Five Below Stock Rises After Earnings and Sales Beats

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A Five Bottoms Inc. in Bloomington, Illinois. Vehicles parked outside the store

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Daniel Acker/Businesshala

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Five Bottom was rising on Thursday as the discount retailer overcame supply-chain challenges and reported third-quarter earnings and sales that topped Wall Street estimates.

The stock rose 2.7% to $194.32. The stock fell 7% on Wednesday.

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Adjusted earnings at Five Bottom (ticker: Five) were 43 cents per share, well above estimates of 29 cents. Net sales in the quarter were $607.6 million versus $477 million in the year-ago quarter and beat analysts’ forecast of $563.9 million.

“We delivered record-setting third quarter performance over a record third quarter last year,” said Five Bottom President and Chief Executive Joel Anderson. “These results reflect unprecedented performance by our teams in challenging supply-chain environments.”

“In a world with a significant supply-chain disruption, FIVE is proving it can best manage through this volatility,” said Jefferies analyst Randall Konick. He said how gross margin was 180 basis points above consensus.

KONIK has a Buy rating on the stock with a price target of $300.

“Strong Q4 on sales and gross margin confirms inventory and freight fears,” said Morgan Stanley analyst Simeon Gutman, who reiterated an overweight rating on the stock and a $230 price target.

Gutmann said Wednesday’s pullback was related to growing fears in the stock market about the Omicron version of the coronavirus. The analyst is overall positive on the stock.

Only one analyst tracked by FactSet rated the stock as sell, while 15 gave it buy and seven hold ratings. The average price target is $234.90.

The company opened 52 new stores and entered its 40th state of New Mexico in the latest quarter.

“With an additional 17 new stores opening in the fourth quarter, we have completed our 171 new openings for the year,” said CEO Joel Anderson.

The retailer’s fourth-quarter guidance calls for net sales of $985 million to $1 billion, assuming 2% to 4% growth in comparable sales.

For the full year, Five Bottom’s net sales are expected to be between $2.84 billion million and $2.86 billion, assuming comparable-store sales growth of 30%.

“We view the comp guide as a potential holiday pull-forward and a tough January in comparison to prudent uncertainty,” Gutman said.

Write to Karishma Vanjani at [email protected]

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