Key Points
- Five Below shares surged 13.84% at pre-market trading, and the company reported Q3 adjusted earnings per share of $0.42, beating estimates of $0.17.
- Revenue rose 14.6% YoY to $843.7 million, surpassing forecasts. The company opened 82 new stores, increasing its total locations to 1,749.
- Full-year guidance was raised, with earnings per share projected at $4.78-$4.96 and revenue at $3.84-$3.87 billion.
- Analysts offered mixed responses, with Morgan Stanley optimistic and Bank of America cautious.
Shares of Five Below Inc. (NASDAQ:FIVE) surged 13.84% or 14.53 to $119.50 at pre-market trading after the discount retailer posted better-than-expected third-quarter results and raised its full-year outlook. The company also announced the appointment of Winnie Park as its new Chief Executive Officer, effective December 16, 2024, marking a significant leadership transition for the growing retailer.
For the third quarter, Five Below reported adjusted earnings per share of $0.42, far exceeding analyst expectations of $0.17. Revenue increased by 14.6% year-over-year to $843.7 million, surpassing the $796 million consensus forecast. Comparable sales rose modestly by 0.6% during the quarter, reflecting improved performance across a broader range of merchandise categories compared to the prior quarter. Interim CEO and COO Ken Bull highlighted stronger operational execution as a key driver behind the results, expressing optimism about the company’s performance.
The company opened 82 new stores during the quarter, ending the period with 1,749 locations across 44 states, an 18.1% increase in store count compared to the same quarter of last year. This expansion aligns with Five Below’s strategic growth plan, which aims to capture more of the discount retail market.
Following the robust Q3 results, Five Below raised its full-year guidance, projecting adjusted earnings per share (EPS) of $4.78 to $4.96 on revenue of $3.84 billion to $3.87 billion. These figures exceed Wall Street’s estimates of $4.61 EPS and $3.8 billion in revenue, signaling strong confidence in the company’s trajectory. For the fourth quarter, the company anticipates revenue of $1.35 billion to $1.38 billion and adjusted EPS of $3.23 to $3.41, despite an expected 3-5% decrease in comparable sales.
Morgan Stanley analysts responded positively to the results, noting a significant acceleration in Q3 comparable sales and raising their price target for the stock from $100 to $120. They emphasized that Five Below’s historically high valuation offers considerable upside if positive trends persist.
However, Bank of America analysts expressed caution, maintaining an Underperform rating due to concerns about the sustainability of comparable sales growth and potential risks to profit margins from further deleveraging and tariffs. Despite these reservations, Bank of America slightly increased its price target for the stock from $75 to $80.
