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Five Below stock drops pre-market due to lower-than-expected earnings and reduced forecasts.

TraderKnows
TraderKnows
06-07

Five Below recently announced its first-quarter results, which fell short of expectations. The disappointing performance, coupled with a pessimistic outlook, caused the company's stock price to plummet.

In pre-market trading on Thursday, Five Below's stock dropped significantly after the company reported first-quarter earnings below expectations and lowered its profit guidance for fiscal year 2024.

The discount store chain reported first-quarter earnings per share (EPS) of $0.60, which fell short of analysts' expectations of $0.63. Quarterly revenue was $811.9 million, also below the forecasted $835.01 million.

Comparable sales decreased by 2.3%, whereas analysts had anticipated a growth of 1.42%.

The stock plummeted more than 16% in pre-market trading.

Five Below expects second-quarter EPS for 2024 to range between $0.57 and $0.69, significantly below the forecasted $0.99. Revenue is projected to be between $830 million and $850 million, also lower than the expected $883 million.

For fiscal year 2024, Five Below anticipates EPS to range from $5.00 to $5.40, down from the previous estimate of $5.71 to $6.22, and below analysts' expectations of $6.00. Revenue for 2024 is expected to be between $3.79 billion and $3.87 billion, lower than the previous forecast of $3.97 billion to $4.07 billion. Analysts had predicted $4.03 billion.

Capital expenditures for fiscal year 2024 are expected to be approximately $345 million to $355 million.

In an earnings report, Goldman Sachs analysts stated: “Based on FIVE’s soft same-store sales, we believe the pressure on low-income consumers may be greater than we initially anticipated.”

“However, despite short-term headwinds, we maintain a buy rating as FIVE’s long-term growth prospects remain intact. If recent pricing and marketing tests prove successful, there could be potential upside in demand in the latter half of the year,” they added.

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