Five Below on Wednesday said that first quarter net sales rose 27.2% year over year as comparable sales rose 3.2%. Net income in the quarter rose 159.8% to $21.8 million, and operating income rose 93.3% to $24.7 million, according to a press release. The quarter's results were affected by a calendar shift, the company said.
The discount chain opened 33 new stores in Q1, ending the quarter with 658 stores in 32 states, a footprint increase of 19% from a year ago. New store productivity was about 124%, CEO Joel Anderson told analysts in a conference call, according to a transcript from Seeking Alpha. Adjusted for the timing of openings during the quarter and the calendar shift, new store productivity would still be north of 100%, he added.
Five Below expects to end the year with some 750 stores, Anderson said. The company's total capital expenditure for this year is $137 million, going to building new stores, remodeling about 10 and building distribution centers.
Five Below benefited mightily from the fidget spinner craze of last year, and that could pressure results in the second quarter and beyond, executives said on Wednesday. But the company isn't too worried because it's been focused on making new, permanent customers out of those who came in for the doodads.
That is predicated on a merchandising mix that includes plenty of items that customers "just have to have," Anderson told analysts Wednesday.
"[I]t was really on our shoulders to keep those customers, and I think it's a combination of our store experience continues to get better, the marketing team has captured those customers and then the merchants continue to bring relevant product to it," Anderson said.
That confidence is reflected in the company's growing physical footprint. "Looking out longer term, with our continued and consistent success as we expand our store footprint and build out our distribution network, our conviction in the 2,500 plus store potential for Five Below only grows," he said.
Five Below has also launched its first-ever direct-to-retail and has been introduced to several new vendors as Toys R Us winds down its U.S. business, he also said.