Why Five Below Is One of Thursday's Big Earnings Winners

Retail

Published: June 7, 2018 9:05 am

Last Updated: January 11, 2020 10:40 pm

When Five Below Inc. (NASDAQ: FIVE) released its fiscal first-quarter financial results late Wednesday, the retailer said that it had $0.35 in earnings per share (EPS) and $296.3 million in revenue. The consensus estimates had called for $0.32 in EPS on revenue of $291.8 million. The same period of last year reportedly had EPS of $0.15 and $232.9 million in revenue

During the quarter, net sales increased by 27.2% year over year. In the same time, comparable sales increased 3.2%.

Looking ahead to the fiscal second quarter, the company expects to see EPS in the range of $0.36 to $0.38 and revenues between $332 million and $335 million. The consensus estimates call for $0.34 in EPS and $327.5 million in revenue.

Five Below also opened 33 new stores and ended the quarter with 658 stores in 32 states. This represents an increase in stores of 19.0% from the end of the first quarter of fiscal 2017.

Joel Anderson, president and CEO, commented:

We are very pleased with the strong start to fiscal 2018, as we delivered both sales and earnings above our guidance ranges for the first quarter. Continued outperformance from our new stores and healthy comparable sales were accompanied by strong gross margin performance, SG&A leverage and tax rate favorability, resulting in EPS that more than doubled versus last year.

Anderson added:

Our consistent performance continues to reinforce our confidence in the 2,500 plus nationwide store opportunity we see for Five Below. We are making disciplined investments to support that future growth and are excited to announce our plans to build a new distribution center just south of Atlanta, which will provide us with capacity and flexibility as we continue to grow in the Southeast.

Shares of Five Below closed Wednesday at $81.28, with a consensus analyst price target of $82.06 and a 52-week range of $44.30 to $81.77. Following the announcement, the stock was up about 16% at $94.50 in early trading indications Thursday.

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