Five Below wins over shoppers with major strategy shift

Five Below wins over shoppers with major strategy shift

Aparajita Chatterjee

Sun, September 6, 2026 at 1:17 AM GMT+3 4 min read

• FIVE +5.10%

Low prices alone are no longer enough to guarantee success in discount retail.

Chains also have to give shoppers a reason to keep coming back, whether that means new products, viral merchandise, rewards, or making in-store shopping easier.

Five Below has spent the past year changing all three.

Now its latest results suggest shoppers are responding.

Five Below's second-quarter net sales jumped 22.9% to $1.26 billion, while comparable sales increased 14.1%.

It marked the retailer's fifth consecutive quarter of double-digit comparable-sales growth.

The retailer also opened 52 net new stores, bringing its total to 2,022 locations in 46 states.

Adjusted earnings more than doubled to $1.68 per share from 81 cents a year earlier.

More shoppers are walking into Five Below

Five Below has been changing how customers interact with its stores.

TheStreet previously reported that Five Below eliminated its dedicated Five Beyond section and began placing merchandise priced above $5 alongside similar products throughout the rest of the store.

For example, a higher-priced mirror can now sit in the décor department rather than in a separate higher-priced section toward the back of the store.

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The goal was to make those items easier for customers to discover without abandoning Five Below's value identity.

More than 80% of its assortment remained priced at $5 or less when the company discussed the strategy earlier this year.

That change comes with another strategy, getting shoppers into stores with a steady stream of new, trend-driven merchandise.

Five Below has leaned into categories and products that can spread quickly on social media, including collectibles, beauty, candy, Pokémon merchandise, and viral toys.

The company previously said that social listening and creator engagement helped it identify and promote trends, such as for its Squishy Dumpling products.

Five Below keeps products moving, analysts approve

Analysts see that merchandising strategy as increasingly important.

Truist raised its Five Below price target to $297 from $273, maintaining a Buy rating.

The firm highlighted Five Below's "Rolling Thunder" strategy, which continually introduces new products and collaborations and packages merchandise into larger themed sets that can be promoted through social media and influencers.

Telsey Advisory raised its target to $305 from $280, saying the second-quarter results demonstrate progress in the company's customer-focused strategy.

Jefferies raised its target to $420 from $350 while maintaining a Buy rating.

The firm compared Five Below's improving productivity and profit model with the playbook used by TJX Companies, owner of TJ Maxx and Marshalls.

Morgan Stanley was more cautious.

It raised its target to $300 from $235 but maintained an Equal Weight rating, warning that higher fuel and freight expenses could make future earnings outperformance more difficult.

Five Below's stock price is up 4% this past week and up 31% over the past quarter.

Five Below raises its outlook

Five Below's confidence has increased substantially since just one quarter ago.

The retailer now expects fiscal 2026 net sales of $5.63 billion to $5.71 billion, up from its previous forecast of $5.40 billion to $5.48 billion.

Comparable sales are expected to rise 10% to 12%, up from its previous expectation of 6% to 8%.

Five Below also raised its adjusted earnings forecast to $9.83 to $10.31 per share, from $8.65 to $9.05.

For the third quarter, the company expects comparable sales growth of another 8% to 10%.

Five Below is still dealing with tariffs and higher transportation costs, and management's outlook reflects the tariffs currently in place.

But the larger test was whether Five Below could prove it could sell more products above $5, chase fast-moving trends, and expand its store base without weakening the low-price identity that made the chain popular in the first place.

Related: Kohl's has a customer problem that's proving hard to fix

This story was originally published by TheStreet on Sep 5, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.