Macy’s forward 12-month P/S multiple sits at 0.30, above its median of 0.25 in the past year.
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FIVE or Macy's: Which is the Better Bet Now?
Both Five Below and Macy's are executing well and have made meaningful progress in strengthening their businesses. Macy's deserves credit for improving operational efficiency, expanding its higher-growth luxury banners and diversifying its revenue streams, making it an attractive option for investors seeking a turnaround story. However, Five Below appears to be the stronger investment at this stage. Its business is supported by consistent customer demand, a differentiated value-focused retail model, a long runway for store expansion, and multiple growth drivers that are still in the early stages. While Macy's is focused on stabilizing and optimizing its existing business, Five Below is expanding from a position of strength, offering greater long-term growth potential. For investors looking for the more compelling retail opportunity today, Five Below holds the edge over Macy's.
Five Below and Macy’s currently sport a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
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