Five Below Inc. (NASDAQ:FIVE) came under pressure in premarket trading on Thursday, with shares falling around 12% despite reporting first-quarter results that comfortably exceeded Wall Street expectations and issuing upbeat guidance for the remainder of the year.
The discount retailer delivered adjusted earnings per share of $2.22, outperforming analyst forecasts of $1.69. Revenue rose 32.5% year-on-year to $1.29 billion, ahead of the $1.2 billion consensus estimate, while comparable sales increased by 22.7% during the quarter.
Management attributed the strong performance to broad-based demand across its product categories and customer base.
“We are thrilled with our outstanding first quarter performance, which is a testament to the team’s execution of our customer-centric strategy,” said Chief Executive Officer Winnie Park. “The result was broad-based growth across our merchandising worlds, new and existing customers, and all demographic and geographic segments.”
The company also delivered a significant improvement in profitability. Operating income climbed to $154.2 million from $50.8 million in the same period last year, reflecting stronger sales volumes and improved operating leverage.
During the quarter, Five Below opened 49 net new stores and ended the period with 1,970 locations across 46 U.S. states, representing a year-on-year increase in store count of nearly 8%.
Full-Year Forecast Raised
Looking ahead, Five Below raised its expectations for fiscal 2026 and continues to anticipate strong growth across both sales and earnings.
The retailer now expects adjusted earnings per share of between $8.65 and $9.05 for the full year, implying a midpoint of $8.85. Revenue is forecast to range from $5.40 billion to $5.48 billion, with the midpoint of $5.44 billion supported by plans to open approximately 150 net new stores and deliver comparable sales growth of 6% to 8%.
For the second quarter, management expects adjusted earnings per share of $1.17 to $1.29 and revenue of between $1.18 billion and $1.20 billion. The outlook assumes comparable sales growth of 7% to 9% and roughly 50 additional store openings.
The company noted that its forecasts incorporate currently enacted tariff rates through July 24, 2026, while assuming that tariffs revert to the levels in place at the start of the fiscal year thereafter.
Analysts Debate Sustainability of Growth
Despite the strong quarterly performance, some analysts questioned whether the exceptional growth seen in the first quarter can be maintained throughout the remainder of the year.
Bernstein analysts highlighted the possibility that management’s guidance may still prove conservative given the scale of the earnings beat.
“Given the recent momentum, the updated guide may still prove to be conservative. In particular, if the company manages to meet or beat its Q2 comp guide, it will be able to reach the high end of the full-year guide even with very muted comp in H2,” the analysts said.
The brokerage believes future comparable sales trends will be a key indicator of whether recent improvements are sustainable.
“We see meaningful upside potential if FIVE manages to continue to comp positive in H2, which will be an indication that its strong momentum is sustainable, led by fundamental improvements in merchandising and marketing that result in stronger pricing power… Conversely, we see downside if comp turns negative especially going into Q4,” Bernstein added.
While the market reacted negatively in the short term, the company’s results underscored continued momentum across both existing stores and new locations, supported by customer growth, expanding store coverage and improving operational performance.
More About Five Below
Five Below is a U.S.-based specialty discount retailer focused on offering trend-driven merchandise at value-oriented price points. The company targets younger consumers and families through a broad assortment of products spanning toys, technology accessories, beauty, sports, home décor, snacks and seasonal items.
Operating nearly 2,000 stores across the United States, Five Below continues to pursue an aggressive expansion strategy while investing in merchandising, marketing and customer engagement initiatives designed to drive long-term sales growth and market share gains.