Five Below Soars After Crushing Q3 Estimates
The discount retailer's comparable sales surged 14.3%, signaling robust consumer demand and prompting a full-year guidance upgrade.
Five Below Inc. (NASDAQ: FIVE) shares jumped Wednesday after the discount retailer posted third-quarter financial results that far surpassed Wall Street expectations, driven by a remarkable surge in customer traffic and spending.
The Philadelphia-based company, known for its trendy items priced largely at $5 and below, reported a 14.3% increase in comparable sales, a key metric for retail health. The performance blew past analyst forecasts and signaled strong operational momentum heading into the critical holiday season. Shares of Five Below climbed over 4% in afternoon trading to trade around $165, rewarding investors and underscoring confidence in its growth trajectory.
For the quarter ending in October 2025, Five Below announced that total revenue grew 23.1% year-over-year to $1.04 billion, comfortably beating the consensus estimate of $981 million. The bottom line was even more impressive, with adjusted earnings per share hitting $0.68. This figure was more than double the consensus forecast of $0.25, demonstrating significant margin improvement and cost control.
Joel Anderson, President and CEO of Five Below, attributed the stellar performance to "broad-based strength across our worlds," referencing the store's curated product categories. "Our incredible Q3 results were driven by the Five Beyond format, which continues to drive traffic and higher basket sizes," Anderson stated in the earnings release. The 'Five Beyond' concept, which features higher-priced items, has been a key driver of the company's recent success.
The strong results prompted management to raise its full-year 2025 outlook. The company now projects net sales to be in the range of $4.21 billion to $4.24 billion, with adjusted earnings per share expected between $5.52 and $5.68. This updated guidance suggests that the company anticipates the strong consumer demand to persist through the fourth quarter.
Analysts reacted quickly and positively to the news. Guggenheim maintained its 'Buy' rating and raised its price target on the stock from $165 to $185, citing the strong comparable sales and the potential for continued margin expansion. Mizuho also increased its price target to $160 from a previous $150, though it maintained a 'Neutral' rating, suggesting some valuation concerns may linger despite the strong performance.
Five Below's performance stands in contrast to a mixed environment for discount retailers, where some competitors have struggled with shifting consumer habits and inflationary pressures. The company's ability to attract and retain its core demographic of teens and tweens with a constantly refreshing inventory of trend-right products appears to be a significant competitive advantage.
With a market capitalization now approaching $9 billion, Five Below continues its aggressive expansion, opening new stores and converting existing locations to the more profitable Five Beyond format. The stock is currently trading near its 52-week high of $168.98, reflecting a strong recovery and growing investor optimism about its long-term strategy.