Five Below Posts Modest Q1 Increases Amidst Comparable Sales Dip

Five Below

PHILADELPHIA, PA — Five Below (NASDAQ: FIVE), a leading American discount retailer, reported a surge in its net sales by 11.8% to $811.9 million for the first quarter that ended on May 4, 2024. This figure is significantly up from the $726.2 million recorded in the same period of the previous year. Despite this seemingly impressive increase, the company also reported a drop in its comparable sales by 2.3% compared to the same quarter of the previous year.

In an aggressive expansion plan, the company opened 61 new outlets during the quarter, raising its total stores to 1,605, an increase of 17.4% from the first quarter of the previous fiscal year.

However, the company also faced some financial hurdles. Operating income dipped from $42.4 million to $36.2 million, largely due to a $2 million non-recurring expense related to settling employment-related litigation. When excluding these one-off payments, the adjusted operating income would have been registered as $38.2 million.

The effective tax rate also saw an increase standing at 23.5% compared to the previous year’s rate of 18.6%. Net income, on the other hand, decreased to $31.5 million from the previous first quarter’s $37.5 million. In terms of earnings per share, there was a drop to $0.57 in the first quarter of fiscal 2024 from $0.67 in the corresponding period in the previous fiscal year.

Despite the mixed fortunes, Five Below’s President and CEO, Joel Anderson, remained upbeat, stating that while their first quarter sales were a disappointment, the company managed to deliver adjusted earnings per share (EPS) within their outlook through disciplined cost management. He further emphasized that Five Below remains a high growth retailer and revealed plans to open approximately 230 new stores by the end of the year.

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Looking forward, the company expects net sales for the second quarter of Fiscal 2024 to be in the range of $830 million to $850 million. For the full year, they’re projecting net sales to stand somewhere between $3.79 billion and $3.87 billion.

This performance and future outlook underscore the two contrasting dynamics shaping the retail sector. On one side, increased sales signify a recovering economy and potentially bigger market share. On the other hand, the drop in comparable sales may be reflective of increased competition, fluctuating market trends, or changes in consumer behavior. Ultimately, how the company navigates these dynamics will set the stage for its future performance and growth.

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