Third-quarter sales rose 21.6%
Five Below (FIVE) reported third-quarter sales of $312.8 million, which beat analysts’ estimate by 2.9%. The company’s sales beat analysts’ estimate for the seventh consecutive quarter.
On a YoY basis, Five Below’s sales rose 21.6%. The company’s new store openings, attractive product assortment, and compelling value deals were the major driving factors. Management added that the 2018 stores were on track to deliver average unit volumes of over $2 million—the highest for any year.
Strong comps growth of 4.8% also helped the top line. The comps were driven by higher transactions and higher average tickets.
For the fourth quarter, management expects the sales to be $593 million–$600 million based on an estimation of five net new store openings and comps growth of 3%–4%. In the fourth quarter of 2017, the comps rose 5.9%.
Analysts expect the sales to increase 18.1% to $596.4 million. CEO Joel Anderson said that holiday season merchandise has received a good response from customers. The holiday season sales are off to a strong start. The holiday assortment includes a four-foot Christmas tree, Star Wars figures, and a “paint-it-yourself” Squishy toy.
For fiscal 2018, the sales are expected to be $1.55 billion–$1.56 billion—compared to the previous guidance of $1.53 billion–$1.54 billion. The comps are expected to increase ~3.3%–3.7%—compared to the previous guidance of 2.5%–3% growth.
Top-line growth strategy
Five Below remains on track to open 125 stores in fiscal 2018. The company opened 53 new stores in the third quarter. As of November 3, the company operated 745 stores across 33 states. In the fourth quarter, Five Below plans to open five net new locations.
Five Below sees the dissolution of Toys “R” Us as an opportunity to boost its business. The company is focusing on getting a better and bigger product assortment to boost its presence in the toy market. Five Below has already started advertising for toys and games on the digital marketing platform.