Source: Five Below
Five Below isn’t slowing down its expansion even if consumers are more discriminating about spending their money.
The retailer posted a first-quarter net sales increase of 13.5 percent and net income of $37.5 million, up from $32.7 million the year before, as it opened 27 new stores in 19 states and converted 250 Five Below stores into its Five Beyond format which sells higher-priced goods.
Five Below CEO Joel Anderson, speaking yesterday on the retailer’s earnings call, said his company is now on pace to exceed its goal of opening 200 stores in 2023 “while building our pipeline for next year and beyond” as a result of having acquired an unspecified number of leases from retailers in bankruptcy. Two recently opened stores were in the top-25 of Five Below’s all-time grand openings.
The retailer reported that transactions increased by 3.9 percent in the first quarter, helping to offset a 1.2 percent decline in the average ring.
Mr. Anderson said the retailer’s increase in transactions was Five Below’ highest since 2017, excluding the pandemic when federal stimulus payments were made to Americans. He called the first-quarter performance “a strong indicator that Five Below is a destination customers rely on even in tougher economic times.”
Five Below is looking to increase its average unit volume in stores by adding Five Beyond sections and introducing new services and products, , including “ear piercing and fun snarky helium balloons,” Mr. Anderson said.
The retailer is committed to expanding the Five Beyond concept within its traditional stores and as a standalone concept. The conversion of 250 Five Below locations to the Five Beyond banner put the retailer well on its way to achieving its goal of 400 store conversions in 2023.
Mr. Anderson said that merchandising is a company strength. Seven of Five Below’s eight merchandising worlds (AKA categories) – Tech, Create, Play, Candy, Room, Style, Party and New & Now – posted gains in the first quarter. Tech was the exception as consumers focused more on consumables while shying away from higher-priced discretionary items.
Five Below opened its first global sourcing office in India in the first quarter.
“We are very excited to have a presence on the ground to work directly with our factories overseas and, together, develop and bring to market even more amazing products at disruptive and distorted value for our customers,” Mr. Anderson said.