Five Below's (FIVE) outsized comps in Q3 were driven by better execution, merchandising, store changes, and growth across most segments, UBS said in a Wednesday research report.
The company is likely benefiting from solid product trends in segments such as collectibles, beauty, and licensed products, among others, according to the note.
Drivers like revamped merchandising, store opening approach, more impactful marketing initiatives focusing on digital and social, and product trends are supporting the company's momentum, analysts wrote.
Ticket growth was supported by average unit retail growth, pricing simplification, and positive response to Five Beyond items, the brokerage stated.
Gross margin improvement in Q3 could be attributed to fixed cost leverage and better shrink results, partially offset by the net impact of tariffs, according to UBS.
The brokerage said it reiterated its buy rating on the stock and raised its price target to $210 per share from $204.
Price: 166.10, Change: +2.95, Percent Change: +1.81
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