Key Takeaways
- Five Below missed quarterly earnings and revenue estimates and cut its outlook as inflation led its lower-income customers to pull back on spending.
- The discount retailer’s comparable store sales declined 2.3% year-over-year.
- Five Below now anticipates full-year comparable store sales will be down 3% to 5%.
Shares of Five Below (FIVE) plunged Thursday, a day after the discount retailer posted worse-than-expected quarterly results and lowered its guidance as inflation hurt its low-income customers.
The store chain reported first-quarter fiscal 2024 adjusted earnings per share (EPS) of $0.60, with net sales rising 11.8% to $811.9 million. Both were shy of estimates.
Comparable store sales declined 2.3% from the first quarter of fiscal 2023, while operating income slumped 14.6% to $36.2 million. The company noted that excluding expenses for employment-related litigation, the figure would have been $38.2 million, although still below 2023 levels.
Five Below CEO Says Shoppers ‘Far More Deliberate’ With Spending
Chief Executive Officer (CEO) Joel Anderson explained that while Five Below saw positive comparable sales from its higher-income shoppers, “the macro environment disproportionately impacted our core lower income customers.” Anderson added that the results confirmed that “consumers are feeling the impact of multiple years of inflation across many key categories such as food, fuel, and rent and are, therefore, far more deliberate with their discretionary dollars.”
The company now sees full-year revenue in a range of $3.79 billion to $3.87 billion, down from the previous forecast of $3.97 billion to $4.07 billion. It anticipates comparable store sales to drop 3% to 5%, down from its prior estimate of flat to a 3% increase.
Five Below shares sank 12.9% by 10 a.m. ET Thursday to $115.68. They are down about 45% in 2024.