One of this week's biggest losers is Five Below (NASDAQ:FIVE). Shares of the cheap-chic retailer hit a 52-week low on Monday, tumbling 11% after posting disappointing holiday sales. Same-store sales for the two-month peak shopping period ending Jan. 4 declined 2.6%, a sharp contrast to the positive comps it was targeting for the fiscal fourth quarter back in early December. 

Posting negative comps in a buoyant economy is never a good look, but this isn't the end of Five Below. Monday's drop may have been well earned given the disappointing news, but let's go over why the retailer that sells a wide range of deeply discounted yet trendy merchandise isn't going away anytime soon.

Exterior shot of Five Below.

Image source: Five Below.

1. Things are relatively better now

The weak holiday performance is shocking because Five Below has been an all-weather winner in the past, but also because of the timing of the miss. When Five Below was forecasting comps to climb 2% to 3% in the fiscal fourth quarter that ends in a couple of weeks, it was doing so a month into the two-month shopping season. It was already past the late start to the shopping season as a result of Thanksgiving taking place at the latest possible day. The failure here had to come in the final three weeks heading into Christmas. 

The good news here is that by hosing down its comps guidance (Five Below now expects same-store sales to clock in 2% to 2.5% lower for the quarter), it points to relative improvement in the final month of the year. We already know that comps declined 2.6% through the first two telltale months, so things are apparently not that bad right now.

2. Expansion is still growing strong

Five Below has increased its store count by 20% over the past year, making the 13.4% increase in net sales during the two-month shopping period problematic. Comps are down, and newer stores are likely in lower-volume markets. 

Things aren't great, but Five Below isn't going to slam on the brakes until it can assess the reasons for the December dud. It plans on opening 180 new stores in fiscal 2020, up from the roughly 150 it will ultimately open this fiscal year.

3. Changes are coming

The novelty of a store where everything costs $5 or less may not always make financial sense, and you're already seeing Five Below stretch the limit of its moniker by offering some tech items that ring up at $5.55. One test that the chain will be expanding is its Ten Below zones where it can offer new product categories with more pricing wiggle room. 

Five Below announced that it will add Ten Below zones to many of its new and remodeled stores. This may seem to be sending the wrong value message to consumers, but you probably have more than a few stores with the word "Dollar" in the name that sell things costing more than a single buck. Five Below is hedging its bets here, giving it more flexibility in the merchandise it can stock. 

4. A dud quarter isn't the end

Five Below's revised guidance for the entire fiscal year means that this will be the first time that net sales don't grow by 20% or better in a fiscal year. Picking up the pace of expansion will help offset some of that top-line sting, but retail can be fickle. Chains bounce back from a soft quarter, and Five Below has shown a knack for having a strong read on the pulse of changing trends for its young shoppers. 

Fidget spinners won't cut it anymore, but that's been the case for more than a year now. If Five Below strings together a few negative quarters, it would be problematic. But for now, you have to give the chain the benefit of the doubt given its historical growth. Even with the shocking holiday season, this will still stretch the chain's streak of positive comps on an annual basis to 13 years. Five Below is doing too many things right to let one bad quarter implode the bullish thesis. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.