Five Below Sinks Despite Earnings Beat

Five Below Inc. (NASDAQ: FIVE) released its fiscal fourth-quarter earnings report after the markets closed on Tuesday. The company said it had $0.77 in earnings per share (EPS) on $326.4 million in revenue. That compared to Thomson Reuters consensus estimates of $0.76 in EPS on $323.74 million in revenue. The same period from last year had $0.61 in EPS on $263.76 million in revenue.

During the quarter, comparable store sales increased by 3.6%. Also the company opened three net new stores and ended the quarter with 437 stores in 27 states, representing an increase of 19% from the end of the same period from 2014.

In terms of the outlook for the fiscal first quarter, Five Below expects EPS in the range of $0.09 to $0.10 and net sales in the range of $186 million to $189 million. There are consensus estimates that call for $0.10 in EPS on $188.47 million in revenue for the first quarter.
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On the books, the cash, cash equivalents and short-term investments totaled $99.4 million, compared to $63.2 million at the end of the previous fiscal year.

Joel Anderson, CEO of Five Below, commented:

Our successful fourth quarter and full year 2015, particularly the all-important holiday season, was the result of strong execution against the key initiatives we prioritized in 2015.  These included continuing to deliver a fresh and compelling merchandise assortment, developing exciting marketing campaigns, successfully opening a new East Coast distribution center and most importantly, building on our strong track record of opening highly productive new stores that generate a less than one year payback on our investment.

Anderson concluded:

For 2016, we plan to build upon our success while continuing to be focused on our strategic priorities of new stores, merchandising, marketing, and systems and infrastructure. As we look further ahead at the future for Five Below, we believe we will deliver against our average annual goal of 20% top-line growth, along with greater than 20% bottom-line growth through 2020.

Shares of Five Below closed Tuesday at $38.89, with a consensus analyst price target of $41.64 and a 52-week trading range of $26.95 to $41.47. Following the release of the earnings report, the stock was initially down 3% at $37.70 in the after-hours trading session.