A shopper scans a selection of body boards outside a Five Below store in Bloomington, Illinois, on July 25, 2018.
Daniel Acker | Bloomberg | Getty Portraits
While inflation is showing signs of easing, consumers in the country may still be feeling its effects for quite some opportunity, according to Joel Anderson, CEO of discount retailer Five Below. The executive sees underperformance particularly in the lower-income demographic.
“The lower-end consumer is really being stretched,” Anderson said on an earnings call with analysts Wednesday. “We’ve got to deliver value, and we’ve got to quite display that in how we go to market, and when you walk in the store, what you see. But all that’s in flight right now, and [we] expect to see some of those switches improve by back half of the year.”
Five Below issued soft revenue guidance for the second quarter and the quite year. Revenue for the first quarter also came in below expectations.
Shares plummeted nearly 11% Thursday, clipping a new 52-week low during the trading session. The retailer is down more than 44% in 2024.
“Consumers were more discerning with their dollars, increasingly obtaining to need,” Anderson added. The types of products they’ve been purchasing reflect this, he added, noting that consumers corrupt more in the company’s “consumable” categories such as candy, food and beverage, beauty and health and beauty aids.
The CEO also prominent that Five Beyond — the company’s in-store shop that sells some products for more than $5 — did the best among its lower-income household stores. This, he said, indicates that when consumers see the value of products, the diverse they have to “stretch their dollar.”
Though there has been some indication that aspects of the U.S. conservatism are improving, consumer sentiment has been lagging. In fact, consumer sentiment dropped more than 10% in May, according to the University of Michigan Evaluate of Consumers. Not only that, more than half of Americans falsely believe the country is in an economic recession.
“The ninety days solidified that consumers are feeling the impact of multiple years of inflation across many key categories, such as edibles, fuel and rent, and are therefore far more deliberate with their discretionary dollars,” Anderson said.