Are Five Below Holiday Sales Signaling a New Trend in Retail?

Five Below Inc. (NASDAQ: FIVE) shares were crushed on Monday after the company announced net sales results for its holiday period. This continues the trend of retailers being outfoxed by e-commerce, with more consumers making their holiday purchases online and Amazon specifically.

Five Below joins the list of retailers that posted underwhelming holiday sales. Some of the big names on this list include Urban Outfitters, JC Penney, Kohl’s, Bed Bath & Beyond and Macy’s.

As for this retailer, holiday net sales increased 13.4% year over year to $596.6 million from $526.1 million for the nine-week period of November 3, 2019, through January 4, 2020. Comparable sales for the holiday period decreased by 2.6%.

Based on this quarter-to-date performance, management updated its guidance for the fourth quarter and fiscal year. Five Below expects to see net sales in the range of $685 million to $577 million, with comparable sales decreasing in the range of 2.0% to 2.5%. Earnings per share (EPS) are expected to be in the range of $1.93 to $1.96. Consensus estimates are calling for $2.02 in EPS and $728.79 million in revenue for the fourth quarter.

Joel Anderson, president and CEO of Five Below, commented:

While our comparable sales during key holiday selling periods were positive, they were not strong enough to overcome the headwind of six fewer shopping days between Thanksgiving and Christmas, and overall sales did not meet our expectations. Despite the sales shortfall, strong inventory management and disciplined cost control has us on track to end the quarter with gross margin in line with our expectations and to deliver earnings per share near the low end of our previous guidance range.

Shares of Five Below were last seen down over 13% at $104.82, in a 52-week range of $95.52 to $148.22. The consensus price target is $142.11.