It isn't often that a brick-and-mortar retailer captures investors' attention, but that's exactly the case with Five Below (FIVE -1.35%) stock lately. The youth-focused retailer has trounced the market in the past year as Wall Street gained confidence in its rebound.

Investors are excited about the prospect of an aggressive expansion pace, paired with the potential for rising market share in niches outside of the chain's traditional core focus of products priced at $5 or less.

That bullish narrative will be tested when the retailer announces its second-quarter earnings results in just a few days. So let's look at the metrics that will matter in that report, set for Wednesday afternoon.

Three young women shopping at an outdoor mall.

Image source: Getty Images.

Market share

What makes Five Below more attractive than some of its retailing peers is its ability to amplify sales growth through rising customer traffic and a growing store base. That's what happened in the previous quarter when sales soared 160%.

Investors are looking for slower but still market-trouncing growth this week. Revenue should land between $640 million and $660 million, management predicted back in June, which would translate into roughly 50% year-over-year gains.

Look for a healthy balance in that growth between increased customer traffic and an expanding sales footprint. Five Below is launching new locations at a record pace and attracting record demand, too. A continuation of these trends bodes well for Q2, and beyond.

Profitability 

Five Below recently hit on a great way it can navigate through today's inflationary pressures, expand market share in new categories, and raise profit margins all at once. Its new Ten Below retailing section is a hit with customers since it gives them new niches to browse like gaming and home furnishings.

It's also a boon for the business. "We do now have the ability to go above the $5 price point, which is a great way to overcome the pressures of inflation," CEO Joel Anderson said in early June. Continued wins on this score would show up in rising average spending and higher profit margins. Five Below might even soon start setting new records in its core operating margin, which has quickly rebounded to over 12% of sales.

FIVE Operating Margin (TTM) Chart

FIVE Operating Margin (TTM) data by YCharts

Store growth plan

Investors on Wednesday will get a detailed outlook for the third quarter, along with some preliminary comments about how management sees the holiday shopping season going. That outlook might be unusually cautious given the recent rise in COVID-19 cases across the country.

But the long-term trends for this retailer will come down to its success at quickly building out a robust national footprint. Executives had predicted as many as 180 new store launches this year, marking an annual record. "New stores have always been the fuel for the Five Below growth engine," Anderson said. If management affirms, or even raises that outlook this week, then investors can feel confident that the chain sees plenty of good reasons to continue plowing ahead with its aggressive growth strategy despite short-term risks.