Five Below shares fall sharply on Q1 results miss, lowered 2024 outlook

Shares in Five Below (NASDAQ: FIVE) fell sharply in Thursday’s premarket trading after the company reported worse-than-expected results for Q1 and lowered its fiscal 2024 earnings guidance.

The discount store chain reported Q1 earnings per share (EPS) of $0.60, missing the analyst consensus of $0.63. Revenue for the quarter stood at $811.9 million, also below the consensus projection of $835.01 million.

Comparable sales declined by 2.3%, more than the 1.42% increase expected by analysts.

The stock plunged more than 16% in the premarket.

For Q2 2024, Five Below expects EPS of $0.57-$0.69, significantly lower than the consensus estimate of $0.99. Revenue is anticipated to be between $830 million and $850 million, also well below analyst expectations of $883 million.

For FY2024, Five Below forecasts EPS of $5.00-$5.40, down from the previous range of $5.71 to $6.22, and short of the consensus estimate of $6.00. Five Below expects 2024 revenue to land between $3.79 billion and $3.87 billion, down from the earlier forecast of $3.97 billion to $4.07 billion. Analysts were expecting $4.03 billion.

Gross capital expenditures for fiscal 2024 are expected to be approximately $345 million to $355 million.

“Based on FIVE’s comp weakness, we do think the lower-income consumer is likely under more pressure than we originally thought,” Goldman Sachs analysts said in a post-earnings note.

“However, we remain Buy rated despite the near-term headwinds as FIVE’s long-term growth story remains intact, and there could be upside to 2H24 expectations due to improved shrink from recent mitigation efforts, more needs-based buying occasions vs. 1H, and improved demand if recent pricing and marketing tests prove successful,” they added.

Analysts added that FIVE’s valuation “remains compelling” after the recent sell-off.

By Vahid Karaahmetovic

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