Five Below Profit Up, But Sales Misses; Stock Down - Update

(RTTNews) - Specialty retailer Five Below Inc. (FIVE) Thursday reported a higher third-quarter profit, helped by double-digit sales growth. While quarterly earnings matched Wall Street estimates, sales missed expectations.

The company provided weak guidance for the crucial fourth quarter, but again raised its expectations for the full year 2013.

Investors were none too impressed with the announcement and Five Below shares tumbled 14 percent in after-hours trade on the Nasdaq.

Five Below targets operates as a discount retailer, offering teens and pre-teen shoppers, products from headphones to fashion accessories to candy, all priced at $5 or below.

The Philadelphia, Pennsylvania-based company posted quarterly net income to common shareholders of $1.7 million or $0.03 per share, compared with $0.7 million or $0.01 per share last year.

Excluding items, adjusted earnings for the quarter were $2.6 million or $0.05 per share, compared with $1.6 million or $0.03 per share in the prior year.

On average, 14 analysts polled by Thomson Reuters expected earnings of $0.05 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the quarter grew 28 percent to $110.8 million from $86.6 million a year ago. Analysts estimated sales of $112 million.

On a same-store basis, sales for the quarter were up 9 percent.

Selling and other expenses for the quarter were higher at $31 million, compared with $25 million a year ago.

The company opened 28 net new stores and ended the quarter with 304 stores.

For the fourth quarter, Five Below expects net earnings of $0.48 to $0.50 per share, adjusted earnings of $0.49 to $0.51 per share and sales of $214 million to $217 million. Analysts expect earnings of $0.52 per share on sales of $218.3 million.

For fiscal 2013, the company now expects net earnings of $0.62 to $0.64 per share, adjusted earnings of $0.70 to $0.72 per share and sales of $538 million to $541 million. It earlier estimated net earnings of $0.60 to $0.63 per share, adjusted earnings of $0.68 to $0.71 per share and sales of $531 million to $536 million.

Analysts expect earnings of $0.73 per share on sales of $543 million for 2013.

Five Below stock closed Thursday at $47.75, down $1.96 or 3.94%, on a volume of 1.9 million shares. In after hours, the stock further dropped $6.75 or 14.14% at $41.00.