Gordon Haskett downgraded Five Below to Hold from Accumulate with an $85 price target. The company last week “surprisingly pre-announced disappointing” Q2 to-date sales in conjunction with the resignation of long-time CEO Joel Anderson, the analyst tells investors in a research note. The firm says Five Below’s revised Q2 guidance suggests the comp decline will accelerate in July to down 10%, despite lapping a similar year-over-year compare throughout the quarter. Gordon Haskett is now more convinced that Five Below’s move to higher price points above the company’s historical $5 “sweet spot a few years ago may have been a mistake.” It says going back to price points $5 and below “might be the answer.” In addition, the backdrop for discretionary spending may get worse before it gets better with a shorter selling season this holiday season “only complicating matters,” contends the firm.
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