Five Below opening 170 to 180 stores; expanding new, higher-priced in-store concept

Five Below finished an ‘unprecedented’ year with earnings, net sales and comparable sales that topped analysts’ expectations. 

The value tween and teen retailer remains one of the few specialty retailers that is not pulling back on brick-and-mortar growth. Five Below plans to open 170 to 180 new stores in 2021, up from 120 last year, and will enter two new states — Utah and New Mexico — as its footprint expands to 40 states. The company, which ended the year with more than 1, 050 stores, is also expanding its distribution center network with the addition of a facility in Arizona this year.

Five Year is also planning to expanding its "Five Beyond" in-store concept to 30% of its fleet by the end of 2021, CEO Joel Anderson said on the company's earnings call. The concept, which evolved from the chain's "Ten Below" pilot, is a store section that features merchandise priced above the retailer's signature $5 price threshold.

 "The customer has responded positively to our new Five Beyond assortment, which is filled with fresh, amazing value items and new categories to our customers," Anderson said.

Five Below’s net income increased 12.3% to $123.9 million in the quarter ended Jan. 30. Earnings per share totaled $2.20 compared to $1.97 in the year-ago period. Analysts had expected earnings of $2.12.

Net sales increased 24.9% to $858.5 million, topping estimates of $839.3 million. Comparable sales rose 13.8%.

“We closed out an unprecedented year with fourth-quarter results that were even stronger than we expected, highlighted by a record fourth-quarter comparable sales increase of 13.8% with broad-based strength across our worlds,” said Joel Anderson, CEO. 

For the full year, Five Below’s net sales rose 6.2% to $1.962 billion from $1.846 billion last year. Comparable sales decreased by 5.5%. 

“We enter 2021 with this same focus and dedication as we continue to invest in our foundation and in innovation across product, experience and supply chain, while returning to more normalized annual store growth,” Anderson said. “With continued focus on providing extreme value, trend-right products our customers ‘just gotta have!', combined with execution against key strategic initiatives, we are well-positioned to achieve our objectives for 2021 and beyond.”

For the first quarter, Five Below is estimating a profit of $0.56 to $0.68 a share, ahead of estimates of $.36, or an adjusted $0.40. It put revenue at $540 million to $560 million (based on opening 60 of the new stores), also more than expected.