Five Below halts imports of Chinese goods, its primary source of merchandise.

Five Below, the retail chain renowned for offering a variety of affordable merchandise, has announced a halt on imports from China due to escalating U.S. tariffs that have significantly increased costs. Based in Center City, the company operates approximately 1,500 stores and has built a brand around low-priced products such as colorful accessories and novelty items, predominantly sourced from China.

In an official statement, Five Below expressed its decision to proactively pause orders from China as a strategic move to assess various options for sourcing products that align with current consumer trends while remaining competitively priced. The chain is actively exploring alternative merchandise and may shift its focus to suppliers from countries that do not face the same tariff levies.

Shipping giant Moller-Maersk A/S informed Five Below’s manufacturing partners in China to return all shipping containers dispatched since early April and to cease additional shipments. This interruption in supply is indicative of broader challenges retailers face amid recent trade policy changes.

Following this announcement, Five Below’s stock experienced a downturn, closing at .47 on Friday, reflecting a considerable decline from over 0 at the beginning of 2024. The company has grappled with stagnant sales and a deceleration in new store openings over the past year, compelling the nonprofit to implement restructuring measures, including management changes.

According to a recent filing with the U.S. Securities and Exchange Commission, Five Below highlighted the potential adverse effects of increased tariffs on its operational costs, profit margins, and pricing strategies, potentially leading to higher expenses for consumers. With a significant portion of its inventory sourced from overseas, particularly China, the retailer is focused on negotiating better prices with suppliers and identifying new product sources both internationally and domestically.

In the wake of heightened tariffs, Five Below’s management has acknowledged potential difficulties as rising prices could dampen consumer purchasing behavior, further challenging retail profitability at a time when the industry is already navigating a transformation in shopping trends.

Despite the current pressures, Five Below has made strategic adjustments to its growth trajectory. Earlier this year, co-founder Thomas Vellios returned to leadership to reposition the company toward its roots, scaling back aggressive expansion plans and emphasizing value-focused merchandise, a shift from recent strategies that leaned toward larger stores and elevated price points. The company has appointed Winnie Park as Chief Executive Officer, marking a new chapter in its ongoing evolution as it seeks to stabilize its market presence amidst ongoing economic challenges.

As Five Below navigates this complex landscape, its commitment to adapting to shifts in the retail environment while managing external pressures will be critical in determining its future trajectory.