In the previous earnings report, Five Below issued guidance for this quarter. The company expected net sales to be in the range of $182 million to $185 million and GAAP EPS to be $0.12 to $0.13.
This is a dollar store for teenagers and other small people. Younger people tend to not have any money anyway, and teenagers have high unemployment regardless of the economy. Everything in Five Below’s stores is, strangely, $5 or below. A recession would have to be so bad that teenagers and preteens lose their meager allowance for it to really affect the company.
Plus, much of Five Below’s business has to do with school supplies, and the public school system will not collapse in the next recession. We have no gauge of how Five Below performed in previous recessions, but its business model and clientele suggests it will pull through just fine.
A few analysts weighed in on the retailer prior to its earnings being released:
- Deutsche Bank reiterated a Buy rating with a $44 price target.
- Jefferies reiterated a Buy rating with a $48 price target.
- RBC Capital initiated coverage with an Outperform rating and a $48 price target.
So far in 2015, Five Below has underperformed the broad markets. Shares are down 8.2% year to date and 7.7% in the past 52 weeks.
Shares of Five Below closed Tuesday down 3.1%, at $37.47 in its 52-week trading range of $28.51 to $47.89. The stock has a consensus analyst price target of $43.60.
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