By Senad Karaahmetovic
Shares of Five Below (NASDAQ:FIVE) are down more than 7% in premarket trading Thursday after the company slashed its full-year EPS guidance.
FIVE reported a Q1 EPS of 59c, compared to 88c in the year-ago period and in line with the consensus estimates. Net sales stood at $639.6 million in the period, up 7% YoY and missing the analyst consensus.
For Q2, FIVE expects EPS in the range of 74c to 86c, missing the consensus projection of $1.20. The company expects Q2 net sales in the range of $675 million to $695 million, while analysts were looking for $730.5 million. The company also expects to add more than 30 net new stores in Q2.
On a full-year basis, Five Below expects EPS in the range of $4.85 to $5.24, down from $5.19 to $5.70, and compared to the analyst expectations of $5.47 per share.
FY 2023 net sales are expected to range between $3.04 billion and $3.12 billion, down from $3.16 billion to $3.26 billion, and compared to the consensus estimates of $3.21 billion.
Despite the guidance cut, BofA analyst Jason Haas still believes the offered outlook is “optimistic”.
Although we remain bullish on FIVE’s long-term growth potential, we increasingly think that the company may need to cut FY22 guidance again,” Haas said in a client note.
The analyst slashed the price target to $200.00 per share from $250.00 to reflect FY22 weakness. Still, he remains bullish on FIVE “as we believe in FIVE’s long-term growth potential after a “reset year” in FY22.”
Citi analyst Paul Lejuez also slashed the price target as he goes to $187.00 from $205.00 but sounds more positive than Haas on the outlook front.
“We believe these are near-term bumps but there is nothing that changes the growth runway (one of the best in retail) that is the key reason we like this stock. Though FIVE has yet to see the benefit of consumers trading down, we believe they will as more consumers seek value,” Lejuez told clients in a note.