Five Below Sales Go Under in the Fourth Quarter

Retail

Published: January 9, 2015 11:10 am

Five Below Inc. (NASDAQ: FIVE) announced increased sales from last year, but the total was less than previously guided for the nine weeks ended January 3. Overall, sales for the fourth quarter were considered soft at best.

The company said that net sales in this period increased by 24.5% from the same period in the previous year, from $185.3 million to $230.7 million.

Comparable store sales for the period increased by 3.2% from the previous year, and the gain is attributable to the increase in the average ticket.

Net sales for the fourth quarter are expected to be in the range of $262 million to $263 million. This is taking into account the 3% increase in comparable store sales. Thomson Reuters has consensus estimates for the fourth quarter of $265.75 million in revenue.

The company said net income is expected to be in the range of $32.5 million to $33.0 million, while earnings per share are expected in a range of $0.59 to $0.60.

Thomas Vellios, co-founder and CEO, commented on the soft sales:

We saw softness in the business post-Black Friday that continued into early December. Our sales accelerated closer to Christmas and into the post-holiday period, resulting in a comp store sales performance for the nine weeks of +3.2%. Additionally, we continue to see strong performance from our new stores and now expect to deliver total net sales growth for fiscal 2014 of 27% and adjusted net income growth of approximately 30%. We look forward to discussing fiscal 2014 and our outlook for fiscal 2015 on our fourth quarter earnings call in March.

ALSO READ: December Retail Sales Gains Signal Good Holiday Quarter

At the same time, the company announced that Michael Romanko would assume the role of Executive Vice President of Merchandising, where he will be responsible for overseeing all aspects of the merchandising strategy. Could this be a reaction to the soft sales?

Shares of Five Below were down over 16% at $36.55, following the announcement of softer sales. The stock has a consensus analyst price target of $46.79, which implies upside of 28.1%. The 52-week trading range is $33.94 to $47.89, and the market cap is near $2 billion.

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