Five Below lifts sales outlook to $5.71B as value demand holds

Five Below raised its full-year sales forecast to as much as $5.71 billion after second-quarter revenue climbed 22.9%, driven by new stores and trend-right merchandise.

"Our Crew delivered strong results by collaborating on trend-right product stories at amazing value in stores that are fun and easy to shop," Winnie Park, chief executive officer of Five Below, said. "The balance between new store growth and double-digit comparable sales growth for the past five quarters is a testament to our operating flywheel gaining momentum."

The Philadelphia-based value retailer now projects full-year adjusted earnings per share of $9.83 to $10.31, up from a prior range of $8.65 to $9.05. Comparable sales are expected to rise 10% to 12% for the year, versus an earlier forecast of 6% to 8%. Second-quarter adjusted diluted EPS came in at $1.68, up from $0.81 a year earlier.

Net sales for the quarter ended Aug. 1 reached $1.26 billion, up from $1.03 billion in the prior-year period. Comparable sales increased 14.1%, the fifth consecutive quarter of double-digit growth. The company now operates more than 2,000 stores across 47 states, with approximately 150 net new stores planned for the full year.

GAAP diluted EPS for the quarter was $3.99, boosted by $163.6 million in IEEPA tariff refunds. Excluding those refunds and other items, adjusted operating income rose to $113.2 million from $55.1 million a year earlier. For the first half, net sales totaled $2.55 billion, up from $2.00 billion in the prior-year period.

For the third quarter, Five Below expects net sales of $1.21 billion to $1.23 billion, comparable sales growth of 8% to 10%, and diluted EPS of $1.01 to $1.13. The company plans approximately 40 net new stores in the quarter.

The board on Aug. 29 approved a new $600 million share repurchase program, replacing the prior authorization from November 2023. The program has no fixed expiration date.

The guidance raise places Five Below among the stronger performers in the discount retail space, where chains including Dollar Tree and Dollar General compete for budget-conscious shoppers. The raised outlook points to management's expectation that value-seeking consumers will sustain spending through the holiday season. Investors will watch third-quarter results for evidence that comparable sales growth can hold above 10% as the company expands its store base.

This article is for informational purposes only and does not constitute investment advice.