Discount retailer Five Below sees ‘great back-to-school season’ by focusing on home learning environment, CEO says

Five Below CEO Joel Anderson told CNBC on Wednesday that the discount retailer has seen positive signs from back-to-school shopping despite the coronavirus pandemic shifting many districts across the U.S. into remote learning arrangements this fall. 

“The merchants did a great job pivoting, and we’re seeing a great back-to-school season, albeit it’s very different than the traditional season — all about backpacks and pencils,” Anderson said on “Closing Bell.”  

Instead, Anderson said, consumers have been favoring items that can help make learning from home a more enjoyable experience for children who live in places where in-person instruction has been canceled or delayed. 

“Depending on the state, the municipality, they’re going back in their homes and they want to create an environment that makes school comfortable being at home, Zooming,” he said, referencing the videoconferencing provider Zoom.

Back-to-school shopping is a critical period for many U.S. retailers, but the changing dynamics of the Covid-19 outbreak made for an uncertain fall season. Retail executives from companies such as Walmart and Kohl’s indicated last month the sale of school-related items was off to a slower start stemming from the pandemic. 

“We really shifted it more to being about ‘room,'” Anderson said of Five Below’s approach to back-to-school shopping. 

The former president and CEO of Walmart.com said Five Below is approaching the upcoming Halloween season in a similar way, with the prevalence of trick-or-treating likely to be impacted by the pandemic. Earlier Wednesday, new health guidelines from Los Angeles County were released that aimed to curtail Halloween-related activities, citing potential for coronavirus transmission.  

“It’s going to be less about trick-or-treating and more about decor and still creating a fun experience at home, and at Five Below you can do that without having to break the bank, so to speak,” said Anderson. 

Shares of Philadelphia-based Five Below are down about 2% so far in 2020, but the stock has seen a fierce rebound from coronavirus-driven lows. After bottoming at $47.53 per share on March 19, the stock has rallied more than 160% to close Wednesday’s session at $125.28. 

In the early stages of the U.S. Covid-19 outbreak, JPMorgan analyst Matthew Boss pointed to Five Below as one retailer that could emerge stronger as a result of the pandemic, which, in addition to its health consequences, has resulted in significant economic consequences for millions of Americans. 

Anderson said Wednesday that Five Below opened more than 60 new stores during the second quarter despite the coronavirus-induced disruption to its existing stores, which were temporarily shuttered. 

“We have a really good muscle on how to open stores quickly,” he said. “We never thought we’d have to use that muscle to reopen our existing stores. Basically, at the start of the quarter, we were at zero. We reopened all 900 and then we saw the opportunity to get back to playing offense.”