Back to top

Image: Bigstock

Five Below (FIVE) Posts Sturdy Holiday Sales, Comps Rise 10.1%

Read MoreHide Full Article

Amid a challenging retail backdrop, Five Below, Inc. (FIVE - Free Report) posted sturdy holiday sales results that exceeded management’s expectations. This extreme-value retailer for tweens and teens registered strongest comparable sales increase for the festive season since 2011. Undeniably, the company’s focus on enhancing merchandise assortment, improving supply chain, strengthening digital capabilities and delivering better WOW products bode well.

A Closer Look at the Holiday Sales

Five Below highlighted that net sales for the holiday Period — from Nov 1, 2020 through Jan 2, 2021 — surged 21.1% to $722.3 million from $596.6 million reported in the comparable nine-week period from Nov 3, 2019 through Jan 4, 2020. Markedly, comparable sales for the holiday shopping season rose 10.1%.

Joel Anderson, president and CEO, said, “These strong results illustrate the broad appeal of our Wow offering at amazing values as well as the inherent flexibility of our model and merchandise offering. We featured extreme value products, as well as Wow gifts in our expanded Five Beyond offering, all of which resonated with customers. These sales results were accompanied by gross margins that were in line with our expectations and SG&A leverage that was stronger than planned.”


Provides Upbeat Guidance

Management guides fourth-quarter fiscal 2020 net sales between $835 million and $840 million. This suggests an improvement of 21.5-22.2% from the year-ago period. The company forecast comparable sales increase of about 11%.

For fiscal 2020, Five Below envisions net sales in the band of $1.939-$1.944 billion. This indicates year-over-year growth of 5-5.2%. However, it expects approximately 6.5% decline in comparable sales.

Coming to the bottom line, the company anticipates earnings in the range of $2.08-$2.12 per share for the final quarter and between $2.07 and $2.11 per share for the fiscal year. While the current Zacks Consensus Estimate for the quarter is pegged at $2.05, the same for the fiscal year stands at $2.04.

Markedly, shares of Five Below have shown bullish run on the bourses in the past year. This Zacks Rank #2 (Buy) stock has advanced 67.8% in the said period compared with the industry’s rally of 22.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wrapping Up

No wonder, the holiday season, which accounts for a sizeable chunk of yearly revenues, is a make or break for retailers. Taking into account consumers’ product preferences and growing inclination toward online shopping due to social distancing, and greater stay at-home and work-from-home trends, retailers ramped up investments in digitization to provide a seamless shopping experience. To beat the COVID-19 blues, retailers kicked off holiday shopping deals earlier this year with an extended promotional period to avoid rush at stores, given the health concerns.

We note that L Brands (LB - Free Report) posted strong holiday sales results that exceeded management’s initial expectations. Strength in the Bath & Body Works segment and improved Victoria’s Secret performance aided the upbeat outcome. Comparable sales for the nine-week period ended Jan 2, 2021, increased 5%.

GameStop (GME - Free Report) informed that its comparable store sales for the nine-week period ended Jan 2, 2021 increased 4.8%. Notably, e-commerce sales soared 309%, and represented about 34% of total company sales. Again, Zumiez (ZUMZ - Free Report) reported comparable sales increase of 1.7% for the ten-week period ended Jan 9, 2021. Meanwhile, total sales dipped 0.7% during the holiday period.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Go Deeper With Exclusive Zacks Research

Normally $25 each - click below to receive one report FREE:

GameStop Corp. (GME) - free report >>

Zumiez Inc. (ZUMZ) - free report >>

Five Below, Inc. (FIVE) - free report >>

L Brands, Inc. (LB) - free report >>