With Five Below's (NASDAQ:FIVE) stock dramatically outperforming the market so far this year, investor focus will be intense around the company's upcoming second-quarter earnings report. The teen retailer's last few quarterly announcements have shown the type of sales growth that can support management's long-term hopes to roughly triple its existing store footprint over time.

Yet a few key concerns have to be addressed before Five Below can claim to have that kind of robust momentum. Let's look at the metrics that investors will be watching in the company's report, set to come out after the market closes on Sept. 6.

Two young women share a secret while shopping.

Image source: Getty Images.

1. Sales gains

Five Below's sales soared 27% last quarter, but if you dig a bit deeper than that headline number, you'll see that its results weren't especially impressive. Comparable-store sales, or sales at existing locations, rose by 3% to fall near the low end of the guidance range that CEO Joel Anderson and his team had issued three months before. In addition, Five Below's customer traffic was slightly negative, which implies weak growth ahead. In fact, the company has predicted flat comps for the second quarter.

Executives blamed unseasonably cool weather for helping keep a lid on sales growth last quarter, and we'll find out on Sept. 6 if warmer temperatures had the opposite effect. Given the huge run-up in the stock, investors are likely expecting faster comps and a return to positive customer traffic when Five Below announces its second-quarter results.

2. Profitability

Gross profit margin expanded by more than a full percentage point last quarter to reach 33% of sales. That's a healthy sign, since it means the retailer didn't have to resort to aggressive promotions to keep its sales rising. However, like the revenue metric, Five Below's profitability figure wasn't as strong as it might appear at first glance.

Executives explained in a conference call with investors that both gross and operating margins were lifted higher by the fact that there were major costs in the year-ago period tied to the retailer's first push into the California market. Those favorable comparisons lessen over the next few quarters, and that's a key reason that management has predicted a modest profitability decline for the second, third, and fourth quarters of the fiscal year.

Keep an eye on where those margin figures land next Thursday, since they'll play a big role in deciding whether the company can extend its multiyear streak of market-thumping earnings growth.

3. The holiday outlook

With half the fiscal year behind it, and with holiday season preparations well underway, Five Below will be in an ideal position to update its fiscal-year outlook. Right now, that prediction calls for only modest sales gains of between 1% and 2% in 2018 as the addition of about 125 new stores pushes overall revenue up by about 20%. Earnings should expand at a slightly faster rate as falling tax liabilities more than offset increased costs, including wages.

It seems likely that investors will want to see at least a slight upgrade to those predictions on Thursday. Many peer retailers have raised their 2018 forecasts while describing some of the best industry conditions in years. A similar boost to Five Below's growth trends would give management more confidence that it can hit its goal of having as many as 2,500 locations across the country, up from fewer than 700 today.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends Five Below. The Motley Fool has a disclosure policy.