A shopper browses a selection of bodyboards outside the Five Below store in Bloomington, Illinois on July 25, 2018.
Daniel Acker | Bloomberg | Getty Images
While inflation is showing signs of easing, the effects may still be felt by consumers across the country for quite some time, according to Joel Anderson, CEO of the discount retailer. Five down. The manager sees low productivity, especially among low-income people.
“The lower tier clients are really struggling,” Anderson said on a call with analysts Wednesday. “We have to create value, and we have to really demonstrate that in how we go to market and when you walk into the store, what you see. But it’s all in flight now, and [we] expect some of these changes to improve by the end of the half-year.”
Five Below released revenue guidance for the second quarter and full year. First-quarter revenue was also below expectations.
The stock fell nearly 11% on Thursday, hitting a new 52-week low during the trading session. In 2024, the retailer’s shares fell more than 44%.
“Consumers have become more discerning with their dollars, increasingly buying out of necessity,” Anderson added. The types of products they buy reflect that, he added, noting that consumers are buying more in the company’s “consumer” categories, such as candy, food and beverage, beauty and health, and beauty products.
The CEO also noted that Five Beyond, the company’s own store that sells some items for more than $5, performed best among low-income home improvement stores. This, he said, indicates that when consumers see value in products, they have to “stretch their dollars.”
While there have been some signs that some aspects of the US economy are improving, consumer sentiment is lagging. In fact, consumer sentiment fell by more than 10% in May, according to a consumer survey from the University of Michigan. Not only that, more than half of Americans mistakenly believe the country is in an economic recession.
“The quarter confirmed that consumers are feeling the impact of multi-year inflation in many key categories such as food, fuel and rent, and are therefore being much more prudent with their discretionary dollars,” Anderson said.