Dive Brief:

• Credit Suisse analysts last week lowered Five Below’s rating to neutral from outperform, saying that the company’s stellar growth may bump into competition from Amazon and that its recent stock rise has its limits.

• The discount retailer "remains one of the most differentiated concepts in retail ... and operates the quickest new store return model we have seen," Credit Suisse analyst Judah Frommer wrote in a note to clients cited by CNBC. "That said, we see risk/reward as balanced at these levels given the stock's material outperformance.”

• Last month, Five Below reported that first quarter net sales rose 27.2% year over year as comparable sales rose 3.2%. Net income in the quarter rose 159.8% to $21.8 million, and operating income rose 93.3% to $24.7 million. 

Dive Insight:

Five Below has maintained a focus on brick-and-mortar retail as it painstakingly curates on-trend merchandise for discovery.

The discount chain opened 33 new stores in Q1, ending the quarter with 658 stores in 32 states, a footprint increase of 19% from a year ago. New store productivity was about 124%, CEO Joel Anderson told analysts in a conference call, according to a transcript from Seeking Alpha. Adjusted for the timing of openings during the quarter and the calendar shift, new store productivity would still be north of 100%, he added.

Five Below expects to end the year with some 750 stores, Anderson said. The company's total capital expenditure for this year is $137 million, which will be used to build new stores, remodel about 10 and build distribution centers.

Five Below benefited mightily from the fidget spinner craze of last year, and that could pressure results in the second quarter and beyond, executives also said. But the company isn't too worried because it's been focused on making new, permanent customers out of those who came in for the doodads. That's predicated on a merchandising mix that includes plenty of items that customers "just have to have," Anderson said.

Though the retailer has largely treated e-commerce as an afterthought, it has also launched its first-ever direct-to-retail and has been introduced to several new vendors as Toys R Us winds down, he also said.