Five Below stock climbs on rosy outlook

Five Below (FIVE) reported a 49% jump in earnings for the second quarter helped by new stores performance, healthy comparable sales, strong gross margin performance, and favorable tax rate. The high-growth value retailer’s stock rose more than 8% in the aftermarket as its earnings and revenue exceeded market expectations. Also, the company guided third quarter above Street’s view and raised its fiscal 2018 guidance.

With revenue climbing by 22.7% to $347.7 million, the company’s earnings soared 49.1% to $25.1 million or $0.45 per share. EPS included a $0.03 benefit in the latest quarter due to the accounting of employee share-based payments. Comparable sales increased by 2.7%.

The company opened 34 new stores and ended the second quarter with 692 stores in 33 states. This represents an increase in stores of 18.5% from the end of the previous year quarter.

Looking ahead into the third quarter, Five Below expects net sales of $301 million to $304 million and EPS of $0.17 to $0.19. The sales outlook is based on the opening of about 50 new stores and assuming a 3% to 4% increase in comparable sales. Net income is predicted to be $9.7 million to $10.7 million.

For the fiscal year 2018, Five Below lifted its net sales outlook to a range of $1.528 billion to $1.540 billion from the range of $1.502 billion to $1.517 billion, and its EPS guidance to the $2.51 to $2.57 range from the prior estimate of $2.42 to $2.48. The sales forecast is based on the opening of about 125 new stores and assuming a 2.5% to 3% rise in comparable sales.

Shares of Five Below ended Thursday’s regular trading session up 0.65% at $115.51 on the Nasdaq. The stock had surged 74% so far this year and a whopping 136% in the past one year.