Teen- and tween-centric discount retailer Five Below Inc. on Wednesday grew more pessimistic on its full-year sales outlook and said it would pull back on opening new stores in the months ahead, as it deals with dimming shopper enthusiasm and tries to shore up its existing stores.
However, sales trends for the second quarter and its profit outlook for the third quarter were better than expected. And even as Five Below $(FIVE.UK)$ expressed disappointment in its performance, shares moved 6% higher after hours.
"Our second-quarter results fell short of what we know this business is capable of delivering," Ken Bull, Five Below's interim chief executive, said in a statement.
"Our response to the macro pressures of the last few years and the evolving consumer environment has required even greater execution, compelling and differentiated assortments and focus on the customer," he continued.
For the second quarter, Five Below said revenue rose 9.4% year over year to $830.1 million, above FactSet forecasts for $822 million. Same-store sales fell 5.7%, a bit better than the 6.6% drop that had been forecast by analysts.
The company reported adjusted earnings per share of 54 cents. That was in line with FactSet forecasts.
Like other retailers, the company, which sells toys, decor and tech gear - much of it priced under $5 - has faced a more cautious consumer dealing with higher prices for basics. Lower-income shoppers have been hit harder. And the benefit of big toy trends from last year isn't there this year.
"We are refocused on delivering an edited assortment that leads with value and newness to wow our core pre-teen and teen customer, maximizing each of our worlds and offering a fun store experience that reflects our brand," Bull said in the company's earnings release.
"We remain confident in our long-term store growth opportunity, however we are moderating store growth to 150 to 180 stores in 2025," he continued.
For the third quarter, Five Below said it expected revenue of $780 million to $800 million, with the midpoint just below analysts' expectations. It forecast adjusted earnings per share of 10 cents to 22 cents, with the midpoint of that range above Wall Street's estimates.
The company said it expects full fiscal-year revenue of $3.73 billion to $3.8 billion and a roughly 4% to 5.5% decline in same-store sales. That compared to a forecast in June for $3.79 billion to $3.87 billion in revenue and a same-store sales drop of 3% to 5%.
Five Below said it expects full-year adjusted earnings per share of $4.35 to $4.71. That's down from expectations in June for $5.00 to $5.40.
