Jim Cramer on Five Below: "A Successful Turn Can Generate Years of Terrific Gains"

Five Below, Inc. (NASDAQ:FIVE) is one of the stocks Jim Cramer discussed, along with the tech battleground. Cramer noted that the company’s CEO “set up Five Below for multi-year growth,” as he stated:

“… It’s Park (CEO Winnie Park) who set up Five Below for multi-year growth, even as the chain already has 1,900 stores across almost every state in the union. And look, the numbers were incredible. In the latest quarter announced last night, Park delivered an astounding 14% same-store sales growth, almost unheard of for a chain like Five Below. Some of the transformation comes from going back to basics.

Park has worked hard to, as she said in the conference call, sharpen the focus on the customer, the kid. Second, she’s using digital channels and social media to help drive people to the stores. Third, she’s developed what Five Below calls curtain-up moments, holiday merchandise for six different occasions. She says this management’s job is to please the boss, which isn’t her; it’s the customer. She killed it in the two most recent curtains-up: Halloween and back to school. They caused sales acceleration throughout the quarter, and now we’re in the biggest shopping season of all. Some of the success came from scrapping the Five Beyond section of the store, which had hobbled stores with a kind of a no-fly zone of expensive merchandise. They’ve taken that space for big-time seasonal merchandise instead.

Now, there’s some secret sauce we don’t know about… We don’t know how they avoided taking a profit hit from tariffs either… All in all, I think Five Below’s story is all about curation. Park uses terms like generation of content, not clothes, content, not toys. She’s basically putting on six shows a year that are driving an immense amount of traffic. The changes, though, are still in their infancy. That’s why I think that Five Below, last year, the butt of many jokes, is firmly in the turnaround mode. A successful turn can generate years of terrific gains for you, the shareholder, meaning the stock might indeed have a lot more room to run.”

Five Below, Inc. (NASDAQ:FIVE) sells a wide range of low-priced essentials, decor, tech accessories, toys, crafts, snacks, and seasonal items.

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Disclosure: None. This article is originally published at Insider Monkey.