Five Below hits it out of the park in Q1

Teens’ demand for slime to fidget spinners helped boost Five Below’s first quarter sales, comps and earnings well above expectations.



For the first quarter ended April 29, the teen value retailer reported a net income of $8.4 million compared to $6.8 million in the first quarter of fiscal 2016. Meanwhile, the chain’s sales increased almost 21% to $232.9 million, from $192.7 million in the first quarter of fiscal 2016.



Diluted income per share grew 25% to $0.15. Not only was this a jump from $0.12 per share in the first quarter of fiscal 2016, it also topped investor expectations by $0.01.



Comparable sales increased by 2.6%. The chain’s CEO Joel Anderson credits on its young shoppers’ demand for two hot trends — slime and fidget spinners. “Using our scale and leverage, we moved fast to get slime on our shelves and source high-quality spinners, which we are offering at an amazing value of only $5,” he said. “We are continuing to add to the spinner assortment as demand remains strong.”



Merchandise across the retailer’s “Tech and Room” category, as well as candy were also credited for leading first quarter performance. “Bluetooth continued to be popular, as were sequin pillows, mermaid blankets and emoji-related products,” he added. “Our Easter selling season was a success.”



The company continues to expand its breadth. Five Below opened 31 new stores and ended the quarter with 553 stores in 32 states. This represents an increase in stores of 20.7% from the end of the first quarter of fiscal 2016.



Looking ahead to the second quarter, the retailer expects net sales to be in the range of $273 million to $280 million. It plans to open approximately 27 new stores, and expects a 5% to 8% increase in comparable sales. Net income is expected to be in the range of $13.4 million to $14.7 million, with a diluted income per common share range of $0.24 to $0.27.



For the full year of fiscal 2017, net sales are expected to be in the range of $1.227 billion to $1.242 billion based on opening approximately 100 new stores, and a 3% to 4% increase in comparable sales. Net income is expected to be in the range of $88.4 million to $91.1 million, with a diluted income per common share of $1.59 to $1.64. The 53rd week is expected to contribute approximately $15 million in sales and approximately $0.02 in diluted income per common share.