Five Below is accelerating new store growth again this year and has shared a long-range profit forecast indicating that the value-oriented teen and tween retailer expects accelerating growth to be a recurring theme.
A net increase of 71 new stores last year – on top of 62 units the prior year – enabled Five Below to increase sales 23.7% to $326.4 million in the fourth quarter and 22.3% to $832 million during the fiscal year ended Jan. 30. Also contributing to the top line growth was a fourth quarter same store sales increase of 3.6% and a full year increase of 3.4%.
Profits increased 26.1% to $42 million, or 77 cents a share, compared to $33.3 million, or 61 cents a share, during the fourth quarter the prior year. Full year profits increased 20.1% to $57.7 million, or $1.05 a share, compared to $48 million, or 88 cents a share.
"Our successful fourth quarter and full year 2015, particularly the all-important holiday season, was the result of strong execution against the key initiatives we prioritized in 2015,” said Five Below CEO Joel Anderson.
Among the initiatives Anderson highlighted were the continued delivery of fresh and compelling merchandise, development of exciting marketing campaigns, the successful opening of an East Coast distribution center and the addition of highly productive new stores that generate a return on investment in less than a year.
"Our performance in 2015 once again illustrates the strength and consistency of Five Below. In addition to consistently strong new store performance, we delivered our 10th consecutive year of positive comparable sales growth in 2015,” Anderson said. “More importantly, since going public in 2012, we have achieved average annual earnings per share growth of 27%.”
Given the company’s track record and a unique retail concept where merchandise is priced less than $5 it is little wonder that Five Below is optimistic about its future prospects. This year, the company plans to open 85 new stores, adding to its base of 437 units. The additional square footage combined with expectations for a 3% same store sales increase has Five Below advising investors that its annual sales could surpass $1 billion this year.
Longer term, the company shared a bullish forecast that extends to 2020 which suggest continue store expansion and increased productivity from existing stores.
"For 2016, we plan to build upon our success while continuing to be focused on our strategic priorities of new stores, merchandising, marketing, and systems and infrastructure,” Anderson said. “As we look further ahead at the future for Five Below, we believe we will deliver against our average annual goal of 20% top-line growth, along with greater than 20% bottom-line growth through 2020."