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Five Below (FIVE) Rides on Business Model and Pricing Power
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Five Below, Inc. (FIVE - Free Report) has been strategically focused on offering in-trend products, enhancing supply-chain efficiency, bolstering digital capabilities and expanding brick-and-mortar footprint. The company's impressive merchandise assortment aligns with evolving consumer trends. These factors, in conjunction with its pricing strategy, position it well to serve diverse demographic shoppers and resonate well with value-seeking customers.
Known for its collection of stylish and high-quality goods, the company aims to curate an immersive shopping experience for its customer base. With a core selection of items priced between $1 and $5, coupled with exceptionally affordable choices, the brand ensures that customers can readily embrace the latest and most desirable products.
Image Source: Zacks Investment Research
Let’s Delve Deep
Five Below has introduced several customer-centric enhancements, such as curbside pickup and a dedicated mobile app, which includes assisted checkout. These efforts are complemented by an expanded collaboration with Instacart to facilitate expedited same-day deliveries. The integration of payment options such as Venmo and PayPal has further enriched the overall customer experience.
The company has undertaken a digital transformation by streamlining vendor transactions, implementing a core merchandising platform, and leveraging cloud-based data and analytics to optimize inventory management. A new vendor management platform has been launched to enhance transparency and facilitate real-time communication. This is in addition to the continuous work to create more advanced planning systems and tools for predicting replenishment needs.
In terms of brand strategy, Five Below is actively expanding its digital marketing investments to extend its reach to a broader audience. The objective is to establish stronger brand awareness, increase customer traffic and position itself as a premier shopping destination.
Growth Strategies & Customer-Centric Approach
With a total store count of 1,367 at the end of the first quarter of fiscal 2023, the company recognizes substantial growth opportunities nationwide. It opened 27 stores across 19 states in the fiscal first quarter. Five Below's growth strategy revolves around prioritizing operational efficiency, achieving strong sales per store, implementing supply-chain innovations and harnessing the advantages of economies of scale.
The company's primary goal centers around creating an immersive shopping experience that caters particularly to the preferences of not only tweens and teenagers but a broader range of customers.
The company's robust sales performance and transaction trends underline the expansion of its customer base, attracted by its value-centric philosophy and on-trend merchandise. Despite facing challenges, the company is determined to enhance its market share by embracing novel strategies, such as opening stores and introducing innovative products. The company intends to open more than 200 stores and convert 400 stores to the new Five Beyond format in fiscal 2023.
What Else to Know?
In the past year, shares of this Zacks Rank #3 (Hold) company have rallied 39.6% compared with the industry’s growth of 6.9%. Also, the stock has outpaced the Retail and Wholesale sector’s rise of 1.1%.
Further, the Zacks Consensus Estimate for fiscal 2023 and 2024 earnings imply year-over-year increases of 19.2% and 21.2%, respectively. The Zacks Consensus Estimate for sales for the current and next financial years is pegged at $3.56 billion and $4.19 billion, indicating year-over-year increases of 15.6% and 17.8%, respectively. The impressive long-term earnings growth rate of 22.1% emphasizes the intrinsic strength of the company.
Wrapping Up
In spite of the challenging macroeconomic conditions, FIVE is content with its financial outcomes in the first quarter of fiscal 2023 and its operational successes. On its last reported quarter’s earnings call, management expected second-quarter fiscal 2023 net sales to be $755-$765 million, suggesting a rise from the $668.9 million reported in the same period last year.
The projection takes into account the opening of 40 stores and a 2-3% increase in comparable sales. In addition, fiscal second-quarter earnings per share are forecast between 80 cents and 85 cents, whereas it reported 74 cents in the same period last year.
Bet Your Bucks on These Hot Stocks
Here we have highlighted three better-ranked stocks, namely GIII Apparel Group (GIII - Free Report) , Urban Outfitters, Inc. (URBN - Free Report) and lululemon athletica (LULU - Free Report) .
GIII Apparel, which is a manufacturer, designer and distributor of apparel and accessories, carries a Zacks Rank #2 (Buy) at present. The company had a significant EPS surprise of 244.44% in the last reported quarter. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for GIII Apparel’s current fiscal-year sales and earnings suggests growth of 1.9% and 0.4% from the year-ago period’s actuals. GIII has a trailing four-quarter earnings surprise of 47.4%, on average.
Urban Outfitters, which specializes in the retail and wholesale of general consumer products, has a Zacks Rank #2 at present. The expected EPS growth rate for three to five years is 18%.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year sales and earnings suggests growth of 5.3% and 60.6% from the year-ago period’s reported figure. URBN has a trailing four-quarter earnings surprise of 12.2%, on average.
lululemon, a yoga-inspired athletic apparel company, currently carries a Zacks Rank #2. The company has an expected EPS growth rate of 20% for three to five years.
The Zacks Consensus Estimate for lululemon’s current fiscal-year sales and earnings suggests growth of 17.1% and 18.4%, respectively, from the year-ago period’s reported figures. LULU has a trailing four-quarter earnings surprise of 9.9%, on average.
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Five Below (FIVE) Rides on Business Model and Pricing Power
Five Below, Inc. (FIVE - Free Report) has been strategically focused on offering in-trend products, enhancing supply-chain efficiency, bolstering digital capabilities and expanding brick-and-mortar footprint. The company's impressive merchandise assortment aligns with evolving consumer trends. These factors, in conjunction with its pricing strategy, position it well to serve diverse demographic shoppers and resonate well with value-seeking customers.
Known for its collection of stylish and high-quality goods, the company aims to curate an immersive shopping experience for its customer base. With a core selection of items priced between $1 and $5, coupled with exceptionally affordable choices, the brand ensures that customers can readily embrace the latest and most desirable products.
Image Source: Zacks Investment Research
Let’s Delve Deep
Five Below has introduced several customer-centric enhancements, such as curbside pickup and a dedicated mobile app, which includes assisted checkout. These efforts are complemented by an expanded collaboration with Instacart to facilitate expedited same-day deliveries. The integration of payment options such as Venmo and PayPal has further enriched the overall customer experience.
The company has undertaken a digital transformation by streamlining vendor transactions, implementing a core merchandising platform, and leveraging cloud-based data and analytics to optimize inventory management. A new vendor management platform has been launched to enhance transparency and facilitate real-time communication. This is in addition to the continuous work to create more advanced planning systems and tools for predicting replenishment needs.
In terms of brand strategy, Five Below is actively expanding its digital marketing investments to extend its reach to a broader audience. The objective is to establish stronger brand awareness, increase customer traffic and position itself as a premier shopping destination.
Growth Strategies & Customer-Centric Approach
With a total store count of 1,367 at the end of the first quarter of fiscal 2023, the company recognizes substantial growth opportunities nationwide. It opened 27 stores across 19 states in the fiscal first quarter. Five Below's growth strategy revolves around prioritizing operational efficiency, achieving strong sales per store, implementing supply-chain innovations and harnessing the advantages of economies of scale.
The company's primary goal centers around creating an immersive shopping experience that caters particularly to the preferences of not only tweens and teenagers but a broader range of customers.
The company's robust sales performance and transaction trends underline the expansion of its customer base, attracted by its value-centric philosophy and on-trend merchandise. Despite facing challenges, the company is determined to enhance its market share by embracing novel strategies, such as opening stores and introducing innovative products. The company intends to open more than 200 stores and convert 400 stores to the new Five Beyond format in fiscal 2023.
What Else to Know?
In the past year, shares of this Zacks Rank #3 (Hold) company have rallied 39.6% compared with the industry’s growth of 6.9%. Also, the stock has outpaced the Retail and Wholesale sector’s rise of 1.1%.
Further, the Zacks Consensus Estimate for fiscal 2023 and 2024 earnings imply year-over-year increases of 19.2% and 21.2%, respectively. The Zacks Consensus Estimate for sales for the current and next financial years is pegged at $3.56 billion and $4.19 billion, indicating year-over-year increases of 15.6% and 17.8%, respectively. The impressive long-term earnings growth rate of 22.1% emphasizes the intrinsic strength of the company.
Wrapping Up
In spite of the challenging macroeconomic conditions, FIVE is content with its financial outcomes in the first quarter of fiscal 2023 and its operational successes. On its last reported quarter’s earnings call, management expected second-quarter fiscal 2023 net sales to be $755-$765 million, suggesting a rise from the $668.9 million reported in the same period last year.
The projection takes into account the opening of 40 stores and a 2-3% increase in comparable sales. In addition, fiscal second-quarter earnings per share are forecast between 80 cents and 85 cents, whereas it reported 74 cents in the same period last year.
Bet Your Bucks on These Hot Stocks
Here we have highlighted three better-ranked stocks, namely GIII Apparel Group (GIII - Free Report) , Urban Outfitters, Inc. (URBN - Free Report) and lululemon athletica (LULU - Free Report) .
GIII Apparel, which is a manufacturer, designer and distributor of apparel and accessories, carries a Zacks Rank #2 (Buy) at present. The company had a significant EPS surprise of 244.44% in the last reported quarter. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for GIII Apparel’s current fiscal-year sales and earnings suggests growth of 1.9% and 0.4% from the year-ago period’s actuals. GIII has a trailing four-quarter earnings surprise of 47.4%, on average.
Urban Outfitters, which specializes in the retail and wholesale of general consumer products, has a Zacks Rank #2 at present. The expected EPS growth rate for three to five years is 18%.
The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year sales and earnings suggests growth of 5.3% and 60.6% from the year-ago period’s reported figure. URBN has a trailing four-quarter earnings surprise of 12.2%, on average.
lululemon, a yoga-inspired athletic apparel company, currently carries a Zacks Rank #2. The company has an expected EPS growth rate of 20% for three to five years.
The Zacks Consensus Estimate for lululemon’s current fiscal-year sales and earnings suggests growth of 17.1% and 18.4%, respectively, from the year-ago period’s reported figures. LULU has a trailing four-quarter earnings surprise of 9.9%, on average.