Specialty discount store chain Five Below posted net sales increase of 13.5 per cent to $759 million for the second quarter ended July 29.

Comparable sales were up 2.7 per cent supported by a 4.5 per cent increase in comparable transactions. 

Operating income was $58.6 million compared to $56 million in the prior-year period, and earnings per share jumped 13.5 per cent to $0.84.

The company opened 40 new stores and ended the quarter with 1407 locations across 43 states.

Although a lot of the growth was delivered through physical expansion, this is still a strong result given most of the products are discretionary and core customers are suffering inflation, commented Neil Saunders, MD of GlobalData.

Seen as a “place of relatively affordable small indulgences that can be squeezed into even a relatively tight budget”, Five Below is winning both old and new shoppers and is also good at finding and capitalizing on trends in areas like toys and collectibles, Saunders continued.

Reflecting on the second half of the year, Joel Anderson, president and CEO of Five Below, said the company will offer a “terrific line-up” trend-right product at outstanding value for the holiday season. 

“While we are adjusting our earnings guidance to reflect an anticipated increase in shrink reserves, our sales outlook remains unchanged.”

The company expects full-year net sales to be in the range of  $3.5 billion to $3.57 billion with an increase in comparable sales of between 1 per cent and 3 per cent.

“The second half of the year should be favorable to Five Below. The company excels at seasonal events and both Halloween and the holidays should attract even more customers who are seeking great value,” Saunders concluded.