Five Below has turned squeezing a toy into a stock-market thesis. Shares of the discount retailer have climbed roughly 26% so far this year, a run analysts trace substantially to viral "squishy" toys — foam dumplings, Needohs and other tactile novelties that turned the chain's games-and-toys aisle into a magnet for kids and, increasingly, adults filming themselves squeezing them.
The trend showed up unmistakably in the numbers. Five Below's first-quarter comparable sales jumped 22.7%, with net sales up 32.5% to roughly $1.3 billion, and the company raised its full-year sales guidance to as much as $5.48 billion. Squishy toys drove traffic but produced smaller baskets, analysts noted — customers came in for a $5 fidget toy, then wandered the rest of the store.
Jefferies bets on more than a fad
That combination convinced Jefferies analyst Randal Konik to upgrade the stock and lift his price target to $350, implying more than 40% upside from where shares traded when the call landed on August 13. Konik's note argued that skeptics who wave off the rally as trend-chasing are overlooking "the structural improvements underway" — rising sales productivity, high-single-digit new-store growth and what he modeled as roughly 27% annual earnings-per-share growth through fiscal 2029. Wall Street's broader consensus remains more cautious, with a "moderate buy" rating and a mean price target near $260.
Five Below has also been reorganizing around the trend rather than just riding it: the company recently folded its "Five Beyond" store-within-a-store section, which had housed pricier merchandise, back into regular categories. CEO Winnie Park said the items are now "integrated in line with their applicable merchandise categories," while stressing that "value remains a critical component" of the chain's pitch to shoppers navigating still-elevated grocery and gas prices.
Management has tempered expectations for the current quarter, guiding to 7-9% comparable sales growth — a step down from the first quarter's outsized pop, and an acknowledgment that no toy trend, however viral, sustains a 20%-plus comp forever.