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Five Below (FIVE) Rides High on Strategies: Apt to Hold

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Five Below, Inc. (FIVE - Free Report) seems well poised for growth, thanks to its robust business strategies. FIVE’s focus on providing trend-right products, improving supply-chain operations, strengthening digital capabilities and remodeling stores will continue to yield solid results. Also, FIVE remains committed to enhancing customer experience through several ways. Its Triple-Double growth strategy also looks encouraging.

For fiscal 2023, the Zacks Consensus Estimate for Five Below’s sales and earnings per share (EPS) is currently pegged at $3.56 billion and $5.58 each. These estimates suggest growth of 19.4% and 25.8%, respectively, from the year-ago period’s corresponding figures. Also, for the current fiscal year, the consensus estimate for sales presently stands at $2.98 billion, indicating an increase of 4.7% from the prior-year reported figure. This reflects analysts’ optimism on the stock.

Let’s Delve Deeper

Five Below has been digitizing vendor transactions, implementing a core merchandizing platform, and applying cloud-based data and analytics to analyze demand, and accordingly, manage inventory. FIVE rolled out curbside pickup and strengthened the buy online, pick up in-store business model.

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FIVE is adding assisted checkout (or ACO) capabilities and is committed to providing same-day delivery service to make shopping convenient. ACO is already available in 60% of stores and will be chain-wide by 2025. Five Below extended its partnership with Instacart to bring an expedited same-day delivery service to all its outlets. The addition of Venmo and PayPal as payment options also enriches customer experience.

Recently, Five Below announced that it will offer customers the option to buy online and pick up orders in-store throughout the United States. Guests can now get orders from more than 1,250 stores located across the nation. Customers can choose from FIVE’s $1-$5 extreme value collection of games, tech, arts & crafts, beauty, and much more. They can also shop from its recently-launched Five Beyond section, available in certain stores. This section comprises seasonal products of more than $5 and other premium products.

The latest initiative allows customers to conveniently shop online and quickly receive their required products. This is a smart move by FIVE before the arrival of the festive season, whereby it is likely to tap greater sales and boost overall profitability.

Apart from reinforcing its digital capabilities, Five Below remains committed to expanding its store base as well as enhancing the in-store experience to draw traffic and win more customers. In fiscal 2021, FIVE opened 171 stores and remodeled 45 outlets. Management intends to open about 375-400 stores over the next two fiscal years, including approximately 160 new stores in fiscal 2022. FIVE’s Triple-Double growth strategy to triple the number of stores by 2030 and approximately double the sales and earnings per share by 2025 also appears encouraging.

Wrapping up, FIVE’s business model, digital endeavors, store-growth opportunities, and strength in the Five Beyond section will continue to boost growth. Shares of this Philadelphia, PA-based player have increased 15.9% in the past three months compared with the industry’s 5.6% rally. A Growth Score of B coupled with a long-term expected earnings growth rate of 18.6% further speaks volumes for this currently Zacks Rank #3 (Hold) stock’s creditworthiness.

Here Are 3 Key Stocks for You

Some better-ranked stocks are Ulta Beauty (ULTA - Free Report) , Buckle (BKE - Free Report) and Designer Brands (DBI - Free Report) .

Ulta Beauty, the leading beauty retailer, presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Ulta Beauty’s fiscal 2022 sales suggests growth of 13.7% from the corresponding year-ago level. ULTA has a trailing four-quarter earnings surprise of 32.8%, on average.

Buckle, a leading retailer of apparel, footwear and accessories, has a Zacks Rank #2 (Buy) at present. BKE has a trailing four-quarter earnings surprise of 12.7%, on average.

The Zacks Consensus Estimate for Buckle’s fiscal 2022 sales and earnings per share (EPS) suggests growth of 6.8% and 4.5%, respectively, from the year-ago corresponding figures.

Designer Brands, the leading footwear and accessories designer, presently has a Zacks Rank of 2.

The Zacks Consensus Estimate for Designer Brands’ fiscal 2022 sales and EPS suggests growth of 6.9% and 23.5%, respectively, from the corresponding year-ago levels. DBI has a trailing four-quarter earnings surprise of 55.1%, on average.

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