Five Below Says ‘Value and Fun’ Drive Better-Than-Expected Sales

Specialty discount retailer Five Below said it is driving sales by offering customers both value and fun.

The company has been finding “new, disruptive products at extreme value” and promoting them through its growing presence on social media, Five Below President and CEO Joel Anderson said Wednesday (Nov. 29) during the company’s quarterly earnings call.

Goods that resonated with customers during the third quarter included Halloween products like huge inflatables for the front yard and light-up face masks, Anderson said.

“We believe we have established Five Below as the go-to brand for value and fun, though a big opportunity remains to increase brand awareness,” Anderson said.

During the third quarter, Five Below exceeded its guidance for sales, comparable sales and earnings per share (EPS), the company said in a Wednesday press release.

Compared to the same quarter the previous year, its net sales increased by 14.2% and its comparable sales increased by 2.5%, according to the release.

Five Below also opened a quarterly record 74 stores and converted 400 stores to its new Five Beyond format, the release said. Five Beyond stores offer products priced above $5 while still being priced lower than competitors, according to the company’s website.

“These stores are driving traffic, they’re attracting new customers and they’re retaining more current customers,” Anderson said during the call.

Looking ahead, Five Below has raised the midpoint of its fiscal 2023 guidance, with Anderson saying the company is well positioned to meet its goals for both the holiday season and the full year, according to the press release.

During the fourth quarter, customers traditionally focus on needs like gifts for children, which is an area where parents and grandparents rarely cut back on their spending, Anderson said during the call.

“We turn from a store of wants in quarters 1 through 3 into a store of needs in the fourth quarter,” Anderson said. “Our customers need to buy gifts, whether they’re for their kids or their nieces, nephews or grandchildren, or even office co-workers, and we are the perfect place to find that awesome gift at incredible value.”

The company’s holiday assortment for the current quarter includes lounge pants, blankets, seasonal T-shirts and Marvel action figures, Anderson said.

“Our teams are focused on delivering incredible value, trend-right products and a really fun shopping experience for the holidays as well as building for the long-term future,” Anderson said.

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