Five Below & Uber Eats: A Dynamite Delivery Partnership Fueling Retail Revolution

The retail landscape is shifting rapidly, and Five Below (FIVE) has just thrown down a bold move with its nationwide launch of delivery via Uber Eats. Announced on June 5, 2025, this partnership unlocks a new revenue stream for the discount retailer while positioning Uber (UBER) as a disruptor in the underpenetrated non-food delivery market. Let's dissect why this strategic synergy could be a game-changer—and why investors should take notice.

Strategic Synergy: Leveraging Scale and Demand

Five Below's product mix—affordable items priced at $15 or under—has always been a magnet for budget-conscious shoppers. Now, pairing this with Uber's 1,500+ Five Below locations and its 14 million active monthly users creates a powerful one-two punch. Customers can order everything from party supplies to electronics with $0 delivery fees for Uber One members, reducing friction in the buying process. This isn't just a convenience play; it's a direct response to rising demand for instant gratification.

Meanwhile, Uber Eats expands its ecosystem beyond food, capitalizing on a $50 billion U.S. non-food delivery market that's still untapped. The partnership also diversifies Uber's revenue streams, shielding it from over-reliance on volatile food delivery trends. For Five Below, the move amplifies its reach to urban centers and busy families who might not visit stores regularly.

Financial Fortitude: A Solid Foundation for Growth

Five Below's financials are a testament to its resilience. With an 8.91% revenue growth over the past year and a robust current ratio of 1.79, the company is primed to scale this initiative. Its first-quarter 2025 earnings—$0.86 EPS, beating estimates by 10%—and a 7.1% comparable sales jump underscore its operational strength.

Analysts are bullish: Mizuho, Citi, Jefferies, and others have raised price targets to an average of $125 per share, reflecting confidence in its growth trajectory. Even with tariff pressures, Five Below's shift away from China-based sourcing and focus on localized supply chains should mitigate risks.

Untapped Market Potential: The Non-Food Delivery Frontier

The non-food delivery sector is the next battleground. While Uber and DoorDash dominate food delivery, consumers are increasingly seeking same-day access to everyday items. Five Below's partnership with Uber taps into this demand, offering a unique value proposition: $0 delivery on $15 items (a steal compared to Amazon's Prime fees). This pricing model could steal share from big-box retailers and online competitors alike.

Uber's existing logistics network—a key advantage—allows Five Below to avoid the costly buildout of its own delivery infrastructure. With 1,800 stores nationwide, Five Below's geographic footprint ensures coverage in dense urban and suburban markets, where delivery demand is highest.

Risks and Considerations

No investment is risk-free. Five Below's guidance for $4.3–4.4 billion in 2025 sales assumes 3–5% comparable sales growth—a slowdown from recent quarters. Macro risks, including inflation and consumer spending shifts, could pressure margins. Additionally, competition from DoorDash (which already partners with Five Below) and other delivery platforms may dilute Uber's exclusivity.

However, these risks are mitigated by Five Below's low price point and necessity-driven product mix (think school supplies, holiday decor). These items are less cyclical than discretionary goods, offering a buffer against economic downturns.

Investment Recommendation: Buy with a Bullish Outlook

This partnership isn't just a sideshow—it's a strategic move that could redefine Five Below's ceiling. With $1.7 billion in cash and a debt-to-equity ratio of just 0.2, the company has the financial flexibility to invest in growth. Analysts' average price target of $125 (a 15% upside from current levels) aligns with Five Below's potential to capture 10% of the non-food delivery market.

Recommendation: Buy FIVE with a price target of $130 by year-end 2025. The stock's current valuation (P/E of 22x) remains reasonable given its growth profile, and the Uber Eats partnership adds a compelling catalyst. Investors should also monitor Q2 earnings for delivery revenue contributions and market share gains.

In a world where convenience reigns, Five Below and Uber are building a moat that's hard to replicate. This isn't just a partnership—it's a blueprint for the future of retail.