Five Below plans to open nearly 10 new brick-and-mortar locations at Simon-owned shopping centers this summer, the real estate investment trust announced Thursday. The retailer currently has 21 stores at centers owned by the Indiana-based REIT. The new Five Below stores will open through this summer.
They are located at Pismo Beach Premium Outlets and Great Mall in California; at Indiana Premium Outlets in Edinburgh; at Albertville Premium Outlets and Miller Hill Mall in Minnesota; at Pocono Premium Outlets in Pennsylvania; at Gaffney Premium Outlets in South Carolina; and at Pleasant Prairie Premium Outlets and Johnson Creek Premium Outlets in Wisconson.
An existing Five Below at Arundel Mills in Maryland will receive a full remodel, Simon said.
Paul Ajdaharian, Simon’s senior vice president of leasing, said the REIT’s expanded relationship with Five Below is based on the success of the stores already operating in Simon malls and it’s “a natural extension of our commitment to growth.”
Although its pace of openings will be slower than last year, Five Below said in March that it aims to open 200 stores this year. Over the last year, the retailer said it converted nearly 250 of its approximately 1,300 existing stores to a new Five Beyond store-in-store format that features an enhanced selection of items above the company’s signature $5 price point.
"Expansion to 3,500-plus stores is a key strategic pillar of our vision for growth, and our relationship with Simon is core to continuing our national expansion efforts,” George Hill, Five Below’s chief retail officer, said in Simon’s announcement.
The Philadelphia-based discount retailer positions itself in the market by offering essentials like beauty and pet items alongside fun, trendy and discretionary items like candy, tech, toys, and room decor that appeal to tweens and teens.
Last year, some Five Below locations also began offering ear piercing last year and helium balloons. As other retailers like Party City, Christmas Tree Shops and Tuesday Morning are shrinking their physical footprint or closing altogether, those moves advance Five Below into the party and gift sector.
Five Below “is all over the growing opportunity to move into more favorable real estate within their 9-10K square foot model,” David Bellinger, executive director of Roth MKM said in an April note.
“The company is testing units in grocery-anchored shopping centers, outlet centers, and more urban areas where rents have come down in order to feed the 200+ new store-per-year pipeline. We would characterize the company's 3,500+ store target (still less than 50% built out today) as realistic and maybe even somewhat light at this point,” Bellinger said.
Five Below’s net sales rose 8% to nearly $3.1 billion last year. The company plans to report its Q1 earnings June 1.