What Five Below, Inc. told the SEC could break it.

A significant majority of Five Below's merchandise is manufactured outside the United States, with China the single largest source of goods it imports and sources from domestic vendors — concentrating its supply chain in China and exposing margins to changes in the price and flow of imported goods.

“A significant majority of our merchandise is manufactured outside of the United States, with China as the single largest source of merchandise we import and source from domestic vendors. Changes in the prices and flow of the goods we import and source from domestic vendors, for any reason, could continue to have an adverse impact on our operations.”

Recent and threatened U.S. tariffs on China, Mexico, Canada and other countries — including the uncertainty following the Supreme Court's IEEPA Decision invalidating certain tariffs — and retaliatory tariffs could lower Five Below's gross margins on impacted products and raise its (or its vendors') import expenses unless it can negotiate lower costs, shift sourcing, raise prices, or alter/drop products.

“In particular, recent U.S. tariffs imposed or threatened to be imposed on China, Mexico, Canada, and other countries (including after the U.S. Supreme Court invalidated certain tariffs imposed under the International Emergency Economic Powers Act (the “IEEPA Decision”)) and any retaliatory actions taken by such countries could result in lower gross margins on impacted products, unless we are able to successfully take any one or more of the following mitigating actions: negotiate lower product costs with our vendors, purchase products produced in countries with no or lower tariffs or transition away from domestic vendors who source from China or other tariff impacted countries, increase our prices, or alter or cease offering certain products.”