How the ‘No Buy’ Trend of 2025 Is Boosting These 3 Stocks

Key Points

• The Wall Street Journal reported that the “No Buy” trend is all the rage on TikTok and social media as consumers are tired of inflation and vowing to spend less to nothing to pay down debt in 2025
• While the “No Buy” trend may be a detriment to retailers, it can mean a surge of business for the very deep discount retailers.
• Buy now, pay later companies can also benefit as the “No Buy”-ers consciously avoid using credit cards to avoid high interest rates.

The Wall Street Journal pointed out a peculiar new trend on social media, where influencers are not showcasing their lavish purchases but rather going the opposite route, embracing a “No Buy” trend. Consumers are tired of inflation and lofty credit card interest rates and have deemed 2025 a year of frugality. TikTok is littered with “No Buy Challenges," where users are spending less to nothing and working to pay down debt. While this trend may be painful for most retailers in the consumer discretionary sector, some discount retailers may end up being benefactors of the “No Buy” trend.

Dollar Tree: When the Off-Price Is Still Too Expensive

The advent of the off-price shopping trend took social media by storm in 2024, triggering consumers to shop expensive brands at deep discounts through off-price retailers like Ross Stores Inc. NASDAQ: ROST and TJX Companies Inc. NYSE: TJX. They shunned low-quality dollar stores, but the “No Buy” trend may perk up the business of Dollar Tree Inc. NASDAQ: DLTR as frugality shopping grows. Off-price shopping is about treasure hunting for quality at a value price, but “No Buy” shopping is all about saving money. This trend is already showing up with business upticks.

Dollar Tree posted EPS of $1.12, beating consensus estimates by 5 cents. Revenues rose 3.5% YoY to $7.57 billion, beating consensus estimates of $7.45 billion in the third quarter of 2024. Same-store sales rose 1.8% YoY for Dollar Tree stores, 1.9% for Family Dollar stores and 1.8% enterprise-wide.

In-Line Guidance for Q4, Potential Sale of Family Dollar

Dollar Tree issued in-line guidance for Q4 2024 with EPS of $2.20 to $2.30. Revenues are expected between $8.1 billion to $8.3 billion versus $8.23 billion. The company will continue to undergo its strategic review for its Family Dollar stores, which could include a potential sale or spin-off.

Dollar Tree CEO Mike Creedon commented, "As an organization, our top priorities remain to accelerate the growth of the Dollar Tree segment, completing the Family Dollar strategic review process, and unlocking value for Dollar Tree shareholders."

Five Below: Paying a Little More, But Still Frugal

While Dollar Tree sells most of its items for $1.25 for the most frugal budget-conscious shopper, Five Below Inc. NASDAQ: FIVE is for those who don’t mind splurging a bit more for most items priced at $5.00 or below. Business is bouncing back with velocity as many shoppers find it easier to trade down incrementally.

The turnaround was apparent in its third quarter 2024 earnings when it reported EPS of 42 cents, crushing consensus analyst estimates by 25 cents. Revenues rose 14.6% YoY to $843.71 million, crushing the $801.48 million consensus estimates. Q3 comp sales rose 0.6% YoY versus a mid-single digit decrease from previous guidance. The company opened a record 82 new stores, and Black Friday was very encouraging.

The company announced a new CEO; Winnie Park is a 30-year veteran of retail and, most recently, the former CEO of fast fashion giant Forever 21.

Holiday Period Sales Update and Reaffirmed Q4 Guidance

On Jan 13, 2025, Five Below provided a holiday sales update and reaffirmed guidance. Net sales for the Holiday Period of the nine weeks from Nov 9. 2024, through Jan 6, 2025, saw revenues rise 8.7% YoY to $1.19 billion. However, comparable sales for the 2024 Holiday Period fell by 3.2% YoY. The company continued to reaffirm Q4 2024 guidance.

Affirm: Buy Now, Pay Later in Four Interest-Free Installments Bi-Weekly

One of the common themes with the “No Buy” trend is to try to pay down credit card debt, but especially to stay away from the high interest rates. Affirm Holdings Inc. NASDAQ: AFRM is the pioneer of the buy now, pay later (BNPL) industry in the United States. When “No Buy”-ers need to spend, they will opt to go with a clean, interest-free installment plan like Affirm's, which is four payments each paid every two weeks until the balance is paid off.

It’s a win-win for shoppers and merchants who benefit from the conversion from window shopper to buyer, which is why they pay a fee to Affirm. The fourth quarter holiday shopping season is the busiest period of the year, and 2024 should have produced some record metrics.

FQ1 Sets the Stage for a Blowout FQ2 Holiday Shopping Season

Affirm reported a loss of 31 cents per share in fiscal Q1 2025, which still beat consensus estimates by a penny. Revenue ballooned 40.7% YoY to $698.48 million, crushing the $664.04 million consensus estimates. Gross merchandise volume surged 35% YoY to $7.6 billion.

Affirm conservatively issued in-line guidance for fiscal Q2 2025 of revenue between $770 million and $710 million versus $784.51 million. GMV is expected to be between $9.35 billion to $9.75 billion. Fiscal full-year 2025 revenues are expected to rise 20 bps higher than fiscal 2024 as a percentage of GMV, which should be more than $34 billion.