After all, global growth, inflation, fuel costs, interest rates, supply chain disruptions and competition are all elements that affect FedEx’s revenue, margins and strategic investments. They also each represent things all businesses need to watch out for.

And as the company’s Thursday (Sept. 19) first-quarter 2025 earnings proved, while the operating backdrop is tough and uncertain, embracing digital innovation to unlock growth through new efficiencies represents a promising way through.

“Despite a challenging quarter, we remain focused on transforming our network, improving our efficiency, lowering our cost-to-serve, and enhancing our ability to adapt with speed to evolving market dynamics,” said Raj Subramaniam, FedEx Corp. president and chief executive officer on Tuesday’s earnings call. “Overall, I remain confident in the value-creation opportunities ahead as we focus on reducing our structural cost, growing revenue profitably and leveraging the insights from our vast collection of data as we continue to build the world’s most flexible, efficient and intelligent network.”

The logistics company’s financial results showed a profit of $790 million, or $3.21 a share, for the most recent quarter; compared with $1.08 billion, or $4.23 a share, during the same quarter last year.

FedEx executives cited a decline in weight per shipment, reduced priority shipments and one fewer operating day as reasons for the decreased results during the quarter, noting that FedEx Freight “continues to execute its long-term strategy of streamlining its network,” having completed the closure of seven small-market facilities during the quarter.

A reduction of structural costs from the company’s DRIVE program initiatives partially offset these factors, FedEx leadership told investors.

Read more: Experts Expect Spinoff as FedEx Considers Future of Freight Unit

Digital’s Role in Prioritizing a Streamlined Approach

While FedEx Freight continues to provide less-than-truckload freight transportation services as a separate subsidiary, on June 1, FedEx Ground and FedEx Services were merged into Federal Express, becoming a single company operating a fully integrated air-ground express network, under the company’s DRIVE transformation program.

As a result, the company reaffirmed its financial forecast for the full-year 2025 of permanent cost reductions from the DRIVE transformation program of $2.2 billion; as well as capital spending of $5.2 billion, with a priority on investments in network optimization and efficiency improvement, including fleet and facility modernization and automation.

“Our revised outlook reflects our continued confidence in the execution of our DRIVE initiatives and the effects of our recent pricing actions, which we expect to help offset weaker-than-expected demand trends,” said John Dietrich, FedEx Corp. executive vice president and chief financial officer.

But FedEx also revised its fiscal 2025 revenue and earnings forecasts downward for its revenue growth rate year over year to a low single-digit percentage, compared to the prior forecast of a low-to-mid single-digit percentage increase.

The company issued downward guidance on earnings per diluted share, now projected at $17.90 to $18.90 before the MTM retirement plans accounting adjustments, compared to the prior forecast of $18.25 to $20.25 per share; and $20 to $21 per share after also excluding costs related to business optimization initiatives, compared to the prior forecast of $20 to $22 per share.

Read more: How Digital Transformation Aligns Supply Chains With Compliance, Sanctions Risk

As executives stressed to investors, digital transformation and consolidation is crucial to the broader effort by FedEx to streamline operations and improve efficiency in response to the softer demand that has impacted the industry at large.

PYMNTS Intelligence revealed in July that concerns over supply chain integrity and macroeconomic conditions highlight how larger external factors also remain on CFOs’ radars.

PYMNTS also analyzed here earlier how businesses in the transportation, shipping and logistics sector are turning to technologies like embedded supply chain finance to enhance resilience, drive efficiency and ultimately transform their operations.

As FedEx navigates through a period of economic uncertainty and shifting market dynamics, the outcome of its digital transformation efforts will likely have significant implications for the company’s future performance and its position within the global logistics sector.

The post FedEx Tamps Down 2025 Outlook Despite Digital Transformation Efforts appeared first on PYMNTS.com.

Darden Restaurants President and CEO Rick Cardenas acknowledged the need for speed during the company’s first-quarter earnings call Thursday (Sept. 19).

“We operate in a very dynamic, competitive industry,” Cardenas said, highlighting that while full-service restaurants have traditionally offered a leisurely experience, modern diners seek quicker dining options. “In a world that has gotten faster, full-service restaurants have not kept up.”

While the company reported a 1% total sales increase, to $2.8 billion, same-store sales slipped 1.1%. Additionally, same-store sales declined 2.9% at Olive Garden and sank 6% in its fine dining segment. Meanwhile, same-store sales rose 3.7% at LongHorn Steakhouse.

Darden Restaurants officials recognize today’s consumers have less time to spare and are looking for alternatives that cater to a speedier experience.

“We’re trying to capture that occasion where guests have a little less time to eat than they did 10 years ago,” Cardenas said. “This is about the speed and pace of meals. This is a guest needs’ challenge. They have other options to dine. The full-service restaurant category really hasn’t gotten faster. We see opportunities to speed up our process. We’re going to spend our time to improve our time.”

Cardenas said the company makes investments in technology “all the time” and “one of the things we were talking about is how do we help the restaurant get a little faster. Our focus is to work on our operations and if we need more technology to help that, we will. Over time, we believe being a little faster is going to be beneficial to our guests, to our team, and to our investors.”

Menu Update, Delivery Deal

Cardenas said the company is revitalizing its menu, beginning with the return of the Never Ending Pasta Bowl at Olive Garden. This promotional initiative aims to attract customers back, particularly following a significant decline in traffic in July, which was impacted by severe weather and increased travel. Chief Financial Officer Raj Vennam noted that while sales have improved since then, ongoing strategic adaptations are essential for sustained recovery.

“The significant step down in traffic during July led to our first-quarter earnings being lower than expected,” Vennam said. “Following the softness in July, our sales trend has continued to improve. Considering this recovery as well as the planned initiatives to support the remainder of the fiscal year, we are reiterating our guidance for fiscal 2025.”

The company announced a strategic partnership with Uber Technologies, set to launch with a pilot program with Olive Garden in late 2024. By leveraging Uber’s logistics network, Darden Restaurants aims to offer seamless, on-demand delivery through its own channels, ensuring proprietary guest data is maintained.

Once launched, customers will be able to order delivery from Olive Garden’s website and app at more than 900 company-owned locations across the U.S. Deliveries will be powered by Uber Direct, using Uber’s logistics network to bring Olive Garden meals directly to customers’ homes.

“Guests have been asking us for home delivery options and they continue to show they are willing to pay for the convenience,” Cardenas said. “As we continued to evaluate delivery, it was important for us to find a way to address this guest need state without disrupting the team member or guest experience and without compromising our competitive advantages and simple operating model. Uber is a partner we believe shares that vision and can meet our expectations. Their investment in a custom-integration, commitment to Olive Garden’s first-party delivery growth, and efficiency and speed at a national scale, made this exclusive partnership a clear choice.”

Despite the challenges, Cardenas remains optimistic about the company’s long-term prospects, adding, “I am confident in the actions all our brand teams are taking to address their guests’ needs without compromising the long-term health of our business for short-term benefits.”

The post Darden Restaurants Faces Pressure to Improve Speed Amid Declining Sales appeared first on PYMNTS.com.

During the company’s third-quarter earnings conference call with analysts and investors Thursday (Sept. 12), Adobe president and CEO Shantanu Narayen said Adobe’s customer-centric approach to AI is “highly differentiated across data, models and interfaces. We train our Firefly models on data that allows us to offer customers a solution designed to be commercially safe.”

Adobe has released Firefly models for imaging, vector and design, and previewed a new Firefly Video model.

“Our greatest differentiation comes at the interface layer with our ability to rapidly integrate AI across our industry-leading product portfolio, making it easy for customers of all sizes to adopt and realize value from AI,” Narayen explained. “We’re delighted to see customer excitement and adoption for our AI solutions continue to grow and we have now surpassed 12 billion Firefly-powered generations across Adobe tools.”

Third-quarter revenue rose 11% to $5.41 billion while digital experience subscription revenue grew 12% to $1.23 billion.

“We’re bringing together content creation and production, workflow and collaboration and campaign activation and insights across Creative Cloud, Express and Experience Cloud,” Narayen said. “New offerings including Adobe GenStudio and Firefly Services empower companies to address personalized content creation at scale with agility and enable them to address their content supply chain challenges.”

Firefly-powered features in Adobe Photoshop, Illustrator, Lightroom and Premiere Pro help amplify users’ creative potential and increase productivity. Adobe Express offers a streamlined, versatile platform for effortless content creation, enabling millions to unlock their creative capabilities. Acrobat’s AI Assistant enhances the value extracted from PDF documents, while Adobe Experience Platform’s AI Assistant helps brands automate workflows and cultivate new audiences and customer journeys. Additionally, Adobe GenStudio merges content and data, combining rapid creative expression with enterprise-level personalization to meet scale needs effectively.

David Wadhwani, chief business officer, digital media at Adobe, said during the earnings call that, for decades, PDF has been the “de facto standard for storing unstructured data, resulting in the creation and sharing of trillions of PDFs. The introduction of AI Assistant across Adobe Acrobat and Reader has transformed the way people interact with and extract value from these documents.”

In the third quarter, Wadhwani said Adobe released significant advancements, including the ability to have conversations across multiple documents and support for different document formats, saving users valuable time and providing important insights.

“We’re thrilled to see this value translate into AI Assistant usage, with over 70% quarter-over-quarter growth in AI interactions,” he noted.

In addition to consumption, Wadhwani added: “We’re focused on leveraging generative AI to expand content creation in Adobe Acrobat. We’ve integrated Adobe Firefly image generation into our Edit PDF workflows. We’ve optimized AI Assistant in Acrobat to generate content fit for presentations, emails and other forms of communication. And we’re laying the groundwork for richer content creation, including the generation of Adobe Express projects. The application of this technology across verticals and industries is virtually limitless.”

Tata Consultancy Services recently used Adobe Premiere Pro to transcribe hours of conference videos and then used AI Assistant in Acrobat to create digestible event summaries in minutes, Wadhwani noted.

“This allowed them to distribute newsletters on session content to attendees in real time,” he said. “We’re excited to leverage generative AI to add value to content creation and consumption in Acrobat and Reader in the months ahead. Given the early adoption of AI Assistant, we intend to actively promote subscription plans that include generative AI capabilities over legacy perpetual plans that do not.”

When consumers use Adobe’s generative features, “they retain better,” Wadhwani said. “We’re also seeing that when people come to Adobe to try our Creative Cloud applications or Express application, they’re able to convert better. There are all these ancillary implied benefits that we’re getting. But in terms of direct monetization, what we’ve said in the past is that the current model is around generative credits. We do see with every subsequent capability we integrate into the tool, total credits consumed going up. Now, what we are trying to do as we go forward, we haven’t started instituting the caps yet. And part of this is, as we’ve said all along, we wanted to really focus our attention on proliferation and usage across our base.”

Wadhwani said leadership was “watching very closely as the economy of generative credits evolves. And we’re going to look at instituting those caps at some point when we feel the time is right and/or we’re also looking at other alternative models.”

Wadhwani also added that company officials “see the opportunity to engage very deeply in the monetization. But we want to play it out over time and proliferation continues to be our primary guide.”

The post Adobe’s Firefly AI Hits 12 Billion Generations, Previews Video Creator appeared first on PYMNTS.com.

“We clearly see ourselves as a winner in the consolidated luxury space,” he told analysts and investors during the company’s fourth-quarter and full-year earnings call on Thursday (Sept. 12). “After a difficult period last autumn, we’re back on track for strong growth and the U.S. continues to be a strong driver for our growth. We’re building a community for luxury enthusiasts and building it with digital experiences is paying off.”

The Munich-based digital luxury platform delivered significant improvements in revenue and profitability, projecting continued growth despite macroeconomic uncertainties. Net sales grew 14% in the second half of FY24 and 10% in the fourth quarter. Year-over-year, growth in the U.S. rose 25%.

Kliger attributed the company’s performance to a better balance between supply and demand, which helped mitigate the severe discounting issues of previous periods. Operationally, Mytheresa made significant strides, notably ramping up its Leipzig warehouse operations to handle more than 80% of customer orders by late July. To streamline logistics and enhance efficiency, the company closed its Heimstetten warehouse.

Global Events and Partnerships

A series of high-profile global events and exclusive partnerships also marked Mytheresa’s successful quarter. The company hosted luxurious multi-day experiences with brands such as Brunello Cucinelli, Dolce&Gabbana, and Valentino, including Italian retreats and yacht cruises, which were well-received by top customers. The launch of exclusive capsule collections and pre-launches with brands like Gucci and Loewe further highlighted Mytheresa’s dedication to offering sought-after products.

Additionally, a successful Mytheresa x Flamingo Estate pop-up in East Hampton attracted more than 6,000 registered guests over eight weeks, creating a vibrant community for luxury enthusiasts.

“We have a resilient and consistent business model with outstanding customer satisfaction, along with decreasing customer acquisition costs,” Kliger noted. “We’ve accelerated our topline growth and profitability and reinforced our unique position with our top customers. We are very pleased with our performance in the fourth quarter as it drove the continued very positive momentum for Mytheresa in the second half of fiscal year 2024 with double-digit growth and almost doubling of profitability compared to prior year. We are very pleased with our full fiscal year 2024 results.”

Building Customer Loyalty

Kliger said Mytheresa reaffirmed its position as “the best high-end luxury digital platform. Mytheresa builds a community for luxury enthusiasts. We create desirability through digital and physical experiences. We believe Mytheresa offers the best digital luxury shopping experience for big spending consumers and brands.”

While Kliger highlighted Mytheresa’s resonance in the U.S. and Europe (“with the exception of Germany”), Asia is “at the other end of the spectrum,” which will “take some time.”

“China is a very important market for us and we continue to invest in the market,” he noted. “China is very high on our focus list. Chinese consumers are focused on the very best ready to wear pieces.”

Kilger expects promotional intensity and customer acquisition costs to normalize.

“Overall, it is a clear vote for quality of customer relationships and quality of assortment building,” he added. “That’s what drives winning in this marketplace. You must compete on those items and not the lowest price.”

The post Mytheresa Leans into Digital Experiences and Global Events appeared first on PYMNTS.com.

Anderson emphasized moving from the strategy phase to the execution phase of the company’s immediate priority: “Our focus right now and No. 1 priority is improving profitability. I believe in what Mike was working on and what the management was working on. We’ve got to strengthen retail fundamentals. The second half is about executing.”

Anderson described retail fundamentals such as merchandise excellence and service-driven business.

“We have to get the service business right with clean, well-merchandised stores,” he said, “and make sure our digital offering is easy and efficient. We have to be masters of efficiency with a strict discipline around inventory. We’ve got to get those retail fundamentals in order before we focus on growth again.”

While Petco’s net revenue of $1.52 billion decreased 0.5% for the second quarter, comparable sales inched forward 0.3%. The second-quarter highlight was Services and Vet sales, which rose 10%.

“Merchandising is our greatest opportunity to deliver profitability,” Anderson explained. “I believe in Petco’s deep-rooted mission. I’ve experienced firsthand the immense joy pets bring to families, including mine. Today, Petco sits at a critical juncture. There are clear opportunities to significantly improve our financial performance.”

Anderson noted three things that excite him about Petco: “Our integrated store footprint brought to life across multiple channels, delivering a differentiated offering that can make Petco a destination for pets and pet parents. If we present our customers with unique, on-trend products, we’ll accelerate our return to retail excellence. And our breadth of services offering, including our Vet platform, which is the biggest competitive differentiator for us and a significant long-term growth driver.”

During his first few weeks on the job, Anderson is committed to what the team and board have worked on for the past six months.

“It’s a disciplined and holistic approach to retail with better execution, leveraging Petco’s unique strengths,” he explained. “Simply put, I love pets and I love retail. I’m filled with optimism for the opportunities we have to establish trust in our financial discipline and grow the brand.”

He noted four key initiatives:

• Returning to retail fundamentals
• Meeting and exceeding customer expectations
• Capturing market share
• Meaningful improvement to the bottom line

“My assessment is we are completely on the right track,” Anderson said. “We’ve got the right strategy. Now we just have to go execute. What got me excited about joining Petco is what’s not broken is the brand, and what’s not broken is the passion we have out in the field for pets and pet parents. We’ve got more work to do on the assortment, specifically looking at how we’re priced to remain competitive and generate a reasonable margin. We are not starting over. We have much work to do, but everything I’ve seen since joining mirrored what I was told during my hiring process. We’re on the path to return to retail excellence and return this iconic brand to its winning ways.”

The post New Petco CEO Joel Anderson Prioritizes Retail Fundamentals appeared first on PYMNTS.com.

“Over the past 18 months the external environment has become more favorable,” O’Sullivan said. “Two years ago, our core low-income customer was under severe economic pressure from the higher cost of living. Since then, it feels as if two things have happened. As inflation has moderated, the situation for lower-income shoppers has somewhat improved. In parallel, economic pressure and uncertainty have spread and broadened well beyond lower-income shoppers. There is now a greater focus on value across demographic groups and income bands. This greater focus on value is helping our business.”

During the company’s first-quarter earnings call, O’Sullivan described the external situation and the health of the consumer as “being hard to read.”

At the time, O’Sullivan said, “It felt like there were conflicting data, some positive, some negative, on discretionary spending trends. I would say in the last few months, it feels to us that the situation has become a lot clearer, and it feels like that has driven a much greater focus on value across the board. I think that recent earnings reports from other retailers are all pointing in the same direction. Retailers that are offering the best value are winning and driving comp sales.”

Deal-Seeking Consumers Switch Loyalties

O’Sullivan said value-conscious consumers are trading down into Burlington Stores.

“The pressure on the lower-income customer hasn’t gone away, but it feels to us like it may have moderated,” he said. “And that low-income shopper is still very fragile, but as inflation has come down, I think their situation has improved somewhat. We see evidence of that in our own data. Two years ago, our comp sales trend for stores that are in lower-income trade areas was below the rest of the chain. We have a lot of stores in lower-income trade areas and they tend to be relatively high volume. So, when they’re not comping well, we pay a lot of attention.”

PYMNTS own data shows that cash-strapped consumers living paycheck to paycheck are trading down instead of foregoing purchases. That presents a boon for the discount retailers.

Burlington Leans Into Value to Woo Shoppers

Burlington Stores, an off-price discount retailer known for its high-quality branded apparel and home merchandise, reported a 5% increase in comparable store sales and a 13% rise in total sales, exceeding expectations.

The company opened 36 net new stores during the second quarter and, O’Sullivan noted, “we’re on track to open 100 net new stores plus approximately 30 relocations. As discussed in the past, on average, we expect our new stores to run at about $7 million in sales in their first full year. I am pleased to say that our new stores are running ahead of this benchmark.”

O’Sullivan pointed to the company’s success with full-price selling.

“Our merchants are focused on offering really sharp value out of the gate at the initial ticketed price,” he said. “This is driving faster turns and lower markdowns. This means that there is less inventory making it to the clearance rack. Our comp on clearance sales was down double-digits in Q2. Meanwhile, our comp on full-price selling was positive 7%.”

O’Sullivan praised the company’s execution during the second quarter, saying, “We have made a lot of changes and improvements to our business over the last few years in merchandising and in operations. We are still in the early innings of many of these programs. And to be clear, we have a long way to go in terms of achieving full potential off-price execution. But we are gaining traction and making some good progress.”

Offering a mix of better brands has proven successful, O’Sullivan added.

“We see an opportunity more generally to elevate our assortments,” he said. “We’ve been shifting in that direction for a while now and we’ve seen good selling on those better brands, and we’ve seen good selling at higher price points. We believe that increasing the mix of better brands accomplishes two things. Firstly, those brands themselves drive increased trade-down traffic to our stores. Trade-down shoppers are looking for better, more recognizable brands. Secondly though, those brands also help to validate and reinforce the whole store. Even if a shopper does not buy the specific item, the fact that they see the brand, reinforces the off-price value proposition. It provides a halo, if you like, to our business. So, in the coming months, you will see a higher mix of better brands in our runs.”

The post Burlington Stores CEO Says Lower-Income Shoppers Gaining Amid Economic Shifts appeared first on PYMNTS.com.

Since a Supreme Court ruling overturned a law that prevented state-sanctioned sportsbooks in 2018, over $220 billion has been wagered in the U.S. sports gambling industry, Bloomberg reported Friday (Sept. 6).

The beneficiaries of this trend include mobile betting apps like FanDuel and DraftKings as well as betting kiosks at stadiums, according to the report.

Much of the gambling is focused on NFL games, with the league’s 2023 season accounting for an estimated $26.7 billion of the amount bet by Americans, the report said.

Despite the growing popularity of online sportsbooks and online gaming, the options for instant payouts remain relatively rare, according to the PYMNTS Intelligence report “Generation Instant: Gamers and Winning.”

Less than half of gamers now have access to instant payments, even though 8 in 10 gamers prefer immediate access to their winnings, the report found.

Among the gamers who are not expecting (or are not offered) instant payouts, 44% said they receive their winnings via cash, 17% said they receive non-instant digital payments and 11% collected their winnings in the form of a check, according to the report.

When instant distributions are available, 18% opt for immediate payouts, with 8% collecting their winnings in digital wallets and about 3% transferring their winnings to a bank account, per the report.

The gaming sector is one of the leaders in offering instant payments, according to the PYMNTS Intelligence report “Meeting the Demand for Instant Ad Hoc Payments.”

Gaming firms report that instant payment methods represent 37% of their ad hoc payment transactions, according to the report.

DraftKings reported in August that the number of new online sports betting and iGaming customers it gained during the second quarter increased nearly 80% compared to the same period in 2023.

“We very efficiently acquired many more new customers than we expected and saw continued healthy existing customer engagement in the second quarter,” DraftKings CEO and co-founder Jason Robins said Aug. 2 during the company’s quarterly earnings call.

The post US Sports Gambling Industry Totals $220 Billion Since 2018 appeared first on PYMNTS.com.

“What you’re seeing in our results is momentum,” CEO Jennifer Hyman said during the call.

Second-quarter revenue increased 4.2%, to 78.9 million, up from $75.7 million for the same period last year. Hyman pointed to an enhanced customer experience, improved site performance and “palpable energy driving RTR” through its Reserve business.

“The most momentum is in our special event reserve business,” Hyman said.

Orders for this segment rose 10% in July and 20% in August, reflecting the effectiveness of recent improvements in customer experience and inventory management. Hyman noted new customer growth surged 50% year over year without any additional marketing expenditures, underscoring the impact of enhanced end-to-end customer experiences and optimized inventory.

The company’s ability to increase customer reengagement and loyalty has been pivotal in this upward trend.

“We are very optimistic in Reserve growth for the second half,” she said. “The teams are focused on our end-to-end experience for Reserve. Until June, there was no dedicated focus team on Reserve and we had seen that business decline the past few years. Now we’re having this be a tremendous new funnel of new customers into RTR.”

Active subscribers fell 6%, from 137,566 to 129,073. Chief Financial Officer Sid Thacker, attributed the decline to a reduction in promotions.

RTR is leveraging a variety of strategies to fuel its growth, focusing on SEO improvements to drive organic traffic and enhance customer engagement.

“Our improved site experience, combined with enhanced merchandising, is designed to set us up for success in the second half of the year,” Hyman said. This effort includes a revamped approach to marketing and content, with a particular emphasis on timely and engaging campaigns. Monthly icon campaigns celebrating fashionable women and a renewed college ambassador program are central to this initiative.

A significant part of RTR’s strategy involves reenergizing its in-person presence. Looking ahead, RTR is expanding its efforts with a Southeast roadshow and mobile tour this fall, targeting universities with strong Greek life and sports culture. This tour aims to capture the Generation Z audience and further boost market share.

“In real-life events, we’ve seen hundreds of women standing around the block to get into events,” Hyman said. “Reigniting everything around marketing will not only drive higher org traffic, but higher customer engagement.”

Hyman noted RTR’s three priorities: expanding its Reserve business, increasing organic traffic and deepening customer relationships. Improvements in customer experience have helped attract former customers.

“Over the past three years, we’ve been heavily focused on cost and profitability,” Hyman said. “And now, we repositioned the entire accompany around growth. These actions give me the confidence that growth is coming for RTR. We have momentum across all different aspects of our business.”

Hyman believes RTR’s growth stems from its product-market fit.

“One of our key goals is increasing organic traffic,” she said. “SEO is a component of it and the other component is making customers fall in love with you. Brand awareness and brand love for RTR is very high. I’m really excited about the second half.”

The post Rent the Runway Charts New Course With In-Person Events, Revamped Consumer Experience appeared first on PYMNTS.com.

Founded by David Schlessinger and Thomas Vellios, the company has aimed to be a go-to destination for preteens and teens by offering cheap products. Yet, recent financial results and market conditions have prompted a refocus on its core customer base.

Vellios, who co-founded Five Below, acknowledged the company’s recent challenges during the second-quarter earnings call.

“Over the past few years, we lost some of that sharp focus on our core customers,” Vellios said.

The company had expanded rapidly — opening over 450 new stores and remodeling more than 750 locations since 2022 — while also broadening its product assortment. These efforts came during a challenging macro environment and seem to have diluted the core value proposition that initially set Five Below apart.

“We know the resulting issues are fixable,” Vellios said. “Work is already underway, and we are committed to an operational and strategic refocus of our business. Going forward, we are refocusing on our core customers. We are prioritizing initiatives that enhance value, improve the shopping experience, streamline our operations and ensure that we meet the evolving needs of our customers. Specifically, we need to regain our speed and intensity in identifying and bringing in key trend items into our stores that delight our customers. We need to deliver more wow and value, which, for Five Below, is the intersection of trend, quality and price.”

Second-quarter sales rose 9.4%, to $830 million, but comparable store sales fell 5.7%. The drop was attributed to a decrease in transaction volume despite positive store traffic. This discrepancy pointed to issues in conversion rates, suggesting that while customers were visiting, they were not purchasing as frequently or in the quantities expected.

Ken Bull, interim CEO, president, and COO of Five Below, outlined a plan to address these issues, noting second-quarter results “fell short of what we know this business is capable of delivering.”

The strategy includes simplifying the product lineup and emphasizing lower price points that have historically been popular among Five Below’s young shoppers. Bull emphasized that the company plans to “significantly reduce the breadth of our assortment” and return to pre-pandemic levels. By concentrating on $5 and below price points and streamlining store operations, Five Below aims to enhance the shopping experience while delivering exceptional value.

Bull explained how Five Below found itself in this position.

“Over the past few years, we faced significant macro pressures, including stimulus-driven demand, supply chain disruptions, inflation and evolving customer preferences,” he said. “To manage inflation’s impact, we raised prices and expanded price points. We also overexpanded our assortments and pursued an ambitious Triple-Double vision to triple our store count by 2030 and double EPS by 2025.

“In hindsight, this timeline was too aggressive, creating immense pressure on the organization,” he added. “We increased corporate overhead, raised retail prices, tightened store labor and faced added complexity from shrink mitigation efforts. To address these issues, we have a plan focusing on key areas across product, value and store experience.”

Bull also highlighted the importance of maintaining a fun and energizing store environment.

“Our strategies to improve the product will only be successful if we deliver our customers a store experience that reflects our brand,” he said.

To achieve this, the company is reevaluating its store operating model to reduce complexity and optimize labor. This approach will help ensure that Five Below stores remain engaging and aligned with the expectations of its target audience.

Similarly, Dollar Tree, the parent company of Family Dollar, which operates more than 16,000 stores across the U.S. and Canada, is revamping its strategy with a focus on diversifying its product range and delivering more value to its core customers. The new initiative, now in 1,600 stores, introduces items priced between $1.50 and $7 without raising existing product prices.

Dollar Tree plans to introduce more than 300 new items by year-end as part of its expanded multi-price assortment. This initiative is designed to meet the demand for more variety and value, aiming to boost store performance and customer engagement.

In a press release accompanying the company’s second-quarter results released Wednesday (Sept. 4), Dollar Tree Chairman and CEO Rick Dreiling noted early success, with stores featuring the new format seeing significant sales increases.

“We are encouraged by the continuous progress we are making,” he said, emphasizing that this transformation is crucial for adapting to shifting consumer preferences and economic conditions. With many stores yet to be converted, the company anticipates continued growth.

One of the key insights from Five Below’s recent evaluation was the need to reinvigorate the sense of excitement and discovery that initially drew customers to Five Below.

“We just kind of lost our way a little bit based on the things that we were focused on post-pandemic,” Bull said. The company plans to reintroduce elements of surprise and delight into the shopping experience, aiming to “get the wow back” into their assortment.

The post Five Below Refocuses on Core Customers Amid Strategic Overhaul appeared first on PYMNTS.com.

Despite facing a challenging macroeconomic environment, the company is making strategic moves that could redefine its market position and appeal to a broader customer base. One of the most noteworthy initiatives is the rollout of Dollar Tree’s multi-price format.

This new strategy, which has been implemented in 1,600 stores, aims to diversify the product range with items priced between $1.50 and $7. The goal is not to raise prices on existing products, but to introduce new items at higher price points, in a bid to enhance the shopping experience and attract more customers.

In a press release accompanying the company’s second-quarter results released Wednesday (Sept. 4), Dreiling highlighted the early success of this initiative, noting that stores with the new format have experienced a substantial sales lift.

“We are encouraged by the continuous progress we are making in the transformation underway at Dollar Tree and Family Dollar,” he said. “This transformation is seen as a key component of the company’s strategy to adjust to changing consumer preferences and economic conditions. Customers are responding favorably to initiatives like our expanded multi-price offering and we are already seeing a meaningful sales lift at the 1,600 Dollar Tree stores that have been converted to our newest in-line multi-price format. With thousands of stores left to convert, we believe we are still in the very early innings of this rollout, with many years of runway left ahead of us.”

Consolidated second-quarter net sales inched up 0.7%, to $7.37 billion. Same-store sales grew slightly (1.3%) at Dollar Tree due to higher traffic, and decreased (0.1%) at Family Dollar despite increased traffic, reflecting a drop in average ticket.

Dollar Tree’s commitment to expanding its multi-price assortment includes plans to introduce more than 300 new items by the end of the year.

The expanded assortment is expected to boost store performance over time, with early results showing positive customer engagement and sales growth.

Dollar Tree Chief Operatiing Officer Michael Creedon acknowledged the challenges of this transformation but expressed confidence in its potential. “Transformations are rarely easy or linear,” Creedon said during the earnings call. “That is especially true for a company as large as ours. But we believe deeply in the positive impact we’re having in the areas we control.”

During the fourth quarter of fiscal 2023, company officials launched a comprehensive store portfolio optimization review, which involved identifying stores for closure, relocation or re-bannering based on an evaluation of current market conditions and individual store performance. They identified approximately 970 underperforming Family Dollar stores, including some 600 stores to be closed in the first half of fiscal 2024, and around 370 stores to be closed at the end of each store’s current lease term.

As of Aug. 3, 2024, 655 stores identified under the portfolio optimization review closed, with 45 more scheduled to close during the remainder of fiscal 2024. The company adjusted its full-year fiscal 2024 consolidated net sales outlook range to $30.6 billion to $30.9 billion. It expects to deliver comparable store net sales growth in the low single digits for the enterprise and both the Dollar Tree and Family Dollar segments.

“Clearly, we are not pleased with our second-quarter results or having to revise our full-year outlook,” Creedon said. “But this updated outlook reflects how the challenging macro environment continues to pressure our customers. We are strong believers in the inherent strength of Dollar Tree’s differentiated business model and its long-term strategy of multi-price expansion and store growth acceleration. Today, we need to be sensitive and responsive to the needs of our customers and meet them where they are and how they are living.”

Offering perspective on the multi-price strategy, Creedon said, “To give you a sense of how these stores are performing, costs for the 1,600 stores we’ve converted were up 4.6% in the second quarter versus less than 0.5% at our other formats.” In addition, “Our Q1 conversions who had the benefit of the new multi-price format and assortment for all of Q2 did a 5.1% comp. Importantly, these in-line stores showed strength across the assortment with a 6.7% consumables comp and a 2.6% discretionary comp. Considering the vast majority of our new discretionary multi-price items won’t be in these stores until later this year, we are very pleased with these early results.”

The post Dollar Tree Navigates Retail Transformation With Multi-Price Strategy appeared first on PYMNTS.com.