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Five Below stock rises on earnings beat, optimistic holiday sales forecast

Five Below (NASDAQ:FIVE) stock rode to a strong gain in Wednesday’s extended trading session after exceeding earnings expectations and raising full-year guidance.

For the third quarter, $0.29 in GAAP earnings per share nearly doubled the expectation among analysts while $645.03M in revenue exceeded estimates by $30.95M. Comparable sales decreased by 2.7% versus the third quarter of fiscal 2021. However, that figure was well above the 5.9% decline anticipated by analysts.

“We delivered third quarter results that were better than our guidance in spite of the difficult macro environment and challenging year-over-year comparison,” CEO Joel Anderson said. “Our performance was driven by ticket and transaction metrics that improved throughout the quarter, disciplined expense management and continued focus on our long-term Triple Double vision.”

He added that the Philadelphia-based discount chain continued to expand store locations into two new states during the quarter with designs on growing further. A total of 40 new stores were opened in the quarter with 250 stores set to be updated to a new store model as well.

“We are continuing to play offense, and the progress we made across product, experience and supply chain will all drive our holiday execution,” Anderson said. “With the completion of our five-node distribution network, we are set up to deliver products to our growing store base even more efficiently.”

Into the holiday sales period, management remains optimistic, raising forecasts into the critical shopping season.

The company anticipates net sales in the holiday season to range from $1.09B to $1.11B as compared to a consensus estimate of $1.08B. As such, full-year sales forecasts were hiked to $3.04B to $3.06B from a prior $2.97B to $3.02B guide and above the $3B Wall Street consensus. Meanwhile, full-year diluted income per common share is expected to be in the range of $2.93 to $3.09, suggesting upside to the consensus of $2.94.

Shares of Five Below rose 8.48% shortly after the earnings results were released.