A similar decline in sales as inflation persists

A decline in spending by lower-income consumers led to a decline in comparable sales during the first quarter Five below.

Comparable sales at value retailers fell 2.3% during the quarter ended May 4, compared with the same period a year earlier, Five Below reported on Wednesday (June 5). Earnings release.

Meanwhile, the company’s net sales rose 11.8% year over year as it opened 61 new stores during the quarter, contributing to a 17.4% increase in the number of locations during the same quarter in 2023, according to the release.

Joel AndersonFive Below’s president and CEO said Wednesday during the company’s quarterly earnings call that he attributed the decline in comparable sales in part to consumers being “more discerning with their dollars, and increasingly buying on an as-needed basis.”

“We’ve had positive results in our higher-income groups, which indicates some concession to those customers looking for value in our stores,” Anderson said during the call. “However, we saw poor performance in the lower-income demographic that further offset these results.”

“This quarter has reinforced that consumers are feeling the impact of many years of inflation across many key categories such as food, fuel and rent, and are therefore being more intentional with their discretionary dollars,” Anderson added.

Five Below primarily sells items priced between $1 and $5, while also offering some products priced above $5 in its Five Beyond Shop, according to its company. Investor relations website. Its product portfolio includes eight categories, which it calls Style, Room, Sports, Tech, Create, Party, Candy, and New & Now.

As it works to increase sales, Five Below will focus on quickly identifying and capitalizing on trends, communicating its value across social media channels, measuring the impact of price cuts on sales, and optimizing its cost structure across the entire organization, Anderson said. During the call.

The retailer is also working to mitigate the downturn. One of the biggest changes made is the shift from self-payment to partner-led payment, Anderson said during the call. Customer feedback on the change has been “very positive,” he added.

Looking ahead, Five Below expects to see a moderate decline in comparable sales in the current quarter and a 3% to 5% decline in comparable sales for the full year of fiscal 2024, according to the earnings release.

The company expects to open about 230 new stores by the end of 2024. It currently has 1,605 locations in 43 states, according to the release.

Longer term, Five Below aims to have 3,500 stores nationwide by the end of 2030, Anderson said during the call.

“Although there is a greater overall consumer dynamic, we are always on the offensive at Five Below and will not sit idly by waiting for consumer economics to improve on their own,” Anderson said.