Let’s dig into the relative performance of Five Below (NASDAQ:FIVE) and its peers as we unravel the now-completed Q2 discount retailer earnings season.

Discount retailers understand that many shoppers love a good deal, and they focus on providing excellent value to shoppers by selling general merchandise at major discounts. They can do this because of unique purchasing, procurement, and pricing strategies that involve scouring the market for trendy goods or buying excess inventory from manufacturers and other retailers. They then turn around and sell these snacks, paper towels, toys, clothes, and myriad other products at highly enticing prices. Despite the unique draw and lure of discounts, these discount retailers must also contend with the secular headwinds of online shopping and challenged retail foot traffic in places like suburban strip malls.

The 5 discount retailer stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was 0.6% below.

In light of this news, share prices of the companies have held steady as they are up 1.9% on average since the latest earnings results.

Weakest Q2: Five Below (NASDAQ:FIVE)

Often facilitating a treasure hunt shopping experience, Five Below (NASDAQ:FIVE) is an American discount retailer that sells a variety of products from mobile phone cases to candy to sports equipment for largely $5 or less.

Five Below reported revenues of $830.1 million, up 9.4% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with underwhelming earnings guidance for the full year.

Ken Bull, Interim CEO, President and COO of Five Below, said, “Our second quarter results fell short of what we know this business is capable of delivering. Our response to the macro pressures of the last few years and the evolving consumer environment has required even greater execution, compelling and differentiated assortments and focus on the customer."

Five Below delivered the weakest full-year guidance update of the whole group. Interestingly, the stock is up 9.7% since reporting and currently trades at $86.50.

Read our full report on Five Below here, it’s free.

Best Q2: Burlington (NYSE:BURL)

Founded in 1972 as a discount coat and outerwear retailer, Burlington Stores (NYSE:BURL) is now an off-price retailer that has broadened into general apparel, footwear, and home goods.

Burlington reported revenues of $2.47 billion, up 13.4% year on year, outperforming analysts’ expectations by 2%. The business had an exceptional quarter with optimistic earnings guidance for the next quarter and an impressive beat of analysts’ EBITDA estimates.

Burlington achieved the fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 3.5% since reporting. It currently trades at $263.29.

Is now the time to buy Burlington? Access our full analysis of the earnings results here, it’s free.

TJX (NYSE:TJX)

Initially based on a strategy of buying excess inventory from manufacturers or other retailers, TJX (NYSE:TJX) is an off-price retailer that sells brand-name apparel and other goods at prices much lower than department stores.

TJX reported revenues of $13.47 billion, up 5.6% year on year, exceeding analysts’ expectations by 1.1%. Still, it was a mixed quarter as it posted underwhelming earnings guidance for the next quarter.

TJX delivered the slowest revenue growth in the group. Interestingly, the stock is up 3.7% since the results and currently trades at $117.60.

Read our full analysis of TJX’s results here.

Ollie's (NASDAQ:OLLI)

Often located in suburban or semi-rural shopping centers, Ollie’s Bargain Outlet (NASDAQ:OLLI) is a discount retailer that acquires excess inventory then sells at meaningful discounts.

Ollie's reported revenues of $578.4 million, up 12.4% year on year. This print topped analysts’ expectations by 3%. Taking a step back, it was a mixed quarter as it also logged a solid beat of analysts’ EBITDA estimates but a miss of analysts’ gross margin estimates.

Ollie's pulled off the biggest analyst estimates beat and highest full-year guidance raise among its peers. The stock is up 5.6% since reporting and currently trades at $99.42.

Read our full, actionable report on Ollie's here, it’s free.

Ross Stores (NASDAQ:ROST)

Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ:ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.

Ross Stores reported revenues of $5.29 billion, up 7.1% year on year. This number was in line with analysts’ expectations. Overall, it was a strong quarter as it also put up a solid beat of analysts’ EBITDA estimates and a decent beat of analysts’ earnings estimates.

Ross Stores had the weakest performance against analyst estimates among its peers. The stock is down 5.9% since reporting and currently trades at $143.65.

Read our full, actionable report on Ross Stores here, it’s free.

Market Update

As expected, the Federal Reserve cut its policy rate by 25bps (a quarter of a percent) in November 2024 after Donald Trump triumphed in the US Presidential election. This marks the central bank's second easing of monetary policy after a large 50bps rate cut two months earlier. Going forward, the markets will debate whether these rate cuts (and more potential ones in 2025) are perfect timing to support the economy or a bit too late for a macro that has already cooled too much. Adding to the degree of difficulty is a new Republican administration that could make large changes to corporate taxes and prior efforts such as the Inflation Reduction Act.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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