The discount retailer raised its full-year sales and profit guidance but cautioned that tax refund tailwinds masked underlying consumer stress
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Credit: JJBers / Wikimedia Commons (CC BY 2.0)
Five Below reported first-quarter net sales of $1.29 billion on Wednesday, up 32.5% from a year earlier, as comparable sales rose 22.7%. The company also raised its full-year guidance, but Five Below stock fell after the close as executives flagged caution over the consumer outlook.
Against analyst expectations of $1.74 per share, the company delivered adjusted diluted earnings of $2.22 per share, according to Benzinga. Quarterly revenue of $1.29 billion came in ahead of the $1.22 billion consensus, per Benzinga.
Five Below ended the quarter with 1,970 stores across 46 states after opening 49 net new locations during the period, the company said.
Full-year net sales guidance was bumped up to $5.40 billion to $5.48 billion from the prior outlook of $5.2 billion to $5.3 billion, according to Benzinga, while the adjusted diluted earnings per share target moved to $8.65 to $9.05, compared with the earlier range of $7.74 to $8.25.
Despite the strong results and raised guidance, Five Below stock fell more than 6% in after-hours trading, according to Benzinga. Executives signaled that the first quarter's strong performance was partly fueled by higher tax refunds that may not persist.
"We're looking at the world that our customers are living in: with rising fuel costs, with very sticky inflation, with a somewhat soft labor market. And we think a piece of that pain that they are feeling wasn't felt in the first quarter purely because of tax proceeds," CFO Daniel Sullivan said on the earnings call, according to Bloomberg. "We remain cautious with respect to the macro environment, consumer sentiment and buying behaviors," he added.
The company's full-year guidance assumes tariff rates currently in place through July 24, 2026 revert to rates in place at the start of the fiscal year after that date, the company said.
CEO Winnie Park pointed to social media momentum as a key driver of the quarter's results. "We successfully amplified social media trends and drove outsized traffic through coordinated merchandising and marketing efforts," Park said in a statement. A viral "squishy dumpling" toy drove a meaningful portion of the quarter's sales gains, and executives said the retailer planned to apply what it learned from that runaway product to generate foot traffic in the months ahead, according to Bloomberg.
For the second quarter, Five Below guided for net sales of $1.18 billion to $1.20 billion and comparable sales growth of 7% to 9%, with adjusted diluted earnings per share of $1.17 to $1.29.
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