Former Macy’s merchant heads to Five Below

Dive Brief:Former Macy’s Inc. merchant Michelle Israel will be Five Below’s chief merchandising officer as of Monday, the discounter said Wednesday. Her 30-plus years in merchandising at Macy’s and Bloomingdale’s spanned categories and ranged from luxury to off-price.Joining her Monday will be Daniel Sullivan as chief financial officer. Most recently he spent more than six yearsat Edgewell, serving as CFO and chief operating officer. Previously he was CFO at Party City and Ahold, and CFO and COO at Heineken.Sullivan replaces Ken Bull, who has served as Five Below’s interim CFO as well as chief operating officer since June; Bull remains as COO, the company said. All report to former Forever 21 chief Winnie Park, who took over as Five Below’s chief executive in December.Dive Insight:This leadership bodes well for Five Below, according to several analysts.The discounter has been making progress under Park, focusing on newness. In its most recent quarter, net sales surged more than 23% year on year to over $1 billion, comps rose more than 12% and profits expanded.“Following a year of transition, we view [Five Below’s] build out of its management team under the early success of new CEO Winnie Park as a positive next step,” Wells Fargo analysts led by Edward Kelly said in a Wednesday client note.Indeed, the appointments aren’t so much a shakeup as a vote of confidence in the company’s trajectory, according to analysts from several firms.“We are encouraged by the new leadership appointments, as they should help the company accelerate growth and improve operations by ensuring strategic initiatives related to merchandising, pricing, inventory management, and marketing are executed well,” Telsey Advisory Group analysts led by Joseph Feldman said in their client note. Those analysts said they are personally familiar with Sullivan and Israel and believe they are “good fits.”These picks “should increase its operational rigor and eliminate an uncertainty for [investors],” UBS analyst Michael Lasser said in an early take Wednesday. “Both are seasoned executives with deep retail experience.”Several analysts commented on these executives’ ability to further operational strides made in the past several months.That includes William Blair’s Phillip Blee, who views “store operations/labor and a refreshed merchandising position” as “the key drivers behind the company’s recent comp improvement.”Much of Five Below’s success lies in that merchandising, a broad assortment of low-priced toys, doodads, treats and sundries. In a statement Israel said she has admired the retailer “for successfully establishing itself as ‘the’ destination for a highly curated value assortment and fun experience that sits at the intersection of trend and value.”At Macy’s Inc., Israel’s most recent role was senior vice president and general merchandise manager in beauty and center core (including jewelry, shoes and handbags) at Macy’s. She previously also led value brands Bloomingdale’s The Outlet and Macy’s Off Price/Backstage, when she oversaw merchandising, stores, planning and finance, according to Five Below’s press release.Her hire “looks to check all of the boxes,” Wells Fargo’s Kelly said.As with other retailers making headway in their strategies, many of Five Below’s challenges are external, particularly the new import levies being imposed by the Trump administration.“In our view, the most significant risks include tariffs; increasing competition in the big-box retail, grocery, and convenience space; the rise of online discount platforms; and the inherent volatility amid significant changes to its merchandising strategy and store operations,” Blee said.