Five Below: Strong Q1 Comparable Sales
Here's our initial take on Five Below's (NASDAQ: FIVE) fiscal 2025 first-quarter financial report.
Key Metrics
| Metric | Q1 FY24 | Q1 FY25 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $811.9 million | $970.5 million | +19.5% | Beat |
| Earnings per share (adjusted) | $0.60 | $0.86 | +43% | Beat |
| Comparable sales growth | (2.3%) | 7.1% | +9.4 pp | n/a |
| New store openings | 61 | 55 | -10% | n/a |
Rising Transactions, Operating Income, and Earnings
Five Below reported solid first-quarter results despite a complex macroeconomic backdrop. Comparable sales rose by 7.1%, driven largely by an increase in transactions, while total revenue jumped 19.5%. The company opened 55 new stores during the quarter, and those stores are performing well, according to Five Below CEO Winnie Park.
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The retailer is navigating tariffs and global economic uncertainty, and so far, those potential headwinds haven't had much of an impact on Five Below's business. Operating income and adjusted earnings per share rose significantly from the first quarter of fiscal 2025, with the latter beating analyst expectations.
For the fiscal second quarter, Five Below expects to open around 30 net new stores and produce comparable sales growth between 7% and 9%. Total revenue should come in between $975 million and $995 million, while adjusted EPS is expected between $0.50 and $0.62.
For the full fiscal year, the company sees comparable sales growth between 3% and 5%, 150 net new stores, revenue between $4.33 billion and $4.42 billion, and adjusted EPS between $4.25 and $4.72.
Image source: Getty Images.
Immediate Market Reaction
Share prices of Five Below were up about 2% in after-hours trading on Wednesday soon after the release of the first-quarter report. The company beat analyst estimates for revenue and adjusted EPS, and its second-quarter outlook looked solid. However, the full-year outlook called for slower comparable sales growth, which could be keeping the stock price in check.
What to Watch
While tariffs and economic uncertainty aren't having much of an impact on Five Below right now, the situation is fluid. The company sourced about 60% of its purchases from domestic vendors in 2024, although it's difficult to know how exposed those vendors are to tariffs. The timing and makeup of trade deals the U.S. strikes with other countries will have an impact on Five Below's costs, and consumer behavior remains a wildcard. Investors should listen to Five Below's earnings call on Wednesday evening for more information from management on how tariffs are affecting the full-year outlook.
Helpful Resources
- Full earnings report
- Investor relations page
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Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends Five Below. The Motley Fool has a disclosure policy.
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