Five Below sinks despite Q1 earnings beat and optimistic Q2 outlook

Discount retailer Five Below delivered impressive Q1 earnings, beating out analyst estimates on Wednesday after the bell. But instead of getting a pat on the back, investors responded by sending the stock down as much as 9% in after-hours trading.

Here are the numbers:

• Q1 sales of $1.28 billion (compared to analyst estimates of $1.23 billion, per FactSet).

• Q1 adjusted earnings per share of $2.22 (estimate: $1.77).

The company raised its guidance for the full fiscal year and now projects full-year net sales between $5.40 billion and $5.48 billion (up from the $5.20 billion to $5.30 billion estimated last quarter), beating out analysts’ full-year estimates of $5.36 billion.

Similarly, the company expects Q2 revenue to fall between $1.18 billion and $1.20 billion, above Wall Street expectations of $1.14 billion.

The stock has risen over 80% in the past 12 months as consumers across income brackets search for affordable goods. The retailer has maintained its aggressive expansion campaign, opening 150 net new stores in fiscal year 2025. On Wednesday, Five Below said it still plans to open 150 further locations in fiscal year 2026.

Recently, the company has not only courted customers looking for cheaper everyday items, but also dopamine hits like its “squishy dumplings,” a Wall Street winner, according to analyst Spencer Hanus at Wolfe Research.

“Our continued focus on compelling newness at amazing value and great store execution are at the heart of our operating flywheel,” said Winnie Park, CEO of Five Below. “We successfully amplified social media trends and drove outsized traffic through coordinated merchandising and marketing efforts.”