True blowout reports are hard to come by these days among brick-and-mortar retail chains. The pandemic has been rough on most mall and shopping strip concepts that lack a strong e-commerce game. It's against this backdrop that Five Below (NASDAQ:FIVE) is thriving, and Wednesday afternoon's better-than-expected report is sending shares of the cheap chic discounter to all-time highs on Thursday.

Net sales soared 25% to $858.5 million in Five Below's fiscal fourth quarter. You're going to see a lot of retailers come through with heady year-over-year growth in the coming months, and that will make sense once we lap the early stages of the pandemic lockdown. However, Five Below is posting double-digit gains for a quarter that came to a close at the end of January. We're stacking that up against a year earlier, when the economy was humming along over the holidays and the country wasn't bracing for a pandemic. Five Below is killing it right now, and if the retailers in your portfolio aren't holding up in this operating climate, you might want to see what this 1,020-unit chain is doing right. 

Exterior shot of a Five Below store with some items on display outside.

Image source: Five Below.

Rising above 

Growing your sales by 25% is always going to be impressive for a concept that is barely dipping its toe into the e-commerce revenue stream. Five Below operates a chain that -- true to its name -- stocks a wide variety of goods priced at $5 or less. Most true "dollar-store" concepts stock up on deeply discounted overstocked items, but Five Below's higher five-buck ceiling gives it the flexibility to fill its shelves with trendier items that have proven popular with the teens and preteens that frequent the store. 

Five Below is expanding its footprint across the country, and that is understandable. It has grown its store base by 13% over the past year. However, that explains only roughly half of the the net sales pop. Comparable-store sales surged 13.8% in the fiscal fourth quarter for Five Below. Put another way, Five Below's store base may be posting a double-digit increase but the same can be said about sales at the individual store level.

Analysts should know better after being burned by Five Below's outperformance lately, but they still haven't caught up to reality. Wall Street pros were holding out for only $838.3 million in net sales, or a 22% top-line advance. Analysts also undershot Five Below's performance on the bottom line. Net income improved 12% to hit $2.20 a share, well above the $2.11 that the market was targeting. 

If the holiday quarter was a beat, the current quarter is shaping up to be a romp. The $540 million to $560 million that Five Below is now modeling for the fiscal first quarter that ends next month is well above the $440.9 million that analysts were expecting. The Wall Street pros expecting a profit of just $0.39 a share during the seasonally sleepy fiscal first quarter will need to take out their erasers. Five Below's guidance calls for earnings per share to clock in between $0.56 and $0.68.

There's naturally a wave of analysts scrambling to paint Five Below in rosier hues. RBC Capital, Barclays, Craig-Hallum, Wells Fargo, Deutsche Bank, and Goldman Sachs are among the firms jacking up their price targets on Thursday morning. 

Five Below is standing tall in a world of iffy retail stocks. It's one of the few chains thriving in the new normal, instead of merely being satisfied with surviving.

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.