Five Below stocks slump on weak outlook

Shares of Five Below Inc. plummeted in Thursday’s pre-market trading after delivering a weaker than expected outlook amid the challenging macroeconomic headwinds.

The American specialty discount store plunged 8.25% or 11.17 points to $124.20 per share. The move completely reversed its prior upturn of 0.98% or 1.32 points to $135.37 per share. In addition, the downturn slashed $620.07 billion million from its stock valuation.

Accordingly, Five Below lowered its current guidance. For the full 2022-year, Five Below projects EPS between $4.85 to $5.24 per share. The prospect is below the expected $5.47.

Then, revenue guidance is within the range of $3.04 to 3.12 billion, missing the $3.20 billion anticipated. The outlook is also down from the March estimate of $3.16 billion to $3.26 billion in sales.

Nevertheless, the firm still predicts to open 160 stores during the period. Meanwhile, it sees comparable sales to remain flat or fall as much as 2.00%.

Moreover, Five Below now expects second-quarter earnings in the range of $0.74 to $0.86 per share. Eventually, the numbers are below the consensus of $1.20.

The off-price retailer also anticipated its revenue from $675.00 to 695.00 million. This figure came in lower than the market estimate of $729.50 million.

Five Below’s first-quarter earnings

The downbeat outlook came after Five Below reported narrow misses on top and bottom lines for the first quarter. Remarkably, the firm cited a 3.60% decline in comparable sales coming as a particular disappointment.

Subsequently, its net income sharply dropped to $32.70 million from the $49.60 million a year earlier.

Five Below’s revenue slightly jumped 7.00% to $639.60 million, missing estimates for $653.00 million. Meanwhile, the retailer earned $0.59 per share, above an outlook of $0.58. Regardless, same-store sales skidded 3.60%, worse than the 1.30% expected drop.

The business’s performance reflected the weighing impact of the rising costs, triggering consumer anxiety.