Five Below Gains Despite ‘Soft’ Results, Analyst Says Outlook ‘Was No Worse Than Feared’
2022.09.01 13:58
Five Below Gains Despite ‘Soft’ Results, Analyst Says Outlook ‘Was No Worse Than Feared’
By Senad Karaahmetovic
Shares of Five Below (NASDAQ:FIVE) are up over 3% despite disappointing Q2 results.
FIVE reported a Q2 EPS of $0.74 to miss the analyst estimate of $0.79. Revenue for the quarter came in at $668.9 million, again lower than the consensus estimate of $682.26 million.
“We delivered earnings per share within our guidance range despite lower than expected sales, which we believe were largely driven by the impact of accelerated inflation on our customers’ purchasing behavior during the quarter,” Joel Anderson, president and CEO of Five Below, said.
For this quarter, Five Below sees EPS in the range of $0.08 to $0.19, much worse than the consensus of $0.29. Revenue is seen between $600 million and $619 million while the Street consensus was $636.5 million.
As far as the full-year outlook is concerned, FIVE has guided to $4.26-$4.56 in EPS on revenue of $2.97 billion to $3.02 billion. This compares to the analyst estimate of $4.83 EPS on sales of $3.07 billion.
In Q2, comparable sales fell +5.8%, worse than the analyst estimate of -4.7%. For this quarter, the midpoint of the provided guidance is calling for falling comparable sales of -7% to -9%, and -3% to 5% on a full-year basis.
A Deutsche Bank analyst noted updated full-year outlook “was no worse than feared.”
“We think this is key for the company’s 2023 EPS story, as the bull case is supported by 1) good visibility into high-teens unit growth; and 2) a structurally lower operating expense structure,” she said in a client note.
A KeyBanc analyst cut the price target to $172.00 from $190.00 to reflect “soft” results.
“We believe most investors were bracing for these challenges and believe 3Q should represent the low point for comps for FIVE. As such, while we are disappointed in the lowered outlook, and still see some risk to holiday, we remain positive on the LT story, new product price points, and the Triple-Double strategy. As such, we remain Overweight,” he wrote in a client note.
