The American discount chain Five Below has had to absorb a blow to profitability in the last quarter due to an unexpectedly strong increase in thefts and other forms of inventory loss, colloquially referred to as "shrink". To counteract this trend, the company is now taking measures such as limiting self-checkout kiosks, verifying cash register receipts, and enhancing security measures with guards. These adjustments come after a period in which retail thefts have increased industry-wide, and other retailers report similar challenges.

In the specific case of Five Below, inventory shrinkage accelerated since the last year, pushing the company's earnings per share in the fourth fiscal quarter to the lower end of its own forecasts. Joel Anderson, the CEO of Five Below, emphasized the need for an aggressive strategy to reduce theft-related losses to pre-pandemic levels or to offset the impact in the coming years.

Despite a challenging environment, Five Below continued to record strong revenue growth, with earnings in the last quarter increasing by 19% to $1.34 billion. However, this figure was slightly lower than analysts had expected. The company's profit amounted to $202.2 million, or $3.65 per share, compared to $171.3 million, or $3.07 per share, in the same period last year.

The forecasts for the upcoming quarter and the full year fell short of Wall Street's expectations, leading to a 13% decline in Five Below's stock price after the market closed. Given the ongoing industry-wide issues with inventory loss, competitor Dollar Tree has also recently announced similar challenges for the first half of the year.