A shopper browses through a selection of bodyboards outside a Five Below store in Bloomington, Illinois, on July 25, 2018.
Daniel Acker | Bloomberg | Getty Images
While inflation is showing signs of easing, consumers in the country may be feeling the impact for quite some time, according to Joel Anderson, CEO of the discount retailer Five down. The manager sees poor performance particularly in the lower-income population group.
“The lower end customer is really overwhelmed,” Anderson said in a conference call with analysts on Wednesday. “We have to deliver value and we have to really express that in the way we go to market and in what you see when you walk into the store. But all of that is trendy right now, and.” [we] We expect some of these changes to improve by the end of the year.
Five Below issued soft sales guidance for the second quarter and full year. Sales in the first quarter also fell short of expectations.
Shares plunged nearly 11% on Thursday, hitting a new 52-week low during the trading session. The retailer is down more than 44% in 2024.
“Consumers became more discerning with their money and increasingly purchased on demand,” Anderson added. The types of products they purchased reflect this, he added, noting that consumers bought more in the company’s “consumables” categories such as candy, food and beverage, beauty and health, and beauty aids.
The CEO also noted that Five Beyond — the company’s store that sells some products for more than $5 — performed best among its lower-income household stores. This shows, he said, that when consumers see the value in products, they need to “stretch their money that much further.”
Although there are signs that parts of the US economy are improving, consumer sentiment is lagging. In fact, consumer sentiment fell more than 10% in May, according to the University of Michigan Consumer Survey. Additionally, more than half of Americans incorrectly believe that the country is in an economic recession.
“The quarter showed that consumers are feeling the impact of years of inflation in many key categories such as food, fuel and rent and are therefore far more conscious of their available funds,” Anderson said.
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2024-06-06 20:12:39
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