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Five Below Q2 earnings beat Street view; revenues miss

By Staff Correspondent |

Specialty apparel retailer Five Below (Nasdaq: FIVE) reported stronger than expected earnings for the second quarter, aided by positive comparable store sales. Revenues rose 20% but missed the forecast. The company’s stock fell sharply Wednesday evening, immediately after the announcement.

Five Below (FIVE) Q2 earning beat Street view; stock falls on revenue miss

At $417.4 million, net sales were up 20% year-over-year in the second quarter but below the market’s projection. The growth reflects a 1.4% increase in comparable-store sales.

The Bottom Line

Supported by the solid top-line performance, net profit advanced to $28.8 million or $0.51 per share during the three-month period from $25.1 million or $0.45 per share a year earlier. Earnings came in slightly above Wall Street’s expectations.

Also read: Guess? Stock jumps after Q2 earnings, revenue beat

Joel Anderson, CEO of Five Below, stated, “For the second quarter, we delivered total sales growth of 20% and EPS at the high-end of our guidance range. We saw broad-based strength across our worlds, despite a 1 slower start to summer, which impacted sales of our seasonal assortment. Our performance once again was driven by continued strong results from new stores.”

Outlook

For the third quarter, the company expects net sales to be in the range of $369 million to $374 million, based on opening of 55 new stores and assuming a 2% to 3% increase in comparable sales. Net income is forecast to be between $7.6 million or $0.14 per share and $9.8 million of $0.17 per share.

For fiscal 2019, sales are estimated to be in the $1.872-$1.892 billion range, assuming opening of 150 new stores and a 3% increase in comparable sales. Full-year net income is expected to be in the range of $173.4 million or $3.08 per share to $179.9 million or $3.19 per share.

Other Highlights

The company opened 44 new stores and ended the quarter with 833 stores, representing a 20.4% year-over-year increase. It also repurchased 146,185 shares for about $16.6 million.

Related: Five Below Q1 2019 Earnings Conference Call Transcript

Shares of Five Below had dropped about 20% after hitting a record high in April. The stock closed Wednesday’s regular session sharply higher.

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