Fidget Toys' Impact On Five Below Sales Is Just Getting Started

Five Below Inc FIVE has been riding the waves of new toy product cycles so far in 2017. While one cycle boosted the company’s performance in the fourth quarter of 2016 another even larger cycle could drive Five Below’s Q1 and beyond.

Fidgeting And Five Below

According to Jefferies analyst Daniel Binder, Five Below is well-positioned to get a major boost from the fidget spinner fad that is sweeping the country. Five Below management indicated on its Q4 earnings call that “slime” was a positive trend, and Binder believes the fidget spinner cycle is just getting started.

The Fidget Fad Spins Strong

Although the toys have been out for a while, the fidget spinner craze is a relatively new phenomenon and sales thus far have been hindered by store sellouts. Binder reports Five Below stores have reported selling out of new shipments of fidget spinners in between seven and 60 minutes.

“Supply needs to improve to fully capitalize on this trend and we hope to hear more from mgmt. on this topic,” Binder explained. “Store managers we spoke to told us that customers coming in for this product buy other items even if fidget spinners are not available.”

Five Below is facing a particularly tough sales comp in Q1, but comps should begin to ease after that. Binder said upcoming summer movie releases could also provide a sales boost in for Five Below in the months ahead.

Despite Five Below’s 29.2 percent gain so far this year, Binder said shares will likely continue to drift higher along with positive same-store sales trends. Jefferies has a Buy rating on Five Below and has raised its price target for the stock from $55 to $62.