Nothing Below About Five Below
Five Below is one of the fastest growing retailers craters to teens and pre-teens like my daughter. Five Below is often compared to the Dollar Stores, but they sells everything from cell phone cases and chargers, remote control cars, yoga pants, nail polish, footballs, candy and seasonal items for Easter, Halloween and Christmas. And get this...everything is $5 or less.
Ever since their opening their first store at the Gateway Shopping Center in Wayne, Pennsylvania on October 4, 2002, Five Below has had an aggressive expansion plan. Modern Retail reported earlier this month that the company has opened more than 150 stores in the past 18 months, making it one of the fastest-growing brick-and-mortar chains in the country. The company now has close to 900 stores with the goal of having 2,500 locations by 2020.
The company is also expanding their fleet of distribution facilities. The company opened one in Atlanta in the Spring of this year. The facility is approximately 700,000-square-foot and has the ability to expand up to about 1 million square feet.
And the company just announced they are building another distribution center just North of Houston. Once it’s complete next year the facility will an 860,000-square-foot building and the third one for company.
When it comes to earning Five Below has been knocking things out the box. Recently, Five Below reported third quarterly earnings of 17 cents per share, which met the analyst consensus estimate. The company reported quarterly sales of $377.4 million, which beat the analyst consensus estimate of $373.52 million. This is a 20.6% increase over sales of $312.823 million the same period last year.
Five Below (NASDAQ:FIVE) delivered another quarter of 20%-plus growth on the top line when it reported earnings in early December. The company reported broad growth across its eight "worlds" led by style, tech, candy, and room items. Growth has mostly been driven by new store openings, but comparable sales also accelerated quarter over quarter, which should provide some momentum for the holiday season.
There are a few other initiatives that should boost sales, too. The company's increasing scale is allowing management to develop a strong relationship with Walt Disney to source unique merchandise, which should pay off with the recent release of Frozen 2.
The greater scale is also paying off with the new Ten Below category, where Five Below is offering an expanding assortment of tech gear, including iPhone and iPad accessories, Bluetooth devices, and gaming accessories, for less than $10. The rollout of this new category has been so successful that it has expanded to 25 stores.
But one of the coolest things Five Below is getting into is esports. Five CEO Joel Anderson said that there are about 100 Five Below stores with excess space for the 3,000-square-foot centers with 30 to 50 personal computers for video gaming. The company is partnering with Nerd Street Gamers and will do a pilot in several stores beginning in 2020.
I like what Five Below is doing and I suspect price will take out the all-time highs sometime in 2020.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
