Five Below shares sink on forecasts, as retailer leans into higher-priced goods

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Shares of Five Below Inc. fell in after-hours trading Wednesday, after the teen-centric discount retailer offered up a full-year forecast that disappointed Wall Street.

Five Below

said it expected full-year sales of $3.49 billion to $3.59 billion, with the midpoint below FactSet forecasts for $3.58 billion. Executives said they expected the company to earn between $5.25 and $5.76 a share; the midpoint of that forecast was also below FactSet estimates for $5.65 a share.

Five Below forecast full-year same-store sales growth of 1% to 4%, compared with Wall Street’s estimates for a 2.8% gain.

For the first quarter, Five Below said it expected sales of $723 million to $735 million and a same-store sales increase of 2.5% to 4%. The same-store sales forecast was above expectations for 2.4%, but the midpoint of the sales forecast was below FactSet’s forecast for $731 million. Five Below’s per-share profit forecast, of between 59 cents to 65 cents, was below estimates for 69 cents.

Shares fell 3.7% after hours.

Five Below sells toys, home decor, stuffed figurines and some tech items — generally priced below $5. However, the company has rolled out merchandise that sells for above that price. The company reported earnings as other retailers cut prices on toys, following stronger enthusiasm for them when pandemic restrictions still existed, and as Hasbro Inc.

has laid off employees.

Chief Executive Joel Anderson, in a statement, said that the chain’s inventories were in good shape. And he said the company planned to open 200 new stores during the company’s fiscal year, and convert 400 stores to its new Five Beyond format, which sells items priced above $5. He also said that the chain would roll out new categories in the year ahead.

For the fourth quarter, Five Below reported net income of $171.3 million, or $3.07 a share, compared with $140.2 million, or $2.49 a share, in the fourth quarter of the company’s fiscal 2021. Revenue rose 12.7% to $1.12 billion, compared with $996.3 million in the prior-year quarter. Same-store sales rose 1.9%.

Analysts polled by FactSet expected earnings of $3.06 a share, on revenue of $1.11 billion and same-store sales growth of 0.9%.

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