The earnings results indicated that consolidated net sales were 23.7% higher to about $1 billion.
Investors sent the stock up by 1.5% in after-market trading on Wednesday (Aug. 27) as management boosted sales guidance and said comp sales should grow in the range of 5% to 7% this year.
CEO Winnie Park said on the conference call with analysts that there had been notable growth in spending on “summer fun” categories and that sales of back to school items also have grown.
“In the second quarter, we executed our planned strategic pricing changes to whole price points in order to simplify the shopping experience for our customers,” said the CEO, as the majority of non-candy items are prices at $1 to $5. Social media is also helping to drive traffic into brick-and-mortar locations, Park said.
Ken Bull, chief operating officer and interim chief financial officer, said on the call that the company’s inventory is well-positioned for the holiday shopping season.
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“If you look at our guide and our assumptions going forward, again,” Bull told analysts, the tickets sizes have “been in a kind of low single-digit range increase. I would expect that to remain relatively consistent as we move through into the back half of the year.”
During the question-and-answer session, looking ahead at that holiday season, Park said, “We’d love to be known as a gift destination for America at great value. So you’re going to see tons of gifting as well as lounge, a great holiday decor, anything you need for those stocking stuffers last minute. So we really want to outfit all of holiday and again, at great value. So that’s the plan.”
Eyeing Expansion
Overall, she said, customer growth has been strong, both in terms of new and retained business amid an uncertain backdrop of tariffs.
Said Park: “Tariffs are a reality and have certainly been baked into our forward outlook. I think that the key piece of this is the reaction to the tariff and how do we mitigate it. … We’ve got a toolkit from looking not only at just price, but also looking at assortment changes. … And with that assortment change, there’s a diversification of country of origin as well as vendor base.”
The company continues to eye expansion, having opened a net new 32 locations in the quarter, with a total tally 11.5% higher than a year ago.
“We certainly have a lot of white space. We believe there’s still more white space in the market, especially as we enter new markets later this year, like the Pacific Northwest,” Park told analysts.
“Where we’ve seen momentum in the business,” Park said, “is in businesses like … toys and games, but also in some of the other businesses like beauty and even in lounge, that are just a little more experience based and impulse based and driven by kids.”
