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Five Below Raises Full-Year Guidance
But Discount Retailer Cautious on Consumer 'Pain'
Key Takeaways:
- Shares of Five Below tumbled after the discount retailer beat first-quarter earnings expectations and raised its full-year profit guidance but signaled caution over the consumer in the months ahead.
- The company posted 23% same-store sales growth and lifted fiscal 2027 comparable-sales outlook to 6%–8% but cited inflation, fuel costs and a soft labor market.
- The retailer said it will stay cautious on spending trends after tax refund-driven demand fades, while continuing to use viral products to drive store traffic.
Shares of Five Below Inc. tumbled on June 3 after the discount retailer beat first-quarter earnings expectations and raised its full-year profit guidance but signaled caution over the consumer in the months ahead.
The Philadelphia-based chain raised its fiscal 2027 comparable-sales forecast to growth of 6% to 8%, up from its prior view of about 3% to 5%, but left its comparable sales guidance for the second half of the year unchanged, saying it remains wary about consumer sentiment following a quarter when Americans enjoyed higher tax refunds.
“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,” Chief Financial Officer Daniel Sullivan said in an earnings call.
“We remain cautious with respect to the macro environment, consumer sentiment and buying behaviors,” he added.
Five Below same-store sales rose 23% in the first-quarter, topping analysts’ expectations for an 18% gain.
The company said sales in the quarter benefited from demand for a “squishy dumpling” toy that went viral on social media, adding that it would draw lessons from the success of the product to drive store traffic in the future.
For the fiscal year, Five Below sees adjusted earnings per share coming in between $8.65 and $9.05, higher than its prior forecast of $7.74 to $8.25.
Five Below shares fell as much as 14% in late trading June 3. The stock had risen 18% this year through the close, outpacing the 13% gain in the S&P MidCap 400 Index.
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Low-cost retail peers Dollar Tree Inc. and Dollar General Corp. have also posted stronger-than-expected quarterly results as they attract more affluent customers seeking discounts.
Five Below ranks No 33 on the Transport Topics list of top wholesale/retail carriers. Dollar Tree ranks No. 34.
Dollar General ranks No. 21 on the Transport Topics Top 100 list of the largest private carriers in North America and No. 3 on the wholesale/retail list.
