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Five Below Faces Share Price Plunge on Q1 Results Miss and Lowered 2024 Outlook

In Thursday’s premarket trading, shares of Five Below (NASDAQ) experienced a sharp decline after the company reported disappointing results for Q1 and revised down its fiscal 2024 earnings outlook.

The discount store chain disclosed Q1 earnings per share (EPS) of $0.60, falling short of the analyst consensus of $0.63. Revenue for the quarter totaled $811.9 million, also missing the consensus projection of $835.01 million.

Comparable sales saw a decline of 2.3%, surpassing the anticipated increase of 1.42% expected by analysts.

The stock plummeted by more than 16% in premarket trading.

For Q2 2024, Five Below anticipates EPS to range between $0.57 and $0.69, notably lower than the consensus estimate of $0.99. Revenue is forecasted to fall between $830 million and $850 million, significantly lower than analyst expectations of $883 million.

Looking ahead to FY2024, Five Below has adjusted its EPS projection to be between $5.00 and $5.40, down from the previous range of $5.71 to $6.22, and below the consensus estimate of $6.00. The company also expects revenue for 2024 to range from $3.79 billion to $3.87 billion, down from the earlier forecast of $3.97 billion to $4.07 billion. Analysts had anticipated revenue of $4.03 billion.

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

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

The analysts further noted that FIVE’s valuation “remains compelling” following the recent sell-off.

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