PHILADELPHIA, PA — Five Below, Inc. (NASDAQ: FIVE) has disclosed its financial outcomes for the second quarter and year to date period ending August 3, 2024, revealing a mixed performance with notable growth in store numbers but challenges in sales metrics. The discount retailer reported an increase in net sales by 9.4% to $830.1 million, despite a 5.7% dip in comparable sales for the quarter.
The company continued its aggressive expansion, inaugurating 62 new stores, culminating in a total of 1,667 locations across 43 states. This represents an 18.5% growth in store count compared to the same period last year. However, operating income declined to $41.5 million from the previous $58.6 million, with adjusted operating income settling at $37.0 million. Net income for the quarter stood at $33.0 million, a decrease from $46.8 million in the prior year, while adjusted net income was $29.7 million.
Ken Bull, Interim CEO, President, and COO, acknowledged the quarter’s underperformance. “Our second quarter results fell short of what we know this business is capable of delivering,” he stated. Nonetheless, Bull remains optimistic, emphasizing the company’s strategic refocus on improving product assortments and enhancing customer experience. He added, “We are refocused on delivering an edited assortment that leads with value and newness to wow our core pre-teen and teen customer.”
For the year to date, Five Below’s net sales rose by 10.6% to $1.64 billion. The company opened 123 new stores, nearly doubling the number of new openings compared to the previous year. Operating income for this period was $77.7 million, down from $101.0 million last year, with net income at $64.5 million.
Looking ahead, Five Below projects third-quarter net sales between $780 million and $800 million, with a potential net loss ranging from $2 million to $13 million. The company anticipates opening approximately 85 new stores during this period. For the full fiscal year, net sales are expected to reach between $3.73 billion and $3.80 billion, with plans to open about 230 new stores.
Bull reiterated confidence in the company’s long-term growth strategy, albeit with a more moderated pace of expansion in 2025 to focus on improving store-level execution. “I am confident in the core appeal of Five Below, the underlying strength of our business model, the talent of the teams across the company, and our ability to reinforce our destination appeal and improve our results,” he concluded.
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