Five Below’s (NASDAQ:FIVE) third-quarter results exceeded analysts’ estimates and the company’s own guidance despite a tough retail landscape. Additionally, the discount retailer, which sells most of its merchandise between $1 and $5, raised its full-year outlook. Shares were up 9% in Thursday’s pre-market trading.
Five Below’s Q3 FY22 (ended October 29, 2022) sales increased 6.2% to $645 million, topping analysts’ expectation of $614.1 million. Comparable sales declined 2.7% but came ahead of the company’s guidance of a decline in the range of 7% to 9%. Q3 earnings per share (EPS) fell 32.6% to $0.29. Nonetheless, the company surpassed the Street’s EPS estimate of $0.15. Five Below attributed its Q3 performance to improved ticket and transaction metrics and disciplined expense management.
During the Q3 earnings call, CEO Joel Anderson stated that the company is “pleased with the start to the fourth quarter, including Black Friday weekend results.” The retailer expects holiday quarter sales in the range of $1.085 billion to $1.110 billion (comparable sales growth of -1% to 1%) and EPS of $2.93 to $3.09.
Five Below expects full-year sales of $3.038 billion to $3.063 billion and EPS to be between $4.55 and $4.71. It had earlier guided sales of $2.97 billion to $3.02 billion and EPS of $4.26 to $4.56. The improved outlook came ahead of analysts’ expectations of EPS of $4.41 on sales of $3 billion.
Five Below continues to expand its store base, with the planned opening of 150 new stores in the current fiscal year. In Q3 FY22, the retailer opened 40 new stores, ending the quarter with 1,292 stores.
What is the Target Price for Five Below?
Five Below scores the Street’s Strong Buy consensus rating based on 11 unanimous Buys. The average FIVE stock price target of $176.18 implies 9.5% upside potential. Shares have declined 22.6% year-to-date.
