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Five Below ramps up store growth in 2020, revises Q4 outlook

New store openings will remain a priority for Five Below this year. 

The tween and teen value retailer reported Monday that it will open 180 new stores in 2020. This equates to 20% unit growth for the fiscal year, according to the company.

With each new store opening, the company plans to keep an eye on innovation. “We will incorporate a Ten Below zone in the majority of these new stores, as well as our remodels,” said Joel Anderson, president and CEO of Five Below. “We are also excited to announce the acquisition of a robust e-commerce platform, fulfillment operation and certain other assets of Hollar.com, which will expand our digital capabilities.”

Despite the company’s aggressive store expansion plan, Five Below lowered its outlook for the fourth quarter. Sales for the quarter-to-date period from November 3, 2019 through January 4, 2020 increased by 13.4% to $596.6 million from $526.1 million in the comparable nine-week period from November 4, 2018 to January 5, 2019. However, comparable sales for the holiday period decreased by 2.6%. 

Based on this decline, Five Below revised its fourth-quarter sales out-look to range from $685 million to $688 million, and expects same-store sales to decrease 2.0% to 2.5%. Earnings per share will range from $1.93 to $1.96.

The company also updated its fiscal guidance with net sales of $1.845 billion to $1.848 billion, or growth of 18.3% to 18.5%. The company expects a same-store sales increase of 0.5% to 0.7%, and earnings will be $3.07 to $3.10, or growth of 15.4% to 16.5%.

“While our comparable sales during key holiday selling periods were positive, they were not strong enough to overcome the headwind of six fewer shopping days between Thanksgiving and Christmas, and overall sales did not meet our expectations,” Anderson said. “Despite the sales shortfall, strong inventory management and disciplined cost control has us on track to end the quarter with gross margin in line with our expectations and to deliver earnings per share near the low end of our previous guidance range.”

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