Good morning, everyone. It is great to be here with you today to discuss our holiday results and give you an update on our Triple-Double strategy that we shared with you almost two years ago at the Investor Day. Joining me today from management are Joel Anderson, our President and CEO, and Kristy Chipman, our CFO and Treasurer. Joel and Kristy will kick off with the presentation, and Ken Bull, our Chief Operating Officer, will join for a Q&A breakout at 9:30 A.M. in Palazzo C. Before we get started, want to take a minute to review our forward-looking statements on the screen behind me. We may make certain forward-looking statements that pertain to our future. We are under no obligation to update those statements. They may reflect our current forecast based on our knowledge of our business today.
In addition, actual results may differ materially from those expectations due to risks and uncertainties as outlined in our public filings. Now, onto a quick video that shows you some of the fun that we provide for our customers, and then Joel will begin the presentation.
Let me tell you. Girl, you my little boo thing. So I don't give a what you do say, girl, I know. You a little too tight. I'll be shooting that shot like 2K, girl, I know. Tell 'em I, tell 'em I'm next. Tell 'em you find a little something, which I know. Tell 'em I, tell 'em I'm next. Tell 'em you find a little something, which I know! You my little boo thing. So I don't give a what you do say, girl, I know. You a little too tight. I'll be shooting that shot like 2K, girl, I know. Tell 'em I, tell 'em I'm next. Tell 'em you find a little something, which I know. Tell 'em I, tell 'em I'm next. Tell 'em you find a little something, which I know.
So I don't give a what you do say, girl, I know. You a little too tight. I'll be shooting that shot like 2K, girl, I know. Tell 'em I, tell 'em I'm next. Tell 'em you find a little something, which I know. Tell 'em I, tell 'em I'm next. Tell 'em you find a little something, which I know.
Good morning, everybody. So great to see you. I love that video. It always puts a smile on my face, and it's truly what we do here at Five Below, try and create an environment where you can let go and have fun. I can't believe this is my tenth year at ICR. Some of you have been with me the whole time on this journey, and some of you are brand new to the journey, and so I say welcome to those. It's also hard to believe that this is our twentieth year, as a company. It was only 20 years ago that we created a concept that was so simple. It was about teens and tweens having a place to spend their allowance money. It was a place that delivered wow product at incredible value in a fun treasure hunt environment.
We've come a long way since that journey began, and while it sounds so simple, it's yet so complicated that it's yet to be replicated. It turns out that a store of wants was much more difficult to create than a store of needs. Even for us, our eight worlds, it took us a while until we really understood the flexibility they provided so that we could constantly chase new trends. The infrastructure needed to support this concept was very difficult and very unique. But as I look back on my 10 years, I'm here to tell you that the foundation is now built, the disciplines and routines needed have been rehearsed and implemented, and the culture is alive and well. I would argue with you that the best is still in front of us at Five Below.
Before we look to the future, though, I wanna go back and look at this recent holiday, and I'll ask Kristy to share the results with you. Kristy?
Thanks, Joel. On our third quarter call, we shared that we were pleased with the start of the quarter, including our Black Friday performance. I'm happy to share with you that we ended the 10 weeks with total sales of $1.16 billion, driving 15.6% total sales growth and comp sales of +3.6%. This comp sales was driven by transactions and offset by ticket, as we've seen for several quarters now. The good news is Supercharged and non-Supercharged stores or in our Five Beyond format stores, both posted positive comp sales and comp transactions. From a merchandise standpoint, the holiday assortment resonated with our customers, including our holiday decor, apparel, stocking stuffers, and wrapping accessories.
We continue to see strength in our needs-based categories, such as food and beverage, including candy, and health and beauty, which also includes our travel section. The majority of our departments comped positively for the holiday season. Finally, Five Beyond exceeded our expectations as we delivered on that seasonal assortment and center-of-plate gifts that resonated with our customers. The guidance we provided at our last quarter earnings call is on the screen. Given the performance over the last 10 weeks, along with the expected comparisons for January, we now expect total sales to be on the high end of the guided range and comp sales of approximately 3% and EPS within the range. We also opened a record number of new stores at 204, and we converted over 400 of our stores to the new Five Beyond format. Joel? Oops.
Thanks, Kristy. Now I'd like to update you on the Triple-Double strategy. As you recall, we shared this strategy with you back in March of 2022, and it was very simple: We were going to triple our stores by 2030. We're gonna double our earnings and sales by 2026-2025. Today, I will update you on exactly where that vision stands, but in order to do that, I wanna take a minute and look backwards at the last five years. When I look at this slide, I think of years that were very tumultuous and full of multiple macro headwinds, headwinds that everybody in this room shared with us. At the same time, as I think about Five Below, I see a very resilient retailer, a retailer that has survived and thrived through all this time.
What I am most proud of is that during this five-year time period, we have delivered superior operating performance and grown sales 18% and earnings per share 15% on a four-year CAGR. Those headwinds of these macro events are now largely behind us and are built into our base. We push forward into 2024 with momentum and excitement for the future of Five Below. I'd like to give you an update on exactly where we are with the Triple-Double as it stands today. As it relates to tripling our stores by 2030, I repeat, nothing has changed. We still expect significant store growth, and we expect to triple our stores by 2030. We opened 1,000 stores in the last seven years. We're gonna open 2,000 stores in the next seven years. It truly has a long runway of growth in front of us.
As I think about the double, and doubling our sales is now pushed out by about one year to 2026. Given the impact of 2021 and the lapping of stimulus and the macro headwinds from higher inflation, we now expect to double our sales by 2026. Specifically, we expect to double sales to $5.7 billion, made up of two components: 15% average annual unit growth and a 2%-4% average annual comp growth. While we're not giving you guidance today, let me remind you, as you think about 2024, that the calendar will be a much more difficult year, with five fewer shopping days during the holiday period, and therefore, you should expect us to be on the lower end of the range I just provided for you.
Now, turning our attention to the bottom line, EPS will approach $10 a share by 2026, effectively doubling our earnings per share of $4.95 in 2021. You can also begin to expect us to lever as we lap the headwinds, and they begin to subside, delivering margin expansion of approximately 20%-40% on an annual average basis as we lever on comp sales and new store sales growth. The drivers of this leverage include a strong new store growth pipeline, enhanced supply chain efficiencies, like the opening of our offices in India this past year, a complete focus on inventory optimization, which Ken Bull is leading, and the ability now to lever on our fixed costs. Like sales, in 2024, you should think about this in the lower end of the range as we lever on a much more difficult holiday period.
Over time, you should expect us to grow our margin to at least 12%. Now, as I turn our attention to how we'll do this, I think about the five strategic pillars that we outlined for you after our earnings call in 2022. I've provided you several updates on these each quarter, but two of them in particular will have a big impact on our Triple-Double, namely store expansion and store potential. We will focus on those two today, and I'll ask Kristy to give you the specifics on how we will deliver on store potential and store expansion, and I will continue to give you updates on all five in each quarterly earnings call. With that, I'll turn it over to Kristy.
Thanks, Joel. So the first pillar is our store growth plan and store expansion. As I just mentioned, we opened a record 204 net new stores in fiscal year 2023, and we'll grow that to between 225-235 in fiscal 2024, and grow again to 250-270 by the end of fiscal 2025, for a 15% two-year CAGR. Our pipeline sets us up to return to a more normalized cadence of opening with nearly half of our stores in the first half of each year. To accomplish this, we're gonna continue to densify in markets, grow into more urban areas, and continue our semi-rural market expansion. There's a lot on this slide, but the headline here is: we continue to have industry-leading new store models.
Our current outlook for our portfolio is a $2.2 million average unit volume, delivering $500,000 in store EBITDA and a 23% four-wall EBITDA margin. Additionally, you will see that our average investment cost is now approximately $500,000. In part, this increase is due to inflation, but primarily due to us taking over construction on many of our sites. As you know, rising interest rates over the past couple of years have caused many landlords to be cash-constrained, which limits the availability of vanilla box locations, where the landlord bears the cost of delivering the location and the shell to us. Our debt-free balance sheet, excluding leases, provides us tremendous financial flexibility and has allowed us to choose to play offense and continue on our aggressive growth plans, where we are able to use our balance sheet to lease as-is locations and take on the construction ourselves.
This does a couple things. There are higher upfront costs and a slightly higher payback. It also comes with tenant allowances in the form of rent abatement, and approximately 30%-40% of our store locations will be in this format for the next year or two. As interest rates normalize, so will our mix of stores over time, and we are very pleased with our new store performance and this new store model. The next pillar is store potential, and this pillar is all about maximizing sales and profit in our existing stores. We grow comp sales and achieving Five Beyond everywhere. We started with helium balloons, and we offer at about 900 locations today, or 60% of our chain. W e also have a new line queue, which created a Snack World, allows for a better checkout experience, and increased selling space for impulse purchase items.
We have about 200 stores with this new line queue, and you will start to see it more often as we roll it out to all of our new locations and converted stores in 2024. On a Five Beyond front, the elevated shopping experience brings new categories and extreme distortive value to our customers at prices between $6-$25. Our merchants continue to innovate on the assortment, not only during the holidays, but are bringing new and innovative things to this class of products in the form of suitcases, arcade games, higher-end beauty items, and then, of course, those seasonal items. Five Beyond conversions drive traffic. They elevate sales in the overall box, and that includes both Five Below and Five Beyond products. As we've said before, Five Beyond product penetration is about mid-single digits, and we expect this to grow to approximately 10% by 2026.
Taking one click deeper on the pacing of these conversions, we started this in 2022, and we now have 55% of our comp stores in the Five Beyond format. We will convert more over the next three years, delivering 70% by the end of 2024, 90% by 2025, and 95% by 2026. We've shared the mid-single-digit outperformance in year one of our converted locations, and we have approximately 240 locations now in their second year of performance and are pleased to see them with second-year comps in line with the chain so far. With that, I'll turn it back over to Joel.
Thanks, Kristy. Hopefully, you've seen we've tried to give you a lot of specifics about where Five Below is today and an update on our Triple-Double strategy, with very few changes to that. In fact, the excitement of growth and the specifics we've given you for 2024 and 2025 are pretty ambitious. In fact, I can't think of another retailer of our size that plans to open over 800 stores in the next three years, as well as convert an additional 500 stores to our latest Five Beyond format. You should also, as I said earlier, expect us to leverage. We will be able to leverage due to these increased sales and our past environments so that we can drive margins. We will also begin to expand our services and add more store features, some of those which Kristy went through in detail with you.
We also expand the plan to continue to innovate in Five Beyond, as we now are focused on assortments as well as classification clarity and improved visual presentation. You roll all this together, and like I said at the beginning, the best of Five Below is still in front of us. We now expect a three-year CAGR that will deliver sales of 17% and earnings per share growth of 20%. It truly is an exciting time here at Five Below. I'm proud to have been able to lead this company for 10 years, and I'm excited about what the future is as we continue to grow and expand the Five Below and Five Beyond concepts. We will answer questions for you later on this morning at our breakout coming up.
With that, I'd like to thank you for joining us this morning and appreciate all your support you've given to Five Below. Thank you very much.