Winners And Losers Of Q1: Five Below (NASDAQ:FIVE) Vs The Rest Of The Discount Retailer Stocks

As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q1. Today, we are looking at discount retailer stocks, starting with Five Below (NASDAQ:FIVE).

Discount retailers understand that many shoppers love a good deal, and they focus on providing excellent value to shoppers by selling general merchandise at major discounts. They can do this because of unique purchasing, procurement, and pricing strategies that involve scouring the market for trendy goods or buying excess inventory from manufacturers and other retailers. They then turn around and sell these snacks, paper towels, toys, clothes, and myriad other products at highly enticing prices. Despite the unique draw and lure of discounts, these discount retailers must also contend with the secular headwinds of online shopping and challenged retail foot traffic in places like suburban strip malls.

The 5 discount retailer stocks we track reported a mixed Q1. As a group, revenues beat analysts’ consensus estimates by 0.7% while next quarter’s revenue guidance was 1.6% below.

In light of this news, share prices of the companies have held steady as they are up 4.3% on average since the latest earnings results.

Five Below (NASDAQ:FIVE)

Often facilitating a treasure hunt shopping experience, Five Below (NASDAQ:FIVE) is an American discount retailer that sells a variety of products from mobile phone cases to candy to sports equipment for largely $5 or less.

Five Below reported revenues of $970.5 million, up 19.5% year on year. This print exceeded analysts’ expectations by 1.3%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts’ EBITDA estimates but full-year EPS guidance missing analysts’ expectations significantly.

Winnie Park, CEO of Five Below said, "Our first quarter results demonstrate the effectiveness of our strategy, grounded in trend-right product, extreme value and a fun store experience. We were pleased to see broad-based strength across the majority of our merchandising worlds, resulting in a transaction-driven 7.1% increase in comparable sales, as well as strong performance from our new stores. Our teams executed our customer-centric strategy at a very high level, and these results reflect the progress we are making across merchandising, marketing and end-to-end operations."

Five Below achieved the fastest revenue growth and highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 16.2% since reporting and currently trades at $140.60.

Read our full report on Five Below here, it’s free.

Best Q1: Ollie's (NASDAQ:OLLI)

Often located in suburban or semi-rural shopping centers, Ollie’s Bargain Outlet (NASDAQ:OLLI) is a discount retailer that acquires excess inventory then sells at meaningful discounts.

Ollie's reported revenues of $576.8 million, up 13.4% year on year, outperforming analysts’ expectations by 1.9%. The business had a strong quarter with a solid beat of analysts’ EBITDA estimates and a decent beat of analysts’ gross margin estimates.

Ollie's pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 18% since reporting. It currently trades at $132.16.

Is now the time to buy Ollie's? Access our full analysis of the earnings results here, it’s free.

Weakest Q1: Burlington (NYSE:BURL)

Founded in 1972 as a discount coat and outerwear retailer, Burlington Stores (NYSE:BURL) is now an off-price retailer that has broadened into general apparel, footwear, and home goods.

Burlington reported revenues of $2.50 billion, up 6% year on year, falling short of analysts’ expectations by 0.9%. It was a slower quarter as it posted EPS guidance for next quarter missing analysts’ expectations significantly and full-year EPS guidance missing analysts’ expectations.

Burlington delivered the weakest performance against analyst estimates in the group. Interestingly, the stock is up 11.1% since the results and currently trades at $265.40.

Read our full analysis of Burlington’s results here.

Ross Stores (NASDAQ:ROST)

Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ:ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.

Ross Stores reported revenues of $4.98 billion, up 2.6% year on year. This number surpassed analysts’ expectations by 0.5%. More broadly, it was a slower quarter as it recorded EPS guidance for next quarter missing analysts’ expectations significantly and revenue guidance for next quarter missing analysts’ expectations.

Ross Stores had the slowest revenue growth among its peers. The stock is down 14.4% since reporting and currently trades at $130.29.

Read our full, actionable report on Ross Stores here, it’s free.

TJX (NYSE:TJX)

Initially based on a strategy of buying excess inventory from manufacturers or other retailers, TJX (NYSE:TJX) is an off-price retailer that sells brand-name apparel and other goods at prices much lower than department stores.

TJX reported revenues of $13.11 billion, up 5.1% year on year. This result topped analysts’ expectations by 0.7%. Aside from that, it was a slower quarter as it produced EPS guidance for next quarter missing analysts’ expectations and full-year EPS guidance missing analysts’ expectations.

The stock is down 9.1% since reporting and currently trades at $122.70.

Read our full, actionable report on TJX here, it’s free.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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